are we NEAR the start of mass adoption?
(POST ORIGINALLY PUBLISHED JANUARY 21ST, 2022)
2021 was unquestionably the year of the alternative Layer 1. We saw incredible activity, adoption, & capital flood into ecosystems outside of Ethereum and Bitcoin. Price is not always a great metric for visualizing activity, but directionally it paints a clear picture of how explosive the growth was across these platforms.
These three alone have grown to ~$85 billion in aggregate market cap, which is to say nothing of what’s been built on Binance Smart Chain, Cosmos, Polkadot or Algorand. Now I’m not suggesting all these ecosystems will be around and flourishing through the next cycle (lest we forget the ICO boom) but the genie is out of the bottle when it comes to crypto. It’s here to stay, mass adoption is coming, wagmi, etc. etc. etc.
However! We still have that pesky blockchain trilemma to contend with…
The two most well-known blockchains both optimized for security & decentralization. Other chains have optimized for scalability, but this is not a post about which approach is better; multi-chain is the future and there will be room for a host of different approaches. To date though, these existing networks haven’t bridged the gap to mainstream adoption, nor credibly provided the scale needed to support a new web (i.e. one capable of supporting ~5 billion internet users).
bUt We ArE sTiLl So EaRlY sEaN. gIvE iT tImE!
Yes, we are. I will grant you that. I happen to believe the giga brains will continue to push technology forward and innovate in ways we can’t even imagine right now. That being said, progress being inevitable says nothing about the speed at which that future arrives. We can realize it quicker/slower depending on the choices we make today. With that in mind, if we intend to onboard billions of users there are specific challenges we need to contend with.
As blockchains grow, there are several needs that arise:
Processing transactions requires more computational power given the increased number of transactions
Relaying transactions & blocks requires more network bandwidth
More storage is required as the state grows – unlike processing power & network bandwidth, the storage requirement grows regardless of whether throughput changes
Ethereum – the smart contract leader today – is aware of these needs and working hard to implement its rollup-centric roadmap to address them. I’m a huge fan of Ethereum and believe it will continue to play a central role in crypto. That doesn’t mean it is without limitations or technical debt that leaves it susceptible to newer entrants. One of those entrants is NEAR. I’ve spent the last few months reading about the protocol, lurking in the Discord, experimenting with Near University, and listening to the founding team’s vision. The balance of this post will mostly introduce the protocol to those unfamiliar with it and cover where it stands in the alternative layer 1 ecosystem. Note: This is not me shilling bags. I’m writing about Near because I think it’s a compelling protocol with ambitious goals and an engaged community. Yes, I own NEAR tokens. No, I do not care if you buy them or not (NFA ofc).
Where did Near come from?
The founders of Near tried to build on Ethereum back in 2018 and found it very difficult. They decided to build their own smart contract platform to create an experience for developers to pick things up quickly & build + ship fast. I will spare you the technical details of Near’s approach – check out the whitepaper (https://near.org/papers/the-official-near-white-paper/ and the original sharding design framework https://near.org/downloads/Nightshade.pdf) – but suffice it to say that it is taking a similar sharding approach as Ethereum. The team also built Aurora, an EVM implemented as a smart contract on the NEAR blockchain. EVM is likely where a lot of financial transactions will continue to happen given how much money is stored in smart contracts (i.e. it is as “hack-proof” as can be reasonably expected).
What makes Near unique in my mind is the emphasis it places on usability. If you go through its documentation, listen to the founders speak or talk to community members, you quickly realize the vision is for it to be the chain of mainstream adoption. Near wants to look & feel like the existing web; it wants to have all of the “normal world” applications running in a web3 world (i.e. so users own, participate & govern them). Billions of users is the goal.
Near is acutely aware that scalability doesn’t matter if there’s no demand for that throughput. If your indie band only commands an audience of a few hundred, you don’t need to secure Madison Square Garden as a venue. Similarly, if your blockchain can infinitely scale, but only a couple million users are comfortable actually using it, who cares? With this reality in mind, the team prioritized end-consumer and developer usability. It’s no secret a roadblock to widespread crypto adoption has been the user onboarding experience. For those of us who interact with all this technology daily, it can be easy to forget how painful it is for someone new.
“Near allows developers to take actions on behalf of their users, which allows them to onboard users without requiring these users to provide a wallet or interact with tokens immediately upon reaching an application. Because accounts, which have human-readable names…keep track of application-specific keys, user accounts can also be used for the kind of ‘Single Sign On’ (SSO) functionality that users are familiar with from the traditional web (eg ‘Login with Facebook/Google/Github/etc.’)”
This comes from Near’s whitepaper and may sound heretical to maxi groups, but they’re missing the point. The core idea behind this is to onboard non-cryptonatives in ways they are more accustomed to. This is a worthwhile objective in my mind. UX needs to dramatically improve if we’re going to bring the next billion people to crypto.
Some of the other end-user usability benefits include (i) easy subscriptions through contract-based accounts that allow for simple subscription creation and custom permissioning for applications, (ii) familiar usage styles such that developers can pay for usage on behalf of their users in line with existing web usage models, and (iii) predictable pricing. I will admit this final “benefit” is bit weak in my view; it simplifies people in a way I think is too close to how web2 treats its users.
Usability is not just for end consumers though. Developer usability is arguably more important. An early decision the team made was to support Typescript as a way to onboard developers.
The other core developer-centric benefits are (i) robust tooling on the platform and APIs that provide developers with the same kind of experience they are accustomed to from traditional web apps (i.e. one-click deploy, integrated unit testing, easy front-end integration) and (ii) business models that help developers monetize the open components they create for the ecosystem by rewarding them with rebates based on usage. This has potential to be a more robust method for devs to monetize their infrastructure – when a contract is called, a percentage of the fees generated by the network automatically gets allocated to that contract. This incentivizes early infrastructure development: early contracts will build the network effects that ultimately increase usage. Near deeply believes in developer experience and has demonstrated that with its commitment to providing an environment where devs can build & ship quickly while benefiting directly.
I will likely write a follow-up to this discussing the other important factors – namely scalability & security – Near needs to tackle and what’s being worked on currently to address them. By no means do I think Near is some magic bullet to adoption, and there are drawbacks to their approach. One of the big differences between ETH1, or a chain like Solana, is that processing of applications on Near is happening in parallel & asynchronously. If one app calls another, this happens at a slightly different time. Other blockchains operate where everything happens in one sort of transaction so no other operations can execute between one app calling another. This has downstream consequences but could also unlock new use-cases. Time will tell.
I’ll be interested to watch Near’s platform and ecosystem develop over the coming months. The immediate problem it’s tackling is “how to allow developers to easily create useful applications that users can actually use and which will capture sustainable value for those developers”. Simple enough, but simple doesn’t mean easy. I’ve found the community and ecosystem compelling so would encourage those of you who haven’t interacted with Near at all to DYOR.
As always, would love to hear what y’all think, what I missed, who is building cool stuff on Near, or why I’m completely wrong.
hit me on twitter @0xsmac & try not to look at charts these days :) …. remember, the builders during the bear market are the “overnight successes” of the next bull cycle
POST ORIGINALLY PUBLISHED JANUARY 21ST, 2022