Topics Altcoins
Bybit Learn
Bybit Learn
Intermediate
Apr 19, 2022

NEAR Protocol (NEAR): Sustainable and Infinite Scaling with Chunk Sharding

Although smart contract blockchains are a dime a dozen these days, NEAR Protocol certainly stands out with an elaborate technology that’s aiming to solve the problems present in earlier blockchain systems. From its user-friendly approach to a focus on sustainability, NEAR Protocol certainly looks promising, as FOMO sends more users into its volatile rallies. Curious about how the NEAR coin will impact the current cryptocurrency and DApp market? Discover what NEAR Protocol is — and how it’s poised to revolutionize the way people build distributed applications.

What Is NEAR Protocol?

NEAR protocol is an advanced Level 1 blockchain capable of running smart contracts, and is more scalable for the future of decentralized application development. NEAR Foundation is responsible for the NEAR Protocol blockchain and the ecosystem surrounding it. It traces its roots to the NEAR Collective, which is an extensive collection of people and companies collaborating to create one of the biggest open-source projects in this space. The focus of the NEAR Collective is on building something friendly for developers and end-users alike. Their goal is to have an entire ecosystem that everyone can seamlessly get involved in without needing immense technical prowess. Since a significant portion of blockchain technology is too difficult for the average user to understand, it’s almost impossible for some people to get started in the community. The great news is a few members of this team have experience building a scalable database system that uses sharding. That’s why the unique Nightshade sharding system is going to be so crucial for the future of the NEAR Coin.

Sharding is a concept from the world of relational databases. It allows a database to scale horizontally by splitting and distributing the data across multiple servers. The NEAR blockchain’s Nightshade algorithm makes it possible to infinitely scale the number of transactions that the NEAR network can process per second. This killer feature separates it from coins like Bitcoin and Ether. Since scalability is built into the Level 1 network, it doesn’t require various additions and hacks that networks like Ethereum do to get more performance. It also makes it very affordable to build your app on the network.

How Does NEAR Protocol Work?

The first major difference between the NEAR Protocol’s blockchain and many others is its reliance on commodity servers, instead of expensive enterprise-grade hardware. For example, Solana requires a minimum of 128 GB of RAM for each server. It also requires some of the most expensive enterprise processors currently available. Because of this, it makes it difficult for the network to scale without a major capital investment. 

NEAR Protocol focuses on being user- and developer-friendly. It also requires much less complicated hardware to function. The unique Nightshade algorithm’s Doomslug consensus mechanism allows you to easily scale to 100,000 transactions per second. The other significant feature of NEAR protocol is that it uses proof of stake (PoS) instead of proof of work (PoW).

Nightshade and Chunk Sharding

Unlike with many other coins and blockchains, each validator on the NEAR network only holds a portion of the entire blockchain. That means each validator can process transactions in parallel, making the entire network more robust and fast. With the considerably reduced hardware cost, it’s possible to scale the NEAR Protocol’s blockchain even further. The obvious benefit is that transaction fees will become negligible, making it possible for developers to create huge projects without the cost problems associated with the Ethereum network.

Doomslug Consensus

One of the largest problems with massively distributed network systems is building a consensus between all of the nodes on the network. NEAR’s Doomslug consensus achieves finality in a single round of communication. Even in the worst-case scenario, it achieves 2x improvement in latency when compared to Tendermint, allowing the network to spend more time processing transactions than achieving consensus.

Rainbow Bridge

Rainbow Bridge makes it possible to send tokens between NEAR, Aurora and Ethereum. This quickly and inexpensively minimizes the number of transactions you need in order to move from the NEAR Coin to others. However, transferring to Ethereum can be very expensive if the network is congested, and it takes two transactions to achieve finalization.

Aurora Layer 2 Scaling Solution

Aurora builds on the NEAR Protocol blockchain to build a Layer 2 scaling solution that is compatible with Ethereum. It provides the speed and scalability of the NEAR Protocol blockchain with the reach of Ethereum. This lets developers build DApps compatible with Ethereum more cheaply and comfortably. It also makes it easier to scale without worrying about bloated gas fees and other drawbacks that come with Ethereum, and to develop applications — since building DApps is baked into the NEAR Protocol blockchain.

What Makes NEAR Protocol Unique?

What is NEAR doing that makes it so unique compared to other blockchains in this category? The main difference is in its scalability. It’s also based on a user-friendly, modern UI interface that allows you to create a wallet to carry NEAR Coins. NEAR Coin might not be as popular as others in its class, but it’s still growing at a rapid pace. The Nightshade mechanism also differentiates NEAR from other Level 1 blockchains. Finally, there’s the use of commodity hardware — instead of expensive enterprise-class servers.

NEAR Protocol vs. Ethereum (NEAR vs. ETH)

Ether was the second major cryptocurrency behind Bitcoin. Because Ethereum came out at a time when this technology was still in its infancy, it suffers from some of the problems created by using PoW instead of PoS. Ethereum’s network is notoriously slow and expensive, so gas fees can make it almost impossible to develop scalable applications on the network. Transactions can also be prohibitively expensive for a lot of people.NEAR Coin can deliver much better performance with Nightshade and Doomslug. This combination of potent technology makes NEAR Coin much more useful for developers and end users. Another problem that Ethereum suffers from is scalability. NEAR’s Nightshade and Doomslug innovations give it the edge over Ethereum. Because of that, it can scale horizontally.

NEAR Protocol vs. Solana (NEAR vs. SOL)

Solana is more similar to NEAR than other Level 1 blockchains. However, there is a major difference that makes NEAR a superior alternative. What is NEAR Coin doing that makes it so usable? 

The major innovation is the type of server needed to become a validator. Solana validators require upward of $100,000 to become part of the validation network. The server requires at least 128 GB of RAM. It also requires more than 16 cores from a modern server CPU. These processors typically cost thousands of dollars, compared to a few hundred for commodity hardware. 

Solana also requires an SSD that needs to be replaced relatively frequently, as well as a considerable number of Solana tokens on hand for voting and being a validator. The overwhelming majority of validators on the network operate at a loss in the hope that they’ll be able to increase fees. It isn't a sustainable model, and evidenced by how few validators there are compared to other systems.

NEAR Protocol vs. Fantom (NEAR vs. FTM)

NEAR is comparable to Fantom in many ways. Fantom aims to be decentralized and permissionless. It’s open-source, and offers the same smart contract capability as NEAR. It also offers more in terms of speed and capability than previous generation networks. However, it still suffers a few problems when compared to NEAR and its associated technologies. 

Despite being fast, Fantom doesn’t offer the same sharding mechanism that Nightshade provides for its NEAR Coin. In addition, it doesn’t have anything comparable to what Doomslug brings to the table. Because of that, it doesn’t have the infinite scalability potential that NEAR Coin does. It also has higher transaction fees, making it an inferior choice, which shows in the current valuations of NEAR Coin and FTM. Finally, Fantom’s network isn’t as user-friendly as that of the NEAR Protocol. This major issue significantly changes the playing field, because it discourages some users and developers from adopting the Fantom network.

Top NEAR Protocol DApps

No blockchain is worth much without the appropriate apps that people want to use. What makes the entire NEAR Protocol blockchain special are the killer apps it already possesses. What is NEAR doing right now to make things better? NEAR Coin is one of the most user-friendly coins available, and makes developing applications simple. Combined with the capabilities of Nightshade and Doomslug, NEAR Coin is poised to assist in the development of many useful DApps in the coming years. For now, the network has enough valuable programs that you’re going to love. So what is the NEAR Protocol being used for right now?

Mintbase

When people ask what makes NEAR unique, you can point them to Mintbase, a global platform that allows anyone to create NFTs relatively easily. You don't need to be an expert, and you can easily sell your creations on the market. 

An NFT is a digital asset with verifiable ownership. This means you can easily and securely verify the owner. Ownership is guaranteed through cryptographic protection. As an owner, you can rent or sell your assets on markets like Mintbase and receive commissions. As such, Mintbase is one of the first revolutions in this industry, and it’s going to allow people to sell things as the metaverse grows. There’s almost no limit to the type of digital asset you can create. For example, musicians can create their own music and sell it in the marketplace. Mintbase moved to NEAR because Ethereum became too expensive. In certain instances, Ethereum’s gas fees were a lot more expensive than the price of the actual asset.

Flux

Flux is a decentralized, open-market protocol that allows developers to make a market out of anything. The only limit is the developer’s imagination. Flux is built on NEAR because it provides the scalability and power needed for a modern and open internet. It also provides security that’s unlike anything else in the industry. The other major benefit is that FLUX allows developers to quickly and easily create any market they want. What is NEAR going to look like in the future? That’s something we’ll have to figure out, but for now, it will dramatically help with tools like Flux that can help build some of the most innovative systems today.

Paras 2.0

Paras 2.0 aims to become a marketplace built on the NEAR protocol blockchain for digital collectibles. What will NEAR Protocol enable us to do in the future? The answer will only be apparent as we build out more of these digital assets. What is NEAR going to look like when it has more sophisticated marketplaces selling real products that a general audience will want to purchase? The answer to this question is the reason things are so exciting for this excellent protocol.

NEAR Crowd

NEAR Crowd is similar to many of today’s “gig” websites. What is NEAR doing for the gig economy? It’s allowing people to do small jobs for each other while getting paid in NEAR Coin. This makes it possible to build an extensive ecosystem that’s self-supporting. People earn NEAR coins, which they can then turn into other useful products. This ecosystem is only growing with time, and it’s going to evolve into something exceptionally special. 

What is NEAR doing to make this functionality happen? The smart contract capability embedded in the NEAR Protocol blockchain makes it possible to issue payments and refunds automatically. This means that the person doing the work can be confident that they’ll get paid, and the person receiving the work will only be debited once they’ve gotten something they’re happy with.

NEAR Tokenomics

How will NEAR compare with other coins in the future? In terms of economics, NEAR is looking spectacular compared to what’s now available. The maximum supply of NEAR tokens is 1 billion. That gives NEAR Coin enough flexibility to expand with the marketplace's needs. However, it isn't too many coins to make the value worth less than a penny, as with so many others. 

NEAR is currently valued at $15.68, which is quite remarkable for a new coin. It has a market cap of over $10 billion, and its fully diluted market cap is over $15 billion. There are 673 million NEAR Coins in circulation right now. That represents 67% of the maximum supply. NEAR Coin is expected to grow in value over the next five years, due to its practicality and wide range of use cases As people discover new ways to utilize the coin, NEAR Coin will be utilized in ways that we haven’t yet imagined.

NEAR Protocol Stablecoin

Stablecoins are becoming a bigger part of most Level 1 networks. NEAR’s stablecoin, $USN, is due to launch soon, in partnership with other well-capitalized stablecoins. The benefit of this is that you’ll be able to get attractive APYs on the NEAR network. We’re also going to see the coin compete with the likes of LUNA and USDT. Moreover, it’s going to be listed on Coinbase in a few months, meaning that it’s only going to grow with time. The attractive APR means that the entire DeFi ecosystem around NEAR may grow exponentially in value.

Is NEAR a Good Investment?

What are the short- and long-term potential of the NEAR Coin ecosystem? Many coins have come and gone in a flash, including meme coins.  Combine this with the many pump-and-dump schemes in this industry, and it’s quite difficult to figure out whether NEAR has the staying power necessary to compete with the large, established coins. It’s even more difficult to predict whether NEAR will be here in the next few years. 

The good news is that NEAR Protocol recently raised $350 million. This funding round was led by Tiger Global, but many other big companies are in the mix as well. However, this is a recent occurrence, and there was a funding round of $150 million before this recent one. This gives NEAR the staying power needed to do big things. The money combined with the technical advantages that NEAR brings to the table could potentially be devastating for its competitors.

NEAR Price Prediction

What about NEAR’s value in the future? This is a good question when deciding whether it’s the right place to put your money. The market is down right now, meaning it’s the perfect time to get in. At $15, NEAR Coin is looking to triple in the next four years according to speculators

The market typically has a close relationship with the flow of Bitcoin, but many other Level 1 coins have often moved a little bit more when Bitcoin rises in value. The technical advantages that NEAR brings to the table make it a reasonable possibility that it could hit at least $50 in the next few years. This makes it an attractive choice for people looking for a solid investment and a great place to stake your coins in the coming years, making NEAR one of the most valuable coins in terms of dollar value and market capitalization. It’s also a great point to get in on NEAR as a validator, as the requirements are quite low. In fact, you only need a four-core CPU to start on this network. This is a far cry from what’s required for a network like Solana.

The Bottom Line

NEAR Protocol has the technical capabilities and people behind it to help it grow into one of the best coins in the industry. If you’re looking for a prediction of what the crypto world may become, look no further than NEAR. The combination of the Nightshade sharding design and the Doomsbug consensus algorithm is a killer. For newer investors and crypto beginners wondering what NEAR is, given all the technology and developments involved, it’s clearly the future.