Near Protocol is part of a new generation of blockchains like Cardano, Solana, and Polkadot that are using novel approaches to improve the “tradeoffs between scalability, decentralization, and security.”
Blockchains like Near that add functionality and incentivize development could be attractive to developers in the short term, the report said. Near’s sharding approach “mitigates common scaling issues associated with increased centralization due to pooling and reduced security due to misaligned incentives.”
However, according to the report, it is too early to pick long-term winners and losers.
In the long term, we expect blockchains that prioritize usability and market themselves effectively will gain market share by attracting a strong and diverse ecosystem of applications that drives adoption, network effects, and cash flow.”
While Near does prioritize network availability, while other blockchains focus on maximizing throughput, it needs to do more. The bank noted that despite Near’s focus on availability, innovative architecture, and an ecosystem of more than 1,000 applications, Near’s development stagnated in 2022 compared to the previous year.
Transaction fees have fallen since the first quarter of last year, and new user rates have declined since the second quarter, suggesting that its "apps are no longer driving accelerated user growth."
The note adds that much of the software powering third-generation blockchains like Cardano, Solana, Polkadot, Tron, Avalanche, and Near is “still immature” and that development of these innovative technologies is “still in phase one.”
