How NEAR’s Simple Nightshade Works
If you’ve spent any length of time in crypto, then you likely already know that Proof-of-Work blockchains are useful, but they have their limits.
On Bitcoin, for example, miners are in a constant state of competition to be the first to validate a block. The first miner to solve the puzzle set by the network picks up the reward, while all the expended effort of its rivals goes to waste.
Furthermore, as such networks grow, they require more and more energy, which has led Bitcoin to expend as much energy as a small country.
For cryptocurrencies and their related networks to truly achieve widespread adoption, we need something better.
Enter proof-of-stake blockchains
In PoW networks, miners dedicate hardware resources (large, expensive computers) to secure the network. Proof of Stake “validators” meanwhile, stump up their holdings of the network’s native cryptocurrency, instead of using powerful computers.
With Proof of Stake, to get a chance to verify transactions in a block — and get the associated fees — validators must lock up, or stake, a set amount of the native currency. The blockchain uses that locked-up crypto to secure the network.
By becoming a staker, they take on the responsibility of proving the legitimacy of transactions, depending on how many coins they choose to stake. Typically, each PoS network has a threshold in this respect, which means you are elected to be a block producer or “validator” if you hold at or above a certain number of said network’s native coin in an online or “hot” wallet. There are other conditions involved in becoming a validator too, but we won’t go into that in this post.
In NEAR’s case, validators needed to hold around 3.3 million $NEAR to qualify as validators — but this is changing thanks to a new round of upgrades, allowing more people with few tokens to take part in securing the network. More on that later.
As you may already know based on our last update, this year we’re kickstarting a multi-phase process of transitioning NEAR to its ideal state. The first phase of that process is what we’ve dubbed, “Simple Nightshade.” We thought it’s high time to break down what it is, how it works, and why it’s the foundation for what will set NEAR apart for years to come.
Unmasking Simple Nightshade: From Beacon Chains to a Better Way
Simple Nightshade is NEAR as it is now, but incrementally sharded.
Picture a blockchain as a singular conveyor belt, pushing products through from initial assembly to packaging and then delivery. Each worker, whether human or otherwise, is responsible for a small task, all of which incrementally move the product through to its final state.
That’s similar to a non-sharded blockchain, where transactions are sent, verified, processed, and added to one long chained database by either miners or validators. Whether the blockchain involved is Proof-of-Work or Proof-of-Stake, the key stumbling block is the same: only so much can be done before the whole process slows down.
One blockchain is one blockchain and it’s limited in its processing capacity or throughput. Every miner or validator works on the same group of transactions, processing one block at a time. Consequently, the more used the blockchain in question becomes, the slower it becomes.
Consider Ethereum, which now serves as the settlement layer for the bulk of DeFi products and services, yet historically averages a throughput of 20 transactions per second. If we compare these numbers to, say, Visa, which most accurately averages 1,700 transactions per second, it’s easy to see that even crypto’s leading networks aren’t yet scalable to the masses.
Something needs to be done and sharding points the way forward.
Instead of depending on all miners or validators to process each block, one at-a-time, a sharded network is one that is purposefully broken into several chains or “shards,” to which subsets of validators are assigned.
These subsets, in turn, process small groups of transactions instead of doing so altogether as in traditional PoS networks. Once they’ve done their work in their shards, a hash or abbreviated, encrypted record of the transactions added to the shards is typically sent back to “a beacon chain,” which you can imagine as both the securer of the network and its’ determiner of finality.
This is, however, the way Ethereum plans to structure sharding. At NEAR, we are aiming for a different direction, to both swiftly deliver a fully sharded network and to exponentially increase our network of validators. Overall, the driving vision is for users to be able to become validators, even from their high-end mobile phones.
While Simple Nightshade is only the beginning of this journey, once you understand what it includes, you’ll find it easier to understand where we’re headed and why a multi-stop road is needed to get there.
Under the Hood: Sharding with Simple Nightshade
As we’ve previously discussed, Simple Nightshade moves NEAR from a single chain blockchain, to a sharded one, in terms of its’ design or “state,” but not in terms of validator responsibilities. That means all of those who qualify as validators will continue to verify all transactions together, but the network itself will be split into shards. In Simple Nightshade, there are four shards.
Think of NEAR in the beginning as a single checkout line. NEAR however, has multiple checkout lines for the same store. The Simple Nightshade upgrade gives transactions on the network more roads to travel down to be approved, to increase throughput, and decrease network congestion.
Above all, it will be far cheaper to reach consensus — i.e., add a block to NEAR’s chain, since each block will only require a backing of 0.1% of all of the staked coins in NEAR’s ecosystem. All in all, imagine Simple Nightshade as the backbone for all of our future upgrades, leading to NEAR becoming a fully-sharded, NEARly infinitely scalable network, ready for the masses.
Phase 1 of Simple Nightshade will build on it, further decentralizing NEAR by expanding the criteria for who can be a validator. Once it launches, a new subset of validators called “chunk-only producers” will go live with it. These individuals won’t need to have any specialized hardware and will be able to earn NEAR for validating the blocks of a specific shard, paving the way for anyone, anywhere to help secure the network. We expect this phase to occur in January 2022.
Following that, phase 2 will erase the requirement for all shards to be tracked by all validators and open up the process of becoming one even further, while fully sharding the NEAR network in terms of how transactions are processed as well. We expect this phase to occur in Q3 of next year and on its heels, in Q4, we will introduce dynamic splitting and merging of shards based on resource utilization. In other words, more checkout lines will be able to open as needed to decrease network latency and increase throughput.
For now, with all of the above in mind, we hope you’ll find it easier to track NEAR’s progress and how it sets itself apart. Remember that any time you have further questions on any of this material, check out the NEAR protocol development roadmap.
About NEAR
NEAR is a high-performance blockchain that is designed to be super-fast, incredibly secure, and infinitely scalable. NEAR’s vision is to create a network that enables people to re-imagine finance, creativity and community in new and inclusive ways.
NEAR is built by an award-winning team of engineers and entrepreneurs to be simple to use, inclusive and good for the environment. NEAR is backed by top VCs such as A16Z, Pantera Capital, Electric Capital, Dragonfly Capital, Coinbase Ventures, Blockchain.com, and Baidu Ventures.
Join NEAR’s community:
Telegram: https://t.me/cryptonear
Discord: https://discord.com/invite/UY9Xf2k
Twitter: @NEAR_Blockchain & @NEARProtocol
Want to hear from the NEAR team directly? Check out our company blog.
