WHY Did NEAR Suddenly Get Bought by Institutions? AI Layer One Narrative and On-Chain Data Verification

NEAR Protocol saw a round of price action in May 2026 that was clearly decoupled from mainstream crypto assets, prompting the market to reassess its underlying logic. According to Gate market data, as of May 27, 2026, NEAR’s price had surged from an early-May low of $1.24 to above $2.50, and its market cap had returned to above $3 billion. At the same time, both Bitcoin and Ethereum experienced large-scale capital outflows. CoinShares data shows that in the last week of May, global crypto funds recorded net outflows of $1.47 billion, marking a second consecutive week of net outflows, with total outflows of $2.54 billion over two weeks. Against this backdrop, NEAR stood out and became one of the main beneficiaries of institutional rotation in that period.

How is institutional capital rotating?

To judge the nature of a market cycle, the first thing to observe is the structural flow of capital. In late May, institutional capital movements showed three notable characteristics:

First, defensive withdrawal at the aggregate level. Crypto funds recorded net outflows for two consecutive weeks, totaling $2.54 billion. The U.S. market was the main source of outflows, indicating that global risk-averse sentiment continued to spread.

Second, selective adds at the structural level. While total outflows persisted, assets such as XRP, NEAR, and Solana were among the few that received net inflows. This suggests institutions were not exiting entirely; instead, they were switching themes and reallocating positions.

Third, narrative concentration at the thematic level. Institutional capital is accelerating toward privacy coins and AI tokens, and NEAR is listed as one of the representative beneficiary assets.

Along with the shift in capital flows, there has also been a deep change in the position structure. According to on-chain data tracking, venture capital firms such as a16z and Tiger Global Management collectively hold 14.38% of NEAR’s total supply—accumulated gradually since 2019. Grayscale’s AI-themed investment portfolio also includes assets such as NEAR, TAO, and RENDER, providing institutions with a diversified allocation channel within this track.

In addition, on-chain data shows that a whale opened a long position of 2.34 million NEAR (about $6.45 million) with 10x leverage within the past 10 hours, and has a plan to place orders to keep adding, indicating strong bullish confidence. Another whale wallet’s holdings show that its NEAR position is over $4.8 million, and together with core allocations to AI and infrastructure assets such as STRK and TON.

From the capital data, a basic inference can be drawn: institutional allocation to NEAR is not a short-term speculative move, but rather a medium- to long-term strategic layout based on the AI narrative. As a16z and Tiger Global—two of the most active technology investors in the primary market—continue to hold positions, their sustained holdings themselves implicitly endorse NEAR’s technology roadmap. However, concentrated institutional holdings also imply potential risks of concentrated selling, which is a variable that needs to be monitored continuously.

Where does NEAR’s AI narrative come from?

The most core driver behind NEAR’s rally this round is that the market is repricing its strategic positioning as an “AI Layer One.” To understand this positioning, it needs to be examined from three levels: founding DNA, technical architecture, and product rollout.

NEAR co-founder Illia Polosukhin is a figure of iconic significance in the AI field. He was one of the eight co-authors of the 2017 Transformer paper “Attention Is All You Need”—the Transformer architecture proposed in that paper is the underlying technical framework for all major large language models today, such as ChatGPT, Claude, and Gemini. This academic background gives NEAR the legitimacy of its AI narrative that differentiates it from other public chains—it is not about “pasting an AI label,” but embedding AI DNA into the founding team’s knowledge structure.

At the Buidl Asia conference in April 2026, Polosukhin publicly pointed out that NEAR Protocol started as an AI project, and only later developed blockchain infrastructure to facilitate participation and compensation allocation for data collection and AI model training. He further argued that there is a key mismatch between current blockchain infrastructure and the needs of AI agents managing individuals’ personal finances. Traditional blockchains are designed around the principle of “fully transparent transactions,” but when AI agents execute asset transfers, DeFi investments, and position management on behalf of users, publicly visible wallet activity and transaction history create unacceptable security and privacy loopholes.

From the perspective of technical architecture, NEAR uses Nightshade sharding as its core, dividing the network state into multiple parallel processing shard chains. In May 2026, NEAR achieved the publicly verifiable milestone of 1 million TPS shards, driven by the Nightshade sharding architecture. In terms of network activity, NEAR recorded about 838,000 daily active addresses and about 1.7 million daily transactions, placing it alongside BNB Chain in the Layer 1 segment, second only to Tron. The dynamic re-sharding upgrade planned for the 2026 roadmap will go live in June, enabling the network to automatically expand the number of shards based on demand, realizing self-expansion capability.

On the product side, Near.com, the super app, was officially launched on February 23, 2026. It integrated cross-chain exchange, privacy tools, smart contract management, and AI capabilities. It supports managing multi-chain assets with a single account and enables privacy-preserving transactions across more than 35 chains. NEAR AI Cloud and Private Chat tools have been integrated into applications such as Brave Nightly, serving a broad user base. In late May, it launched Confidential Intents based on TEE bridges and privacy sharding, ensuring privacy protection for cross-chain transfer routing paths, counterparties, and economic relationships. NEAR’s official data shows that nearly half of Swap transaction volume has adopted privacy routing.

As for protocol revenue, NEAR generated approximately $15.6 million in protocol revenue in the first four months of 2026. Analysts expect full-year revenue to be between $40 million and $60 million. NEAR Intents’ cumulative cross-chain transaction volume has already exceeded $10 billion. Of that, $2.15 billion was recorded in the past 30 days, completed by more than 540,000 independent addresses.

NEAR’s AI narrative has strong “technical density” support—it is not like some projects that rely only on slogan-style marketing. Instead, it has a concrete product matrix (AI Cloud, Confidential Intents, Near.com) and verifiable technical progress (sharding expansion, privacy feature rollout, revenue growth) as an evidence chain for narrative implementation. However, it should be noted that there is still a significant conversion gap between “AI-friendly infrastructure” and “mass adoption of AI agents.” This depends on the pace of development across the entire AI agent economy track.

Compared with the competitive landscape of Solana and Sui

NEAR’s AI Layer One positioning does not operate in a vacuum. In the Layer 1 space, Solana and Sui are the two competitors most often used for comparison. Together, the three represent three different technical paths and market positioning.

On-chain data comparison

Looking at key indicators of on-chain activity, in the first half of 2026 the three public chains showed distinctly different trends:

• Solana: Daily active addresses of roughly 2.03 million to 2.89 million. May data shows its on-chain daily active addresses fell sharply from February’s peak of 5.01 million by about 42%, reaching the lowest level in four months. DeFi total value locked (TVL) is also under pressure.
• NEAR: Current market cap is about $3.57 billion. Daily active addresses are about 838,000, and daily transaction volume is about 1.7 million. Although its absolute user base is smaller than Solana’s, its on-chain activity and transaction volume are both continuously expanding.
• Sui: Monthly stablecoin transaction volume exceeds $100 billion. The number of monthly active developers increased by 219% year over year, and there are more than 500 active projects in its ecosystem.

Differences in technical route and strategic positioning

The core differences among the three public chains can be distinguished across the following dimensions:

| Comparison Dimension | NEAR | Solana | Sui | | --- | --- | --- | --- | | Core Technology | Nightshade dynamic sharding | Proof of History + Firedancer client | Object-centric parallel execution + Move language | | Confirmation Time | About 1 second | About 0.4 seconds | About 0.4–0.5 seconds | | Strategic Positioning | AI-native infrastructure + cross-chain intents | High-frequency DeFi + payments + consumer | Gaming + payments + institutional products | | Privacy Capability | Confidential Intents/Payments live | Pseudo-anonymous (public by default) | In the roadmap stage, still under development | | Developer Ecosystem | Over 1,700 active developers, over 800 projects | About 17,708 active developers, 83% annual growth | 219% annual developer growth | | Institutional Products | Grayscale trust, Bitwise ETP | Spot ETFs (multiple), CME futures | CME futures, Canary/Grayscale spot ETFs |

Developer data sources: NEAR has over 1,700 active developers and over 800 projects. NEAR has more than 1,200 monthly active developers. Solana and Sui data are compiled from various publicly available documents and third-party data platforms.

The logic of differentiated competition

From a strategic positioning standpoint, the competition among the three is no longer a homogeneous race of “who is faster and who is cheaper.” It is shifting toward differentiation:

• NEAR’s moat lies in the completeness of its AI-native narrative and its early-mover advantage in the privacy execution layer. Polosukhin’s academic background, the Nightshade sharding architecture’s adaptability to AI agent workloads, and the already deployed Confidential Intents feature form a combination that other public chains cannot easily replicate in the short term.
• Solana’s advantage is scale—its massive user base, mature DeFi ecosystem, and a matrix of institutional-grade financial products give it overwhelming advantages in liquidity depth. However, the recent significant drop in on-chain activity is worth watching closely.
• Sui’s breakthrough is developer growth—its 219% year-over-year growth makes it one of the fastest-growing public chains, and the security features of the Move language have migration appeal for teams in the Solidity ecosystem.

The three public chains have not formed a zero-sum “winner takes all” battle. Instead, they have built advantages in three differentiated tracks: AI agents, high-frequency trading, and payment settlement. The core competitive pressure NEAR faces is not direct crushing from technical metrics, but periodic fluctuations in narrative hype across the entire track—if the AI agent economy cannot deliver as expected, NEAR’s narrative premium will face re-evaluation.

Are the drivers of the rally facts or sentiment?

The sustainability of any rally depends on whether its underlying drivers come from fundamental improvements or sentiment-driven speculation. In NEAR’s rally this round, there are both types of factors:

Fundamental support factors:

• In terms of tokenomics, the network upgrade completed in October 2025 reduced the maximum annual inflation rate from 5% to about 2.5%. Although early community votes did not meet the threshold, the upgrade was ultimately successfully executed on October 30, 2025. It is expected to reduce the number of newly minted tokens by nearly 60 million per year.
• In terms of ecosystem data, NEAR Intents’ cross-chain transaction volume has surpassed $10 billion. Protocol revenue reached $15.6 million in the first four months of 2026. Analysts expect full-year revenue to grow to between $40 million and $60 million.
• In terms of institutional access, Bitwise submitted a listing application for a spot NEAR ETF to the SEC in May 2025. Grayscale also submitted an S-1 filing in January 2026 and plans to convert the Grayscale Near Trust into a spot NEAR ETF, with the code GSNR.
• In terms of technology rollout, key features such as Confidential Intents and Confidential Payments have transitioned from the roadmap to usable products, and have been integrated with USDC to support the AI Agent Market.

Sentiment-driven factors:

• In late May, Arthur Hayes, co-founder of BitMEX, publicly posted that NEAR should be on the list of crypto assets to focus on, explicitly stating that NEAR has the potential to achieve about 20x growth by 2027.
• Nvidia’s earnings boosted the AI sector overall, significantly increasing the market’s risk appetite for AI-themed assets.
• NEAR’s 24-hour trading volume surged at one point. When the price broke through key resistance levels, short-squeeze pressure was triggered. According to media reports, this rally led to the liquidation of over $9.85 million worth of short positions, and buyback activity further pushed prices higher.

Conclusion

The drivers behind NEAR’s rally this round come from a combination of three factors: proactive institutional allocation, market recognition of the AI Layer One narrative, and supply-side improvement resulting from optimized tokenomics. Unlike the “Ethereum killer” narrative label of the 2021 cycle, NEAR’s current strategic positioning is more focused. It is no longer trying to become a competitor to a general-purpose Layer 1. Instead, it is building a differentiated advantage in the niche AI agent economy track.

Based on on-chain data, NEAR’s activity, protocol revenue, and ecosystem adoption are all trending upward, providing fundamental support for the narrative. But from a valuation perspective, the current price already reflects high growth expectations. Whether prices can keep rising afterward depends on the adoption rate of core products such as Confidential Intents, the actual effectiveness of the dynamic re-sharding upgrades, and the overall development pace of the AI agent track.

In competition with Solana and Sui, NEAR’s moat is not about absolute leadership in performance parameters, but about the integrity of its AI-native narrative and its early-mover advantage in the privacy execution layer. The sustainability of this advantage will be the key variable determining NEAR’s competitive ranking in the next cycle.