NEAR: Misconceptions

August 11, 2022

 

Introduction 

NEAR is a user and developer-oriented Layer 1 protocol primed for more hyper-growth in the “NEAR” future. NEAR primarily focuses on scalability via sharding, intending to onboard billions of users through its intuitive, user-friendly design and seamless user experience. Due to NEAR being so new, many misconceptions and overlooked features exist.

Misconception 1: NEAR has the same features as every other blockchain

Reality: NEAR prioritizes user experience to the point where NEAR’s web wallet makes human-readable account names instantly claimable.

Although this overlooked feature is held predominantly by non-NEAR users, many people are unaware that NEAR uses human-readable accounts in its web wallet.

NEAR’s goal is to bring web3 to over a billion users. Besides being one of the only protocols with the requisite technology to do this (through nightshade sharding), it also has another feature that many layer 1s aspire toward: a great user experience. NEAR correctly recognizes that using features such as public keys containing strings of random numbers and letters is not conducive to onboarding non-tech native users. A web3 for a billion people needs to be simple and intuitive in the same way that web 2 is. Without this, onboarding will be slow or non-existent.

To this end, NEAR’s web wallet introduces human-readable account names. Some people may argue that many other blockchains also have human-readable accounts, such as ENS for Ethereum; however, the important part here is available in the wallet by default, actively encouraged and free. By having human readable accounts in the wallet by default, onboarding, accessibility, and utility is drastically increased immediately. Every hurdle placed in the way of convenience from a user-perspective will likely repel potential users and prevent some users from coming back if the process is too difficult or convoluted.

  • Easier to onboard non web3 literate users and web2 users
  • Less chance of transactional mishaps
  • Can be used for other future use cases such as “DNS, certification, and applications” according to NEAR’s docs.

Overall, NEAR makes transacting for everyone much simpler—many people do not have an ENS account or are confused by public key cryptography—and therefore someone sending a transaction to a non-human readable name can still find this extremely challenging.

Misconception 2: NEAR is similar to most other layer 1s in terms of their tokenomics and rewards structure.

Reality: NEAR is one of the earliest protocols and layer 1s to directly reward developers via contract rewards

Most web3 participants are unaware that NEAR is sailing in uncharted waters regarding its tokenomics. Developers’ transaction rewards are baked into NEAR’s tokenomics design which will have a long term gravitational pull on developers bringing them into NEAR.

Many proof-of-stake chains only reward two sets of network participants: validators and delegators; however a third forgotten network participant, the developer, is often overlooked in terms of tokenomics design. Yet a developer’s creative fruits are necessary for any blockchain to thrive! NEAR, by the design of its tokenomics, directly incentivizes developer participation and contract creation by allocating 30% of transaction fees to a smart contract when used.

This opens up a wide range of funding opportunities—allowing developers to allocate it to themselves as income, or allocate it towards ecosystem funding and growth, giving it back to the community, DAO creation, R&D or split into sub-allocations and further all the aforementioned processes.

Other notable effects formed by developer incentivized smart contracts are as follows:

  • Flywheel effect forming a positive feedback loop
  • Attracts more developers to the network
  • Self-reinforcing and self-sustaining network
  • Can have autonomously self-funded developer libraries
  • More good developers mean more good dApps, more good dApps creates more users, more users bring more liquidity to the smart contracts and more liquidity in the smart contracts funds more good developers. Variations of this can exist and more liquidity to the smart contract can be used to fund whatever the developers and community think benefits them.

This developer incentivized tokenomics design and rewards structure will prove pivotally important moving towards the future as NEAR gains traction and this flywheel effect and other feedback loops organically grow communities.

Misconception 3: NEAR’s TPS is fairly average and many other networks outperform it.

Reality: NEAR has potentially infinite scalability capabilities in terms of TPS, is aiming for 100,000 in the near future and may be the first network to solve the scalability trilemma.

All blockchains should be built to autoscale—that is to say, scalability should be built into the system design. NEAR has embedded this into their design philosophy and into their sharding architecture from the get-go. It was initiated with the first phase of NEAR’s four-part sharding roadmap called Simple Nightshade and will end with the fourth and final phase of Nightshade sharding called dynamic resharding. Dynamic resharding will be released in 2023. Dynamic resharding has the following properties:

  • Infinitely scalable
  • Can handle TPS/ users surges
  • Splits and merges shards dynamically akin to a load balancer
  • The network is dynamically adjusting
  • Optimized resource allocation

Why does this matter? Because NEAR’s dynamic resharding effectively overcomes the blockchain trilemma whose specter haunts the web3 ecosystem. Not only is NEAR’s dynamic resharding an innovation solution not found elsewhere, it retains the properties of security and decentralization inherent to the web3 space.

The infinite scalability enabled by dynamic resharding means that there will be no scalability threshold imposed at any point in the future—NEAR will never max out its TPS capabilities, which means they will never encounter Ethereum-like network upgrades to be required for scalability in the future. So irrespective of NEAR’s current TPS of 3000 and its near term aim of 100,000 TPS,NEAR is the only network with plans to pull off such a technologically prodigious feat and may be one of the default networks on which dApps go to scale.

Misconception 4: NEAR is not multi-chain or cross-chain and lacks interoperability

Reality: NEAR is multi-chain and cross-chain and has interoperability through multiple conduits

Many people overlook or are unaware of how NEAR is building, facilitating and integrating a multi-chain and cross-chain world. Many projects on NEAR are ensuring that NEAR is interoperable with all the major ecosystems such as Bitcoin, Ethereum, Cosmos and Polkadot.

The Octopus network is one such project. Built on NEAR, the Octopus project allows app-chains or application-specific chains to create and provide a form of horizontal scalability and greater customizability, flexibility to any project on NEAR that wishes to have its own blockchain. These app chains are created through substrate (Parity Tech’s blockchain SDK) with the use of pallets and can be EVM compatible using Barnacle EVM as a template. The Octopus Network uses the Octopus relayer at its core which is a group of smart contracts on NEAR that establish a security leasing market as Octopus uses a leased proof of stake model. This model is similar in some respects but not the same as Polkadot’s leased security model.

Octopus’s relay smart contracts facilitate interoperability to NEAR and Etheruem through the use of the Rainbow Bridge. The Rainbow Bridge is another component in NEAR’s arsenal of interoperability.

Other bridges such as Allbridge also make NEAR and Aurora more interoperable through the bridging of assets. NEAR’s aurora is an EVM compatibility layer built on NEAR which allows smart contracts, dApps tooling etc. to live on NEAR. Aurora offers a wide range of improvements across all of the relevant metrics when compared to the average price of the Ethereum mainchain, such as a 1 second average block time, 2 second transaction finality and $0.02 Transaction cost.

Aurora is the most widely used NEAR protocol by transaction with 2,068,149 transactions occurring in the past 14 days. Aurora has at least 153 projects residing on it and currently has a TVL of $237.42m.

On Octopus network’s Q2 2022 roadmap, it shows it is creating an IBC Bridge for Octopus appchain to Cosmos and also IBC appchain to Polkadot later in the year. In the future, any Octopus app-chain near will be able to instantly integrate the Cosmos IBC module should they wish, providing even greater interoperability between the Cosmos ecosystem, non-Cosmos IBC chains and between other Octopus app-chains .

To summarize, NEAR is firmly in the multi-chain camp and will soon be even more deeply entrenched in the cross-chain camp with IBC enabled through Composable Finance and through app chains.

Conclusion 

NEAR is a technological powerhouse that is rapidly innovating and iterating. Due to these novel technologies and features, many people misunderstand the level of unprecedented innovation that is exploding out of the ecosystem. NEAR is at the forefront of the web3 revolution and its user-centric design and developer-oriented approach is enabling an evolution in the way web3 is experienced. From its infinite sharding, to mimicking web 2 experience, NEAR is an evolution in the web3 space smashing and breaking current paradigms and trailblazing new for future protocols to follow.

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