NEAR was instantiated to help builders. This means helping them to create meaningful applications with the power to impact real lives by making those apps secure enough to hold substantial value but as easy to use as anything on today’s web. It also means helping them to get to market faster by making applications as easy to build, test and deploy as anything on today’s web.
Today, the validators who run the NEAR Protocol and the tokenholders who delegated to them voted to advance the network into its final stage of MainNet. This transition to “Phase II” is the most significant milestone in NEAR’s history and the most important one to drive its future.
In this post, you will learn what this means, what the path forward looks like and how you can get involved.
What this Means
The transition to Phase II occurred because NEAR Protocol’s validators indicated via an on-chain voting mechanism that they believe the network is sufficiently secure, reliable and decentralized to remove transfer restrictions and officially allow it to operate at full functionality. Accounts that are subject to lockup contracts will now begin their unlocking timeline. The shift to Phase II means 3 important things:-
- Permissionlessness: With the removal of transfer restrictions, it is now possible for anyone to transfer NEAR tokens and participate in the network. Specifically, it is now possible for anyone to send or receive tokens, to create accounts, to participate in validation, to launch applications or to otherwise use the network… all without asking for anyone’s permission. This means individuals, exchanges, defi contracts or anyone else can utilize the NEAR token and the NEAR network in an unrestricted fashion.
- Voting: The community-operated NEAR Protocol successfully performed its first on-chain vote, indicating that community governance is operational and effective. The exact mechanism will change going forward but this is a substantial endorsement of the enthusiasm of the community to participate.
- Decentralization: The dozens of validators who participated in the vote were backed by over 120 million tokens of delegated stake from over a thousand individual tokenholders and this vote indicates that they believe the network is sufficiently secure and decentralized to operate freely.
Day Zero: What Comes Next
Amazon founder Jeff Bezos likes to tout his “day 1 philosophy”, in which the company is meant to operate as if it’s only the first day along the journey of serving customers. We can correct their off-by-1 error by acknowledging that NEAR is now in Day 0... that the network is finally and fully out in the world but there is a lot of room to grow from here. In the short term, the next step for the network is for validators to implement a system upgrade which will enable protocol inflation and allow stakers to receive rewards for their activities to help secure the network. The code for this upgrade is expected to be released on Monday October 19 in order to give the community plenty of time to finish claiming tokens and set up their delegation to stakers. After that, it usually takes anywhere from 1-2 days for the normal upgrade process to be adopted among validators. Once this happens, the network’s supply will inflate at 5% annually, an increase which is offset (to a varying degree) by the burning of transaction fees. In the medium term, there are a number of key research and development areas that the team is excited to explore, while acknowledging that the ultimate operation and growth of the network is no longer entirely in any one group’s hands.- Sharding: NEAR currently operates with a single shard because that provides more than enough capacity to serve a very high degree of load. Transitioning to multiple shards is unlikely to be required anytime soon, so there is an opportunity to improve the technology. The current sharding spec is implemented in a 4 shard testnet and a variation of it runs on an independent network which is run by a Guild. While this is a good start, the NEAR team continues to improve the spec so the next version of this is expected to be released by the end of the year and implemented in the first half of next year.
- Ethereum Bridge: The Rainbow Bridge, which will likely be the first fully permissionless bridge between Ethereum and a performant Layer 1 protocol, is operating across TestNets while work continues to improve reliability and usability for MainNet operation. It is likely that this will be able to roll out on MainNet before the end of the year and that this will occur in several stages that follow progressive decentralization.
- EVM: Developers can already run EVM code using a smart contract which has been deployed since February but it is currently gas intensive and clunky. One effort over the next few months is targeted at implementing precompiled EVM, which would allow Ethereum developers to easily drop their existing contracts onto NEAR and offer significant performance at the same time.
- Tooling: The tooling which supports building on and using the platform still has a wide range of improvements to come. Wallets like the NEAR wallet will continue to improve their delegation, staking, voting and other capabilities which support full network functions for everyday people. For developers, improvements in everything from examples to indexers will help smooth out the experience of developing on this platform even more.
- Empowering Community Leaders: The Guild Program is one of the most visible steps to empower people who want to build communities around NEAR with resources and support but it’s not the only one. We’re all excited to see what the community comes up with over the coming months and thrilled to see how groups are beginning to support each other.
- Funding: The NEAR Foundation has committed to providing funding for the community by supporting a $1.5M+ community fund (with additional early funding from Coinlist), a grants program for infrastructure and a series of investment grants in projects building atop decentralized technologies. Expect all of these to roll out through the end of the year.
- Governance: No decentralized network has reached maturity without navigating a few storms. We’ve all been impressed with how the community has stepped forward to take charge during the last few weeks and how communication and coordination has organically evolved to serve the needs of the network. As things progress further, we’ll do everything we can to make sure all stakeholders are heard and that the future path of the network is directed by a balanced group of participants. The validator-led voting process was important for Phase II but future governance will allow the community a more direct voice and that’ll be important whenever the first (inevitable) community crisis emerges.
What You Should Do Now
NEAR is “open for business” but, like Ethereum before it, the platform is just the substrate onto which you can apply your creativity. It’s secure storage, rapid compute, smooth payment rails and composable components that add up to unstoppable applications… but what applications get created is entirely up to you. NEAR has deliberately focused on building a platform that can support the entire range of decentralized use cases, whether that’s providing stablecoins to people across the globe, building decentralized financial tooling on chain, creating marketplaces to improve gaming experiences, tokenizing investment assets or more because each of these use cases benefits from the tooling, liquidity and components produced by the others. This breadth of possibilities gives NEAR access to the largest possible opportunity set and there’s something for everyone in the ecosystem to do now:- Developers: This is all for you! The NEAR platform still needs polishing in many places (which you can help with…) but it’s production ready and you can build production ready apps. If you’re just getting started with decentralized apps, check out the New to NEAR? docs. And join https://near.chat to get in the conversation.
- Tokenholders: You can help the network substantially in a number of different ways. If you like to test-drive new technology, look for new applications built on NEAR where you can play with them and maybe spot a breakout idea. This could, for example, be a game for fun or a decentralized finance app which helps solve real problems with liquidity or risk management. Or, if you aren’t sure, you can delegate to a validating pool and let your tokens work for you by participating in securing the network and earning rewards for doing so.
- Entrepreneurs: Whether you’re at the first step of your journey or are looking back at a well-worn path, the Open Web Collective can help you make sure you’re leveraging not just the best of decentralized technology but also the best support for building and fundraising along the way.
- Validators: NEAR allows a unique level of innovation for validators. Whereas you previously could only compete based on how much you charge delegators for your services, NEAR’s flexible delegation contracts allow a wide range of experimentation. If you want to stay on top of what’s happening with validators, I recommend checking out the NEAR Validator Advisory Board (NVAB) and following their meetings to stay in the loop. If you’re already a validator, starting a Guild or building your community presence in other ways (by giving back to the community!) will be crucial for attracting delegation. Check out the Guilds for a path and help doing so.
- Designers, product people, marketers, academics, sales people, investors, accountants and, yes, lawyers: This ecosystem needs your help! Ethereum’s early years inspired a generation of people to try their hand at building successful businesses using decentralized tools but the technology was too early and the ecosystem never fully developed. For everyone who, like us, believes that the technology is finally at a place where we can cross the usability gap and build apps real people will use, please consider joining or starting a Guild so you can get in on the ground floor of the next wave forward.
