The NEAR Protocol team has unveiled a new staking mechanism. The initiative was launched jointly with the developers of Aurora.
According to NEAR protocol, a node can become a NEAR validator only if the amount in the staking transaction is above the seat price defined by the protocol. The seat price is dynamically calculated and is a function of the number of NEAR tokens staked by other validators.
Delegation on NEAR is not implemented on the protocol level, which allows each validator to create or customize their own contract that they use to attract delegators. If validators want to accept delegated stake, they must deploy a staking pool contract, which defines commission fees and reward distribution split, and advertise that contract as the destination to delegate.
Unlike other PoS networks, NEAR uses a staking pool factory with a whitelisted staking smart contract to ensure delegators’ funds are safe. Therefore, to run a validator node on NEAR, a staking pool must be deployed to a NEAR account and integrated into a NEAR validator node. Each validator may decide their commission fees and how to reward distribution works.
Alex Shevchenko, head of Aurora Labs, said:
“The new model allows better alignment of incentives across the NEAR ecosystem. We look forward to the cooperation of projects and professional validators, and providing users with much more value,”
In the NEAR Protocol network, delegation is not implemented at the protocol level, which allows each validator to create and configure their smart contracts. He needs to deploy a staking pool whose contract determines the commission fees and distributes rewards to attract delegates.
Until recently, this model did not differ from other protocols based on Proof-of-Stake: the user contributes a native NEAR token to the pool and receives a reward in the same asset. According to the project team, the average annual profitability will now be 10%.
Such an approach does not allow ecosystem projects to participate in the network’s security since they cannot benefit from the rewards paid. The new model enables validators to include third-party tokens in the NEAR staking payout structure.
Recall that in January 2022, the NEAR Protocol team raised $150 million in a funding round led by the Three Arrow Capital venture fund.
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