NEAR 2021: A Year in Review

Welcome to the NEAR Retrospective! It’s been quite a year for NEAR Foundation, Near Inc., and, of course, all the incredible projects and community members that make all of this possible. 

So we thought it was high time to look back at some of the highlights from 2021: everything from protocol upgrades, ecosystem funding, community developments, and new projects launching on NEAR mainnet. 

We’ll also be giving a sneak peek at what’s to come in 2022 in a separate post, so keep a lookout for that. 

Protocol Progress 

The sign of a healthy network is one that is constantly adding improvements and tweaks to the performance, stability, and security—and NEAR protocol had that in abundance in 2021. 

Near Inc.’s engineering team racked up 20 upgrades to the protocol. Among the highlights were protocol update 35 – implicit accounts. This allows NEAR to have Ethereum style accounts that are public keys. They are created on-chain when someone transfers a nonzero amount of tokens to this account.

Another stand-out upgrade was protocol update 42. Here engineers lowered storage staking cost from 1N per 10kb to 1N per 100kb. This dramatically reduced the barrier of entry for contract developers. Before this change, when a developer deployed a 300kb contract, they needed to have at least 30 $NEAR on the account. After the change, they only need 3 $NEAR.

Lastly, not leastly, protocol upgrade 48 brought our WebAssembly runtime from wasmer0 to wasmer2. This shift helped half the cost of wasm operations, helping unlock many applications building on Aurora that were previously blocked because their transactions could not fit in NEAR’s gas limit.

This trend continued throughout the year, culminating in our biggest protocol announcement this year, Sharding. 

Sharding Takes Shape 

When NEAR released its design for the protocol back in 2019, we initially envisioned a completely sharded blockchain. We quickly realized that this brand new network didn’t have an immediate demand for processing hundreds of millions of transactions. Besides, a fully sharded blockchain is a complex endeavor, and we’d need a little time to do it right. 

However, the average number of daily transactions has now surpassed 300K. As more and more projects are building on NEAR, the volume of transactions is only going to increase dramatically in 2022. While the NEAR network is still only using a fraction of its total capacity, we wanted to start the transition to sharding now to avoid any unpleasant surprises, as well as ensure we can support all applications on NEAR. 

November 15th marked the beginning of this transition, as we unveiled Simple Nightshade, the first step (Phase 0) in our fully-sharded and secure blockchain. We dropped Simple Nightshade now so that we could preempt any unpleasant surprises with transaction speeds later. In Phase 0 of Nightshade, NEAR’s sharding is split across many nodes, making it super fast and ready for the onboarding of leagues of new developers and blockchain users. 

In early 2022, NEAR will move into Nightshade Phase 1, in which we will introduce the new role of chunk-only producers—those who only validate one shard. They produce chunks (shard blocks) for a specific shard and don’t need expensive hardware to do so—all without sacrificing network security. In Phase 2, currently scheduled for Q3 of 2022, both state and processing will be fully sharded, and validators won’t need to track all shards. And in Q4 of 2022, we will enter Phase 3 (Dynamic Sharding), in which we will enable the network to dynamically split and merge shards based on resource utilization. This will make NEAR almost infinitely scalable and able to handle any short-term spikes in usage. 

For more details on sharding, head over to the NEAR Medium page, where we’re publishing a series of features on how Nightshade is impacting the platform. Beyond a simple primer on how sharding works, we’re also exploring how Simple Nightshade is now powering the DeFi space and helping make NEAR carbon-neutral, amongst other things.   

Funding finds its feet

An ecosystem needs support, especially in its early days when projects are just finding their feet. In 2021, NEAR Foundation went above and beyond to foster growth and innovation. 

First up, there was the news that the NEAR ecosystem announced a monumental $800 million in funding initiatives targeted at accelerating growth. While NEAR is giving all communities access to this record amount of funding, there will be a special focus on Decentralized Finance (DeFi) teams who are actively revolutionizing and reimagining the way we interact with money. 

DeFi projects on NEAR have already been thriving this year, with $200 million total value locked across projects like Ref Finance, Skyward, and Octopus. In addition to ecosystem fund news, Proximity Labs, a research and development firm targeting the NEAR ecosystem, announced its own $350 million grants DAO to build on the momentum.

In the ecosystem, key projects like Aurora raised $12 million in its first funding round. The Ethereum Virtual Machine (EVM) for scaling decentralized applications on NEAR, received funding from the likes of Pantera Capital, Electric Capital, Dragonfly Capital and other funds.  

Flux Protocol, meanwhile, the decentralized oracle provider building on NEAR, raised $10.3 million to build the future of open finance earlier in the year. The project’s round was led by Distributed Global, with participation from Coinbase Ventures, CoinFund, Uncorrelated, Figment Capital, Maven 11, Reciprocal Ventures, Jabre Capital, Greenfield One, IOSG, and Flow Ventures.

With funding in place, it was only a matter of time before the ecosystem took off. 

Explosive Ecosystem Growth 

NEAR’s 2021 was marked by massive growth. Fueled by Rainbow Bridge, which connects NEAR with Ethereum, as well as Simple Nightshade sharding, the NEAR ecosystem saw an exciting proliferation of gaming, Metaverse, NFT, and DeFi projects. 

Gaming

Gaming was probably always destined to be a strong crypto industry, and 2021 proved to be a fantastic year for NEAR-based gaming projects. We expect this Web3 gaming momentum to carry over into 2022. 

In 2021, OP Games, a blockchain-based Web3 gaming platform, began transforming how users buy, own, and trade in-game assets. Unlike current gaming platforms, which often monopolize worlds by sandboxing digital assets, OP Games is offering them as NFTs and turning entire games into fractionalized NFTs. This way, players and fans can co-own projects and, if the game finds success, shape how it develops through its DAO. 

Similarly, Vorto Network began developing its online marketplace, where users will be able to buy in-game items and digital assets through a crypto wallet. Hash Rush, a blockchain-based, real-time strategy (RTS) game set to launch on Vorto Network in January 2022, will let players immerse themselves in the Hermeian galaxy, where they build, compete, and exchange goods through various levels. Hash Rush will be a great example of Web3’s “play-to-earn” model, which creates a digital goods economy for participants. 

Another title, NEAR Lands, is a pixelated land-based open-world game designed as much for the community as the gameplay. In the NEAR Lands online universe, players create characters and items, as well as engage with friends and other participants, while adventuring through the game’s landscape. 

As Q4 drew to a close, Inite earned a $50,000 grant to help build its NFT gaming platform. A unique type of Metaverse experience, Inite is a motivational game based on the scientific method, where players receive daily tasks designed to boost their creativity. By playing Inite, players can earn tokens by generating ideas to improve individual cognitive skills and productivity. 

NFTs 

Even more than gaming, 2021 was a strong year for NFTs. And with NFTs percolating into the public consciousness, it’s easy to see why. Paras and Mintbase, two NEAR NFT marketplaces, led the charge in bringing more NFTs to the NEAR ecosystem. 

Mintbase, which began building on NEAR in August of 2020, officially launched in 2021. The team had originally begun developing on Ethereum, but migrated over to NEAR when it became prohibitively expensive for them. With its fast transaction speeds and low costs, NEAR was the obvious choice for Mintbase, which hosts its own NFT marketplace but also has an NFT utility engine that helps people build their own.  

In early December, electronic music DJ and producer deadmau5 and indie rock band Portugal. the Man collaborated with Mintbase and NEAR to mint their NFT single “this is fine”. If deadmau5 and Portugal. the Man go platinum (sell more than 1 million records in the US), they will make blockchain history. It’s already putting Mintbase firmly on the NFT map. 

The NFT marketplace Paras offers real-world trading cards of artworks as collectibles, which users can quickly mint, buy, and sell quickly at little cost. Paras recently launched Boom Boom! the first mini digital comic series on NEAR, and PARADIGM. Both of these are part of Paras Comics, the platform’s new comics-specific feature. The Paras marketplace already has thousands of users purchasing one-of-a-kind NFT collections. It also boasts over 18,000 Twitter and 3,000 Telegram followers—a testament to its rapidly expanding community. 

From July 17th to the 25th, 2021 at the Shanghai National Exhibition and Convention Centre, Paras collaborated with Web3Games and NEAR to showcase Chinese artists who were selling NFT artworks at an exhibition. One artist, Huang Heshen, created the “Toorich City Series”, a collection of exclusive NFTs on Paras that explores Bu Tu Garden Community, a digital set of 10 luxury single-family villas.

Elsewhere in China, the NEAR dApp Feiyu recently debuted. Built atop NEAR, Feiyu is a new take on social media, where users express creativity by sharing memes and GIFs. All of this happens in an NFT-based metaverse where users don’t have to register a wallet. Driven by rewards, Feiyu users earn tokens or NFT items (skins, weapons, etc.) for participating in the community.

On the audio NFT front, DAO Records is working to reimagine the record label and to fairly pay musicians for their recordings. In the current music industry model, record labels and streaming services take the majority of musicians’ earnings. With DAO records, the founders are encouraging independent artists to release and package new music as audio NFTs. 

To Date, DAO Records has released over 150 NFTs from over 100 artists. And in the last 14 months, DAO Records has also produced over 50 virtual events, where musicians, fans, and NFT lovers can meet and socialize in custom-designed Metaverse gatherings. 

Metaverse 

While much crypto momentum found its way into DeFi and NFT apps, a number of Metaverse apps also launched on NEAR in 2021. These Metaverse apps laid the groundwork, in their own unique ways, for integration with blockchain gaming, DeFi, NFTs, and other crypto projects. 

Metaverse AI, for example, is developing an Open Metaverse for Web3. Using Metaverse AI’s advanced AI engine, users will be able to create decentralized identities and high-fidelity 3D avatars. These blockchain-based DiD (decentralization identifier) avatars give users ownership of their virtual identities and assets, and the ability to move them across the larger Metaverse. 

Another NEAR Metaverse project is Reality Chain, which will launch on Octopus Network, a substrate-based appchain network on NEAR. Reality Chain offers users gaming and social activities with the feel of immersive, multiplayer functionality and features.

A radically different take on the Metaverse can be found in the Illust Space app. Billing itself as an “open augmented reality infrastructure for the world,” the Illust Space team is building an augmented reality Metaverse. The app gives users the tools to mix the real and digital worlds for their artworks while making them collectible through NFT technology. 

Also in 2021, NEAR debuted its MetaBUILD series, a hackathon designed to encourage developers to build on NEAR. As the name indicates, building the Metaverse is a major emphasis of this hackathon. The first MetaBUILD held August 27th to September 19th, and the latest, MetaBUILD 2 (December 22 – February 10, 2022), both made $1 million in prizes available to developers and teams.

DeFi 

DeFi, or decentralized finance, has become a cornerstone of any crypto ecosystem. In little more than 12 months since mainnet launch, there are now more than 40 DeFi projects calling NEAR home. From infrastructure providers like Rainbow Bridge, Flux and Aurora, to token swap markets 1inch, Trisolaris, and Onomy Protocol, there are staking platforms, lenders, borrowers, credit scorers, and even BananaSwappers. 

As noted above, both NEAR’s $800 million global ecosystem fund and Proximity Labs’ $350 million Grants DAO will support DeFi projects and other dapps building on NEAR. NEAR’s Nightshade sharding will also supercharge DeFI by expanding the blockchain’s transaction speeds and security. 

Launched this year, Aurora is one of the most notable DeFi projects on NEAR. A platform that makes EVM contracts interoperable on NEAR, Aurora allows developers to keep using Ethereum while boosting their apps with NEAR’s super-fast transactions and low barriers to entry. Aurora is partnering with a number of other promising DeFi projects on NEAR, like the cross-chain oracle Flux and Rose, a stable swap and borrowing protocol, to level up the ecosystem’s DeFi game. 

Yet another highly visible DeFi player on NEAR is Ref Finance, a community-led and multi-purpose decentralized exchange, asset issuer, and lender. Ref Finance accomplishes all of this through a single, synchronous DeFi stack. What’s more, it’s fun and easy to use. 

If you’re looking for an interest rate market protocol, then Burrow is a dApp to check out. And if you’re looking for a token launchpad, be sure to dive into Skyward Finance, a DeFi platform that makes token launches fair and community-centric, as well as bot and attack-resistant. Another cool thing about Skyward Finance is that its DAO gives the community access to the token launch immediately instead of letting front-runners like private investors and VC firms pump and dump tokens. 

If you’re looking for more on NEAR DeFi apps, we’ll be publishing an article on the top DeFi projects building on NEAR. So, stay tuned for that in the new year. 

The DAO Community is Growing

One of the major takeaways of 2021 is that NEAR’s community of Decentralized Autonomous Organizations is rapidly growing and diversifying. This is another trend that the NEAR ecosystem and larger blockchain community can expect to carry over into 2022 and beyond. 

Sputnik DAO V1, a hub for NEAR’s DAO ecosystem, currently has a total of 248 DAOs, with a total of 17,633 transactions for a total payout of 989,598 $NEAR ($9,292,324 USD). The Sputnik DAO hub now has a Total Value Locked (TVL) of 113,969 $NEAR ($1,070,164 USD). Factoring in those decentralized organizations in the Astro DAOs ecosystem, it’s safe to say there are now over 400 DAOs on the NEAR platform. 

Much of the DAO community growth can be seen in NEAR’s blockchain infrastructure and the DeFi space. The biggest DAO by total assets is Aurora, a token exchange bridge between NEAR and Ethereum, and Octopus, a platform for building appchains (independent, custom blockchains).

2021 saw explosive growth in how DAOs experimented with governance tooling on NEAR. In the first half of the year, SputnikDAO went through two iterations—one for disseminating the Community Fund and the other to incorporate custom call ability. By the time Astro DAO launched in October, there was such demand for its offerings that hundreds of DAOs came into existence in only 2 months. And in Q4, the NEAR community did quite a lot of thinking about liability protection, legal entities, and state regulation of DAOs. 

Creatives DAO, a fully community-run DAO Vertical, launched this year to support the ecosystem’s creative Guilds and DAOs. Discussions are just beginning about MultiDAOs, and how DAOs can better coalesce for collaborative decision-making efforts. NEAR is also supporting a research initiative hosted by Governauts that is examining DAO-based reward systems. 

DAO projects are being supplemented by DAO Guilds, which support these and other blockchain sectors with different resources. Various Guilds are even acting as specialized sub-DAOs working in areas like legal, software development, and DeFi. These and other Guilds are there for when app founders and developers want to tap into specific expertise and resources to improve their own project, technology, or DAO.

DaoBox, based in Switzerland, is another resource for projects and organizations looking to design DAOs. The company offers a toolkit for DAOs building in NEAR, helping them establish the DAO, get a headquarters address, raise funds, and stay compliant through accounting. 

A Brief Look Toward 2022

A number of developers building on NEAR will launch their projects in 2022, bringing many more DeFi, NFT, Gaming, Metaverse, and other exciting and cutting projects to the NEAR ecosystem. These teams came to NEAR because they know that whether you’re developing or simply using NEAR apps, joining the ecosystem is fast, easy, and secure.

With NEAR’s $800 million global ecosystem funding initiative, expect to see many more DAOs established as we head into 2022. These funds, alongside Guilds and other blockchain-based expertise and resources, will be vital in helping DAOs succeed and, just as importantly, bringing the masses from Web2 to the Open Web.