NEAR Protocol: All You Need to Know
The rise of the Internet as a mainstream technology has brought a new wave of possibilities and opportunities that could have never been foreseen. The web is an intricate part of our day-to-day lives, affecting how we communicate, learn, share data and even transact online. It has become a powerful platform to build many applications, taking advantage of its decentralized nature. With so many possibilities at hand, it almost feels like you can't afford to miss out on this opportunity!
In the same way, the sudden boom in cryptocurrencies also brings forth opportunities for smart contracts and DApps to flourish. Cryptoeconomics paves the way for an entirely different class of applications - one where every incentive structure is decoupled from institutions or any other central point of control.
But, due to this decentralization, these platforms are primarily self-regulated and not subject to any built-in standard for security. As a result, it would be challenging to ensure that all users follow the rules and don't breach smart contracts. Moreover, the lack of a decision-making framework makes it hard to arrive at a consensus if there is an issue or conflict which might lead to a complete breakdown of the application itself.
NEAR Protocol is positioned as an autonomous decentralized network that can easily host DApps by providing cost-efficient solutions to overcome several challenges. It supports instant transactions on top of blockchain protocols like Ethereum (ERC20) and Counterparty (XCP).
What is the NEAR Protocol?
NEAR is a protocol for hosting decentralized applications. It is currently live on the Ethereum blockchain as a "minimum viable product" and will later be implemented on other open blockchains like Bitcoin, Tendermint, EOS, etc. The NEAR Protocol aims to provide the necessary infrastructure for DApps - giving support to instant transactions across all platforms, advanced consensus protocols, and cross-application/cross-blockchain messaging.
NEAR protocol aims to incentivize a blockchain network for DApp developers, managers, and users. Moreover, it would also allow them to trade or exchange data without any third-party involvement. NEAR will provide the infrastructure for all these utilities through its high throughput blockchain, which can easily host decentralized applications on top of it.
NEAR is an open-source project with the aim to establish a network independent of any third-party institutions. It aims to be completely autonomous by providing incentives for protocol-level governance and application management - thus allowing ecosystem participants to thrive unhampered by any outside influence.
One key benefit that NEAR brings forth is that it lets you run any decentralized application within minutes - permitting developers to instantly publish their DApps on NEAR rather than spending long periods developing new ones from scratch. The NEAR protocol supports Ethereum and decentralized Counterparty applications to expand support to other systems in the future.
In addition, DApps built on NEAR can also use new features made available by protocols like Bitcoin or Tendermint, which enhance their capabilities manifold. With a low barrier of entry, developers can easily create and launch a new blockchain application without any significant investment or prerequisites.
How does NEAR Protocol Work?
The NEAR Protocol works straightforwardly. It builds on top of existing blockchains like Ethereum and Counterparty to allow DApps built on it to take advantage of the platform's functionality.
As far as consensus is concerned, NEAR uses PBFT (Practical Byzantine Fault Tolerant). It is because it considers the importance of having an efficient system that can withstand malicious attacks that would seek to harm the network. As such, PBFT allows for asynchronous consensus formation where all nodes can communicate without any need for their order or time synchronization.
This protocol creates several rounds of voting at every stage - making this entire process quite efficient. Network throughput increases significantly due to PBFT's optical communication structure and efficient consensus formation. NEAR uses a Proof of Stake (PoS) mechanism for block mining.
Every participant can mine new blocks by staking their coins on the network and being rewarded with NEAR tokens. This process ensures both speed and security - making it an optimal choice for decentralized applications requiring fast transaction validation times.
NEAR allows all stakeholders to receive rewards proportional to their stake in case consensus is reached, or they get punished otherwise. This protocol enables the ecosystem participants like developers, users, miners, etc., to govern themselves without third-party institutions such as banks or governments.
Sharding solutions that NEAR Protocol provides:
Following are the sharding solutions that NEAR protocols offer that makes the entire functioning more accessible and more secure:
This sharding method allows for the nodes to be divided into groups that function in isolation. For example, if you have a network with 30 nodes, each group would only consist of 3 nodes. This way, consensus can be reached much faster and more efficiently than usual.
This protocol allows the current mainnet to connect with other future blockchains. It ensures that all transactions can be easily moved from one blockchain to another without compromising speed and security.
This protocol is meant to withstand DDoS attacks that commonly take place on blockchain networks. In addition, the concept of independent shards can be applied here wherein transactions are not processed jointly in one block but rather are organized into parallel threads.
What is the mechanism of NEAR Protocol staking?
Staking is a process in which an individual places a certain amount of their coins on the NEAR network for verification and then receives rewards proportionate to their stake when consensus has been reached. In this way, they don't need to spend time mining block after block - instead, just staking their coins gets them rewarded when consensus is reached.
The user's coins are locked during staking and can be unlocked whenever they like. Moreover, if the participant is not sure about the number of coins required for mining, they can opt to join a mining pool that has already staked some amount on their behalf while paying them proportionately with their shares in the mined block. There are two primary methods of NEAR protocol staking that are:
The process of Validator Staking ensures that all nodes involved in mining are following the consensus rules to make sure that there is no fraud or corruption taking place. These validators put their stakes (coins) on the network and then start staking to vote for the blocks they think are valid. If more than two-thirds agree on a block, the network approves it, and the miner is rewarded with NEAR tokens.
In this method, a miner who is unsure about the number of coins they need to stake can also opt for Delegator Staking. In that case, a mining pool will have already staked some amount on their behalf while paying them proportionately with their shares in the mined block. Miners can increase or decrease their share anytime they like, and the mining pool will adjust their stakes accordingly.
Why choose the NEAR Protocol for development?
NEAR Protocol enables developers to create DApps that can be used for various purposes. The smart contracts offered by NEAR are easy to understand and use, allowing the developers to focus more on their idea than getting bogged down in technicalities like gas prices. In addition, there is no fee for using NEAR Protocol, unlike Ethereum's Gas fees which makes it an inexpensive choice for both users and developers alike.
NEAR also includes scaling features through sharding (POW), cross-shard transactions (POS), and bridge/Aurora protocols (DPoS). It ensures that the network doesn't get bottlenecked at any point during its growth.
Apart from offering support services like staking wallets, pools, exchanges, block explorers, NEAR also has a Wiki to help developers with their queries. The NEAR Foundation regularly updates this Wiki for all users to learn more about the latest features on offer. In addition, there are several use cases that businesses can leverage to gain an edge in their industry.
Looking to get started with the NEAR Protocol? Seven Bits can help. We are an experienced blockchain development company that offers you advanced enterprise solutions. Get in touch with our team at email@example.com to explore how we can help you in your project.