NEAR Protocol - Network Overview
Published · Updated
NEAR Protocol is an open-source platform built to streamline the development and growth of decentralized applications (dApps).
NEAR is designed with security and performance at the core, allowing developers to create applications which manage high-value assets including money, identity and contractual information, whilst at the same time allowing for quick and efficient access.
With a focus on providing developers with a clean, user-friendly experience, NEARs approach to development is one focused around accessibility and scaling blockchain applications to accelerate the world’s transition to open, decentralized technologies. The protocol is a public, sharded, developer-friendly, proof-of-stake blockchain, making it an efficient platform due to its scalability and ease of use.
NEAR is compatible with Ethereum 1.0 today providing a complete integration with Solidity contracts (without the need for rewrites). Furthermore, an ETH-NEAR bridge allows for cross-chain interoperability and communication. This provides developers with flexibility and removes the need to fully commit to just one tech stack.
Market Size & Potential
Near Protocol was launched in 2020 with a vision to give back control of financial assets and sensitive data to the users to which it belongs, with an ambition to build digital infrastructure for a new internet where evil actors are barred from manipulating it.
Similar to what has been developed by Ethereum and Polkadot, NEAR is a base-layer blockchain allowing for applications and programs to be built on top of it. Imagine Amazon’s AWS, except controlled by the NEAR community.
Through the use of Sharding, NEAR has a capacity to scale up significantly beyond the capabilities of existing blockchain solutions. Unlike with non-sharded networks, transaction fees on the NEAR network can be kept low due to congestion on the network being alleviated through dynamically expanding the system’s capacity via resharding.
Token Allocation & Utility
The NEAR platform is built around NEAR - a token which enables holders to use, build and deploy applications, take part in the governance of the network and earn staking rewards in the process.
The NEAR token sale was conducted in August 2020 with a fundraising goal of $12,500,000 which was successfully met. Investors include MetaStable, Electric Capital, Accomplice, SVAngel, Amplify and HomeBrew.
The NEAR token is the manner in which users - developers, builders, community members, use applications on top of the NEAR network. By “use”, this refers to e.g. submitting transactions on the network. This makes the NEAR token an essential utility unit within the network.
The network utilises a “gas” model very similar to that deployed by Ethereum used to pay for transactions on chain. Through a “block-rewards-with-burn” model, NEAR supply decreases over time as token supply is burned with rates of high usage. The annual token emission is 5%, while the final inflation can fluctuate based on usage and transaction burns.
Even a negative inflation is a possibility based on the amount of fees burned. The effective inflation rate is calculated every epoch (½ a day).
NEAR validators are rewarded with a predetermined inflationary reward with incentives aligned to incentivise enhanced network usage through improving validator return rates and security.
Slashing Risk
Currently slashing is turned off but it is considered to be added with an increase of shards in the system.
NEAR validators can be penalised in two primary ways resulting in a partial loss of a delegated stake:
- Double Signing: Signing two blocks at the same height.
- Invalid Chunks: Producing a chunk with invalid data.
These types of errors can occur for a number of reasons, both due to malicious intentions, as well as due to non-malicious errors or misconfigurations.
To better manage the risk of accidental slashing, NEAR network uses a progressive slashing system where the portion of slasked stake is a multiple of the amount of stake that exhibited the double signing behavior during the epoch in question.
Useful NEAR Resources
To learn more about delegating NEAR with P2P, visit www.p2p.org/near.
About P2P Validator
P2P Validator is a world-leading non-custodial staking provider securing more than $3 billion in staked assets by over 10,000 delegators across 25+ high-class networks. Our infrastructure is under advanced monitoring with alerts and 24/7 technical support making it the best choice for institutional investors.
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Alex Bondar
Research & Analytics at p2p.org.