A Closer Look: Defining Projects in the Near Ecosystem

After digging deeper into the Near protocol and a survey of some of the most prominent projects in the ecosystem, this third and final article will hone in on three key communities driving the ecosystem.

Thanks to the simple, secure, and scalable design of its decentralized application (dApp) platform, Near has rapidly risen in popularity to become a competitor of the Ethereum chain.

Its ecosystem has grown swiftly to encompass almost 900 active projects. Here are three in particular that everyone should know about:

Ref Finance, Sweateconomy, and Burrow.

Ref Finance

Source: Ref Finance

Ref Finance is a community-led, multi-purpose DeFi platform built on the NEAR Protocol that supports trading, lending, and synthetic asset creation. The dApp was initially created by Illia Polosukhin, co-founder of NEAR Protocol. Following the deployment of the application in April 2021, Proximity Labs, a research and development company focused on NEAR, received a grant from the NEAR Foundation to bootstrap and scale Ref Finance.

Early June 2021, Proximity set up the Ref Finance DAO (Decentralized Autonomous Organization). DAO members were selected based on their value, contribution, and activity across the board.

Ref Finance is built on the NEAR blockchain, so it benefits from the same permissionless and censorship-resistant properties as all projects in the ecosystem — operating without trusted intermediaries. Anyone can trade and/or become a liquidity provider (LP) for a pool by depositing an equivalent value of each underlying token in return for pool tokens (LP tokens). These tokens track pro-rata LP shares of the total reserves, and can be redeemed for the underlying assets at any time.

Unlike Uniswap, the leading DEX (decentralized exchange) on Ethereum, Ref relies on a smart contract that manages the automated market maker functions, including swap and liquidity provision. Ref’s smart contracts also contain all liquidity pools, composed of two or three NEP-141 tokens (ERC-20 equivalent on NEAR). When a LP creates a new pool, the pool fee is customisable.

Every pool has the same fee structure, as shown below.

Source: Ref Finance

Inspired by Uniswap v2 and Curve Finance, Ref Finance’s exchange functionality is an automated liquidity protocol powered by two constant product functions:

  • Swap function: x * y = k
  • StableSwap function: χDn−1 * ∑ xi + ∏ xi = χDn + ( D / n )n
  • StableSwap function for yield-bearing tokens (Rated pools)

Tokenomics

REF is a Governance token that rewards its holders with a protocol revenue-sharing model. Details of the token contract and allocation are as follow:

  • Token name: Ref Finance
  • Ticker: REF
  • Fungible Token Contract: token.v2.ref-finance.near
  • Fungible Token Standard: NEP-141
Source: Ref Finance

Ecosystem Participants

The Ref Finance ecosystem primarily consists of five types of users: traders, liquidity providers, stakers, voters, and developers.

  • Traders can swap NEP-141 tokens,
  • Liquidity providers receive swap fees and REF emission incentives to provide tokens to liquidity pools.
  • Stakers receive a pro-rata share of the protocol revenue.
  • Voters can participate in the governance of the project and the allocation of liquidity incentives.
  • Developers can integrate directly with Ref Finance smart contracts to empower users in their interactions with tokens, trading interfaces, trading strategies, and more.

Traders

There are different types of traders interacting with the protocol:

  • Speculators can use a wide range of strategies from fundamental to technical analysis, to simply “aping in” (the speculative process of buying a token shortly after launch or news events without conducting thorough research).
  • High-frequency bots can cover different strategies, such as market-neutral arbitrage or long/short positions.
  • dApp users can purchase tokens for use in other applications on NEAR. For example, buying PixelDapp tokens to play games.
  • Smart contracts can execute trades directly by implementing swap functionality– from products like DEX aggregators to custom scripts.
  • Legal entities (for-profit or non-profit organisations) and/or DAOs can leverage the platform for management of affairs, such as settlement of an invoice in a different currency/token.

Traders are all subject to the same fees for trading on the platform.

Liquidity Providers

Liquidity providers, or LPs, are a fragmented group, mainly made up of:

  • Passive LPs: Token holders who passively invest to accumulate trading fees. Passive participants generally do not actively monitor their positions and impermanent loss.
  • Sophisticated LPs: Active traders focused on market making as their primary strategy. Active participants usually develop custom tools and actively monitor their positions and impermanent loss.
  • Token Projects: Depending on promotion and incentive strategies, the development teams of token projects sometimes choose to become LPs to “initiate” liquidity, by creating a liquid pool for their token.
  • Protocol-Oriented or “Politicised” LPs: Certain entities could be focused primarily on the REF<>NEAR pool and the vetoken model, allowing them to participate in the governance of the protocol (also see Voters).

Stakers

Stakers can have different objectives and belong to specific subgroups:

  • Long-term stakers are usually interested in a predictable source of revenue derived from the protocol revenue, while holding the protocol token and participating in the governance.
  • Short-term or intra-strategy stakers are staking for a limited period of time, with the objective to optimise their returns. Generally these stakers would participate until the underlying token (REF) needs to be sold or used for a different purpose (i.e. liquidity provision).
  • Voting-only stakers can be identified as users that purchase and sell tokens before and after a proposal for additional voting influence. They are generally interested in participating/influencing the future of the protocol by voting on specific proposals.

Voters

VeToken holders can participate in the governance of the projects by voting on key governance proposals and by voting on the allocation of REF tokens to specific farms for additional farming rewards.

Voters can be:

  • Community members, organisations, or investors that are interested in participating in the development and strategic orientation of the project
  • Project owners who want to support/grow their community by voting on the allocation of additional rewards for their corresponding farm
  • Short-term farmers who want to maximise their farming APR by voting on the allocation of additional rewards for their corresponding farm

Developers

There are many ways Ref Finance can be used by developers, some examples include:

SWEATCOIN

Sweatcoin is a fitness platform that leverages the Move-to-Earn (M2E) model by allowing users to convert their physical movements into digital currencies. As people move around, they generate SWEAT tokens, which they can donate to charities, use to buy products, or convert to other cryptocurrencies.

The Sweatcoin platform was created in 2016 by Oleg Formenko and Anton Derlyatka. From the beginning, it was a platform that encouraged people to move. The founders were interested in promoting health, so they leveraged blockchain technology to create a system that motivated people to exercise. However, shortly after starting the platform, they felt that their target users were not yet ready for a crypto-based payment system. After six years of iteration, they announced their intention to continue with crypto payments via the SWEAT token on the Ethereum and NEAR networks.

The Sweatcoin app has more than 100 million users who have collectively earned nearly 20 trillion coins. When the SWEAT token launched, former users were allowed to redeem their Sweatcoin in-app rewards for the SWEAT cryptocurrency. Within 24 hours of offering the redemption mechanism and integrating the crypto-based payment system, Sweatcoin added 150,000 users. The accessibility has made the app very popular, because unlike most cryptocurrencies, where users have to buy equipment to mine coins or invest their assets to earn rewards, Sweatcoin users simply move to earn SWEAT.

In its simplest terms, Sweat Economy is a crypto ecosystem that simplifies the M2E payment model. The Sweatcoin group claims that their mobile app is the number one health and fitness application downloaded in 2022 in 58 countries. The team continues to “take steps” to manage its token supply to attract users, as shown in SWEAT’s supply schedule.

Source: Sweat Economy

Tokenomics

The SWEAT token is the fuel behind Sweat Economy — the reward token and the primary currency of exchange in the ecosystem. As the only reward token, it’s used to unlock rewards points, including vouchers and discounts for various brands, tickets to popular sports activities, and stablecoin prizes. Users can also stake their SWEAT tokens and raise their daily minting limit.

Additionally, Sweat Economy is developing an NFT-based game in the SWEAT wallet. Users will be allowed to stake their tokens and compete with other users. Every head-on match will burn tokens, permanently remove them from circulation to improve scarcity by reducing the total supply. External NFT owners who want to advertise their products to the Sweatcoin community need SWEAT tokens to pay for service charges.

Source: Sweat Economy

Burrow

Burrow is a decentralised, non-custodial, pool-based interest rates platform that enables users to supply assets to earn interest, and to borrow against them to unlock liquidity. Burrow is similar in nature to Aave, Compound, and other pool-based protocols.

Burrow runs natively on the NEAR blockchain, and the Burrow protocol’s smart contracts are written in Rust.

A key aim of the Burrow dApp to unlock liquidity for interest-bearing assets, particularly layer 1 staking derivatives such as stNEAR and stETH. For instance, users of the application will be able to deposit stNEAR as collateral, then borrow more NEAR to create a leveraged staking position, or borrow a stablecoin to create a self-repaying position.

Borrowing and Lending

Users can supply assets to the protocol and immediately begin earning passive interest. The interest rates are variable and fluctuate based on the demand vs supply for the given asset.

Users can withdraw their supplied assets at any time, as long as the utilisation rate for the asset will be less than 100% after the withdrawal. If the proposed withdrawal will raise the utilisation rate to 100%, the withdrawal will be temporarily unavailable (note: if this does occur, it will be a very expensive situation for borrowers, and lucrative for suppliers)

Users can borrow against their supplied assets on Burrow. All positions must be over-collateralized. If the value of a user’s collateral drops below the minimum collateral ratio, their collateral will be liquidated to pay off their debt.

On Burrow, each asset has a unique minimum collateral ratio, as each asset carries unique risk. The collateral ratios of each asset can be found here.

The aggregate risk of an account can be measured through the Health Factor, which represents the combined collateral ratios of the borrowed assets.

If the health factor is higher than 100%, it means the account is in a good state and can’t be liquidated.

Governance

Burrow is governed by the Burrow DAO, which operates using the SputnikDAO / AstroDAO framework. Sputnik is very flexible, enabling DAOs to create roles with encoded responsibilities, and to execute any transactions supported by the NEAR blockchain.

The DAO is responsible for managing the treasury and reserve funds, onboarding new assets, and managing asset risks through a range of parameters.

Current DAO Structure

The DAO has two roles: council and community board. The Council has 5 members and can create and vote on proposals. The Community Board has 15 members which can only vote on proposals.

The Council submits proposals, and the Council and Community Board together vote to approve or reject them. In many cases, the Council will submit proposals on behalf of the Community Board or the broader Burrow community.

If an approved proposal requires the DAO to perform complex actions involving multiple transactions, the Council will create and approve proposals executing those actions. For example, if the Community Board approves a proposal to add liquidity to a token pair on Ref, the Council Board will create proposals to execute the three transactions required to do so, and then approve those proposals.

Once a substantial portion of the BRRR tokens are distributed, the DAO will vote to add the Token Holder role. It is expected for Token Holders to replace the Community Board and will be approving or rejecting proposals submitted by the other roles.

To keep the Council and Community Boards accountable, Token Holders will be given the ability to add and remove members of these roles. It will also be possible to create additional roles with a range of permissions.

Tokenomics

The majority of the supply of Burrow’s BRRR governance token will be distributed to active Burrow users and community members.

Distribution

Source: Burrow
  • Total Supply: 1,000,000,000 BRRR
  • Community: 50%
  • DAO Treasury: 20%
  • Core Team: 20%
  • Strategic Investors: 10%

6% of the total supply (60,000,000 $BRRR) was distributed to the Burrow community in the first three months after launching. The token was non-transferrable (i.e. non-withdrawable from the Burrow app) for the first 4 weeks, until the DAO voted to approve transfers. This waiting period ensured that Burrow would be able to better align with early users and supporters.

Conclusion

The Near Ecosystem is growing day by day and new projects are added almost daily. Many of the steps that Near has taken recently are tempting developers to build projects in the Near Ecosystem.

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