Scaling problem solution
The NEAR blockchain development team seeks to solve the scaling problem by enabling resource-intensive decentralized applications (dapps). NEAR blockchain development is based on Proof of Stake (PoS) . The system uses an innovative consensus mechanism called Nightshade with the implementation of sharding, due to which, in theory, has no restrictions on the network bandwidth.
Decentralized Internet Creation
According to Alexander Skidanov, Co-founder of NEAR, his goal is to create an Internet where all applications are decentralized and managed by a community, where no one is spied on.
In April 2021, NEAR Protocol launched a cross-chain solution with Ethereum called the Rainbow Bridge. The “bridge” will allow the movement of ERC-20 tokens between the two networks. The Rainbow Bridge will seamlessly merge the economies of the two blockchains, expanding the possibilities for Ethereum users. In the future, it is planned to connect a universal “bridge” with Polkadot and Cosmos. As a result, NEAR Protocol should become a hub for various networks.
In the second quarter of 2021, NEAR blockchain developers will add support for the Ethereum Virtual Machine. This will provide a fully interoperable environment for developers to run the second-largest cryptocurrency code on the NEAR blockchain.
According to the project roadmap, during the current Post Mainnet phase, the NEAR team intends to implement several additional options. First, this is the implementation of the zero-knowledge technology, similar to that used in Zcash – it will allow private transactions on the NEAR blockchain.
The second possible update is the implementation of private shards. It will allow groups of users or entities to capitalize on the security and speed of the NEAR blockchain, while maintaining the private nature of their activities. Users will be able to hide their activities from the rest of the network participants.
Finally, NEAR intends to implement mobile nodes. The use of phones to power blockchains is nothing new, but so far there are limitations. These include insufficiently powerful mobile Internet networks and mediocre telephone equipment. NEAR co-founder Alexander Skidanov has been striving to integrate the protocol with mobile telephones since the inception of the project. In the near future, when mobile phones and networks become effective enough, the final decision on integration will be made by the user community through a vote.
Boosty Labs started working with NEAR Protocol in 2020 and partnered with NEAR on numerous projects.
First, we helped them with their bug bounty program. They posted on their GitHub information about what was not working for them, and anyone who wanted to could contact them with suggestions to fix these flaws for a fee. That ended up being a grant program to support people who wanted to help develop the protocol. We were part of this program and made our suggestions.
Then, in the summer of 2021, they asked us if we could put together a team that would be able to create a desktop crypto wallet. We did that, and then we created a blockchain explorer for them. There is a website, Etherscan, where you can enter the number of the crypto wallet, crypto transactions or any identification data in the Ethereum blockchain, and they provide information about the contents of the wallet, transactions and thenumber of certain tokens. A blockchain explorer is an important component of any project with its own blockchain, since without it, the user cannot navigate the world of crypto transactions. Therefore, it was a very important project in which we took part.
Next, we were testing NEAR products – in particular, the wallet. We helped improve their previously created crypto wallet. Nobody knew how to use it. The wallet's most serious problem was that it was not sufficiently tested, and there was a risk of some vulnerabilities. We tested the wallet (QA Testing Services) and established support for it.
Also, we organized a technical support team for them. We had employees who communicated with their community, their users in various forums. We learned about user problems and wishes, and helped resolve these problems. If our employees could not resolve individual issues, then they contacted the NEAR team and acted together.
NEAR Protocol was created by programmers Alexander Skidanov and Ilya Polosukhin. Work on the project began at the end of 2018. Since then, the team has grown to 50 people and includes developers from Facebook, Google and Niantic, as well as many medalists and finalists in international sports programming competitions. Two team members have won the programming world championship twice (there are nine such people in the world). Almost all team members are from the Russian Federation and the countries of the former USSR. The project is also supported by outsource NEAR development profs.
During the NEAR ICO, which took place in August 2020 on CoinList, 120 million NEAR tokens (12% of the initial supply of 1 billion tokens) were sold at a price of $0.30. The project raised $33 million.
On October 13, 2020, the NEAR Protocol mainnet was launched.
NEAR is based on the Delegated Proof of Stake (DPoS) consensus algorithm and uses sharding to optimize performance. However, unlike sharding in other cryptocurrencies such as Polkadot, all shards in NEAR are treated as part of the same blockchain. In addition, NEAR uses the Rainbow Bridge to provide interoperability with Ethereum.
The integrity of the blockchain is ensured by the Nightshade mechanism, due to which only a snapshot of the current state of each shard is added to the block on the NEAR blockchain. Each shard maintains its own set of validator nodes that pass the state of their shard whenever a block is produced.
You can think of this mechanism as the intersection of many roads. The intersection is the NEAR blockchain, and each road is a shard. Shards are able to work in parallel, since the transactions performed on them do not intersect. This model significantly improves system performance.
Another important component of NEAR is a mechanism called Doomslug, which allows validator nodes to take turns creating blocks, which happens every 12-hour epoch. A new block is created approximately every second.
The source of the block creation reward is inflation, which is currently around 5%.
Ninety percent of the block creation reward goes to staking validators and delegated staking pools; 10% goes to the NEAR Treasury.
To become a validator node in NEAR, you need to stake tokens. The specific amount of funds in the stake depends on the number of tokens that are staked by other validators in a particular shard. This metric also determines the proportion of block rewards that are paid each epoch (12 hours).
Each shard in NEAR contains 100 seats. To perform the function of a validator, you must have at least one seat. The value of each seat is determined by the total number of NEAR tokens staked in the shard. Validators who break the rules risk losing part of their steak. Validators and delegates can opt out of staking at any time.
This model is designed to motivate validating nodes to provide new or smaller shards with a lower entry threshold. If a user does not have enough funds to buy NEAR tokens in an amount sufficient to purchase a seat, he can try to persuade delegates to delegate their tokens to him through staking pools. For delegating tokens, users receive a portion of the block creation reward from the validators on which they stake.
NEAR is the native cryptocurrency of the NEAR blockchain. It is used for staking by validator nodes and delegating participants. Although the source of rewards to validators and delegates is 5% annual inflation, NEAR tokens are burned to pay network fees.
NEAR network fees are minimal. Given sufficient network activity, the NEAR token, in theory, becomes a deflationary asset. Annual inflation goes to zero if the network processes more than 1 billion transactions per day, and it can drop to -2% if more than 2 billion transactions are processed daily.