NEAR protocol is a scalable smart contract platform that supports decentralized applications of almost any kind. Its token, NEAR, can be used to pay for transaction fees and storage as well as for staking by token holders who participate in achieving network consensus as transaction validators.
The recent development fund raised in October 2021 for NEAR ecosystem totals $800M. Proximity Labs, a newly formed DeFi DAO, aims to distribute nearly 30% of the fund, nearly 40M NEAR tokens over the next four years on NEAR’s DeFi sector.
Data from Footprint shows the total value locked (TVL) of NEAR’s DeFi surpassing $140M ($160M as of 15 Nov 2021) after a 20% boost within a day after news of the fund was released. The native token, NEAR, also hit an all-time high of $12.3 on the next day.
Footprint Analytics: TVL of NEAR
NEAR: A sharded, developer-friendly, proof-of-stake public blockchain
NEAR’ s mainnet went live in April 2020. The protocol is a blockchain network designed to provide a user-friendly environment for decentralized applications with greater capacity, higher throughput, and better compatibility with other chains. End-users and developers can easily create their own scalable, sustainable blockchain-based applications using NEAR’s development suite.
NEAR aims to achieve 100,000 TPS at 1 million nodes per second by introducing the elements such as:
- Nightshade: the protocol that addresses sharding issues including state validity and data availability
- Doomslug: the blockchain generation mechanism
- Rainbow Bridge: the connection that facilitates the project’s interoperability with Ethereum
NEAR uses the Proof of Stake (PoS) system as its consensus mechanism. With PoS, nodes that can become transaction validators must stake their NEAR tokens to be considered for participation.
According to Footprint, NEAR has received two rounds of fundraising—$21.6M in May 2020 and $30M in August 2020—from venture capital firms, such as Coinbase Ventures, Andreessen Horowitz (a16z), Blockchange Ventures, and Pantera Capital.
Native DeFi of the NEAR Ecosystem
With the launch of the Rainbow Bridge and other core components, NEAR has begun to establish its native DeFi sector. The following two projects are now live on NEAR.
Ref.finance is a native NEAR AMM as well as the first DeFi platform of the NEAR ecosystem designed for swapping, farming, and staking. Leveraging NEAR’s 1-2 second finality, low costs, as well as its user-friendly and interoperable infrastructure, Ref.finance’s TVL surpassed $110M just two months since its inception in August 2021.
Interface of Ref.finance
Liquid staking: Metapool supporting NEAR’s POS network
Users can stake their NEAR tokens through Metapool and receive the same equivalent of stNEAR tokens in return. This makes them validators of the NEAR POS network. The more stNEAR tokens held, the more stNEAR are rewarded, with a 10% APY according to the Metapool website.
Metapool was launched in September 2021, currently at the early stage of development.
- OysterPack, a liquid staking platform, is building several tools to further unlock liquidity for DeFi on NEAR.
- Project Cheddar will provide a loyalty token that rewards users of dApps in the NEAR ecosystem through its partnership or integrations with other projects.
- Liquality, the non-custodial and multi-chain wallet, makes it possible for atomic swap between cryptocurrencies such as BTC, ETH, NEAR, and others.
- NEAR’s oracles will be powered by Flux Protocol and Band Protocol. Both of them bring price feed not only on-chain data across existing oracles but also off-chain data including sports and weather, which makes the NEAR blockchain more variable.
From the data above, NEAR’s DeFi is still at an early stage after an 18-month infrastructure construction. Being fast, cost-efficient, and user-friendly, NEAR offers opportunities for new protocols, applications, and experiments. Some of the possible ways to participate in the NEAR network include becoming a POS validator by staking NEAR and earning rewards.
Maxine Smith is a Singapore based crypto writer.
Author’s note: The above content above is for reference only and does not constitute investment advice. If you spot any errors, feedback is welcome.