What is the NEAR Protocol? How It Can Contribute to the Adoption of Web 3.0?

NEAR Protocol is a decentralized cloud infrastructure designed to host decentralized applications (Daaps). This smart contract-capable platform is focused on providing a developer and user-friendly platform. Unlike other decentralized platforms, NEAR uses human-readable account names instead of cryptographic wallet addresses.

The new users can easily interact with smart contracts and decentralized apps even if they don’t have a wallet. Furthermore, it enables users to create markets and mint NFTs (Non-fungible Tokens) using its advanced mechanisms.

Understanding NEAR Protocol

NEAR Protocol is pretty much similar to centralized data storage systems like Amazon Web Services as it provides an open-source infrastructure for developers to deploy code without having to create their own infrastructure.

The major difference is that centralized data storage systems are managed by a single entity while the NEAR protocol is managed by a distributed network of computers or nodes. NEAR protocol splits its infrastructure into different segments through its sharding solution called Nightshade.

Thus, the computers have to handle a small number of transactions instead of processing the requested transactions altogether. It eventually helps with fixing the scalability issue found in old blockchain networks.

NEAR vs Ethereum

The continuously increasing demand for blockchain and cryptocurrencies has become quite challenging for Bitcoin and Ethereum due to scalability issues. The Ethereum Network is noticeably affected because of the growing interest in non-fungible tokens (NFTs) and decentralized applications.

As a result, the transaction fee and gas prices are significantly increased which is quite discouraging for developers and other users. NEAR protocol has fixed this problem with its sharding technique allowing users to enjoy fast transaction speed with affordable gas fees.

NEAR Protocol Brief History

NEAR Protocol was founded by Illia Polosukhin and Alex Skidanov as a Machine Learning Platform in 2017. The project was recognized as NEAR.ai at that time. Illia Polosukhin is the former Google Developer who helped with building artificial intelligence and other search engine tools. And Skidanov worked as the director of engineering at MemSQL before joining this program.

Polosukhin and Skidanov learned about cryptocurrency and smart contracts during their research. They decided to build the NEAR Protocol when they couldn’t find a blockchain network that could fulfill their needs and aspirations. They managed to raise around $50 during the first four months.

They both launched the NEAR protocol in 2020 and right after the launch, their team grew to ten members. And now, there are 80 members in their team called NEAR Collective.

How Does NEAR Protocol Work?

NEAR Protocol is the base layer blockchain that enables developers to build decentralized applications on its network. NEAR protocol is dedicated to providing better performance with several unique features that aren’t found in other smart contract-capable blockchains like Ethereum, TRON, Polkadot, Cardano, and EOS.

Nightshade Sharding

NEAR protocol processes data more efficiently by distributing the transaction processing across multiple validator nodes. Thus, it processes a higher number of transactions per second because only a small amount of network transactions is assigned to each node. The network consists of multiple shards where transactions are processed in parallel.

Each shard produces a fraction of the next block after the validation process. These fractions are called chunks and they’re compiled together after the entire process. They are then added to the base layer in the form of a complete block. NEAR Collective team claims that the network can handle millions of transactions per second using this process.

Thus, it can keep the transaction fees low while maintaining the overall efficiency of the network. Although NEAR uses the Proof-of-Stake mechanism for transaction processing, it works a bit differently compared to other PoS networks. On this network, the validators are selected using an election protocol called Thresholded Proof-of-Stake (TPoS).

It’s some sort of an auction where validators define the number of NEAR tokens they’re willing to stake for the process. The system then updates the minimum threshold required to become a validator. The minimum threshold updates every 12 hours. The users can become validators by staking NEAR tokens above that threshold.

Rainbow Bridge

Rainbow Bridge is a network between Ethereum and NEAR Protocol that enables users to transfer ERC-20 tokens, wrapped tokens, stablecoins, and NFTs. Thus, developers can take advantage of high transaction speed with lower fees. The Rainbow Bridge is a decentralized network. So, the users won’t have to worry about their data being forged.

The users can transfer assets through MetaMask and other Web3 Wallets. It’s not possible to directly transfer tokens between networks. Therefore, the users need to lock their tokens in an Ethereum smart contract. They can then transfer it to NEAR Protocol.

It will cost around $1 to transfer assets from Ethereum to NEAR Protocol. And the transaction may take around 1-2 seconds. But the transaction time and fees may be high depending on the traffic and gas prices on Ethereum.


Aurora is a layer-2 solution that can host thousands of transactions per second. It consists of Aurora Engine and Aurora Bridge. Aurora Engine supports all tools available in the Ethereum Ecosystem. Thus, the developers can start building Dapps on this network without having to learn a new process.

The Aurora Bridge enables them to transfer ERC-20 tokens and smart contracts from Ethereum to NEAR Protocol. The transaction speed can be paid in the form of Ethereum tokens.

What are the Use Cases of the NEAR token?

NEAR is an ERC-20 token with a circulating supply of 665 million coins. It has a maximum supply of 1 billion tokens that will be released through the rewarding process. With a market cap of $11 billion, NEAR is the 19th best cryptocurrency.

Transaction and Storage Fee – It’s the main use of the NEAR tokens in the NEAR Ecosystem. A fraction of the transaction fee is paid to the developers and the remaining fee is burnt.

Staking – NEAR token holders can earn rewards by staking their NEAR tokens. The rewards are distributed based on the number of NEAR tokens staked.

Governance – NEAR token holders can also participate in the voting process organized for the future growth of the ecosystem.


NEAR Protocol is one of the fastest-growing crypto projects. It aims to provide a developers and user-friendly platform with several unique features. Nightshade Sharding is the most important aspect of this network designed to fix the scalability issue. Feel free to leave a comment if you need more information about how NEAR Protocol works.

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