NEAR Protocol's Vision for AI-Driven Blockchain Adoption

In a recent episode of the Lightspeed podcast, hosts Jack Cubec and Murt Mim Taz sat down with Illia Polosukhin and Bowen Wang, key figures behind NEAR Protocol, to discuss the current state of crypto, AI integration in blockchain technology, and NEAR's innovative approaches to scaling and cross-chain liquidity. The conversation provided deep insights into NEAR's vision for the future of blockchain technology and its potential to revolutionize how we interact with digital systems.

The NEAR Thesis: Blockchain for AI

NEAR Protocol positions itself as a blockchain platform built specifically for AI applications. Illia Polosukhin explained the core thesis behind NEAR:

"The high level is that NEAR is a blockchain for AI, effectively building out core pieces of infrastructure for what we believe the future will look like. The thesis is that there will not be a need for separate apps, separate wallets, separate even chains going forward, because AI is a universal interface through which you can effectively command the reality around you, especially computing, internet, connect to services, etc."

This vision anticipates a future where AI acts as the primary interface between users and digital services, abstracting away the complexities of individual blockchain networks and applications. In this scenario, users would interact with AI assistants that handle the intricacies of blockchain transactions and cross-chain operations seamlessly.

NEAR's Approach to Scaling: Sharding

One of NEAR's key technological advantages is its approach to scaling through sharding. Bowen Wang detailed the protocol's sharding mechanism:

"Last year in August, we launched this 9.2.0, this new design that makes everything fully sharded. Basically, the idea is that every validator attracts at most one shard at a time. And we do this through serious validation to ensure security."

NEAR's sharding approach involves:

1. Block producers
2. Chunk producers (shard blocks)
3. Validators

Validators are randomly assigned to shards every block through an on-chain randomness beacon. This system allows for efficient state transition and execution, with state witnesses distributed by chunk producers to validators.

The sharding mechanism has enabled NEAR to achieve significant performance improvements:

"Before we were struggling with this performance issue of once you have a large enough state and not everything's in memory, you have this problem with unpredictable latency when you do database read or when you do state read. Now what we do is that we actually hold-- we force everyone to hold the entire state in memory."

This in-memory execution approach, similar to Solana's strategy but implemented differently, allows for fast and stable transaction processing.

Current Sharding Status and Future Plans

As of the podcast recording, NEAR was operating with six shards, with plans to expand to eight shards in the near future. Bowen Wang announced:

"We are actually just released a new version that's-- that spread two shards each into two shards. So we will have eight shards. And it's already live on test. I will go live on main it next week."

The sharding scheme is currently based on account ranges, with manual balancing of shard size and gas usage. Future plans include implementing dynamic sharding based on system calculations.

NEAR's Unique Sharding Advantage

NEAR's sharding approach offers a significant advantage in terms of scalability and flexibility. Illia Polosukhin highlighted:

"The cool thing about this design is that, actually, if you want to split, you can split next block. We build the one block split. So you can do the shard in one block, because it splits among the shard boundaries."

This ability to quickly adjust shard boundaries allows for rapid scaling in response to network demands.

Transaction Throughput and Block Time

NEAR's current performance metrics are impressive:

• Each shard can handle between 10,000 to 20,000 transactions per second for simple transactions.
• The current block time is 1 second.
• Plans are in place to reduce block time to 400 milliseconds.

These figures position NEAR as a highly competitive blockchain in terms of transaction speed and throughput.

Chain Abstraction and Cross-Chain Functionality

While NEAR focuses on scaling through sharding, it also emphasizes chain abstraction and cross-chain functionality. Illia Polosukhin explained the rationale behind this approach:

"Given the incentives right now, right? Like people keep launching new networks, new networks keep investing in more apps. People want to use those apps. So like it makes sense to really unlock for everyone who's using this, who using that city to actually access those."

NEAR's strategy involves creating a chain-agnostic experience for users, allowing them to interact with multiple blockchain networks seamlessly. This approach is exemplified by NEAR's intent framework and cross-chain bridges.

The Intent Framework

NEAR's intent framework is designed to facilitate cross-chain transactions and liquidity. Bowen Wang described how it works:

"There is basically a small contract that does the settlement. So how it works is that let's say your user, you know, wallet, you want to swap Solana for USDC. And then there's like a software, a network of suburbs gets plugged in and gives you quotes and you select the best quote."

The intent framework allows users to interact with multiple chains without needing to understand the underlying complexities. It also provides a mechanism for value capture within the NEAR ecosystem:

"The value capture there is that there's a protocol, the smart contract, basically charges a commission fee from each trade, similar to all, like all other, how other DeFi stuff works."

OmniBridge: Unlocking Cross-Chain Liquidity

To further enhance cross-chain functionality, NEAR has developed OmniBridge, an extension of their previous Rainbow Bridge. Bowen Wang explained:

"OmniBridge is kind of this extension of a rainbow bridge that we built before, which is only between Ethereum and NEAR, we're now extending it to multi-chain that supports Solana, Base, Arbitrum and going to add more chain support and so on."

OmniBridge leverages a multi-party computation (MPC) network that allows NEAR smart contracts to sign transactions that can be executed on other chains. This approach provides faster and more robust bridging capabilities compared to traditional proof-based bridges.

AI Integration in NEAR

NEAR's focus on AI extends beyond just providing infrastructure. The protocol is actively developing AI-powered features and use cases. Illia Polosukhin outlined some of these initiatives:

"We've been focused directly on how to rebuild useful agents. So everything from on-chain actual useful, like executing actions for you to actually doing things in real world, right? And you can imagine how do I buy stuff? How does it actually plan and execute a plan?"

These AI agents are envisioned to handle complex tasks, from planning trips to executing financial strategies across multiple blockchain networks.

Shade Agents and Confidential Compute

One of NEAR's innovative AI-related features is the concept of "Shade Agents." These agents leverage trusted execution environments (TEEs) to provide verifiable and confidential processing. Illia Polosukhin explained:

"What we've been building with AI and kind of realized we can just generalize that is effectively a verifiable and confidential processor. It's a cloud of nodes that can execute arbitrary code, including machine learning, LLM inference, etc., in a verifiable way."

This technology allows for the execution of complex computations off-chain while maintaining verifiability and confidentiality. It opens up possibilities for AI-driven decision-making in blockchain applications without compromising security or decentralization.

NEAR's Vision for the Future

Looking ahead, NEAR sees itself as a crucial infrastructure layer for the AI-driven future of blockchain technology. Bowen Wang summarized this vision:

"I do believe that we are going to like a world where AI would be the center of your life, right? Everything you do, like, whether it's like browsing internet or like buying stuff, it would be through AI. But like there has to be some way for it to both have, you know, truly autonomous AI agents that can connect, that can actually like control asset and like can do stuff and like spend those as I can manage those assets."

NEAR aims to be the platform that enables this AI-driven future, providing the necessary infrastructure for billions of AI agents to interact, manage assets, and execute complex operations across multiple blockchain networks.

User Adoption and Real-World Applications

NEAR has already achieved significant user adoption through various applications and partnerships. Illia Polosukhin highlighted some key examples:

1. Kaikai: A pre-installed app on Oppo and Xiaomi phones, using NEAR for payments and loyalty programs.
2. Sweat Wallet: A fitness app with a large user base, leveraging NEAR for crypto integrations.
3. Hot Wallet: A multi-chain wallet that creates NEAR accounts for users across various blockchain networks.

These applications demonstrate NEAR's strategy of integrating blockchain technology into everyday user experiences without explicitly emphasizing the underlying blockchain infrastructure.

The State of the Crypto Market

Reflecting on the current state of the crypto market, the NEAR team expressed a nuanced view. While acknowledging the recent trends in meme coins and AI-related tokens, they emphasized the importance of building long-term, useful infrastructure:

"We maybe over-focused on building useful stuff. But from our perspective, kind of these meme games, they're important. They create attention loops. But they're all short term. And so we are here for the long term and going to continue building."

This focus on long-term utility aligns with NEAR's vision of creating a blockchain ecosystem that supports real-world applications and AI-driven interactions.

Ethereum's Alignment Problem and NEAR's Approach

The conversation also touched on Ethereum's current challenges, particularly regarding the alignment of incentives between the base layer and layer-2 solutions. Bowen Wang offered a critical perspective:

"It seems like, looking from right now, it's hurting them in the longer term because it's really hard to solve this alignment problem. When it's just like the incentives, they're not like naturally not aligned. All those L2s have their own tokens. And it's really hard to understand how that ties back into the ETH token solve."

In contrast, NEAR's approach of building a fully sharded, scalable base layer while also supporting chain abstraction and cross-chain functionality aims to address these alignment issues from the ground up.

Future Developments and What to Watch

As NEAR continues to evolve, the team highlighted several key areas to watch in the coming months:

1. Improved scalability and lower latency, with 400-millisecond block times on the horizon.
2. Expansion of the intent framework to support multi-chain asset trading and even real-world assets.
3. More sophisticated AI agent use cases, including autonomous market creation and resolution.
4. Further development of chain signature applications for multi-chain lending and prime brokerage services.

These developments underscore NEAR's commitment to pushing the boundaries of what's possible in blockchain technology, with a particular focus on AI integration and seamless cross-chain interactions.

Conclusion: NEAR's Unique Position in the Blockchain Landscape

NEAR Protocol stands out in the blockchain space with its innovative approach to scaling, AI integration, and cross-chain functionality. By focusing on creating a blockchain infrastructure tailored for an AI-driven future, NEAR is positioning itself at the forefront of the next wave of blockchain adoption and utility.

The combination of efficient sharding, chain abstraction, and AI-powered agents creates a unique value proposition that addresses many of the current challenges in the blockchain industry. As the crypto market continues to evolve, NEAR's focus on building long-term, useful infrastructure may well prove to be a winning strategy in driving mainstream adoption of blockchain technology.

As blockchain technology continues to mature and AI becomes increasingly integrated into our daily lives, platforms like NEAR that bridge these two transformative technologies will likely play a crucial role in shaping the future of digital interactions and decentralized systems.

Facts + Figures

• NEAR Protocol currently operates with 6 shards, soon to be expanded to 8 shards.
• Each shard on NEAR can handle between 10,000 to 20,000 transactions per second for simple transactions.
• NEAR's current block time is 1 second, with plans to reduce it to 400 milliseconds.
• NEAR has nearly 15 million monthly active users, many of whom are unaware they are using the blockchain.
• The Kaikai app, which uses NEAR, is pre-installed on Oppo and Xiaomi phones.
• Sweat Wallet, built on NEAR, has 150 million installs on its main app.
• NEAR's sharding mechanism allows for shard splitting to occur in a single block.
• NEAR's OmniBridge supports Solana, Base, and Arbitrum, with plans to add more chains.
• NEAR's intent framework charges a commission fee on trades, which is then used to buy and burn NEAR tokens.
• NEAR's Shade Agents use trusted execution environments (TEEs) for verifiable and confidential processing.
• NEAR's asynchronous execution model allows for pausing and resuming transactions, enabling off-chain computations.
• NEAR is developing AI agents capable of creating and resolving markets autonomously based on social media interactions.
• NEAR's Aurora project offers a way to run customized EVM-compatible chains on top of NEAR with lower maintenance costs.

Questions Answered

What is NEAR Protocol's main thesis?

NEAR Protocol positions itself as a blockchain platform built specifically for AI applications. The core thesis is that in the future, there won't be a need for separate apps, wallets, or chains because AI will serve as a universal interface through which users can command digital services and interact with blockchain technology seamlessly.

How does NEAR's sharding mechanism work?

NEAR's sharding approach involves block producers, chunk producers (for shard blocks), and validators. Validators are randomly assigned to shards every block through an on-chain randomness beacon. This system allows for efficient state transition and execution, with state witnesses distributed by chunk producers to validators. The design enables quick shard splitting and efficient in-memory execution.

What is the intent framework in NEAR?

The intent framework is NEAR's solution for facilitating cross-chain transactions and liquidity. It allows users to interact with multiple chains without understanding the underlying complexities. The framework includes a settlement contract that processes trades, with a network of solvers providing quotes. It charges a commission fee on trades, which is used to buy and burn NEAR tokens, creating value for the ecosystem.

How does NEAR integrate AI into its blockchain?

NEAR is developing AI-powered features and use cases, including AI agents capable of executing complex tasks across multiple blockchain networks. One key innovation is "Shade Agents," which leverage trusted execution environments (TEEs) to provide verifiable and confidential processing. This allows for off-chain AI computations while maintaining security and decentralization.

What is OmniBridge and how does it work?

OmniBridge is NEAR's solution for cross-chain liquidity, extending their previous Rainbow Bridge to support multiple chains including Solana, Base, and Arbitrum. It uses a multi-party computation (MPC) network that allows NEAR smart contracts to sign transactions that can be executed on other chains, providing faster and more robust bridging capabilities compared to traditional proof-based bridges.

How does NEAR plan to achieve mainstream adoption?

NEAR focuses on integrating blockchain technology into everyday user experiences without explicitly emphasizing the underlying infrastructure. Examples include partnerships with apps like Kaikai (pre-installed on some smartphones), Sweat Wallet (a fitness app), and Hot Wallet (a multi-chain wallet). By abstracting away blockchain complexities and leveraging AI interfaces, NEAR aims to make blockchain interactions as seamless as possible for average users.

What are the key future developments for NEAR?

NEAR is working on improving scalability and reducing block times to 400 milliseconds. They're expanding the intent framework to support multi-chain asset trading and even real-world assets. The team is also developing more sophisticated AI agent use cases, including autonomous market creation and resolution. Additionally, NEAR is furthering the development of chain signature applications for multi-chain lending and prime brokerage services.

How does NEAR's approach differ from Ethereum's layer-2 scaling strategy?

While Ethereum has adopted a rollup-centric roadmap with multiple layer-2 solutions, NEAR has focused on building a fully sharded, scalable base layer while also supporting chain abstraction and cross-chain functionality. NEAR's approach aims to address alignment issues between the base layer and scaling solutions from the ground up, avoiding the potential fragmentation and incentive misalignment that Ethereum's strategy may face.