All about NEAR Protocol

Blockchain Protocol Development Company LeewayHertz
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We are in Web 3.0, popularly known as the decentralized web. It is the latest generation of internet applications and services powered by distributed ledger technology. One of the key features of Web 3.0 is Decentralized Finance (DeFi). Startups and Enterprises are eager to adopt them because of their growing popularity every day. DeFi gives the corporates access to the global digital market. However, the DeFi platforms hold some limitations, such as high cost, lower transaction speed, and are deemed to be less environmentally friendly. So to tackle these limitations, a new protocol named NEAR is introduced. With its sharding feature, NEAR Protocol offers blockchain scaling solutions for startups and enterprises. It has a lower cost, high transaction speed, and is also environment friendly.

NEAR Protocol is a new arrival in the digital market that focuses on addressing the limitations of the older system through a community administrated sharded blockchain platform. Artificial Intelligence researcher Illia Polosukhin founded it along with Alex Skidanov. The network runs on Nightshade, a (PoS) Proof-of-stake consensus mechanism that focuses on offering stable fees and scalability. Startups and Enterprises can build their dApps using blockchain technology, and the NEAR Protocol enables them to swiftly open up to a new world of NFTs and other business models.

What is NEAR Protocol?

NEAR is a platform for application development designed to offer the perfect environment for decentralized applications (dApps) by overcoming certain downwards of the systems in competition, including low speeds & throughout and poor cross-compatibility. NEAR Protocol consists of several innovations to increase scalability and reduce costs for end-users and developers. NEAR Protocol aims to incentivize a blockchain network to build and launch dApps on the DeFi platform and yield profit by staking and sharding in the blockchain network. The nucleus of the NEAR Protocol’s design is the concept of sharding. This process aims to split the network’s infrastructure into several segments known as nodes to handle a fraction of the network’s transaction. The distribution of blockchain nodes instead of distributing the complete blockchain across network participants. It helps pave the path for a more efficient way to retrieve data and scale the decentralized platform.

The NEAR protocol blockchain is secure and permissionless. The network’s innovations consist of a new consensus mechanism called ‘Doomslug.’ NEAR Protocol can be used to pay fees for storing data and processing transactions and is also used to run validator nodes on the network by staking currency tokens.

How does NEAR Protocol work?

NEAR Protocol is a Proof of stake (Pos) that helps startups and enterprises with sharding solutions for their scaling. Let’s have a look at the sharding solutions that NEAR Protocol provides and how NEAR Protocols work :

Nightshade:

Sharding is a blockchain structure that allows each participating node to store a small subset of the platform’s data. It allows a blockchain to scale more fluently and enables larger transactions per second with reduced transaction fees. Nightshade allows NEAR to maintain a singular chain of data. The nodes handle the computing required to maintain these data into ‘chunks.’ The nodes process the data and additional information to the main blockchain network. One of the be benefits of Nightshade is that its architecture provides fewer chances of failures when it comes to security as the participating nodes are only responsible for maintaining smaller segments of the blockchain.

Rainbow Bridge:

NEAR Protocol has an application called the Rainbow bridge that allows the network participants to transfer Ethereum tokens back and forth between Ethereum and NEAR. To move tokens from Ethereum to NEAR, a participant must deposit Ethereum tokens in the Ethereum smart contract. These tokens are then locked and will create new tokens in NEAR’s platform representing the original Etherem tokens. Since the original funds are stored through the smart contract, we can reverse this procedure if users wish to retrieve their original tokens.

Aurora:

Aurora is a layer 2 scaling solution built on a NEAR protocol for developers to launch their Ethereum decentralized applications on NEAR’s network. Aurora is built using Ethereum coding technology. The Ethereum Virtual Machine (EVM) enables developers to link their Ethereum Smart contracts and assets seamlessly.

What is the mechanism of NEAR Protocol staking?

To stake NEAR tokens, users must get their NEAR Protocol wallet account. Setting up a NEAR wallet is not a tedious task, as, after a few initial steps creating an account and confirming personal details, the NEAR wallet will be required to be funded with a minimum of three NEAR tokens. The three tokens cover the cost of creating the NEAR wallet and the new account ID. Hence, there is no minimum amount needed to stake on the blockchain network (excluding the three NEAR tokens required to create the NEAR wallet). However, there are two primary ways of NEAR Protocol staking with different roles and rewards depending on the responsibility assumed within the network. The two primary ways of NEAR Protocol Staking are as follows :

Validator Staking:

The Proof – of – Stake (PoS) requires the validators to stake a minimum of NEAR tokens. The amount is dynamic and can fluctuate with the number of NEAR tokens staked by other validators. These tokens have often been used as collateral to prevent any evil activity on the network. Any bad actors on the network will get their collateral stake dropped. The validators are responsible for validating blocks in the network and return receiving transaction fees and rewards every epoch (Approximately 12 hours). An Epoch is an era of time within the blockchain network. Validators can choose not to stake their collateral any time they wish to. In that scenario, the funds will remain locked for three Epochs before it is released.

Delegator Staking:

Users who want to earn staking rewards without taking the accountability of running a validator node on the blockchain network can delegate their stake to an individual validator node or validator pool to earn a percentage of the fees earned by the individual validator node. The delegators aren’t penalized or fined by the NEAR Protocol. Hence, If a delegator’s chosen validator turns to be a bad actor at the blockchain network, delegators will only lose the rewards from that respective validator. So a delegator doesn’t need to fear its stake being slashed by the NEAR Protocol.

What are some use cases of NEAR Protocol?

As NEAR Protocol provides infrastructure for Web 3.0, it distinguishes itself through its unique developer and user-friendly features. NEAR Protocol empowers millions around the globe to invent and explore new businesses and communities for a sustainable and more inclusive future. So let’s take a look at some of the use cases of NEAR Protocol :

1.Decentralized Finance:

DeFi or Decentralized Finance is critical for building an open web. Its rise in recent times results from success on Ethereum, super-changing experimentation with blockchain-based financial institutions. Actions that used to take weeks in traditional finance systems can now be done within seconds because of the primitives of the DeFi. The same gush of experimentation and interest that has provided numerous opportunities for DeFi users has made it harder for new potential earners to gain entry into the DeFi platform. Network congestion, the skyrocketing price of gas, and evergrowing prices of the tokens make the entry of new builders and creators difficult with the barriers. But now, NEAR is making DeFi more accessible for everyone, especially those just starting to explore the crypto space. With the launch of Rainbow Bridge, DeFi is now live on NEAR Protocol and is unlocked for creators and users worldwide. All the assets that originate in Ethereum are now fully functional and usable on NEAR Protocol-based dApps.

2.Non Fungible Tokens:

NFT can be considered digital containers that can hold Internet Protocol, but when it is liberated to be owned and traded, creators worldwide can have new ways to produce, distribute, and monetize content. The most important concept of NFTs is that after years of sharing creative output in the world of the web, there is Digital scarcity resulting in that now it can prove in the digital space that a single person uniquely owns a file or piece of data. NFT is a unique digital certificate registered on a Blockchain (Digital Ledger). It can use it to record the ownership of any asset, whether digital or physical. The NFTs allow ownership over Digital Assets. The NEAR Protocol is a better platform for NFTs as it is significantly faster than generation 2 blockchains.

3.Decentralized Autonomous Org:

DAOs(Decentralized Autonomous Orgs) are like shared bank accounts for entirely digital communities. So it’s really easy for communities to act like companies and build sustainable and models for themselves. The DAOs can issue fungible tokens which act as membership cards with a lot more potential to drive more engagement. It is a modern way to organize, fund, and empower independent communities by default.

Why choose NEAR Protocol for the next development project?

NEAR Protocol focuses on eliminating the barriers that come in the way of web 3.0 adoption. NEAR Protocol provides high-speed transaction speed with lower transaction fees. NEAR has a progressive User Experience (UX) for the users of the dApps on the DeFi platform. Also, NEAR is environmentally friendly, making it best suitable for an upcoming explosive growth in the Digital Market ecosystem. Sharding helps create a more efficient way to retrieve network data on the blockchain network and scale the dApps on the DeFi platform.

The NEAR Protocol uses a Proof of stake election mechanism called Threshold Proof-of-Stake(TPoS). So in this system, it creates a predetermined way to create a large number of participants to maintain the blockchain network. It helps in increasing the decentralization & security of the blockchain. Using the mechanism Threshold Proof-of-Stake (TPoS), NEAR creates a fair reward distribution system for the users of the dApps. With all the exclusive features in the NEAR Protocol, it can be the best option for a Blockchain Protocol to choose for your next dApps development project.

Conclusion

NEAR Protocol is one of the most innovative and technologically more advanced Protocols in the blockchain ecosystem. NEAR Protocol is a decentralized application (dApp) platform that focuses on developer and user-friendliness. NEAR is a Proof-of-Stake Blockchain that uses sharding technology to achieve scalability.. To accommodate this mission NEAR Protocol has incorporated features like human-readable account names as opposed to cryptographic wallet addresses and for new dApp users to interact with the dApps and smart contracts. Our team can help startups and enterprises build their blockchain solutions and dApps on NEAR blockchain to leverage the full advantage of NEAR’s ecosystem, including its high speed, scalability, sharding solutions, interoperability and low fees.

If you want to build blockchain solutions with NEAR Protocol, we are happy to collaborate with you. Please connect with our blockchain experts to discuss your project requirements.

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Author’s Bio

Akash Takyar
Akash Takyar
CEO LeewayHertz
Akash Takyar is the founder and CEO at LeewayHertz. The experience of building over 100+ platforms for startups and enterprises allows Akash to rapidly architect and design solutions that are scalable and beautiful.
Akash's ability to build enterprise-grade technology solutions has attracted over 30 Fortune 500 companies, including Siemens, 3M, P&G and Hershey’s. Akash is an early adopter of new technology, a passionate technology enthusiast, and an investor in AI and IoT startups.

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