Why NEAR will occupy a place in the public chain

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Why NEAR will occupy a place in the public chain

The competition of public chains has been a hot spot of attention in the crypto industry, and 2021 has shown a flourishing state of a hundred flowers, both in terms of ecology andTokensThe major public chains have achieved good results in terms of growth. The most prominent public chains are represented by Solana, Avalanche and Terra.

There is another emerging public chain in the public chain circuit that should not be overlooked, although it has not gained much attention, its technology is very new and unique among many public chains. NEAR is committed to be the most user and developer friendly smart contract platform, so NEAR is good at looking at the problem from the perspective of users and developers, and it also occupies a place among the competing public chains because of its slicing technology.

Of course.NEARThis paper analyzes NEAR ecology in detail and introduces the novel technology of NEAR while analyzing some of the risks it may face.

Competition in the public chain circuit has become more crowded and intense following the rise of DeFi, with hundreds of public chain competitors and the overall total cryptocurrency market cap climbing. Despite the size of the market, there are still only two major large players, namely Bitcoin andEtherThe market for super 50% is controlled by them.

Most of the emerging public chains are focused on the smart contract space, and Ether has dominated the smart contract market since its emergence until now. However, in the past 18 months, a large number of Ether competitors have managed to break the circle, and in terms of total locked-in value (TVL), Ether dominated the entire smart contract market with 97% at the beginning of 2021, but as of March 2022, this number has dropped to below 60%.

Ether's current bottlenecks are obvious, such asNetworkCongestion, high Gas fees, low scalability, and other issues. And with the smart contract market gradually getting bigger and continuing to grow rapidly, it's no surprise that competition is increasing. Ether's competitors are trying to break Ether's current bottlenecks by being faster, cheaper or offering more attractive reward structures. But how many winners are there in the end?

As highlighted in Messari's "The Cryptocurrency Thesis of 2022," the technology platform is trending toward a duopoly. Ether and Ether Virtual Machines (EVMs) have a big lead and it will be hard to completely overtake them. In addition, there is already a large group ofDevelopersand builders build on EVM. The benefits of EVM are so great that major competitors are using or transitioning to EVM rather than trying to compete head-to-head without this capability. Even competitors like Solana and Cardano have recently added or are adding EVM compatibility (Terra being an exception). In many cases, EVM has solidified its position through its network effect.

If we thought the smart contracts space would be dominated by two players, which public chain would come out on top?Solana, Avalanche and Terra had strong results in 2021, each growing their market share (as measured by TVL) by 4%, 5% and 8% respectively.Cardano has long been the number two smart contracts platform in terms of total market cap, only recently overtaken by Terra and BNB. second largest smart contract platform, only recently overtaken by Terra and BNB. After years of delays, Candano's smart contract functionality finally went live on the network in September 2021, but Cardano only gained 0.05% of smart contract market share.

In mid-2020, a new agreement joined the race to try to gain a foothold. With an experienced team, strong funding and novel underlying technology, NEAR quickly grew to a market cap of over $10 billion within a year of going public. The following is an overall analysis report of NEAR's growth.

I. Protocol and team overview

NEAR was founded in 2018 by Illia Polosukhin and Alexander Skidanov. As students, they both topped the International Collegiate Programming Competition at the ICPC World Finals, with Alex winning a gold medal.Alex worked as a software engineer at Microsoft, while Illia worked in engineering at Google, spending a lot of time on its TensorFlow machine learning platform. They were working on unrelated jobs when they met, and the problem of machine learning brought them together.

At the time, the creators were exploring a way to solve the program's synthesis, and they needed developers from all over the world to help solve the problem with small chunks of code. To send payments to these people, the team tried to use traditional financial networks, but they were too slow or too costly, and they also ran into problems when they tried to use cryptocurrency platforms. The existing blockchain was too slow, too expensive, or couldn't handle enough transactions. This led them to try to build a better blockchain, and the NEAR protocol was launched.

As they delved into the technology of Ether, the largest smart contract platform, the NEAR team found that the way of thinking about coding on Ether was very unintuitive for most traditional developers. They built NEAR's components from the ground up using industry standard tools used by Google, Microsoft and other tech giants, including leveraging WebAssembly to enable the use of standard programming languages. This underscores a key ethos of the NEAR team: a developer-first mentality in everything they do. NEAR can support any language that can be compiled into WebAssembly, which currently includes Java, Go, Rust, and others. This should make it easier for Web2 developers to create applications, rather than having to learn a very specific language (such as Solidity, Ethereum's preferred language) to start coding. WebAssembly also allows developers to more easily port their legacy applications to Web3. If NEAR programmers want to be more flexible in building their applications, then Rust will be their preferred coding language.

As this flexibility is added to blockchain technology, NEAR's vision evolves into one where it can become the foundational platform for building a decentralized or "open network". In order to achieve this scale, the existing underlying blockchain must be able to handle huge transaction volumes quickly and cost-effectively, and NEAR is working to achieve all of these goals.

II. Technology

Blockchain Basics

NEAR uses a PoS consensus algorithm called threshold-proof-of-stake. By increasing the number of validators, more networks are allowed to participate. Third-party solutions, such as Metapool, have also been built to suppress large pools of validators and further drive decentralization.

DoomSlug allows NEAR to achieve so-called "actual finality" of transactions after only one round of communication between validators, rather than waiting for multiple blocks as is the case with Ether. Finality is a term used to refer to the consensus that NEAR can continue to produce and finalize blocks when a blockchain transaction is effectively irreversible by the network if half (50%) of the participants are online and no invalid or incorrect blocks are proven, a 50% consensus known as "Doomslug Finality ".

This 50% majority is different from the 66% required by the Byzantine Fault Tolerant (BFT) consensus algorithm. The nuances behind this are quite technical, but the main improvement of NEAR over popular BFT algorithms (such as PBFT, Tendermint or Hotstuff) is the reduced communication time between participants and the implicit assumption of block producer integrity, where the chain is reversed only if a block producer is chopped for proposing an incorrect block. If participants want to see the full BFT final result, they only need to wait for one more block to be confirmed. These adjustments allow NEAR final results to be completed in 1-2 seconds, compared to over a minute or more for Ether.

Compatibility

NEAR's blockchain can be used to run smart contracts, but it is also compatible with the Ether Virtual Machine (EVM), allowing Ether developers to easily port applications.NEAR accomplishes EVM compatibility in a unique way: a smart contract, called Aurora, is deployed on NEAR's main network.Aurora essentially acts as its own standalone network, but it is a smart contract rather than an entirely new blockchain. This design allows for greater upgrade flexibility while demonstrating the power of NEAR's underlying technology, as other blockchains do not yet have the ability to run EVM in this manner.

Aurora operates as a sidechain and does not validate blocks off-chain like a similar Layer 2 solution on Ether, but instead all validation happens on the NEAR and Ether chains. Because it is not a blockchain itself, Aurora inherits its block time and consensus mechanism from the NEAR network. In terms of payment transactions, users pay the NEAR network fees in ETH when using Aurora or its apps, instead of some local tokens. This approach makes user operations much simpler.

Source: Aurora.dev

Security and scalability

Nodes on a blockchain have the basic functions of processing transactions, communicating with other nodes, and storing the history of the blockchain. Current blockchain technology requires all complete nodes in the network to process each transaction and store the history of the entire chain. This helps the network stay secure, but it makes the network slow because the network must wait for updates from each node. For example, Ether has about 2,500 nodes that must be kept in sync.NEAR's approach to scalability is similar to Ether 2.0 because it utilizes sharding. Slicing breaks the blockchain history into smaller pieces, which allows them to be stored between different parties. In the process, it distributes load storage, processing and computation across multiple nodes to increase network speed and scalability. Instead of each transaction, each node can process and save a portion of the overall state.

Source: Vitalik Buterin

While sharding brings the above benefits, it also brings security risks and communication challenges. In most of the chains that utilize or plan to utilize it, sharding is done at the blockchain level. This makes a fractured blockchain similar to a network consisting of multiple sub-blockchains. The problem with this approach is mainly the communication between the slices and the security of each individual slice, where each slice is somehow an island, as the verifier can only see the complete state of their respective slice. When a new block is created, a snapshot of each slice is taken and passed to the main chain. Each slice will naturally have fewer verifiers than the main chain, so they are more vulnerable to bad guys, a setup that makes each slice less secure than the entire chain. A traditional sharding network would randomly assign verifiers to shards to deal with this problem. Randomness on blockchains is a complex problem, and all current attempts to implement randomness in shards have their own trade-offs.NEAR takes a novel approach to randomness, tolerating up to 2/3 of bad actors before the protocol is broken.

Source: NEAR.org

NEAR introduces a sharding technology called NightShade to improve on the above mentioned problems. Unlike the main chain, which is sharded into individual block chains, NightShade works by sharding individual blocks. Each shard generates its own batch of data, called a "block," which is then organized into a block by the primary validator. Each block contains all block headers, which are metadata containing information about the contents of the block: a complete list of transactions for that slice. This approach reduces the amount of space that a slice takes up in each block. In this way, communications about individual slice transactions can also be propagated throughout the blockchain. This allows the chain to process, store and network propagate in parallel. From the perspective of users and developers, NEAR looks like one processing chain rather than multiple independent chains like Cosmos or Polkadot. NEAR was scaled from 1 to 4 fractions last December. This system upgrade requires zero network downtime and no changes are required by developers or users.

Source: Nightshade White Paper

There are currently 100 validators protecting the network. These validators are responsible for generating and validating the blocks discussed above. The price to obtain a seat as a validator is quite high due to the small number of seats. As of December 2021, the price of a seat was 3.6 million NEAR, but today it has dropped to about 50,000 NEAR and will likely continue to drop as more seats are added.The number of validators will be increased in NEAR's planned update in mid-2022. The number of NEAR tokens needed to become a verifier depends on the number of pledges on the slice, and the fewer people pledging on the slice, the lower the requirement for new pledges. This will provide an incentive for pledgers to move to less popular slices.

The final phase of NightShade will introduce dynamic re-slicing, where the number of networks and slots scales as user demand increases. This allows for high throughput while keeping costs manageable. Dynamic resharding is expected to be implemented by the end of 2022. At that time, due to the amount of usage on the network, there will be eight shards, one dedicated to running Aurora. the flexibility of the NEAR architecture allows applications to be ported to their own dedicated shard as they become very popular, which is a more challenging process on other blockchains.

To further drive scaling, NEAR has partnered with the Octopus network to allow developers to build and publish their own "app chains" that are designed for specific use cases and work in parallel with the main chain. All of Octopus' application chains are cross-compatible with other blockchains, and the network is launched as a smart contract on top of NEAR. polkadot has similar application-specific chains, but they are expensive to start and maintain. For example, launching a chain on Octopus is less than $100,000, while on Polkadot it is 40 times more expensive than on Octopus.

Source: NearClub

Availability

Finally, a seemingly minor but important aspect for getting started with Web 2 users is the NEAR account model. In other public chains, your public key is used as your account number, and this public key is associated with your private key to control the account. NEAR, on the other hand, constructs the public key as a human-readable address, similar to the one constructed by ENS for Ether, but for free.

Source: wallet.near.org/

For example, JohnDoe.near might be a wallet address near you. In addition, this public key does not have to be associated with a master private key, it can be associated with multiple private keys with different permission levels. They can be allowed to interact with only certain contracts, spend only a certain amount, use only a specific time period, etc.

In summary, NEAR has built technology to enable transactions that are fast (~1 second), quick to complete (~1-2 seconds), cheap (less than a penny) and secure.

III. Investors

Like most of its ethereum competitors, NEAR has received significant venture backing from the start. They closed a $12 million venture capital round in July 2019, and the deal made its initial public offering on CoinList in the summer of 2020. It raised $33 million with 12% of 1 billion total tokens. Most recently, they raised another $150 million led by Three Arrows Capital.NEAR's investor list includes A16Z, Pantera Capital, Electric Capital, Dragonfly Capital, Coinbase Ventures, Blockchain.com, and Baidu Ventures.Aurora in October 2021 raised its own dedicated funding round, raising $12 million.

NEAR's venture capital allocation is slightly lower than its competitors (AMAX, SOL and LUNA) that launched at the same time. As with most of the newer public chains, the public receives a smaller share.

Source: Messari, The Block, Galaxy Digital Protocols

IV. Token Economics

Use

NEAR tokens have four main uses: network security (via pledge), transaction and data storage fees, medium of exchange, and unit of account. The storage component is somewhat unique in that you need to hold some NEAR in your account to pay for network storage, and this amount grows as the amount of storage you need grows. This dynamic requires those who use the network more to take more risk, thus reducing the likelihood of bad actors spamming the network. It also aligns current users with future users of the network, who are essentially paying for future storage costs, as transactions must be recorded as permanent on the blockchain. This storage mechanism also creates an additional layer of NEAR tokens that are removed from the market as network activity increases. Stored tokens cannot be pledged or used in other applications. This storage requirement also extends from users to smart contracts. Below is the amount of storage allocated per NEAR. For reference, the entire ethereum chain is about 500 GB, and if NEAR grows to this size, about 5% of supply will be reserved for storage in the account.

Source: NEAR Passbook Economics

Inflation and burn rate

NEAR is an inflation model with an annual inflation rate cap of 5% for large rewards each year. Notably, 90% of these rewards are paid to validators and 10% to the NEAR treasury. Some networks heavily subsidize their growth through high inflation, but NEAR ties inflation to network usage. the NEAR network charges and consumes network fees (similar to Ether after EIP-1559), so real inflation is lower, sometimes much lower, depending on network activity. As network activity increases, the real inflation rate decreases. With daily transaction volume reaching 1.5 billion per day, the overall inflation rate approaches 0% (the maximum daily transaction volume to date is about 1.8 million). In reality, this number is likely to be much smaller. Some experts believe that, depending on the type of transaction, the volume is closer to 100 million transactions per day (some transactions cost more than others).

For the distribution of fees, 70% of transaction fees on NEAR are burned and 30% is sent to the creator of the smart contract with which the user is interacting, incentivizing the creator to build on the network.

Pledge Incentive

Approximately 35% of existing NEAR is currently pledged, generating over 11% per year for the pledger. Adjusted for inflation, the real reward is approximately 7%. This reward is fairly consistent whether you are pledging NEAR or running a verifier. This real rate of return is the highest of any public chain.

Supply

NEAR has launched with 1 billion tokens. Each NEAR is divided into 10^24 yocto, which is the smallest unit of account. The vesting schedule for token investors is staggered in the first two years after launch. This is somewhat unique, as most other public chains unlocked most of their tokens almost immediately (Solana, Ether, Cardano, Polkadot, etc.). Since the end of 2020, the circulating supply has increased by more than 400% as more tokens are unlocked. By the end of 2022, the supply should reach a stable level.

Value Added

Overall, NEAR has a pretty good cycle of value-add. Through 30%'s share of smart contract fees and $800M in grant funds incentivizing developers to build sustainable applications, incentivizing pledgers to protect the network through a fairly high APY (more attractive than most peers post-inflation), and incentivizing users to hold/use the growing ecosystem tokens. As the network grows, so does the revenue for developers. As more fees are consumed, lower inflation is realized, which yields more real revenue for pledgers and allows users to have more apps and traders to trade. The entire ecosystem also provides a built-in financing mechanism for future growth by transferring 10% fees to the treasury with each transaction.

V. Ecosystem

The Alpha version of NEAR's main network was launched in April 2020, the Beta version in September 2020, and finally the official launch for all users in October 2020. Although NEAR has been launched less than two years ago by now, joining the NEAR ecosystem is much easier. With NEAR, you can register your wallet through their website, but instead of a browser extension like MetaMask, the wallet is embedded in the browser itself. In this way, NEAR feels more like Web2, it operates more like a "sign in with Google" than a Metamask extension, and the NEAR wallet even allows you to simply create your own tokens through your browser wallet. For existing Web3 users, Aurora has partnered with Consensys to make Metamask compatible with NEAR. This should make it easier for edge ethereum users to interact with the protocol. With the ability to create one-time private keys, NEAR also guides users by sending them a key that gives them access to NFT or some tokens to use to start the network. They also incentivize users to invite others through this "NEARDROP" method.

For users in other ecosystems, NEAR has existing bridges from major ecosystems such as Ether, Terra and Cardano. The Ethernet bridge, known as the Rainbow Bridge, is NEAR's most popular portal, with a TVL approaching $750 million. Since the launch of the Rainbow Bridge, daily trading volume on the NEAR network has soared 40 times. Most Rainbow Bridge trades are denominated in stablecoin, and most volumes spiked in late December on the back of USTs. The bridge was vetted by Consensys Diligence and ABDK Consulting prior to launch, giving users peace of mind.

In addition to the Rainbow Bridge, NEAR supports bridging over 100 tokens via AllBridge. in October 2021, the bridge was audited by consultant Harken and found to be secure.

Application Ecosystem

The NEAR ecosystem has grown rapidly in the past two years. Today, NEAR and Aurora have over 350 projects and still continue to grow. in October 2021, NEAR launched an $800 million ecosystem development grant fund. These funds will be managed by the newly launched DAO, with at least $350 million going to DeFi, $100 million to startups and $250 million to existing developers, making this one of the largest grant funds ever launched for a public chain. It's safe to say that developers will want to build on NEAR and receive so much funding. For smaller developers, NEAR has launched the MetaBuidl hackathon, donating $1 million in prizes to grow the ecosystem. Below is a chart of available projects, and we will discuss some of the popular ones in each major category.

Source: NEARMates

Infrastructure

The two most important infrastructure projects on NEAR are Aurora and Octopus Network, which we have already covered in detail. NEAR has links to industry-standard backend technologies such as IPFS and Ceramic for decentralized storage, Chainlink for prophecy machine services, and The Graph for indexing. for block exploration, the NEAR is compatible with Etherscan and has built its own set of native block browsers: the mainnet NEAR block browser and the Aurora Aurora block browser. a network of proof-of-stake operators has also emerged for the commissioning of NEAR tokens, establishing compatibility with the popular smart contract insurance platform Insurace. All in all, the ecosystem has been developing an infrastructure backbone that is expected to emerge on larger, more well-known chains.

DeFi

DeFi on NEAR launches in April 2021. There are currently three major DeFi protocols on NEAR and over 20 more on Aurora. In total, they hold over $600 million in TVL, ranking 17th among major blockchains. The most popular applications in the overall NEAR ecosystem are currently the decentralized exchanges Trisolaris (Aurora) and Ref Finance (NEAR). The third most popular application is Meta Pool, a liquidity pledge premium similar to Lido on Ether. In addition, Curve and Sushi are planned to be launched on NEAR in the near future.

Trisolaris, a fork of SushiSwap, accounts for approximately 56% of the overall NEAR ecosystem TVL, and an even higher 75% of TVL in Aurora. trisolaris is more popular than Ref Finance because it has the speed and low cost of NEAR, while paying out in ETH. It is worth mentioning that Triisolaris is also considering adopting the VE token structure promoted by Curve.

The largest DeFi application on the NEAR mainchain is Ref Finance, accounting for over 70% of TVL. In the broader NEAR ecosystem (including the Aurora app), Ref accounts for approximately 19% of TVL. Ref Finance is an automated market maker that allows for license-free trading of any token on the NEAR network. Users earn REF tokens by providing liquidity. Similar to other major DEXs, Ref Finance is managed by a DAO. The protocol raised $4.8 million from Jump, Dragonfly and Alameda in February 2022.

NFT/games

NFTs and games are also very popular on NEAR, whose largest NFT platform is called Mintbase. Mintbase builds on traditional NFT buying and selling among users, allows royalties or payments to be distributed among multiple wallet holders, strives to solve storage issues raised by the NFT industry, and partners with Arweave for decentralized storage. nft The Hip Hop Heads series traded over $500,000 during its debut on Mintbase in late 2021.Mintbase also partnered with popular artist DeadMau5 to launch NFT on its platform in December 2021.Despite the spike driven by these projects, the Mintbase user base has yet to prove sticky ( see below).

Source: DappRadar

Due to NEAR's unique account structure, NFT builders have the option to sell their accounts to third parties. This will provide the new account holder with a permanent stream of future revenue generated from these NFT sales. This transfer is not as simple on other platforms. For example, the popular Pudgy Penguins NFT on Ether has been trying for nearly three months to transition the owners of its projects, but is still struggling with multiple logistical hurdles.

Games on NEAR are still in the early stages, with many announcements made as of the first quarter of 2022, but few games actually launched. web3 Games Studio has raised millions of dollars to build games on NEAR. op Games has raised $8 million and plans to launch more than 500 games on NEAR by the end of 2022. Another studio, Vorto Gaming, has raised $4 million.

Developer Ecosystem

2021 saw rapid growth in developers on NEAR, the second fastest growing protocol ever, after BNB. in 2021, the total number of developers on NEAR quadrupled, second only to Solana (see chart below). growth continued in 2022, with over 500 more active developers added in January and February.

Source: Power Capital

These developers are also not just targeting small projects. near ranked third in dedicated FTE growth in 2021, with a growth rate of 2,91%. terra and solana had slightly higher FTE growth rates than near at 3,13% and 3,07%, respectively. near attracted more than 100 full-time active developers. behind only Cosmos, Solana, Polkadot, Ether and Bitcoin. most of the growth in 2021 comes before the announcement of the Ecosystem Development Fund discussed earlier.

To gain continued momentum, NEAR Treasury has also created a built-in financing mechanism through the 10% transaction fee mandate, which is invested in the development of the ecosystem. near also hosts coding competitions for high school and college students to lay the groundwork for the long-term development of the ecosystem.

VI. NEAR and competitors

Competition is ongoing among the major public chains, all wanting to achieve maximum network speed, low cost and maximum security. Each competitor takes a different approach to maximizing each of these vectors, while making a series of trade-offs in terms of centralization. Ideally, the best blockchain should be fast, secure, widely available, and extremely decentralized.

Many of the throughput and latency statistics are theoretical, as most of these blockchains are not yet near their advertised maximum capacity. Nonetheless, NEAR currently leads in many key metrics, including transaction cost, maximum transactions per second and pledge yields. But NEAR lags in many decentralized categories, including the number of validators, the cost of running nodes and the Nakamoto factor. Unlike other highly centralized competitors such as BNB, however, NEAR has a plan to decentralize as it grows. As the network grows, NEAR is slowly adding slices. NEAR rewards validators who work on less popular slices, thereby incentivizing smaller pools of validators. As the number of slices increases and activity grows, the network will naturally become less decentralized.

VII. Future Roadmap

NEAR's current and future development is coordinated by the NEAR Foundation, and NEAR's future goal is to use DAOs and guilds to hand over the reins to the community in the future. Guilds are a unique feature of NEAR in that they are organized, decentralized, and united around a common cause. It may seem that guilds operate in a similar way to DAOs, but the difference is that guilds really focus on uniting under a common skill or passion and then using it to contribute to the organization or accomplish certain goals. A guild can contribute to multiple DAOs. They operate a bit like different departments of a company (i.e. accounting, marketing, HR). The current NEAR team likens the Foundation to the rocket that will take NEAR into space, and the guilds and DAOs will guide the agreement forward to new planets. the NEAR Foundation has begun handing over its media pages to the community.

In terms of technology development, NEAR's roadmap is open and continuously updated. near plans to continue to increase the number of verifiers, thereby lowering the threshold for becoming a verifier. near also plans to continue to increase the number of slices as the network grows. The team also hopes to further improve the cost of gas as usage increases.

VIII. Value Analysis

With a sales-to-price ratio of nearly 1,000 today, NEAR is actually cheaper on a price-to-sales basis compared to its roughly contemporaneous launch peer Solana, and is nearly identical when we consider revenue growth rates. solana's market cap is more than three times that of NEAR, and at some point has even been eight times that of NEAR.

User activity is driving token prices in the short and long term, and by looking at key metrics such as user and developer activity, we see some mixed results. Key statistics appear to have leveled off, with transaction volume stabilizing at ~300,000 per day and active accounts at ~20,000 per day. Three Arrows Capital announced they are leading a $150 million round of funding, which may have caused a significant spike in user activity in January, which impacted our numbers.

On a more positive note, although the data set is limited, activity on social media appears to be steadily increasing in 2021.

A limiting factor in terms of unquantifiable token demand is that NEAR is currently listed on only a limited number of exchanges. NEAR is already listed on Binance, Upbit, Kucoin and Firecoin, and has yet to appear on Kraken, FTX US, BitStamp or Coinbase. However, major competitors Avalanche, Solana and Cardano are already listed on these exchanges. the lack of NEAR listing on major exchanges naturally limits the number of buyers, especially in the US.

Finally, as we discussed earlier, NEAR staggered the unlocking schedule for its tokens, which has created continued selling pressure. And the majority of token unlocks will be completed 24 months after the mainnet launch, in October 2022. Those investors who have unlocked their tokens will have tokens priced well below $0.50. At today's price levels, they will immediately be able to make a 20x profit, so it is not surprising that this dynamic is putting downward pressure on the tokens.

Source: NEAR.org

All of Solana's tokens are unlocked in early January 2021 and most of the Avalanche tokens are unlocked in August 2021. Both tokens are performing quite well after some initial downward pressure. We may see a similar dynamic after the unlocking of most NEAR tokens acquired at very low prices in October 2022.

IX. Risks

Centralization issues

Currently NEAR is still very centralized, with only about 100 nodes validating transactions. And the cost to become a verifier is high, at about $1 million, and up to $33 million by November 2021. While NEAR has worked to reduce the cost of validators and increase the total number of validators, and NEAR is moving in the right direction in terms of cost and decentralization, it still relies heavily on the authorization of smaller pledges, and the centralization problem remains severe.

High number of cross-chain developers

Most of the operations in the NEAR ecosystem take place on Aurora EVM-compatible applications. While developers can easily port applications over, this is, after all, a two-way street. In fact, with $500 million of TVL's $600 million on Aurora, developers can develop EVM-compatible applications. This EVM bootstrapping model has had mixed results, for example, there are twice as many cross-chain developers in the Polygon ecosystem as there are native application developers. eVM compatibility is a great entry point, but developers must be incentivized to build native applications on the chain.

Lack of marketing awareness

NEAR lacks branding and marketing awareness, and Solana was launched close to it, but with very different attention and price appreciation. Most public chains have better known leaders, such as Vitalik of Ether, Do Kwon of Terra, Emin Gün Sirer of Avalanche, Sam Bankman-Fried of Solana, and CZ of BNB. in contrast, NEAR does not have a leader that it can relate to. In addition, another reason for the lack of attention could be that NEAR tokens are not listed on major US exchanges.

Strong and many competitors

NEAR competes directly with Solana for developers, and while NEAR has multiple languages that can be coded, the main language is Rust, as is Solana. the demand for Rust encoders is high, and both NEAR and Solana are well funded by venture capital, so the competition between the two is fierce. As of now, Solana's token price is outperforming NEAR by a wide margin and has been gaining attention for a long time, thus attracting more developers in general, which gives NEAR a slight disadvantage.

The public chain market has always been competitive and NEAR has many features that attract users, but users seem to be only slowly entering the ecosystem. At the moment, NEAR seems to have very limited appeal to users.

Lack of real-world testing

NEAR technology has amazing specifications, but will it be able to withstand the larger throughput once the network scales to a large number of transactions? Therefore scalability tests need to be performed before NEAR can be trusted by users.

X. Conclusion

NEAR tries to leverage all existingPublic Chainthe best part of the blockchain, add some improvements, and make them coexist on one blockchain. It has the scalability of ETH 2.0 through sharding, but then takes its performance to the next level by dynamically re-sharding it. It offers Avalanche's EVM compatibility for traditional Web3 developers, but pushes the ecosystem further by offering fee waivers for developers. It has Polkadot application-specific chains, but at a lower cost. It has Solana speed but solves the spam problem through data storage requirements.NEAR solves the overall blockchain problem head on, it looks and feels like a chain but solves the problems most other chains encounter.

The team and technology behind NEAR is of high quality, but there is still some risk. The network effect in the crypto industry is real, and NEAR is already lagging behind other major public chains. But nevertheless, if we are to live in a multi-chain world, I believe NEAR should also be able to have a place on the table.

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