NEAR Protocol

Time factors

	Protocol time	Human readable time
Protocol time 1	Block	1 second
Protocol time 2	Epoch (= 43,200 blocks)	12 hours
First reward delay	2 epochs	24 hours
Reward frequency	At the beginning of every epoch	12 hours
Unbonding period	4 epochs	48 hours

• The protocol has an implicit block time target of 1 second. Actual block times can fluctuate depending on network conditions.

Lifecycle

Must know before staking

Minimum staking amount	✅	0.1 NEAR
Partial stake changes	❌
Partial reward withdrawal	❌
Compounding	✅
Penalty	⚠️
Slashing	❌

• Delegation happens on a smart contract. Each validator has its own dedicated staking pool smart contract that helps pool stake.

• Validators can be kicked out. A validator that falls below the uptime threshold (90%) for a given epoch will not receive any rewards and will be kicked out of the active set. The uptime for each validator in an epoch is defined as $\text{produced blocks / expected blocks}$.
• Rewards are added directly to staking balance.

Advanced topics

Rewards

• Rewards come from newly issued tokens and transaction fees.

  • Inflation rate applied to total token supply. The protocol has a fixed inflation rate of 5% applied to total supply. 10% of this newly issued tokens are sent to the protocol’s treasury. The other 90% is distributed to stakers.

  • Transaction fees. 30% of all transaction fees are directed to contract creators while the remaining 70% is distributed to stakers.

• Factors that impact realized rewards.

  • Validator performance. Rewards for a validator is reduced by the portion of missed blocks.

Risk

• The protocol does not have any penalties or slashing.

• Validators can be kicked out. A validator that falls below the uptime threshold (90%) for a given epoch will not receive any rewards and will be kicked out of the active set. The uptime for each validator in an epoch is defined as $\text{produced blocks / expected blocks}$.

Validators

Total validator cap	❌
Validator requirements	⚠️

• The protocol has a dynamic stake requirement for validators. All validators need to maintain the stake requirement to remain part of the active set.

Resources

• NEAR documentation: https://docs.near.org/

• NEAR Protocol specification: https://nomicon.io/

• NEAR whitepaper, Economics in a sharded blockchain: https://near.org/papers/economics-in-sharded-blockchain/

• NEAR explorer: https://explorer.near.org/