Altcoin Review #3 NEAR Protocol: Its Role in the AI Space and Bullish vs. Bearish Thesis

As artificial intelligence continues to reshape industries and drive innovation, the intersection of AI and blockchain technology is generating significant buzz in the investment world. Recent surges in AI stocks, notably NVIDIA, have caught the attention of investors, with the company’s stock skyrocketing amid the AI frenzy. But what if the future of AI isn’t just confined to traditional tech stocks? Enter NEAR Protocol—a decentralized blockchain platform poised to ride the coattails of the AI revolution. As AI applications become more mainstream, cryptocurrencies like NEAR stand to benefit from the surge in demand for decentralized solutions. The fusion of AI and blockchain is not merely a trend; it's a paradigm shift that could see NEAR Protocol’s value soar alongside the stocks of AI powerhouses. Investors are keenly watching how this convergence will unfold, as the potential for NEAR to become a leader in the AI-driven crypto landscape could lead to substantial price action and a new era of wealth creation.

In recent years, the blockchain ecosystem has expanded dramatically, giving rise to various platforms that cater to specific use cases. Among these, NEAR Protocol has emerged as a noteworthy contender, particularly in the realm of decentralized applications (dApps) and artificial intelligence (AI). This article delves into NEAR Protocol’s narrative within the AI space, discusses its technological innovations, and outlines both bullish and bearish theses regarding its potential future.

What is NEAR Protocol (NEAR)?

NEAR is a decentralized development platform that employs a Proof-of-Stake (PoS) consensus mechanism and is set to feature a sharded architecture to enhance transaction throughput. Its block generation scheme, known as Doomslug, and the proposed sharding design dubbed Nightshade are key technologies that will work together to scale the network and minimize congestion. NEAR has been designed to be both developer and user-friendly, featuring several key innovations that facilitate application development and user onboarding.

The NEAR blockchain was created and developed by the NEAR Foundation, with its mainnet going live in April 2020. Validators voted to unlock token transfers in October 2020, and NEAR launched its Rainbow Bridge to Ethereum in March 2021, enabling cross-chain interactions.

Brief History

Initially conceived as a machine learning project, NEAR was founded in early 2017 by Illia Polosukhin and Alexander Skidanov. They began exploring program synthesis before realizing the need for a new blockchain that could meet the demands of smart contract platforms and crypto payments. After gathering a team of engineers, they officially began building NEAR Protocol in August 2018, with the vision of offering developers an easy path to create scalable decentralized applications.

NEAR’s Technology

NEAR’s blockchain leverages a new consensus algorithm and sharding architecture to achieve high performance. Key elements of NEAR’s technology include:

1. Dynamic Re-Sharding: NEAR plans to implement sharding, a method of scaling that spreads computing and storage across multiple servers, allowing for greater efficiency. The project will use dynamic re-sharding, adjusting the number of shards based on user demand.

2. Nightshade: This innovative sharding approach allows each shard to produce "chunks" of data that together create a single block. This method enhances the efficiency of cross-shard transactions.

3. Doomslug: NEAR’s unique block production technique ensures practical finality of blocks with only one round of communication, significantly speeding up transaction confirmations.

4. Developer Rewards: NEAR allocates 30% of transaction fees to the smart contract that initiated the transaction, incentivizing developers to build applications on the platform.

5. Staking and Staking Rewards: NEAR token holders can stake their tokens to help secure the network. Stakers receive rewards in NEAR for their contributions, enhancing the network's security while providing an additional income stream for participants.

NEAR Protocol's Narrative in the AI Space

As AI continues to gain prominence, NEAR Protocol is positioning itself as a key player in integrating blockchain technology with AI applications. This convergence offers several exciting possibilities:

1. Decentralized AI Models

NEAR enables the development of decentralized AI models that leverage the collective power of distributed networks. By utilizing smart contracts, developers can create AI algorithms that operate transparently and securely, addressing concerns related to data ownership and privacy.

2. Tokenized Incentives for AI Contributions

NEAR’s tokenomics allows for the creation of incentives that reward participants for contributing to AI development. Users can earn tokens by providing data for AI training or contributing computing power to enhance model performance.

3. AI-Powered dApps

The integration of AI into dApps built on NEAR could revolutionize various sectors. For instance, AI could enhance decentralized finance (DeFi) applications by offering real-time insights and analytics based on users’ transactions.

Near Token Technical Analysis

The technical analysis for NEAR Protocol over the past month indicates a neutral sentiment overall, with more sell signals than buy signals. Out of 23 indicators assessed, 8 are categorized as sell, 9 as neutral, and 4 as buy.

Oscillator Indicators

• The Relative Strength Index (RSI) is at 49.145, reflecting a neutral stance.

• The Stochastic %K at 41.792 and the Commodity Channel Index (CCI) at 10.668 both suggest a neutral trend.

• The Average Directional Index (ADX) is at 37.724, which also indicates a neutral trend.

• While most oscillators remain neutral, the Momentum indicator shows a buy signal at 0.827, and the MACD Level reflects a buy at 0.198.

Moving Averages

The moving averages are predominantly bearish, with several short-term averages signaling sell:

• The Exponential Moving Averages (EMAs) for periods of 10, 20, and 30 days are all in the sell category.

• Conversely, the Simple Moving Averages (SMAs) for the 20 and 30-day periods suggest buy signals, with values at 3.508 and 3.276, respectively.

  
  

Overall, while the short-term indicators are showing some positive momentum, the prevailing trend across moving averages and oscillators suggests caution, emphasizing a neutral to bearish outlook for NEAR Protocol in the short term.

Bullish Thesis for NEAR Protocol

1. Growing Demand for Decentralized Solutions: As concerns about data privacy and centralization grow, NEAR’s focus on decentralization and user control positions it as an attractive solution for developers building AI applications.

2. Strong Developer Ecosystem: NEAR has been fostering a robust developer community through initiatives like hackathons and grants. A strong developer ecosystem is vital for driving innovation and adoption.

3. Strategic Partnerships and Collaborations: NEAR has established partnerships with various projects, enhancing its visibility and expanding its ecosystem. Collaborations with AI companies could lead to innovative solutions that showcase the capabilities of NEAR.

4. Staking Rewards: The ability for users to stake their NEAR tokens not only enhances network security but also provides participants with an avenue for passive income, further incentivizing community engagement.

5. Adoption of AI in Blockchain: The integration of AI across industries suggests a significant opportunity for NEAR to capture market share, driving demand for its token.

Bearish Thesis for NEAR Protocol

1. Competition from Established Blockchains: NEAR faces fierce competition from established networks like Ethereum and Solana, which could hinder its market penetration.

2. Regulatory Concerns: The evolving regulatory landscape surrounding cryptocurrencies and AI technologies could present challenges, potentially impacting development and investment.

3. Market Volatility: NEAR, like many cryptocurrencies, is susceptible to market fluctuations. A downturn could negatively affect its price and investor confidence.

4. Execution Risk: Successfully integrating AI with blockchain technology depends on various factors, including technological advancements and developer engagement. Any missteps could hinder NEAR’s growth.

Conclusion

NEAR Protocol stands at a critical intersection of blockchain technology and artificial intelligence. Its potential to revolutionize how AI applications are built and deployed makes it a compelling option for developers and investors. The combination of strong technological foundations, an engaged community, and innovative staking mechanisms positions NEAR for potential success.

However, stakeholders must also consider the challenges outlined in the bearish thesis. The convergence of AI and blockchain presents immense promise, and NEAR Protocol's role in this narrative could shape the future of decentralized applications in the AI space. Whether NEAR can capitalize on its strengths and overcome its challenges will be key to its long-term success in this rapidly evolving landscape.

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