UNDERSTANDING THE NEAR BLOCKCHAIN OPERATING SYSTEM (BOS)

When Illia first announced the concept of the Blockchain Operating System (BOS) back in October of 2022, it was met with skepticism and confusion by a majority of the Web3 community. Why isn’t NEAR trying to grow their ecosystem?! Now, almost eight months later, we can confidently say that not only do we understand the BOS vision, but that we’re convinced it offers a unique competitive advantage, and an exceptionally forward looking and strategic move.

This is the best way to explain the BOS for someone trying to orient themselves with how it fits into the existing landscape: the BOS is your all-in-one solution, for connecting a user or a business to an application on a blockchain. The following overview is not financial advice, but rather a holistic overview intended to encapsulate one of the most unique bets a Layer-1 has taken.

Why BOS Matters in the Modern Web3 Landscape

In today’s increasingly complex digital Web3 environment, a system that simplifies user interaction with decentralised applications (dApps), widgets, and gateways is a godsend. This is where NEAR Protocol’s Blockchain Operating System (BOS) comes in. BOS presents itself as a multi-faceted platform designed to revolutionise how we engage with open-source blockchain technology.

The term ‘BOS’ (sometimes spelled ‘bOS’) might conjure images of desktop icons and taskbars, but it’s important to dispel that notion. NEAR’s BOS is a transformative concept that goes beyond being a ‘lite’ client or a typical operating system. In a nutshell, BOS serves as a dynamic platform that encompasses:

• dApps: Standalone applications that leverage blockchain technology for various functionalities.
• Widgets: User-friendly, plug-and-play components that add enhanced features to dApps.
• Gateways: Interfaces tailored for specific user groups, making blockchain tech accessible to a broader audience.

Part II: Deep Dive into BOS Architecture

The Triad of Core Pillars

A well-designed architecture is paramount for any system to succeed. BOS thrives on three integral pillars:

1. Aggregation Layer: Think of this as the face of BOS. It hosts a variety of widgets and gateways, making them readily available for end-users.
2. Connectivity Layer: Acting as the middleware, this layer forms the connective tissue between the Aggregation Layer and the Blockchain Layer. It facilitates seamless data exchange, ensuring that user interactions with dApps are efficient and smooth.
3. Blockchain Layer: This foundational layer houses the smart contracts, assets, and all critical blockchain data. Essentially, it’s the heart of BOS, driving its core functionalities.

Monetisation in the BOS Ecosystem: The Role of $NEAR

In the heart of NEAR lies the $NEAR token, the monetary pillar upon which the ecosystem leans for sustenance. Far from being just another cryptocurrency token, $NEAR is a versatile asset driving numerous functionalities.

Deployment Costs: Widgets, Components, and Gateways: While it might seem that deploying widgets, components, and gateways in the BOS environment requires only a small amount of $NEAR. Small costs compound over time, especially as you scale your applications and services. For businesses and developers, it’s crucial to plan for these costs when budgeting for the life cycle of their projects.

Medium of Exchange: The Currency of Choice: $NEAR is the linchpin of financial interactions within the NEAR ecosystem, whether you’re looking at licensing agreements or API calls.

Subscription Models: Revolutionising Open-Source Sustainability: Unlike it’s commonly perceived, open-source development can generate value back to the original creator. Through subscription models on the BOS, users can potentially gain access to premium features on the BOS such as the premium checkmarks on NEAR Social or customised widget experiences. This is an ingenious way to elevate the value proposition of open-source projects, historically undervalued and underfunded.

Principal Staking: Empowering Gateway Providers: In a manoeuvre to enhance user experience, gateway providers have the option to purchase and stake $NEAR tokens to offset transaction fees. This not only drives down the costs for end-users but also aligns the incentives of gateway providers with the broader ecosystem, creating a win-win for all involved.

Part III: Future Outlook

Where Is NEAR Headed?

NEAR (BOS) aspires to make its Protocol the central hub in a multi-blockchain universe. This ‘Hub and Spokes’ strategy ensures that all other blockchains will interface with NEAR, thereby streamlining the user experience across platforms.

Potential Risks: What People Should Watch For

As promising as NEAR’s BOS may sound, there are risks involved:

• Ecosystem Development: A robust selection of high-quality dApps is essential for BOS’s long-term success. Without it, the entire system could falter.
• Business vs Tech Focus: A potential pitfall could be an overemphasis on business solutions at the expense of technological development, leading to a less-than-ideal user experience.

Conclusion: Why NEAR (BOS) Deserves Your Attention

NEAR isn’t just another cog in the cycle of Web3; it’s a comprehensive system aiming to streamline how we engage with blockchain technologies. BOS promises to be a revolutionary platform that should be on the radar of anyone keen on the future of the Open Web.

Why BOS Matters in Simple Terms

Since coming into the universe of blockchains, NEAR has always built its competitive moat around usability. The core team has been obsessed with how bad and difficult it is to actually use a blockchain, and hence much of the innovation on NEAR stems from solving for the user who doesn’t know anything about blockchain.

as if they were just using the internet to browse for Amazon clothes. The BOS connects the janky and painful world of the internet of value with the intuitive and relatively familiar world of the common internet (sometimes referred to as Web2.0).

That’s it — that is the BOS. Now you know.

Of course, in order to really understand what that means from a practical perspective we need to see the BOS in action. What we’re going to do here is pretend like you are a developer, or an entrepreneur, or a venture capital analyst / partner, or a community builder — and we will tell you straight up, how to think about making sense of the BOS.

You may or may not realize how terribly fragmented using any solution in crypto is today. You have to have your own wallet (backed up with your seed phrase), and every time you want to do anything on-chain you have to click ‘confirm transaction’, and all of the different solutions in a blockchain ecosystem are exploded across the internet so you have to really look around and stay on Twitter to find the best dApps, communities, and opportunities as they emerge. Organizations have a nearly impossible job handling a wallet or account on-chain, and most users in this space never leave the safe confines of a centralized exchange. Basically, crypto today is a bunch of users who got rich in past cycles (maybe like 10 million total people), and then the remaining 6 billion people sitting on the sidelines or with an exchange account who think that this is all about speculating on the next Pepe or Doge.

You: Yeah I realize that is a pain in the ass, and to be honest, even though I say I use all of these dApps, I actually just LARP because I am too afraid to lose my funds or get hacked playing around in this fragmented and unfamiliar environment.

Exactly. We have this problem where no one can easily use the dApps in an L1 ecosystem, and the result is that developers building solutions don’t have enough users, investors are afraid to put liquidity into solutions that are too inaccessible, most businesses still don’t see real world value, and the average person has no patience to ‘learn’ about this whole thing if its painful and time consuming.

You: And somehow, BOS solves all of this?

Yup. The BOS is all about taking all of the complexity from this process away, such that any business, user, or project can build an interface directly into their website that contains all of the blockchain jargon and complexity beneath it. But here’s the catch: The user doesn’t see that. The user only sees whatever the person hosting the interface wants them to see. And that person can make the user experience so incredibly easy that the user doesn’t even know they are using a blockchain application.

You: Go on, this sounds kinda promising but I still don’t get it.

Any application on a blockchain is built using a combination of different widgets, and tools: Things like storage, indexing, oracle price feeds, bridging and so forth connect to a decentralized application. The specific widget or tool doesn’t matter so much as the fact that in normal industry terms, everyone is on their own to connect all of these pieces together and then find a way for users to be able to easily use their product.

The blockchain operating system is a bit like Wordpress for blockchain insofar as now anyone can create an access point to a specific application, and ‘add-in’ or combine other widget’s and applications to that interface, much like we added in plug-ins to word press websites.

You: How does that change the overall blockchain experience?

Great question. Now, the entire fragmented and jargon-filled product stack is hidden behind a clean and friendly user interface (we call these gateways), whereby the specific interface operator can subsidize the user’s experience, so that there is no more wallet, or transaction fee, or complex onboarding process!

What this does is it incentivizes the development of different widgets, dApps, and other ‘plug-in’ like solutions for gateway providers to leverage in constructing (decentralized) or (white labeled) solutions for their user base. Now the entire ecosystem is connected through the BOS. It’s one place, where every single dApp, widget, and gateway, can be creatively aggregated to provide a new way of onboarding a user.

So just like with websites, we could create clever mechanisms to engage users on a specific browser — NEAR, as an ecosystem — will offer the singular platform of entry for businesses, users, and builders, to frictionlessly access the universe of blockchains.

You: I think I am starting to get it. What benefit does this bring to NEAR?

We will get to that later on, but the big point you should take away here is that the BOS is bringing the different pieces of the decentralized application puzzle together, and stacking them in a way whereby anyone can create their own entry point to a specific blockchain-use case or application. This platform is the foundation from which you can imagine payment processors, custody solutions, storage solutions, oracles, and other fancy tools being available to just ‘plug-in’ to any dApp or gateway, that is trying to get users to leverage a specific solution. The user, for their part, just clicks, and engages the product, and no longer has to worry about transaction costs, accounts, wallets, and so forth.

In this sense, NEAR is not only making it easy to access all of the existing solutions of crypto — like NFTs and DeFi and Web3 Games — but it is also expanding the pie to onboard users for entirely new blockchain-based solutions, many of them rooted in real-world value creation.

Let’s look at some examples.

Example 1: Steam Gaming On-Chain

Description: A gateway that offers one-click access to any Web3 game on NEAR, Ethereum, and Solana, with all transactions inside of the game prepaid, and with a custody module attached for users interested in shared custody. A game item marketplace is also situated inside of the gateway, allowing users to easily play, earn, sell / trade, and custody their game items. One 10$ a month payment, and the user gets access to 50+ games with no upfront costs!

How it Actually Works: Fragmented game ecosystems that usually would have to compete for users, are now integrated directly into a single front-end, that subsidizes user onboarding and eases custody and management of user game assets. The BOS allows a gateway developer to connect multiple dApps in one place, right next to the game-asset exchange, and then ‘plug-in’ on-ramp and custody widgets to optimize their users’ experience. They can then ‘gate’ the entire experience under a normal credit card payment system.

What is Different with BOS: The components for the gateway developer are easily available, and with a custody and on-ramp plug-in, any existing company with a large user base can spin up an on-chain steam, without requiring permission from anyone else. BOS brings all of the components together into one place optimizing for both users and builders.

Example 2: A Front End For The On-Chain Carbon Economy

Description: A single gateway for institutions and market-makers to globally access the on-chain carbon credit economy. Custody, trading, and investment components allow investors and corporations to be able to purchase, trade, track, and offset any bridged or natively generated carbon credit. Multi-chain credits either bridged from legacy registries, or newly minted on-chain are equally available for all users of the gateway.

How it Actually Works: The gateway operator creates a unified interface for the fragmented pieces of the on-chain carbon market: Multi-chain components of carbon pools on Flow Carbon, and Toucan are combined with Forward pools from Solid World DAO and the auction mechanism of Open Forest Protocol. In one single interface a user has a homebase for interfacing with all on-chain environmental assets, with built in custody and payment options.

What is Different with BOS: A very fragmented and clunky world of disparate dApps offering different ways of interacting with on-chain carbon credits, is transformed into a single unified interface with minimal friction and optimal choice for institutions and investors. BOS creates the most comprehensive, accessible, and seamless on-ramp into the world of on-chain carbon.

Example 3: Global Blockchain Account Marketplace

Description: A gateway for users to purchase a named ID from any blockchain ecosystem (.eth, .near, .sol, .aptos, .sui, etc.), subsumed as a single domain marketplace for all blockchains. User’s have the unique capacity to buy, sell, custody, or use their account ID’s in any ecosystem directly from this gateway. Secondary markets for locked accounts that may hold vested tokens, also become available, in a separate tab of the same interface. This gateway becomes a one-stop shop for identity management on-chain. Other dApps and protocols integrate facets of this gateway (for particular ecosystems) to grease the wheels for their users and ease onboarding friction.

How it Actually Works: The different identity frameworks of each ecosystem are integrated ‘beneath the surface of the gateway’ such that the gateway operator is able to broker the buying and selling of accounts between ecosystems (this is as a high level example, the underlying architecture would necessarily be more complex). This also applies to secondary markets for certain named ID’s that may possess locked tokens or memberships. The gateway provider then integrates a custody widget, on-ramp/off-ramp, and pre-pays transaction costs for potential users.

What is Different with BOS: Instead of users fighting each other on each blockchain for certain named ID’s, a single gateway is used as the global domain service across blockchain ecosystems. As high-level account names become more common in the future, it is likely that dApps will shed their ecosystem reference (.eth, .near), and simply focus on buying a specific on-chain name, in line with their mission or objectives (.rockets, .spacetravel).

NEAR: The Central Blockchain in a Hub and Spokes Model

Most descriptions of the BOS do not touch its relationship to monetization within the NEAR Ecosystem. This is a very common complaint from builders inside of NEAR: ‘BOS is great, but I don’t see how it fundamentally helps the NEAR Ecosystem or my concept.’ This section is for you — and hopefully it will help get your mind going on the many enhancements it will bring to both the NEAR Ecosystem and your specific concept.

BOS Monetization

In a world of Gateways, dApps, and Widgets all being built for different user bases, there is a fundamental place for $NEAR to ‘anchor’ the entire system. This is done in two fundamental ways:

1. First, $NEAR is used as the medium of exchange for any licensing, or implementations between dApps, widgets, and gateways. So if you have a gateway with a massive user base looking to play Web3 games, you might charge new Web3 games a fixed fee in $NEAR to be placed on my gateway, so that users can access the game. In a similar vein, if you’re a custody widget that radically eases on-ramping institutions or users by connecting to a traditional bank, you might charge a gateway with a fixed fee in $NEAR to use for all of their users wishing to connect with dApps on their front-end. In all of these scenarios, $NEAR is the reserve currency of the BOS.
2. Second, when it comes to running a gateway, many gateway providers will benefit from improving their users’ experience by ‘hiding’ the blockchain complexity from them. This will require the gateway providers to cover the transaction fees of their users, and any other user-actions that may incur a cost on-chain (think execute a trade, or mint an NFT). To do this in a financially sustainable manner, most gateways will purchase a principal stake of $NEAR tokens that they can then stake on the network, to generate fees sufficient to cover their estimated monthly costs (based on the number of users they envision using their gateway). Depending on who the gateway provider is, and how many users they intend to onboard to use a NEAR-based application, there will be a consistently large amount of NEAR being purchased off of public markets, and staked on the network. It is expected that this mechanism will grow in proportion to both the users, and different front-ends, dApps, and widgets available on the BOS.

Here we can see the commonly referenced, and deeply loved ‘Flywheel’ of the BOS:

• Create a gateway that makes it frictionless for users to use a dApp or suite of dApps.
• More users onboard to the ecosystem, and generate or spend value for time, labor, assets, etc.
• More demand grows for different dApps, widgets and gateways.
• More gateways are created, which purchase large amounts of NEAR to stake so as to subsidize their users in a frictionless experience.

And look where we are again –

• More users onboard to the ecosystem, and generate or spend value for time, labor, assets, etc.

What needs to be mentioned here is that BOS is a value add for every single builder inside of the NEAR Ecosystem at this time. With BOS, you are not on your own to find users for your dApp, trading platform, or NFT marketplace: Now you can connect your dApp, trading platform, or NFT marketplace to any frontend being built by another party, and offer access to your dApp through that gateway.

It’s a lot like saying: If it’s the early internet it’s more efficient to list your ‘digital calculator tool’ on wordpress, so every single website builder can integrate it into their website, then to try to market a single website for using a digital calculator.

This should suffice for monetization possibilities. Before moving to the longer term implications of BOS, we still need to discuss what has been aptly labeled above as the hub and spokes strategy. This relates to the multi-chain approach that BOS enables.

The Hub and Spokes Strategy

Right now most blockchains are copy-pasta’s of each other, with very few nuances differentiating them. They all are starting to have naming services (.ETH, .NEAR, .SOL, .APTOS, etc.), they all have wallets and custodians, and they all have the classic ‘products’ that found a user-base in the last cycle (NFT marketplaces, AMM’s, Lending protocols, and so forth). We could say that they are all at similar stages of development in their ‘tech tree’ (civilization style).

The BOS is designed to eventually allow gateways to offer users access to different dApps on different chains. Such that it remains a single unified experience for a user — but beneath the surface there is a bridging or mirroring of assets such that the different dApps appear on the gateway to interact seamlessly. This equally applies for widgets and components that may help users interact with a specific dApp.

Take the above example of a gaming gateway like steam but for only Web3 games. A user could sign up, create an account, and start playing games. Then they might want to trade an item they received in a game on a game-item marketplace. If the game is built on NEAR, but the marketplace is running on Ethereum, the BOS allows the user to sell that item as if it was all one unified interface. Then beneath the surface, the item is getting mirrored and sold on ETH in real-time — subsidized by the gateway provider.

The vision of the BOS is to make NEAR the central blockchain, connecting all other blockchains to one another. Other visions for interoperability have purported to do as much, but BOS brings a product stack into the picture that ‘hides away’ the majority of the complexity in using different blockchains and allows sophistication and customization on the ‘gateway’ into the system. While this is undoubtedly a long-term approach that will take years to fully integrate, any traction on BOS via NEAR alone in the coming years, will build an increasingly durable moat for NEAR as a whole to eventually integrate multi-chain components and dApps. It is a noble vision for a fragmented landscape of chains today.

The BOS in Context: 1 Billion Users in the Coming decade

This final section has to do with long-term implications and the real ‘narrative’ power of the BOS. To start, look at the current state of development of all of the existing L1’s and tell me what you see.

You most likely see:

1. Tribalism over the same core (“degen”) users, hunting for the next airdrop.
2. Uncertainty among every Foundation as to what brings real product market fit.
3. Lingering questions from builders on all blockchains, about how users can frictionlessly access their dApp.
4. More L1’s launching all with the now normalized focus of liquidity, users, NFT’s, and daily transactions.

And then, there is NEAR — going all-in, on a blockchain operating system to ‘abstract’ away the complexity and hide it under a customizable gateway that any person can optimize for a specific user base with easy widget connectivity to optimize for a specific dApp.

Notice what the BOS strategy is really offering in context:

1. A one-stop shop for accessing the best existing use-cases across crypto.
2. Away of expanding the pie of total users to the effect that there will be thousands if not tens of thousands of people participating in the internet of value, without going through the traditional → Set up binance account → setup metamask → send funds to metamask → get scared and keep most wealth in binance cycle.

We can’t emphasize the second point enough: Everyone in this industry loves to say to one another ‘we’re early, don’t worry’, ‘Our goal is to onboard the first 1 billion users’, and so forth. But with BOS, hiding the blockchain complexity, and offering users frictionless access to blockchain solutions rooted in real-world value, addresses an entirely new subset of users that nobody else has been able to cater towards.

Another way of looking at this is thinking about the early internet, and imagining how many companies ended up creating their own websites on Wordpress. BOS is likely going to be the basis for Bank of America tokenizing and trading assets on-chain, Real-Estate companies playing with financialized real-estate products, corporates purchasing and offsetting on-chain carbon credits, and scientific research laboratories monetizing their research. This is the internet of value emerging from an infant to a teenager.

Where BOS May Fail: Risks and Warning Signs Ahead

A comprehensive introduction to the BOS wouldn’t be complete without a fair dose of realistic criticism. What this section should outline are the implicit presuppositions that many have accepted in order for BOS to take off. Many of such presuppositions, however, remain to be delivered:

• Ecosystem Development: BOS, in its best case scenario, is a level-up for all dApps and products building and launching in the NEAR Ecosystem. The idea is that the BOS inserts on top of the ecosystem to provide more frictionless and user-friendly pathways from which clunky technical services can be delivered intuitively to users. The idea of ‘white labeling’ these open–source services, has further allure for future gateway business models. The problem, if we are being honest, is that NEAR — like many Alt-L1s — does not have a shining track record of bringing or keeping builders in their ecosystem. The DeFi scene is immature, NFT liquidity is low, and average volume across NEP-141 tokens remains a pain point. Is there a scenario where BOS doesn’t end up working, simply because there are not enough base-applications to utilize it?
• Business over Tech: A second issue may lie in execution error. Any open-source system requires evangelization for exponential adoption and success. In a certain scenario, the NEAR Foundation and Pagoda prioritize custom ‘business solutions’ over developer relations. In this scenario, there is a fundamental communication failure, insofar as the paid NEAR entities are building the majority of the tech stack, and insufficient organic growth is coming into the ecosystem to build on their own. We suspect this scenario would play out in the following manner: Everyone working on BOS would believe that landing 1–3 major partnerships on BOS would cement its value proposition in the mind of builders and VCs across crypto and Web2. Once 1–3 major partnerships are delivered, everyone would then realize that until there are easy low hanging opportunities — projected and evangelized to the builders — business success does not translate to technical adoption or excitement. The remaining 12–14 months of bear market would be wasted on quickly forgotten business deals, fumbling the opportunity to recruit builders into this new framework. The underlying problem — which has plagued NEAR from the very beginning — is that just having good tech is not enough in Web3: Having good tech, and a strong culture and guiding ethos between all interested stakeholders, is what brings and keeps people in an ecosystem.
• Would you Buy Into BOS If It Launched on ETH Tomorrow? An interesting final point is to consider whether the BOS ‘framework’ would work on an already well-developed ecosystem like Ethereum. This can be read in two ways:

1. BOS will fail on NEAR because it does not have sufficient growth or traction, and would be better off focusing on EVM-ecosystems (granted, this is part of the strategy, but rustic NEAR is still front and center for now).
2. BOS will succeed on NEAR in the long-term, as NEAR is simply younger than Ethereum but is better positioned than ever to follow in the footsteps of Ethereum. This is due to better fundamental design across key management, sharding, and crypto-economic incentives.

Looking ahead, the most relevant consideration for BOS on the whole, is that user-experience and account abstraction will remain a key problem to solve-for in the coming 10 years. There are only a finite amount of ways this plays out — and BOS is putting one forward on an ecosystem level.

Conclusion

The promise of BOS is an ever expanding ecosystem of widgets, dApps, and gateways, for an ever increasing number of blockchain-use cases, and an ever increasing stream of daily active users. The game has leveled up. The tech tree has expanded. Custody providers, payment processors, oracles, indexers, storage solutions, DAO tooling, NFT marketplaces, Play2Earn games, DeSci widgets, local AI’s, IoT sensor networks, and so forth, can all share and benefit from new users onboarding to live, work, and play on-chain on a single platform via multiple frontends — the blockchain operating system.

At the time of writing, BOS is just a toddler with the best killer use-cases, integrations, and gateways waiting to be created. It’s also the middle of the bear market, just eleven months before the next halving and the traditional start of another cycle. Once more, look at the fragmented landscape of chains around you, and ask yourself, is BOS worth spending some time, labour, or money on?

Original source provided by Lyrik Ventures.

About NEAR Protocol

NEAR is on a mission to onboard a billion users to the infinite possibilities of Web3 with the Blockchain Operating System (BOS). Leveraging its high-performance, carbon-neutral protocol, which is fast, secure, and scalable, NEAR provides a common layer for browsing and discovering the Open Web.

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