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NEAR Ecosystem
NEAR Ecosystem/
NEAR Protocol ($NEAR)
NEAR Protocol ($NEAR)
NEAR Protocol ($NEAR)

NEAR Protocol ($NEAR)

 
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    WHAT IS IT

    NEAR is a layer 1 PoS (proof-of-stake) blockchain that was developed to overcome some of the limitations of competing blockchains such as low throughput, low speeds, and poor cross-compatibility. It is a development platform built on a sharded, proof-of-stake, layer-one blockchain. NEAR was also certified as carbon-neutral in February 2021 by south pole.
     
    NEAR is being built by the NEAR collective which wrote the initial code for the NEAR protocol. This is a worldwide community of researchers, developers, and designers. NEARs code is open source, meaning anyone can join the collective in order to contribute to the development of the platform.
     
    NEAR features its own unique scaling solution known as Nightshade and a powerful consensus engine called Doomslug both of which I will cover in more detail below.
     
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    THE NEAR PLATFORM

    NEAR’s platform and architecture were designed to solve the problems of usability and scalability in order to improve adoption for both developers and end-users. NEAR’s organization and governance structure are designed to continuously evolve the protocol in order to never become obsolete. There are 4 main design principles that drive the NEAR protocol:
     
    1. Usability for end-users and developers
    1. Scalability
    1. Simplicity of design
    1. Sustainable Decentralization
     

    Usability For End Users And Developers

    The dApps created and deployed to the platform aim to be seamless for both usages by the end-user and creation for the developers.
     
    For developers, this means using familiar coding languages, robust tooling, predictable pricing and various developer business models to improve the experience of creating dApps and working in NEAR eco.
     
    For end-users this means simple onboarding, easy subscriptions through contract-based accounts, familiar usage styles to Web2, and again predictable pricing when using the platform.

    Scalability

    The platform is designed in a way to be able to scale with no real upper limit due to sharding and Nightshade (described below) in order to handle and support enterprise-grade usability and globally-used applications. Sharding results in transaction speeds of around 100,000 transactions per second (tps). The Doomslug consensus also allows NEAR to achieve transaction finality near instantly.

    Simplicity Of Design

    The design of NEAR aims to be simplistic in its nature. This is to optimize for simplistic, ease of use and ease of understanding above theoretical perfection and complicated intrinsic systems.

    Sustainable Decentralization

    In order to secure the network in both the short term and the long term the platform is designed to encourage significant decentralization through both the community and it’s security model via Nightshade. The goal is to be permissionless and inclusive through this decentralization in order to actively encourage participation.
     
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    As stated above NEAR features its own unique scaling solution known as Nightshade which is a sharding technology and a powerful consensus engine called Doomslug. Let’s dive into these.

    NIGHTSHADE

    Since NEARs release the design for their protocol back in 2019 it was always designed to be a sharded blockchain. Let’s break down what a sharded blockchain means first and then we can dive into NEARs Nightshade design.

    What Is Sharding?

    In it’s simplest form sharding in regards to blockchains refers to splitting the nodes of the network into different groups or “shards”. The different groups of nodes are then assigned to specific sections of the network. By doing this it eliminates the need for each node to store the entire blockchain locally.
     
    This is used as a scaling solution for blockchains because it can speed up processing and query times because each node no longer needs to validate every single transaction on the network in each new block appended to the blockchain.
     
    The implementation of sharding is what will be occurring in the deployment of the Ethereum 2.0 update coming soon in order to allow for scaling the network.
     
    Video preview

    How Does Nightshade Work?

    In essence, Nightshade moves NEAR from a single chain blockchain to a sharded blockchain. This allows NEAR to scale horizontally by partitioning the blockchain across subgroups of nodes and distributing computation across multiple parallelized sub-chains or shards. Through what is called Dynamic Re-Sharding the network intends to adjust the number of shards supported by the network regularly based on user demand at the time.
     
    Nightshade is designed to reach consensus and settle cross-shard transactions. Nightshade modifies the typical sharding abstraction in order to solve common difficulties in the validation process. Read more about that here - https://near.org/papers/nightshade/#nightshade
     
    In Nightshade there are two roles: block producers and validators. To become a block producer, a participant of the network will have to lock a certain number of $NEAR. The maintenance of the network is done in epochs, where an epoch is a period of time on the order of days. The participants with the w largest stakes at the beginning of a particular epoch are the block producers for that epoch. I will go into more detail below on validators but also see phase 1 of Nightshade rollout to piece it together.
     
    Nightshade assumes that each shard works together to produce "chunks" of data that collectively create a single block. 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.
     
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    There are 4 phases overall for the rollout of Nightshade to complete. Each one brings the goal of a fully functional sharded mainnet. Let’s go over each phase below. After that, I will cover how state validity and data availability work in order to keep the network secure.
     
    1. Phase 0: Simple Nightshade - Increasing the Throughput of the Network
    1. Phase 1: Chunk-Only Producers - Further Decentralizing the Network
    1. Phase 2: Nightshade - Increasing the Accessibility for Validators
    1. Phase 3: Dynamic Resharding Unlocking NEAR to Infinite Scale
     

    Phase 0

    Phase 0 consists of sharding the state but not the processing. The current state will be split into 4 shards and all validators will continue to track all shards. Security on-chain is not affected because of this. This will increase the throughput of the network. A mechanism is built in this step to split the shards into further multiple parts through live upgrades in the future.

    Phase 1

    Phase 1 introduces a new role which is chunk-only producers, who are only responsible for producing chunks which are parts of a block from a shard. These chunk-only producers only need to run inexpensive hardware. Again security on-chain is not affected because these chunk-only producers don’t actually produce blocks or approvals. The main point of phase 1 is to increase the decentralization of NEAR. After phase 1 is complete, estimated between 200-400 validators with only a small fraction (those that are block producers) running expensive hardware.

    Phase 2

    Phase 2 eliminates the need for validators to track all the shards. Once completed both state and processing will be fully sharded. This will also reduce the hardware requirements of running a block producer on NEAR in turn making the network more accessible for validators.

    Phase 3

    In this phase, there will be a fully functional sharded mainnet with a fixed number of shards. The ability for the network to dynamically split and merge shards based on resource utilization should be complete and operational completing their hopes of building a blockchain that can scale to meet demand.
     
    Videos on Nightshade/Sharding
    Articles on Nightshade
     

    State Validity And Data Availability

    For a full breakdown of State Validity And Data Availability refer to these documents here. https://near.org/papers/nightshade/#state-validity-and-data-availability

    DOOMSLUG

    NEAR uses a customized proof-of-stake (PoS) consensus model that they have named Doomslug. The main difference between Doomslug and other consensus models is that finality can be achieved after just one round of communication between nodes in the network, as opposed to other blockchains that can require multiple rounds.
     
    Doomslug finality deems a block irreversible unless at least one participant is slashed. Slashing is a punishment for misbehaving validators in which their tokens staked in order to validate the network are “slashed” meaning a portion is taken for trying to manipulate or trick the network.
     
    Doomslug incorporates a finality protocol to achieve BFT (Byzantine Fault-Tolerant) consensus across the network during the second round of communication.
     
    Similar to most BFT consensus algorithms, Doomslug nodes can continue operating even if there is a bad actor in the network. However, unlike BFT algorithms which require two-thirds of the network to be honest and online, just over half the network is required to be compliant to keep producing blocks with the Doomslug algorithm.
     
    Information on Doomslug

    GOVERNANCE

    NEAR has a protocol treasury that receives .5% of the total NEAR supply annually. The funds allocated to the protocol treasury are then distributed by the NEAR foundation, dedicated protocol maintenance, ecosystem funding, and guiding the governance of the protocol. Their governance follows the protocols and design principles stated at the top.
     
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    RAINBOW BRIDGE

    The Rainbow Bridge is the official bridge for transferring tokens between Ethereum, NEAR and the Aurora networks. The Rainbow Bridge is a key project that will allow NEAR to be interoperable with Ethereum by allowing users to seamlessly move their assets from the Ethereum network over to the NEAR network.
     
    The rainbow bridge is a product of Aurora (covered below) which is the Ethereum compatible scaling solution built on NEAR.
     
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    Rainbow Bridge links

    AURORA

    Aurora is a Layer 2 scaling solution built on NEAR Protocol intended for developers to launch their Ethereum decentralized applications on NEAR’s network.
     
    Aurora is built using Ethereum’s coding technology, EVM (Ethereum Virtual Machine), as well as a cross-chain bridge (Rainbow Bridge) which enables developers to link their Ethereum smart contracts and assets seamlessly to NEAR.
     
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    Aurora consists of the Aurora Engine, which is a high performance EVM and the Aurora Bridge (Rainbow Bridge mentioned above). These facilitate the trustless transfer of ETH and ERC-20 tokens between Ethereum and Aurora allowing for interoperability.
     
    Aurora is an independent and self-funded initiative outside of NEAR. However, they share some team DNA and plan to leverage the continually evolving NEAR protocol technology
     
    Links for Aurora

    NEAR WALLET

    Developers at NEAR have also developed a convenient wallet application for NEAR tokens that is an in-browser and web-based wallet. Users can use this wallet to create and interact with other NEAR accounts. This wallet is also required to interact with the NEAR protocol.
     
    The wallet is used to store the NEAR tokens and NEP21 token standards, which are supported on the NEAR blockchain. The wallet allows users to send or receive NEP21 and NEAR tokens and interact with applications on the protocol.
     
    A key differentiator for NEAR accounts is that NEAR uses human-readable accounts and not a hash. So an account on NEAR would not read as 0x71C7656EC7ab88b098defB751B7401B5f6d8976F but as alice.near or bob.near.
     
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    TOKENOMICS

    $NEAR is the native currency of the protocol. It is used as the core medium of exchange and gas for transactions.

    The Coin Has 3 Main Functions

    1. Powering transactions - $NEAR is the native currency of NEAR and acts as the gas token.
    1. Staking reward - Validators earn $NEAR Tokens, with a static inflation rate of about 4.5% each year, as a reward for producing new blocks. As becoming a validator is rather complex and expensive; alternatively, you can stake towards validators staking pool to earn staking rewards also.
    1. Governance - $NEAR coin holders can also propose and vote on ways to improve the overall NEAR Protocol going forward.
     
    1 billion $NEAR tokens were created at Genesis on April 22, 2020, which were allocated to groups such as financial backers and core contributors.
     
    For a categorical breakdown of each section below click here
     
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    INVESTORS

     
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    TEAM

    NEAR was co-founded by Alexander Skidanov, a software developer who previously worked for Microsoft, and Ilia Polosukhi, an ex engineering manager at Google. Skidanov and Polosukhi started NEAR in 2017.
     
    Links found for team members
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