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):

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!

As part of the Foundation’s commitment to transparency, each week it will publish data to help the NEAR community understand the health of the ecosystem. This will be on top of the quarterly reports, and the now monthly funding reports. 

You can find the quarterly reports here.

You can find monthly reports on funding here.  

Last week’s transparency report can be found here. 

The importance of transparency

The NEAR Foundation has always held transparency as one of its core beliefs. Being open to the community, investors, builders and creators is one of the core tenets of being a Web3 project. But it’s become apparent the Foundation needs to do more. 

The Foundation hears the frustration from the community, and it wants to be more pro-active in when and how it communicates. 

New Accounts and Active Accounts

New Accounts are new wallets being created on the NEAR blockchain. In November the number of new accounts has been declining. This week, new account creation has averaged 16,000 new accounts per day, down from a monthly average of 24,000 wallets per 24 hours.

Looking at the quarter, the highest day for new account creation in Q3 was September 13 where 130,000 new wallets were created in one day. Collectively, these numbers equate to 22,454,000 total wallets on the NEAR blockchain.

The Daily Number of Active Accounts is a measure of how many wallets on NEAR are making transactions on chain. Over the last week, the number of daily active accounts has been on average, above 50,000, remaining consistent across the week.

Historically, as the chart below shows, this is a decline from highs of more than 100,000 active accounts on the network. The highest number of active accounts on any one day in Q3 this year was logged on September 14, where 183,000 accounts were active.

New Contracts and Active Contracts

Contracts on NEAR are simply programs stored on a blockchain that run when predetermined conditions are met. The Daily Number of New Contracts is a valuable metric for understanding the health and growth of an ecosystem.

The more active contracts there are, the more projects are actively engaging with the NEAR protocol. The chart below shows a cyclical rhythm to new contracts, with rises and falls a common occurrence. Over the last seven days, the number of new contracts has risen from a low of 12 new contracts on November 27 to a high off 44 new contracts on November 30.

Active contracts is a measure of contracts that execute in a 24 hour period. This number has remained consistent throughout the last week with an average of 500 active contracts on the NEAR network. Taking a historical perspective on these numbers, the average has declined in Q3, with previous highs in active contract activity coming in the third week of September 2022.

Used Gas and Gas Fee

Gas Fees are a catch all term for the cost of making transactions on the NEAR network. These fees are paid to validators for their services to the blockchain. Without these fees, there would be no incentive for anyone to keep the network secure.

Over the last few weeks, the daily amount of gas, expressed here as PetaGas, which is the equivalent of 0.1 $NEAR, has risen. To learn more about Gas on NEAR, there is an excellent explainer in the NEAR White Paper. The Daily Amount of Used Gas has increased, briefly topping 8,000 PetaGas, before returning to the weekly average of just over 7,000 PetaGas.

The Daily Amount of Gas correlates with the Daily Gas Fee used on the network. Over the last week, there has been an uptick in the amount of Gas used, which can be brought on by a number of different factors. One of the most common is increased activity among users of the network.

Daily Transactions

The daily number of transactions is a record of how many times the blockchain logged a transaction. The earliest data available is from the third and fourth weeks of November. The data shows that daily transactions had been trending upwards and at the end of November, were averaging more than 500,000 transactions per day. Since then, the number has declined sharply and now sits below 400,000.

These reports will be generated each week and published on Friday.

As part of the Foundation’s commitment to transparency, each week it will publish data to help the NEAR community understand the health of the ecosystem. This will be on top of the quarterly reports, and the now monthly funding reports. 

You can find the quarterly reports here.

You can find monthly reports on funding here.  

Last week’s transparency report can be found here. 

This week, the Foundation is focusing on the state of token supply in the ecosystem.

The importance of transparency

The NEAR Foundation has always held transparency as one of its core beliefs. Being open to the community, investors, builders and creators is one of the core tenets of being a Web3 project. But it’s become apparent the Foundation needs to do more. 

The Foundation hears the frustration from the community, and it wants to be more pro-active in when and how it communicates. 

Total Supply

At Genesis, the NEAR blockchain was created with one billion tokens. Since then, the number of supply has increased to 1.1 billion. This number steadily rises due to inflation. For reference, 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.

The total number of live accounts has been increasing rapidly, up to a total of 22 million. At present, new accounts are created on NEAR at an average rate between 35,000 and 38,000 new accounts per day. This number is down from the week before, which average 37-39,000 accounts per day.

Circulating Supply Statistics

Below is a break down of the circulating supply. The blue section represents the total number of $NEAR, and the green section represents tokens not currently locked in lockup contracts.

The number of tokens in circulating supply has been steadily increasing at a faster rate than the total circulating supply. In the past week, 3 million more $NEAR has moved from locked contracts to circulating, taking the number of circulating tokens from 827 million, to 830 million. This is typically due to further unlocks within both the NEAR Foundation Treasury and contractual vesting schedules.

Active Accounts

The most active accounts on NEAR are displayed here as the most active in the past 14 days. The most active account is relay.aurora, which is the main conduit by which Aurora moves transactions between Ethereum and NEAR. In the past two weeks, it recorded more than 900,000 transactions.

The second most active account was oracle.sweat, which is allows SWEAT users to communicate with the NEAR blockchain. The oracle.sweat account made just under 800,000 transactions in the last two weeks. The remaining accounts, collectively recorded more than a million transactions in the time period.

Daily Number of Transactions

The daily number of transactions is a record of how many times the blockchain logged a transaction. The earliest data available is from the second week of November. The data shows that daily transactions have been trending upwards and sit just under one million transactions per day. This is significant growth from the previous average of 400,000 per day.

These reports will be generated each week and published on Friday.

Welcome to our Funding Team Report that captures and highlights data  for the month of October 2022. The purpose of this document is to provide transparency regarding our Funding Team’s activities last month, and is to be shared publicly to the NEAR ecosystem and our investor network.

Summary 

1. Grant data

1.1. Approved Grant program data

1.2. Grant highlights

1.3 Completed projects & Milestone data

1.4 Effectiveness of the funding program

2. External funding in the NEAR Ecosystem

3. Ecosystem highlights

1. Grant data

1.1. Approved Grant Program data

Data reflects projects that have applied for a Grant via the Grants Program and that have been signed by the NEAR Foundation during the month of October (01.10.2022 to 31.10.2022).

 *Note: all applications have been processed.

General Grant data

Grant tracks**

** For more information please have a look at our grant tracks.

Grants per category 

NFTs                                 5

Infrastructure / Wallets             3

Social Impact                        1

Institutional / Financial            1

Gaming / Metaverse                   1

DAOs                                                 1

Other                                2

Grants per country (Top 5)

United States                3

United Kingdom               3

Switzerland                  1

Singapore                     1

Thailand                      1

1.2. Grant highlights 

This section provides highlights of grants that have been signed during the month.

NFT projects 

Disrupting Hollywood by allowing retail to invest in film making, create experiences for token holders and collectives. Founded by an Executive Producer who has sold shows with Matt Damon and Jimmy Kimmel, and a 3x Tech Founder (USC Law/London School of Economics) whose last web3 startup reached over 500k holders and $500m mcap. 

The Platform allows for easy, self-certified and third-party validation of files, with the results stored securely on a blockchain, creating an irrefutable record of activity. This will increase trust and transparency in the NEAR NFT space and be a platform for existing and upcoming NFTs.

Web3 gaming launchpad and building SDKs for gaming developers. The team has plenty of experience building web3 gaming platforms with their current company called Playfix

Data base on the NEAR blockchain that acts as a repository for information relating to a property, like a passport for a house. The goal is to provide a transparent platform to make buying and selling houses simpler, safer and quicker.

NFT.HipHop is being developed to be the primary destination for all Hip Hop-centric NFT/Web3 projects. The founder is deeply rooted within the NEAR Ecosystem and aims to bring his existing large web2 community in the Hip Hop space to NEAR.

Infrastructure / Wallets projects 

NFT Analytics tool that allows tracking of held NFTs and provides updates for  upcoming mints and collections, with the focus on approaching the communities and people about NEAR. Strong connection with the TENK Bay and drives NFT growth within NEAR. 

MAP Protocol is an omnichain layer of Web3 with highly secure cross-chain communication built upon light-client and zk-SNARK technology. MAP Protocol connects both EVM & non-EVM chains, extending the EVM layer with pre-compiled smart contracts of destination chains seamlessly.

NEARBlocks features optimisations being provided by Invoker Labs.

Institutional / Financial projects 

Datality brings trust and safety to connect researchers with research data providers. A two-sided data marketplace with blockchain as the transparent layer of trust.

Social Impact projects 

AIDONIC offers digital cash and voucher assistance, powered by NEAR and by ensuring end-to-end transparency, cost- and speed efficiency and accountability for social fundraising and last-mile aid distribution.

DAO’s

Provide insights for the Near Ecosystem that improves its ability to collaborate effectively and operate thriving communities thanks to predictive indicators of viability as well as diagnostic tools for DAO Communities. 

Gaming / Metaverse projects 

Pixudi is an NFT based blockchain project where a traditional race board game meets Heroes of Magic mechanics. It is more than a game, it’s bridge from the real world of board games to the blockchain world of NFT based on DAO mechanics.

Other projects 

Modular collection of social and identity protocols. Developers can use part of all of the stack for anything from adding social features to deploying a fully decentralized, token-aware web3 social network. decent.land is built using Arweave for permanent storage and NEAR for user-facing contracts.

EV charging network in the Americas with a web3 value creation mechanism for the drivers. Team has installed over 100 charging slots in the last six months and plans to integrate NEAR for settlements while increasing the installation of charging stations.

1.3 Completed projects & Milestone data 

Grant agreements are structured with milestones. Depending on the selected grant track, a grant can have from 1 to 5 milestones. For more information the funding team invites you to explore our milestone guide. 

Projects completed per category 

Infrastructure / Wallets             3

Gaming / Metaverse                   3

DAOs                   1

Other                                2

Infrastructure / Wallets projects 

An inheritor of the official NEAR wallet. The most well-known and feature filled web wallet for the NEAR Ecosystem.

Coding to earn, sell open-source product as NFT. BytePay is a platform that supports paid tasks to complete open-source projects on Github. Not only can you  code to earn but also sell open-source product as NFT.

The development of an MVP for a NEAR blockchain event push notification service. DApp developers would be able to subscribe to their contract events in their backend without having to implement their own indexer, instead implementing webhook endpoints to which this service would push updates.

Gaming / Metaverse projects

Reality Near is a multi-metaverse that will combine Virtual Reality and Augmented Reality technologies so that users can experience their different enhanced realities like never before.

MeowRush is a PVP multiplayer game on the NEAR blockchain with different tournament modes: Race, Battle Royale, Obstacles, and Arcade. MeowRush is going to be integrated into the Meowverse metaverse with a Multi-chain ecosystem.

GameFi for the masses, built on their own native Unreal game engine  with Augmented Reality/Virtual Reality engine.

DAO’s

Mute is building a safe and secure community that focuses on protecting members of the crypto community by providing accurate and up-to-date information on projects, risk assessments, and education. 

Other projects

SharpShark is a WEB3 copyright protection service that helps businesses protect and monetize their textual, visual, and other copyrightable content.

A decentralized co-op platform for AMM liquidity providing that will double LP investors’ return on invested capital while at the same time boost liquidity for projects’ tokens.

1.4 Effectiveness of the funding program  

Total external funding (overall amount) came from projects that have received a grant (around 40%).

2. External funding in the NEAR Ecosystem

This section provides information about external funding in the NEAR ecosystem

• 2 closed projects in Q4 ‘22 – ($6.2M)
• 2 finalizing rounds
• 20 new fundraising processes kicked off 
• 22 VC intros made

Closed Rounds (Quarter-to-Date)

• EmpireDAO – Raised a $2.8m seed round with participation from NEAR Foundation to build a global community starting with a flagship location in NYC. Please stop by the NEAR space at EmpireDAO if you are ever in NYC! 

• t2.world – Raised a $3.4m seed round led by Inflection and Archetype to empower readers and writers to grow their communities in the Web3 space.

3. Ecosystem highlights  

NEARWEEK is the one-stop-shop for all NEAR related news. Each weekly newsletter and edition is made possible via news contributions from the NEARWEEK community to the NEWS DAO. Subscribe or visit NEARWEEK.com to get your weekly dose of news from the NEARverse!

For the month of October we invite you to read through the following newsletters : 

Newsletter 78 

Newsletter 79 

Newsletter 80

Newsletter 81 

If you are interested in getting funded : 

• explore the NEAR Funding  linktree
• visit NF’s website : https://pages.near.org/
• contact NF Grants : [email protected] 

As part of the Foundation’s commitment to transparency, each week it will publish data to help the NEAR community understand the health of the ecosystem. This will be on top of the quarterly report, and the now monthly funding reports. 

You can find the quarterly reports here.

You can find monthly reports on funding here.  

This week, the Foundation is focusing on the state of staking in the NEAR ecosystem. 

The state of staking, as of Friday 18th November 2022

At the time of writing, there is 469 million NEAR staked, which equates to approximately 42% of the total supply, or 56.5% of circulating supply. 

The staking total is spread across 131 validators, which is up on last month’s total validator number of 126, a four percent increase in the decentralization of the network. 

The seat price – the amount of NEAR required to be eligible for staking has fallen precipitously. From 100,000 NEAR in October to just 20,000 NEAR in November, this means securing the network has become more accessible than ever before. The Foundation expects the number of validators to grow significantly to approximately 300 by the end of this year, as NEAR Foundation starts to delegate to Stake Wars winning participants.

This will continue as the protocol deploys its roadmap. In 2023, for example, the number of validators will continue to climb to a maximum of 400. You can read more about the road map here. 

Staking Distribution 

Of the 131 validators, eight validators hold 33% of the total staked balance, representing 154 million $NEAR. A total of 15 validators, hold 50% of the total staked balance, and 116 validators hold the other 50% of the total NEAR available. A stake of 33% is the stake that can halt the network, according to Pikespeak. 

To improve decentralisation, the Foundation, along with the ecosystem is continuing to improve the breadth and depth of the validators, and actively encourages stakeholders to delegate to validators outside the top 15. 

Why are validators important? 

The NEAR network is decentralized, meaning that multiple people collaborate in order to keep it safe. We call such people validators.

In order to make sure that all the transactions in the network are valid, i.e. that nobody is trying to steal money, the validators follow a specific consensus mechanism.

Currently, there are a few well-known consensus mechanisms to keep a blockchain working correctly and resistant to attacks. NEAR Protocol uses a version of Proof-of-Stake, particularly Thresholded Proof of Stake.

In Proof-of-Stake, users show support to specific network validators by delegating NEAR tokens to them. This process is known as staking. The main idea is that, if a validator has a large amount of tokens delegated is because the community trusts them.

Validators have two main jobs. The first is to validate and execute transactions, aggregating them in the blocks that form the blockchain. Their second job is to oversee other validators, making sure no one produces an invalid block or creates an alternative chain (eg. with the goal of creating a double spend).

If a validator is caught misbehaving, then they get “slashed”, meaning that their stake (or part of it) is burned.

In the NEAR networks, an attempt to manipulate the chain would mean taking control over the majority of the validators at once, so that the malicious activity won’t be flagged. However, this would require putting a huge sum of capital at risk, since an unsuccessful attack would mean slashing your staked tokens.

Why is decentralization important? 

Staking is not only about the rewards, it is the basis for security and stability of the NEAR Protocol. To avoid centralization, split your stake between smaller staking pools instead of putting everything in the largest one.

Community members like Zavodil Validator have created excellent alternatives to NEAR’s official explorer, embedding metadata from the active staking pools to help you choose which Validators to Stake with. Also, consider joining the #staking channel on https://near.chat and ask questions!

These reports will be published each week, and cover different aspects of the ecosystem. 

With this report, the NEAR Foundation would like to expand the consistent and frequent communication with the NEAR community, to contribute to the long-term health and viability of the ecosystem.

As a result, the Foundation is publishing its first transparency report and committing to quarterly reports moving forward.

The purpose of the Foundation, per its articles of incorporation is promoting and developing new technologies and applications, especially in the fields of open and decentralized software architectures, to enable innovation to benefit people around the world. A dominating but not exclusive focus is set on the promotion and development of the NEAR Protocol and related technologies as well as the promotion and support of applications using the NEAR Protocol. 

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

Below the Foundation shares details of how it allocated funding in Q4 2021 and Q1 + Q2 of 2022. This will include the rationale for these decisions and insight into future plans.

In totality, the Foundation deployed $540M in fiat and tokens during these three quarters. The allocation of these funds has helped the ecosystem while it grew at an unprecedented rate.

• The number of accounts on the NEAR Protocol has grown from 1.1 million at the beginning of 2022 to 15.6 million accounts at the end of Q2. 
• The number of weekly active developers deploying on mainnet has grown from 250 to 1,500 per week.
• DAOs have surged from 50 to 700 and the number of projects deployed on NEAR has increased from 100 to 750.

The NEAR Foundation in Q4 2021 

In Q4 of 2021, the NEAR Foundation announced the launch of an $800 million ecosystem fund. The fund was to be split into four broad groups:

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

The below goes into further detail about how much was allocated, how much was committed and what projects were included in the allocation. 

Proximity DeFi Grants

Allocation: $350 million 

Committed: $350 million 

Why DeFi? 

DeFi is one of the cornerstones of a healthy blockchain ecosystem. The provision of financial products and services helps users learn the tools necessary to safely navigate a Web3 ecosystem, as well as drive innovation.

DeFi helps other projects grow by facilitating quick, safe, and easy ways to move and swap currencies in and out of projects as they see fit. While the Foundation cannot deploy DeFi primitives itself, it can help support the creation of funds that can. Proximity forms that function inside the NEAR ecosystem. 

Proximity is a research and development firm supporting projects building decentralized finance (DeFi) applications on NEAR and Aurora through grants, advisory services, and developer support. 

Proximity’s allocation decisions are independent of the Foundation. 

Ecosystem Grants 

Allocation: $250 million 

Committed: $133 million 

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

The Foundation has come up with specific strategies and has deployed capital within each vertical.

• Infrastructure and Integrations – Infrastructure is a catch all term for key parts of the ecosystem that are needed to help unlock mass adoption. These include things like wallets, bridges, oracles, zk technologies, privacy tools, and improved tools for developers. Integrations with the NEAR network are crucial to bring more users into web3. The following partnerships have been instrumental in accelerating NEAR’s connection with the rest of web3.
  • Key projects: Aurora, Pagoda, Calimero, Switchboard, Octopus, Brave, Coinbase Earn, BitGo, USDT, Fireblocks, Token Terminal, Copper

• Gaming / Entertainment – The web3 gaming space is still wide open. The first iteration of web3 games proved consumer demand. Now, there is room to iterate on long-term sustainable models, introduce permissionless composability, and create new forms of NFTs in addition to games that are primarily or even fully on-chain.
  • Key projects: Armored Kingdom, SWEAT, Endlesss, Niche, playEmber, eFuse

• NFTs –  NFTs on NEAR is a large and extremely important opportunity in which NEAR has a unique tech advantage as NEAR NFTs are applications that are programmable. NEAR has a chance to be the first mover in true, long-term, sustainable and unique NFT use cases.
  • Key projects: Few & Far, Mintbase, Paras, Seatlab, Stack Sports 

• DAOs – We believe NEAR has the strongest no-code, easy to use, DAO tech stack that is already helping to decentrally govern key ecosystems and hundreds of millions of dollars. We will facilitate DAO use cases in investing, gaming, NFTs, sustainability, and science. 
  • Key projects: AstroDAO, OrangeDAO, SailGP, Flamingo DAO, Unchain Fund 

Startup Funds

Allocation: $100 million 

Committed: $18 million 

The Foundation does not believe it should be the sole distributor of capital to developers and entrepreneurs. Decisions should not be made in a vacuum with just one centralized organization.

In order to further decentralize capital deployment, the Foundation has allocated grant funds to MetaWeb,  MOVE Capital, Stealth Capital, Open Web Collective who are focused on funding projects of the NEAR Ecosystem, each with their own thesis. 

The Foundation has committed $18 million thus far to these funds that have subsequently made 50+ allocations into NEAR ecosystem projects. 

• MetaWeb, another NEAR native investment fund, has raised $30m from Sequoia, in addition to NF. MetaWeb have made 33 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 15 investments to date, 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. 
• 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. 

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In addition to these, additional funds will be announced in the coming months, focused on specific verticals such as Sustainability, Sports & Entertainment, and Web2 → Web3.

Collectively the NEAR Foundation believes these funds will help realize its vision of bringing a billion users to Web3 in a healthier, more decentralized way. 

Regional Hubs 

Allocation: $100 million 

Committed: $33 million 

To be global, we have to be local.

As part of NEAR’s ambition to reach a billion people, the Foundation believes we need hubs around the world to connect with people where they are – with local events, in local languages, to find the best people wherever they are and forging partnerships with local organizations.

The NEAR Foundation has outlined seven regional hubs as part of its roadmap. So far, three have launched: 

• Ukraine Hub (in exile in Lisbon) 
• Kenya Hub (Sankore) 
• Balkans Hub

In addition to these hubs, the Foundation will soon be announcing Vietnam and India hubs and will be launching additional hubs in South Korea and the US.

The Foundation has chosen these locations based on a variety of factors, including web3 adoption, # of developers, regulatory environments, and available capital.

Funding, Treasury & Decentralisation 

In addition, the NEAR Foundation has received $560m from the following key backers: Tiger Capital, FTX, a16z, Circle, Dragon Fly, and many others.

The Foundation has been very conservative in how the funds have been managed. Exposure to non-NEAR assets has been limited, with over $0.5b of funds raised held in fiat in Swiss bank accounts. This strategy helps ensure that the Foundation maintains sufficient resources throughout the market downturn. 

This approach has left the Foundation in an extremely strong position to continue to distribute funds to high quality projects for the foreseeable future.

The Foundation is on a continued decentralization journey, and as part of this mandate working on its promise to put tokens in the hands of the community. 

The community has come together in response to Illia’s talk from ECC in Paris to implement an ecosystem-wide self-governance treasury called the NEAR Digital Collective (NDC).

​​The purpose of the NDC is to further decentralize NEAR’s ecosystem governance, distribute more of the Foundation’s token holdings to the community and move decision-making on-chain in order to make our community more resilient, transparent, and fair.

A Community Working Group is now forming to take the next steps to launch and implement the NDC framework. This process is led and shaped by the community. Building better, sustainable self-governance at a global level starts with the community.

Every voice matters and we believe the process now being launched can serve as a model approach across Web3 for the creation and implementation of truly decentralized, on-chain governance.

The Road Ahead

NEAR’s mission is to:

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

The NEAR Foundation is committed to this mission. We will continue to support the ecosystem, drive awareness to NEAR and web3, and continue to educate regulators around the world.

The Foundational will continue to invest and deploy capital in the key verticals mentioned above: infrastructure, integrations, gaming / entertainment, NFTs, 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.

As part of this journey, we are also committing to releasing quarterly transparency reports moving forward to show the NEAR community where capital is deployed and why. This will also include performance of the largest investments, grants, funds, and hubs

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!