NEAR Foundation Transparency Report : Q3 2022

In this second NEAR Foundation Transparency Report covering Q3 of 2022, the Foundation aims to deliver on its commitment to  consistent and frequent communication with the NEAR community. 

This transparency report is one of NEAR Foundation’s vital contributions to the NEAR ecosystem’s long-term health and viability.

NEAR Foundation Mission and Purpose

NEAR’s mission is to:

Remove every barrier for Web3 creators, by creating an ecosystem that is uniquely simple, safe, scalable, and sustainable.

The Foundation’s purpose is the promotion and development of new technologies and applications, especially in the fields of open and decentralized software architectures, to enable innovation that benefits people around the world. This includes but is not limited to promoting and developing NEAR Protocol and related technologies, as well as promoting and supporting decentralized applications running on the NEAR Protocol.

To deliver on its purpose, the Foundation is organized around 3 core areas of focus: awareness, support, and governance.

Below, the Foundation shares details of how it allocated funding in Q3 of 2022. This includes the rationale informing these decisions as well as insight into future plans as the ecosystem heads into 2023 and beyond.

Core Metrics

• The number of accounts on the NEAR Protocol grew from 15.6 million at the end of Q2 to over 20.6 million accounts at the end of Q3. 
• Weekly Active Wallets surged to 280k per week — up from 26k at the end of Q2.
• The number of weekly active developers held flat at 1.1k during this period.

Total and Circulating Supply

As of the end of Q3, NEAR’s total supply increased to 1.1b NEAR. This is up 14m compared to  the end of Q2 due to inflation and fewer transaction fees burned. 

90% of the 5% annual inflation is sent to Validators to be paid out as staking rewards, with the residual 10% returned to the NEAR Foundation Treasury.

Circulating supply increased 74m NEAR to 798m (73% of total supply) due to further unlocks in both the NEAR Foundation Treasury and contractual vesting schedules.

Ecosystem Holdings

At the end of Q3, 67% of total supply had been deployed to projects, partners, contributors, backers, and the broader ecosystem.

465m NEAR had been staked (42% of total supply), representing 62% of all NEAR owned by the ecosystem.

126 validators supported the network, with 33% of total staked NEAR delegated to the 9 largest validators.

The NEAR Foundation Treasury

At the end of Q3, NEAR Foundation held fiat reserves of $450m and 358m NEAR. 

The Foundation has continued to adopt a highly responsible approach to treasury management in order to minimize the risk of loss in a turbulent market. Exposure to non-NEAR assets therefore has been limited, with fiat reserves held in AAA-rated Swiss  bank accounts. This strategy helps ensure that the Foundation maintains sufficient resources and runway even if the market downturn lasts for multiple years.. 

As a result, the Foundation is in an extremely strong position to continue to distribute funds to high-quality projects for the foreseeable future.

The NEAR Foundation in Q3

During Q3, NEAR Foundation continued to support high quality projects that will support our mission to onboard 1 billion users.

In total, the Foundation committed $39M during Q3, further contributing to our Q1’21 commitment of  an $800 million ecosystem fund. 

The $800m ecosystem fund is split into four broad groups:

• $350M – Proximity DeFi Grants – to help projects in the space of financial innovation within the NEAR ecosystem. (Proximity will be publishing its own transparency report on December 21, 2022.) 
• $100M – Startup Funds – to decentralize capital deployment into dedicated investment funds within the ecosystem.
• $250M – Foundation Grants – to support projects building on NEAR through direct investment and grants.
• $100M – Regional Funds – to establish physical hubs in key regions around the world to provide a local presence. 

Funds Distributed So Far from $800m Ecosystem Fund (to Partners):

Category	Announcement	Q3 Commitments	Total Committed
Proximity DeFi Grants	$350m		$350m
Foundation Grants	$250m	$26m	$159m
Startup Funds	$100m	$10m	$28m
Regional Hubs	$100m	$3m	$36m
Total Ecosystem Fund	$800m	$39m	$573m
Charity & Education		$0m	$6m
Total Capital Deployed		$39m	$579m

Below, the Foundation shares details of how it allocated funding as of Q3 of 2022. This includes both the rationale for these decisions and insight into future plans.

Startup Funds

Allocation: $100 million 

Committed: $28 million

Committed in Q3: $10 million 

NEAR Foundation believes that it should not be the sole distributor of capital to developers and entrepreneurs within the NEAR ecosystem. As necessary as the Foundation is to NEAR’s growth, decisions should not be made in a vacuum through a single centralized organization. 

To help decentralize NEAR, the Foundation has in turn decentralized capital deployment. The Foundation has allocated grant funds to MetaWeb, MOVE Capital, Stealth Capital, and Open Web Collective, each of which is focused on funding projects within the NEAR ecosystem according to their own vision. 

So far, the Foundation has committed $28 million to the existing funds. Specific updates from each fund are listed below:

• MetaWeb, a NEAR-native investment fund, has raised $30m from Sequoia, in addition to NF. MetaWeb has deployed over $11m across 36 investments to date, including Niche, Orderly, Above.Land, and Sender Wallet.

• MOVE Capital is a NEAR-native investment fund that has raised $13m from Accomplice and DCG, in addition to NF. MOVE has made 20 investments to date totalling over $7m, including Tonic, Calimero, Few & Far, and Sweatcoin.
• Stealth Capital is an investment fund for founders, and brings a wealth of experience supporting the development of projects on Solana and Polygon, as well as NEAR. Stealth had deployed $6m by the end of Q3.
• Open Web Collective is a blockchain accelerator and investor backing the builders of the multi-chain, decentralized web. Open Web Collective’s approach to supporting founders is hands-on, user-centric, and analytical.​

Foundation Grants 

Allocation: $250 million 

Committed: $159 million

Committed in Q3: $26 million 

Foundation Grants cover a broad range of investments from grant allocation to direct investment. Grants are primarily focused on the following verticals: Infrastructure & Integrations, Gaming & Entertainment, NFTs, and DAOs.

The Foundation has specific strategies for each vertical and has deployed capital across all of them.

• Infrastructure and Integrations – “Infrastructure” is a catch-all term for key ecosystem partnerships, integrations, and technologies that support access to mainnet and successful development on NEAR. These key components include: frictionless onboarding solutions, wallets, bridges, oracles, custodians, zero-knowledge technologies, privacy tools, and improved tooling for developers. Integrations with the NEAR network are laying the groundwork for the next phase of the community’s growth, which is bringing more users from Web2 into Web3 — what the Foundation calls Web 2.5. The following partnerships have been instrumental in making progress towards this initiative.
  • Key projects: Aurora, Pagoda, Calimero, Switchboard, Octopus, Brave, Coinbase, BitGo, Fireblocks, USDT, USDC, Token Terminal, OnMachina, Keypom
• Gaming / Entertainment – The Web3 gaming space is still wide open and rapidly evolving. The first wave of Web3 games proved that there was consumer demand for blockchain-based gaming. Right now, there is a great deal of room for experimentation, iterating on long-term sustainable models, introducing permissionless composability, and creating new forms of NFTs as well as games that are partially or even fully on-chain.
  • Key projects: Armored Kingdom, SWEAT, Endlesss, Niche, playEmber, eFuse
• NFTs –  NFTs on NEAR present a massive opportunity, in which NEAR’s flexible infrastructure and focus on usability are ideal for many NFT use cases, especially those focused on utility. With its strong position in the Web3 space, NEAR has the potential to become a leader in fostering sustainable and innovative NFT use cases that provide lasting value for all participants.
  • Key projects: Few & Far, Paras, Mintbase, Satori, Apollo42, Tradeport, Bee NFT/Beexperience, Tamago
• DAOs – The Foundation believes NEAR has the strongest no-code, easy to use DAO tech stack in Web3 and sees DAOs as key enablers of decentralization. NEAR is helping communities govern their treasuries and activities in a completely decentralized way, with the help of our DAO stack.  We will continue to facilitate DAO use cases in investments, NFTs, gaming, sustainability, science, and beyond.
  • Key projects: AstroDAO, SailGP, Unchain Fund , Flamingo DAO, Breeder DAO

In Q3, NEAR Foundation distributed a further $26 million to over 100 projects, including Mintbase, Circle, Satori, Clear Street, and OnMachina, as well as to Caerus to set up an Entertainment Venture Studio.

Regional Hubs 

Allocation: $100 million 

Committed: $36 million 

Committed in Q3: $3m – Banyan (US Hub), Balkans 

As part of NEAR’s goal of  reaching a billion people, the Foundation has been actively helping NEAR community projects launch hubs across the globe. To be global, we must first be local — and that means connecting with people where they are and empowering them to build Web3 projects that address their own communities and needs. NEAR Hubs host local events in local languages to find the best people and projects and to forge partnerships with local organizations.

To date, NEAR Foundation has launched seven regional hubs. An extension for the Balkans Hub and the launch of the US hub were announced in Q3: 

• Ukraine Hub (winding down as of Q4 2022) 

• Kenya Hub (Sankore) 
• Balkans Hub
• Vietnam Hub
• India Hub
• South Korea Hub
• US Hub 

The Foundation chose these locations based on a variety of factors, including Web3 adoption, number of developers, regulatory environments, and available capital.

NEAR Digital Collective Update

Early in Q3 (July), NEAR announced the NEAR Digital Collective (NDC) — a pioneering effort in decentralizing ecosystem governance and funding. Through the NDC DAO, high-level decisions will be made on protocol and ecosystem development through a “fund-of-funds” structure, where working groups, projects, and ecosystem funds will build communities and invest in specific regions and verticals. NEAR sees the NDC as a potential model approach across Web3 for the creation and implementation of truly decentralized, on-chain governance.

During Q3, following a positive community response, a Governance Working Group was formed to take the next steps to launch and implement the NDC. They solicited applications for interested contributors to join the Governance Working Group. This working group is tasked with producing a detailed roadmap and key milestones for NEAR governance implementation, focusing on the following areas:

• NEAR Constitution – Creation and ratification of shared values and basic rights for all community members. NEAR ecosystem’s north star.
• Governance Framework & Proposal Process – Vision for a decentralized governance system & core governance components confirming structure, responsibilities, participation rules, and dispute resolution process.
• Technical Governance Development Plan – On-chain practical implementation of the governance framework.
• Legal Framework – Legal structure for the governance structure to ensure sustainability, risk mitigation, and true community ownership.
• Community Engagement Guidelines – Standards to encourage positive, sustainable community behavior and interaction consistent with the values of the NEAR Constitution.

Through Q3, the Governance Working Group has been working on a draft of a NEAR Constitution, a Legal Framework  for governance structure, and a Code of Conduct. Follow along for the latest from the NDC, including weekly updates.

The Road Ahead

NEAR remains committed to its mission to:

Remove every barrier for Web3 creators, by creating an ecosystem that is uniquely simple, safe, scalable and sustainable.

The Foundation will continue to support the ecosystem, drive awareness to NEAR and Web3, and — now more than ever — educate regulators across the globe.

We will continue to invest and deploy capital in the key verticals mentioned above: Infrastructure, Integrations, Gaming/Entertainment, NFTs, DeFi, and DAOs.

In addition, the Foundation will continue to decentralize and deploy capital into additional ecosystem funds and regional hubs that are dedicated to the ongoing health of the NEAR ecosystem.

For any questions or feedback, please reach out to [email protected].

All of these efforts are to allow you to create without limits. 

We believe in a world where creativity is no longer held back by technology.

A world without limits.

Thank you!