What is NEAR Protocol?

Your ear will perk up when you hear mention of the name NEAR because it is up more than 50% in a little more than 4 weeks in March 2022, but currently gave up all its gains by the start of May. However this coin has potential due to its advanced Nightshade sharding technology that allows it to process up to 100,000 transactions per second. What makes NEAR Protocol unique is that it makes it easier for developers to create Dapps by creating the infrastructure needed to run the Dapps within its distributed networks. Think of it like the cloud for Dapps.

Let's take some more time to get acquainted with NEAR. In this article you will learn about the background of the project, the tokenomics, historical price data, technology and more.

Background

NEAR Protocol first started out as a machine learning project in 2017. Illia Polosukhin and Alexander Skidanov found the project back then and while they were working on their machine learning project they&ndashlike many others during the 2017 crypto craze&ndashdiscovered crypto currency and became fascinated with what it could do. However, while they researched blockchain and crypto currency technologies they discovered that none of the technologies out there could match what they wanted to do. They needed something fast and scalable. Since there was nothing available for them to use, they created it themselves. That's how NEAR went from being a machine learning project to its own blockchain and crypto currency.

True decentralization requires decentralized cloud services

In modern computing, application and web hosting have all moved to the cloud and there are only a handful of major cloud service providers such as Amazon Web Services, Microsoft Azure, and Google Cloud Services that allow for cloud hosting. This has a lot of advantages for most. However, the major drawback to this is that it does not allow for true decentralization, because your dapp is hosted on a centralized service.

This is where NEAR Protocol comes in because it offers the hosting capabilities that are distributed and decentralized. It gives you the decentralized hosting that Amazon and Microsoft can't because they are centralized companies and go against the whole idea of decentralization.

Almost every crypto currency attempts to solve a problem in a unique way. NEAR solves the problem of centralized cloud computing. Now that you know that, let's move on to tokenomics and learn more about how the financial part of NEAR operates.

Tokenomics

The NEAR Protocol mainnet was launched in April 2020 with 1 billion tokens created in the genesis block. More than 2 years later, there are more than 670 million tokens in circulation with a price at $11.80 USD that sets the market cap at $7,972,602,157 at the time of writing and pushes it up to #16 on CoinMarkeCap's ranking. It sits just below Shiba Inu Coin on the ranking index.

NEAR is a Proof-of-Stake token so it has a system of validators that stake their tokens in order to become a validator and earn rewards on validating blocks. Fees for transactions are very, very low and the transaction rate is very, very high. This is the common theme for the third generation crypto currencies. All transaction fees are burned by NEAR which means the more people that use the token, the more valuable it will become as tokens are removed from circulation. This is a built in feature to get a grip on inflation and stay ahead of the fiat currencies. It's only been on the market for 2 years but lets see how well the price has performed.

Historical Price Data

While the mainnet launched in April of 2020, CoinMarketCap's price data only starts in October 2020 with the price starting at $1.18 and hovering around there until January 2021 when NEAR Protocol had its first run bull period, in which it almost reached $8 per token on 12 March 2021. Within a few months of that peak, the price fell down to under $2 for the summer and then picked back up entering August 2021. By 7 September, it broke $10. It pulled back a little bit, then broke $10 again, but lost support rather quickly. IT had some ups and downs heading into the end of December, but really took off at the end of the year, hitting $15.17 on New Year's Eve. After crossing into the new year, the token did even better, it hit the highest price it has been: $20. Support waned and surged and waned and surged again several times after that, indicating that investors are taking their profits when the price gets high. At the time of writing the price is at $11.80 and could surge again, if the recent data in the chart is any indication.

Technology

In this section, you will learn about the cool technology that NEAR Protocol is using. Since NEAR is operating on a simple and efficient means, it is not overloaded with features and functions. It has the technology to do what needs to be done and no more. Its most notable features are the Nightshade Sharding Technology, which allows for super fast processing of transactions and the Rainbow Bridge which allows users to exchange Ethereum for NEAR tokens.

Nightshade Sharding

NEAR Protocol uses its own Nightshade technology, which it pioneered on its own, to improve transaction throughput. Transaction throughput has been an issue for the first generation crypto currencies. Slow networks lead to high fees, which is what NEAR is eliminating. Nightshade is a variation of sharding, in which individual sets of validators process transactions in parallel, across multiple sharded chains. This Nightshade sharding improves the overall capacity of the blockchain. In contrast to 'regular' sharding, the shards in Nightshade produce a fraction of the next block, called 'chunks.' By using this sharding process, NEAR Protocol is able to achieve up to 100,000 transactions per second and achieve instant transaction finality thanks to a one-second block cadence. Bitcoin's block cadence is 1 block per 10 min! With this process NEAR is able to keep transaction fees at almost zero.

NEAR Protocol also improves upon the convoluted onboarding process of other blockchains by having human-readable addresses and building decentralized applications with similar registration flows to what users have already experienced. Moreover, it provides developers with modular components, which means that developers don't need to start from scratch helping them start projects like token contracts or NFTs more quickly.

Rainbow Bridge

NEAR Protocol includes an application called the Rainbow Bridge that allows users to easily transfer Ethereum tokens back and forth between Ethereum and NEAR. This bridge is required because they are separate blockchains and you cannot just exchange any tokens on them. Normally, you need to exchange tokens like for like, so any ERC20 token is exchangeable with any token made on the Ethereum blockchain. So because you can't exchange the tokens directly, a smart contract works within the rainbow bridge to exchange the tokens in the following process.

In order to move tokens from Ethereum to NEAR Protocol, a user would first deposit tokens in an Ethereum smart contract. These tokens are then locked, and new tokens would be created on NEAR's platform representing the original ones.

Since the original funds are held in storage through the smart contract, the process can be reversed when the user wishes to retrieve their original tokens.

Atomic NEAR Wallet

Atomic Wallet offers you a great place to store your NEAR tokens. Besides just being a wallet for storing, sending, and receiving, you can do much, much more with an Atomic wallet. Atomic Wallet has some great features such as having a built-in decentralized exchange/swap where you can buy more than 300 crypto currencies and have them securely stored in your Atomic Wallet. What's more is that you can stake a number of tokens right in the Wallet! On top of that, for each transaction you make in Atomic Wallet, buying, selling, or swapping, you are eligible to get up to 1% back per transaction paid out in Atomic Wallet's native token, AWC.

Do you still have some more questions or are you looking for resources with more information? Then look no further! Check out the FAQ and Resources section below!

FAQ

What are cloud computing services?

Cloud computing services are utilized by developers to host their applications in the cloud. In this way, they are easier to develop, update, maintain and reduce development time and increase efficiency. Cloud services are provided by three companies, Amazon, Microsoft and Google. However, by having these large, centralized companies run decentralized apps takes away from the app being truly decentralized. NEAR offers its own decentralized cloud services for developers to launch their Dapps on, making them truly decentralized apps.

What is Sharding?

Sharding is a method of making a database more manageable for computers. This technique has been used in many modern applications but its use in blockchain is still relatively new.

Sharding is important when it comes to crypto because many networks have difficulty scaling. Some of the largest blockchain networks, like Ethereum, are considering sharding as a potential way to manage their rapidly growing number of users and transactions. Sharding allows for fast processing times of large amounts of data.

What is Blockchain interoperability?

The concept of blockchain interoperability refers to the ability of different blockchain networks to exchange and leverage data between one another and to move unique types of digital assets, in this case tokens, between the networks' respective blockchains. In an interoperable system, once disparate blockchain networks and assets can easily plug into and be combined with one another. This type of feature needs to be programmed into a system, because crypto currency from other blockchains can't be exchanged without a 'bridge' mechanism.

What is Machine Learning?

Machine learning is a branch of artificial intelligence (AI) and computer science which focuses on the use of data and algorithms to imitate the way that humans learn, gradually improving its accuracy.

Machine learning is an important component of the growing field of data science. Through the use of statistical methods, algorithms are trained to make classifications or predictions, uncovering key insights within data mining projects. These insights subsequently drive decision making within applications and businesses, ideally impacting key growth metrics.

What are third generation crypto currencies?

These are the newer crypto currencies that are trying to solve the problems of the previous generations. Which are scalability, networking processing times, high transaction fees and slow block times. Some examples of third generations crypto currencies are Cardando, NEAR, Solana, etc. This just names a few for the time being.