Near Protocol launched its Chain Signature technology, allowing a single transaction to go through multiple blockchains. The protocol’s smart contracts will be able to perform transactions on any other chain.
Near Protocol (NEAR) introduced its Chain Signature technology, going live on mainnet. The protocol users will be able to sign a transaction that would go through any blockchain. Through a single wallet, Near Protocol users will be able to order multiple DeFi operations, instead of taking multiple steps.
Near Protocol’s co-founder announced the new tool, which is based on a series of cross-chain smart contracts.
With the new move, Near Protocol joins the trend of protocols that aim for interoperable tools. Unfortunately, the new cross-chain transfers will not be able to overcome all bottlenecks, since liquidity is still fragmented and cross-chain calls may also face limitations.
The goal of Near Protocol is to invite builders who will create cross-chain apps, while attracting sufficient liquidity for each app. Other Web3 projects have succeeded in bringing liquidity providers, while only building the cross-chain technology for easier and safe transfers.
Near Protocol has already drawn creators, tapping the previous waves of Web3 games, DeFi and NFT projects. Top apps on Near Protocol already draw in more than 1M daily active users, with leaders like Hot Game, Kai-Ching and Sweat Economy.
The L1 network is a high-capacity chain, with more than 6.5M transactions in the past 24 hours. Near Protocol reports a total of more than 100M wallets, and is one of the rivals of L1 networks like TRON. The network also reports 62M users, while handling 2.3B interactions with smart contracts.
Chain Signatures is live on all mainnets! Huge step towards Chain Abstraction: Chain Signatures enables @NEARProtocol smart contracts to sign transactions on any blockchain. Whereas before we had fragmented liquidity in DeFi, now there will be a single DeFi layer for all chains.…
— Illia (root.near) (🇺🇦, ⋈) (@ilblackdragon) August 8, 2024
Near Protocol aims to realize the trend of account abstraction, where a single wallet seamlessly connects multiple protocols. Chain Signatures aims to use a single account for multiple chains. Near Protocol already holds wrapped versions of major tokens, including top DeFi assets. Using cross-chain actions may simplify trading in other ecosystems.
Near Protocol aims to build chain abstraction despite skepticism about inter-operable chains. Vitalik Buterin, the founder of Ethereum, has called for more compatibility. Near Protocol was created as a layer-1 network precisely with compatibility in mind, and has remained connected to Ethereum since its beginning.
Major chains can be bridged, but most projects compete to lock in value and liquidity while denying access to smaller chains. Near Protocol tried to bring more users to Ethereum, as it rallied during the peak Web3 bull market.
Near Protocol aims to rebuild liquidity
Near Protocol is a recipient of liquidity from Ethereum, though the flows are limited to $7.49M. Currently, Near Protocol relies on a native list of smaller exchanges, and carries around $200M in value locked. Adding cross-chain features may boost flows and establish new liquidity locations.
The Rainbow Bridge is the main feature for cross swaps between Near Protocol and Ethereum. The bridge is holding more than $451M in assets, with a slight outflow in the past weeks.
Currently, Near Protocol is more in need of liquidity, as it tries to replicate the Ethereum DeFi ecosystem on a smaller scale. The project is in the top 20 and has gained attention as a trending asset on Binance. However, Near Protocol lags behind the growing Optimism ecosystem, especially Base.
One of the advantages of Near Protocol was its highly successful ICO and funding rounds, raising around $607M. Despite the presence of VC investments, NEAR has a high free float and only 100M tokens are not in circulation. NEAR has a market cap of $4.3B and a fully diluted market capitalization of $4.7M. The NEAR token drew attention after doubling its value in Q1 with peaks near $1. In the whole of Q2, NEAR lost 27% and currently trades between $3.74 and $4.07.
NEAR still has net gains in 2024, moving between a low of $2.47 and a peak above $9. The token expanded by nearly 200% net in 2023, despite the bear market. NEAR has existed independently from other layer-1 projects and the token price often moved against the rest of the market.
Cryptopolitan reporting by Hristina Vasileva
