Author: DFG Official Source: medium Translation: Shanooba, Golden Finance

NEAR has quickly become a leader in the increasingly integrated fields of Web3 and AI, but its roots in the field of artificial intelligence run deeper than many people realize. Interestingly, NEAR was not initially conceived as a blockchain project. One of its co-founders, Illia Polosukhin, embarked on this journey with a different goal in mind: to create an AI-driven enterprise. Polosukhin is one of Google's eight researchers who introduced the revolutionary Transformer model, a key architecture that supports today's most popular AI tools (such as OpenAI's ChatGPT), and he initially sought to advance AI in a different way.

However, during the initial AI project development, the team encountered significant challenges, especially in incentivizing and coordinating the different contributors to building AI models. It was this obstacle that made them realize: blockchain technology can provide the perfect solution. By leveraging a high-performance blockchain with integrated encryption payments, they can facilitate seamless exchange of fundamental data, computation, and AI models - a key feature in building an outstanding Decentralization AI ecosystem. This insight led to a critical shift from AI to blockchain, ultimately giving birth to what we now know as the NEAR protocol.

However, what truly sets NEAR apart is its astonishing alignment with some of the most compelling narratives in today's tech world. Whether the focus is on artificial intelligence, chain abstraction, achieving modularity through data availability, or scaling through Sharding, NEAR's name always comes up. This raises an interesting question: is NEAR simply following popular trends, or are they truly providing innovative products that enhance the blockchain experience?

To answer this question, we must delve deeper into NEAR's infrastructure.

Solving the scalability problem of Block chain: NEAR method

Scalability is a challenge facing blockchain networks, and people are exploring various solutions to meet the increasingly rising demand for fast and efficient transactions. Although some blockchains have already implemented second-layer scaling, sidechains, and state channels, these methods often involve trade-offs in terms of interoperability, composability, and usability.

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 the protocol. Sharding technology divides the blockchain state into smaller, more manageable parts, called 'Sharding', and each Sharding can independently process transactions. This design greatly improves the network's throughput without burdening any single Node with the responsibility of processing all transactions.

In the initial stage, NEAR implemented a design that divides each Block into 'blocks', with each block containing transactions specific to Sharding. Block producers and validators are assigned to specific Sharding, meaning they only need to process transactions related to their Sharding. This not only optimizes processing efficiency, but also enables NEAR to achieve a throughput of approximately 3,000 transactions per second (TPS) with the initial setting of four Sharding.

In the process of continuous development, NEAR is enhancing its system through stateless validation, allowing validators to verify transactions without storing the entire blockchain state. This innovation drops hardware requirements, further enhances accessibility, and achieves Decentralization of the network. In addition, NEAR is exploring the integration of zk-SNARKs (Zero-Knowledge Proof) and dynamic reSharding into its Sharding design, which can further improve scalability by achieving faster and more secure transaction verification. NEAR will expand to 10 Sharding by the end of the year, increasing network capacity by 50% to meet the increasing demand.

Nightshade Sharding of NEAR provides the scalability, speed, and interoperability needed to support AI projects that require processing large datasets and executing transactions quickly. The network's fast finality ensures that AI-driven applications can run in real time, making NEAR an ideal platform for developers looking to innovate in the Decentralization AI field.

NEAR's Block chain interoperability full-stack modular architecture

As the Block chain landscape becomes more and more decentralized, the demand for interoperability and seamless Cross-Chain Interaction is more important than ever. NEAR protocol recognizes this challenge and has built its platform as the driving force behind a unified multi-chain ecosystem. Through the implementation of a series of innovative technologies, such as the fast data availability (DA) layer, longer calculations (MPC) for secure Cross-Chain Interaction transactions, super-fast finality layer (SFFL), and chain abstraction, NEAR aims to provide a unified and user-friendly experience across multiple Block chains. Each of these components plays a crucial role in positioning NEAR as a top-tier interoperable Block chain.

Enhancing Cross-Chain Interaction Compatibility and Connectivity

NEAR's commitment to interoperability is further demonstrated through its integration with ETH and the broader blockchain ecosystem. Aurora is a Smart Contract on NEAR that is a compatible blockchain and ecosystem with ETH. Aurora's runtime engine supports seamless deployment of Solidity and Vyper Smart Contracts, enabling developers to leverage NEAR's powerful infrastructure while maintaining compatibility with ETH. NEAR is compatible with popular tools such as Metamask through NEAR Snap, while the Rainbow Bridge facilitates the transfer of tokens and data between ETH, NEAR, and Aurora, highlighting the commitment to interoperability.

In addition to maintaining interoperability with other ecosystems, NEAR also provides seamless access to assets through cross-chain interaction via re-staking. Allstake allows for the native re-staking of cross-chain interaction assets, creating a trustless decentralized ecosystem that contributes to the security of AVS. Built on the NEAR protocol, Allstake leverages liquidity from multiple ecosystems to create a seamless cross-chain experience.

The fastest data availability layer in the market

NEAR's DA layer is managed by Nuffle Labs (the behind-the-scenes team of NEAR's modular products), ensuring efficient access and processing of large amounts of data on the blockchain. Leveraging Nightshade, NEAR DA provides a powerful solution for aggregating ETH transactions and other high-volume projects. Unlike other DA solutions, NEAR's Consensus Mechanism maintains speed even under a heavy influx of data, ensuring fast data publishing and querying.

Overview of popular DA solutions:

With more and more blockchains using Zero-Knowledge Proof to achieve unified security of Cross-Chain Interaction, NEAR's DA provides easier and cheaper data queries and Settlement for dApps from multiple networks. In addition, NEAR DA ensures that Nodes remain synchronized even if operators are offline, adding an extra layer of reliability. This feature is not only beneficial for currently high-demand applications, but also makes NEAR a key participant in future Cross-Chain Interaction Settlements.

Providing support for other blockchain infrastructures with ultra-fast final layer.

Based on the theory of modular blockchain, NEAR and Eigenlayer have collaborated to develop the Super-Fast Final Layer (SFFL). This innovative settlement layer greatly reduces transaction time and Rollup costs, while inheriting the security and finality of both NEAR and Ethereum through Eigenlayer. SFFL relies on NEAR DA to obtain transaction data, allowing Nodes to efficiently access and verify transactions.

Due to the support of cross-rollup transactions by SFFL, it has boosted the volume of NEAR, and the deflation effect has been generated on NEAR Token due to 70% of transaction fees being burned. The collaboration with Swell further strengthens NEAR's position in the modular blockchain stack, as the latter has delegated a large amount of ETH to SFFL, bringing the vision of chain abstraction closer to reality.

Unifying Blockchain: NEAR's Vision for Chain Abstraction

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

NEAR's FastAuthSecret Key management system allows users to manage their NEAR accounts with email Address, simplifying account creation and recovery. The system also supports multiple Secret Keys for different functionalities, enhancing security and usability.

In addition, NEAR integrates MPC technology through chain signature to ensure the security of Cross-Chain Interaction transactions, allowing users to interact with multiple blockchains without managing different Wallets and seed phrases.

The Attraction of NEAR

Stablecoin and TVL rise

Since July 2023, the Stable Coin Market Cap of NEAR has remained relatively stable at around $75 million. However, the beginning of Q2 2024 marked an important turning point, as the Market Cap of all Stable Coins on NEAR experienced a significant rise.

This rise is reflected in the Total Value Locked (TVL) of NEAR and its EVM-compatible brother Aurora. From July 2023 to now, the total TVL of NEAR and Aurora has surged from about $55 million to $230 million, a threefold rise in dollar terms. Adjusting for the native Token value, the TVL calculated in NEAR has doubled, while the TVL calculated in AURORA has dropped by 40%. This indicates that the overall rise in TVL is mainly driven by the pump in NEAR's price, highlighting the positive sentiment of the market towards this network.

Decentralized Finance on NEAR

The landscape of Decentralized Finance on NEAR is currently dominated by two main platforms: Burrow and Ref Finance. The lending platform Burrow has seen a significant increase in activity due to its Stable Coin incentive lending program. Similarly, the Decentralized Exchange (DEX) Ref Finance has actively incentivized its Stable Coin mining pools, with the total volume recently surpassing 70 billion US dollars. These incentive measures are mainly funded by NEAR Tokens, which may play a key role in the surge of the Stable Coin Market Cap in 2024.

Emerging Categories and Trends in the NEAR Ecosystem

Stake again

Staking has become a new and rising category in the NEAR Decentralized Finance ecosystem, with platforms like Allstake contributing around $15 million to TVL. Although Liquidity staking is not typically included in TVL metrics, it remains the largest category with a locked value exceeding $280 million.

On the Aurora side, while there are several popular EVM DApps, the most widely used application is still Aurora Plus, which is a platform aimed at achieving free transactions and promoting AURORA Token stake.

NEAR's Commitment to Web3 Artificial Intelligence Development

As part of its broader strategy to become a leading AI platform in the Web3 ecosystem, NEAR has made significant progress in developing and nurturing AI projects on its network. In addition to the efforts of the NEAR Research Lab, the protocol has also launched the NEAR AI x Horizon (HZN) Incubation Program, which is specifically designed to support pioneering projects at the intersection of AI and blockchain technology. In the first batch of incubated projects, the program provides selected projects with non-equity guidance, technical assistance, and guidance to expand innovation.

NEAR HZN's equity-free model enables 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 demonstrated by several previous alumni who collectively raised over $20 million in external capital. The program starts a new round of financing every May, three times a year, and aims to incubate a steady stream of groundbreaking AI projects.

The NEAR HZN program currently supports six projects covering 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, agent infrastructure, and extending AI through NEAR's Data Availability (DA) layer.

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

Conclusion: NEAR's strategic positioning as a leader in the blockchain and artificial intelligence fields

NEAR protocol not only conforms to the trend of popular narratives, but also lays the foundation for the future of blockchain and artificial intelligence through its innovative and extensive infrastructure. By integrating a powerful data availability layer, cutting-edge execution layer, and zero-knowledge technology, NEAR has become an important part of the infrastructure, benefiting its ecosystem and the wider blockchain field.

NEAR is rooted in artificial intelligence and pivoting to blockchain, indicating a deep understanding of both fields. Its scalable and reliable infrastructure enables NEAR to refocus on artificial intelligence and have the necessary foundation to drive significant progress previously unattainable. With features like chain abstraction, NEAR simplifies multi-chain interaction, making it an ideal platform for seamless access to various blockchains and rapid transactions needed for artificial intelligence development.

Even in a fiercely competitive environment, NEAR always keeps its promises. With the help of co-founders' leadership, strategic partnerships, and dedicated R&D labs, NEAR is positioning itself as a true leader at the intersection of blockchain and artificial intelligence. This is not just about keeping up with the trend, but shaping the future of technology in a way that drives meaningful progress and adoption.