What Technology does NEAR Protocol use?

 

The crypto community has faced a significant scalability difficulty as dApps have risen in popularity. The ability of a blockchain to handle a high number of transactions at an acceptable speed and cost is referred to as scalability in this context. Due to the huge demand for Ethereum, scalability issues have arisen. While some argue for scaling solutions to be implemented on top of Ethereum (Layer-2 solutions), other projects, such as NEAR, have chosen to develop totally new blockchains with distinct design.

The deployment of sharding is the NEAR Protocol's proposed answer to this scaling challenge. Before going into detail about what this entails, it's important to understand the three primary tasks of blockchain nodes: they process transactions, relay validated transactions and finished blocks to other nodes, and store the network's state and history. As network congestion grows, these jobs become increasingly difficult for nodes to do.

By breaking or partitioning the network into shards, sharding reduces the computational strain (or fragments). With this strategy, each node is only required to perform the code that is relevant to its shard, allowing shards to run computation in parallel, increasing the network's capacity as the number of nodes grows.

NEAR employs a PoS approach to reach network-wide consensus. To be considered for participation in PoS, nodes who want to be transaction validators must stake their NEAR tokens. Holders of tokens who do not want to run a node can delegate their stake to validators of their choice. Every epoch (about every 12 hours), NEAR chooses validators using an auction method, and validators with bigger stakes have more impact in the consensus process.

Some validators are in charge of validating "chunks," which are collections of transactions from several shards, while others are in charge of generating blocks, which contain chunks from all shards. Other nodes, known as "fishermen," monitor the network for harmful activity and report it. A validator's stake will be reduced if they behave improperly.

NEAR Token Economics

The NEAR token is primarily used to pay transaction fees and as collateral for blockchain data storage. NEAR tokens are also used to reward numerous blockchain stakeholders. Transaction validators receive an NEAR token reward per epoch in exchange for their efforts, which equates to 4.5 percent of the total NEAR supply on a yearly basis.

Developers that build smart contracts also get a cut of the transaction fees generated by their contracts. The remaining transaction fees are burned, enhancing the NEAR token's scarcity. NEAR has also established a protocol treasury, which receives 0.5 percent of total NEAR supply each year in order to reinvest in ecosystem development.

In addition to NFTs, the NEAR Protocol can support tokens that are "wrapped" from other chains. Similarly, NEAR has built a bridge with Ethereum that enables users to send ERC-20 tokens from Ethereum to NEAR.

NEAR Platform Governance

The NEAR Foundation, a Switzerland-based non-profit dedicated to protocol maintenance, ecosystem funding, and directing protocol governance, distributes funds to the protocol treasury. The Reference Maintainer, who is chosen by the NEAR Foundation board, is in charge of technical changes to the NEAR crypto network, albeit all nodes in the network must agree to updates by upgrading their software. The Reference Maintainer will eventually be overseen by community-elected representatives.

NEAR Protocol strives to stand out in the crowded field of Web 3.0 infrastructure providers by offering unique developer and user-friendly capabilities.