Introduction

NEAR Protocol is a decentralized platform that seeks to facilitate the development and deployment of dApps on its blockchain technology. More precisely, NEAR Protocol is a decentralized smart contract platform that focuses on creating a developer and user-friendly experience. Its consensus mechanism is Proof-of-Stake and it uses sharding technology to achieve speed and scalability. NEAR also provides a bridge and scaling solution for the Ethereum blockchain.

NEAR Protocol uses Proof-of-Stake (PoS) consensus to secure and validate transactions on the blockchain. Validators earn NEAR Token rewards for producing new blocks in the form of a static inflation rate of about 4.5% each year. 

Token holders not interested in being a Validator can stake to a Validator’s staking pool and earn a portion of Token rewards too. This incentivizes Token holders to stay involved with the community and support Validators who are keeping the network running smoothly. 

One of the main aspects to be aware about the blockchains that use proof of stake is the decentralization. Decentralization is by far one of the most important factors in a crypto ecosystem. As you probably already figured out, the validation system in place might fail to honor this by progressively moving towards a more traditional centralized environment. Why and how could this happen?

• As it was briefly mentioned previously, validators are incentivized to hold more and more NEAR to guarantee a spot in the network for themselves.
• Users look at the voting power (= total staked NEAR) of a validator as a good indicator of who to trust and delegate their funds to. This is understandable and that's why there's a need to constantly educate the user base and promote smaller validators.

Methodology

In this dashboard we are gonna asses the state of governance on NEAR in terms of decentralization basing on a different metrics:

• Distribution of staking by validators
• Power distribution by validator ranks
• Most common staking actions currently and over time
• Evolution of Nakamoto coefficient

Results

If we take a look at the distribution of staking by validators, we can see how Meta, Aurora and Valisaurus DEX are the pools holding a major percentage of the total NEAR staking, followed by Astro-stakers, BinanceNode and Future_is_Near, whose percentage are above 5%. The rest of the pools have a percentage below 5%.

Looking at the power distribution of valdiators grouping them by ranges, we can see how in September 2021, the top 10 validators holded more than 80% of the total staked NEAR. However, this percentage decreased over time registaring a percentage near to 60% on July. It is good for Near decentralization. In fact, the top 10 to top 50 percentage increased from 16% to around current 32%.

These first metrics situated above show a perspective of the current actions being done on Near in terms of Governance. In the first donut, we can see that the major of the actions (more than 60%) are “deposit and stake” actions. Followed by unstake actions like “unstake” or “unstake_all”, representing no more than 33% of the actions together. Unbond delegations and update validator actions represents a few percentage of actions.

If we group the staking terms and unstaking terms as same actions, we can see how overall, staking represents 67.4% of the total actions while unstaking 32.5, the rest are for unbond delegation and update validator.

In terms of monthly actions, we can see how October 2021 was the most prominent one with more than 54k staking actions and 13.4 unstaking actions. A big difference between both terms being more users staking than unstaking. From that point to April 2022, the numbers remained cosntant but during the past months it seems that the activity decreased a little bit. The other type of actions are neglegible.

Another interesting metric to measure the decentralization is the Nakamoto Coefficient, that represents how many validators are needed to accumulate more than 50% of the total current NEAR staked.

Based on a Monthly basis, we can see how the amount of needed validators has increased from 2 to 6. Showing an improvement on the Near decentralization.

Another important metric for decentralization is to take a view on the number of total amount staked versus the amount of validators that are holding the tokens.

In this case, we can see how in a monthly basis, the amount of NEAR staked increased over time. However, the situation is not similar fo the amount of active validators. In this case, it seems that the major amount of validators were registered on January 2022 month, and after that, the number of validators started to decrease while the amount of NEAR staked continued increasing. Another good point for decentralization.

Top 3 validators study

The final approach is to take an overview of the evolution of the governance activity around the current top 3 validators. Considering the current percentage of staking sharings, Astro Stakers, Meta and Aurora pools are the top 3 ones. Then, this part have been done taking into account these three main validators.

The first of the charts shows the percentage that the top 3 validators are holding among the total NEAR staked in a monthly basis. It can be seen how the percentage was around 25% during the first months and in March reached the highest value above 30%, now the percentages decreased a little bit.

Looking at the monthly Near staked, it can be seen that the amount experimented an uptrend. In January, the last of the 3 pools incoroporated, Aurora, started to acquire some Near staked. Since now, the total staked by these three pools has passed from around 25M to the current 50M of NEAR.

Finally, considering the last two charts, we can see how both, the amount of staking actions and the amount of delegators that this pools are capting decreased over the last months. While from September 2021 to April 2022 the numbers remained similar in a specific range, since May 2022 a downtrend has been done.

Key insights

• Overall, the major of the actions (more than 60%) are “deposit and stake” actions. Followed by unstake actions like “unstake” or “unstake_all”, representing no more than 33% of the actions together. Unbond delegations and update validator actions represents a few percentage of actions.
• Meta, Aurora and Valisaurus DEX are the pools holding a major percentage of the total NEAR staking, followed by Astro-stakers, BinanceNode and Future_is_Near, whose percentage are above 5%. The rest of the pools have a percentage below 5%.
• In September 2021, the top 10 validators holded more than 80% of the total staked NEAR. However, this percentage decreased over time registaring a percentage near to 60% on July. It is good for Near decentralization. In fact, the top 10 to top 50 percentage increased from 16% to around current 32%.
• The amount of NEAR staked increased over time, but not the active validators. In this case, it seems that the major amount of validators were registered on January 2022 month, and after that, the number of validators started to decrease while the amount of NEAR staked continued increasing.
• Based on a Monthly basis, we can see how the amount of needed validators has increased from 2 to 6.
• The top 3 validators was holding around 25% during the first months and in March reached the highest value above 30%, now the percentages decreased a little bit.
• The total staked by these three pools has passed from around 25M to the current 50M of NEAR.
• The amount of staking actions and the amount of delegators that this pools are capting decreased over the last months. While from September 2021 to April 2022 the numbers remained similar in a specific range, since May 2022 a downtrend has been done.