Near: The Next-Gen User Friendly Blockchain
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Introducing Near Protocol
NEAR is a decentralized application platform that secures high-value assets like money and identity while providing the performance necessary to make them useful for everyday people.
It is built atop a brand-new public, proof-of-stake blockchain that uses a novel consensus mechanism called Doomslug and a new sharding approach called Nightshade, which splits the network into multiple pieces so that the computation is done in parallel and there is no theoretical limit on capacity.
NEAR's contract-based account model provides the flexibility that other chains only get from second layer components, allowing NEAR to consistently provide better native usability for developers, validators, and end-users.
Growth narrative
NEAR was created by Alexander Skidanov and Illia Polosukhin, two brilliant minds highly passionate about machine learning. It first started as an artificial intelligence and machine learning project in 2017, with the aim to explore the field of automated programs from a human specification.
They then headed towards programmable smart contract platforms and crypto payments. However, blockchain and its technologies at this time did not meet their needs, which led them to begin the development of the NEAR Protocol in August 2018.
It is well-known that Ethereum, the most used general-purpose blockchain, can only process less than 20 transactions per second on the main chain. This limitation, coupled with the popularity of the network, leads to high gas prices (the cost of executing a transaction on the network) and long confirmation times; despite the fact that a new block is produced approximately every 10–20 seconds, the average time it actually takes for a transaction to be added to the blockchain is 1.2 minutes, according to ETH Gas Station. Low throughput, high prices, and high latency all make Ethereum not suitable to run services that need to scale with adoption.
We most recently saw it with the latest Bored Ape Yacht Club's NFT mint, the Otherside metaverse lands, Otherdeeds. There was a gas war at the mint, and fees suddenly spiked to thousands of dollars per transaction. While some were able to get their transactions processed within a few hours for a couple of hundred dollars in gas fees, others reported paying upwards of $4,000 for a single transaction.
The average gwei, or price of Ethereum gas, was roughly 100 to 200 times normal. In addition to abnormal prices for a transaction, it was not guaranteed for everyone to have the opportunity to mint (because of the limited supply, large number of transactions, and blockchain congestion), and many paid such gas fees to have their transaction rejected and therefore get no NFT in exchange.
This is where NEAR is the solution. NEAR scales through sharding, a technology that Ethereum plans to implement in 2023, although announced several years ago and postponed many times. NEAR has launched phase 0 of its roadmap towards a fully sharded blockchain in 2021. This phase, nicknamed Simple Nightshade, was the first step to making NEAR super-fast, incredibly secure, and capable of onboarding millions of users into the world of Web3 without skipping a beat.
The last phase of the sharding development will be Dynamic Resharding and is expected to be released in Q4 2022. Sharding partitions data into several pieces. Data can then be processed in parallel with each other. The goal of Dynamic Resharding is to create the ability for the network to split and merge shards based on resource utilization dynamically. This will make NEAR almost infinitely more scalable and resilient to short-term usage spikes. We could see NEAR with a 100,000+ TPS - Enough to surpass Visa for real-world usage.
Innovation
NEAR's blockchain uses a new consensus algorithm and a sharding architecture to achieve a relatively high level of performance.
The key elements of NEAR's technology are:
Dynamic Re-Sharding
Nightshade
Doomslug
Fees as Developer Rewards
Token Balance-Based Storage
Dynamic Re-Sharding
There are two ways to approach scalability - Horizontal and Vertical. NEAR has chosen to use sharding, which is a type of horizontal scaling technique. Sharding is an approach to scaling databases, and it involves spreading computing and storage capacity across multiple servers. In the world of blockchains, sharding involves partitioning a blockchain across subgroups of nodes and distributing computation across multiple parallelized sub-chains "shards".
With Dynamic Re-Sharding, the network regularly adjusts the number of shards supported by the network based on user demand. The project calls this demand-based approach to scaling "Dynamic re-sharding". This scheme allows the network to only pay for the infrastructure and scale it needs at any given time.
Dynamic re-sharding might be a more cost-efficient approach to scaling and securing a sharded network since node storage requirements can adjust with demand. Dynamic Re-sharding is not live yet on NEAR's network since the sharding technologies on NEAR are not fully deployed yet.
Nightshade
NEAR uses a new sharding approach called Nightshade to reach consensus and settle cross-shard transactions. Each shard has its own separate pool of validators and nodes.
Most sharded networks use a smaller validator committee that rotates its lead block proposer when validating transactions across shards. This approach introduces some difficulties to the validation process. For instance, these validator groups must either download the entire state of each shard or receive only the portion that changed. The validation process for either technique can be inefficient as the first one requires a bigger time frame and the second one requires a larger state size.
Nightshade offers a different model by modifying the typical sharding abstraction. It assumes that each shard works together to produce "chunks" of data that collectively create a single block. Blocks are produced with a regular cadence regardless of whether each individual shard has produced its "chunk" for that specific block height.
Nightshade is a leader-based system, meaning it assigns a single validator to produce each block. This validator must assemble the data chunks generated by each shard during their leadership period into a block. Leadership assignments will rotate through the existing validator set. Validators don't accept transactions, only chunks.
Doomslug
Doomslug is NEAR Protocol's new block production technique. According to the team, it enables the network to achieve some sense of practical finality after one round of communication, with a finality gadget providing BFT finality after a second round. Practical finality in Doomslug (or Doomslug finality) is when a block is irreversible unless at least one participant is slashed. Doomslug also allows the network to continue producing and finalizing blocks as long as over half of the validator set are online and honest, although the finality gadget will stall if less than two-thirds of participants are online.
Fees as Developer Rewards
NEAR distributes 30% of any transaction fee to the contract (or contracts) that the transaction calls. The contract's owner (often a developer group or a DAO) can decide how to allocate these funds. These fee "rewards" effectively incentivize early application development on NEAR. The percentage of fees allocated to this reward is a system-level parameter (which can be adjusted by governance), but developers may choose to receive any amount equal to or above this minimum value.
Token-Based Storage
NEAR token holders have the right to store data on the chain. For example, if someone holds a balance of 1 NEAR, it means that the person can store nearly 10 KB of data on the account. This model is similar to how checking accounts in banks require a minimum balance to have an account. It allows contracts that are maintaining important states to pay validators proportionally to the amount of data they are securing.
These innovations provide a technical advantage to NEAR compared to some popular Layer-1:
source: Nansen
Edge on the market
One of the most talented teams in Crypto, with highly technical engineers and winners of programming competitions, skilled in machine learning, artificial intelligence, etc.
Sharding technology on point planned since the beginning of NEAR's conception and much more advanced than its competitors.
Private shards: Companies can create private shards to keep data more secure. (e.g., hospital)
Over $533M in funding from almost every A-list Venture Capital.
The $800M Development Ecosystem Fund is one of the largest development funds in Crypto.
Developers can use Rust or Assembly (common languages) to develop in the NEAR ecosystem.
A lot of educational resources to help onboard developers to NEAR.
30% of transaction fees go to contract owners, which can attract a lot of builders to the ecosystem.
70% of all transaction fees are burned, meaning the network becomes disinflationary as usage increases.
User-friendly experience, interfaces, wallet, in adequation with the ambitions of massive adoption.
NEAR's metrics are growing, and the protocol is attracting more and more users even in this environment not conducive to growth and capital attraction.
source: DefiLlama
Concerns
NEAR is another Layer-1 that promises to be faster, cheaper, and more secure than Ethereum. They can develop a really good blockchain with the means and the first-class team that they have, but it will be hard, as for any Layer-1, to try to become as mainstream and attract as many users and developers as Ethereum.
There was some expectation around NEAR's stablecoin since it is a decentralized stablecoin similar to TerraUSD (UST) and has the same kind of minting mechanism. People were expecting an APY of 20% or higher to compete with UST's APY and attract users; however, the APY is not quite 20%, and the USN release did not create a big media effect. NEAR's stablecoin will therefore have to gain adoption and utility slowly and gradually.
NEAR's ecosystem is ready to use and user-friendly. However, the wallets are also part of their ecosystem, and it is not possible to display a NEAR's wallet on Metamask. This can lead to a lack of adoption and NEAR insulation.
NEAR is already high in terms of market capitalization (top 20) and is around 2x away from other important L1 such as Polkadot or Avalanche. Such a capitalization may seem less attractive to some investors and is also dependent on overall market growth to truly deliver high returns.
The Sharding technologies are not yet fully implemented, and only the first phases of the plan have been released. However, NEAR is still way ahead of Ethereum when it comes to sharding, and it is way harder for Ethereum to build while scaling compared to NEAR. However, it is concerning to think what would happen to NEAR if they fall behind on their sharding implementation or if Ethereum succeeds in implementing this technology in the expected time. NEAR would lose an important edge.
Even if Ethereum does not succeed in implementing the sharding in time, its scaling through Layer2 is becoming more and more popular and widely used. It also allows new technologies, which would be far too complicated to integrate into Ethereum directly, to emerge through Layer2.
The number of competitors to Ethereum and all the Layer-1 is huge, and it is difficult to think that they will all be used and keep a large number of developers, users, capital, etc. Also, every Layer-1 has its specificities and its own technologies; some technologies like Avalanche's subnets or Polkadot's parachains also offer good scalability and security and can be the preferred options by developers and users in the future.
Team
Over 140 people work at NEAR. Many medalists and finalists of international sports programming competitions are among them.
Here are some of the many brilliant minds on the NEAR team.
Alexander Skidanov
Co-founder
Alexander has a master's degree in computer science and is recognized for his technical skills. He has notably won a bronze and a gold medal at the International Collegiate Programming Contest in 2005 and 2008. Alexander started his career as a Software Developer at Microsoft in the field of machine learning before working for over 5 years at MemSQL (now Singlestore), first as a Senior Software Developer, then as a Director of Engineering. He designed and built several key components of the database and drove several critical projects. Alexander cofounded Near in 2017.
Illia Polosukhin
Co-founder
Illia has a master's degree in applied math and computer science, and his main domains are artificial intelligence and machine intelligence. He worked for 6 years as a Software Engineer at Salford Systems (now Minitab), developing new tools for big data predictive analytics, text mining, and geo mining. Illia then worked at Google for over 3 years as an Engineering Manager, managing a team of Deep Learning and Natural Language Understanding Researchers. Illia cofounded Near in 2017.
Maksym Zavershynskyi
Head of Engineering
Maksym has a master's degree and a Ph.D. in computer science. He has more than 15 years of professional experience in IT. He developed an analytical system for the Budget Committee and the Accounting Chamber of Ukraine. Maksym also has been a researcher for 4 years in the design of probabilistic algorithms and proximity data structures. He worked for 3 years as a Software Engineer at Google, first in Zurich, then in New York. Maksym has been working at Near for over 5 years, first as an Engineer, then as the Engineering Manager, until now, as the Head of Engineering.
Vladyslav Frolov
Engineering Manager
Vladyslav has a master's degree in Security of Information and Communication Systems. He has over 13 years of work experience. He is a very experienced developer with very diverse computer science skills. As a Software Engineer, he developed a variety of websites and web services for EwaDev and Salford Systems (now Minitab). Vladyslav also is an expert in BigData and Machine learning, where he offered his expertise to Salford Systems and Mirabit. He is also very invested in the open-source development community and has shared over 50 open-source projects and contributed to over 100 projects. Among many skills, Vladyslav is an expert in Linux systems, Backend and Frontend development, web development frameworks, Databases, System administration, BigData, Docker and cloud systems, etc. He has been working at Near since 2019 being a Software Engineer and Engineering Manager.
Partners & Backers
Community
Size and engagement
source: Twitter
source: SocialBlade
Communication
source: SocialBlade
Price
Token Release Date: $NEAR – October 14, 2020
Product Release Date: Near Mainnet – April 22, 2020
Market Capitalization: $NEAR $10,558,657,000 – April 22, 2022
All Time Low: $NEAR $0.526 – November 04, 2020
All Time High: $NEAR $20.42 – January 16, 2022
TA Analysis
Looking at the daily timeframe, $NEAR has been on an uptrend since the listing, forming higher highs and higher lows within its extensions.
Back ago, a strong range was formed at $4-$7 and after a correction was successfully broken out from, leaving a demand zone which was tested a few times, showing extreme support.
Now the asset is forming a new range that is slightly inclined (confirming the uptrend) with a new demand zone that was not yet tested from above.
To all of that, we can clearly see a triangle pattern (decreasing volatility) within the last uptrend extension. Now, if we measure this triangle with horizontal volume profiles, we get some very interesting price points (yellow circles) that provide a lot of confluence over the area:
Top one (strong resistance) - VAH, nPOC (of smaller range), and triangle boundary itself
Bottom one (strong support) - VAL, demand zone 1, and triangle boundary itself
These two points can be used to take some active trades (short and long, respectively) with easy invalidation points and a great risk/reward ratio.
However, if we want to consider an investment, a great approach would be to have limit orders at Demand zone 1 and Demand zone 2 to be prepared for any scenario. (does not imply a stop loss)
A more detailed review is in the video below!
Technical analysis of $NEAR provided by Oleg Khodovskyi.
Markets
CEX
Tokenomics
Distribution, vesting periods, circulating supply.
NEAR's venture round brought in over $12 million with the following sales:
Private Sale 1:
06/01/2017 - 09/30/2017
21.6M $NEAR
$0.0375 per $NEAR
Raised: $810,000
Private Sale 2:
06/01/2018 - 09/30/2018
57.6M $NEAR
$0.05 per $NEAR
Raised: $2,880,000
Private Sale 3:
01/01/2019 - 03/30/2019
70.67M $NEAR
$0.12 per $NEAR
Raised: $8,480,000
Private Sale 4:
04/01/2019 - 06/30/2019
2.5M $NEAR
$0.15 per $NEAR
Raised: $375,000
Series A:
10/01/2019 - 03/31/2020
84.27M $NEAR
Total Raised: $21,596,505
Option 1: $0.25 with a 36-month vesting schedule (raised $18,933,487)
Option 2: $0.29 with a 24-month vesting schedule (raised $659,863)
Option 3: $0.32 with a 12-month vesting schedule (raised $2,003,155)
Community Sale:
08/11/2020 - 08/13/2020
120M $NEAR
Option 1: $0.40, 40-day vesting schedule (raised $10,000,000)
Option 2: $0.34 with a 12-month vesting schedule
Option 3: $0.29 with a 24-month vesting schedule
At this point, over 356M $NEAR tokens were sold (but slowly released) out of the 1 billion total supply.
Currently, 68% of the total supply has been released.
The network issues inflation rewards at a rate of 5% per year. Of these epoch rewards, 90% (4.5% total) goes to validators, and the remaining 10% (0.5% total) will go to the protocol treasury.
$NEAR also burns 70% of all transaction fees; therefore, real inflation (rewards - fees burned) could be less than 5%, depending on the level of network activity.
Community sales' supply has been almost fully released as of early 2022. However, the seed investors and Series A investors are still slowly getting their tokens.
Token Utility
Security & staking:
Stakers receive rewards in $NEAR by staking their tokens and contributing to network security.
Network Fees:
The utility of the network is provided by storing application data and providing a way to change it by issuing transactions. The network charges transaction fees for processing the changes to this stored data. The $NEAR network collects and automatically burns these fees, such that higher usage will lead to more $NEAR tokens being burned.
A minimum percentage of smart contract usage fees is allocated for developer rewards. This reward effectively incentivizes early application development that increases network use. When a contract is called, some portion of the transaction fees generated by the network is automatically allocated to the contract. A minimum value has been set as a system-level parameter, and the developers can choose any value to or above this minimum value.
Governance:
Blockchain technology allows for new governance capabilities, known as on-chain governance. On-chain governance is when proposed protocol changes are decided by a stakeholder vote, usually by holders of a governance token, here $NEAR, and voting happens on the blockchain. With some forms of on-chain governance, the proposed protocol changes are already written in code and implemented automatically if the stakeholders approve the changes.
Not financial advice. The Crypto Intelligence Report is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Do your own research and make an informed decision.
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