NEAR: A Pioneer in the Integration of Web3 and AI

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

However, when the team initiated their first AI project, they encountered significant challenges, particularly in incentivizing and coordinating the different contributors involved in building the AI models. It was this barrier that made them realize that blockchain technology could provide the perfect solution. By leveraging a high-performance blockchain with integrated crypto payments, they could facilitate the seamless exchange of essential data, computation, and AI models – a key feature for constructing an outstanding decentralized AI ecosystem. This insight prompted the critical shift from AI to blockchain, ultimately giving rise to the NEAR protocol.

What truly sets NEAR apart is its astonishing alignment with some of the most compelling areas 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 always manages to capture attention. This raises an intriguing question: Is NEAR merely riding the wave of trends, or is it 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 usability.

Nightshade Sharding 2.0: NEAR's Scalable Backbone

One of the key features of NEAR is its Nightshade sharding technology, which is a core component of the protocol's scalability strategy. 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 from a specific shard. Block producers and validators are assigned to specific shards, which means 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 validation. 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 provides the scalability, speed, and interoperability needed for AI projects that require handling 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 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 the unified multi-chain ecosystem. By implementing a series of innovative technologies—such as fast data availability (DA) layer, multi-party computation for secure cross-chain transactions (MPC), 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 demonstrated through its integration with Ethereum and the broader blockchain ecosystem. Aurora is a smart contract on NEAR, which is an Ethereum-compatible blockchain and ecosystem. The Aurora engine runtime supports 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 the Rainbow Bridge facilitates the transfer of tokens and data between Ethereum, NEAR, and Aurora, highlighting its commitment to interoperability.

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

The fastest data availability layer in the market

The DA layer of NEAR is managed by Nuffle Labs, 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 data inflows, ensuring quick publishing and querying of data.

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

uses ultra-fast finality layer to support other blockchain infrastructure.

According to the modular blockchain theory, NEAR has partnered with Eigenlayer to develop the ultra-fast final layer (SFFL). This innovative settlement layer significantly reduces transaction times and Rollup costs while inheriting the security and finality of NEAR and Ethereum through Eigenlayer. SFFL relies on NEAR DA to obtain transaction data, enabling nodes to efficiently access and verify transactions.

As SFFL supports cross-rollup transactions, it has boosted the trading volume of NEAR. With 70% of transaction fees being burned, this has created a deflationary effect on NEAR tokens. The collaboration with Swell further strengthens 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 Vision for Chain Abstraction

Modular blockchain architecture has achieved scalability, but it has also led to fragmentation, resulting in the fragmentation of liquidity, user experience, and interoperability. NEAR addresses these challenges by promoting 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 an email address, 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 needing to manage different wallets and mnemonic phrases.

The Appeal of NEAR

stablecoins and TVL growth

Since July 2023, the market capitalization 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 capitalization of all stablecoins on NEAR has experienced significant growth.

This growth is reflected in the total locked value of NEAR and its EVM-compatible sibling Aurora, ( TVL ). From July 2023 to now, the total TVL of NEAR and Aurora has soared from about $55 million to $230 million, a year-on-year increase of 3 times in dollar terms. After adjusting for the value of native tokens, the TVL calculated in NEAR has doubled, while the TVL calculated in AURORA has decreased by 40%.

DeFi on NEAR

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

Emerging categories and trends in the NEAR ecosystem

Re-staking

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

In terms of Aurora, although there are several popular EVM DApps, the most widely used application is still Aurora Plus, which is a platform designed for free transactions and to facilitate AURORA token staking.

NEAR's Commitment to Web3 AI Development

As part of a broader strategy to become a leading AI platform in the Web3 ecosystem, NEAR has made significant strides in developing and nurturing AI projects on its network. In addition to the efforts of the NEAR Research Labs, the protocol has launched the NEAR AI x Horizon (HZN) incubation program, which is specifically designed to support 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 guidance for scaling innovations.

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 to be successful, as demonstrated by previous alumni who have collectively raised over $20 million in external capital. The program starts a new round of funding 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 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 that are building networks in areas such as AI consumer applications and agent infrastructure, and are expanding AI through NEAR's data availability (DA) layer.

By addressing various 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 technological infrastructure) demonstrates NEAR's commitment to fostering AI development on its platform, ultimately bridging the gap between AI and decentralized technology.

Conclusion: NEAR as Blockchain and AI