Interview with co-founder of NEAR Protocol: how Ukrainian-developed blockchain creates Web3

The NEAR Protocol team, which develops a blockchain to create dApps (decentralized services), has recently raised $150 million, and the Near token has long been at the top of the Coinbase ratings. 

• NEAR is a blockchain for creating decentralized open-source applications that offers developers and users a much faster experience and a thousand times lower fees than other blockchains such as Ethereum or Bitcoin.
• The project is expected to become a platform for the easy and cheap creation of decentralized services for any activity: from finance and security to social media and organization management applications. At the same time, for users, the use of such applications will not differ from the usual centralized services because NEAR Protocol and the developers of each application do all the work.
• NEAR was founded in late 2018 by Alexander Skidanov from Russia and Illia Polosukhin from Ukraine as a response to alternative blockchain networks, which require users to have a high level of technical expertise, making it difficult for ordinary people to use them, and transaction fees of tens of dollars.

AIN.Capital’s journalist talked to one of the founders of NEAR Protocol, Illia Polosukhin, about what his project offers developers and users and how it will help create a truly decentralized Internet.

What is NEAR Protocol?

Basically, NEAR Protocol is a platform for developers that allows the creation of decentralized programs. We try to solve several problems, and our motto is “simple, secure, scalable.”

The platform is easy to use for both developers and end-users. It is economically and cryptographically secure, and can quickly scale with the growing audience, number of users, and number of applications.

How do developers and end-users benefit from using NEAR Protocol?

We live with the choice of being in one of two realities. Either we will find ourselves in a world where large corporations control everything, most likely two or three at most, and they will feed the information directly to our brains and tell us what to do, or we will find ourselves in a world where everything is built on open technologies and, accordingly, all data, all money, everything belongs to users.

To have the second option, you need a so-called protocol to make some programs, market systems, for example, those that are not dependent on centralized companies and are not controlled by them. You need to be able to communicate with different users, programs, and computers so that they can work together.

The blockchain itself is a way to create protocols. It is a tool that allows you to easily develop new protocols for communication between different agents. On the blockchain, you can build things like markets and new economic instruments, and it allows you to record what someone owns and so on. In addition, the blockchain allows you to create new types of organizations that work on entirely different principles than the usual ones: companies, non-profit organizations, and the Facebook community. These are the opportunities that the blockchain currently provides.

And the problem that was before was that this system was not scalable and expensive to use, i.e., only those who could pay could use it. And the difficulties in using it: you need to understand the blocks, hashes, private keys, etc.

We try to tackle all these issues and provide people with a tool. NEAR developers can write programs whose users do not have to think about all these blockchain nuances, implementations, and other hassles. They can buy and use the product. We create development solutions that allow them to make simple products for their users.

How is the NEAR Protocol currently used?

I just mentioned a new type of organization. There is, for example, AstroDao with the idea of allowing any group of people to create their own organization, let’s even call it a cooperative. And this cooperative can manage some of its resources, make decisions, invest, accept money, pay salaries, and so on.

In principle, this is no different from the fact that you can go and form a company, but there is an opportunity to change the rules. You can tell us what decisions we make together, what decisions I make separately, how much money everyone can pay independently.

And most importantly, it is global. It is not a company of a particular country but a global system because we now live in a quite global world. So, for example, we have a meeting with colleagues from 3-4 countries. And we need to decide in which country to incorporate our organization and what exactly to do with it: shall we establish a non-profit or some kind of association?

It is amazingly easy to kick off with our protocol. And it costs about $5 to create and fully deploy anything. The user has to have bots in popular applications, such as Telegram or Slack, and with their help, they can fully manage their company. And such a company can grow — you can add new people, new types of roles, etc. That is an example of a program that is already written in NEAR.

There is another example: the creation of global marketplaces. One of the cases that prompted us to create the NEAR Protocol is the process of creating artificial intelligence that we once worked on. That project required data. For that, we gave tasks to people around the world, and they solved them, and we used this data to teach our artificial intelligence.

Back then, I worked at Google and had millions of dollars allocated for such tasks. And Google had a specific service that made payments to such people. But when we started setting up the same process, it turned out to be exceedingly difficult to pay people all over the world. We had people from China, Russia, Ukraine, and even Cuba. And it is problematic to send money to all these places from America.

And we viewed the blockchain strictly as a platform for sending money. And then someone in the community saw that idea and wrote a platform, now called NEAR Crowd, that currently employs 2,000 people globally to do the job. It is an open platform, an open marketplace. Anyone can come, take part in these processes, and earn money.

NEAR Protocol is about globality, the possibility of open participation, the possibility of creating economic parameters. The more interesting is the ownership, the idea of which is currently being developed. That is the ownership of the platform by the users and employees of this platform. They will receive a percentage of the future success of this platform and, accordingly, can participate in decision-making.

What is the role of the token in the development of the project?

Because NEAR is a Layer 1 blockchain, it needs protection. In the sense that the data itself, the performance of this system itself is protected by the fact that there are a number of computers, nodes, so-called validators that put their NEAR tokens on to make them work properly.

They say: “Here is $1 million in NEAR tokens, I will do the correct work. If you can prove me wrong, you can take the money from me. But if I am right, I’ll earn some more tokens on top of the work I did for the network.”

It is similar to how miners mine Bitcoin, but they don’t stake their own money. Instead, they spend more time looking for hashes to solve puzzles. And accordingly, if they try to do something wrong, they will simply lose that time. We are trying to optimize energy consumption and make the optimal system as a whole. So, the stake of validators here is NEAR tokens.

Currently, we have about 400 million NEAR tokens staked, which corresponds to billions of dollars, which ensures the security of the system itself. It takes billions of dollars in non-tokens to try to attack one and do something to it. It is clear that this is costly and difficult to implement.

Second, payment for transactions and data storage on the blockchain also takes place in NEAR tokens. So, if we take Amazon as an example, Amazon’s servers would stake the token, and users and developers would pay in NEAR tokens. But this condition is at the protocol level, and on top of that, you can add a payment in any other currency, which will be ultimately converted to NEAR.

In addition, the NEAR token is involved in all financial transactions, all new programs released on NEAR are released with a market that runs on NEAR or sell their tokens for NEAR tokens.

What does NEAR Protocol benefit from the scaling concept? Is this the way to decentralize everything and Web3?

Yes, our vision is Web3. In a global sense, Web3 is an open alternative to a world where centralized companies run everything. I also call it an open Google. I worked at Google, and everything there is quite open inside: if you are inside the company, you have all the services, all the teams and the code is open, all the services are open, and so on. But that is only if you’re inside and have all the Google users, and you can launch a new product for them.

But firstly, it is a kind of filter “who can participate in it.” Secondly, one economic model of the company connects all this. And here, we look at it as an open system with a common lining. A common platform, NEAR, and you can build a vast number of applications on top of it because they can interact with each other because of the shared infrastructure and the open paradigm in general.

At the same time, they all have their own economic models. That is, they are all guided not by the decisions of company leaders but by the market economy. That is, they have their own economic model. An excellent example of that would be Aurora, a project that was actually started by the guys who worked with us at NearInk, but they have now joined a separate team, and now they also have their own token. They are built on Near. They provide additional services and have long passed the stage of a unicorn startup.

So, the idea is this: many separate services, protocols, and applications are built on one system. They are all connected, there is intercommunication between them, and simultaneously, as a user, I manage my data and participate in management. And due to the fact that this is my data, I can get into any application, and it can connect to them.

The simplest example is a social graph: if I go, for instance, to Facebook, there is one social graph, and if I go to LinkedIn, there is another social graph. And if the Web3 social graph was mine, my friends, I’d get into any application and see my friends there. And the same applies to money. Any program I get into has my money. I see my money, and I can do something with it.

Here is an example: DeFi (decentralized financial services, ed.) already exists. Wherever you go, whatever exchanger you use, there is your money, you can exchange it for something else or deposit it or do something else. And it all works together because it is under one infrastructure, under one cover.

Speaking about scalability, we assume that we have such an infrastructure, an open ecosystem, and millions, ideally billions of users are starting to join it. To accomplish this, the infrastructure must be able to scale. Google employs tens of thousands of people, hundreds of data centers, and millions of computers to do this. And we need the same infrastructure.

Currently, all existing infrastructures, such as Bitcoin, Ethereum, etc., are now single-computer systems. That is, each computer in the system must check everything, so the performance of the entire network is limited by how much one computer can do. Then comes the market economy. If we have a limited amount of possible work, then the one who pays more can access it. Those who are not willing to pay more have no access. Prices are rising.

So, what we do is we scale it. It is what Google, Facebook, Amazon, and others are doing. The idea is that as the number of users and the number of transactions increases, we will add more and more computers to the system and parallel the execution process. In this way, we will increase transaction capabilities.

It is a rather complex development. Ethereum has been trying to make it since 2014. They said they wanted to do it, but not everything is clear so far. So, it is necessary to do everything based on this concept from day one.

Was this scalability and path to WEB3 originally conceived when creating the NEAR Protocol?

Yes, when we first started, we looked at Ethereum, which then cost $0.20 per transaction, which looks cheap compared to the current $20-50 but is actually still expensive considering that we paid people $0.15 per task. And we went looking for alternatives and realized that no one was building scalable alternatives.

That was our first push: we wanted to make a scalable system because we came from such systems. My co-founder worked at Microsoft on creating SingleStore, a database provider. And it was strange for us to see systems without the possibility to scale.

How is the project developing now, and what are the goals and plans?

Currently, we are working on a few areas: we continue to improve the protocol because we cannot say that the work on it is over, and we are developing the ecosystem around the NEAR Protocol. We have been up and running for about a year and already have over 200 applications, almost 2 million users, but we are still very far from a fully deployed ecosystem. Accordingly, we have a lot of work to do, and we need to dedicate countless investments and help to develop the ecosystem.

We recently announced that we have $800 million to invest in the ecosystem. These are financial proposals, grants, and investments, including in specific regions. For example, in Ukraine, we have regional hubs that help invest in local startups. We hold hackathons, where we recruit specialists, help them create programs, and develop their ideas. Now we will help those who have made exciting programs with their launch and development.

A lot of work is done in this direction, growing the ecosystem, attracting specific applications that will attract their users, and connecting it all.

Users of such applications will also be users of the NEAR Protocol, even if they do not know the details of the project, won’t they?

On the one hand, that is correct, but on the other hand, they are more likely to be common. This is an interesting point. For example, there is Google Drive and Google Play. On the one hand, they can both attract their users, but they have a common Google login, so users become shared in a sense and move between applications.

We also have connections between applications: if you use one where you already have some resources, you can easily use the other. Therefore, the more programs attract their users, the greater the use of other programs on the same platform. A very strong network effect is taking place here.

Why Ethereum, despite being so expensive and terribly slow and exceedingly difficult to use, has such a high market value? Because even with a small number of users and a relatively small number of applications, compared to the App Store, for example, it still has a robust connection between these applications, and so many financial transactions can be done, making it practical.

So yes, our goal is to create as many highly connected application components as possible that together help build the ecosystem and engage users.