Shards, Speed, Scalability: What Is the NEAR Protocol in Crypto? 

For new blockchains to stand out in today's crowded crypto market, where thousands of crypto protocols compete, they need impressive technology, a compelling vision, and unique use cases. While this increased saturation makes it more challenging for emerging tokens to reach the top tiers of market cap ratings, some projects manage to defy the odds and outshine fellow chains. 

For example, the NEAR protocol continues to gain ground as a next-gen smart contract chain thanks to an innovative approach to transaction validation and scalability, which has crypto traders closely monitoring the NEAR protocol price. 

NEAR’s history

Before programmers Illia Polosukhin and Alexander Skidanov thought of building a blockchain, they focused solely on creating an artificial intelligence program called “NEAR.ai.” However, as the team researched cryptocurrencies and automated smart contract commands, they decided to pivot their focus to decentralized tech in 2018. The following year, Polosukhin and Skidanov founded the nonprofit NEAR Foundation to fund the development of the new NEAR blockchain. 

Leading up to the NEAR protocol’s 2020 mainnet launch, the NEAR Foundation raised $21.6 million from an initial coin offering (ICO) of its NEAR cryptocurrency. Following NEAR’s early adoption, traders and venture capital firms invested another $500 million in the project one year after its release. 

How does the NEAR protocol work?

The NEAR protocol uses a Proof-of-Stake (PoS) algorithm to reach consensus and post transactions on its distributed payment ledger. In this system, computer operators (aka nodes) download NEAR’s software and commit (or “stake”) NEAR coins on the blockchain to get the chance to validate transactions. Whenever nodes post transaction data on the blockchain, they earn NEAR coins as compensation. 

The distinguishing feature of NEAR’s PoS system is that it uses a technology called “sharding.” This framework breaks nodes on the NEAR protocol into separate groups (or “shards”) to handle a portion of the transaction history. Nodes submit their blocks to separate “Nightshade” chains, which aggregate all the data before organizing it on the complete payment ledger. This deliberate fracturing reduces network congestion, helping NEAR protocol achieve relatively fast transaction finality, low fees, and scalability. 

The NEAR protocol welcomes third-party developers to create decentralized applications (dApps) using the sharded infrastructure as its base layer. Programmers use the Rust or AssemblyScript coding languages to write automated “smart contract” commands for their dApps on NEAR, making it possible to create web-based experiences without third-party intervention. Examples of projects built on the NEAR protocol include the mobile payment dApp KAI-CHING and the move-to-earn fitness dApp Sweat Economy. 

NEAR protocol FAQs

What is the NEAR coin? 

NEAR protocol's native cryptocurrency trades under the ticker "NEAR," which is used to pay transaction costs (aka gas fees) and secure the network through PoS consensus. Developers also use NEAR coins to buy data space on the NEAR blockchain to run their dApps. As a fungible cryptocurrency, the NEAR protocol coin price always has a 1:1 value on crypto exchanges, and traders find the latest market price using real-time NEAR protocol price charts. 

What makes the NEAR protocol unique? 

NEAR’s most distinctive feature is its intricate sharding infrastructure, which gives this blockchain relatively extreme speed, scalability, and low fees. Developers and traders also point out the NEAR protocol is a user-friendly blockchain thanks to its support for coding languages like Rust and human-readable account IDs. 

How can NEAR coins be staked?

Validator nodes on the NEAR protocol must invest in specialized hardware units and meet a high minimum threshold of NEAR coins to run a full node. However, the NEAR protocol allows crypto traders who don’t meet these high requirements to delegate their NEAR to a validator and receive partial rewards. Traders interested in staking NEAR must download a self-custodial crypto wallet compatible with the NEAR blockchain (e.g., My NEAR Wallet) to earn rewards from staking.

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