CryptoCurrency

NEAR Protocol Information: How Does NEAR Protocol Work?

NEAR Protocol funding rounds

NEAR Protocol supply

NEAR Protocol price action

NEAR Protocol: What Is It?
The nifty contract-supporting Layer-1 blockchain NEAR was developed to solve the scalability problems with cryptocurrencies, which are now among the most significant problems facing contemporary blockchains like Ethereum. NEAR employs roughly 100 validators based on the proof of stake consensus technique to defend the blockchain from a 51% attack, which has been identified as a top concern for work-based blockchain evidence. Emerging at a time when developers and investors are searching for a blockchain that is dependable, scalable, and sustainable, NEAR has a great deal of potential to overtake many other blockchains in the cryptocurrency sector.

How Is NEAR Protocol Operational?
As an alternative to the very energy-intensive proof of work (PoW) consensus process, proof of stake (PoS) shields the blockchain from a 51% attack, in which miners seize control of the consensus and jeopardise the chain’s security. PoS, which uses significantly less power than PoW, is thought to be a much more sustainable technique that NEAR implemented on the chain. Second, Nightshade is among the most noteworthy features offered by NEAR. The most important component of NEAR is nightshade, a sharding technique. By distributing the processing of transactions and verification among several validator nodes rather than backlogging every verification on the mainnet, sharding helps to minimise the workload on the mainnet. Ethereum is a prime example of the latter circumstance; while it intends to introduce Sharding with ETH 2.0, it is now processing all mainnet transactions and is receiving a lot of criticism from the community. Long finality periods and expensive petrol costs—which have occasionally cost investors as much as $50—have been the results of this.
NEAR is also well-known for its Rainbow Bridge, which solves the lack of cross-chain interoperability, another issue that Ethereum is working to resolve. The Rainbow Bridge joins the Ethereum and NEAR blockchains and facilitates the transfer of cryptocurrency assets, ERC-20 tokens, Wrapped tokens (such as WBTC, WETH, etc.), NFTs (BAYC, CryptoPunks, etc.), and other stablecoins (USDT, USDC, UST, etc.). The bridge functions by locking the required quantity of assets by taking them out of circulation on the sender’s chain and producing equivalent tokens on the receiving chains to balance the overall supply of the assets. This is done rather than transmitting assets directly across chains. Rug pulls are less likely to occur since the supply trapped on the bridge is decentralised and not owned by a single party.
The chain’s third and most noteworthy feature is Aurora, a Layer-2 solution built on the NEAR blockchain that was designed to help developers reach a wider audience by enabling them to expand their DeFi applications onto devices that are compatible with Ethereum. Because Aurora is an Ethereum Virtual Machine (EVM), it can be supported by every tool in the Ethereum ecosystem. As a result, developers can extend the functionality of their protocols without having to modify them for use with distinct chains. NEAR is expanding quickly in the DeFi space since it supports the features listed above. The total value locked (TVL) on the chain increased by 525% in just three months, from $93 million to $517 million. However, on May 16, it began to decline to $465 million after losing $52 million in the May 9 crash. Ref finance, Burrow, Meta Pool, LiNEAR Protocol, Jumbo Exchange, and Oin Finance are the only six active protocols on the blockchain. NEAR hosts a variety of Dapps, including Decentralised Exchanges, Lending, Liquid Staking, and more.

The NEAR Protocol’s past
NEAR was a tool developed in 2017 by Illia Polosukhin and Alexander Skidanov to investigate programme synthesis. But as the development team started experimenting with cryptocurrency payments and programmable smart contracts, they transformed NEAR into what it is now. The NEAR Protocol was being developed by a group of engineers and its inventors by August 2018.
The Scalability and Sustainability of the NEAR Protocol
Illia and Alex developed the NEAR Protocol using the PoS consensus process in order to satisfy the growing needs for scalability and interoperability. In April 2020, the blockchain made its official debut, and in September 2020, it effectively attained complete decentralisation. Unlike other chains that just replicated code from an earlier blockchain, NEAR was able to accomplish its goals more quickly since it was entirely rewritten (rather than requiring a hard fork).
A $350 million grant DAO was also made available by Proximity Labs to assist the NEAR DeFi ecosystem. With over $45 million already granted for development, these grants and funding have made it possible for over 800 initiatives, including NEAR Lands, Mintbase, ARterra, and others, to gain assistance.
In 2022, NEAR held two of its biggest funding rounds. On January 13, 2022, Three Arrows Capital and eleven other investors raised $150 million in the first round. The second investment round, which was managed by Tiger Global management and collected $350 million from investors like FTX Ventures and Hashed, took place on April 7. This backing demonstrates that NEAR is making progress towards its goal of addressing major issues and offering its cryptocurrency users solutions.
The native NEAR coin of the NEAR Protocol grew significantly in 2022 and entered the top 20 cryptocurrencies by market valuation. The blockchain, like Bitcoin but not Ethereum, has a limited quantity of tokens generated in its lifetime—1 billion NEAR, to be exact. A total of 688.6 million NEAR, or roughly 69%, were in circulation as of May 16, 2022. At the time of writing, each NEAR token was worth $7.27.
The November 2020 to March 2021 rally saw NEAR’s greatest gain, as the cryptocurrency surged by 1,315.81% in just 5 months. By September 2021, NEAR was trading for $9.7, having gained by 539% in just two months starting in July 2021. However, the NEAR token’s highest documented all-time high was $20.69 in January 2022. An attempt to surpass that high in April was fruitless. Following this fruitless attempt, NEAR fell to $3.50 in less than a week as a result of the TerraUSD (UST) depegging event that precipitated the May 9 market crisis. The token saw a 50% loss in value, however it recovered 10% in the previous day, and as of this report, it was trading at $7.14.
In contrast to Ethereum, NEAR Protocol has built a cryptocurrency future where smart contracts can be inserted for any purpose at a reasonable cost. Because blockchains must be scalable and sustainable, NEAR’s PoS consensus process and Nightshade sharding technology are now possible. The limited number of NEAR tokens has significantly increased as a result of these capabilities and NEAR’s intentions to develop Ethereum alternative interoperability, such as the Rainbow Bridge, Aurora Layer-2, and more. To facilitate the transfer of Ethereum-based digital assets from one blockchain to another, the protocol also provides extensive support for decentralised applications, DeFi products, decentralised exchanges, lending, liquid staking, grants, and investments.

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