NEAR is about to take off? But these details cannot be ignored

At the beginning of 2022, the NEAR ecosystem seems to be showing signs of eruption. Earlier, NEAR founder Illia Polosukhin publicly stated that the total number of daily active accounts on the NEAR Protocol chain has exceeded 2 million. On January 4, the price of NEAR exceeded US$1.741 billion, a record high, and its market value once exceeded US$10 billion. NEAR’s contrarian performance is even more eye-catching. According to Defi llama data, NEAR’s daily trading volume has increased by more than 29%, while the daily trading volume of Ethereum, Terra, BSC, Avalanche and SOL, which are the top five in terms of total lock-up volume Volume increases are negative.

In addition, a recent annual report issued by the encrypted venture capital Electric Capital shows that according to the average number of monthly active developers in 2021, NEAR has become the sixth largest developer ecosystem, and the top five are Ethereum, Wave Cards, Cosmos, Solana and Bitcoin. At the same time, NEAR’s average monthly active developers increased by more than 4 times, second only to Solana’s 4.9 times.

Has the NEAR public chain really reached the critical point of outbreak? Can its strength be sustained? What is the support behind it? This article attempts to use appropriate length to give you a comprehensive and objective interpretation, which is for reference only.

NEAR’s Unique Positioning: Sharding Technology and the Ethereum Layer 2 Public Chain

Developers have been suffering from the high cost of Ethereum for a long time. The accepted solution is to improve the scalability of the chain through sharding technology and Layer 2. With its unique sharding technology, NEAR has been compared to the “Layer2 representative” and “Ethereum killer” by the outside world. V God has also publicly stated: NEAR is an opponent that makes me anxious. The following is a general introduction to the principle of NEAR’s sharding technology.

Fragmentation technology is difficult to implement, complicated in design, and has high security requirements, which is why ETH2.0 has been delayed. Most of the technical paths that pursue “scalable” public chains are to centralize processing on high-end hardware to provide temporary throughput improvements. NEAR allows low-end devices to participate in the network as nodes without the need to purchase high-end hardware and greatly reduces the entry threshold.

Complementing it is the Doomslug consensus mechanism (a type of PoS) adopted by NEAR, which can speed up the creation rate of blocks and cannot be tampered with, and can still be fast even when half of the verification nodes in the entire network are offline. Complete transaction confirmation. At the same time, through the state sharding technology, the number of shards of NEAR can be dynamically adjusted with the usage of the network. At present, the number of transactions per second that each shard of NEAR can support has exceeded 1,000, which is still in an unoptimized state. In theory, because NEAR shards use a horizontal expansion mechanism, 10 shards can reach 10,000 TPS, and so on, with no upper limit.

It is based on this unique design that the NEAR official team released a bold statement in the 2021 annual summary report that the NEAR network currently only uses 13% of its performance. The report also sorts out the progress of implementing the sharding technology, with a total of 4 stages—

Phase 0: In November 2021, the simplified version of the Night Shadow Protocol will be launched, which will make NEAR’s shards divided by multiple nodes and improve the running speed;

Phase 1: At the beginning of this year, the system introduced a new role that only produces shards, and only verifies one shard, and no expensive hardware is required thereafter;

Phase 2: In the third quarter of 2022, state and processing will be fully sharded, and validators will not need to track all shards;

Phase 3: The network will dynamically cut and merge shards according to resource usage, and NEAR will expand infinitely at this time.

The novel sharding technology design makes NEAR’s gas fee close to zero compared to Ethereum. This makes NEAR a popular choice for undertaking Ethereum spillover projects, like the Layer 2 concept public chains such as Polygon and Arbitrum. NEAR also took this to get a $21.6 million financing led by a16z when the overall crypto market was in a downturn in May 2020.

The expansion plan Aurora + 800 million US dollars incentives, the direct promoter of this round of momentum

Of course, Aurora, an Ethereum expansion solution built on the NEAR network, plays a key role in attracting developers. As an Ethereum-compatible virtual machine, Aurora allows developers to transfer ERC20 assets to the NEAR chain without modifying the code, with almost 0 transaction fees. Therefore, developers regard it as a Layer 2 expansion project on NEAR. However, what is more developer-friendly than other EVM compatible chains is that developers do not need to convert ETH into the corresponding native token to pay gas fees before entering the new ecosystem. Developers don’t even need to hold NEAR, they can enjoy services within the NEAR ecosystem with just ETH. This may also be one of the reasons why NEAR’s price and liquidity have been flat.

However, this relatively friendly mechanism design is undoubtedly very attractive to users and developers. Well-known cross-chain projects Celer cBridge and Synapse Protocol, as well as MetaMask wallet development companies ConsenSys and MathWallet, have also recently cooperated with Aurora, and are committed to efficient cross-chain asset circulation and cross-chain user access. In October last year, Aurora also announced the completion of a $12 million first round of financing, with Pantera Capital and other institutions participating.

It is worth mentioning that the Terra public chain, which has been making great progress during this period, has also assisted the start of the NEAR ecosystem. On December 22 last year, Terra began to integrate its stablecoin UST into the NEAR and Aurora ecosystems. After that, users can directly bridge Terra’s assets or other supported on-chain assets to Aurora through Allbridge. Affected by this, on December 28, Illia Polosukhin, the co-founder of NEAR Protocol, tweeted that the total number of daily active accounts on the NEAR Protocol chain has exceeded 2 million. On January 9, the cross-chain bridge project Allbridge officially announced that since its access to Aurora in December last year, the cross-chain assets from other public chains to Aurora through Allbridge have exceeded $14 million. Data shows that Aurora’s total lock-up volume once exceeded $500 million. It can be said that Terra, which currently ranks second in total lock-up volume, directly brought fire to the NEAR public chain during its peak period.

Although NEAR provides a cost-effective development environment and transfer channel for project parties at the technical level, the competition of public chains has turned to all-round and multi-dimensional since the development of the encryption industry. Following Solana, Avalanche Protocol, Terra and Fantom, NEAR has also joined the army of huge incentive subsidies. At the end of October last year, NEAR announced the launch of an ecological development fund of $800 million, of which $250 million of the ecological fund will be allocated within 4 years, focusing on the DeFi field.

Under the heavy money, there are many people who respond. According to statistics, NEAR currently has 63 infrastructure protocols, 110 Dapps, and 22 development programs. Among them, the DeFi and NFT sectors are the most numerous, with 54 and 43 models respectively. The well-known and representative native projects on the NEAR chain include: the multi-functional DEX Ref Finance, the Octopus Network (Octopus Network) that provides security leasing and distribution services for the application chain, the liquid staking solution MetaPool, and supports ordinary users to create NFTs The toolkit Mintbase, the pixel NFT game Pixelparty, and the social NFT trading platform Paras.

At the beginning of 2022, Web3 has become the default in the minds of most users and the biggest outlet in the future. There are many layouts of NEAR in the Layer2 application ecology, and also do not want to miss this hot spot, even if it is a concept. On January 3, the CEO of the NEAR Foundation publicly stated that he is committed to defining the NEAR protocol as the first choice for building Web3. On January 10, the CEO of Three Arrows Capital, which anchors the Web3 track, added NEAR to his Twitter profile, and only SOL, AVAX and LUNA were included in the list. It is foreseeable that with the approach of NEAR’s Phase 3, in 2022, when the sharding technology is becoming more and more mature, NEAR may become a popular choice for Web3 developers.

It’s been a long time, but the best is over

Since its establishment in 2017, NEAR has focused on sharding technology to solve the problem of public chain expansion. As NEAR officially stated, when NEAR released the design of the protocol in 2019, its original idea was to create a fully sharded blockchain. In addition, NEAR’s technical team also comes from Internet giants such as Google, and the developer talent pool is constantly being replenished, so the R&D strength should not be underestimated. The many factors listed above are superimposed together to shape the amazing potential that NEAR has only recently revealed. But for NEAR, the prime time for development may have passed.

The first is the macro environment. The Fed is expected to raise interest rates stronger, and the market is filled with increasingly pessimistic expectations. On January 10, Goldman Sachs predicted that the Federal Reserve will raise interest rates four times in 2022, compared with the previous forecast of three, and the crypto market will suffer a huge shock. Data shows that as of January 9 (last Sunday), the total market value of encrypted assets was $1,957.1 billion, a decrease of $287 billion or more than 12.7% from the previous week, which may be a precursor to a bearish market. When the Fed’s boots of raising interest rates several times have landed, the transfer of funds may lead to the loss of B-end and C-end users, that is, investors and developers. All public chains, including Ethereum, cannot stand alone, and the NEAR public chain is no exception.

The second is that the subdivision track is full of variables. The landing of Ethereum 2.0 may be fatal to all “Ethereum killers” including NEAR. David Duong, director of institutional research at Coinbase, recently published a research report titled “The real “Ethereum killer” may be Ethereum itself. The report asks: If Ethereum 2.0 can replace the current Ethereum network with a faster, cheaper option, how valuable will those L1 alternatives — the so-called “Ethereum killers” be in the end?

The Ethereum official has advanced the timetable for the implementation of 2.0 to 2023, which means that the time window for NEAR is only more than one year left. We can speculate from this that if NEAR has not formed a stable and prosperous ecosystem, it will be difficult to resist the siphon effect of Ethereum. At present, the total lock-up volume of 214 projects on the Ethereum chain has reached 156 billion US dollars, which is almost twice the total lock-up volume of the public chains ranked 2-11 in terms of lock-up volume. The disparity is evident, let alone Ethereum. After the launch of 2.0, these public chains lost their competitive advantages.

In addition, given that Ethereum 2.0 has been repeatedly delayed, NEAR is more of a transitional alternative, which may be lacking in ecological durability. Recently, although the NEAR ecosystem has performed strongly, according to DappRadar data, the number of daily active users of projects on the NEAR chain ranked 5th to 10th is between 129 and 6, which cannot be compared with the vast majority of applications in Ethereum. , which also intuitively reflects the lag of NEAR in ecological construction.

It is worth noting that the incentive plan of up to 800 million US dollars aimed at prospering the DeFi ecosystem does not seem to have worked significantly. DappRadar data shows that the top three applications on the NEAR chain are not from the DeFi field. The top two Paras 2.0 and NEARnames are both NFT trading markets; the third ranked NEAR Crowd is an on-chain crowdsourcing platform. Moreover, the daily active users of these three applications are all around 2,000, which is not outstanding in the industry.

There are also doubts about NEAR’s most familiar technical capabilities. The crypto circle V Coin Bureau recently analyzed in a public video that the development progress of NEAR’s sharding technology may not be as smooth as the official expected.

Coin Bureau pointed out: First, NEAR founder Illia Polosukhin put forward a proposal for an off-chain computing framework to improve scalability in April last year, but it has not been implemented so far; secondly, the NEAR Foundation has previously issued a quarterly transparency report content solicitation proposal , but this proposal, and many others, received only a few hundred views and a few replies; finally, consistent with Solana, NEAR’s smart contracts are also coded in Rust, indicating that both are competing for this niche developer community. However, their final choice requires no further judgment.

However, NEAR also seems to be interested in replicating Solana’s rise path, and it will be seen by holding hackathon competitions from the end of 2021. So, can NEAR finally seize the window period of more than one year and polish the sharding technology to the realm, so as to cross the bulls and bears and build a stable on-chain application ecology and digital value system? This will take time to verify.

Posted by:CoinYuppie,Reprinted with attribution to:
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