State of NEAR Q4 2024

Key Insights

• NEAR advanced its AI and Chain Abstraction initiatives with the alpha launch of AI Research Hub and AI Assistant, the introduction of its first AI Accelerator and Chain Abstraction Accelerator cohorts, and the debut of NEAR Intents. NEAR Intents is already gaining traction, with several projects integrating them into their products, like Infinex.
• NEAR’s market cap ended Q4 at ~$5.73 billion, a ~2.09% QoQ decrease, with the token price retracing ~7.13% QoQ to ~$4.91. NEAR dropped 10 spots in market cap ranking to 21st, underperforming in Q4 compared to leading assets.
• NEAR experienced growth in network usage, with average daily transactions rising ~7.95% QoQ to ~7.42 million and average daily active addresses increasing ~15.82% QoQ to ~3.55 million.
• NEAR’s DeFi TVL ended Q4 at ~$240.16 million, down ~4.48% QoQ. Burrow led the ecosystem with a ~50.37% QoQ increase in TVL to ~$170.98 million, accounting for ~68.66% of the total TVL.
• The “Call for Delegates” proposal aims to onboard qualified delegates to ensure effective community-driven governance and greater decentralization within the NEAR ecosystem.

Primer

NEAR Protocol (NEAR) is a smart contract platform that utilizes a Thresholded Proof-of-Stake (PoS) consensus algorithm to execute transactions and aims to provide foundational infrastructure for decentralized applications, AI-powered systems, and cross-chain interoperability. NEAR incorporates the Nightshade 2.0 sharding mechanism, which facilitates increased transaction throughput and scalability by taking a novel approach to basic network functionality, and is EVM-compatible via Aurora.

The NEAR ecosystem is expanding chain abstraction across many blockchains and ecosystems, with the goal of abstracting the blockchain away from the end user and developer experience. The vision for chain abstraction is to enable applications to function seamlessly across all blockchains, with effortless onboarding and features like gas fees and bridging becoming invisible to the end users. To achieve this, NEAR is developing the core building blocks, including:

• Account Aggregation: A key component of Chain Abstraction that enables users to manage identities, assets, and transactions across multiple blockchains through a unified experience, eliminating fragmentation and reducing complexity.
• Sharded Blockchain: NEAR, powered by Nightshade 2.0, is designed to support billions of AI-driven interactions with high-speed, low-cost transactions. As of Q3 2024, NEAR operates on six shards, with plans to expand to ten shards and introduce dynamic re-sharding in 2025 for adaptive scalability.
• NEAR Intents: A transaction framework that enables AI agents to autonomously execute transactions and requests across Web2 and Web3, allowing for frictionless, cross-chain interactions without manual oversight. Built on Chain Signatures, NEAR Intents ensure secure, automated execution at scale.

The NEAR Foundation is focusing its efforts and resources on making NEAR the home for User-Owned AI, built on a foundation of Sharded Blockchain, Chain Abstraction, and NEAR Intents. All key innovations that enable AI to operate autonomously, transact seamlessly, and scale securely, helping establish NEAR as the Blockchain for AI. The foundation is investing significant capital and resources in creating the best ecosystem for the development of AI agents, including core AI infrastructure investments through the NEAR Horizon AI Incubator, the NEAR Foundation x Delphi Labs AI Accelerator, and additional R&D efforts through NEAR.AI. Over 50 teams are actively building AI-driven applications, research projects, and tooling on NEAR, laying the groundwork for being a leader in the decentralized AI space.

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Key Metrics

Financial AnalysisMarket Cap and Price

In Q4, NEAR initially spiked upward before dropping back down and finding support around Q3 levels. It ended the quarter with a circulating market cap of ~$5.73 billion, a ~2.09% QoQ decrease, while the token price retraced to ~$4.91, a ~7.13% QoQ decrease despite the token reaching a Q4 high of ~$8.19 in December. With price heavily affected at the end of Q4, NEAR dropped 10 spots in its market cap ranking to 21st overall, indicating it performed worse than other leading assets.

Revenue

In Q4, NEAR's revenue, which measures network transaction fees but excludes storage staking, increased to ~$2.11 million, marking a QoQ increase of ~26.81%. This increase can be attributed to the rise in overall transaction and DEX volume. The average transaction fee in Q4 was ~$0.0031, a ~15.91% QoQ increase.

NEAR employs a fee-burning mechanism for transaction fees, where 70.00% of all fees are burned while the remaining 30.00% is directed to the contract from which the transaction originated.

Supply

NEAR's native token (NEAR) is used for staking, transaction fees, and storage fees. NEAR employs a combination of inflationary and deflationary measures, with no fixed token supply. The network follows a fixed annual inflation rate of 5.00%, with 90.00% of the inflationary rewards directed toward validators, while 10.00% is allocated to the protocol treasury.

As of Q4, ~95.12% of NEAR’s supply is in circulation, of which ~49.08% is staked. The annualized nominal yield from staking is ~8.95%, while the annualized real yield is ~4.55%.

Network AnalysisUsage

NEAR continued to experience increased levels of address activity and transaction volume in Q4 2024. The average daily active returning addresses increased ~15.82% QoQ to ~3.55 million; the average daily new addresses increased ~29.05% QoQ to ~361,046; and the average daily transactions increased ~7.95% QoQ to ~7.42 million.

Development

NEAR experienced a continued decline of its weekly active core developers, which decreased by ~13.95% QoQ from 185 to 159, while weekly active ecosystem developers decreased by ~30.34% QoQ from 185 to 129.

NEAR places an emphasis on supporting developers, with 30.00% of transaction fees distributed to the creators of the smart contract called by a given transaction. In addition to this fee structure, NEAR offers an extensive suite of tools tailored for developers working within its ecosystem. These include SDKs for popular coding languages, sandbox environments, a NEAR CLI, and NEAR Developer Governance. The NEAR Dev Hub serves as a resource repository for developers, facilitating collaboration and innovation within the ecosystem. Early successes include sponsored hackathons, the formation of community groups, and collaboration on NEAR Enhancement Proposals.

NEAR.ai is the launchpad for developers building in the crypto x AI space to gain exposure to the infrastructure and tools NEAR has developed. Already launching two products in Alpha stages, AI Research Hub and AI Assistant, NEAR is showing the developer community why they are the blockchain for AI.

Additional development activities in Q4 2024 included:

• NEAR is now compatible with Ethereum wallets, such as MetaMask and Phantom.
• Nearcore v2.3.0, released on Oct. 30, 2024, introduced protocol changes to refine validator performance and rewards. Key modifications included setting the chunk validator kick-out threshold to 70.00% and adjusting the contribution of endorsement ratios in rewards calculations. This release also modified how receipts are stored for gas and size calculations in congestion control, potentially improving transaction processing efficiency.
• Nearcore v2.3.1, released on Nov. 13, 2024, addressed non-protocol issues such as relaxing the size limit on receipts and adding a tx_root check when validating chunk state witnesses.
• Nearcore v2.4.0, released on Dec. 9, 2024, introduced protocol optimizations, including relaxed congestion control for higher transaction buffering and the exclusion of contract code from state witnesses for separate distribution. It also fixed a bug related to invalid costs associated with wasm_yield_resume_byte.

Security

NEAR employs a Thresholded Proof-of-Stake (TPoS) consensus mechanism with three distinct validator roles: Block Producers, who are responsible for validating transactions across all shards; Chunk-Only Producers, who focus on individual shards with reduced hardware requirements; and Hidden Validators, who act as independent third-party monitors.

The implementation of Nightshade sharding began with Phase-1 in September 2022, enhancing the network's capacity to support Chunk-Only Producers. By Q1 2024, NEAR launched Phase-2 of Nightshade sharding with six shards operational on mainnet, progressing towards the plan to expand to 100 shards. Q1 2024 also saw the launch of the Enterprise Node Operators program by Meta Pool in partnership with the NEAR Foundation, which started onboarding leading institutions into the ecosystem, including Deutsche Telekom and NTT DATA. Stateless Validation, also known as Nightshade 2.0, launched on mainnet on Aug. 22, 2024. This upgrade improved throughput for each shard by 5x and increased the total number of shards available for the network.

By the end of Q4 2024, NEAR had 236 active validators and ~49.08% of eligible supply staked.

Governance

Building off the House of Stake governance proposal from Q2 2024, the Gauntlet partnership continues to advance the governance structure of NEAR. On Dec. 5, 2024, Gauntlet announced the NEAR Call for Delegates proposal, asking individuals to apply to become Endorsed Delegates in the House of Stake. The application window is from Dec. 16, 2024, to Feb. 16, 2025. After the application window closes, the NEAR Foundation will review all delegate applications and release their selection of Endorsed Delegates on Feb. 24, 2025. The Call for Delegates aims to ensure a diverse and qualified pool of delegates who can contribute to the NEAR ecosystem’s governance effectively and responsibly.

The NEAR Call for Delegates proposal includes the following:

• The Call for Delegates seeks individuals who will represent tokenholders and participate in governance decisions on their behalf. These delegates will play a crucial role in ensuring the effective decentralization of the NEAR ecosystem.
• To become an Endorsed Delegate, interested individuals must submit a Delegate Application on the NEAR governance forum during the specified application window. The application should include answers to a detailed questionnaire covering topics such as experience, governance history, priorities for the NEAR ecosystem, conflict of interest disclosures, and responses to hypothetical delegate scenarios.
• Endorsed Delegates will receive a special tag on the NEAR governance forum and delegation/voting interfaces, making it easier for tokenholders to identify and delegate their voting power to them.

Ecosystem Analysis DeFi

NEAR's DeFi TVL ended Q4 2024 at ~$240.16 million, reflecting a ~4.48% decrease from the previous quarter.

Burrow remained the leading protocol by TVL by a wide margin, sitting at ~$170.98 million and accounting for ~68.66% of the total TVL, up ~50.37% QoQ. Ref Finance followed with a TVL of ~$60.07 million, a ~0.95% QoQ increase. Allstake, which launched on June 20, 2024, finished Q4 with ~$13.93 million in TVL, a decrease of ~24.68% QoQ. Orderly Network and Octopus Network (now known as Omnity Network) transitioned away from the NEAR ecosystem, and their TVL share decreased accordingly. Both networks have laid out transition plans (Orderly Plan & Omnity Plan) for users with funds in their protocol to ensure no loss is incurred.

In Q4 2024, NEAR’s Liquid Staking TVL decreased ~10.32% QoQ to ~$250.81 million. LiNEAR Protocol had a TVL of ~$132.41 million, reflecting a ~8.77% QoQ decrease, while Meta Pool had ~$111.70 million, showing a ~11.78% QoQ decrease.

Throughout the quarter, NEAR had an average daily DEX volume of ~$8.45 million, reflecting a ~25.40% increase from the previous quarter. Ref Finance remains the leading DEX by volume on NEAR, with an average daily volume of ~$8.35 million.

In Q4 2024, NEAR’s stablecoin market cap saw another increase, reaching a total of ~$683.69 million, up ~1.88% QoQ and up ~880.71% YoY.

Chain Abstraction

Building off the successful launch of Chain Signatures, which enables NEAR accounts, including smart contracts, to sign transactions on various blockchains, effectively eliminating the need for traditional bridges, NEAR has taken the first steps to realizing a full chain abstracted future.

Several applications already utilize Chain Signatures on NEAR's mainnet, including the Sweat Wallet, which allows over 2.50 million active users to bridge assets to/from various blockchains. Allstake, an omnichain restaking protocol, utilizes Chain Signatures for cross-chain state synchronization, enabling users to restake assets across NEAR, Solana, Ethereum, and Bitcoin. HERE Wallet and Bitte Wallet are also leveraging Chain Signatures to offer multichain experiences, with Bitte Wallet enabling passkey wallets for any network, including Bitcoin.

NEAR Intents is a live application that enables users to swap assets seamlessly across different networks. It leverages a spot DEX and Chain Signatures to facilitate these cross-network trades securely. As Chain Signatures and NEAR Intents have open SDKs, developers can use them in their own applications. An example of this is the Infinex platform, which uses both Chain Signatures and NEAR Intents to power its platform.

User-Owned AI

NEAR’s User-Owned AI initiative is a leader in integrating artificial intelligence with blockchain technology. This effort focuses on democratizing AI development, ensuring user control over data and assets, and fostering a decentralized framework for AI applications. Central to this effort is the concept of chain abstraction, which makes NEAR Intents possible, allowing AI to autonomously execute cross-chain transactions and requests across both Web2 and Web3, breaking down silos and enabling seamless operations for AI agents and related business models. Meanwhile, the sharded NEAR blockchain provides scalable, low-cost blockchain infrastructure that is built to handle large magnitudes of AI transactions. The development of the NEAR AI Assistant and AI Research Hub, which are in alpha stages, aims to support easier development through AI-driven platforms.

Building off the launch of the AI Accelerator programs in collaboration with Delphi Labs, in early Q4, NEAR announced the first cohort of projects during a demo day on Dec. 14, 2024. Each of the eight projects selected for the cohort received technical guidance, funding opportunities, access to NEAR and Delphi’s networks, and $50,000 in compute credits from Aethir. NEAR HZN announced the launch of the Chain Abstraction Accelerator, which was modeled after the success of the AI Accelerator program. The cohort for the Chain Abstraction Accelerator consists of nine teams with the guiding mission of building new DeFi Primitives and cross-chain capabilities utilizing Chain Signatures.

NEAR hosted a worldwide hackathon, [REDACTED], with over 1,600 participants. The 30 winning teams cumulatively received over $900,000 in prizes.

Other notable AI events on NEAR included:

• Additions to the Enterprise Node Operator (ENO) Program in collaboration with MetaPool
  • Deutsche Telekom, a telecommunications giant, joined the ENO.
  • NTT DATA, a global technology consultancy, joined the ENO.
• The NEAR Infrastructure committee set the following 2025 Priorities:
  • Decentralized AI: Investing in infrastructure to support NEAR’s growth in decentralized AI applications.
  • Chain Abstraction: Developing tools for better NEAR accessibility and multichain interoperability (e.g., explorers, oracles, Omnitoken, and Omnibalance).
  • Continuous Improvement: Supporting ongoing infrastructure commitments like wallets, Fast NEAR, and NEARBlocks.
  • Working Groups: Establish groups to manage accounts, draft RFPs, and drive proactive ecosystem development with regular RFP postings.
  • Wallet Enhancements: Advancing NEAR single sign-on to Solana apps and integrating on-ramps/off-ramps.

Nightshade 2.0

Nightshade 2.0 represents a significant advancement in NEAR’s sharding architecture and introduces stateless validation. A concept popularized by Vitalik Buterin, stateless validation allows validators to confirm transactions without storing the entire blockchain state locally and retrieve the necessary state information directly from the network, reducing resource requirements and operational costs, in addition to eliminating the need to maintain local shard states.

Nightshade 2.0 bolsters NEAR’s capacity to handle a growing number of users and transactions by an estimated 400.00% increase in transaction execution speed. The reduced operational costs lower barriers to entry for validators while enhancing decentralization and security. Improved performance through faster transaction execution is crucial for supporting high-demand applications in DeFi and emerging use cases like User-Owned AI. Nightshade 2.0 lays the foundation for integrating future technologies, including dynamic re-sharding, further gas cost reductions, and optimized state witness sizes.

Where Nightshade 2.0 goes from here:

2025+

• Addition of a transaction priority fee.
• Dynamic resharding to increase efficiency when a shard is overloaded or underutilized.
• Runtime performance improvements (still in the idea stage).
• Addition of leaderless consensus.
• Addition of sharded smart contracts to help with scalability.

Closing Summary

In Q4 2024, NEAR demonstrated significant strides in ecosystem growth, technical advancements, and strategic initiatives despite facing negative market challenges. While its market cap and token price experienced declines, the network’s fundamentals showed resilience, with increased transaction volume, address activity, and stablecoin adoption.

NEAR’s ongoing initiatives, such as Chain Signatures, User-Owned AI, and Nightshade 2.0, underscore its commitment to scalability, interoperability, and cutting-edge use cases. As NEAR moves into 2025, its priorities include enhancing infrastructure, improving wallet usability, and fostering User-Owned AI. With a strong focus on Chain Abstraction and community-driven governance, NEAR is building the foundation for future adoption and technological breakthroughs.