It is a common opinion in the cryptocurrency community that cryptocurrencies, even the most popular ones such as Bitcoin and Ethereum have scalability problems. On average Bitcoin is able to deal with 7 transactions per second, while Ethereum can handle 15. To solve this most critical issue of cryptocurrency transactions, many solutions have been proposed. For instance, a quite promising one, sharding, is implemented by many blockchain projects such as Zilliqa, but to what extent sharding is successful is debatable.
Furthermore, whether it is “real” scalability is another topic of debate. Whereas some forms of sharding are capable of providing high transaction throughput, this is only true for a specific number of nodes, meaning that these forms do not scale well with any number of nodes and with the size of the network. Considering the possibility of further technological improvements, we can consider these to not be future-proof, but only temporary solutions.
Near Protocol is a decentralized computing platform with a mobile-first approach, aiming to solve the problem of scalability. This approach enables the network to have a more decentralized nature as this lowers the entry barrier since most cell-phones are able to become nodes. For instance, 53% of Bitcoin’s mining is controlled by three pools and efficient Bitcoin mining requires expensive machines and is usually conducted by ASICs. Even the second most used “mining” approach, proof of stake, has a centralization problem, as seen with networks such as EOS and Steemit. Enabling a lower entry barrier without any requirement of specialized hardware, Near Protocol is capable of having a truly decentralized network.
Proposed sharding implementations face a problem of security, because a small number of nodes working on each block is sufficient to undo, censor, reorder or tamper with transactions. In order to solve this issue and attain a higher level of security, the Near Protocol splits transaction verifications from block signing activities. Verifiers are able only to execute and validate transactions in their own shards and witnesses create global blocks. This means that a malicious actor has to corrupt all witnesses in the network in order to corrupt a block, not only witnesses who are responsible for a single block. Furthermore, since witnesses are rotated every minute, a higher degree of security is obtained.
The Near Protocol will use a native token once they have moved to their main-net which is planned to be launched in March 2019. This token will be used for any action taking place within the network.
No information on Near Protocol’s token metrics or how the team is planning to use the token sale proceeds are released at the time of writing.
CEO Alexander Skidanov: Skidanov has worked as a software developer at Microsoft and as the director of engineering at MemSQL.
Ilia Polosukhin: Polosukhin is a former Google employee.
Evgeny Kuzyakov: Kuzyakov was a senior software engineer at Facebook and a software engineer at Google.
Maksym Zavershynskyi: Zavershynskyi has worked as a software engineer at GlobalLogic and Google before joining to Near Protocol.
Vlad Grichina: Grichina was a software engineer at Google.
Below is a breakdown of the risks and growth potential of Near Protocol.
- Token metrics are not released at the time of writing, making it hard to evaluate the project’s financial worth and any return on investment. (-2)
- Although the mobile-first approach is a quite good and standard way to improve decentralization, it also means that farms of low-cost mobile devices capable of becoming a node, such as an extremely cheap cell phone, can be formed easily. (-2)
- The mobile-first approach is definitely a good idea to attack the centralization problem that many blockchains have. (+2)
- Decoupling of transaction verifications and block signing activities massively increases the network’s security. (+1.5)
- The team consists of many former Google, MemSQL, and Facebook employees. (+3)
- The test-net is planned to be launched in December and the main-net in March. This should keep the buying pressure high after the ICO is concluded and prevent an immediate dump upon the listing. (+2.5)
Many blockchains, including the most popular ones such as Bitcoin and Ethereum, suffer from a problem of scalability. The Near Protocol provides a viable solution with a mobile-first approach, tackling problems with scalability and centralization. Using a specific instantiation of sharding, separating transaction verifications from block signing activities allows them to achieve a higher level of network security. The team consists of many former Google and Facebook employees, which is definitely a good sign for the project. Also, two important milestones, the test-net launch in December and the main-net launch in March, are quite close and should keep the buying pressure high. Still, it is hard to evaluate the project’s financial worth and any return on investment in the absence of information on token metrics. Furthermore, the low entry barrier to becoming a node might make farms of low-cost mobile devices a possibility. Near Protocol receives a 5/10.