How-To Guides: Intermediate

A Complete Guide to The NEAR Ecosystem

By Jinia Shawdagor | February 10, 2022

NEAR is not built on Ethereum. Both are smart contract platforms within the crypto space. Ethereum is fundamentally a financial platform that utilizes a public ledger in which all the verified transactions are stored. NEAR operates as a base blockchain upon which developers can build and deploy applications.

The NEAR ecosystem is an innovative decentralized application platform tailored to promote the future-forward open web and secure its economy.

In a world where blockchains’ capacities are limited by insecurity and issues with scalability, and user-unfriendliness, the NEAR platform has stepped up to solve these challenges.

This ever-expanding community-based network allows developers to put together user-friendly applications and smart contracts while securing high-value assets that include identity or money. 

These features have helped the platform gain approval and adoption among innovators, entrepreneurs, and end-users.

In this article, we explore the NEAR ecosystem and see why it works for both developers and users.

How Does NEAR Work?

The NEAR network is a base blockchain that hosts applications that access shared and secured pools of data, identity, as well as money.

Characterized by a decentralized base, its token (native asset) facilitates transactions and the development of applications.

The underlying technology you find in Bitcoin is also in use on the NEAR blockchain but has been stepped up with features like sharding, community consensus, and refined usability. 

Database sharding in NEAR’s protocol works differently from most blockchain systems. 

Here, all shards are considered a slice of the same blockchain with only a snapshot of every single shard’s present state uploaded to the network. 

All shards have distinct validator nodes that tout the shard’s status anytime a block is generated. The transactions don’t overlap, allowing shards to run simultaneously, which dramatically increases the platform’s efficiency.

The technology ensures engineers and developers can create decentralized apps quickly and with minimum effort. 

The app platform is permissionless, fully functional, and safe. Developers have access to community support to help them learn, construct, test-run, and deploy their apps. 

A highly advantageous option compared to centralized societies where innovators find themselves at the mercy of governments or cloud platforms that can limit how they work.

The inherently open nature of NEAR also allows end-users to explore the backend code, and determine how the apps intend to utilize their personal information.

So, how fast is NEAR? 

Thanks to the 1-second block cadence, the NEAR protocol can handle close to 100,000 tps (transactions per second) and attain transaction finality instantaneously. 

According to NEAR, its advanced technology enables it to achieve significantly cheaper transaction fees than those you would typically find on other blockchains like Ethereum.

Outstanding Features of NEAR Protocol

Usability

Engineers and innovators can conjure experiences that closely mirror the web experiences their expected users are familiar with. Users don’t have to understand blockchain ideas or engage in permission-asking interactions to interact with the app.

Rather, they go through simple onboarding routines, familiar usage styles, and undeviating pricing. 

This move towards “usability-centric” apps heightens the platform’s appeal.

Sharding Approach

We mentioned this earlier, and it’s a key differentiator for the platform. With NEAR’s sharding technique, the network’s capacity expands as more nodes join.

Once network utilization is deemed high enough, the nodes break up into multifold shards each containing parallelized computing.

With this strategy, demand determines whether the network scales up or down.

Real Decentralization

In the preservation of true decentralization, NEAR protocol engages the “Proof of Stake” technique which is both predictable and fair. 

In this technique, the entrance barrier for nodes is lowered to ensure more can engage as opposed to pooling in select powerful validators. Being an incrementally scaling system, the network grows as more nodes join.

The protocol also facilitates infrastructure monetization in a lawful manner. 

The moment you invoke a contract, the network apportions a part of the fees to the contract that you can access. 

This way, infrastructure developers can profit from what they do without resulting in unlawful means.

Governance

NEAR’s governance allows fast protocol improvement. The mandate extends to the community whose input and supervision help ensure the protocol’s independence remains secure.

NEAR Protocol Token

Being the principal native asset within this network, the NEAR token is readily available to all accounts. It supports economical synchronization among members and the novel interactions between the apps built upon the network.

Just like Ether, every token is a disparate digital asset used for: 

  • Processing transactions 
  • Storing data
  • Staking
  • Engaging in governance procedures that may influence the distribution of network resources as well as determining the network’s future technological direction.

NEAR tokens may be earned by:

  • Being an active community member
  • Winning NEAR hackathons
  • Getting involved in development bounties
  • Running a community that empowers innovators to work with the platform

Staking on NEAR

The NEAR protocol works with Proof-of-Stake consensus to acquire and validate transactions. 

As a NEAR validator, you bag token rewards upon generating new blocks on the blockchain. These rewards are based on a static inflation rate.

If you would rather not be a validator, you have the option of staking to a validator’s staking pool, which will still earn you some token rewards. Your rewards will be commensurate to the sum total of tokens you’ve staked to the Network.

When choosing a validator, consider the “pool fees” they have listed. This percentage is what the validator retains to manage their operations.

Say 200 rewards have been created, and the validator has listed 10% as pool fees. They will keep 20 tokens to themselves and distribute the remaining 90% to token holders who staked at their pool.

Beware of validators with zero fees simply because running top-quality infrastructure is an expensive affair. A professional validator will charge a reasonable fee to provide something so valuable.

Further, validators change their fees from time to time, so you’ll want to keep a close eye on the charges in your pool.

It’s worth noting that staking isn’t just about bagging rewards but also about the protocol’s stability and security. We recommend splitting your stake among smaller pools and with different validators to avoid centralization. 

Requirements for Staking 

Validators can read through official NEAR documentation for a better understanding of how things work. Right from setting up their nodes to selecting optimal hardware configurations, and even connecting with other validators.

Token holders wishing to stake to validators’ pools have an easier time. They only need to set up the transaction through the NEAR wallet and in some instances through their custody provider. 

One thing is sure, both validators and token holders need NEAR tokens to stake.

Choice of Wallets?

There are plenty of custody solutions or community wallets you can work with depending on your preference.

The NEAR wallet is a preferable choice for many since it enjoys support from the NEAR Core team, partners, and the NEAR foundation. 

When choosing a wallet, you’ll need to consider how you received your NEAR tokens. If your tokens came inside Lockup Contracts, then the NEAR wallet may be your only option until the token balance unlocks— which might be a while.

Unlocked tokens grant you access to numerous compatible wallet providers with varying technical capacities. Again, you’ll want to check that they fit your requirements.

While at it, do confirm that the wallet supports your preferred validator and staking pool since not all staking providers and wallets are compatible.

Which Projects are Based on NEAR?

The NEAR protocol has generated plenty of interest within and outside the cryptocurrency sector. Here are some of the projects available on the ecosystem:

The Flux Protocol

One of Flux’s goals is to develop open-source applications that are creative and flexible, for the open-source markets. With Flux, developers and innovators have access to an easy-to-use protocol for establishing markets.

Math Wallet

Math Wallet is a lot of things. 

It’s a web and hardware wallet that facilitates more than 67 different projects and an app that offers a DApp database. Developers can download the DApp of their choice and learn how to build their own.

Math Wallet also offers MathVault, a Decentralized Finance (DeFi) solution that provides staking and storing solutions.

Mintbase

Mintbase feels like the Amazon marketplace. Users, including those with minimal technical knowledge, can develop and distribute their very own digital goods.

Paras

As a non-fungible token marketplace Paras focuses on digital collectibles, with the belief that physical art forms should be future-proofed through digitization. They thrive on introducing conventional collectibles into the crypto space.

Coinbase Custody

Coinbase is a trusted crypto custodian that focuses on delivering highly secure storage solutions for both individuals and institutions that have large crypto holdings.

They also provide other crypto-native features like staking, decentralized finance, and governance. 

Octopus Protocol

The Octopus Protocol leverages blockchain technology to facilitate a global hub where people can trade, lend, borrow, and exchange synthetic assets. It’s an open protocol that promotes equal opportunities for people to engage with synthetic assets.

Magic Wallet

This user-friendly wallet is just that—user-friendly. It’s highly compatible with non-technical end-users affording them features like user authentication via phone number or email. Users can access applications on any device or web browser with no extension.

Trust Wallet

Do you handle varied digital assets? The Trust Wallet is a versatile wallet that allows users to transact a variety of currencies. You can easily send, receive, or store digital assets that aren’t connected to the Ethereum system.

The platform offers straightforward setup and use solutions along with security features like a backup facility (to facilitate recovery) and private keys.

Finoa

This platform targets professional investors by providing digital asset financial services. The platform offers an all-in-one interface that can be combined with its Digital Asset Management infrastructure for a unified user experience.

Portis

Created by ShapeShift, Portis offers multiple asset support. This non-custodial blockchain wallet sports a nice design and user-friendly interface.

Aave

As a liquidity market protocol, Aave allows end-users to engage as depositors or borrowers. Here, depositors provide liquidity (and earn passive income) while borrowers borrow in over-collateralized or under-collateralized fashion.

Rainbow Bridge

This platform is the bridge between Ethereum and NEAR, enabling users to send ERC-based assets directly to a NEAR app and vice versa. 

The platform is a permissionless and generic protocol that relies solely on the security of the connected chains. Users can deploy new bridges, use existing bridges, or participate in the maintenance of existing bridges without requiring approval from anyone.

Ref Finance

Connected to the Rainbow Bridge is Ref Finance, a straightforward project that offers liquidity pools for NEAR, run by a smart contract. A single contract contains multiple pools allowing traders to transact across pools at a go. 

Ref Finance also partners with other leading projects on NEAR including Flux, Paras, and the Octopus Network.

Band Protocol

This cross-chain data oracle network connects real-world data to smart contracts. Their goal is to ensure smart contracts on blockchain can communicate seamlessly with trusted off-chain data. 

With Band Protocol, users can create and run on-chain oracles, token curated registries, token issuance, and reputation scores.

The above list is by no means exhaustive, rather a selection of what’s available on the NEAR ecosystem. A quick look at the NEAR website will reveal all the projects thereon.

FAQs

Who is backing the NEAR protocol?

Venture capitalists that have supported and helped build NEAR include MetaStable, Accomplice, Coinbase Ventures, Arrington XRP Capital, Pantera, Libertus Capital, and Scalar Capital.

MultiCoin Capital, Amplify Partners, a_capital, Homebrew, Greenfield One, IOSG Ventures, GFS Ventures, Block Change, DragonFly Capital, and SV Angel are also part of the group.

Is NEAR built on Ethereum?

NEAR is not built on Ethereum. Both are smart contract platforms within the crypto space. Ethereum is fundamentally a financial platform that utilizes a public ledger in which all the verified transactions are stored. NEAR operates as a base blockchain upon which developers can build and deploy applications.

Can You Mine NEAR Protocol?

NEAR Protocol is essentially a proof-of-stake currency where a consensus mechanism is used to validate transactions and create new blocks in the blockchain. You can’t mine the blocks on the NEAR Protocol using hashing algorithms as you would Bitcoin.

Is NEAR Open Source?

The code for NEAR is actually open-source, which means anyone can join and participate in its development.

Does MetaMask Support NEAR?

Yes, MetaMask supports NEAR. As long as your account balance is higher than 0.05 ETH, you can claim an account on the NEAR platform and use Rainbow Bridge to connect the two blockchains.