Guide

What Is NEAR Protocol (NEAR)? A Beginner’s Guide

It has been many years since blockchain technology made its debut with Bitcoin back in 2009. It was all very new, very recent, and a bit experimental at first, and people were terrified to either acknowledge or adopt blockchain technology in the early days, but that time period has passed. Blockchain technology and decentralization have come a long way since then; you can see multiple cryptocurrencies developing and evolving as time passes, and multiple consensus algorithms are either in the works or already deployed to solve multiple problems of interoperability, scalability, and customization.

Blockchain technology is making plenty of strides moving forward to become the host of modern finance and to present people with a system that is much more efficient, interoperable as well as scalable down to the very nickel. With multiple cryptocurrencies either evolving or being developed as days pass by, and with the prospect of non-fungible tokens, decentralized apps, and other such associations, it has become extremely difficult for managers or validators of these decentralized networks to uphold the higher standards of scalability.

It leads to a crippled service in terms of transaction validation, ineffective communication, and broken links when it comes to making the service interoperable. But to address these issues in the most professional way possible and to propose a subtle fix that will remain effective for years to come, there is a new protocol that has been developed and is now available, the NEAR Protocol. It is a layer one blocking system that incorporates the use of nightshade, which is an extremely efficient sharding technology that helps network validators to achieve scalability.

It got launched back in 2020, and since then, it has become a decentralized cloud media to host multiple decentralized applications over the years. It offers cross-chain interoperability, which is something that no other blockchain system has proposed. It does so with the help of Rainbow Bridge and a layer two solution, which is known as Aurora. ERC-20 tokens for users can be bridged from Ether blockchain to the NEAR Protocol, which allows them to have access to increased throughput and extremely low transaction fees, for that matter.

NEAR is the native token that has been established since the beginning of the NEAR Protocol. You can use this token for the sake of either paying for your transaction fee or, if you are hosting decentralized apps over the network, then for your data storage fees. If you want to earn rewards and profit from the network, then you are given the permission to stake your NEAR tokens into a wallet of your choosing, which allows you to not only get paid and earn rewards while also taking part in governance-related votes and decisions for the network.

Many Blockchains Face Scalability Issues

With blockchain technology becoming more mainstream and people finally getting out of the blockchain dilemma, its adoption continues to increase. At present, there weren’t enough as only Bitcoin, Ether, and XRP were present at the very beginning of decentralization, and soon this reached a proportionate amount of users, thus running into scalability-related issues and challenges.

Even with the betterment of technology and all those years passing by in the blink of an eye, these crypto environments have not done anything significant to address the scalability issues, and with other systems such as non-fungible tokens and decentralized apps getting mixed into the scene, the situation has become only dire. Ether, for example, continues to fluctuate its transaction fees based on the overall influx of people and at a particular time. This is not only troubling for the people but also for the developers as well.

That is why many crypto environments and blockchain systems out there are actively scouting for any solution regarding scalability and to get their blockchain networks all the required tools to get better and become more efficient in the future. The NEAR Protocol is the only blockchain system at present that is not only addressing these issues, but it’s actually doing something to make the problems of scalability diminish over time from the crypto world altogether.

A Brief Introduction to NEAR Protocol

As stated earlier, NEAR Protocol is a layer one blockchain solution that employs the use of sharding technology to solve scalability-related issues. It uses a proof of stake consensus algorithm for the sake of securing the network as well as validating any requests that are made by the users; other than that; it also uses smart contracts for the sake of remaining a secure place for everyone to interact with.

NEAR Protocol began its journey back in 2020, and presently it is being developed as a cloud infrastructure that is open source which helps not only users in hosting decentralized applications on it but also a few non-fungible token types as well as smart contracts. There are a lot of development tools and programming languages that are enabled on the NEAR platform, which you can use based on your own interest or easement.

These elements, along with cross-chain functionality, which is the ultimate hallmark of the NEAR Protocol, allow for the development of decentralized apps and their successful orchestration. You won’t find any cryptographic wallet addresses over the network because it believes in making the onboarding process for people relatively simple and more human than it ever was. This might be the only blockchain environment out there that does this and feels proud in doing so.

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As a cherry on top, NEAR Protocol is completely carbon-free, which means that it doesn’t deal in any kind of technology or data processing that involves the burning of fossils or any other counterproductive elements that would be a potential threat to the environment.

Working Mechanism of NEAR Protocol

Now that you have come around to understanding NEAR Protocol, what is it and just how it can help many blockchain systems out there solve the scalability-related issues, you must be joyous to know more about how NEAR Protocol works?

There are multiple features enabled by the NEAR Protocol as its initiation process to tackle the competition, such as Ether, XRP, and many other cryptocurrencies blockchain systems out there. To be able to understand what these features are and how they can help you to tackle scalability-related issues, you might have to take a much deeper dive into them.

Nightshade Sharding to Tackle Scalability Issues

Nightshade, without any doubt, is the most promising technology on the NEAR platform. It derives its power and meaning from the world sharding, which is also a recent enough technology alignment designed for much better processing of data to drive insights and validate stuff in a blockchain environment. Sharding simply means the splitting of present work for easier processing of the data or transactions when it comes to the blockchain environment.

So what happens is that whenever a transaction needs to be validated or a certain scalability-related issue which needs to be solved, the whole thing gets split into multiple orientations and blocks. These blocks having a certain amount of work pounded within them will be made available to the validating nodes or users who are working as miners. Each miner will be responsible for their own particular block hence only doing a fraction of the work required to validate the transaction or solve the scalability-related issue of a particular node in general.

This allows the network to reach a higher number of transactions per second which enables smoother and more efficient validation of transactions in real-time. Block procedures are used by the nightshade technology to get things validated in real-time across a parallel fashion, which means that simultaneously multiple nodes or validators of the network will be in on the task trying to complete it in as little time as possible. Only when a validator has done their part of the task, a fraction of the block will be produced, and this fraction is known as a chunk.

When all the chunks pertaining to a particular transaction is overworking and have been recorded, validated, and made available in a single place, these will now be committed to the blockchain of NEAR Protocol to accommodate all the data for a particular transaction or task in question.

This is not yet confirmed practically enough, but it is being said in theory that this technology will allow NEAR Protocol to handle millions of transactions in a single second without dangling with the performance or efficiency of the process at all. Depending on how much traffic the network is receiving at a given moment, these pending validations will get split into thousands or even millions of pieces, and they’ll be assigned to particular validators or nodes so that each and everyone can fulfill a particular part of the job, make multiple chunks which then could be gathered at a single place before these are being submitted into the blockchain environment of the NEAR protocol.

This means that whenever network traffic is higher, then to accommodate the use of resources, the number of nodes will continue to increase; this way, a practical sense of efficiency could be maintained throughout the entirety of the validation process. This will also allow NEAR Protocol to keep transaction fees at their minimum, which is always a good thing not only for the end-user but for the developers as well.

The general proof of stake consensus algorithm brings into account the overall volume of stake that a user has put into the financial pool of the blockchain they are presently serving. The higher the stake that a user has, the more intense their chance to get their hands-on validation of the next block as soon as it is made available.

This is completely unbiased and hurts the overall merit and jurisdiction of all the users and validators of the network; why someone who has the largest stake in the financial pool of blockchain technology should get to call dibs on whatever transaction is made available so they can validate the transaction and could get rewards in return? NEAR Protocol brings into account an immersive solution to this whole conundrum by introducing an election mechanism by the name of thresholded proof of stake.

This consensus algorithm is basically like an auction where a user can provide the network with information about just how many tokens they are willing to stake into the network? This way, the algorithm will receive requests from multiple users who wish to become validators genuinely because they have staked a certain amount of tokens into a signed transaction which confirms their intent toward becoming a validator. The algorithm will then choose the validators for transactions as they appear in a linear fashion over the network based on the number of tokens each and every user has staked and their intent towards becoming a validator as well.

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Rainbow Bridge

It is nothing but a simple application that allows users to transfer their ERC-20 tokens, non-fungible tokens, smart contracts, and other digital items between Ether and the NEAR blockchain environment. This way, developers and users can get the premium advantage of enjoying lower transaction fees along with a higher throughput over the NEAR Protocol. It is a completely decentralized and permissionless environment which means that you don’t require the permission of a dedicated manager or network validator to use this system.

You can send your digital assets from any web three-based wallet to your NEAR wallet while reversing the process if required. You can’t, however, go for a direct token transfer between these networks, and therefore you need to deposit your token into the Ether smart contract beforehand. When the tokens or assets move from Ether to the NEAR Protocol, those tokens will be taken out of circulation from Ether, and new tokens will get developed within the NEAR blockchain to represent those that were allocated from Ether blockchain in the first place.

This is done to ensure that the overall supply of these tokens remains strictly constant across these blockchain environments. The overall transaction fee for this procedure is under $1 on NEAR Protocol and the transaction will not require more than one or two seconds at the top to get validated and docked within a block. But if you wish to reverse the process and send your assets from the NEAR Protocol to Ether, then the process is somewhat lengthy and quite costly as well. What specific transaction fee rate you will receive from the Ether network will solely depend on the present gas prices as well as the traffic that is hitting the blockchain environment presently.

What is Aurora?

The Aurora comes out as a layer two solution that is present on the NEAR Protocol with the sole purpose to help developers and programmers to be able to develop their apps and programs without any confusion or roadblocks by offering them an Ether compatible infrastructure. With the help of Aurora, the NEAR Protocol is able to host almost thousands of transactions in a single second, and all it requires is approximately 2 seconds of the confirmation time for every block to be subjected to the blockchain.

The Aurora is made up of the Aurora engine and the Aurora bridge, and both of these work in harmony to provide the end-user with a compatible and efficient infrastructure through and through. Aurora engine is nothing but an Ether virtual machine that runs on NEAR Protocol, taking advantage of its throughput, efficiency, and at most scalability, whereas providing the developers and programmers with tools and systems, they are practically familiar with and can use to develop their apps in real-time.

This way, developers can get started on the NEAR Protocol without having the need to completely rewrite their decentralized apps or develop new technologies, or affiliating themselves with this newer and kind of orthodox method of development and programming.

Aurora bridge can also be used by these developers for the sake of transferring their smart contracts, and other decentralized apps from Ether into the NEAR protocol, the same kind of conditions and terms apply here as these did in the Rainbow Bridge. Aurora bridge is for the transfer of decentralized apps software and other likable items, whereas the Rainbow bridge is in charge of transferring smart contracts, ERC-20 tokens, and other such elements, including but not limited to NFTs as well.

The NEAR Protocol might be in its very beginner level journey at the moment, but with the passage of time, there are only going to be more improvements and a subtle infrastructure ready to bear the load of optimization and scalability for the other decentralized elements out there. NEAR Protocol has already amassed a good enough clientele with many blockchain systems reaching out to the service provider to solve their scalability-oriented issues so they can focus more on upgrading and development and less about accommodating the ever-increasing network traffic that they have to deal with from time to time.


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Hassan Mehmood (Saudi Arabia)

Hassan is currently working as a news reporter for Tokenhell. He is a professional content writer with 2 years of experience. He has a degree in journalism.

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