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Blockchain investment fund Dragonfly Capital announced its investment in the public chain project NEAR and elaborated on the reasons for the investment.
Written by: Haseeb Qureshi, Managing Partner of Dragonfly Capital Compiler: Perry Wang
Today we are happy to announce that Dragonfly Capital has made a major investment in the NEAR project and will join the NEAR validator advisory committee. We are currently running the third largest verification node on the NEAR mainnet. In the future, we will work closely with other members of the NEAR Verifier Advisory Committee to support NEAR’s next phase of mainnet adoption.
What is NEAR?
Glad to hear this question.
NEAR is the next generation smart contract platform. It is the platform closest to the vision of Ethereum 2.0-a sharded, scalable blockchain, but its launch is several years earlier than Ethereum 2.0.
Ethereum 1.0 cannot meet the growing demand for decentralized applications. This first became apparent when the digital collectible game CryscryKitties blocked the Ethereum network in 2017. Since then, the bull market in late 2020 has made Ethereum’s congestion problem worse. Gas fee has soared to an all-time high, and users are exhausted when interacting with smart contract-based applications.
The average gas price of Ethereum in the past 3 years. Credit: Etherscan
We know this is just the beginning-DeFi applications have not yet reached mainstream audiences, but Ethereum 1.0 has been overwhelmed. Despite these constraints, most DeFi applications (such as AMM and loan agreements) running on Ethereum today perform very well, but blockchain users and developers have higher requirements for public chains.
In 2018, this issue has been deeply rooted in the hearts of the people. At that time, the media dubbed other smart contract platforms “Ethereum Killer”.
This statement is too old-fashioned.
NEAR is not about killing Ethereum. At present, Ethereum will always be an indispensable part of the smart contract environment, and NEAR is more inclined to collaborate with and enhance it, just like another large city in the blockchain network layout.
So far in the smart contract landscape, only one city is important: Ethereum, you can think of it as New York City. All activities related to smart contracts are currently happening on Ethereum. But now it is very congested and calcified, and it needs some way to expand.
Broadly speaking, there are three ways to expand smart contracts. The first way is to bridge multiple heterogeneous blockchains together through “interoperability agreements” such as Polkadot or Cosmos. This is a bit like building a highway system across the country to connect small towns.
The second way is through the Rollup two-story plan. You can imagine it as building taller and taller skyscrapers on Ethereum-not arbitrarily expanding, but a short-term good way to relieve congestion pressure.
The third path is the path taken by NEAR: to build a new L1 public chain with complete governance and compatibility, and bridge it back to Ethereum. For example, NEAR is trying to build a second city: Chicago in the territory of smart contracts.
The metaphor is very vivid. Then let’s talk about the technical level.
Introduction to NEAR
There are two ways to greatly increase the throughput of blockchain transactions: vertical expansion and horizontal expansion.
Horizontal vs. vertical expansion. Credit: PudgyLogic
Vertical expansion means: In order to achieve higher throughput, we will require each node to be very powerful. This means that transaction processing can no longer be completed by ordinary users, but such a network can handle more calculations. Solana and DFINITY adopt this method, which means that in these two blockchains, ordinary users cannot verify the blockchain on commodity hardware.
This is not necessarily a bad thing! The vertically-expanded blockchain is very attractive for certain applications that require high performance and consistent global access status. However, they achieved this goal by sacrificing decentralization of validators.
The horizontal expansion takes a completely opposite path. Horizontal expansion divides the system into multiple shards. Each shard executes only a subset of the total workload on the blockchain, and each validator only needs to verify a single shard (and some “coordinator” shards). Since the work pressure of each shard is lower, more users are allowed to participate in the verification. This keeps the verification decentralized while still expanding the total throughput of the system.
This is exactly the planning vision of Ethereum 2.0: a smart contract platform with arbitrary shards. The only regret is that Ethereum 2.0 seems to take several years to come true: Ethereum founder Vitalik recently stated that the smart contract of Ethereum 2.0 will take too long to be fully realized. Ethereum only has only a few years of transitional time. Can first fully adopt the Rollup program.
NEAR uses the exact same implementation strategy as Ethereum 2.0: a horizontally sharded blockchain, which can support orders that are orders of magnitude higher per second. But unlike Ethereum 2.0, NEAR is currently online.
Let me give you a few figures to give you a taste of the expansion and improvement provided by NEAR: Each shard on the NEAR blockchain can individually process transactions 10 times more than Ethereum 1.0. The NEAR blockchain will eventually have more than 100 shards . This means that NEAR will eventually be able to process 1,000 times more transactions per second than Ethereum 1.0.
But scalability is currently a relatively easy promise. Many brand-new smart contract platforms claim their strong scalability, but users still gather on Ethereum. The real challenge is to create a first-class developer experience that surpasses Ethereum. And this is the highlight of NEAR.
Some of my best friends are developers!
NEAR has been friendly to developers along the way from scratch. Because of the WASM-based runtime, developers can get started and run in NEAR without learning a new programming language.
Are you a web developer? Just use Script (a close cousin of Typescript). Or if you like kernel debugging, just write a smart contract on Rust.
The NEAR contract is similar to a small piece of code of ERC-20, written in AssemblyScript. Credit: NEAR
Of course, most developers in the blockchain today already use Ethereum and Solidity tools. NEAR will soon start the EVM runtime in its virtual machine, which will allow the Solidity protocol to be deployed on NEAR without major changes. This also means that Ethereum tools (such as Ganache or Metamask) will be easily compatible with NEAR-EVM deployments.
But what about assets? We all know that the most popular crypto assets are currently active on Ethereum, whether it is Tether, USDC, or DeFi tokens. Soon you will be able to transfer these assets to NEAR through their trustless bridge- Rainbow Bridge . Almost all cross-chain bridges that currently exist rely on trusted asset custodians, but Rainbow Bridge will be completely decentralized, protected by encryption and incentives, rather than by trust.
There are many other outstanding user experience UX improvements in NEAR. For example, a human-readable address instead of a name like 2e75ed2ffaae39e859b6… can transfer your funds to dcp.near to us. All this is implemented directly at the protocol layer. You can even have multiple names with the same public key, or nest them in another account as a sub-account (such as haseb.dcp.near).
NEAR wallet asset transfer experience
NEAR’s design has many attractive places, such as the first implementation of EIP-1559 , contract layer developer rewards and storage pledges . But NEAR is still a very immature network, and we hope that NEAR can evolve and grow together with a new generation of encryption applications.
But the success of the L1 public chain requires more than just technology.
The great blockchain platform is ultimately built on its community. The DNA of NEAR comes from its founders: Illia and Alex, two highly talented and down-to-earth engineers, who have previously worked in Google and MemSQL respectively.
NEAR has built a world-class team and vibrant community by focusing on the UX of users and developers.
The growth of the NEAR developer ecosystem. Credit: Electric Capital
So far, NEAR has achieved good momentum. But it is still a young network, and there are many roadmaps to be delivered. Whether it will consolidate its position as the dominant smart contract platform in the next few years, let us wait and see.
If you want to know more about NEAR, you can join the NEAR community in Discord or Telegram .
Many thanks to Ashwin Ramachandran for his contribution to this article.