Near 2021 Official Summary: Sharding Preliminary Launch, Ecosystem Welcomes Explosion

Source: NEAR Blog

Compiled by: Xuejing, Chain Catcher

For the NEAR Foundation, Near Inc., and all the incredible projects and community members that made it all possible, 2021 was a year of many experiences.

Looking back on the year, highlights include everything from protocol upgrades, ecosystem fundraising, community development, to new projects launched on the NEAR mainnet.

Protocol Progress

A hallmark of a healthy network is the continuous improvement and adjustment of performance, stability, and security—this was particularly evident for the NEAR protocol in 2021.

The engineering team at Near Inc. conducted 20 upgrades to the protocol. A highlight was Protocol Update 35—Secret Accounts. This allows NEAR to have Ethereum-style accounts as public keys. When a non-zero amount of tokens is transferred to this account, they are created on-chain.

Another notable upgrade was Protocol Update 42. Here, engineers reduced the storage staking cost from 1N per 10kb to 1N per 100kb. This significantly lowered the barrier to entry for contract developers. Before this change, when developers deployed a 300kb contract, they needed to have at least 30 NEAR in their account. After the change, they only needed 3 NEAR.

Finally, equally important, Protocol Update 48 brought our WebAssembly runtime from wasmer0 to wasmer2. This shift helped reduce wasm operation costs by half and unlocked many applications built on Aurora that were previously blocked due to transaction gas limits on NEAR.

This trend continued throughout the year, culminating in our biggest protocol announcement last year—sharding.

Sharding Takes Shape

When NEAR released its protocol design in 2019, we initially envisioned a fully sharded blockchain. We quickly realized that this brand new network would not immediately handle the demand for hundreds of millions of transactions. Moreover, a fully sharded blockchain is a complex undertaking, and we needed some time to get it right.

However, the average daily transaction volume has now exceeded 300,000. As more and more projects are built on NEAR, the transaction volume is only expected to surge in 2022. While the NEAR network is still only using a small portion of its total capacity, we hope to begin transitioning to sharding now to avoid any unpleasant surprises and ensure we can support all applications on NEAR.

November 15 marked the beginning of this transition as we launched Simple Nightshade, the first step towards our fully sharded and secure blockchain (Phase 0). We are implementing Simple Nightshade now so that we can proactively address transaction speed and avoid unpleasant surprises later. In Nightshade Phase 0, NEAR's shards are distributed across many nodes, making it super fast and preparing for new developers and blockchain users to join the organization.

At the beginning of 2022, NEAR will enter Nightshade Phase 1, where we will introduce a new role that only produces blocks, specifically those that validate a single shard. They generate blocks for specific shards (shard blocks) and do not require expensive hardware to do so—all without sacrificing network security.

In the currently scheduled Phase 2 in Q3 2022, both state and processing will be fully sharded, and validators will not need to track all shards. In Q4 2022, we will enter Phase 3 (Dynamic Sharding), at which point we will enable the network to dynamically split and merge shards based on resource utilization. This will give NEAR almost unlimited scalability and the ability to handle any short-term spikes in usage.

Fundraising Gains Traction

The ecosystem needs support, especially in the early stages when projects are just finding their footing. In 2021, the NEAR Foundation spared no effort in promoting growth and innovation.

First, it was announced that the NEAR ecosystem launched an $800 million fundraising initiative aimed at accelerating growth. While NEAR is making this record fundraising accessible to all communities, there will be a particular focus on decentralized finance (DeFi) teams, as they are actively innovating and reimagining our interaction with money.

DeFi projects on NEAR thrived last year, with a total value of $200 million locked in projects like Ref Finance, Skyward, and Octopus. In addition to the ecosystem fund news, the R&D company Proximity Labs, focused on the NEAR ecosystem, announced its own $350 million DAO grant, further strengthening this momentum.

Within the ecosystem, key projects like Aurora raised $12 million in their first round of funding. This funding is aimed at scaling decentralized applications on NEAR using the Ethereum Virtual Machine (EVM), with investments from funds like Pantera Capital, Electric Capital, and Dragonfly Capital.

Meanwhile, the decentralized oracle provider Flux Protocol, based on NEAR, raised $10.3 million earlier last year to build the future of open finance. The funding for this project 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 is only a matter of time before the ecosystem takes off.

Explosive Ecosystem Growth

NEAR's 2021 was marked by massive growth. Driven by the Rainbow Bridge connecting NEAR with Ethereum and the Simple Nightshade sharding, the NEAR ecosystem witnessed a surge in gaming, Metaverse, NFT, and DeFi projects.

Gaming

Gaming is destined to become a powerful sector in the crypto industry, and 2021 proved to be a wonderful year for gaming projects based on NEAR. We expect this Web3 gaming momentum to continue into 2022.

In 2021, the blockchain-based Web3 gaming platform OP Games began changing the way users purchase, hold, and trade gaming assets. Unlike current gaming platforms that typically monopolize the world of sandbox digital assets, OP Games offers them as NFTs and turns the entire game into fragmented NFTs. In this way, players and fans can co-own gaming projects and shape their development through a DAO if the game is successful.

Similarly, Vorto Network began developing its online marketplace, where users will be able to purchase in-game items and digital assets through crypto wallets. Hash Rush, a blockchain-based real-time strategy game (RTS), is set to launch on Vorto Network in January 2022, immersing players in the Hermeian galaxy, where they can build, compete, and trade goods at different levels. Hash Rush will be a great example of the Web3 "P2E" model, creating a digital goods economy for participants.

NEAR Lands is a pixelated land-based open-world game designed with community-focused gameplay. In the online world of NEAR Lands, players can create characters and items, interact with friends and other participants, and embark on adventures within the game.

As the fourth quarter came to a close, Inite received a $50,000 grant to help build this NFT gaming platform. Inite is a unique Metaverse experience, a science-based inspirational game where players can receive daily tasks aimed at enhancing creativity. By playing Inite, players can improve their cognitive skills and productivity to earn tokens through generating ideas.

NFT

2021 was even more significant for NFTs than for gaming. As NFTs permeated public consciousness, the reasons are clear. Two NEAR NFT marketplaces, Paras and Mintbase, led the way in bringing more NFTs into the NEAR ecosystem.

Mintbase began building on NEAR in August 2019 and officially launched in 2020. The team initially developed on Ethereum but migrated to NEAR when it became too expensive. With its fast transaction speeds and low costs, NEAR was the obvious choice for Mintbase. Mintbase has its own NFT marketplace but also features a utility engine that helps people create their own NFTs.

In early December, electronic music DJ and producer deadmau5, along with the indie rock band Portugal.The Man, collaborated with Mintbase and NEAR to launch their NFT single "This Is Good." If deadmau5 and Portugal.The Man reach platinum record sales (over 1 million records sold in the U.S.), they will make blockchain history. This has firmly placed Mintbase on the NFT map.

The NFT marketplace platform Paras offers real-world trading cards as collectibles, allowing users to mint, purchase, and sell quickly at a lower cost. Paras recently launched Boom Boom! the first mini digital comic series on NEAR and PARADIGM. Both are part of the platform's new comic-specific feature, Paras Comics. The Paras marketplace has already seen thousands of users purchasing unique NFT collections. It also boasts over 18,000 Twitter followers and 3,000 Telegram followers—evidence of the rapid expansion of the community.

From July 17 to 25, 2021, at the Shanghai National Exhibition and Convention Center, Paras collaborated with Web3Games and NEAR to showcase Chinese artists selling NFT artworks at the exhibition. One artist, Huang Hesheng, created the "Toorich City Series," an exclusive NFT collection on Paras exploring the Bu Tu Garden Community, a digital collection consisting of 10 luxurious standalone villas.

Elsewhere in China, the NEAR dApp Feiyu recently made its debut. Built on NEAR, Feiyu is a new form of social media where users can express creativity by sharing memes and GIFs. All of this occurs in an NFT-based Metaverse, where users do not need to register a wallet. Driven by rewards, Feiyu users earn tokens or NFT items (skins, weapons, etc.) by participating in the community.

In the realm of audio NFTs, DAO Records is working to reimagine record labels and fairly compensate musicians for their records. In the current music industry model, record labels and streaming services take a large portion of musicians' income. Through DAO Records, the founders encourage independent artists to release new music and package it as audio NFTs.

So far, DAO Records has released over 150 NFTs from more than 100 artists. In the past 14 months, DAO Records has also hosted over 50 virtual events where musicians, fans, and NFT enthusiasts can meet and socialize at custom-designed Metaverse gatherings.

Metaverse

While many crypto forces entered DeFi and NFT applications, numerous Metaverse applications also launched on NEAR in 2021. These Metaverse applications laid the groundwork for integration with blockchain gaming, DeFi, NFTs, and other crypto projects in their unique ways.

For example, Metaverse AI 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 DIDs (Decentralized Identities) empower users with ownership of their virtual identities and assets, as well as the ability to transfer them within the larger Metaverse.

Another NEAR Metaverse project is Reality Chain, which will launch on the Octopus Network, a layer-2 application chain network on NEAR. Reality Chain offers users immersive multiplayer gaming features and social activities.

A completely different perspective on the Metaverse can be found in the Illust Space application. The Illust Space team brands itself as "an open augmented reality infrastructure for the world," building an augmented reality Metaverse. The application provides users with tools to blend the real and digital worlds for their artistic works while making them collectibles through NFT technology.

Also in 2021, NEAR launched the MetaBUILD series, a hackathon aimed at encouraging developers to build on NEAR. As the name suggests, building the Metaverse was the primary focus of this hackathon. MetaBUILD1 took place from August 27 to September 19, 2021, and the latest MetaBUILD 2 is scheduled for December 22, 2021, to February 10, 2022, both offering $1 million in prizes for developers and teams.

DeFi

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

As mentioned above, NEAR's $800 million global ecosystem fund and Proximity Labs' $350 million grant DAO will support DeFi projects and other dApps based on NEAR. NEAR's Nightshade sharding will also enhance DeFi by expanding the transaction speed and security of the blockchain.

Launched last year, Aurora is one of the most notable DeFi projects on NEAR. As a platform that enables EVM contracts to interoperate on NEAR, Aurora allows developers to continue using Ethereum while enhancing their applications with NEAR's ultra-fast transactions and low entry barriers. Aurora is collaborating with many other promising DeFi projects on NEAR, such as the cross-chain oracle Flux and the trading lending protocol Rose, to upgrade the DeFi landscape of the ecosystem.

Another prominent DeFi player on NEAR is Ref Finance, a community-driven multi-purpose decentralized exchange, asset issuer, and lender. Ref Finance accomplishes all of this through a single, synchronized DeFi stack. More importantly, it is both fun and easy to use.

If you're looking for a rate market protocol, Burrow is a dApp worth checking out. If you're looking for a token launchpad, be sure to dive into Skyward Finance, a DeFi platform that allows token releases to be fair and community-centered while being automated and resistant to attacks. Another cool aspect of Skyward Finance is that its DAO allows the community to instantly release tokens instead of letting frontrunners like private investors and venture capital firms buy and sell tokens.

DAO Community is Growing

One of the major takeaways from 2021 is that NEAR's DAOs are rapidly evolving and diversifying. This is another trend that the NEAR ecosystem and the larger blockchain community can expect to continue into 2022 and beyond.

Sputnik DAO V1 is the hub of NEAR's DAO ecosystem, currently hosting 248 DAOs with a total of 17,633 transactions and total expenditures of $989,598 (approximately $9,292,324). The current total locked value (TVL) of Sputnik DAO is $113,969 (approximately $1,070,164). Considering those decentralized organizations in the Astro DAO ecosystem, it is safe to say that there are now over 400 DAOs on the NEAR platform.

Much of the growth in the DAO community can be seen in NEAR's blockchain infrastructure and DeFi space. By total assets, the largest DAOs are Aurora (the token trading bridge between NEAR and Ethereum) and Octopus (a platform for building application chains).

In 2021, the way DAOs experimented with governance tools on NEAR saw explosive growth. In the first half of the year, SputnikDAO underwent two iterations—one for distributing community funds and another for adding custom call capabilities. By the time Astro DAO launched in October, the demand for its product was so great that hundreds of DAOs emerged in just two months. In the fourth quarter, the NEAR community engaged in extensive discussions regarding liability protection, legal entities, and national regulation of DAOs.

Creatives DAO is a community-operated DAO vertical launched in 2021 to support the creative guilds and DAOs of the ecosystem. Discussions about MultiDAO have just begun, as well as how DAOs can better integrate collaborative decision-making work. NEAR also supports a research program hosted by Governauts, which is exploring DAO-based reward systems.

DAO projects are complemented by DAO Guilds, which support these and other blockchain sectors with various resources. Various guilds even act as specialized sub-DAOs, working in areas like law, software development, and DeFi. These and other guilds are there when application founders and developers want to leverage specific expertise and resources to improve their own projects, technologies, or DAOs.

DaoBox, located in Switzerland, is another resource for projects and organizations seeking to design DAOs. The company provides a toolkit for building DAOs in NEAR, helping them establish DAOs, obtain headquarters addresses, raise funds, and maintain compliance through accounting.

A Brief Outlook for 2022

Many developers based on NEAR will launch their projects in 2022, bringing more DeFi, NFTs, gaming, Metaverse, and other exciting cutting-edge projects to the NEAR ecosystem. These teams are coming to NEAR because they know that whether you are developing or simply using NEAR applications, joining the ecosystem is fast, easy, and secure.

With NEAR's $800 million global ecosystem funding initiative, we expect to see more DAOs established in 2022. This funding, along with Guilds and other blockchain-based expertise and resources, is crucial for helping DAOs succeed, and equally important, for guiding the masses from Web2 to the Open Web.