NEAR Protocol and Polygon

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Polygon has gained a lot of traction over the last few months. With scalability being all the rage in the Ethereum community, it makes sense why layer-2 solutions like Polygon have gained such a large following. However, NEAR Protocol not only offers a highly scalable platform on the base layer, but it also provides a layer-2 experience that’s EVM compatible as well. Today, let’s compare both of these projects.

What Is Polygon?

So, to understand Polygon, let’s first look into layer-2. In the Ethereum network, the base Ethereum blockchain is known as “layer-1.” Decentralized networks prioritize security and liveness, which inevitably compromises the speed. The solution here is to build an additional network above the core blockchain called layer-2. The blockchain delegates complex calculations to layer-2, which exponentially speeds up overall throughput. Polygon is an example of a layer-2 solution.

The native token of the Polygon ecosystem is MATIC. MATIC’s main token utilities are:

  • Payment and settlement purposes between participants.
  • Staking and governance. More MATIC you stake, the more your voting power.
  • Pay transaction fees.
  • Reward users for providing computational resources and services.

MATIC has a hard upper cap limit of 10 billion.

Polygon Mechanics

Polygon has a multi-level ecosystem that utilizes EVM-compatible sidechains. The purpose of these sidechains is to unclog the main chain. Sidechains are side blockchains that are linked to the main chain via a two-way peg. The sidechain can have its own unique rules and ecosystem. Periodically, the sidechains are supposed to commit data to the main blockchain to ensure seamless operations.

Developers create their own sidechains to scale up their apps by utilizing the Polygon SDK stack. Polygon has gained in popularity mainly because it’s a lot cheaper to use than the Ethereum mainnet and is a lot faster.

Polygon uses a proof-of-stake (PoS) mechanism, and anyone can become a validator by staking their MATIC tokens. Validators have the following roles in the ecosystem:

  • Validating transactions by approving and confirming exchanges in the sidechains.
  • Network validators can take care of governance by voting on various upgrades.
  • Responsible for selecting block producers for each checkpoint (more on this in a bit).

Polygon sidechains are a section of the Ethereum ecosystems wherein users can quickly execute their projects without worrying about inflated gas prices and slow throughput.

How Polygon Ensures Speed And Decentralization

Polygon’s PoS is mostly used for “checkpointing.” This means that a team of block producers is appointed for each checkpoint, and these producers are in charge of maintaining and ensuring consensus. Having a limited number of producers allows Polygon to form blocks a lot faster than Ethereum (1 second block rate instead of 20 sec).

On top of that, Polygon ensures decentralization by delegating PoS checkpoints periodically to the Ethereum main chain. Every single block created by the block producer has to be validated via a proof of block committed to the Ethereum chain.

How To Interact With Polygon?

This is what you need to do to interact with a project based on the Polygon sidechain:

  • Identify the contract on the Ethereum network and declare the number of tokens you want to send to the Polygon sidechain.
  • A special smart contract called “RootChainManager” activates another contract called “ChildChainManager.” These two contracts work in tandem to ensure that the number of tokens you lockdown in the Ethereum network gets carried over seamlessly to the mainnet.
  • Now the user can move over to the Polygon network and accept their tokens.

Alright, how about the other way round? What if you want to leave the Polygon ecosystem and go back to Ethereum? These are the steps you will need to follow:

  • You must burn your tokens on Polygon.
  • The verification of this burn needs to be sent to the Ethereum mainchain.
  • Once verified, your resources will be re-allocated to you in your wallet.

What Is NEAR Protocol?

In the summer of 2018, Illia Polosukhin and Alexander Skidanov created the NEAR Protocol as the ideal dev platform for decentralized applications. Most other platforms suffer from low speeds, low throughput, and poor compatibility with other chains. 

NEAR Protocol is built from scratch and has the following features to enable good scalability and security:

  • NEAR uses a block generation mechanism called “Doomslug.” Doomslug allows practical or “Doomslug” finality, ensuring that the blocks receive finality in seconds.
  • NEAR is a sharded system that allows for infinite scalability. It takes a unique approach to scale up to billions of transactions in a completely decentralized way instead of depending on centralized processes like other protocols.

What Is Sharding? 

Continuing from the last point, let’s understand what sharding is. Sharding is a technique used in databases to handle bulky data. Sharding breaks down the whole database into manageable chunks called “shards.” These shards can be processed in parallel for fast computation.

Now, what exactly happens in a blockchain during sharding? Let’s take a look:

  • The entire blockchain state gets broken up into smaller shards.
  • Every single account belongs to one unique shard, and they can interact only with the accounts belonging to the same shard.

The problem with normal sharding is that it requires nodes to run on increasingly complex hardware, greeting cutting down the barriers to entry. NEAR’s sharding allows for small nodes to run on simple cloud-hosted instances.

What is Aurora?

Aurora provides an Ethereum-compatible layer-2 experience on top of NEAR and consists of the Aurora Bridge and the Aurora Engine. Ethereum devs can run their apps in Aurora to take advantage of NEAR’s several positive features, such as gas fees and sharding. Overall, these are the enhancements that Aurora is bringing along:

  • Apps can process multiples of thousands of transactions per second. This is an exponential improvement over Ethereum.
  • Aurora is extremely fast since it has a block time of 2 seconds compared to Ethereum’s 15.
  • NEAR’s sharding allows the ecosystem to scale horizontally.
  • Fees on Aurora are 1000x times lower than those on Ethereum. 
  • Completely compatible with Ethereum over the NEAR Protocol. 

DeFi On NEAR and Polygon

Polygon DeFi

Polygon allows you to use most of the popular DeFi apps prevalent on Ethereum, like Curve Finance, 1inch Exchange, and Beefy Finance. As per DappRadar, the top 5 apps by users in the last 24 hours are as follows:

Sushi seems to be, far and away, the most popular app.

Polygon’s increasingly rabid DeFi ecosystem has been a sight to behold. The following image shows you the total value locked (TVL) up in Polygon, which is currently around $5.19 billion.

The TVL reached a peak of $10.54 billion on June 15, 2021. Plus, when it comes to actual value locked in, Aave is – far and away – the biggest protocol, accounting for a staggering 40% of the total TVL.

NEAR DeFi

Compared to Polygon, NEAR DeFi still has a very young ecosystem that’s been growing steadily over the last three months. As of now, the TVL is only around $141.72 million.

The most dominant DeFi app that accounts for over 80% of the overall TVL is Ref Finance.

Ref Finance has some similarities with Uniswap V2, plus it supports more pool types, configurable fees, and it’s completely community-owned. Ref also happens to be the first DeFi platform on NEAR. The main aim of Ref is to bring together DEX, lending protocols, synthetic asset issuer, and more under one umbrella.

NEAR has recently launched a humongous $800 million grant fund that has been specifically aimed at creating a larger and healthier DeFi ecosystem. The fund has some major requirements, which include the following:

  • $100 million for startups
  • $100 million regional fund
  • $250 million ecosystem grants to be distributed over four years.

NFT On NEAR And Polygon

Polygon NFT

Polygon is one of the three blockchains that is currently available on Opensea (one of the biggest NFT marketplaces in the world) along with Ethereum and Klaytn. As per the site’s rankings, here are the top 5 NFTs on Polygon:

It seems like ZED RUN is the runaway leader when it comes to Polygon NFTs. 

So, what is ZED? It’s a provably fair digital horse racing game that’s built on the blockchain. The idea is for you to collect as many racehorses as possible to create a high-quality stable.

NEAR NFT

Currently, there are several NFT platforms on NEAR like Mintbase. Mintbase was started in 2018 by Nate Geier and Calorine Wend and raised $1 million from a seed funding round in 2020. The platform allows users to create and sell assets backed by NFTs. In addition, users can mint different digital assets as NFTs. These assets could range from event tickets to crypto art and everything in between.

Interestingly enough, Mintabase was supposed to launch on Ethereum. However, the high gas fees and increasing congestion prevented them from doing so. So instead, Mintbase saw NEAR as a better platform than Ethereum, with significantly lower gas fees thanks to a more efficient contract execution model.

Conclusion

Polygon has gained much traction over the last year, with layer-2 getting hotter than ever before. In addition, because of its close relationship with the Ethereum community, it has experienced a swift adoption rate.

On the other hand, NEAR has shown a lot of promise by solving scalability issues with sharding. Plus, the $800 million developer grant will bring in a significant amount of utility into the network. Both the protocols – Polygon and NEAR – provide a perfect platform for developers to build a scalable and efficient decentralized economy.

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