The smart contract, introduced by Ethereum in 2015, brought greater functionality to blockchain technology. However, Ethereum has experienced limitations caused by what founder Vitalik Buterin refers to as the blockchain trilemma: the challenge of finding a balance between centralization, security, and scalability.
A number of Layer-1 blockchains – which validate transactions without needing another network – have emerged to address these limitations. One is the NEAR protocol. Launched in 2020, NEAR has gained traction by offering fast transactions (up to 100,000 per second once it’s fully upgraded) and gas fees costing a fraction of a cent. This scalability has helped it attract 1,700 developers and raise over $500 million from leading VCs including Andreessen Horowitz, Pantera Capital, and Electric Capital.
Before we explore some of the projects built on the protocol, let’s briefly review its NEP-141 token standard.
The NEP-141 token standard
NEP-21 was the first NEAR fungible token standard. It was created using the ERC-20 standard for tokens issued on the Ethereum blockchain. But NEP-21 experienced many challenges common to ERC-20, such as the loss of funds during transactions involving tokens sent to smart contracts that aren’t compatible with the standard.
The NEAR community learned from these mistakes and created a new standard called NEP-141 which is more efficient and cheaper than its predecessor while remaining aligned with the NEAR protocol and its vision. Examples of the tokens issued on NEP-141 are Aurora and REF. The former is the governance token for the Aurora network, while the latter serves to govern Ref Finance, a decentralized exchange built on NEAR.
Aurora, Orderly, and Sweatcoin: NEAR projects leading the way
To give you an idea of the types of projects the NEAR Protocol can support, here’s an overview of three of the most successful to date.
Aurora, an EVM on the NEAR protocol
Launched in May 2021, the Aurora network executes Ethereum smart contracts on NEAR. Aurora is EVM- compatible, meaning it’s compatible with the Ethereum Virtual Machine, the software program which runs smart contracts and updates the state of the Ethereum blockchain. That means developers can write smart contracts in Solidity, the programming language created for Ethereum, and deploy them on the more scalable NEAR Protocol. They can also easily migrate decentralized apps (DApps) currently running on Ethereum.
The AuroraDAO, a decentralized autonomous organization, controls the network. Members of the DAO include Aurora Labs (its developer), investors, and partners. Holders of the Aurora native token can also contribute to governance.
As of November 16th, 2022, Aurora has $79.55 million total value locked, a measure of the value of crypto assets deposited on the network. Among the most popular Aurora projects are Bastion, a lending protocol and stableswap, and Trisolaris, a decentralized exchange (DEX).
Orderly Network enables DeFi composability
Orderly Network is a DEX and modular ecosystem aiming to provide a crypto trading experience comparable to mainstream financial exchanges.
Orderly has built an on-chain order book and settlement mechanism which delivers execution to the same standard as a traditional exchange, offering low latency and low fees. The platform also features a risk engine, a matching engine, and shared asset pools, and it provides deep liquidity by partnering with market makers such as Kronos Research. Dapps built on Orderly can offer a broad range of financial services including lending and borrowing, spot and margin trading, and derivatives like perpetual swaps.
In June, Orderly raised $20 million from VCs including Pantera Capital and Dragonfly Capital. Earlier this month, Orderly also obtained an investment from Laser Digital, the crypto subsidiary of Japanese banking giant Nomura, via an agreement for future tokens.
Sweatcoin: earn crypto for walking
Sweatcoin works like any other fitness tracker: you download the free app to your smartphone, and it tracks how many steps you take each day. However, it rewards activity in crypto, allowing users to earn 0.95 sweatcoins for every 1,000 steps. Users can redeem sweatcoins with retailers such as Audible and Headspace on the app’s marketplace or donate to a range of good causes. Alternatively, they can exchange them for SWEAT, Sweatcoin’s native token issued on the NEAR Protocol, which can be staked.
Sweatcoin has registered more than 120 million users and paid out 28 billion sweatcoins. According to Apptopia, it was the most downloaded fitness app in the first half of 2022. Sweatcoin also raised funds over the summer, securing $13 million from investors including Electric Capital and Spartan Capital.
To provide a broader picture of the NEAR ecosystem, here’s a brief introduction to several other DApps built on it:
- Aurigami is the second-largest lending protocol on Aurora. It currently pays APYs ranging from 3% to 35% on various crypto assets including Ether and the USDC and USDT stablecoins. It has unlocked $11.1 million liquidity as of November 16th, 2022, and raised $12 million in July.
- Launched in March, Burrow was the first lending protocol on NEAR. While similar to other lending protocols, it focuses on providing a market for interest-bearing assets like stNEAR and stETH (liquid staking tokens representing the amount of the underlying asset staked elsewhere).
- As mentioned earlier, Ref Finance is a DEX aiming to become a one-stop shop for decentralized finance (DeFi) on the NEAR Protocol. It offers users a range of DeFi tools including a lending protocol and an asset issuer. Ref Finance raised $4.8 million at the start of the year.
- Pagoda is a platform providing tools to build, deploy and grow a DApp on NEAR. It was founded by the primary contributors to the core protocol. Its first product was Simple Nightshade, an upgrade designed to improve NEAR’s scalability.
Learn more about institutional support for the NEAR network and how a qualified custodian can meet your needs.