Summary
NEAR Protocol is a base-layer blockchain that uses the Nightshade Protocol, a unique sharding technology, to achieve scalability. In 2020, the protocol was launched as a decentralized cloud infrastructure for hosting decentralized applications (DApps).
The NEAR blockchain uses the Rainbow Bridge and Layer 2 solution Aurora to achieve cross-chain interoperability. Users can transfer ERC-20 tokens and other assets from the Ethereum blockchain to the NEAR protocol network and enjoy the convenience brought by the latter's high throughput and low transaction fees.
NEAR is the native token of the NEAR protocol and is used to pay for transaction fees and data storage fees. NEAR token holders can also use the NEAR wallet to stake tokens to earn rewards or use tokens to vote for governance proposals.
Introduction
As cryptocurrency and blockchain technology gain popularity and transaction demand grows, Bitcoin, Ethereum, and other networks are beginning to face scalability challenges. The Ethereum blockchain has been plagued by issues in this area, particularly with the attention paid to decentralized applications and non-fungible tokens (NFTs). Traffic spikes often lead to higher gas prices on Ethereum, which increases transaction costs, which can be a deterrent for many users and developers.
While several teams are exploring scaling solutions for blockchain networks, the NEAR Protocol (NEAR) team is focusing on how to address these limitations using sharding.
What is NEAR Protocol?
NEAR Protocol is a low-level blockchain that uses sharding technology to achieve scalability. The protocol uses smart contracts and uses a Proof of Stake (PoS) consensus mechanism to protect the network. The NEAR platform was co-founded by Alex Skidanov and Illia Polosukhin in 2020 and built by the NEAR team. The project direction is to build a community-operated cloud infrastructure for hosting decentralized applications (DApps).
The NEAR platform includes various programming tools, supports different programming languages, and runs smart contracts with cross-chain functions to help developers build DApps. The platform simplifies the registration process and uses readable account names instead of encrypted wallet addresses. As a PoS blockchain, NEAR obtained the climate neutral product label in 2021 for achieving carbon neutrality.
How does NEAR Protocol work?
In order to beat other smart contract-based blockchains such as Ethereum, EOS, Polkadot, etc., the NEAR platform uses the following technologies in the ecosystem to improve platform performance.
Night Shadow Fragment
The Nightshade Protocol is the core technology of the NEAR blockchain, which improves data processing efficiency through sharding. Sharding refers to dividing transaction processing work into fragments and dividing it among multiple validator nodes. In this way, each node only needs to process a small part of the transactions in the network, thereby increasing the number of transactions per second.
According to the Nightshade protocol, block producers and validators on the NEAR platform process transaction data on multiple shards at the same time. Each shard will produce a part of the next block. Each part is called a data chunk. The NEAR protocol blockchain will process and store these data chunks and complete the transactions recorded in them.
Theoretically, after adopting the Nightshade protocol, the NEAR platform can process millions of transactions per second without affecting overall operations. The platform will refer to the real-time network status and automatically split or merge shards according to network traffic and resource utilization. When the network traffic is large, the platform will increase the number of nodes to maintain overall efficiency and avoid rising transaction fees.
Unlike other PoS networks, validators do not need to compete for the next block by staking. The NEAR platform uses the TPoS election mechanism to select validators. The TPoS mechanism is similar to an auction. A large number of validators willing to bid declare how many NEAR tokens they are willing to stake through signed transactions. Next, TPoS will decide the minimum stake required to become a validator in each time period (usually every 12 hours). If the stake exceeds this threshold, there is a chance to be selected as a validator, and the probability of being selected is proportional to the stake.
Rainbow bridge
Rainbow Bridge is an application on NEAR that allows users to transfer ERC-20 tokens, stablecoins, wrapped tokens, and even non-fungible tokens between Ethereum and NEAR blockchains. Developers and users can enjoy the convenience of high throughput and low fees brought by the NEAR protocol.
Rainbow Bridge is a fully permissionless and decentralized application. When bridging tokens, users can directly transfer ERC-20 tokens from MetaMask or other Web3 wallets to NEAR wallets, and vice versa. First, users need to store tokens under a smart contract on Ethereum. Since tokens cannot be transferred directly between networks, they will be locked by Ethereum and removed from circulation. New tokens will be created on NEAR to represent the original tokens, so that the total circulating supply of tokens in the two blockchains remains unchanged.
In most cases, transactions on NEAR are confirmed within 1-2 seconds and the fees are less than $1. However, if users want to transfer tokens back to Ethereum, it will take more time and money. The final fee depends on Ethereum's real-time traffic and gas price.
Aurora
Aurora is a Layer 2 solution in the NEAR protocol blockchain, designed to help developers expand applications on platforms compatible with Ethereum and reduce transaction costs for users. According to NEAR, Aurora can process thousands of transactions per second, with a block confirmation time of only about two seconds.
Aurora consists of the Aurora Engine and the Aurora Bridge. The Aurora Engine is an Ethereum Virtual Machine (EVM) based on the NEAR protocol that is compatible with Ethereum and supports all available tools in the Ethereum ecosystem. This allows developers to easily get started on the NEAR platform without having to rewrite DApps or learn how to use new development tools. Developers can also use the Aurora Bridge (the same technology as the Rainbow Bridge) to seamlessly transfer smart contracts and ERC-20 tokens between the Ethereum and NEAR protocol blockchains. Users can also use Ether to pay transaction fees on Aurora.
What is NEAR Token?
NEAR Protocol (NEAR) is the native token of the NEAR ecosystem. It is an ERC-20 token with a maximum supply of 1 billion. NEAR tokens can be used to pay transaction fees and data storage fees in the network. At the same time, smart contract developers can receive a portion of the transaction fees generated by the contract. To ensure the scarcity of NEAR tokens, the remaining transaction fees will be destroyed.
Token holders can use the NEAR wallet to earn rewards by staking tokens. After staking tokens, they can run validation nodes to earn rewards. The total reward pool is 4.5% of the total supply of NEAR tokens. Token holders can also participate in the governance of the NEAR network, submit proposals related to the platform and products, and vote on them.
How to buy NEAR tokens on Binance?
You can buy NEAR tokens on cryptocurrency exchanges such as Binance.
1. Log in to your personal Binance account and click [Trade]. Select [Standard Edition] or [Professional Edition] trading interface.
2. Click [BTC/USDT] to open the search bar. Type "NEAR" to see the available trading pairs. In this example, we selected NEAR/BUSD.
Click the [Spot] area on the right and enter the amount of NEAR you want to buy. You can place orders using different order types. Select the order type, such as market order, and click "Buy NEAR". These NEAR tokens will be deposited into your spot wallet.
Summarize
As the blockchain space develops, platforms with lower transaction fees and higher throughput are more likely to lead the industry into the mainstream. NEAR's scaling solutions can attract developers who want to build more efficient DeFi products and decentralized applications (DApps). The NEAR roadmap includes the development of sharding technology and Layer 2 cross-chain solutions to further scale its blockchain and ultimately benefit developers and end users.