Earlier this week NEAR Protocol announced their latest $21.6m. funding round led by a16z — with Greenfield we also participated again after having invested in their previous round back in 2019. This is a huge milestone for the team but not only that, equally important the team launched the first phase of their mainnet with a big announcement during this week’s Ready Layer One conference.
Let’s dive into what NEAR Protocol is all about and what the team has achieved since their last funding round back in 2019.
NEAR Protocol is a sharded public, proof-of-stake blockchain and enables mainstream developer as well as user adoption on their smart contract platform offering composability of open-services and state among products and apps, building towards a new open web. Sharding splits the network’s workload into multiple chunks, that can efficiently communicate with each other, thus horizontally scaling through parallel execution and storage, while retaining decentralization — reducing the theoretical limits to capacity dramatically. NEAR is the first blockchain to implement state sharding, that reduces the requirements in state maintenance for individual nodes, allowing for a more decentralized network.
Building bridges & developer adoption
The NEAR team has continued to be extremely active in fostering a vibrant dialogue with the whole web3 space and their leading communities. A great example is the Ready Layer One conference and its subsequent hackathon, which was initiated by them, featured the top minds in the space from Vitalik Buterin of Ethereum to Juan Benet of Protocol Labs/Filecoin. In addition, they have been rolling out their Beta Accelerator program and Open Web Collective in order to support developers and entrepreneurs building on NEAR. First projects building on their chain include ARterra (esports fan engagement platform), TessaB (second-hand mobile phone marketplace with traceability solutions), Flux Protocol (open market protocol), Stardust (revenue-sharing secondary marketplace for gaming) and 1inch (DEX aggregator, initially built on Ethereum with strong early traction). The last example is interesting in particular, as there is also a NEAR — Ethereum bridge being built, that will allow interoperability between the chains for exchanging tokens, as well as supporting more complex smart-contract calls. Thus, NEAR can benefit from the vibrant Ethereum token- and dapp-ecosystem, while bringing scalability to the table. Last but not least, they are continuing to build a rock star team — now featuring 28 contributors to their core Github repo, as well as a strong follower-ship, decentralizing development across the world.
Sharding design & staged rollout over the coming months
As opposed other sharding designs like the concept of a Beacon Chain and many Shard Chains in ETH 2.0 (whose launch timeline has a history of delays) or a Relaychain and many Parachains in Polkadot, NEAR uses a simplified design, viewing the Blockchain as one holistic chain and separating shards into chunks (reduced complexity makes it easier to argue about properties and makes implementation faster). There are nodes producing individual chunks (thus validating the state of the related shard) and nodes that produce whole blocks out of the individual chunks. In a recent edition of their brilliant whiteboard series, Ethereum 2.0 researcher Justin Drake interviews NEAR co-founder Alex, comparing their designs in more detail. The NEAR team excels at assembling the best techniques available, building custom solutions only where necessary in order to execute fast, while prioritizing security. A POA (proof-of-authority) MainNet is already live since April and the Proof-of-Stake version will launch in the next phase of their roadmap, this summer. They will start with a handful of shards to test in production, while additional shards will be added on a continuous basis (scaling with demand, while dynamic re-sharding optimizes data allocation continuously, while leaving capacity buffers for demand spikes on individual shards).
Efficient low-latency block production with economic/game-theoretic security guarantees
Their new Doomslug block production technique offers efficiency gains in having some sense of finality (irreversibility if no validator gets slashed — thus economic security guarantee = stake of 1 validator) after only one round of communication between peers, while the Nightshade finality gadget provides stronger security guarantees after another round of communication (full BFT byzantine fault tolerance — ⅓ of stake needs to be corrupt/be slashed). Another advantage is that Doomslug continues finalizing blocks with just more than half of block producers online (as opposed to the required ⅔ in BFT). Thus, using such hybrid models NEAR reaches pareto improvements in the trade-off space (decentralization, scalability, security).
NEAR provides compelling solutions for the major problems in sharded blockchain design: 1) Data availability, 2) Data validity, especially facing adaptive shard corruption, 3) Cross-shard-communication.