Apr 6, 2022 - Economy & Business

Near secures new $350m investment in giant bet on fast blockchains

Illustration of abstract shapes and the earth.

Illustration: Shoshana Gordon/Axios

Near just secured a new $350 million investment from heavyweight investors, representing a giant bet on fast blockchains and a potential future challenge to Ethereum, the world's second-largest blockchain.

Why it matters: Well, that's a lot of money, right? It's a bet on super fast and cheap transactions in a decentralized fashion.

  • Users follow apps, not infrastructure. This funding will enable more use cases — likely particularly in lending, trading and risk management — powered by the Near blockchain.

Driving the news: Tiger Global, which raised $8.8 billion in a fund last year, led the round with additional participation from firms including FTX Ventures, Hashed, Dragonfly, ParaFi and others.

  • According to its announcement, the new investment will be used to increase its decentralization, support growth of applications built on its blockchain and expand regional hubs.

Like Ethereum, Near can run code ("smart contracts") as well as transactions, but Ethereum is slow, befuddling and expensive to use. So, the market has shown a hunger for Ethereum-but-less-janky.

  • This is its second round in very little time. In January 2022, Near raised $150 million, led by Three Arrows Capital, Alameda, and Jump.

The intrigue: Last year, the buzzy super fast blockchain was Solana, but the chain got stopped twice by denial-of-service attacks, which has stripped it of some of its shine.

  • Over the last year, Solana's coin, sol, 10X'ed its value from last April, reaching $258 in November. But today it trades around $130.
  • Solana's market cap remains roughly four-times that of Near's. Over the same period the coin has ranged between under $2 and $20. The near coin currently trades at $16.13.

Near's secret sauce is "sharding." A simple way to think about that is this: it's sort of like it is several blockchains that run fast because they each have less data to manage, but they check in with each other as they go. It has four shards now.

Quick take: Just like no region in the U.S. is likely to ever unseat Silicon Valley as the top tech hub, don't look for any of its imitators to ever unseat Ethereum.

  • Both have unstoppable network effects. But just as there is plenty of room for other cities to grow great tech scenes, there will also be many great blockchains.

Details: According to its announcement, the new investment will be used to increase its decentralization, support growth of applications built on its blockchain and expanding regional hubs.

State of play: Near announced an $800 million fund last year to support new apps built on the blockchain, with a special focus on decentralized finance (DeFi).

  • Blockchain projects have lots of crypto assets because they give themselves coins when they launch the blockchain (called a pre-mine). In Near's case, it also puts some of the new tokens the protocol generates in its treasury.
  • That said, projects like Near need outside capital because if they fund partners by selling their token stores too quickly it will tank the price and alienate users.

Bottom line: The crypto market only really has two indispensable coins right now, bitcoin and ether, but investors believe there is room for more.

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