NEAR token is the native cryptocurrency of the Near Protocol, a layer-1 public blockchain based on Proof-of-Stake where decentralized applications can be built. 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

1,000,000,000 NEAR tokens were 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 who want to accept delegation can create a special contract and allow users who don’t want to run their 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]

NEAR Utility

Securing the Network

NEAR Protocol is a proof-of-stake (PoS) network, which means that resistance from various attacks comes from staking NEAR. Staked NEAR represents the decentralized infrastructure of servers that maintain the network and process transactions for applications and users on NEAR. Rewards for providing this service are received in NEAR. ^[8]

Providing a Unit of Account

NEAR is used to price computation and storage on the NEAR infrastructure. The network charges transaction fees in NEAR to process changes and transactions. ^[8]

Medium of Exchange

NEAR can be used to transfer value between NEAR applications and accounts. Applications can use NEAR to charge for various functions, like access to data or other complex transactions. Entities can also easily exchange NEAR between each other, without the need for trusted third parties to clear and settle transactions. ^[6][8]