About eight months ago, NEAR Protocol launched its mainnet to a small community of token holders, and a number of reputable VCs — a16z, Pantera, Electric Capital, Dragonfly Capital, Coinbase Ventures. Since then it has largely flown under the radar for most of crypto in spite of exceptional fundamentals and a strong focus on user-experience.
A New Phase For NEAR Has Arrived:
With the launch of the Rainbow Bridge, Open Market Protocol Flux and Pulse, Decentralized exchange Ref.Finance, as well as the upcoming launch of the NEAR EVM and Mintbase on NEAR, NEAR is entering a new phase. Now before you make an instant comparison to another L1 and everything that L1 has going for it, consider the following characteristics that NEAR is positioned to dominate within crypto:
NEAR is going to be able to scalably handle Ethereum and NEAR applications at affordable rates and with quick transaction speeds with streamlined storage and predictable fees. Once the EVM is launched, NEAR becomes a proper ‘World of dApps Protocol’ that will not only handle congested DeFi dApps on ETH, but also future Open Web solutions relating to Gaming, NFTs, Social Tokens, and the next wave of decentralized finance.
The Multi-chain Interoperability of the Future
The Rainbow Bridge was the first product that utilizes Rainbow Protocol. Rainbow Protocol provides 80% of the needed infrastructure for replicating the rainbow bridge with other L1 Chains, such as Cosmos and Polkadot. This means, effectively, that NEAR is actually building fully permissionless and decentralized bridges to a network of other protocols. In the game of castles, that means that while other L1s might have bridges to 1 or 2 other protocols (and bridges that are not permissionless or decentralized at that), NEAR will be the hub for interoperability.
“Derivatives might go to a chain that specializes in that. NFTs might go to a chain that specializes in that. Interchain operability will be a big thing. Where assets can be indexed and referenced, even if they are remote – to a particular chain. Bitcoin had no knowledge of other chains. And nowadays chains do have knowledge of other chains.“
With the blossoming Sputnik DAO infrastructure on NEAR, NEAR’s focus on interoperability is extremely encouraging for streamlining the next generation of on-chain, community governed organizations that can call contracts and move assets between a universe of chains.
Remember everything about how community and DAOs are the future of crypto? Well NEAR is building a world of dApps that will be the hub of a universe of chains. It’s happening on NEAR – Yes both, the World of dApps and the Universe of Chains.
User Experience and the NEAR Account Model
Jumping off from these two points above, we can add the final knock-out punch with the NEAR account model. SO many projects in crypto today are entirely inaccessible for most non-crypto people. There are too many new processes, transfers, and addresses that have to be made, a process that is messy and not user-friendly. NEAR is built from the ground up to fix that problem. That is what the NEAR Account model does so well that other projects either have to try to build into their protocol at a later point, or simply ignore it altogether and limit their scope to crypto-natives. NEAR will scale to entirely new users – the next generation of gamers, existing Fintech, artists, creators, you name it.
NEAR is Future Proof:
Why does being future proof matter? Because the tempo of innovation into the future is increasing extremely quickly. Existing projects today should enjoy the moment, but anyone interested in the future of the space needs to be asking themselves about the future in an honest manner.
How will interoperability across chains roll out in the coming years? Will that be decentralized and permissionless? Will it have to be?
How will crypto appeal to the masses or those looking for alternatives to the existing system? Is friendly UX and easy onboarding a means of accelerating that process?
What type of governance structure will not only be streamlined on a single Layer 1, but also across Layer 1s? How does community-based governance play out in the coming years, with existing infrastructure and silos?
The final appearance of the NEAR Team at ETH Denver featured NEAR Co-Founder Illia Polosukhin as well as NEAR’s Head of Ecosystem, NiMA Asghari. The focus of the discussion was on the nature of DAO’s and the value of DAO’s in the context of the development of crypto. A full PDF Transcript of the talk can be found here, while a YouTube video of the event can be found here.
The Big Picture Value of Decentralized Autonomous Organization (DAOs)
Illia’s contribution to the panel was largely focused on explaining the value of DAO’s in the context of future business models for open source protocols:
“I think, at the highest level, you know, the kind of original discussion of DAOs is about how people can self organize in new ways, and share resources and build something and be aligned…I think it unlocks a lot of on-chain, resources and other things like governance, management, and investment and stuff like this. So it kind of solves this problem right now, while we’re still figuring out just a kind of future pathway that tries to understand how we build companies in the new world?”
As he explains, DAO’s are new governance vehicles for open-source protocols that will seek to align stakeholders around common resources, objectives, and long-term opportunities. They will also be important for handling funds and investments on and between protocols. The new world that Illia refers to, is that of self-executing code: In which protocols themselves must handle contracts and engagements with other devices and protocols, while also accommodating validator and token holder governance preferences.
The Emerging Field of DAOs
The substance of the panel – and the most important points pertaining to the future of DAOs – were brought up by NEAR’s Illia, as he discussed a variety of big-picture topics on how DAOs fit into new paradigms forming around crypto.
A first paradigm relates to DAOs for inter-protocol business development purposes:
“Oh, yeah, I think one of the examples that is emerging for sure is different application DAOs starting to be leveraged more for business development, and like, where either like individuals or, or other DAOs, or other organizations can pretty much apply to, for this DAO to work with some other party, right? And I actually think that’s really interesting, because like, if we imagine that each organization is, you know, operating a DAO, then well, it’s like, almost they are, you know, requesting work or requesting some kind of collaboration from each other. And so that’s kind of already happening through some types of proposals and things like that.”
DAO’s would effectively put collaboration on-chain for all stakeholders to visualize and participate in ongoing collaborative processes. This is directly to the second paradigm of DAOs – as a common API for different stakeholders to collaborate within:
“There’s more projects launching, and then this DeFi explosion, right, where kind of everybody wants to have their own governance, kind of fits our platform, I think this just showcases the need, where the complexity of interaction between all of these parties will just keep growing. And if there is no clear “API” for them to interact with each other, right? Like, we’re kind of going from individuals interacting on the internet, right, to projects, like, you know, Balancer and 1inch, for example, now interacting with each other, they are interacting through smart contracts, but same time, both of them now have a governance layer, that can change, like, you know, a bunch of stuff about how these things work. And so, like this governance, people who are trying to make decisions, they need to find a way to interact with each other.”
DAO’s in this sense, are necessary infrastructure for the expansion and maturation of existing protocols and products running on-chain. As a common ‘API’ like tool, DAOs have the capacity to unify and coordinate governance between protocols.
Challenges for DAOs: Legalities and Membership
As the concept of a DAO is not even 10 years old, they remain extremely young with many remaining challenges. Two of the largest challenges for DAOs revolve around legal considerations, as well as the notion of membership.
Legal considerations were explained in the panel as being constraints from two sides:
“Yeah, and I think for the LAO and people who are dealing with legal doubts, you have like these constraints from two sides, you have to formalize with respect to law, but also code and then you also have humans and communities.”
In short, DAO’s are still trying to navigate parallel worlds of legal jurisdictions, hard-coded rules, and human behavior and decision making. This ties directly into the second challenge, revolving around membership:
“I would say it’s also always a question of like, how do you define memberships? Like you could, you could imagine in certain organizations, especially as they grow that you have certain levels, like, when you think about shares in a company, you have like voting shares, non voting shares. I mean, even, even already in Moloch V2, you have this idea of shares and loot, or we have non-voting members that have a say, if they want to reach me, they can get some of the of the asset in the DAO, but they they’re not able to vote. So I think it will also be part of that, we will have to define what do we mean, when we say membership? What kind of a machine are we interested in? And things like that.”
In short, DAO’s have yet to fully compliment the complexity of human organizational behaviors and are in need of nuances and new structures in order to accommodate a larger host of interests and behaviors for different stakeholders. As the quote above details, the next wave in DAO experimentation is precisely focused on delimiting these different roles and the weight of votes per member.
NEAR’s NiMA Asghari went deeper on this point specifically as it pertained to formalizing DAO Standards:
“We should probably come up with standards for DAOs, too. For example, I remember with MetaCartel, there was no way initially to upgrade the DAO. So everyone had to rage quit and then join the new DAO. So something like this should be formally defined. So if two DAOs have some kind of bond or collaboration or alliance, they know that we will have like a seven days notice period for this other DAO to get dissolved. And then like we have to return the assets and stuff. So I think that’s probably one of the reasons why we do really need to formalize DAO standards.”
Social Tokens and DAOs
One interesting area of DAO innovation is discussed in relation to using Social Tokens for DAO interactions. As the discussion goes, with a social token it is possible to limit engagement with the DAO to those willing to purchase the DAO social token in question:
“At the root of it is you need to hold a token in order to be in this chat. And that is kind of like this beginning of a membership, or, you know, I hesitate to say, identity, because that’s a huge rabbit hole. And then you go to mixing your platform username, because we allow token holders to assemble and coordinate through telegram and discord and the bot just controls. If you were to move those tokens out, the bot would just kick you out. It’s very, very simple. It’s not quite a DAO, but we’re seeing use cases of people using Snapshot, which is an off-chain voting tool, and Collab.Land and to like formalize. I think this notion of membership, and this kind of standardization, I think, will emerge regardless.”
The Tip of the Iceberg
DAO’s are only just starting to become common as a means of handling protocol governance in and between protocols. The panel concluded with the clear point that the current state of DAO’s is very much the tip of the iceberg. NEAR’s Sputnik DAO is one representation of the constant innovation in the space, and the many high hopes for a future involving DAOs both inside Web3 and for existing Web2 applications.
“I mean, in the Web2 space, you’re actually seeing, I think it’s Stir, they, you know, raised 4 million in October to help influencers collaborate on YouTube. And I think it was just yesterday, they announced a $100 million raise. So within four and a half, five months, they went from seed to series A, because there’s demand there, like on the Web2 space. So it’s really like this collision between Web2 creator economy influencers that needs to start collabing because they’re getting demonetised from these different platforms. And then now you see them looking into crypto with the explosion, interest, mainstream adoption, and they’re just looking for another revenue stream. So I think we’re just kind of at the tip of the iceberg.”
Friday marked the launch of ETH Denver. As one of the most popular and memorable conferences of its kind, ETH Denver is a place for networking, product announcements, and community building across the crypto space. NEAR Protocol’s Peter dePaulo took the stage in the opening ceremonies to send a message to the crypto world about NEAR – it’s focus and how it is an accommodating and win-win Layer 1 / Layer 2 Hybrid solution for the space.
“Why are we at ETH Denver? There is a misconception about NEAR that has been bothering me since we started this project. The misconception is essentially that we are a competitor in some way to Ethereum. I am here to contest that.”
To kick off the presentation Peter focused on clarifying the position of NEAR in relation to Ethereum: NEAR is not a competitor of Ethereum. Rather, NEAR is focused on collaborating and bridging – not only with Ethereum but multiple other L1 blockchains. In the context of the larger crypto space, Peter explains NEAR’s role as being the Developer Usability Team:
“I see NEAR’s role in the Ecosystem as the developers usability team, think of us, as the people who, rather than spending all of our time focusing on the scaling side, we are the people thinking: How can we make the onboarding experience, how can we make the developer experience better?”
NEAR GRANTS ARE HERE!
The second most important announcement in Peter’s opening ceremonies speech was that the NEAR Grants program has officially launched with an astounding $1 Million dollars in available funding, split between NEAR and FIAT USD.
“These are for NEAR projects, but they serve 2 core categories. 1 is to extend the technology, and 2 is to reward stellar contributions within the NEAR collective, and the NEAR Ecosystem. Broadly we are really interested in these programs and these projects that are focused on adoption usability, and intuitive developer experience. That is the thing that we are really , really looking for.”
With the crypto market booming, NEAR is making a big play for bringing new developers into crypto – for the benefit of all projects. A full transcript of the talk can be found here.
In crypto, constant innovation is a privilege that is easy to forget. As Bitcoin has demonstrated with peer-to-peer value transfers, and Ethereum has demonstrated with decentralized finance, new forms of tokenizing assets, building crypto-denominated protocols, and writing smart contracts results in the frequent possibility of creating something entirely new and valuable. Like Non-Fungible tokens, Social tokens are a new and quickly emerging asset class in crypto that has garnered serious attention in recent months. Many have even said that 2021 will be the year of Social Tokens. What does that exactly mean?
Define Social Tokens: The tokenization of value tied to a specific person or groups of people, and written into smart contracts.
To date, tokenization has largely encompassed assets: In DeFi this refers to certain financial assets, while for NFT’s this relates to things like content, art, music, and so forth. But with Social Tokens, what is tokenized is access to a specific person or community. Specifically Andrew Steinwald, explains the following about Social Tokens:
Personal Tokens: “Personal tokens are created by individuals and often used to exchange forms of labor. For example, a graphic designer will do one hour of work if paid 100 of their social tokens. In this example, the individual drives the token’s value by performing a service.” (Source)
Community Tokens: “Community tokens are generally used for memberships or communities. For example, creators will launch a community token that users must acquire in order to gain access to private Telegram groups, Discord servers, newsletters, etc. They are also given as rewards and thus incentivize behavior within a community. For example, a community could launch a competition where participants compete to create the best infographic and then token holders vote on the winner.” (Source)
That is to say, that social tokens, unlike other forms of tokenization, center upon the accessibility or services of a particular person or community, pre-defined in the token contract. For many, the concept may initially be somewhat difficult to wrap their minds around. But Social Tokens represent a new frontier of the gig economy, and perhaps new life for industries like media.
The Future of Freelance Work: Issue tokens for yourself that are predefined about when you are available, how many hours of work a token encompasses, and what kind of work can be traded for the token. Allow any individual to purchase your token, and thus pay for your services – either up front or as needed. As a single freelancer becomes more known, popular or valuable, the demand for the token will equally increase due to limited supply.
Access to Special Communities: Clubhouse is a new audio-based application that is invite only. Similar communities in crypto, could allow access via a social token. These communities may range from high profile newsletters, to entire media outlets, to niche groups of like minded people that want to guarantee buy in from other users. Social tokens effectively merge commitment to a group by requiring a ‘buy-in’ up front.
2021: The Year of Social Tokens?
In Forefront’s comprehensive review of Social Tokens, they ask whether 2021 will be the year that social tokens go mainstream. The creator economy or ‘passion’ economy as it was originally known, is already becoming popular:
Messari estimated in October of 2020, that Social Tokens – fully diluted – were valued at close to $200 million USD. In 2020, bigger investment names like Fabric and a16z jumped on board social token platforms like Rally or Roll. Altogether, such trends have led many to speculate about what kind of value and opportunities social tokens might unlock in the years to come – and if truly 2021 will be the year of social tokens?
Social Tokens and NEAR Protocol: A Sign of Things To Come?
In the short time since Mainnet Launch, NEAR has already garnered a reputation for being a hub for non-fungible tokens, artists, and content creators. Social tokens, in many ways, are a natural next step. MintGate is a current project in the Open Web Collective that holds the promise of incubating a home for Social Tokens on NEAR.
According to Forefront, Mintgate is described as “a platform for building tools to empower the creator economy.” With a leading vision “to reinvent value creation by giving creators an easy way to monetize their content with social tokens. We turn any online content into exclusive rewards.”
Mintgate seeks to inaugurate ‘permissioned-tokens’ as a form of accessing content, and creating new value streams for creators. Beyond only permissioned tokens, Mintgate will also offer individuals the ability to launch their own social tokens for themselves, their content or their community.
“This means if someone wants access to your blog, article, design board, video, album, website, or software they need to hold your social token or any other ERC-20, NFT or multi-asset token you specify.” (Mintgate.App)
Ultimately, social tokens are an emerging asset class with an untested frontier ahead. While expectations remain high for the year, it is still unclear exactly how much adoption social tokens will garner, and where in the niche market things might go mainstream.
“The non-custodial crowdfunding solution that’s open to anyone.”
As the NEAR Ecosystem continues to mature, new projects continue to build and onboard to the protocol. While many of these projects represent a new frontier of innovative Web3 solutions, others are hard at work re-imagining existing solutions in new and more accessible ways. In this context, the NEAR Team is pleased to welcome Common Fund to the NEAR Ecosystem.
Common Fund is one of the world’s first non-custodial crowdfunding platforms. Similar to popular crowdfunding platforms like Kickstarter, Common Fund is a place where startups, individuals, and passionate creators can get funding for their projects. However, unlike these legacy funding models, Common Fund is fully smart-contract based: Pledged funds are transferred directly between funders and campaigns, without any intermediary involved.
As an innovative model for crowdfunding that is positioned to scale into the future, Common Fund inverts traditional practice by placing value in auditable and transparent smart contracts so that different stakeholders can interact with one another in a fully decentralized manner. As Kieran Mesquita, CEO of Common Fund states:
“The vision of Common.Fund is to be a platform where projects are able to raise the support they need to bring forth wonderful ideas and initiatives into the world through decentralized cryptocurrencies. This way, projects can garner support from anyone from anywhere in the world.”
Not only is the platform accessible to anyone around the world, it also allows for payments to be made in global cryptocurrencies—making it usable in any particular country. Common Fund is the blueprint for the future of both supporting and bootstrapping projects. It facilitates cryptocurrency-based funding in combination with a platform that is non-custodial and decentralized, while simultaneously providing a stellar user-experience.
Why Build On NEAR?
Common Fund initially started development on Bitcoin Cash before deciding to make the switch to NEAR. According to CEO of Common Fund Kieran Mesquita, Common Fund is looking for a larger ecosystem and community interested in helping early crowdfunds get off the ground faster. NEAR, while young and still under development, offers the best of both worlds: bridging over to ETH, cheap transactions, and an easily accessible and user-friendly wallet for getting connected to the platform. In addition to these benefits the Common Fund team has also found NEAR to be quick and easy for their developers to launch smart contracts —making the platforms’ pathway to market much faster.
“Obviously NEAR transaction fees are a lot, lot cheaper than ETH. It just doesn’t make sense if we are going out and saying that we are able to provide you a platform that has much lower costs than kickstarter and Indiegogo and have someone pledge 10$ in transaction fees.”
Common Fund Future Developments: What To Expect?
“It is our goal to fully decentralize Common.Fund in the years to come.”
In its current form, Common Fund represents an initial foray into a future of decentralized applications and open-source collaboration. In the coming months to years Common Fund will be growing their team—currently at roughly five full time people—and work to fully decentralize the platform so that anyone from anywhere can easily start a campaign or fund a new initiative with their cryptocurrency of choice. More immediately, stable coin integration and pledge routing through a DEX are at the top of the agenda for the Team.
From a broader perspective Common Fund sees its mission as one piece of a much larger process of democratizing access to finance around the world. Through Bitcoin, other Cryptocurrencies and DeFi, finance and money have become systems that are now Open for anyone to participate in. Common Fund represents the next generation of solutions that embodies that same spirit, but for crowdfunding and supporting new projects, companies, and passions.
“I view the whole movement of crypto’s as a way to even the playing field – we give everyone equal opportunity and equal access to world wide finance. So I certainly take the optimistic role and hope that Common Fund can be a component in that process.”
Be sure to follow the development of Common Fund in the coming months, as more campaigns launch on the platform and new crypto’s become compatible for fundraisers and projects alike! To get in touch with the Common Fund Team you can find them on Telegram or visit their website.
Since its launch to mainnet in Quarter 3 of 2020, the NEAR Ecosystem has expanded rapidly across multiple avenues of development. As startup and crypto veterans alike will say, product development very much foreshadows business development: A well-built and well-designed core product that fits a clear market need lays a foundation for robust user engagement, protocol adoption, and ultimately, value into the product.
The NEAR Ecosystem is very much in the early stages of breaking out as a leading L1 Protocol: The protocol has launched with unique developer incentives, the wallet – while still being tweaked – is built upon an innovative account model that promises to be more user-friendly, and developers can start building their own dApps in common programming languages like Rust. How have these developments affected business development on NEAR? And what can we expect from the protocol in the future?
DragonFly Joins NEAR Validator Advisory Board
Image from near.org
This was one announcement that was slightly overlooked, especially in terms of its implications for NEAR. DragonFly Capital is a predominantly China – USA focused Crypto-Asset Investment firm that has invested in a number of different crypto projects. In this announcement, Haseeb explains how DragonFly now runs the 3rd largest validator on the protocol with a Validator Stake of 17.4 Million NEAR.
This is important for two primary reasons: First, it shows that at its current stage of development NEAR remains a very attractive investment to large investment firms that specialize in making highly technical investments. Second, the long-term value proposition of NEAR as being developer friendly as well as more scalable and affordable than ETH has been validated by the DragonFly Investment: It’s not only the NEAR team that realizes or believes in the product that they are building.
First, that NEAR is not out there to kill Ethereum. It’s very much a second city in the crypto space:
“The third path is what NEAR is taking: building a whole new well-governed and compatible layer-1 that can bridge back to Ethereum. In this metaphor, NEAR is trying to build a second city: the Chicago of smart contracts.”
Second, that technically-speaking, NEAR is already available as a massively more cost-efficient and accessible Layer 1 than what newcomers can expect to get from Ethereum:
“To give you a sense for the sheer scalability improvements NEAR offers, each shard on the NEAR blockchain can process 10x more transactions individually than Ethereum 1.0. The NEAR blockchain will eventually have over 100 shards. This means that NEAR will eventually be able to process over 1000 times more transactions per second than Ethereum 1.0. Full sharding is not yet on mainnet, but even the current design is massively more scalable than Ethereum.”
The Open Web Collective Launches Its Second Batch Of Projects!
Image from Open Web Collective
If NEAR is very much in its early stages of breaking out, then the second batch of projects launched in the Open Web Collective stand as a clear signal of what is in store for the protocol in the months to ahead. More concretely, these projects hold the promise of building out the foundational infrastructure of the Open Web across key areas of development: Privacy, Accessibility, Data Management, and Identity.
Here are the projects incubating right now on NEAR:
A more comprehensive analysis of this batch of the OWC and its implications for NEAR will be released in the near future. For now, the resounding conclusion is that there is a plethora of solutions being built for NEAR – across some of the most important areas of development in crypto to date. Time will tell how these projects mature, but for the moment it is a very strong signal that NEAR has a lot of development coming down the pipeline.
Project Updates on NEAR: Mintbase, Common Fund, Flux and 1inch!
In light of the other two announcements there are many more updates about business development inside of the Ecosystem:
For starters, Common Fund has announced that they will be building on NEAR to launch a project that pioneers the future of non-custodial crowdfunding.
Mintbase recently had a business update from CEO Nate Geier on the bi-weekly Createbase call. He explained that development to test net is moving along quickly and that Mintbase has added in a number of new features including:
– Voting mechanics
– Follow other users and manage/customize your profile page.
– In the future you will be able to have multiple tethered NEAR accounts to your profile
– Option to flag for NSFW
– Dark and Light mode for the webpage
– Transfer tokens (and airdrop to multiple addresses at once) with verification badge showing it is a legit NEAR account.
– Languages for the website: Chinese, Portuguese and English
Flux Protocol continues to build out its core protocol infrastructure in what is expected to be a Main Net launch in the coming months! While a lot of internal development is taking place on Flux, they have started to attract serious attention from DeFi veterans as well.
Finally, in late November of 2020, the NEAR Team announced that Mooniswap is bringing its next generation AMM by 1inch to NEAR. This announcement while largely overlooked, has contained within it the promise of creating the world’s first sharded decentralized exchange:
“To start, Mooniswap will migrate their protocol to NEAR’s virtual machine along with establishing a native liquidity protocol on NEAR. The NEAR Rainbow Bridge and EVM integration create a seamless path to market on NEAR in the short term while they architect long term solutions for even more scalability. Eventually, the team will rebuild their core protocol native to NEAR, based on a sharded architecture, and become the first sharded decentralized exchange.”
Image from near.org
Altogether, the clear takeaway is that NEAR is growing. Projects are developing quickly within the NEAR Ecosystem, a class of new projects is being incubated through the Open Web Collective, and the Protocol itself remains an attractive investment for crypto veterans interested in making a long-term play on the future of the space.
Be sure to follow us on Twitter for the latest NEAR Ecosystem news and content.
Today, 4NTS Guild is excited to announce the launch of a New 2021 Initiative that will see NEAR enter the classrooms, campuses, and universities of the world. The 4NTS Vector Strategy.
The 4NTS Vector Strategy refers to our approach to bridging the gap between the confusing and oftentimes maddening world of crypto, with the larger intellectual and business communities that work across industries: Finance, Political Science, Economic History, Entrepreneurship, Emerging Technologies, and Education (among others).
This is very much the beginning of our outreach strategy, but it is one that will snowball over time to bring new minds, ideas, and events to the NEAR Ecosystem from a community of curious and creative intellectuals. To kick off that initiative, 4NTS is pleased to public The Starters Guide To The Open Web. This introduction is meant for those interested in the paradigm shift that crypto-currencies represent, from a Macro perspective.
This Starters Guide Kicks off the 4NTS 2021 Vector strategy. In the coming months 4NTS will be reaching out to academics, business leaders, and innovation experts – and welcoming them into the NEAR Ecosystem so as to create value at the intersection of different fields of expertise. This may include livestreamed conversations: Interviews: Publications, and Events such as Symposiums and Conferences.
Are you currently studying at a University – What areas that you are studying could be enhanced or complimented by the value proposition of the Open Web?
Do you have an old professor or business partner who would be interested in the Open Web and the value proposition of NEAR?
What topics or research do you believe is important to bridge the gap between crypto and existing industries?
The NEAR Protocol Main Net Launched in Quarter 3 of 2020, roughly two years after initial development began. In tandem, on March 1st, 2019 (while NEAR was Building) Melon Protocol, now known as Enzyme Finance, launched it’s Version 1 on Ethereum.
Since that time, both protocols have been developing at breakneck speed: NEAR, for its part, is finalizing the NEAR – ETH Rainbow Bridge, has onboarded a number of new projects, and is also finalizing updates to its wallet. Enzyme meanwhile, has gone through a rebranding, has more than 435 active funds on its network, and continues to recruit fund managers onto its protocol.
In The Case for NEAR Episode 1, we put forward an argument for why Enzyme would benefit from bridging onto NEAR, so as to allow future fund managers to operate funds on either NEAR or Ethereum. This starts, in Section 1, with an overview of what Enzyme is and where it stands in its development. Section 2, explains how Enzyme currently works on Ethereum. Sections 3 and 4 explain the value added by NEAR Protocol, and puts forward a thesis specifying why Enzyme should consider migrating onto NEAR.
What is Enzyme? (Previously Melon)
“Melon is an Ethereum-based protocol for decentralized on-chain asset management. It is a protocol for people or entities to manage their wealth & the wealth of others within a customizable and safe environment. Melon empowers anyone to set up, manage and invest in customized on-chain investment vehicles.” – https://melonprotocol.com/
As described on its website, Enzyme is an open-source protocol that allows fund managers to create and manage a pooled asset vehicle on chain at “a fraction of the cost” of a traditional fund. In short, Enzyme is a decentralized solution for financial asset management: Whereas traditional funds are complex, riddled with fees, intermediaries, and legal documents, Enzyme embeds all of the rules for managing a fund between a portfolio manager and different stakeholders on a smart contract level – making it more cost-effective and straightforward, while still maintaining trust, asset custody for investors, and security.
Rules and Parameters Up Front: Requires fund managers to define the key rules and parameters of the fund which are in turn deployed to the blockchain and enforced by smart contracts – no more need for fund administrators.
Transparent and Immutable Transactions: All transactions are recorded (transparently and immutably) on the blockchain – no more need for complex auditing.
Investors Maintain Custody of Assets: All assets remain in the custody of investors themselves and can be redeemed at any time – no more need for custodians.
Fund Performance is Transparent: All data about fund performance is on-chain thus transparent, enabling investors and managers alike to compare fund allocation and performance. Transactions on the blockchain are near instantaneous, and unlike transactions in the traditional world which can take several days, do not require clearing and settlement services.
Reduced Fraud and Malicious Behavior: By enabling investors to retain custody of their assets and enforcing fund parameters on the blockchain via smart contracts, Enzyme dramatically reduces the ability of fund managers to act fraudulently or malevolently.
Save Time and Money: By automating so many back office and intermediary functions, Enzyme drastically cuts the operating cost of managing a fund – thereby enabling managers to pass on these savings to investors.
Enzyme is a place to create, manage, and invest in investment funds. In this sense, it epitomizes the transition from traditional, centralized finance, to innovative, decentralized finance. Concretely, Enzyme works in the following manner:
As an investor, you head over to Melon Terminal and can browse from existing funds to invest into. DAI, wBTC, wETH, and USDC are all available to invest into a fund. Once you have decided you would like to invest in a specific fund, you simply have to: (1) Approve the smart contract to transfer tokens into the fund (and Pay the Gas Fee). (2) Read the investment request. (3) From which the request is executed by anyone with access to the contracts.
As a fund manager, with meta-mask connected, you can log into Melon Terminal, name your fund, set your fees, agree to the rules of your jurisdiction and then create a fund. Once your fund is created it becomes listed on the Melon Terminal, and if it is made public, it is open to investment from any prospective investors.
Enzyme explains its goal as providing a “Platform for decentralized asset management.” As one of the first projects to build such a solution as a Layer 2 Protocol, Melon has the opportunity to revolutionize and democratize how assets (and future crypto / digital assets) are managed in an open, permissionless and secure manner.
To date, Enzyme boasts a total of 432 funds with more than 4.6 million USD in assets under management. An overview of existing funds can be found at:https://melon.avantgarde.finance/.
What Does NEAR Offer Enzyme?
While Enzyme has built an exceptional protocol on top of Ethereum, it stands to gain much more from bridging onto NEAR. The two main reasons have to do with (1) Low transaction fees on NEAR, as well as (2) the long term usability value proposition. Both are outlined in detail below:
(1) Low Transaction Fees on NEAR
Enzyme is designed for either investment managers or investors to interact with the protocol. However, in its current form this becomes difficult, time consuming and costly due to high fees on the Ethereum Network. As it currently stands, it takes 9 Transactions to deploy a customized Enzyme smart contract when setting up a fund. Gas Fees can fluctuate depending on usage on ETH as well as the amount of time.
1. Begin Setup
2. Accounting Contract
3. Fee Manager Contract
4. Participation Contract
5. Policy Manager Contract
6. Shares Contract
7. Trading Contract
8. Vault Contract
9. Setup Complete
Each of these transactions are costly and time consuming for initial setup. This is also the case when it comes to investing in a fund, as every investor must approve the smart contract to transfer tokens into the fund (and thus pay a gas fee when moving funds into or out of a fund).
On NEAR, transactions are extremely cheap and designed to remain low, regardless of how active the network becomes over time (hence the idea behind dynamically resharding the network as more transactions accrue). While Enzyme currently estimates that it costs a couple hundreds of dollars for setting up a fund on Ethereum, it is estimated on NEAR that all required transactions would cost less than $10 US dollars to get started, with almost no wait time either.
Note: Contracts also return 30% of the transaction fee back to the application / developer. In this sense Enzyme would actually stand to earn additional revenue as their platform grows over time, simply from taking a very small percentage of the NEAR used in starting and managing funds.
“For example, the maximum fee change per block in Ethereum is 12.5%, and the block time is 12-13 seconds. In NEAR, the maximum change is 1% at 1 second block time.” – Deribit Insights
(2) Usability for Long Term Protocol Engagement
The second point that should be considered relates to the long-term usability proposition that NEAR offers Enzyme: Enzyme exists as a place for investors to invest in crypto mutual funds (and hopefully other assets in the future) while managers can handle those funds without actually owning the capital. One question that might be worth asking, is What kind of people would want to invest in a crypto mutual fund?
If any segment (now or in the future) of Enzymes’ audience includes new crypto users, or those unfamiliar with handling the in’s and out’s of wallets, private keys, and alphanumerical addresses, then it would be beneficial for Enzyme to bridge over to NEAR: On NEAR, users are able to handle crypto using more familiar Account ID’s, simple login functionality, and one-click access to their wallet or an application on the protocol.
For the long-term usability of Enzyme, managers from traditional finance and investors new to crypto would benefit (and be more likely to use Enzyme) by having a more streamlined and user-friendly management system than what Ethereum currently offers via MetaMask. For more on this see Alex’s post here.
The Main Takeaway: If Enzyme were to bridge over to NEAR they would be able to keep their current service offering on Ethereum, but would be making a smart long-term investment in offering a more user-friendly and cost-effective service on NEAR.
Why Should Enzyme Migrate to NEAR?
Given these two major benefits, there are ultimately 4 reasons why Enzyme would do well to migrate or bridge across to NEAR: (1) Cost for Users, (2) Time For Onboarding, (3) Usability For Protocol Development, and (4) Support from NEAR.
Cost For Users: On NEAR, Enzyme will be cheap to use for both managers and investors. Starting a fund will not be cost-prohibitive, nor will investing in a fund of your choice.
Time For Onboarding: Setting up a fund will take minutes instead of hours. Sending money between funds is equally fast and will remain so thanks to NEAR’s sharding design.
Usability for Development: Enzyme hopes to re-imagine asset management under the guise of building an open, permissionless, and accessible protocol for future investors and fund managers. When taken in context, this means that Enzyme should be accessible to current fund managers interested in moving into crypto, as well as current investors looking to put crypto in the hands of more experienced traders. Both demands are handled by NEAR with their user-first design, easy account setup, and progressive security models.
Support From NEAR: The NEAR Foundation is currently in the process of finalizing it’s grants program. In parallel, the Melon Council (i.e. Enzyme Council) has stated that they are happy to fund research into initiatives that include “Research on Integration with Interoperability Protocols” as well as “Research on Integration with DeFi Protocols”. Together, the two projects are strong enough to start funding initial research into helping Enzyme bridge across onto NEAR.
Let’s Make It Happen
The Future of Crypto is collaborative, positive sum, and cross-protocol in nature. Bridging Enzyme to NEAR will not only improve traction and engagement for both protocols, but it will also make decentralized asset management more accessible to the world of mainstream finance at a time when Crypto is only starting to become known. As a long-term play for the next 5 years, bridging onto NEAR offers Enzyme an additional opportunity to engage with users and managers in a cost-effective, time-conscious, and user-friendly manner. Let’s make it happen.
Welcome to 2021. Lots of people have said this is going to be a big year for Crypto: Social Tokens, L1 Protocols, NFT’s, Gaming, you name it. Things certainly seem to be trending in that direction, and there is undoubtedly a plethora of opportunities in front of us.
On NEAR Protocol, this year is also shaping up to be a big one: The NEAR – ETH Bridge should open as fully decentralized and permissionless, Flux will launch, Mintbase will continue to build, and the Ecosystem as a whole is well positioned to expand significantly on multiple fronts.
In light of these projections, 4NTS Guild believes that it is important to not forget about the basics: That is to say, the simple things that make all of the difference amidst the noise, euphoria, and innovation. For the NEAR Ecosystem those basics are rooted in the design of the protocol as being scalable, developer-first, and user-friendly. That’s why we are announcing The Case For Building on NEAR Series.
In Crypto there are hundreds of projects – and hundreds of protocols to choose from. More often than not, decisions are made not because all information has been consulted, weighed, and calculated, but because development, and business timelines force founders to move ahead. Our bet is that there are a lot of projects in the crypto space that don’t even know what they are missing out on by not building on NEAR Protocol.
In The Case for Building on NEAR series, we want to go through a selection of crypto projects and protocols; Pick the projects that stand out to us the most in the crypto space, and break down how their solution could work on NEAR, and why that might be a good idea to make the transition NOW. It might have to do with gas fees, it might have to do with usability, and it might have to do with building future solutions in Rust.
Have a recommendation of a project to break down or make the case for? Let us know on Telegram or Twitter (@4NTSGUILD)!