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Next Evolution of BlockChain Software Has Only Just Started: Bank of America

source-logo  coindesk.com 23 March 2023 12:12, UTC

The Near protocol is part of a new generation of blockchains such as Cardano, Solana and Polkadot that are using novel approaches to improving the “tradeoff between scalability, decentralization and security,” Bank of America (BAC) said in a research report Tuesday.

Blockchains like Near that grow functionality and incentivize development are likely to become attractive for developers in the short term, the report said. Near’s sharding approach “mitigates common scaling issues related to increasing centralization due to pooling and decreasing security due to poorly aligned incentives.”

However, it's too early to pick long-term winners and losers, according to the report.

“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,” analysts Alkesh Shah and Andrew Moss wrote.

Bank of America says while Near does prioritize network usability while other blockchains focus on maximizing throughput, it needs to do more. Near development stagnated in 2022 compared with the year before despite its focus on usability, its innovative architecture and an ecosystem of more than a thousand applications, the bank notes.

Transactions fees have fallen since the first quarter of last year, and the rate of new users has dropped since the second quarter, which suggests that its “applications are no longer driving accelerating user growth,” the note said.

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 note added.