GUIDE: What is NEAR Protocol?

The origin: from artificial intelligence to blockchain

NEAR was born in 2018 at the hands of Illia Polosukhin and Alexander Skidanov. Polosukhin came from Google, where he was one of the co-authors of the scientific paper that introduced the Transformer architecture, the basis of today's large language models. Skidanov had worked on distributed databases, a field closely related to the problem of distributing work among many computers.

The project started as an artificial intelligence company teaching machines how to code. When trying to pay contributors in different countries, the founders clashed with the high fees and slowness of existing chains and decided to build their own, designed from day one to scale.

The mainnet launched in phases in 2020 and token transfers were opened in October of that year. Since then, development has been coordinated by the Switzerland-based NEAR Foundation, alongside several independent teams maintaining the software and ecosystem.

How NEAR works internally

NEAR uses Proof of Stake: validators lock NEAR tokens as collateral and, in exchange for correctly producing and verifying blocks, receive rewards. Any NEAR holder can delegate their coins to a validator and share in those rewards without setting up their own node.

Its most characteristic feature is Nightshade, its sharding system. Instead of all validators processing all transactions, the network is divided into several shards working in parallel, and each block collects the chunks produced by each one. This way, total capacity can grow by adding shards, instead of requiring increasingly powerful computers.

Another practical difference is accounts. Instead of long hexadecimal addresses, in NEAR you can have a readable account name, such as "maria.near", and assign it several keys with different permissions. This makes it easier to recover access, grant limited permissions to an app and, in general, for someone without technical knowledge to use the network.

Smart contracts are written primarily in Rust or JavaScript and run on WebAssembly. To attract Ethereum developers, there is also Aurora, an environment compatible with the Ethereum Virtual Machine that runs on top of NEAR.

What is NEAR used for and what is the NEAR token

The NEAR token is used to pay network fees, for the staking that keeps it secure, and to reserve the storage space occupied by contracts and accounts. A portion of each fee is burned and another goes to the contract that generated the activity, rewarding developers of popular applications.

In recent years NEAR has positioned itself in two areas: so-called chain abstraction, which allows controlling assets from other networks like Bitcoin or Ethereum from a NEAR account, and decentralized artificial intelligence, a natural fit given the founders' background.

As an investment, NEAR is a volatile asset that competes with many other high-performance chains, such as Solana or Avalanche, for developers and users. Its technology is well-regarded, but its share of activity is lower than that of the largest networks. Invest only what you can afford to lose and store significant balances in your own wallet.