Since staking is a loan of your infrastructure or assets for blockchain payment, early analysis of new blockchains is key to deciding whether a new blockchain is worth staking or not.

      A new blockchain protocol, NEAR, just raised $350m in a round led by Tiger Global. NEAR also announced the launch of their own algostable (USN) with a deposit APY of “around 20%,” a clear reference to Anchor’s famous 20% deposit rate. This comes on the heels of a $150m raise just three months ago, and $21.6m in May 2020.

      Its cap table is a who’s who of crypto venture capitalists: a16z, Alameda Research, FTX Ventures, Dragonfly Capital, ParaFi Capital, and Three Arrows Capital (3ac), to name just a few.

      From a staking perspective, NEAR’s two recent rounds have eliminated NEAR’s project-abandonment risk. Its staking economics (currently ~12% nominal / 7% real) is secure, as well as attractive. However, as we have learned from experience, high staking yields in the absence of end-user demand just mean a high rate of inflation, a rapidly devaluing currency, and ultimate net losses for stakers. For stakers, it all comes down to end-user demand: Is the NEAR network providing a differentiated product with the potential for demand to sustainably exceed supply?

      Let’s have a look.

      NEAR’s Aspiration: the Proof-of-Stake Rail of Consumer dApps

      NEAR was founded by Illia Polosukhin, an ex-Google machine learning engineer, and Alexander Skidanov, a former researcher for OpenAI. Polosukhin was an early investor in 1inch and several other protocols, while Skidanov seems to be the key protocol engineer and author of the NightShade consensus. NEAR is a highly ambitious attempt to build the core decentralization layer of web3 apps, and its ambition is reflected in the inspiration for its name, The Singularity is Near (Ray Kurzweil’s thesis on human evolution hitting an exponential tipping point).

      As NEAR’s very readable white paper states:

      NEAR is a decentralized application platform with the potential to change how systems are designed, how applications are built and how the web itself works. 

      It is a complex technology with a simple goal — allow developers and entrepreneurs to easily and sustainably build applications which secure high value assets like money and identity while making them performant and usable enough for consumers to access.   

      To do this, NEAR is built from the ground up to deliver intuitive experiences for end users, scale capacity across millions of devices and provide developers with new and sustainable business models for their applications.

      While that probably sounds similar to the mission statements you read from other blockchains, NEAR’s focus on competing with web2 consumer apps makes it unusual. Most crypto protocols focus on financial use cases, because the typical new crypto user is focused much more on maximizing his own returns than any other activity. NEAR seems to reject this avenue as too crowded, and focus on a smaller pond with no sharks. In this respect, NEAR’s nearest competitor seems to be Avalanche (AVAX), which also has a strong focus on consumer-facing dapps, especially games.

      NEAR’s Key Attributes

      NEAR features a remix of other blockchains’ most successful recent innovations, plus a couple of their own.

      • Proof of Stake: NEAR, like Terra (and BNB, SOL, ADA, AVAX, DOT, ATOM, and post-Merge ETH) is a PoS blockchain.
      • Algostable rails: NEAR has stated an intention to launch its own algorithmic stablecoin, USN. Interestingly, this announcement came just four months after NEAR integrated with UST, suggesting that UST encountered technical interoperability issues with the NEAR blockchain, causing NEAR to build a native replacement.
        • NEAR’s decision to go with an algostable structure over a centralized stablecoin, despite algostables’ much higher execution risks, further underscores the fact that algostables, and not centralized stablecoins, are the stablecoins of crypto’s future for all purposes other than being a fiat onramp or offramp.
      • Hybrid consensus: Like DOT and SOL, NEAR utilizes so-called hybrid consensus, splitting block production from transaction finality. In plain English, hybrid-consensus models use randomized committees of nodes to execute transactions, instead of all nodes on the network, to minimize the amount of communication required between nodes to finalize a transaction.
      • Burned transaction fees: Like ETH post the London Fork, NEAR burns transaction fees over a certain threshold (1M tx/day to be exact). The network inflation rate is 5% minus burning. NEAR inflation would go to zero at around 1.4 billion transactions per day (15.4k tx/second).
      • Developer-centric economics: By default, 30% of all transaction fees are paid to the creator of the smart contract used. This is a powerful structural incentive to use the NEAR protocol, on top of NEAR’s massive, $800 million Ecosystem Fund grant pool.
      • New innovations: NEAR brings two consensus innovations: the Doomslug block finality mechanism (implemented) and the Nightshade dynamic sharding system (not yet implemented).

      Financials at a Glance

      NEAR’s VCs own ~22% of protocol emissions to date. Management (Core Team and Foundation) own another 25%. Over 4 years, central agents will be naturally diluted by ~30%, plus secondary market sales. This is similar to Terra, and in-line with the progressive decentralization consensus amongst younger crypto protocols today.

      Token distribution

      source: Messari.io

      Analysis

      Like other alt-L1s, NEAR is racing against the Ethereum Serenity clock to demonstrate that it’s differentiated enough to evolve faster than Ethereum can evolve itself. At the same time, it must build a scalable, interoperable-if-possible / sustainable-if-standalone ecosystem. NEAR’s $520m of funds raised, platinum-plated backing, sharding/consensus evolutions, and relatively more niche specialization give NEAR an attractive risk/reward profile.

      NEAR’s ambition, to become the base layer for on-chain consumer dapps, is also somewhat unique. As NEAR notes in their white paper, centralized networks will always be “orders of magnitude more efficient” than decentralized networks. This has led many blockchains to de-emphasize the consumer dapp space, as they feel users don’t truly value privacy and permissionlessness nearly as much as they think they do — hence L1s’ focus on financial applications (where the extractable value per record is much higher than it is for most consumer applications).

      However, that hasn’t stopped NEAR’s smart contract growth from growing exponentially, albeit off a small base.

      NightShade: Shard the Block, Not the Chain

      Most “ETH killers” have attacked ETH’s obvious weaknesses (cost-effectiveness & interoperability) via distinct tradeoffs. SOL delivers cheapness and speed at the cost of hypercentralization. AVAX created a three-chain model, with one chain optimized for each corner of the famous trilemma triangle. ATOM delivers interoperability. Terra, uniquely, decentralized the stablecoin layer, and married it with the Cosmos SDK for maximum interoperability (essential for a dominant cross-chain stablecoin) and high network centralization (for lowest transaction costs, also uniquely essential for a competitive stablecoin).

      NEAR offers an innovative consensus solution: the NightShade consensus. NightShade shards individual blocks, instead of would be the first major evolution at scale over the Tendermint, Avalanche, and Polkadot consensus mechanisms. AVAX and especially SOL have hit unexpected scaling problems with their own unsharded networks, significantly dampening their scalable-differentiable-runway relative to ETH and leaving the market hungry for a new alternative.

      Given that NightShade has not been implemented yet, the devil will be in the details. However, this is an asset worth watching.


      Staking at a Glance

      The number of global stakers registered its first week-on-week decline in many weeks with the market’s sharp drawdown. Cumulative net staking flow, a new metric tracking net incremental dollar staking value (separate from total staked dollar value), continued to grow, registering +1.3% week-on-week growth, amidst a very soft overall market.

      Many better-known protocols like Eth2.0, AVAX, and Cosmos saw continued inflows. The largest outflows came from Waves, still staggered from the implosion of their Neutrino algostable, and Mina, a privacy-focused protocol.


      Staking Intelligence

      Global Staking Research

      Ethereum L2 Arbitrum launches Nitro Devnet

      Nitro stack makes it easier for developers to deploy contracts on Arbitrum, and once the migration completes, users will be able to make faster/cheaper transactions.

      Read Medium Article

      Uniswap Labs launches venture unit to invest in web3 projects

      Uniswap Labs, the main developer of the Uniswap decentralized exchange protocol, has launched a new venture unit, focusing on startups building blockchain infrastructure, developer tools and consumer-facing applications.

      Read The Block Article

      Long Crypto Traders Feel Pain as Bitcoin’s Slide Leads to $430M in Liquidations

      Futures traders betting on the continued recovery of crypto prices were caught in the crosshairs after bitcoin (BTC) dropped to under $40,000 in the past 24 hours.

      Read Coindesk Article

      Fabric Ventures looks to close two web3 funds worth $245 million

      Fabric Ventures is in the final stages of completing an early-stage web3 fund and on track to close another focused on later-stage investments.

      Read The Block Article

      After exploit – Ronin announces $150M fundraise

      Sky Mavis, the parent company of Axie Infinity, raises $150m of funds from ventures to reimburse affected users of the Ronin bridge exploit.

      Read TechCrunch Article

      Staking Assets

      Largest cross-chain bridge Multichain announces staking

      Multichain (formerly Anyswap) released reward rules for the upcoming MULTI staking and veMULTI that will be launching shortly after the code audit.

      Read Medium Article

      Terra diversifies Reserve with Avalanche Treasury Swap

      Terra announced it will purchase $100m worth of AVAX as another UST reserve asset besides BTC. Terra’s CEO also tweeted about making UST mintable on Avalanche using AVAX.

      Read Twitter Thread

      Near Protocol Raises $350M

      It’s Near’s second nine-figure raise this year. A funding round led by hedge fund Tiger Global raised $350 million to “accelerate the decentralization of the NEAR ecosystem.”

      Read Coindesk Article

      Liquidity Mining 2.0 finally deployed on Polygon

      Polygon launched a KPI-based LM, allocating rewards to dApps/projects that meet the criteria. Check the FAQ page to see how to be eligible to receive reward distribution as a project builder.

      Read Twitter Thread

      Near Protocol is set to launch a stablecoin called USN

      On April 20, rumor has it Near will announce the launch of their native algorithmic stablecoin $USN in collaboration with other well-capitalized stablecoins.

      Read The Block Article

      Staking Providers

      pStake’s bAtom now whitelisted as collateral on Anchor Protocol

      Anchor Protocol users are now given the option to deposit bAtom as collateral to borrow UST. After LUNA, ETH & AVAX is ATOM now the fourth asset which can be used a collateral.

      Read Twitter Thread


      🔔 New Integration live on our Website

      Now you find the current Staking Rewards for Ambrosus:

      💰 Reward Rate: 16.15% 💪 Participating: 62.73% 📊 Staked Value: $5.7m

      To learn more, check out the Ambrosus asset profile: https://stakingrewards.com/earn/ambrosus/


      🔔 New Staking Mondays Episode

      We welcome Thom Ivy of Edgeware

      Watch the full episode here!

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