Near Protocol is a Proof of Stake (PoS) blockchain that aims to address the blockchain’s scalability issue through sharding.
NEAR is a certified carbon-neutral platform whose speed and low fees make it a suitable choice for smart contract and Decentralized Application (Dapp) developers.
NEAR is the native currency of the network and serves multiple purposes such as network security and a unit of account on the blockchain.
In this article, you will learn about NEAR Protocol and its native cryptocurrency, NEAR Token.
NEAR Protocol calls itself a blockchain for everyone! It’s simple, secure, and scalable, providing developers with an easy-to-use platform to build their smart contracts and Decentralized applications (Dapps).
NEAR is built on the Proof of Stake (PoS) consensus mechanism which makes its energy consumption considerably lower than its Proof of Work (PoW) counterparts.
According to NEAR’s documents, its one-year energy consumption is what Bitcoin consumes in only 3 minutes.
NEAR Protocol is also a certified carbon-neutral platform. It tries to offset its carbon footprint by supporting projects such as tree planting.
NEAR acts as a storage for Dapps and offers a variety of development tools to its users. Instead of conventional wallet addresses, NEAR Protocol makes use of “Human-Readable Accounts”.
Therefore, users don’t have to deal with long strings of characters anymore as they have account names like alice.near.
NEAR Protocol also offers a web wallet to its users, enabling them to store and stake their NEAR Tokens or other compatible assets.
NEAR Protocol started its journey as NEAR.ai and used Ethereum for paying contributors.
Illia Polosukhin and Alexander Skidanov, key figures behind the protocol, decided to build their own blockchain as they believed Ethereum is not sufficient for their goal.
In 2019, NEAR Foundation was established, a non-profit organization that oversees the protocol growth and development. The mainnet went live in April 2020.
In 2022, NEAR closed two funding rounds, managing to raise $500 Million to further support its ecosystem.
NEAR Protocol tries to address the scalability limitations of blockchain through Sharding. With sharding, the work of the network is divided into different segments. In this way, multiple machines can work on a fraction of the total load.
For blockchain networks, sharding refers to splitting the large amount of data into smaller segments, called Shards. This allows nodes to be able to do their regular work with only a subset of the data which is much easier to handle.
The sharding in NEAR Protocol is called Nightshade. In this model, the blockchain state is divided into “Chunks”. Blockchain nodes are then responsible for handling these chunks.
It’s important to note that in Nightshade, the blockchain is not divided into various shards, instead, the state of the blockchain is split into chunks.
Through Nightshade, NEAR Protocol will be able to handle a large number of transactions per second for a small fee.
There are two roles in Nightshade: block producers and validators.
To take on any of these roles on NEAR, users have to stake the NEAR token. Additionally, The blockchain is managed in Epochs, a period of time measured in days.
Block producers and validators just need to download the subset of the blockchain state that they are working on.
When a block producer is assigned to create a block, for instance, it has to download the state of the respective shard.
Then during the epoch, the block producer needs to gather all the transactions that can have an effect on that shard.
NEAR is the native cryptocurrency of NEAR Protocol. It has a maximum supply of 1 Billion and consists of smaller units called yocto.
5% of the total supply is issued each year and the network validators received 90% of these newly issued tokens as rewards.
NEAR Protocol burns all the network transaction fees. In other words, the issuance rate is less than 5% because an amount equal to the transaction fees is removed from circulation.
As NEAR grows in size, the transaction fees can surpass 5% of the total supply, giving the network a deflationary nature.
NEAR Token is used for multiple purposes within the protocol:
NEAR Protocol is built on the PoS consensus mechanism and secures its network through staking. Nodes can stake NEAR Tokens to process and verify the transactions of users and applications.
In return, Node operators are awarded NEAR tokens for securing the network and processing transactions.
Users have to pay their transaction fees on NEAR Protocol with NEAR Token. The same rule applies to Dapp developers.
The price of storage and computation on NEAR Protocol is also calculated and paid in NEAR.
NEAR Token can also be used for settlement between different applications on the platform.
Dapps can offer functionalities and services and get paid in NEAR.
You can trade NEAR on most cryptocurrency exchanges, including DIFX. On DIFX, NEAR is available as the NEAR/USDT pair for users to trade on.
Sign up for a DIFX account today and start trading!