As Bitcoin, Ethereum, and other cryptocurrency and blockchain networks gained popularity, scalability issues began to arise due to heightened demand. This issue has become particularly pronounced regarding Ethereum's implementation of decentralized applications (dApps) and non-fungible tokens (NFTs), leading to cost increases in gas prices and transaction fees that can ultimately be off-putting for many users and developers.
NEAR provides various programming tools and languages, along with its smart contracts, which can be used for cross-chain transactions to make building DApps easier. Developers don’t have to worry about a complex onboarding process, for NEAR utilizes human-readable account names instead of cryptic wallet addresses. In 2021, NEAR was honored by receiving the Climate Neutral Product Label due to its carbon-neutral status as a Proof of Stake blockchain.
NEAR Protocol is a blockchain-based system that utilizes distributed ledger technology to provide a secure and cost-effective platform for building dApps. It supports the storage, authentication, and execution of smart contracts and functions as a full network node to maintain and validate the public blockchain. The protocol uses a Proof of Stake consensus mechanism that uses native tokens for staking and voting. It allows users to earn rewards for participating in consensus activities, giving them more blockchain control.
NEAR blockchain is powered by its core technology, Nightshade. This sharding technology enables more efficient data processing by allocating the workload between several validator nodes. Rather than having one node processing millions of transactions, sharding divides the task among many nodes and increases the number of transactions per second (TPS).
Nightshade uses block producers and validators on the NEAR Protocol blockchain to process transaction data across multiple shards simultaneously. Each shard will generate a portion of the subsequent block, known as a chunk, and these chunks are then processed and stored on the NEAR Protocol blockchain to secure the transactions they contain.
The Nightshade protocol could enable the NEAR network to process large transactions per second without compromising performance. The protocol automatically divides and groups shards by responding to high network traffic or resource utilization. A higher number of nodes in the network can be deployed to remain reliable and minimize transaction fees when the demand is high.
In contrast to other PoS systems, validators on the NEAR Protocol are not chosen according to their stake size. Instead, they are selected through Thresholded Proof of Stake (TPoS), a process similar to an auction. Prospective validators indicate their willingness to stake NEAR tokens by submitting a signed transaction showing how much they offer. TPoS will then calculate a threshold, usually every 12 hours, that validators must meet to be eligible. Those that stake above this threshold stand to be chosen proportionately to the amount they have staked.
Rainbow Bridge is an application created for the NEAR Protocol that facilitates the transfer of assets between the Ethereum and NEAR blockchains. People can utilize Rainbow Bridge to move ERC-20 tokens, stablecoins, wrapped tokens, and NFTs between the networks, taking advantage of NEAR's higher throughput and lower fees.
To bridge tokens between Ethereum and NEAR, users need to deposit an ERC-20 asset in an Ethereum smart contract. This will cause the tokens to be locked in place and removed from circulation on Ethereum. At the same time, new tokens are created on NEAR, representing the same assets, thereby maintaining an unchanged total supply across both blockchains. Transferring the tokens is easy through MetaMask or any other Web3 wallet, allowing for a fully permissionless and decentralized process.
Typically, transactions on NEAR will be verified within 1-2 seconds and cost less than $1. However, if the user wishes to return their token to Ethereum, it will take longer and be more expensive. Ultimately, the transaction cost will depend on the Ethereum network's current activity and gas prices.
Aurora is a 2nd layer scaling solution developed for the NEAR Protocol blockchain. It enables developers to build Ethereum-compatible applications at a lower transaction cost for their users. NEAR claims that Aurora can handle thousands of transactions per second with a transaction processing time of merely 2 seconds.
Aurora is made up of the Aurora Engine and Aurora Bridge. The Aurora Engine is an Ethereum Virtual Machine (EVM) on the NEAR Protocol, meaning it is compatible with Ethereum and supports all of the same tools. This makes it simpler for developers to begin their projects on NEAR without learning a new set of development tools or re-coding their DApps. Furthermore, the Aurora Bridge (the same technology as the Rainbow Bridge) can bridge smart contracts and ERC-20 tokens between the Ethereum and NEAR Protocol blockchains. Additionally, users can pay transaction fees with ETH on Aurora.
The NEAR Token is a cryptocurrency token used in the NEAR Protocol, a public, open-source blockchain for developing decentralized applications. The NEAR token (NEAR) is a native ERC-20 token with a max supply of 1 billion tokens. It serves as the primary currency in the NEAR ecosystem and has multiple purposes. NEAR pays transaction and storage fees on the network, and smart contract developers can be rewarded a portion of the transaction fees generated by their contracts. The remaining transaction fees will be burned to create scarcity in NEAR.
Those holding tokens can stake them on the NEAR Wallet to earn rewards. By staking NEAR, these holders run validating nodes to receive rewards of 4.5% of the total NEAR supply. Additionally, they are invited to join the governance of the NEAR network and cast votes on decisions and proposals regarding the platform and products.
As blockchain technology advances, platforms that offer efficient transaction costs and increased throughput have the potential to improve their mass adoption drastically. NEAR offers developers powerful scaling solutions to create more efficient DeFi products and DApps. The NEAR chain is planning further sharding developments and layer-2 cross-chain solutions shortly, which can help further scale the blockchain and its offering for developers and end-users.