Introduction

NEAR Protocol is a decentralized platform that seeks to facilitate the development and deployment of dApps on its blockchain technology. More precisely, NEAR Protocol is a decentralized smart contract platform that focuses on creating a developer and user-friendly experience. 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 Proof-of-Stake (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. 

Token holders not interested in being a Validator can stake to a Validator’s staking pool and earn a portion of Token rewards too. This incentivizes Token holders to stay involved with the community and support Validators who are keeping the network running smoothly. 

One of the main aspects to be aware about the blockchains that use proof of stake is the decentralization. Decentralization is by far one of the most important factors in a crypto ecosystem. As you probably already figured out, the validation system in place might fail to honor this by progressively moving towards a more traditional centralized environment. Why and how could this happen?

• As it was briefly mentioned previously, validators are incentivized to hold more and more NEAR to guarantee a spot in the network for themselves.
• Users look at the voting power (= total staked NEAR) of a validator as a good indicator of who to trust and delegate their funds to. This is understandable and that's why there's a need to constantly educate the user base and promote smaller validators.

Methodology

In this dashboard we are gonna asses the state of governance on NEAR in terms of decentralization basing on a different metrics:

• Distribution of staking actions

• Distribution of staking by validators

• Power distribution by validator ranks

• Most common staking actions currently and over time

• Evolution of Nakamoto coefficient

If we take a look at the distribution of staking by validators, before the winter Meta, Aurora and Valisaurus DEX were the pools holding a major percentage of the total NEAR staking. However, after the past 3 months, its percentage staked has decreased considerably and have been surpassed by Yes Protocol pools.

Looking at the power distribution of validators grouping them by ranges, we can see how over the past three months, the top 10 validators holdings reduced from almost 60% of total staked NEAR to around 55%.

These first metrics situated above show a perspective of the current actions being done on Near in terms of Governance. In the first donut, we can see that the major of the actions (more than 60%) are “deposit and stake” actions in general, and has been followed the same during the past 3 months. Followed by unstake actions like “unstake” or “unstake_all”, representing no more than 33% of the actions together in general. However, there is a difference to the past 3 months, when this percentage increased considerably. Unbond delegations and update validator actions represents a few percentage of actions.

In terms of monthly actions, we can see how September was the most prominent one with more than 11k staking actions and 7k unstaking actions. A big difference between both terms being more users staking than unstaking.

Another interesting metric to measure the decentralization is the Nakamoto Coefficient, that represents how many validators are needed to accumulate more than 50% of the total current NEAR staked.

Based on a Monthly basis, we can see how the amount of needed validators increased from 2 to 6 before the winter. After these past 3 months, the Nakamoto coefficient continued growing reaching 8, showing an improvement on the Near decentralization.

Another important metric for decentralization is to take a view on the number of total amount staked versus the amount of validators that are holding the tokens.

In this case, we can see how in a monthly basis, the amount of NEAR staked increased over the past 3 months. However, the situation is not similar fo the amount of active validators. In this case, it seems that the major amount of validators were registered on mid August.

Top 3 previous validators study: Meta, AstroStakers and Aurora.

The final approach is to take an overview of the evolution of the governance activity around the previous top 3 validators. Considering the percentage of staking sharings before Winter, Astro Stakers, Meta and Aurora pools were the top 3 ones. Then, this part have been done taking into account these three main validators.

The first of the charts shows the percentage that the top 3 validators are holding among the total NEAR staked in a monthly basis. It can be seen how the percentage was around 25% during the first month and the percentage has decreased over the past months to around 22%.

Looking at the monthly Near staked, it can be seen that the amount experimented an uptrend from around 52M of NEAR staked to 55M staked, basically due to the increase of the Astro Stakers holdings.

Finally, considering the last two charts, we can see how both, the amount of staking actions and the amount of delegators that this pools are capting decreased over the last months.

Key insights

• Overall, the major of the actions (more than 60%) are “deposit and stake” actions. Followed by unstake actions like “unstake” or “unstake_all”. However, the unstaking actions has increased over the past months.
• Before the winter Meta, Aurora and Valisaurus DEX were the pools holding a major percentage of the total NEAR staking. However, after the past 3 months, its percentage staked has decreased considerably and have been surpassed by Yes Protocol pools.
• The top 10 validators holdings reduced from almost 60% of total staked NEAR to around 55%.
• the amount of NEAR staked increased over the past 3 months. However, the situation is not similar fo the amount of active validators. In this case, it seems that the major amount of validators were registered on mid August.
• The amount of needed validators increased from 2 to 6 before the winter. After these past 3 months, the Nakamoto coefficient continued growing reaching 8, showing an improvement on the Near decentralization.
• The percentage of Meta, Aurora and Astro Stakers holdings was around 25% during the first month and decreased over the past months to around 22%.
• The amount of NEAR staked experimented an uptrend from around 52M of NEAR staked to 55M staked, basically due to the increase of the Astro Stakers holdings.
• The amount of staking actions and the amount of delegators that this pools are capting decreased over the last months.

Distribution of staking actions

Distribution of staking by validators

Results before Winter

Results after winter

Before the Winter

After the winter