Bridging The Gaps in Blockchain Using NEAR Protocol (NEAR)
What Is NEAR Protocol (NEAR)? NEAR Protocol is said to be the layer 1 blockchain that uses an innovative sharding technology i.e. Nightshade in an order to gain growth. It may be recalled that NEAR Protocol was launched in 2020 as a decentralized cloud infrastructure and it hosted several decentralized applications (DApps).
It also proposes cross-chain interoperability via a Rainbow Bridge and the layer-2 solution which is known as Aurora. With this, the users are allowed to bridge ERC-20 tokens and assets using the Ethereum blockchain to the NEAR Protocol network, providing them with access to higher production and lower transaction charges.
It is pertinent to mention that NEAR is considered a native token of the NEAR Protocol. NEAR is used to pay charges for transactions and data storage. In the meanwhile, the NEAR token holders are also allowed to stake their tokens on the NEAR wallet in an order to earn rewards or vote for the proposals related to the governance.
There was a time when cryptocurrencies and blockchain technology were not in existence but soon after getting into the business, they turned out to be most popular owing to their wonderful services. Similarly, Bitcoin, Ethereum, and other networks started facing challenges pertaining to growth due to the rise in demand.
The affection for decentralized applications and non-fungible tokens (NFTs) made these challenges noticeable on the Ethereum blockchain. However, the network often sees hiked gas prices and transaction charges due to heavy traffic, which seems discouraging for several users and developers.
Indeed, there have been several teams who are trying to find out various scaling solutions for the networks based on blockchain technology. However, the NEAR Protocol (NEAR) team has been focusing on dealing with the restrictions using sharding technology.
What is NEAR Protocol (NEAR)?
As mentioned earlier, the NEAR Protocol is stated as the layer 1 blockchain that uses sharding technology to achieve growth. NEAR secures its network by using smart contracts and adopting the Proof of Stake (PoS) consensus mechanism. Established by the NEAR Collective, it was co-founded by Alex Skidanov and Illia Polosukhin in 2020.
The project is said to be developed as a community-operated cloud infrastructure to host decentralized applications (DApps).
The NEAR platform consists of several programming tools and languages, including smart contracts with cross-chain interoperability to assist developers in building Decentralized Applications. The platform calculates a simplified onboarding process and contains human-readable account names apart from cryptographic wallet addresses.
Being a Proof-of-Stake blockchain, NEAR was also facilitated with the Climate Neutral Product Label in 2021 as it was carbon neutral.
How does NEAR Protocol work?
In order to be up against other smart contract-enabled blockchains such as Ethereum, EOS, and Polkadot, NEAR implements a lot of features in its ecosystem to boost its performance.
Nightshade Sharding
Nightshade is considered the core technology of the NEAR blockchain which is used to process data more efficiently. Sharding is said to be the splitting of the work to process transactions across several validator nodes. With this, each node handles a fraction of the network’s transactions and it also allows a higher number of transactions per second (TPS).
On NEAR Protocol, the Nightshade uses block producers and validators to begin transaction data across multiple shards. Each shard produces a fraction of the next block and each fraction is known as a chunk; these chunks are processed and stored on the NEAR Protocol blockchain in order to complete the transactions.
Theoretically, the Nightshade may enable NEAR to take control of millions of transactions per second without even affecting its performance. Owing to the network’s condition, it will split and merge the shards on the basis of the network traffic and use of resources. In the meanwhile, the number of nodes is increased when the network is said to be at a high capacity. Likewise, the overall efficiency is maintained while the transaction charges may also be kept low.
Unlike other proof-of-stake networks, the validators don’t compete for the next block on the basis of their stake. NEAR Protocol uses a voting mechanism, popularly known as the Thresholded Proof of Stake (TPoS), in an order to select the validators.
Notably, the TPoS is somewhat similar to an auction, where a large pool of validators show how much NEAR token they’re willing to stake through a signed transaction. Afterward, the TPoS determines the minimum threshold to become a validator in each epoch.
Rainbow Bridge
It is said to be an application on NEAR allowing users to transfer the ERC-20 tokens, stablecoins, and wrapped tokens, besides NFTs among the Ethereum and NEAR blockchains. This also allows the developers and users to take benefit from the higher production and low fees of the NEAR Protocol.
The Rainbow Bridge doesn’t require any permissionless and is totally decentralized. In an order to bridge tokens, the users would have to send ERC-20 assets to the NEAR Wallet directly from the MetaMask or other Web3 wallets.
They would be required to deposit the token in an Ethereum smart contract. While direct token transfer is impossible among the networks, the tokens will be locked and taken out of circulation on the blockchain-based Ethereum. Thus, the new tokens will be created on NEAR that would represent the original ones. Therefore, the total circulating supply of the token would be constant across both blockchains.
It is pertinent to mention that the transactions on NEAR are confirmed in 1-2 seconds in most cases and it costs under $1 only. However, if someone wants to move the token back to Ethereum, the procedure may cost more and may even take longer time to process. Irrespective of this, the final value will be based on the current Ethereum traffic and the gas charges.
Aurora
It is a layer-2 solution on the blockchain technology-based NEAR Protocol which aims to assist the developers in expanding their applications on an Ethereum-compatible platform offering low transaction charges for their users. As per the NEAR Protocol, Aurora is enabled to host thousands of transactions per second and takes only approximately 2 seconds to confirm a block.
It consists of both the Aurora Engine and the Aurora Bridge. It is worth mentioning here that Aurora Engine is considered Ethereum Virtual Machine (EVM) on the NEAR Protocol, which means it is compatible with Ethereum and assists all the tools available in the Ethereum ecosystem.
Indeed, it makes it easier for developers to begin their venture on NEAR as they don’t even have to rewrite their decentralized applications or learn how to work with the new development tools. Besides, the developers may also use the Aurora Bridge, which is said to be the technology similar to the Rainbow Bridge, to bridge their smart contracts and ERC-20 tokens among the Ethereum and NEAR Protocol blockchains. Hence, the users are allowed to pay transaction charges with ETH on Aurora.
Read Also –
A Brief History of Bitcoin Dominance
What Is Ethereum Name Service (Ens)?