NEAR Protocol is a layer-1 blockchain designed for scalability and improved user experience. It's capable of quickly processing transactions while maintaining low fees. NEAR was founded in 2018 with a focus on blockchain technology, leveraging the founders' background in artificial intelligence.
What is NEAR
Here's how it works:
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Nightshade (Sharding Technology): NEAR uses Nightshade to divide the network into smaller sections, called shards. This allows multiple transactions to be processed simultaneously, significantly reducing fees and increasing transaction speed. Nightshade enables NEAR to achieve greater scalability and efficiency compared to, for example, Ethereum and Layer 2s, which handle transactions sequentially on a single chain. Although Ethereum is actively implementing its own version of sharding to improve scalability, NEAR's Nightshade is already operational.
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Consensus Mechanism: NEAR Protocol uses Thresholded Proof-of-Stake (TPoS) to keep its network secure. Validators stake NEAR tokens and take part in an auction to earn the right to process transactions. Validators are selected every 12 hours (an epoch) via an auction. The selection isn’t solely based on the amount staked but on the auction outcome. The threshold ensures no single validator or pool dominates the network. Even validators with smaller stakes can secure roles, promoting decentralization. If a validator misbehaves, they can lose their tokens through slashing, which helps keep the network safe.
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Ethereum Compatibility: NEAR has built Aurora, an Ethereum Virtual Machine (EVM) layer that allows Ethereum-based applications to run on its network. This makes transactions faster and cheaper compared to Ethereum while still supporting the same smart contracts and tools. Aurora helps developers move their apps to NEAR easily without major changes, improving scalability and cost efficiency.
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User Experience Improvements: In addition to complex blockchain addresses, NEAR introduced human-readable names to replace complicated wallet addresses.
In summary, NEAR Protocol combines high-speed, low-cost transactions with a user-friendly ecosystem.
Team of NEAR
Illia Polosukhin
Co-founder
Illia is co-founder of NEAR Protocol who currently serves as CEO of NEAR Foundation. Before NEAR, he worked at Google in AI research where he co-authored the landmark paper "Attention Is All You Need". This paper introduced the transformer model underpinning many of today's AI systems. His vision of an open web has guided NEAR's development from the beginning.
Alexander Skidanov
Co-founder
Aleksander co-founded NEAR Protocol with Illia Polosukhin in 2018. He began his career at Microsoft before joining MemSQL. As one of its early engineers, he played a crucial role in developing the core database engine. At NEAR, he focused on addressing blockchain scalability issues through innovative techniques like sharding.
NEAR review
Pros
Scalability Through Nightshade Sharding
NEAR’s Nightshade sharding enhances scalability by enabling parallel transaction processing across multiple shards. This keeps transactions fast and fees low, making it great for apps that need to process a lot of transactions quickly.
User Friendly
NEAR replaces complex cryptographic addresses with human-readable account names, making interactions more intuitive. Unlike traditional blockchain systems that require managing long hexadecimal strings, NEAR's account system allows you to create memorable names. For example, "john.near" or "mybusiness.near”.
Sustainability and Energy Efficiency
As a Proof-of-Stake (PoS) network, NEAR consumes minimal energy compared to Proof-of-Work (PoW) systems. It is carbon-neutral certified, using far less energy than Bitcoin.
Strong Funding
As of 2025, Near has raised $600+ million. It established regional hubs globally and support for multiple projects in their ecosystem.
Strategic Partnerships
NEAR Protocol established a strategic partnership with Zero1 Labs in 2024, focusing on decentralized artificial intelligence (DeAI) development. This collaboration aims to support early-stage developers through practical initiatives including beta tester recruitment, hackathons, product validation, and community-building activities.
Cons
Limited Adoption and TVL Decline
Despite its technical strengths, NEAR's Total Value Locked (TVL) saw a sharp decline during the 2022 bear market and has been slower to recover compared to competitors. As of February 2025, its TVL remains significantly lower than competitors' ($175M vs. Solana’s $10.5B).
Challenging Competitors
NEAR also faces tough competition from established Layer 1 blockchains like Ethereum (liquidity) and Solana (speed), in terms of user acquisition. It has difficulties with gaining market share.
Governance Challenges
NEAR Protocol struggled with governance. Even though the network grew to include millions of users, fewer and fewer people actually participated in voting. The main issue was that their original voting system gave everyone equal say regardless of their investment in the network, which didn't motivate people to stay involved. Community members were also frustrated because they couldn't see how funding decisions were made or how proposals were evaluated. Recognizing these problems, NEAR is now changing to a new system called "House of Stake" where voting power is tied to how many NEAR tokens you lock up and for how long. This new approach aims to reward people who are committed to the network's long-term success rather than treating all voters equally regardless of their stake.