NEAR token is the native cryptocurrency of the Near Protocol, a layer-1 public blockchain. The token is used for paying transaction fees, and for storage, and it can be staked by holders to participate in validating transactions and reaching network consensus. ^[1][2][3]

Tokenomics

There were 1,000,000,000 NEAR tokens created at Genesis on April 22, 2020. ^[2]

17.20% of the Genesis token was allocated to Community Grants and Programs, 14.00% to Core Contributors, 12.00% to Community Sale, 11.76% to Early Ecosystem, 11.40% to Operations Grants, 10.00% to Foundation Endowment, 17.6% to Backers, and 6.1% to Small Backers. ^[4][1][2]

5% of additional supply is issued each year to support the network as epoch rewards, of which 90% goes to validators (4.5% total) and 10% to the protocol treasury (0.5% total). 30% of transaction fees are paid out as rebates to contracts that interact with a transaction, while the remaining 70% are burned. ^[1]

Validators

Rewards

Validators as a group are paid a fixed 90% of around 5% of the total supply annualized (the other 10% goes to Protocol Treasury). Rewards are distributed per epoch — every half a day. Each validator receives a reward proportional to their participation. As a validator stakes, the seats taken is determined via simple auction. After each epoch finishes, the validator will be evaluated based on how many blocks and chunks were produced versus expected production. ^[7]

If it’s below 90% of what’s expected, the validator is considered to be offline/unstable, won’t get any rewards, and will be removed from the coming epoch’s validation (i.e., force unstaked). Validators with at least 90% online presence will receive rewards that grow linearly, with 100% of the reward given to those with a 99% or above online presence. ^[7]

Delegation

Validators can receive $NEAR to stake from third parties via Delegation. NEAR Protocol enables delegation via smart contracts. Validators that want to accept delegation can create a special contract and allow users who don’t want to run their own nodes to deposit their $NEAR into it. By doing so, funds deposited to that contract are available to the creator of the contract to use as part of their stake. ^[7]

Utility

The primary use of the NEAR token is to cover transaction fees and as collateral for data storage on the NEAR blockchain. NEAR tokens are also distributed as rewards to different stakeholders on the blockchain, such as transaction validators, who receive a reward of 4.5% of the total annual NEAR supply for their services. ^[6]

NEAR token is also used to run a validating node as part of the network by participating in the staking process and it helps determine how network resources are allocated and where its future technical direction will go by participating in governance processes. The NEAR token enables the economic coordination of all participants who operate the NEAR Protocol network plus it enables new behaviors among the applications which are built on top of that network. ^[6]