What Is Near Protocol and How Does It Work?

• Near Protocol is a layer 1 blockchain network. It provides a platform on which developers can build decentralized applications (dapps). The most successful layer 1 blockchain is Ethereum, so protocols like Near are seen as challengers.
• The key yardsticks for layer 1 networks are transaction costs, speed and the ability to maintain those features as transaction volumes grow. These factors are the focus for layer 1s like Near to improve upon Ethereum, which has encountered issues with costs and speed over the last few years.
• Near Protocol is faster and cheaper than Ethereum. More importantly, it promises to be faster than some of the other largest challengers. When fully implemented, Near is expected to be able to process up to around 100,000 transactions per second (TPS). Ethereum’s largest rival, Solana, averages less than 3,000 transactions per second, according to its own blockchain explorer. Ethereum averages double-digit transactions per second. Bitcoin does less than 10.
• Outside the crypto sphere, an important comparison is Visa’s (V) capacity. The global payments giant processes around 7,000-8,000 TPS, based on its claim of 232.5 billion transactions over a 12-month period. Near Protocol could eclipse that, though it has not yet realized its theoretical potential as of July 2022.
• “Near has built technology to enable transactions that are fast (~1 second), quick to finality (~1-2 seconds), cheap (less than a penny), and secure,” crypto research firm Messari noted in March 2022.[1]

Transaction Metrics like Frequency, TPM, TPS and Success Rate

Transaction Frequency

• Transaction frequency is quite stable, highest being 600K transactions in Dec 16 2022.
• We have seen 3.5M transactions out of which 81% have succeeded and 19% have failed.

Transaction Success Rate

• The highest number of failing transactions were ~25% transactions failing on Dec 16, 2022.
• It is currently hovering around 20% and not decreasing, it is quite a high number.
• The highest rate of failures are seen on Friday around 3PM UTC, followed by Friday 11PM UTC.
• The highest rate of successful transactions were seen on Tuesday at 1800 UTC.
• Function Call is the method that has seen the Most number of failed transactions.

Transaction Performance

• NEAR has worse performance than other L1s like Ethereum, Flow or Algorand.
• The current Max Transactions per minute are 625, where are the running average is around 17 transactions per minute.
• Median is around 26 transactions per minute which is not that high either.

Conclusion

• NEAR ecosystem seems to have done ok in the week of 14-21 Dec 2022 overall stats-wise, the failure rate seems concerning, the transaction throughput is not that high either and that hasn’t improved since Q3.
• The number of active wallets seem to healthy, but more would need to be done for a growing ecosystem.
• A lot of NEAR has been unstaked in the past week Dec 15-16 alone saw 2.5M $NEAR unstaked.

Transparency Report Overview

• This report build on top of the metrics in the Q3 Report dashboard

• The report dives deep into the following topics and covers the analysis from 14-Dec-2022 → 21-Dec-2022.

• The aim of this transparency report is to do a detailed analysis of metrics over time to actually see how the Near ecosystem did in the week from 14-Dec-2022 → 21-Dec-2022.

• High Level Numbers

• Transaction Metrics like Frequency, TPM, TPS and Success Rate.

• Bridge Transfers

• Governance Decentralization and Staking Metrics

• DEX Swap Metrics

Transaction Metrics like Frequency, TPM, TPS and Success Rate

Transaction Fee $NEAR overtime

• Transaction Fee has been decreasing and currently is hovering around 2K $USD per day.
• 256K $USD fee was collected in the week.
• 99% of the fee has come from FunctionCall method.

Number of wallets new vs active

• In terms of number of new wallets, Dec 15, 2022 was when we saw a spike with 10K new users transacting on the NEAR ecosystem,

• In the week have have seen 67K new wallets join the NEAR ecosystem.

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SQL Credits:

Dashboard Credits:

Governance Decentralization and Staking Metrics

• Decentralization is very important in any platform or ecosystem.
• We try to see how NEAR is doing in terms of de-centralization by looking at the following metrics:
  • The Share of the Top 10 validators as compared to overall ecosystem.
  • The GINI Index and the Nakamoto coefficient

    • Nakamoto coefficient, GINI Index, dominance by the top validator and new stakers[3]

      For deep dive into these metrics:

• What is seen is that currently Top 10 Validators account for 57% of the share of all the validators, this is up from 53% at the starting of the week.
• The Top validator has gained share from 11% to 12.1%

Bridge Transfers

NEAR → Ethereum

• Bridge transfers are another important metric to see how much volume is flowing out of NEAR.
• AURORA is the most common token transferred from NEAR → Ethereum with a cumulative of 1.02M $USD transferred followed by USDC for a total of 819K $USD.
• AURORA is surprising choice this was one held by USDT.
• Dec 21 saw high amount of AURORA being transferred to Ethereum.

Ethereum → NEAR

• Bridge transfers are another important metric to see how much volume is flowing out of NEAR.
• USDC is the most common token transferred from Ethereum → NEAR with a cumulative of 963K $USD transferred followed by ETH for a total of 37K $USD.
• Seems like USDC is the preferred token of choice for transfer from ETH which was one held by USDT
• Dec 17 only saw 300K of USDC transferred to NEAR.

DEX Swap Metrics

• Daily Number of Traders is quite variable between 300-400 traders per week.
• The Daily Swap Volume is also quite variable and varies between 1M - 2M $USD everyday.