Fundamental Insights Weekly

Will NEAR be an Ethereum alternative?

Because of its solid technical team and relatively bland application ecosystem, Near was once teased as the sleeping giant among public chains. And since this year, NEAR’s development has entered the fast lane.

In April, the Rainbow Bridge went live. With the bridge, users can utilize Ethereum assets on NEAR and vice versa. Rainbow Bridge opens the gates for assets to flow between NEAR and Ethereum blockchains and also enables users to bridge any ERC-20 tokens. Some popular tokens with common ERC-20 functionality have been able to interoperate with NEAR already, including but not limited to

1. Stablecoins like USDT,DAI,TUSD,USDC

2. Wrapped assets like WBTC,REN,WETH

3. DEX tokens like UNI, 1INCH and SUSHI

4. Lending tokens like AAVE and COMP

In May, Aurora which implements as Ethereum Virtual Ethereum Machine(EVM) launched on NEAR protocol. Aurora consists of Aurora Engine, the runtime, and Aurora Bridge providing for the permissionless transfer of tokens and data(smart contract) between Ethereum and Aurora.

Aurora fees are up to 1,000x lower than Ethereum’s and its TPS increases by 50x compared to Ethereum 1.0. And the transaction finality on Aurora inherits from the underlying NEAR Protocol, approximately two seconds which is much lower even than a single block confirmation time in Ethereum. Aurora provides the Ethereum 1.0 development experience, with layer-2-like speed and scalability. For Ethereum developers, starting on Aurora is as easy as changing the RPC endpoint. Aurora's full compatibility with Ethereum development tools such as Remix, Truffle, Hardhat, and Metamask. Aurora solves the challenges of the Ethereum ecosystem while preserving the existing engineering investment.

At the recent NEARCon, it was announced that Sharding is coming to NEAR mainnet on November 15. The sharding approach of the NEAR Protocol provides for horizontal EVM scaling. This is a scalability challenge that has plagued Ethereum 1.0 since day one. NEAR is providing a solid solution for it.

At the NEARCon, the launching of an $800 million funding initiative was also announced. The details of how the funds from the funding initiative will be allocated are also shared. $250million out of the $800 million have been earmarked for already existing projects and will be distributed over a period of four years. $100 million will be distributed among 20 startup projects. A further $100 million will be allocated to the NEAR Protocol’s international communities. Prior to the current announcement, the NEAR protocol already had allocated $45 million across over 120 projects.

The landscape is getting clear, fundamental infrastructures are production already, developer-friendly Ethereum tools are fully compatible with NEAR stack, Permissionless transfer of assets and data between Ethereum and NEAR is working and the largest eco-fund in the industry is already in place. What’s next? Will NEAR’s ecosystem be booming and be an Ethereum alternative? We can be fully optimistic about it.

DeFi：

Composability is one of the most important features of DeFi protocols. The power of composability shows up recently, especially in complicated financial products.

Spot trading is straightforward and simple so that Uniswap not only designs out the smart contract protocol itself but also provides a beautiful user interface to the end-users. However, the options product is difficult to understand. So that only trading professionals would trade options directly. In the traditional market, financial institutions design structured products embedded by options to connect end-users and the options market. In DeFi world, the protocols will do instead of institutions.

As the leading project of on-chain options market, Opyn does little to directly serve the end-users. Instead, Opyn provides an excellent options-integrated tool. Other protocols provide structured products to users by integrating Opyn and boosting the trading volume of Opyn as well. The chart shows that the trading volume of Opyn grows linearly to the TVL growth of Ribbon Finance.

The winner of Solana Ignition Hackathon, Katana, offers a suite of investment products across the risk spectrum, enabling users to passively access the best yield-generating opportunities on Solana. The first product introduced by the team in Hackathon is covered-call, which is a classical options structural product model applied in Ribbon Finance as well.

The feature of composability favors the protocol-to-protocol business. For startups without business capability, can focus on the product design itself. Teams with good business resources could increase efficiency by integrating of other protocols.

NFT:

Why is the blockchain-based Metaverse, the real Metaverse?

More and more Internet companies are now focusing on the Metaverse, and Facebook has even changed its company name to Meta to show how much it values the Metaverse, and Tencent has set up several Metaverse teams to work on corresponding projects. However, I think the Metaverse projects developed by Internet companies are still a bit far from the real Metaverse due to the closed traditional corporate system and the limitations of Web 2.0. In other words, a blockchain-based Metaverse is a real Metaverse, based on the following points.

1. DID

In the Web 2.0 era, user accounts or information on any Internet platform does not inherently belong to the user. When users use the software or platform, they are usually asked to sign a user agreement, otherwise, they will not be able to use the software properly. The user agreement often states that the platform has the right to perform various operations on the user’s account and data. It is foreseeable that the identity information of Metaverse, which is implemented based on Web 2.0 model, still does not belong to the user.

The cryptography-based blockchain, on the other hand, fundamentally realizes the private and perpetual storage of identity and assets in the digital world. In Cypto’s world, the user’s identity is only in the hand of the user, and no organization or individual can access his or her assets and information without his or her permission. Thus, with DID, users can truly keep their identity and assets private in the Metaverse.

2. Permissionless

One of the core reasons why the real world can be so businesslike is that it is “permissionless” for humans. As long as all kinds of technology can be realized, theoretically, humans can produce and create at will, without the need to obtain permission from the Earth or even other planets. It is this “permissionless” feature that makes the whole world work efficiently with less unnecessary friction and barriers.

The Metaverse is based on the digital world, which is less bound by the physical rules than the real world and can theoretically create more possibilities. Compared to the real world, the Metaverse should be bigger and more ambitious.

In the real world, many rules are artificially created. The Metaverse, as a new world, should have as low a threshold of ground rules as possible, and if the underlying infrastructure continues to follow the Web 2.0 model, its future development will be limited by the terms of each company. Therefore, the underlying Metaverse must be permissionless, a characteristic that Public Blockchain emphasizes.

3. Composability

The permissionless nature of the public chain allows one protocol to call other protocols without the permission of their development team, which greatly improves the efficiency of collaboration and communication between protocols. DeFi has grown from billions of dollars to over $200 billion in just two years, and composability has played a critical role.

In the future, the composability of blockchain in Metaverse will also greatly reduce the cost of collaboration among various protocols or projects and greatly increase its industry value.

In short, the Metaverse is incomplete without the blockchain; it is merely a three-dimensionalization of Web 2.0, and its essential core has not changed in essence. Only by using blockchain as its underlying infrastructure can it truly bring out the potential of all people and create a more ambitious Metaverse.