An introduction to the Near blockchain ecosystem
NEAR is a layer-1 blockchain that is built to empower creators and developers. This Proof-of-Stake protocol serves as the base layer and enables the creation of decentralized applications (dApps). It is a community-run computing platform, meaning that a distributed network of setups maintains it.
Overview of the Near ecosystem
Launched in 2020 by Alexander Skidanov and Illia Polosukhin, NEAR was originally formulated as a machine learning platform. The founders started NEAR.ai in early 2017 to automate programs from a human specification. For the idea to be materialized, there was a need for a smart contract platform. After thorough research in late 2017 and early 2018, disappointed by the lack of tools, Alexander and Illia decided to design their own blockchain. The process of building the NEAR protocol started in August 2018.
What is Nightshade?
NEAR uses a unique sharding architecture called “Nightshade”.
Sharding is a horizontal blockchain scaling technique that divides large volumes of data into smaller, more manageable subsets. This results in lower fees and a higher number of transactions per second.
The NEAR network is powered by Nightshade, a sharding technique that allows the blockchain to scale linearly to billions of users. Under Nightshade, the list of all the transactions is split into chunks and each validator is required to assemble them into a block.
Benefits of Nightshade:
- Security: As participating nodes are only responsible for maintaining smaller sections of data, the probability of security breaches and malicious practices decreases.
- Time-saving: The Nightshade technique decreases the network congestion, leading to increased throughput.
- Cost efficient: It is cheaper to reach a consensus on the NEAR blockchain as each block requires only a small percentage of all the staked coins in the ecosystem.
The NEAR token and tokenomics
$NEAR is the native utility token of the NEAR ecosystem. It has an annual inflation rate of 4.5%. The inflation rate refers to the rate at which new tokens are issued to pay the network operators (validators).
Functions of the NEAR token are:
- Blockchain Security: the NEAR token helps to secure the network through staking. Validator nodes must put assets at stake in order to sign transactions and are compensated for their work with native NEAR tokens. NEAR holders who cannot or do not wish to run a node can also receive NEAR rewards by delegating their stake to validators.
- Transaction Fees: Owners of the NEAR token can use their holdings to pay transaction fees. NEAR distributes a part of the collected fees among smart contract developers while burning the rest to ensure scarcity.
- Storing Data: The NEAR protocol allows users to store their data safely on the blockchain. In such cases, investors can use their NEAR tokens as collateral.
NEAR protocol governance
NEAR prides itself on being a community-led platform and is open to contributions from the participants. To ensure the protocol’s independence, anyone can submit an improvement proposal within the NEAR forum. Proposals are then put through a draft stage where they are open to feedback and comments from the community. If the majority of the community supports the draft, it goes into motion and the development teams start the process of merging the change.
The Near Foundation
Alex, Illia, and the rest of the team created NEAR to enable community-driven innovation to benefit people around the world. During the process, they soon realized that NEAR is more than just a blockchain. It is an amalgamation of tools, protocols, and developers, all working towards the same goal. The realization that there was no single project that included all the aspects led to the formation of The Near Foundation.
The Near Foundation (NF) is a nonprofit organization based in Switzerland. It’s the umbrella firm responsible for maintaining the protocol functionality, funding the ecosystem development, and overseeing the governance.
What makes NEAR unique?
NEAR to Ethereum
NEAR protocol includes an application called Rainbow Bridge that allows the investors to transfer ETH tokens between Ethereum and NEAR. When a user deposits tokens in an Ethereum smart contract, they are locked in the NEAR wallet and created originally on the platform. This process can also be reversed.
The creator Economy
NEAR envisions the formation of an engaged, decentralized creator economy and empowers creators to invent and explore new experiences.
NEAR is a certified carbon-neutral blockchain. In collaboration with South Pole, the leading low-carbon project developer, it aims to offset its carbon footprint by supporting green projects.
Learn more about institutional support for the NEAR network and how a qualified custodian can meet your needs.
Disclaimer: This article is not intended to be, nor does it constitute financial advice. Finoa does not endorse or recommend any particular securities, currencies, or other financial products. This content is solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any spot currency transactions, financial instruments, or other securities.