Is this Ethereum antagonist a breakthrough investment in the cryptocurrency industry?

Since its launch in 2020, Near Protocol (quotation NEAR 0,60%) has attracted the attention of some big names in venture capital (VC) and hedge funds. In April, it raised a monstrous $ 350 million in a funding round led by Tiger Capital, while just a few months earlier it raised a whopping $ 150 million. It is clear that it has great financial backing to become a leading blockchain project. But does it have enough to launch a serious challenge to Ethereum?

As the top 25 cryptocurrency with a market capitalization of around $ 3 billion, Near Protocol is arguably in the same class as other more well-known tier 1 blockchain rivals such as Solana and Avalanche. For Near Protocol to become a successful investment in the cryptocurrency industry, however, a few things need to happen.

1. Continue to outperform Ethereum

Like Ethereum, Near Protocol is a level 1 blockchain that supports both smart contracts and decentralized applications. Its main advantage over Ethereum so far has been that it is cheaper and faster.

When it comes to transaction processing speed, for example, there is no comparison. Near Protocol can handle up to 100.000 transactions per second, while Ethereum (prior to The Merge) was only able to process 15-20 transactions per second.

In part, Near Protocol was able to achieve these higher speeds by focusing on technical innovations such as sharding, which is a process of breaking down blockchains into subchains. This reduces the computational load on the blockchain and increases the throughput capacity.

Vitalik Buterin, co-founder of Ethereum, has promised similar transaction processing speeds as soon as The Merge is completed. However, it could take years, as Ethereum has already warned that the speed of transactions will not improve overnight. There is yet another long process known as "Surge, Verge, Purge and Splurge" before you can expect 100.000 transactions per second from Ethereum. 

So if the Near Protocol is to be a true challenger to Ethereum, it will have to continue to outperform Ethereum in terms of performance. 

2. Delivering on the promise of Web3

In mid-September, Near Protocol developers gathered in Lisbon, Portugal for the annual NearCON event. One of the most interesting news to emerge from the event was the launch of a new $ 100 million VC fund for the Near ecosystem. 

In partnership with Caerus Ventures, the Near Foundation will look for exciting Web3 culture and entertainment projects to be funded in the future. These will likely include projects related to sport, music, cinema, fashion and art. The only caveat is that the new fund will focus on seed round operations, which usually involve projects still in the conceptual phase. The hope is that some of these fledgling Web3 projects can turn into something meaningful. 

Is Near Protocol to buy?

Thanks to the new listing of Coinbase Global, Near Protocol is able to attract more mainstream cryptocurrency investors. However, for now, we recommend a wait-and-see approach to Near Protocol. Personally? I've added it to my list of cool cryptocurrencies that may be popping up in 2023, but I need to see more blockchain projects before I start buying.