What is NEAR protocol and why is it growing?

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NEAR protocol is a scalable smart contract platform that supports decentralized applications of almost any kind. Its token, NEAR, can be used to pay for transaction fees and storage as well as for staking by token holders who participate in achieving network consensus as transaction validators.

Proximity Labs, a newly formed DeFi DAO focusing on NEAR’s DeFi sector, aims to distribute up to 40 million NEAR tokens over the next four years.

Data from Footprint shows the total value locked (TVL) of NEAR’s DeFi surpassing $140M ($160M as of 15 Nov 2021) after a 20% boost within a day after news of the fund was released. The native token, NEAR, also hit an all-time high of $12.3 on the next day. 

Footprint Analytics: TVL of NEAR

Footprint Analytics: Token Price and Trading Vol of NEAR

Related to the size of the ecosystem development fund, it ranges from $100M to $300M, such as Fantom($314M in August 2021), Harmony($300M in Sep 2021), Celo($100M in August 2021) and Avalanche($180M in August 2021).

That of NEAR totaling $800M has made a record high, which was announced by NEAR Collective on 25 October 2021.

 

NEAR: A sharded, developer-friendly, proof-of-stake public blockchain

NEAR’s mainnet went live in April 2020. The protocol is a blockchain network designed to provide a user-friendly environment for decentralized applications with greater capacity, higher throughput, and better compatibility with other chains. End-users and developers can easily create their own scalable, sustainable blockchain-based applications using NEAR’s development suite.

NEAR aims to achieve 100,000 TPS at 1 million  nodes per second by introducing the elements such as:

  • Nightshade: the protocol that addresses sharding issues including state validity and data availability
  • Doomslug: the blockchain generation mechanism
  • Rainbow Bridge: the connection that facilitates the project’s interoperability with Ethereum

 

NEAR uses the Proof of Stake (PoS) system as its consensus mechanism. With PoS, nodes that can become transaction validators must stake their NEAR tokens to be considered for participation.

According to Footprint, NEAR has received two rounds of fundraising—$21.6M in May 2020 and $30M in August 2020—from venture capital firms, such as Coinbase Ventures,  Andreessen Horowitz (a16z), Blockchange Ventures, and Pantera Capital.

Footprint Analytics: two rounds of fundraising of NEAR

 

Native DeFi of the NEAR Ecosystem

With the launch of the Rainbow Bridge and other core components, NEAR has begun to establish its native DeFi sector.  The following two projects are now live on NEAR.

DEX: Ref.finance

Ref.finance is a native NEAR AMM as well as the first DeFi platform of the NEAR ecosystem designed for swapping, farming, and staking. Leveraging NEAR’s 1-2 second finality, low costs, as well as its user-friendly and interoperable infrastructure, Ref.finance’s TVL surpassed $110M just two months since its inception in August 2021.

Footprint Analytics: TVL of Ref Finance, surpassed $110M in Oct 2021

Interface of Ref.finance

Liquid staking: Metapool supporting NEAR’s POS network 

Users can stake their NEAR tokens through Metapool and receive the same equivalent of stNEAR tokens in return. This makes them validators of the NEAR POS network. The more stNEAR tokens held, the more stNEAR are rewarded, with a 10% APY according to the  Metapool website.

Metapool was launched in September 2021, currently at the early stage of development.

Footprint Analytics: TVL of Metapool, surpassed $30M in Mid November 2021

Interface of Metapool

 

The other DeFi platforms include:

  • OysterPack, a liquid staking platform, is building several tools to further unlock liquidity for DeFi on NEAR.
  • Project Cheddar will provide a loyalty token that rewards users of dApps in the NEAR ecosystem through its partnership or integrations with other projects.
  • Liquality, the non-custodial and multi-chain wallet, makes it possible for atomic swap between cryptocurrencies such as BTC, ETH, NEAR, and others.
  • NEAR’s oracles will be powered by Flux Protocol and Band Protocol. Both of them bring price feed not only on-chain data across existing oracles but also off-chain data including sports and weather, which makes the NEAR blockchain more variable.

 

NEAR shows long-term potential 

From the data above, NEAR’s DeFi is still at an early stage after an 18-month infrastructure construction. Being fast, cost-efficient, and user-friendly, NEAR offers opportunities for new protocols, applications, and experiments.

Some of the possible ways to participate in the NEAR network include becoming a POS validator by staking NEAR and earning rewards or seizing the moment and creating an innovative DeFi application on this fast-growing platform.

Data Source: Near Network Dashboard

The above content above is for reference only and does not constitute investment advice. If you spot any errors, feedback is welcome.

 

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