Bank of America: Near Protocol faces challenges despite powering blockchains like Cardano and Solana

Near Protocol, a blockchain platform designed to mitigate common scaling issues while prioritizing network usability, faces challenges in gaining market share due to a stagnant development pace and declining user growth, according to a research report by Bank of America analysts Alkesh Shah and Andrew Moss.

While Near’s sharding approach has been successful in mitigating scaling issues related to centralization and decreasing security, the report notes that the platform needs to do more to prioritize usability and effectively market itself to gain traction in the long term.

“Over the longer term, we expect blockchains that prioritize usability and effectively market themselves to gain market share by attracting a robust and diverse ecosystem of applications that drives adoption, network effects and cash flows,” the report said.

Although Near boasts an ecosystem of over a thousand applications, the bank notes that development stagnated in 2022 compared to the year before, and transaction fees have fallen since the first quarter of last year, while the rate of new users has dropped since the second quarter.

This suggests that the platform’s applications are no longer driving accelerating user growth, the report said. Despite the challenges faced by Near, the report acknowledges that much of the software powering third-generation blockchains such as Cardano, Solana, Polkadot, Tron, Avalanche and Near is still immature, and the development of these innovative technologies remains in the first innings.

The report suggests that blockchains like Near, which grow functionality and incentivize development, are likely to become attractive for developers in the short term due to their innovative approaches to improving scalability, decentralization, and security.

However, the report also notes that it’s too early to pick long-term winners and losers among the new generation of blockchains, and that those platforms that prioritize usability and effectively market themselves are likely to gain market share in the long run.