The terms of the deal were defined by a16z and joined by some 40 other investment firms including Pantera Capital, Libertus, Blockchange, Animal Ventures, Distributed Global and Notation Capital, according to NEAR co-founder Illia Polosukhin. The token sale is the network’s second following a $12.1 million round last July.
NEAR Foundation CEO Erik Trautman said the protocol – a sharded, Proof-of-Stake (PoS) blockchain – operates in a similar design space as the forthcoming Ethereum 2.0 and the existing Cosmos network.
A databasing method, sharding breaks blockchain storage for PoS chains onto multiple “shards” or servers separated from one another. The main benefit of sharding lies in how blockchains communicate with one another: If every node has to settle every transaction, the blockchain will be slow; if transactions are broken into groupings of shards, transactions can be processed more quickly.
That doesn’t mean scalability is NEAR’s first focus, said Aliaksandr Hudzilin, NEAR’s head of business development. “It’s so early. Nobody needs scalability,” Hudzilin said.
In that vein, NEAR says it’s moving forward slowly and deliberately given the implications of code flaws in a blockchain intended for financial applications. The network will operate under a Proof-of-Authority (PoA) consensus algorithm administered by the NEAR Foundation and the 40 or so validators who purchased tokens from the foundation.
The foundation will oversee token address creation and transactions until Phase 2 kicks in with fewer restrictions later this summer, according to a NEAR blog post. Phase 2 and Phase 3 will transition the blockchain to a PoS system and community governance following general testing.
“It’s actually kind of the only way to do it,” Trautman said. “Our goal is to hand off as quickly as possible from this PoA run to [the] Foundation not touching it.”