What Is NEAR Protocol (NEAR)?   

NEAR Protocol (NEAR) is a blockchain-based decentralized application platform to power the future open web and serves as a collective, a foundation, and a development platform. Users can create new coins, applications, and industries on this web without the need for a central authority to oversee the process. The platform executes apps that share a secure pool of resources; these applications use data and identities entirely controlled by users. 

Conventionally, centralized cloud servers run by tech giants host most applications. As a result, data becomes vulnerable to censorship, hacking, and manipulation. On the other hand, if the cloud that hosts these applications is managed by a global community that is open to everyone, the process becomes transparent. So, users can keep high-value assets such as money, identities, and digital assets on these platforms and use them safely without the need for an intermediary or platform interference.

Interestingly, there are three main barriers to mainstream decentralized applications—a small user base, a limited ability to scale them to accommodate a large community, and security challenges. According to the whitepaper, NEAR aims to progress from traditional decentralized application platforms by overcoming these difficulties. The platform proposes to solve the problem of scalability through sharding. Before getting into the specifics of what this entails, it's necessary to understand the three primary functions of blockchain nodes: processing transactions, relaying validated transactions and completed blocks to other nodes, and storing the network's state and history. Nodes are entities that issue and validate transactions. As network congestion increases with an increasing user base, these tasks become more difficult for nodes to complete. Sharding minimizes the computational load by separating or partitioning the network into "shards." This technique requires each node only to execute code relevant to its shard. Hence, this allows shards to parallelly compute and increase the network's capacity as the number of nodes grows.

Further, the most fundamental infrastructure in the NEAR Protocol is the core platform, which comprises a cloud of community-operated nodes. Smart contracts can be deployed to this cloud. Users can use the applications they power without needing permission from a central agency. Smart contracts are just like regular contracts. However, instead of being drafted on paper, these contracts run in the form of protocols on the blockchain. Applications can securely store their data, ranging from games to digital currency, on the platform.

The whitepaper highlights that a free-market-based system can align the objectives of users and developers alike. The NEAR Platform uses its native token NEAR to tie everything together and seamlessly align incentives. This token enables customers of these cloud resources to pay the service providers and ensure that these players act in good faith. The NEAR token serves the following key utilities:

• Pay processing fees and transaction charges to the platform for storing data.

• Participate in the staking procedure to run a validating node as part of the network.

• Engaging in governance processes to influence network resource allocations and technological design roadmap.

In short, the NEAR token facilitates the economic coordination of all network participants.

History of Near Protocol (NEAR)

NEAR Protocol was initially conceived as a machine learning platform founded by Illia Poloshukin and Alexander Skidanov in 2017. The project was initially called Near.ai. Polosukhin is a master's degree holder in applied math and computer sciences from Ukraine. He has worked as a software engineer for tech companies, including Google. Similarly, Alexander Skidanov holds a master's degree in computer sciences from Russia and worked as a techie in software giants like Microsoft. 

How Are New NEAR Created? 

The NEAR platform uses a proof-of-stake mechanism to validate transactions where validators run nodes to stake some of their tokens as a deposit to ensure good conduct. In a unique way of "threshold proof of stake," the platform conducts an auction of tokens and offers "seats" to validators. Based on the minimum number of tokens they hold from the auction, a given validator may play one of the possible roles: 

1. Block Producer

2. Chunk Producer

3. Hidden Validator

Periodically, validators are rewarded with NEAR tokens in proportion to the number of tokens staked by them. However, the protocol caps the minting of new tokens at 5% per annum.