Will Near Protocol be the next Ethereum? Will this become a top 10 cryptocurrency? In this article, I will be answering these questions and more. This is based on dozens of hours of fundamental research and years of experience in the industry. On that note, let’s dive right in.
In this article:
What is Near Protocol?
Near Protocol is a decentralized smart contract protocol that facilities the building of decentralized applications. It utilizes proof of stake architecture and will implement sharding. What is sharding? Sharding is a process that splits the blockchain into smaller partitions. This allows it to handle a large number of transactions.
The Near Token
Near is the native token for the protocol. It is used to pay the protocol for transactions and data storage. Validators who secure the network are rewarded in Near. It is also used for voting and governance. Holders can vote on various proposals to shape the development of the protocol.
- Fast – The number one advantage of near protocol is sharding. This allows it to handle large numbers of transactions (TPS). When implemented it is expected to process over 100,000 TPS.
- Cheap – transactions cost is near zero.
- Huge Development fund – near protocol launched a whopping $800 million development fund. This will support the development of its DeFi ecosystem and help attract developers from across the industry.
- It’s carbon neutral – In our day and age, this is vital. Unlike the energy-intensive POW system that bitcoin uses, near is carbon neutral. Not only is this less detrimental to the environment but it also means there will be less regulatory scrutiny.
- Low hardware requirements – validators only have to download the data for their assigned shard.
- Token distribution – the main disadvantage is token distribution. When near was created over 35% of the supply was given to founders and venture capitalist backers. This skews a large part of the governance power in their favor.
- Tokenomics – If we look at the unlock schedule above, the inflation of the token is high and this can lead to increased selling pressure.
Near Protocol certainly has a strong ecosystem with over 750 active projects and over 4000 developers. The most popular project is the decentralized exchange Ref Finance with over $230 million locked up. Supporting this ecosystem is USN.
What is USN? It is an over-collateralized stablecoin pegged to the US dollar. It facilitates peer-to-peer payments and can also be used in various DeFi protocols to trade, borrow or lend. Currently, users can get upwards of 10% APR on their USN.
First of all, near protocol plans to introduce private sharing. This will allow users within that shard to transact privately while interacting with the main blockchain. This provides security against the misuse of data and hacks. But ultimately the end goal is to complete the 3 phases of sharding.
The next and final step is dynamic sharding. This will allow “the ability for the network to dynamically split and merge shards based on resource utilization”. This will scale the network dramatically and is planned to roll out in 2023.
As you can see Near Protocol is extremely promising. From its fast and cheap transactions to its huge development fund. Although the token distribution and tokenomics are less than ideal, I feel that the stellar technology and future potential far outweigh the negatives these present. Finally, if the protocol manages to implement phase 3 of sharding then I think it can stand with the likes of Ethereum and Solana.
If you would like to learn about Solana please read my complete overview.