Why DeFi Investors Should Watch Out For NEAR Protocol (NEAR)

Why DeFi Investors Should Watch Out For NEAR Protocol (NEAR)

Discover why DeFi investors should watch NEAR Protocol, a scalable blockchain platform with top DeFi apps, passive income opportunities, and more.

Introduction to NEAR Protocol

NEAR Protocol is a versatile and highly scalable decentralized layer-1, proof-of-stake, smart-contract blockchain. It fixes many problems we currently see on other blockchains, such as high gas fees or slow transaction speeds. NEAR achieves this through the use of Nightshade, its innovative blockchain sharding technology.


It will allow NEAR Protocol to process millions of transactions per second (TPS) with infinite scalability. Nightshade also results in the NEAR ecosystem having low gas fees rivaling other crypto market networks, such as Solana


Interoperability and communication with other blockchains have become vital for Layer-1 blockchains to be successful. NEAR achieves this with its Ethereum Virtual Machine (EVM) compatible Rainbow Bridge and its Layer-2 chain, Aurora. They allow funds from NEAR Protocol, Ethereum, and several other Layer-1 chains to bridge to Aurora or Rainbow Bridge. This makes it easy to go back and forth through the blockchains of your choice.


Like many other smart-contract blockchains, NEAR is the native token of the NEAR network. The NEAR token is required to perform transactions or use smart contracts. NEAR owners can stake their tokens to protect the network, earn a passive income, participate in DeFi, and Yield Farm, and vote on governance proposals.


NEAR Protocol has a lot working in its favor, which has helped its popularity and market cap to surge recently, and it has a bright future ahead. Often it is considered the closest thing to what Ethereum 2.0 is promising to offer, except it is already available today.


Benefits of NEAR’s Sharding Technology for DeFi Markets 

A significant issue with current blockchain technology is the limit on how fast their networks can process transactions and the expensive fees required to use the network. Blockchains, such as Bitcoin or the current form of Ethereum, need nodes to verify every transaction.


Such consensus mechanisms limit how fast the network can run and often makes transactions expensive during peak traffic—often pricing out the everyday user from using the network. The big selling point for NEAR Protocol is how scalable the network is, all thanks to its ts sharding technology. 



Sharding breaks up the blockchain into smaller parts. Instead of nodes verifying every transaction, they only need to verify the transactions in their respective sharded block. It drastically speeds up the possible number of transactions per second (TPS). Other chains, such as Ethereum, plan to develop sharding into their protocol. NEAR focuses on an idea they call Nightshade, which is dynamic re-sharding. 


The amount of shards isn’t set in stone and can be changed depending on the needs of the network. Nightshade sharding can regularly adjust to add more shards during heavy traffic or decrease the amount during inactive periods. It allows the Ethereum competitor to lower fees and maintain lightning-fast speeds when processing transactions.


Like other PoS blockchains, people who want to become validators on NEAR must stake a minimum threshold of their tokens. Users not interested in running their own nodes can still delegate their tokens to validators. NEAR chooses its validators by having an auction system for each epoch. Validators with larger amounts of tokens staked will have more influence in this consensus process.


A portion of the validators will be responsible for verifying “chunks,” a small portion of a shard. Others will be responsible for producing blocks, including chunks from the shards. Finally, the remaining nodes will watch the network and detect bad behavior. 



As mentioned above, the key for new smart contract blockchains that can run decentralized applications to become successful is to be interoperable and work with other networks. The NEAR Protocol has significantly progressed in this area and hopes for further growth.


Rainbow Bridge

The Rainbow Bridge is NEAR Protocol’s EVM-compatible bridge that helps to facilitate the integration of assets and contracts between the NEAR and Ethereum blockchains. It is one of the first fully permission-less, decentralized, and openly accessible bridges in crypto.


The bridge allows you to transfer any cryptocurrency, non-fungible tokens (NFTs), or other assets from Ethereum and other EVM-compatible chains to NEAR and vice versa. The Rainbow Bridge provides NEAR token users access to Ethereum’s large liquidity pools while taking advantage of the lower fees for services on the NEAR ecosystem.


Any ERC-20 token can be used on the bridge, which makes it easier for developers to scale their ETH applications.



Aurora is a layer-2, EVM-compatible scaling solution that runs on the NEAR Protocol. It allows for the use of ETH apps on Aurora and NEAR. Developers can use smart contracts through Aurora to take advantage of the quick transactions, confirmation times, finality, and low fees that NEAR offers. 


Because NEAR has sharding implemented into the protocol, the scaling ability is vast, protecting NEAR and new projects built upon it for the future. While everyday users are priced out of using DeFi on the Ethereum mainnet, users on Aurora and NEAR will pay only cents for their transactions. Aurora can run 50x the number of transactions as Ethereum, but also the fees are 1,000x lower. Because of this, the Aurora ecosystem has been growing at a breakneck pace.


What Are the Top DeFi Applications on NEAR Protocol? 

DeFi (decentralized finance) brings traditional financial services to the blockchain and opens it up for everyone. Services include borrowing and lending crypto, swapping on decentralized exchanges, payment services, liquidity pools, etc. DeFi allows users to earn passive yields on their crypto as well.


Here's a list of the top DeFi protocols running on the NEAR ecosystem:

Ref Finance

Ref Finance was the first DeFi platform built on the NEAR network, similar to Uniswap. The decentralized exchange (DEX) also offers lending, issuing synthetic assets, farming, staking, and more.


It allows permissionless and automated trading between any native NEAR or bridged token. Liquidity providers can earn $REF by staking LP tokens. And you’re able to stake $REF tokens to earn more $REF over time, all while taking advantage of NEAR’s 1-2 second transaction finality, low transaction costs, and interoperable infrastructure. It is also a good place to start with Yield Farming and DeFi crypto investments in the NEAR Protocol.



NEAR’s largest decentralized finance (DeFi) protocol, Bastion, is an algorithmic, decentralized lending and borrowing exchange that runs on Aurora. Bastion is a fork of the popular Ethereum-based DeFi application, Compound. In recent months, Bastion Protocol has surged in popularity and has over $7.34 million of Total Value Locked (TVL) on the platform as of June 2023. You can also bridge funds from NEAR, Ethereum, AvalanchePolygon, and BNB Chain. While here, users can put assets up as collateral, stake assets to earn interest, leverage long and short assets, and borrow assets.


Because Bastion is built on Aurora and NEAR, the platform can reach capital efficiency, fast transaction speeds, low fees, and accurate liquidations. The native token on the platform is Bastion Protocol, BSTN. It is a governance token and can be staked to earn a passive income.


Meta Pool

Meta Pool is a liquid staking network built on the NEAR Protocol. The liquid staking mechanism lets you use your tokens even as you participate in markets while earning rewards, unlike regular staking, where your coins must be locked up. 


Meta Pool has its native governance token, $META, used to participate in the DAO and staking. The current staking reward is around 9.27% APR as of June 2023. On Meta Pool, users can easily stake their NEAR tokens and other DeFi coins using its automatic staking strategies and receive “Staked NEAR” tokens that they can utilize in DeFi. You can swap them back for the original NEAR tokens at any time.



Trisolaris is a decentralized exchange (DEX) on NEAR Protocol, running on Aurora (NEAR’s layer 2). Trisolaris offers faster trading at a much cheaper cost than Ethereum. While it is predominately a DEX, Trisolaris strives to be your home for all your DeFi needs. 


Users can swap on the Trisolaris decentralized exchange and provide liquidity, stake, and farm. Users can also bridge tokens from other chains such as NEAR, Terra, Ethereum, BNB Chain, Avalanche, and Polygon. Whatever your need is, there’s a good chance you’ll be able to find it here.


How to Earn Passive Income with NEAR Protocol 

You can earn passive income by investing in NEAR crypto using the following ways: 


1. Staking 

The NEAR network uses Proof-of-Stake (PoS) consensus to secure and validate transactions on the blockchain. Users can run their own validator or delegate their tokens to a validator. The current APY is around 9% depending on validator fees for staking your NEAR tokens. 


Where to Stake NEAR Protocol

There are several places where you can stake NEAR. One of the most popular places is the Official NEAR wallet, which is also the most trusted. There are other options, such as Dokia Capital and Moonlet’s Wallet. If you want to participate in liquid staking, options like Meta Pool might interest you. 


You can also stake NEAR on KuCoin Earn and grow your NEAR holdings conveniently on our platform. Review the various investment options and the latest APRs before subscribing to one of your choices. 


2. Yield Farming on NEAR Protocol

What Is Yield Farming?

Yield farming is when a user distributes tokens to smart contract users to motivate a particular behavior. In the past, one of the most popular yield-farming methods has been to provide liquidity to decentralized exchange pools such as Ethereum’s Uniswap. Users can deposit funds to provide liquidity and earn yields in a specified token. At the same time, the platform benefits from having increased liquidity and use on their application.


Where to Yield Farm on NEAR

If you are a fan of Yield Farming, many platforms allow you the chance to farm on NEAR Protocol, and the list continues to grow daily. The two most widespread and trusted applications for crypto investors are Ref Finance and Trisolaris, both mentioned above. 


What Rewards Can You Earn From Yield Farming?

Depending on which farming option you choose, you can earn over 100% APR interest, if not much higher, depending on what you decide to farm. 


With high rewards also comes increased risk. Always be aware of price volatility, and remember that rug pulls or smart contract hacks could happen. Using the most trusted and popular Farming applications is always a good idea.


3. Lending Liquidity in NEAR 

Visit KuCoin Crypto Lending to lend liquidity in NEAR tokens to our platform. It is one of the safest and most risk-free options to earn passive income on your crypto. It’s also a great strategy if you are into HODLing your coins. Lend your NEAR crypto and earn attractive daily interest over seven days, 14 days, or 28 days on KuCoin.


Top Competitors: NEAR Protocol vs. Ethereum vs. Solana 

NEAR Protocol, Ethereum, and Solana are prominent blockchain platforms aiming to provide dApp development and smart contract functionality. Here's a comparison of these three protocols:


Consensus Mechanism

NEAR Protocol: NEAR Protocol currently utilizes a consensus mechanism called "Nightshade," which combines elements of Proof of Stake (PoS) and sharding to achieve high scalability and performance.


Ethereum: Ethereum previously used a Proof of Work (PoW) consensus mechanism but is transitioning to Ethereum 2.0. In September 2022, the Ethereum blockchain migrated to a Proof of Stake (PoS) consensus mechanism called "Ethereum 2.0 Beacon Chain." As of June 2023, Ethereum 2.0 development is still underway, and the sharing capabilities still need to be rolled out on Ethereum. 


Solana: Solana employs a unique hybrid consensus mechanism that combines Proof of History (PoH) and Proof of Stake (PoS). PoH establishes the order of transactions, while PoS ensures network security.


Technical Capabilities: Scalability and Transaction Speed

NEAR Protocol: NEAR Protocol aims to address scalability challenges through sharding, allowing the network to process many transactions in parallel. Thanks to Nightshade sharding, NEAR can process as many as 100,000 transactions per second. 


Ethereum: Ethereum has faced scalability issues, resulting in high gas fees and slower transaction speeds of around 30 TPS. Ethereum 2.0 aims to improve scalability by introducing shard chains and a more efficient consensus mechanism.


Solana: Solana boasts high throughput and fast transaction speeds, capable of handling up to 65,000 transactions per second (TPS) due to its unique Proof-of-History (PoH) consensus and architecture design.


Ecosystem and Adoption

NEAR Protocol: NEAR Protocol has been working on building a developer-friendly ecosystem and has gained some adoption in the decentralized finance (DeFi) and gaming sectors. As of June 2023, the NEAR ecosystem is home to 750 active projects and boasts a DeFi total value locked (TVL) of over $69 million. 


Ethereum: Ethereum is the most widely adopted blockchain platform for dApps and smart contracts, with a large developer community and many projects built on its network. Ethereum has over 1,400 dApps running in its ecosystem, while its DeFi TVL alone exceeds $55 billion as of June 2023. 


Solana: Solana has gained attention for its high throughput and low transaction fees, attracting several projects and developers. It has seen significant institutional adoption and has a growing ecosystem. As of June 2023, the Solana blockchain is home to around 400 dApps, and its DeFi TVL is over $921 million. 



NEAR Protocol: NEAR Protocol prioritizes security and has implemented various measures to protect against vulnerabilities and attacks. Instead of using public/private key pairs, NEAR defines accounts as first-class entities and allows using readable account names. It provides a more user-friendly approach and reduces the risk of key loss compromising an entire account.


Ethereum: Ethereum, as the largest smart contract platform, has undergone rigorous testing but has experienced security incidents in the past. Ethereum 2.0 aims to enhance security through the PoS consensus mechanism.


Solana: Solana has faced challenges related to network stability and temporary outages, raising concerns about its overall security.


Note that the development and progress of these protocols are ongoing, and new updates and improvements can impact their respective features and performance. We recommend you refer to the latest information and updates from official sources and project websites to stay updated with the most accurate and current information regarding NEAR Protocol, Ethereum, and Solana.



In conclusion, the NEAR Protocol is a groundbreaking blockchain platform that has piqued the interest of DeFi investors across the globe. Its distinctive features, such as sharding and interoperability, position it as a formidable force in the ever-evolving DeFi arena. With an expanding ecosystem of top-tier DeFi applications and opportunities for passive income through staking and yield farming, NEAR Protocol is on track to become a promising player in the blockchain industry.


As an investor, staying up-to-date with emerging platforms like NEAR Protocol is essential for staying competitive and seizing new opportunities. So, keep a close watch on NEAR Protocol and consider immersing yourself in its ecosystem to uncover the various opportunities it has in store.


Key Takeaways

1. NEAR Protocol is a scalable and developer-friendly blockchain platform that offers unique features such as sharding and interoperability, making it an attractive choice for DeFi investors.


2. The platform's sharding technology increases scalability and throughput, while the Rainbow Bridge and Aurora enable blockchain interoperability, enabling seamless communication with other blockchains like Ethereum.


3. Some of the top DeFi applications on NEAR Protocol include Ref Finance, Bastion, Meta Pool, and Trisolaris, showcasing the platform's growing ecosystem and potential for further growth.


4. NEAR Protocol offers opportunities for passive income through staking and yield farming. Staking can be done on the Official NEAR Wallet, while yield farming is available on various platforms within the NEAR ecosystem.


5. To stake NEAR tokens, users can follow a simple process using the Official NEAR Wallet, while yield farming involves providing liquidity to DeFi platforms in exchange for rewards.


Further Reading 

> What Is Decentralized Finance (DeFi)?

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