by Jordi Guillamón of beToken Capital Research
Dear Tokeners, today we bring you the exclusive report that you like so much that we have done on a blockchain that brings us many positive contributions for the growth of the ecosystem, both with the technology they have already created and with the one they intend to continue growing, with a very promising future projection. It is time to approach NEAR Protocol, let's go there!
A few days ago Naval said:
"NEAR protocol looks like the ETH v2.0 roadmap, but effectively implemented".
What is NEAR Protocol?
NEAR is a decentralised development platform that uses a proof-of-stake (PoS) consensus mechanism and will eventually feature a fragmented architecture to scale transaction performance. Its block generation scheme is called Doomslug and its proposed fragmentation design is called Nightshade. These technologies will work together to scale the network and minimise congestion. NEAR has also been designed to be developer and user-friendly, as it features some key innovations to speed up application development and user onboarding processes. The NEAR blockchain was created and developed by the NEAR Foundation. Its core network went live in April 2020 and network validators voted to unlock token transfers in October 2020. NEAR's bridge to Ethereum (called Rainbow Bridge) was launched in March 2021. It currently has an $800m grants programme to boost the growth of projects within its ecosystem.
The team behind NEAR Protocol
Founders and Core Team
NEAR was initially conceived as a Machine Learning project before becoming a blockchain development platform. In early 2017 Illia Polosukhin and Alexander Skidanov founded NEAR.ai to explore program synthesis: the field of automating programs from human-provided commands. NEAR built on Illia's work as a senior contributor to TensorFlow at Google and Alexander's work as a senior engineer at MemSQL. The synthesis research they were conducting in late 2017 led them to investigate programmable Smart Contracts platforms and cryptocurrency payments while testing a variety of blockchain protocols and exploring the solution space, they realised that the technology didn't quite convince them. They finally decided to start designing a blockchain that could meet their expectations. In August 2018 Alex and Illia assembled a team of engineers and formally began developing NEAR Protocol. The founding vision of the platform was to offer developers an easy way to create DApps (decentralised applications in English) that could be scaled for mass use. To achieve these goals, they chose to establish the Proof of Stake (PoS) mechanism to support transaction verification and block production. Their Linkedin profile lists a total of 69 employees.
Partners of the project
With the great work they have done from NEAR we can see a long list of Partners who have collaborated with them in different aspects, they have developed a section of partnerships on their official website where you can view all the posts in which they announce their Partnerships. The most interesting Partners have been with Elliptic to improve the security of blockchains, Ceramic to improve the identity and dynamic storage of data between blockchains, and Aurora (scalability solution between NEAR and Ethereum) collaborating with ConsenSys to integrate with Metamask and other Ethereum tools.
Investors in the project
NEAR Protocol presents itself as a project with a lot of confidence from numerous investors. In total there are 24 investors, 4 of which have been Lead Investors in some financing rounds, such as Andressen Horowitz Venture Capital, Accomplice, Three Arrows Capital, MetaStable Capital, Coinbase Ventures, Multicoin Capital, Pantera Capital, etc. If we already see that with 24 investors and such titans investing in it you are not convinced, perhaps knowing that they have $183 million in financing rounds will change your mind. These 4 titans have a very good vision to hunt good projects and we have observed it numerous times over the years.
NEAR Tokenomics
The utility token; NEAR
NEAR is the native currency of the NEAR protocol. It represents the central medium of exchange of its blockchain and the unit of account for native transactions. It is mainly used for the following purposes:
Security: holders who stake with their tokens receive incentives in NEAR tokens locking their assets and contributing to the security of the network. NEAR's Proof of Stake (PoS) mechanism provides Sybil with resilience against DDoS attacks (distributed denial of service, usually to crash websites).
Payment of network fees: the network utility is provided by storing application data and providing a way to change it by issuing transactions. The network charges transaction fees for processing changes to this stored data. The NEAR network automatically collects and burns these fees, so that increased usage will lead to more NEAR tokens being burned. A minimum percentage of Smart Contracts usage fees is set aside for developer rewards. This reward incentivises early development of applications that increase network usage. When a contract is made, a portion of the transaction fees generated by the network is automatically allocated to the contract by setting a minimum value as a system-wide parameter and developers can choose any value equal to or greater than this minimum value.
It currently has a maximum supply of 1 billion tokens, as of writing 16/3/2022 it has an outstanding supply of 65% of the total, a good sign for the price knowing that the supply of the token is running out. It enjoys a market capitalisation of $6.918 billion and a fully diluted market capitalisation of $10.574 billion.
These last two data are interesting to observe, given that they can give us information on the long-term valuation that we could give NEAR to try to predict a price as close as possible with the data analysed and we see that it is interesting to have close to 75% of the supply in circulation in terms of supply in the future. We also see that it has a trading volume in the last 24 hours of 611 million dollars, so we can see that the NEAR network is in great demand by its users due to the volume of capital it moves daily and is positioned as one of the main blockchains in terms of value. It currently has a price of 10.59% which places it with a ROI (Return on Investment) currently since its launch of 773% and half of its ATH (Asset Historical High).
NEAR financing rounds
NEAR has completed a total of 7 funding rounds. Below, we will go into more details of each funding round:
1- From 1 June to 30 September 2017, the first private sale was conducted. This is the first private sale conducted by the NEAR protocol offering 21.6 million NEAR at a price of $0.0375 per token, raising a total of $810,000.
2- From 1 June 2018 to 30 September 2018, the second private sale was held. In this second round on a private basis, 57.6 million NEAR were offered at a price of $0.05 per token, raising $2.88 million.
3- From 1 January to 30 March 2019, the third round of private stage financing was held. In this third round, 70.66 million NEAR tokens were offered at a price of $0.12 per token, with proceeds of $8.48 million, raising close to three times the proceeds of the previous round.
4- From 1 April to 30 June 2019, the fourth and final round of private financing was held. During this last private phase, a total of 2.5 million NEAR tokens were offered at a price of $0.15 per token, raising a total of $375,000.
5- From 1 October 2019 to 31 March 2020, a Series A funding round was held in which a total of 84.27 million NEAR tokens were offered. The round featured three different purchase prices, each with a different allotment schedule. The put options were as follows:
-Option 1: $0.25/token with a monthly vesting of 36 months ($18,933,487 raised)
-Option 2: $0.29/token with a monthly vesting of 24 months ($659,863 raised)
Option 3: $0.32/token with a 12-month monthly vesting ($2,003,155 raised)
More than $21 million was raised in this round of funding.
6- An open community sale was held from 11-13 August 2020, where a total of 120 million NEAR tokens were distributed. The round had three different purchase prices, each with a different allotment schedule. The put options were as follows:
-Option 1: $0.40/token with no vesting period ($10,000,000 raised).
-Option 2: $0.34/token with a monthly vesting period of 12 months
-Option 3: $0.29/token with a monthly vesting period of 24 months
More than $10 million was raised in this round of funding.
7- Finally, NEAR's last funding round was held on 13 January 2022 where a total of $150 million was raised in order to accelerate the mass adoption of Web3.
Initial Token Distribution
Having looked at the information regarding the funding rounds, let's take a look at the distribution and release of NEAR tokens. 1 billion NEAR tokens were created on the Genesis blockchain on 22 April 2020. These were allocated as follows, where each category is described in more detail in the following sections:
17.2% / 172 million NEAR tokens for rewards programme (Grants).
14% / 140 million NEAR tokens for the Core Team.
11.4% / 114 million NEAR tokens for Grants operations.
17.6% / 176 million NEAR tokens for Backers.
6.1% / 61 million NEAR tokens for Small Backers.
10% / 100 million NEAR tokens for the foundation fund.
11.7% / 117 million NEAR tokens for the early ecosystem.
12% / 120 million NEAR tokens for a community sale.
Unlocking periods:
Like all projects with good tokenomics as is the case with NEAR, they offer us on their page very comprehensive information about the distribution of tokens and the chronological release over time. Let's take a look at how tokens are released over time:
The Grants programme has a monthly vesting of 60 months.
The Core Team part has a lock-in period of one year followed by a monthly vesting of 48 months.
The operations part of Grants has a monthly vesting of 60 months.
Backers and Small Backers have a monthly vesting of 60 months, with a transfer lock of 12 to 36 months from the transfer unlocking parts; one part not locked for multiple strategies and the other subject to a linear lock of 24 months.
The primitive ecosystem has a monthly vesting of 60 months subject to linear blocks of 6 to 12 months.
Community vending has a monthly vesting of 60 months subject to linear blocks of 12 to 24 months.
NEAR Protocol Ecosystem:
Around NEAR Protocol a large ecosystem of very interesting projects with many useful use cases has been created. We can mainly differentiate 3 types of protocols within the NEAR ecosystem:
Creators: during the last year 2021 we have seen how NFTs have revolutionised the cryptocurrency market and above all the concept of digital art. Advances in the rights of ownership of an object, or the amount of billions of dollars surrounding this sector have also given rise to novel projects within NEAR such as NFT buying/selling platforms (Satori), utility technology for NFT (Mintbase) or platforms to create or collect digital art cards (Paras).
Communities: another trend that is also known as Decentralised Autonomous or DAO's. DAO's are smart contracts for group coordination. DAOs are smart contracts for group coordination. Each vote is verified by the blockchain and funds are distributed based on voting decisions. They are like companies, but have several advantages. DAOs are quick to set up, borderless and transparent, and could not be missing in the NEAR ecosystem, whether for launching DAOs (Sputnik DAO), for DAO governance (Astro) or for empowering DAO communities in the NEAR community (Guilds).
Decentralised Finance (DeFi): The rise of DeFi during the summer of 2020 has driven much of the recent success in Ethereum, boosting experimentation with blockchain-based financial instruments and incentives. However, this surge of interest has led to network congestion and skyrocketing network usage rates. NEAR is making DeFi more accessible to all. With the launch of Rainbow Bridge, DeFi landed on NEAR and for all creators and users worldwide. All assets originating from Ethereum, which now number in the tens of billions, can now be fully used in NEAR applications. We can find AMMs (Ref Finance), DeFi project consultants (Proximity) or cross-chain oracles to access data from different blockchains (Flux Protocol).
Technology behind NEAR Protocol:
The NEAR blockchain uses a new consensus algorithm and a fragmented architecture to achieve a relatively high level of performance. The key elements of NEAR's technology are:
Dynamic re-fragmentation: there are two ways to approach scalability: horizontally and vertically. NEAR has chosen to use sharding, which is a type of horizontal scaling technique. Sharding is an approach to scaling databases and involves distributing compute and storage capacity across multiple servers. In the blockchain world, sharding involves partitioning a blockchain into subgroups of nodes and distributes computation across several parallel sub-chains ("shards"). It is currently being implemented in NEAR.
Nightshade: NEAR uses a new sharding approach called Nightshade to reach consensus and settle transactions between shards. Nightshade offers a different model by modifying the typical sharding abstraction. It assumes that each shard works together to produce "fragments" of data that collectively create a single block. It is a leader-based system, which means that it assigns a single validator to produce each block. This validator must assemble the data fragments generated by each fragment during its leadership period into a block. Leadership assignments will rotate through the existing set of validators. Validators do not accept transactions, only fragments.
Doomslug: is NEAR Protocol's new block production technique. According to the team, it allows the network to achieve some sense of practical finality after one round of communication, with a finality device providing BFT finality after a second round. Doomslug also allows the network to continue producing and finalising blocks as long as more than half of the set of validators are online and honest, although the finalisation device will stop if less than two-thirds of the participants are online.
Final conclusions: Is NEAR Protocol (NEAR) a good investment?
After analysing the whole ecosystem surrounding the NEAR protocol and the innovative technology they provide to their users together with all the big investors accompanying the project on its journey show it as an attractive investment for the coming years. The point we have noted about the limited circulation that will happen over the next few years may be a point in NEAR's favour. As a point against it, which is not, we could determine that with the update that Ethereum is currently making towards the PoS consensus mechanism, it could perhaps eat up a lot of NEAR's ground, But for the moment it seems that they have put the batteries more than the prince of the cryptocurrency ecosystem and it is clear that with the technological advances they have in their blockchain there is no doubt that it is a project that we should have in our portfolios in the long term since they are projects that bring many positive advances to the cryptocurrency ecosystem and above all to the development and growth of the mass adoption of the same over time.
We hope that the report you have just read has helped you to understand more about the potential of this project, remember that this is not investment advice, it is a compilation of relevant information.
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