What is NEAR Protocol?

NEAR Protocol is a public Proof-of-Stake (PoS) blockchain that aims to bring DeFi to the masses with low transfer fees and fast transactions.

Its consensus mechanism is Proof-of-Stake and it uses sharding technology to achieve speed and scalability. NEAR also provides a bridge and scaling solution for the Ethereum blockchain. NEAR Protocol uses PoS consensus to secure and validate transactions on the blockchain. Validators earn NEAR Token rewards for producing new blocks in the form of a static inflation rate of about 4.5% each year.

What Does Decentralization Mean in Crypto?

In blockchain, decentralization refers to the transfer of control and decision-making from a centralized entity (individual, organization, or group thereof) to a distributed network.

However, Some blockchains use Proof of Work mechanism and their mining and mining pool system allows single groups to own large portions of the computing power on the network. Some blockchains use different systems to verify transactions that promote decentralization, such as sharding and proof of stake.

What is Decentralized Staking ?

DeFi staking involves locking one's crypto tokens into a smart contract in an effort to earn more of those tokens in return. Consider it the decentralized equivalent of putting your money in a bank fixed deposit.

Proof of Stake (PoS) involves network participants “staking,” or locking up their crypto assets, in exchange for becoming validators of the blockchain. Validators are randomly selected by the network to verify the blockchain. PoS validators are similar to PoW miners, but instead of work, their “stake” allows them to validate the network.

Validators make themselves available by staking their cryptocurrency and then they are randomly selected to propose a block. The proposed block needs to be attested by a majority of the other validators. Validators profit by both proposing a block as well as attesting to the validity of others’ proposed blocks.

With a proof-of-stake system, the more coins you have, the more voting power you have, and those with the coins are also the ones earning the new coins from staking. Since they don’t need to expend resources to stake, they can simply increase their overall staking amount as they earn ongoing coins from staking rewards, and exponentially grow their influence on the network over time, forever. Network dominance tends to lead to more network dominance, in other words.

Methodology

In this dashboard, I am going to analyze NEAR Protocol in terms of decentralization. For this, I am going to analyze staking activity, block production process, distribution of $NEAR token among blockchain’s users, the activity of NEAR validators, and also the evolution of Nakamoto & GINI coefficiency on the NEAR blockchain.

If the power of the limited number of validators in a blockchain becomes too high, the blockchain becomes LESS decentralized because those limited number of validators can make important decisions for the chain. So, We are going to check the voting power of validators over time on NEAR to check their power distribution and realize how decentralized is the chain.

Moreover, We are going to check the block production activity on these chains. As u know, the more miners/block producers mean the more decentralized blockchain.

Also, I am going to check the evaluation of the Nakaomoto & GINI Coefficient on this chain over time. (Nakamoto Coefficient ascertains the number of nodes that must be compromised to affect the blockchain and obstruct it from functioning correctly. A higher Nakamoto measure indicates a more decentralized network. This means that the network has a large number of nodes.) (The Gini coefficient expresses a system's degree of inequality or, in the blockchain context, centralization. It therefore factors into arguments, like mine, that claims of blockchains' decentralization are bogus.)

Moreover, I am going to check the distribution of $NEAR holders by their balance over time. Because in my opinion, if $NEAR tokens are distributed through a wide number of users, this means the network is more decentralized. In other words, If the share of whales (users with high $NEAR balance) to the other users is less, it’s better for decentralization.

On the above charts, we can see clearly see the increasing volume of staked $NEAR on this chain over time. The share of staking actions is more than unstake transactions in the majority of days and especially, the volume of staked $NEAR and also the net staked $NEAR is getting more and more over time. this is a good point for NEAR protocol because it shows that this blockchain is getting more decentralized as time goes on.

The second half of the year 2021 was the highest peak of $NEAR staking beacuse the highest number of stake transactions and also new delegators have achieved on this protocol during this timespan. but the number of delegations and also new delegators is decreasing as time goes on.

The number of active staking pools on NEAR protocol is also increasing as time goes on. this is clearly a good point for the NEAR blockchain because the staked $NEAR is being distributed among various pools and as a result, this chain is becoming more decentralized. increasing number of pools (even with low share of staked $NEAR on them) shows the increasing decentralization of NEAR protocol.

Staking and Delegation

Based on the above charts, NEAR block producers is growing more and more over time especially with a high increasing spike on January 2022.

In the right chart, we can see how the process of block production on these chains is distributed among block producers. As we see, there are more and more block producers joining the process over time.

Also, there is almost equal share of produced blocks by various block producers on this chain which shows the decentralization of NEAR protocol because block process activity is well-distributed among many producers.

Block Production Activity

On the above charts, we can see the power share of validators on NEAR over time. we can see the power share of top 10 validators is decreasing over time.

During the first months, Top 10 NEAR validators had almost 70% of power in this chain but as time goes on and for example during the recent weeks, we can see their power has decreased dramatically and currently they have almost 50% of total distributed power in NEAR chain and the other 50% is distrubted among other NEAR validators.

So, the decreasing power of top validators and on the other hand, increasing power of other validators (such as Rank 50 - 100) is positive point for NEAR protocol which shows the increasing decentralization in this network over time.

Distribution of Power Between Validators

Nakamoto & GINI Coefficient

As mentioned above, Nakamoto Coefficient ascertains the number of nodes that must be compromised to affect the blockchain and obstruct it from functioning correctly. A higher Nakamoto measure indicates a more decentralized network. This means that the network has a large number of nodes.

The Gini coefficient expresses a system's degree of inequality or, in the blockchain context, centralization. It therefore factors into arguments, like mine, that claims of blockchains' decentralization are bogus. This index is one of the most popular and widely known measures of inequality, typically used to measure inequality of income or wealth in blockchain.

The Gini coefficient measures the inequality among values of a frequency distribution, such as the levels of income. A Gini coefficient of 0 reflects perfect equality, where all income or wealth values are the same, while a Gini coefficient of 1 (or 100%) reflects maximal inequality among values.

Based on the left chart, we can see the Nakamoto Coefficient (= The Decentralization) of NEAR protocol is kinda increasing slightly especially after those first volatile days before April 2021.

But, the growth rate of this metric is not so high which can not be very good for the “decentralization”.

On the other hand, GINI Index is increasing as time goes on and this can not be good point for NEAR chain because it shows the unequality among NEAR validators and reward receivers.

Native’s Token Balance of Users

Summary and Conclusion

• In terms of staking and delegation, The net staked $NEAR is increasing and also there are more staking pools becoming active on this chain which shows the increasing decentralization of NEAR as time goes on.
• NEAR block producers is growing more and more over time and this shows the more decentralization of this protocol over time because there are various number of block producers on this chain. Also, the share of block production activity is kinda equal and well-distributed among all producers which is another positive point of decentralization.
• The power of top 10 validators on NEAR is decreasing over time and this means this blockchain is becoming more decentralized as time goes on. on the other hand, we have seen increasing power of low-rated validators over time.
• the Nakamoto Coefficient (= The Decentralization) of NEAR protocol is kinda increasing slightly, especially after first volatile days before April 2021. But, the growth rate of this metric is not so high which can not be very good for the “Decentralization”.
• GINI Index on NEAR is also increasing dramatically over time and this can not be good news for NEAR chain because the higher GINI index shows the higher unequality of reward distribution among receivers.
• The share of users (whales) who are holding a high amount of $NEAR is decreasing over time. This means that this network is becoming more decentralized because there are less whales who can affect NEAR network which their sudden and high-volume activity.
• Totally, we can say NEAR protocol is becoming more decentralized over time.

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According to the above charts, the share of users (whales) who are holding high amounts of $NEAR tokens is decreasing over time and on the other hand, we can see the majority of $NEAR holders are users with less than 10 $NEAR in their wallet which their share is increasing more and more as time goes on. This means NEAR protocol is becoming more decentralized over time. the less share of whales = less number of users with high power = less number of users with can affect the network with their selling activity = more decentralized network.

NEAR’s Road to Decentralization

In November 2021, NEAR launched Simple Nightshade, the first step toward a fully sharded and secure blockchain. Most blockchains require every node (stakeholders maintaining the network) to store all of the chain’s information as well as process all of the network’s transactions for block production. While keeping the network secure, this can lead to extreme inefficiency and unbearable slowness, as it takes varying amounts of time for all nodes to keep themselves up to date. In turn, this can also make Web3 app building and scaling prohibitively expensive for some developers – a significant hurdle to mainstream adoption. 

NEAR’s Nightshade Sharding alleviates inefficiency and bottlenecks by partitioning a database into smaller pieces (shards). Nodes are divided into small groups responsible for one part of the chain’s data and are able to process transactions simultaneously. The inefficiency of one node verifying transactions in one block is supplanted by multiple nodes verifying transactions in multiple blocks. The result is exceptional speed and throughput on the chain.

While many new blockchains are developing layer 2 scaling solutions and offer theoretical throughput of thousands of transactions-per-second (TPS), their underlying infrastructures hit upper limits that ultimately place a throttle on their capabilities. NEAR’s Nightshade Sharding allows for linear scaling of throughput corresponding to the number of shards, laying the foundation to scale to demand as more and more users onboard the platform. In essence, the network will create more shards when the network is in high demand, and scale them back when demand drops, saving energy and resources. Ultimately, Nightshade gives NEAR the capability to accommodate mass consumer adoption, up to billions of users. 

NEAR is simultaneously working on a number of improvements on the protocol level that will build a secure, user-friendly, and scalable blockchain that can support mainstream usage and adoption. 

In December 2021, the NEAR Protocol team released the updated validator selection algorithm, paving the way for 100 validator nodes on Mainnet, which reduces the validators’ barrier to entry by bringing down the seat price from 3.6 million $NEAR to 67,000. This lowered seat price makes it easier for them to join the active validator set and to maintain their seats. Working against exclusivity, NEAR is committed to making these seats accessible to all demographics, socio-economic classes, and geo-locations.

To further lower validators’ barrier to entry and make this role more accessible to all, NEAR is introducing Chunk-Only Producers in mid-2022. Soon, more individuals will be able to contribute to the participants in the block producing process, which creates new opportunities to not only earn rewards but also enhance the NEAR ecosystem’s security 

The unique role of Chunk-Only Producers allows entities to be solely responsible for producing chunks (parts of the block from a shard) in one shard (a partition on the network). A truly democratizing moment for the NEAR community, this increases the potential for anyone to be an active participant in NEAR’s validator community, as producers need only validate one shard, which requires hardware as simple and attainable as a 4-Core CPU with 8 GB of RAM. 

Long gone are the images of massive buildings filled with rows of server racks so often associated with crypto. NEAR’s design renders obsolete the supercomputers needed to participate in blockchain validation. By removing this traditional high barrier to entry, the stage has been set for a new, large group of Chunk-Only Producers to emerge, dramatically increasing the number of validators on the NEAR network. The evolution of this new role translates to an overall increase in decentralization and security of the network.

Decentralization doesn’t stop at the NEAR blockchain’s underlying technology and infrastructure. NEAR is placing power into the hands of those who matter most – the end-users and developer community. Nearly two years ago, NEAR launched the Guild Community. Conceptualized as a reference to Roman times and Role-Playing Games (RPGs), where groups of builders, makers, and merchants connected to achieve common goals, Guilds have matured into communities that share common interests in supporting the Web3 ecosystem while maintaining a stunning amount of diversity on a global scale. 250+ Guilds exist today, all working to further their common goals, while pushing the shared mission to enhance and grow the NEAR ecosystem, as well as build a multi-chain Web 3 future. Guilds act as community vehicles in the NEAR Ecosystem. By supporting core protocol development, they add a vibrant collection of unique projects built atop its foundation. Knowing no bounds, NEAR Guilds exist across a melting pot of physical geographies and industries. Myriad interests and goals are represented, such as energy-efficient blockchains (Clean NFT), rewarding humans for their contributions to the world (Human), supporting social good initiatives in the Web3 space (Marma J), and so many more. Guilds, the heart of the many that contribute to this growing movement, have grown to become the bedrock of the human element in decentralizing the NEAR community.

In October 2021, the NEAR ecosystem announced a $800M grants fund to accelerate the development of its blockchain. Of this $800M, the largest allocation — $350M from Proximity Labs — will go towards developing the protocol’s DeFi sector. A DeFi DAO will govern how these funds are spent. These grant funds will be absolutely crucial in connecting with new networks for the multi-chain Web3 future.

On March 2, 2022, NEAR announced a new partnership with Multichain, the most popular bridging platform in the crypto space, which supports more than 1,600 tokens, hundreds of millions of dollars in daily transactions, and 540,000 users. As a bridge operator, Multichain has developed the technology for all blockchains to interoperate. With this partnership, NEAR’s user-friendly interfaces and tools are now extendable across the entire Web3 ecosystem. The partnership is a meaningful step forward towards the advancement of a global network of open Web 3 platforms. A decentralized future begins with the right infrastructure. NEAR is committed to enabling the tools to ground this vision in reality, right now.

Within the NEAR ecosystem, Guilds are communities that work towards common, specific goals, from the core protocol development to the projects being built atop it. The current roster of Guilds spans multiple continents and numerous industries. The Guild system’s growing capability, size, and diversity is crucial to the NEAR blockchain and ecosystem future development. Guilds are already helping decentralize NEAR’s operations and growth by enabling smaller teams of developers to work together to improve different aspects of the protocol. In other words, many small groups of NEAR community members, enthusiasts and entrepreneurs with a variety 0f professional experiences and skill sets, are collaborating on specific goals to build, maintain, and improve the NEAR ecosystem.

Source:

Bonus: Validators Analysis

In this part, firstly, you can see an overview of all NEAR validators and their stake/unstake stats in the below table (ordering by Net Staked $NEAR).

Then, You can use the provided parameter above in order to select your desirable “Validator” and see specific analysis and stats about it in the time frame between “From_Date” ~ “To_Date”.

==(First, I have tried to use drop_down parameter for this section but seems its not working (maybe because of many validators!), So, I have just used text parameter)==

NEAR Validators

01node.poolv1.near 08investinwomen_runbybisontrails.poolv1.near abl_pool.poolv1.near alex.poolv1.near anonymous.poolv1.near appload.poolv1.near artemis.poolv1.near ashert.poolv1.near astro-stakers.poolv1.near buildlinks.poolv1.near audit_one.poolv1.near binancestaking.poolv1.near bisontrails.poolv1.near blockdaemon.poolv1.near baziliknear.poolv1.near chorusone.poolv1.near cryptium.poolv1.near d1.poolv1.near dialecticstake.poolv1.near dsrvlabs.poolv1.near continue.poolv1.near electric.poolv1.near epic.poolv1.near erm.poolv1.near figment.poolv1.near fish.poolv1.near foundry.poolv1.near hashquark.poolv1.near hb436_pool.poolv1.near huobipool.poolv1.near ideocolabventures.poolv1.near jubi.poolv1.near kukulastake1.poolv1.near legends.poolv1.near lunanova.poolv1.near magic.poolv1.near masternode24.poolv1.near nearcrowd.poolv1.near sharpdarts.poolv1.near stakefish.poolv1.near staked.poolv1.near finoa.poolv1.near inotel.poolv1.near nc2.poolv1.near nodeasy.poolv1.near fresh.poolv1.near p2p-org.poolv1.near accomplice.poolv1.near aurora.poolv1.near bobby.poolv1.near certusone.poolv1.near dokiacapital.poolv1.near dragonfly.poolv1.near everstake.poolv1.near jazza.poolv1.near lux.poolv1.near moonlet.poolv1.near nearfans.poolv1.near rocknroll.poolv1.near sparkpool.poolv1.near stardust.poolv1.near thepassivetrust.poolv1.near tottenham_hotspur.poolv1.near trillian.poolv1.near zavodil.poolv1.near near8888.poolv1.near openshards.poolv1.near rekt.poolv1.near stakesabai.poolv1.near stakin.poolv1.near zkv_staketosupportprivacy.poolv1.near northernlights.poolv1.near cryptotribe.poolv1.near johnsmith.poolv1.near majlovesreg.poolv1.near okexpool.poolv1.near sweden.poolv1.near smart-stake.poolv1.near

Specific Validator (Parameter) Stats