NEAR Protocol: A Pioneer in the Integration of Web3 and AI

The NEAR protocol is rapidly becoming a leader in the integration of Web3 and AI, with its foundation in the AI field being deeper than many realize. Interestingly, NEAR was not originally envisioned as a blockchain project. One of its co-founders, Illia Polosukhin, embarked on this journey with a different goal: to create an AI-driven company. Polosukhin is one of the eight researchers involved in introducing the revolutionary Transformer model, which provides the critical architectural support for today's most popular AI tools like ChatGPT.

However, when the team started their initial AI project, they encountered significant challenges, especially in incentivizing and coordinating the different contributors involved in building the AI model. This obstacle made them realize that blockchain technology could provide a perfect solution. By leveraging a high-performance blockchain with integrated crypto payments, they could facilitate seamless exchanges of essential data, computation, and AI models—this is a key feature for building an outstanding decentralized AI ecosystem. This insight prompted a critical shift from AI to blockchain, ultimately giving rise to the current NEAR protocol.

What truly sets NEAR apart is its astonishing alignment with some of the most compelling narratives in today's tech world. Whether the focus of discussion is on AI, chain abstraction, achieving modularity through data availability, or scaling through sharding, NEAR's name always comes up. This raises an intriguing question: Is NEAR merely riding the wave of popular trends, or are they genuinely delivering innovative products that enhance the blockchain experience?

To answer this question, we must delve deeper into the infrastructure of NEAR.

Solving Blockchain Scalability Issues: NEAR's Approach

Scalability is a challenge faced by blockchain networks, and people are exploring various solutions to meet the growing demand for fast and efficient transactions. While some blockchains have implemented technologies such as Layer 2 scaling, sidechains, and state channels, these approaches often involve trade-offs in terms of interoperability, composability, and ease of use.

Nightshade Sharding 2.0: NEAR's scalable backbone

One of the major features of NEAR is its Nightshade sharding technology, which is a core component of the scalability strategy of this protocol. The sharding technology divides the blockchain state into smaller, more manageable parts called "shards," each of which can independently process transactions. This design significantly increases the network's throughput without placing the burden of processing all transactions on any single node.

In the initial stage, NEAR implemented a design that divides each block into "chunks", with each chunk containing transactions for a specific shard. Block producers and validators are allocated to specific shards, meaning they only need to process transactions related to their shard. This not only optimizes processing efficiency but also allows NEAR to achieve a throughput of approximately 3,000 transactions per second ( TPS ) with the initial setup of four shards.

In the process of continuous development, NEAR is enhancing this system through stateless validation, allowing validators to verify transactions without storing the entire blockchain state. This innovation reduces hardware requirements, further enhances accessibility, and achieves decentralization of the network. Additionally, NEAR is exploring the integration of zk-proofs( zero-knowledge proofs) and dynamic re-sharding into its sharding design, which can further improve scalability by enabling faster and more secure transaction verification. NEAR will expand to 10 shards by the end of the year, increasing network capacity by 50% to meet the growing demand.

NEAR's Nightshade Sharding offers the scalability, speed, and interoperability required for AI projects that need to handle large datasets and execute transactions quickly. The network's rapid finality ensures that AI-driven applications can run in real-time, making NEAR an ideal platform for developers looking to innovate in the decentralized AI space.

NEAR's Blockchain Interoperability Full-Stack Modular Architecture

As the blockchain landscape becomes increasingly fragmented, the demand for interoperability and seamless cross-chain interactions is more important than ever. The NEAR protocol recognizes this challenge and has built its platform as a leading force in unifying the multi-chain ecosystem. By implementing a range of innovative technologies—such as fast data availability (DA) layer, multi-party computation (MPC) for secure cross-chain transactions, ultra-fast finality layer (SFFL), and chain abstraction—NEAR aims to provide a unified and user-friendly experience across multiple blockchains. Each of these components plays a crucial role in positioning NEAR as a top interoperable blockchain.

Enhance cross-chain compatibility and connectivity

NEAR's commitment to interoperability is further exemplified by its integration with Ethereum and the broader blockchain ecosystem. Some platform is a smart contract on NEAR, which is a blockchain and ecosystem compatible with Ethereum. The platform's engine runtime supports the seamless deployment of Solidity and Vyper smart contracts, enabling developers to leverage NEAR's powerful infrastructure while maintaining compatibility with Ethereum. NEAR is compatible with common tools through NEAR Snap, while some bridge facilitates the transfer of tokens and data between Ethereum, NEAR, and some platform, highlighting the commitment to interoperability.

In addition to maintaining interoperability with other ecosystems, NEAR also provides cross-chain seamless use of assets through re-staking. A certain platform allows for cross-chain native re-staking of assets, thereby creating a trustless decentralized ecosystem that contributes to the security of AVS. Re-staking through this platform is built on the NEAR protocol and can leverage liquidity from multiple ecosystems to create a seamless experience across blockchains.

Fastest data availability layer in the market

The DA layer of NEAR is managed by the behind-the-scenes team of all modular products of (NEAR, ensuring that the blockchain can efficiently access and process large amounts of data. With Nightshade, NEAR DA provides a powerful solution for Ethereum rollups and other high transaction volume projects. Unlike other DA solutions, NEAR's consensus mechanism can maintain speed even in the face of large amounts of incoming data, ensuring quick release and querying of data.

As more and more blockchains use zero-knowledge proofs to achieve unified security across chains, NEAR's DA provides dApps from multiple networks with easier and cheaper data queries and settlements. In addition, NEAR DA ensures that nodes can remain synchronized even when operators are offline, adding an extra layer of reliability. This feature is not only beneficial for current high-demand applications but also positions NEAR as a key player in future cross-chain settlements.

) uses ultra-fast finality layer to support other blockchain infrastructures.

According to the modular blockchain theory, NEAR has collaborated with a certain platform to develop the ultra-fast final layer ###SFFL(. This innovative settlement layer significantly reduces transaction time and Rollup costs, while inheriting the security and finality of NEAR and Ethereum through the certain platform. SFFL relies on NEAR DA to acquire transaction data, enabling nodes to efficiently access and verify transactions.

Due to SFFL supporting cross-rollup transactions, it has boosted NEAR's trading volume. With 70% of transaction fees being burned, it has created a deflationary effect on NEAR tokens. Collaboration with a certain platform has further strengthened NEAR's position in the modular blockchain stack, as the latter has delegated a significant amount of ETH to SFFL, bringing the vision of chain abstraction closer to reality.

) The Unity of Blockchain: NEAR's Chain Abstraction Vision

Modular blockchain architecture achieves scalability, but also leads to fragmentation, resulting in fragmentation of liquidity, user experience, and interoperability. NEAR addresses these challenges by advancing chain abstraction—a concept aimed at providing users with a unified experience across multiple blockchains.

NEAR's FastAuth key management system allows users to manage their NEAR accounts using email addresses, simplifying account creation and recovery. The system also supports multiple keys for different functions, enhancing security and usability.

In addition, NEAR integrates MPC technology through chain signatures to ensure the security of cross-chain transactions, allowing users to interact with multiple blockchains without the need to manage different wallets and mnemonic phrases.

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The Attraction of NEAR

) stablecoin and TVL growth

Since July 2023, the market value of NEAR's stablecoins has remained relatively stable at around $75 million. However, the start of the second quarter of 2024 marks an important turning point, as the market value of all stablecoins on NEAR has experienced significant growth.

This growth is reflected in the total locked value (TVL) of NEAR and its EVM-compatible sibling platform ###. From July 2023 to now, the total TVL of NEAR and the sibling platform has soared from about $55 million to $230 million, representing a threefold year-on-year increase in USD terms. After adjusting for the value of the native tokens, the TVL calculated in NEAR has doubled, while the TVL calculated in the sibling platform's tokens has decreased by 40%.

( DeFi on NEAR

The DeFi landscape on NEAR is currently dominated by two key platforms: a certain lending platform and a certain DEX. The lending platform has seen a significant increase in activity due to its incentive lending program for stablecoins. Similarly, the decentralized exchange )DEX### is also actively incentivizing its stablecoin mining pool, with total trading volume recently surpassing $7 billion. These incentives are primarily funded by NEAR token rewards, which may play a crucial role in the surge of stablecoin market capitalization in 2024.

( NEAR ecosystem emerging categories and trends

Restaking

Re-staking has become an emerging and growing category in the NEAR DeFi ecosystem, with certain platforms contributing approximately $15 million to TVL. Although liquid staking is typically not included in TVL metrics, it remains the largest category, with a TVL exceeding $280 million.

On a certain platform, although there are several popular EVM DApps, the most widely used application is still the enhanced version of the platform, which is designed to facilitate free transactions and promote token staking.

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NEAR's Commitment to Web3 AI Development

As part of a broader strategy to become a leading AI platform in the Web3 ecosystem, NEAR is making significant progress in developing and nurturing AI projects on its network. In addition to the efforts of the NEAR R&D Lab, the protocol has launched the NEAR AI x Horizon (HZN) incubation program, which is dedicated to supporting groundbreaking projects at the intersection of AI and blockchain technology. Among the first batch of incubated projects, the program provides six selected projects with non-equity guidance, technical assistance, and scaling innovation support.

The non-equity model of NEAR HZN allows AI projects to fully focus on building and improving their products without the pressure of giving up ownership. This supportive environment is crucial for fostering innovation and has proven successful, as evidenced by previous alumni who have collectively raised over $20 million in external capital. The program begins a new round of financing every May and continues three times a year, aiming to incubate a steady stream of groundbreaking AI projects.

The NEAR HZN program currently supports six projects that cover key areas of the AI x Web3 stack, including data, computing resources, model networks, and payment infrastructure. These programs complement NEAR's collaboration with other AI-focused projects, which are building networks in areas such as AI consumer applications and agent infrastructure, and expand AI through NEAR's data availability (DA) layer.

By addressing all aspects of AI architecture within the Web3 space, NEAR positions itself as the preferred blockchain for developing AI applications. Its comprehensive support system (, from incubation programs to cutting-edge technological infrastructure ), demonstrates NEAR's commitment to fostering AI development on its platform, ultimately bridging the gap between AI and decentralized technology.

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