While most blockchains are competing on transaction speed (TPS) or decentralization, NEAR Protocol (NEAR) is focused on solving one of the biggest problems hindering Web3 mass adoption: overly complex user experience (UX). With its strategic vision of “Chain Abstraction,” NEAR doesn’t just want to build a better blockchain; it wants to make the blockchain “invisible” to the end-user. So, what is NEAR Protocol? Coin60s will help you explore what NEAR Protocol is and how it works.
What is NEAR Protocol?
NEAR Protocol is a Layer-1 blockchain platform that uses a Proof-of-Stake (PoS) consensus mechanism, designed to be highly scalable, low-cost, and exceptionally developer- and user-friendly.
The project was founded by Illia Polosukhin and Alexander Skidanov, both talented former engineers from Google and MemSQL with deep expertise in machine learning and distributed systems.
NEAR’s vision is to become a “Blockchain Operating System” (B.O.S.)—a foundational layer that allows developers to build applications easily and enables users to interact with Web3 as seamlessly as they use regular Web2 applications.
What is NEAR Protocol’s Breakthrough Technology?
Operating Model: To provide an infinitely scalable and low-cost L1 platform, but with a focus on simplifying the experience for both builders and users.
Core Technology – Nightshade Sharding: This is NEAR’s unique scaling solution. Instead of requiring all validators to process every transaction, Nightshade breaks the network into “shards.” Each shard only processes a portion of the data and transactions, which are then aggregated. This allows the network to process transactions in parallel, significantly increasing throughput as more users join.
Competitive Advantages in User Experience:
- Human-Readable Accounts: Instead of long, complex wallet addresses (e.g., 0x…), users on NEAR have easy-to-remember named accounts (e.g., username.near).
- Native Account Abstraction: NEAR was one of the first blockchains to integrate Account Abstraction at the protocol level. This enables superior features like allowing users to create wallets and log in with an email, recover accounts through friends (social recovery), and even allowing dApps to pay gas fees on behalf of users.
Chain Abstraction: The Strategic Vision and Future of NEAR
This is the most important vision that is shaping NEAR’s future.
What is Chain Abstraction?
It is the idea of a multi-chain future where users do not need to care which blockchain they are interacting with (be it Ethereum, Aurora, Solana, etc.).
How it Works
A user with a single NEAR account could interact with applications across different blockchains without ever needing to switch networks or hold multiple types of tokens to pay for gas. NEAR would handle all that complexity in the background, creating a unified and seamless experience.
Its Importance
If successful, this vision would turn NEAR into the primary gateway for users entering the Web3 world, helping to solve the problems of liquidity fragmentation and the disjointed user experience of the current multi-chain world.
NEAR’s Tokenomics
Utility: The NEAR token is central to the ecosystem and is used to:
- Pay for transaction fees and data storage on the network.
- Stake to become a validator or delegate, participating in network security and earning rewards.
- Participate in on-chain governance.
Deflationary Mechanism: 70% of all transaction fees on the NEAR network are burned, while the remaining 30% are awarded to smart contract developers. This fee-burning mechanism creates deflationary pressure, which could make NEAR deflationary if network activity is high enough.
Inflation: NEAR has an annual inflation rate of about 5% to reward stakers, but this rate is partially offset by the fee-burning mechanism.
Read more: What is Ethereum Classic? Updated ETC review you shouldn’t miss in 2025
NEAR’s Ecosystem and Community
Ecosystem Growth: NEAR’s ecosystem is growing steadily with quality projects.
- DeFi: Core projects like Ref Finance (DEX), Burrow (Lending), and LiNEAR Protocol (Liquid Staking) form the financial foundation of the ecosystem.
- AI (Artificial Intelligence): Given the founders’ backgrounds, NEAR is making a strong push into the AI sector, positioning itself as the ideal blockchain platform for AI applications thanks to its ability to handle large amounts of data at a low cost.
Community: NEAR has a strong developer community, attracted by its user-centric vision and ease of development (supporting popular languages like Rust and JavaScript/TypeScript).
NEAR’s Founding Team and Major Investors
Team: Founders Illia Polosukhin and Alexander Skidanov have extremely impressive technical backgrounds. The teams at the NEAR Foundation and Pagoda (the core engineering company) also include many leading experts.
Investors: NEAR is backed by a list of the world’s leading venture capital (VC) funds, including Andreessen Horowitz (a16z), Pantera Capital, Electric Capital, Dragonfly Capital, and Coinbase Ventures, which brings it credibility and abundant financial resources.
What are the Pros and Cons of NEAR Protocol?
Advantages of NEAR Protocol (NEAR)
- Focus on Superior User Experience (UX): This is NEAR’s biggest and most distinct advantage. The project focuses on solving Web3’s greatest problem: complexity.
- Human-Readable Accounts: Users get easy-to-remember wallet addresses (e.g., username.near) instead of a long string of characters.
- Native Account Abstraction: This allows for features like logging in/creating a wallet with an email, social account recovery, and especially the ability for applications to pay gas fees for users, creating a seamless Web2-like experience.
- Breakthrough “Chain Abstraction” Vision: Instead of forcing users to switch between different blockchain networks, NEAR’s vision is to create an infrastructure layer that allows users to interact with applications on multiple chains (like Ethereum, L2s, etc.) with just a single NEAR account. If successful, this would be a game-changer, turning NEAR into the main gateway to the multi-chain world.
- Highly Scalable Sharding Technology: NEAR uses Nightshade Sharding technology, which allows the network to process transactions in parallel across multiple “shards.” In theory, this allows NEAR to scale almost infinitely and maintain low costs even with millions of users.
- World-Class Founding Team and Investors: NEAR’s founders and core engineers have strong technical backgrounds from top tech companies like Google. The project also has the backing of the world’s leading venture capital (VC) funds like Andreessen Horowitz (a16z), Pantera Capital, and Coinbase Ventures, which provides credibility and ample resources.
Limitations of NEAR Protocol (NEAR)
- Fierce Competition and the “Attention War”: This is the biggest limitation. NEAR must compete in an extremely crowded and aggressive Layer-1 market, with rivals that have larger network effects like Ethereum, Solana, and Avalanche, as well as Ethereum’s L2 ecosystem. Despite its good technology, NEAR sometimes struggles to generate hype and attract the attention of speculative capital compared to its rivals.
- Execution Challenge of a Grand Vision: The “Chain Abstraction” vision is extremely ambitious and technically complex. Building an infrastructure layer that can interact seamlessly and securely with multiple different blockchains is a massive challenge. Any delays or failures in execution would impact market confidence.
- dApp Ecosystem is Still in a Growth Phase: Although there are quality projects, the ecosystem of decentralized applications (dApps) on NEAR is still more modest and has a lower Total Value Locked (TVL) than its top competitors. It needs to attract more “killer dApps” to retain users.
- Complexity of the Token Economic Model: NEAR’s inflation model (to reward stakers) is partially offset by a fee-burning mechanism. Understanding when the network will become deflationary and how value truly accrues to the NEAR token can be more complex than other, simpler economic models.
Read more: What is Bitcoin Cash? Updated BCH review you shouldn’t miss in 2025
Should you invest in NEAR Protocol?
This is a complex question, and the answer depends on one’s belief in the long-term vision and risk appetite. This section provides an analytical framework, not financial advice.
Essentially, investing in NEAR is a bet on the philosophy that user experience (UX) will be the deciding factor in winning the race for mass adoption.
The investment thesis for NEAR becomes attractive if you believe in the following factors: First, you believe that complexity is the biggest barrier in Web3, and that NEAR’s “Chain Abstraction” vision and superior user experience are the right solutions to solve this problem. Second, you trust in the capabilities of the world-class founding team and the highly scalable sharding technology to successfully execute that ambitious vision.
However, investors must face significant risks and challenges. The biggest is the fierce competition from other Layer-1s and Ethereum’s Layer-2 ecosystem, rivals that are also working to improve their user experience. Furthermore, the “Chain Abstraction” vision is technically very complex, and NEAR’s ecosystem still needs more “killer apps” to retain users.
In summary, NEAR is a bet on a long-term strategy that focuses on usability rather than just competing on speed. Consider whether you believe in the most powerful blockchain, or the most user-friendly blockchain, and always Do Your Own Research (DYOR).
Conclusion
NEAR Protocol is a serious effort to make Web3 simple. With its powerful technology and unique “Chain Abstraction” vision, it is building a path for mainstream users to enter the decentralized world organically. NEAR’s success will be determined by whether it can turn this ambitious vision into a practical, seamless experience for millions of users.
Disclaimer: This article is for informational and analytical purposes only and should not be considered financial or investment advice. Always conduct your own research (DYOR) before making any investment decisions.