You are perfectly familiar with the blockchain trilemma, that is, the problem, with the scalability, security, and decentralization of blockchain. As demand for this type of service grows, so does the pressure to find solutions to the scalability of blockchain networks. What is Near Rainbow Bridge and is it likely to solve this problem?
Near Rainbow Bridge is one effective solution, with issues with scalability. Rainbow Bridge is one of the components of the NEAR protocol.
NEAR protocol
NEAR Protocol, is a layer one solution that uses sharding to solve problems with scalability. We wrote about the concerns with scalability of blockchain networks here [LINK – BLOCKCHAINS-Scalability-Master Level].
The developers are Alex Skidanov and Illia Polosukhin, who created NEAR in 2022. The NEAR platform includes a number of programming languages and tools, including smart contracts, incorporating cross chain functionality. This makes it easy for developers using NEAR to create dApps. Moreover, the NEAR protocol offers readable user account names instead of cryptographic wallet addresses. It is also known for its carbon neutrality.
How does the NEAR and Rainbow Bridge protocol work?
The protocol itself has significant advantages over other blockchain ecosystems. Even over Polkadot, Ethereum or EOS. Why? Because NEAR Protocol adds various interesting features to its ecosystem. Which ones? We are talking about Nightshade Sharding, Rainbow Bridge and Aurora. Let’s take a closer look at these features.
- Nightshade Sharding
It is the core technology behind blockchain NEAR. Sharding this enables data processing.
A quick reminder: sharding distributes the load of a master node, to other validation nodes. As a result, all nodes involved manage a portion of the network transactions, providing a higher number of transactions per second (TPS).
Nightshade Sharding complements Rainbow Bridge in improving scalability. Nightshade uses miners and validators to process data. They operate in parallel to each other in multiple shards simultaneously. Each shard produces a faction for the next block. The fraction is known as chunk. Chunks are processed and stored in the NEAR protocol to finalize a given transaction.
You have already noticed that Nightshade enables the protocol to manage millions of transactions per second without affecting its performance. It provides dynamic splitting and merging of shards, depending on network conditions. Once this high performance is achieved, the number of nodes in the network increases while maintaining performance. What’s more, it thus ensures low transaction fees.
The NEAR protocol is much more interesting than one might have expected. As a consensus mechanism, it uses Thresholded Proof of Stake (TPoS) to select validators. This ensures that the validators of the next block do not have to compete on the size of the stake. TPoS acts like an auction that involves multiple validators interested in staking a NEAR token.
According to the number of tokens that validators want to stake, they are selected for Nightshade sharding. Validators who stake more have a better chance of being selected.
- Rainbow Bridge
This is another important function of the NEAR protocol. It is also its main application. Rainbow Bridge was launched in 2021. The list of tokens that can be traded or staked in Rainbow Bridge is really abundant. It includes ERC-20 tokens, wrapped tokens, stablecoins and even NFTs. Interestingly, with this feature, we can exchange tokens between Ethereum and the NEAR protocol. This is a practical possibility for developers and users. Rainbow Bridge is entirely decentralized.
Do you already understand how the Rainbow Bridge works? Using the bridge, we can deposit ERC-20 tokens into Ethereum smart contracts. The new tokens are created in the NEAR protocol, representing the original tokens, while providing a fixed value for the total supply that circulates in both blockchain ecosystems.
NEAR Rainbow Bridge transactions are also extremely fast. They take as little as 1 to 2 seconds, and cost less than $1.
- Aurora
It is a scalability layer 2 solutions. All three complements the NEAR protocol, solving the scalability problem and helping developers increase the interoperability of their applications. At the same time, with lower transaction costs. Aurora handles thousands of transactions per second, providing a block approval time of about 2 seconds.
The two most important components of the Aurora protocol are the Aurora bridge and its engine. The engine is, of course, the Ethereum Virtual Machine, which we have already written to you about here [LINK – WHAT IS THE ETHEREUM VIRTUAL MACHINE AND HOW IT WORKS – MASTER LEVEL].
As a result, developers can start working on the NEAR protocol without knowing any new development tools or rewriting their dApps. On the other hand, Aurora has the same case as Rainbow Bridge – we can seamlessly transfer ERC-20 tokens to and from Ethereum and the NEAR blockchain.
- NEAR Token.
That is, the native token of the NEAR protocol. It is with it that we pay for transactions. Token holders can participate in staking to earn certain rewards. Token holders can also engage in network management by voting on various decisions.
Rainbow Bridge – how does it work?
The rise in popularity of Rainbow Bridge has resulted in many interesting tokens finding their way into the NEAR ecosystem. In its first phase, Rainbow Bridge opened a bridge to the free flow of assets between Ethereum and the NEAR blockchain. The Rainbow Bridge list includes such stablecoins as USDT, DAI and even Uniswap.
If we were to define Rainbow Bridge, we would say that it is the official bridge for transferring tokens between Ethereum, NEAR and Aurora. The bridge is entirely an Aurora product, compatible with Ethereum. At the same time, it is a scaling solution for the NEAR protocol itself.
We can freely transfer tokens between the three networks. Depending on where we want to transfer them, this will involve one, or two transactions. A transfer between NEAR and Aurora requires a single transaction and usually takes up to 10 minutes. In contrast, a transfer to Ethereum requires two transactions and can take up to 16 hours.
Rainbow Bridge architecture
Here are some of the components that are part of the Rainbow Bridge:
- Rainbow Bridge User Interface.
The first element with which we start using Rainbow Bridge. It refers to the UI and is the official site of the NEAR protocol. It is where users provide their interaction with the bridge to transfer resources between networks.
- LiteNode
This is the blockchain node for NEAR Rainbow Bridge. Simply put – intelligent contract. It provides storage for block headers. As a result, it reduces disk space usage resources. LiteNode is also implemented on two smart contracts – one on the Ethereum network, the other on the NEAR protocol.
- Relays.
Relays help LiteNode go through automatic updates.
- Connectors.
These are intelligent contracts for Rainbow Bridge, which define the logic involved in managing cross-chain for a particular asset. They exist in pairs. Significantly, cryptocurrency transfers in Rainbow Bridge happen precisely through connectors.
Summary
The NEAR protocol is an excellent solution for scalability. It offers us Layer 2 solutions, as well as shards. Unlike the other bridges, Rainbow Bridge is compatible with most blockchain networks, allowing the free transfer of a wide range of tokens. The Rainbow Bridge is a kind of benchmark for future scaling solutions.