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What is the Near Protocol, and How Does it Work?


Near Protocol is a DApp platform and Ethereum competitor that places a premium on the developer and user convenience.

Near Protocol is a decentralized application (DApp) platform that focuses on usability among developers and users. As a competitor of Ethereum, NearProtocol is also smart-contract capable and a proof-of-stake (PoS) blockchain.

Near uses sharding technology to achieve scalability, a core aspect discussed later. The native token, NEAR, is used for transaction fees and storage on the Near crypto platform. Tokens can also be used for staking by NEAR tokenholders who wish to become transaction validators and help achieve network consensus.

Near was built by the NeaCollective and conceptualized as a community-run cloud computing platform designed to host decentralized applications. It was also built to be both developer and user-friendly, hence having features such as account names that are human-readable (instead of cryptographic wallet addresses).

How does Near Protocol work?

Decentralized applications have boomed in the crypto community, with DApps that run the gamut from games to financial services. However, it has also become apparent that scalability remains a problem in most blockchains.

The issue of scalability is common among blockchains, especially among older ones such as Bitcoin and Ethereum. The challenges are mainly brought about by blockchains’ difficulty in handling large numbers of transactions at fast speeds and manageable costs.

Projects such as Near seek to address this issue by building an entirely new blockchain using a different architecture. Near’s solution to the problem was implementing sharding.

By using the sharding strategy, Near is able to break up the blockchain into smaller more manageable segments. This reduces the burden on the network by reducing computational load, resulting in an increased throughput of transactions.

As mentioned earlier, the Near protocol uses a PoS system. Nodes interested in becoming transaction validators stake their NEAR tokens to be considered for participation. Token holders may also delegate their stake to their chosen validator if they do not wish to operate a node.

Generally, validators with larger stakes hold more influence in the consensus process. Validators on Near are chosen via an auction system and are chosen at every epoch, typically a 12-hour interval.

Meanwhile, DApps can be built on Near, just like on Ethereum. This is made possible by Near’s cloud infrastructure, which combines serverless computing and decentralized data storage. Near operates using hundreds of globally-located servers.

Unique features of Near Protocol

Sharding strategy

Nodes, in any blockchain, typically have three main functions: processing transactions, communicating valid transactions and completed blocks with each other and storing the history of the network’s transactions. As a network grows and becomes more congested, these functions become more difficult for the nodes to manage.


Nea uses a sharding approach that enables the network’s capacity to grow even as more nodes join. High network utilization results in network nodes dynamically splitting into multiple shards. Computing is then parallelized over these shards, reducing the computational load required of each node.

Through sharding, nodes are not required to run the entirety of the network’s code (which is the case with Bitcoin nodes), just the code relevant to its shards. Near Protocol assumes transactions will touch multiple shards, which is the default behavior for most smart contracts.

Focus on decentralization

To maintain true decentralization, a network should be permissionless, meaning that potential node operators should be able to join freely (as opposed to incentivizing pooling).

Near uses threshold proof-of-stake, a staking technique considered both fair and predictable. This prevents powerful validators from pooling and encourages wide-scale participation among network members. Read More at Cointelegraph CRYPTOCASTER® - DECENTRALIZED FREEDOM!

© 2022 Crypto Caster provides information. does not provide investment advice. Do your research before taking a market position on the purchase of cryptocurrency and other asset classes. Past performance of any asset is not indicative of future results. All rights reserved.


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