NEAR Token Has Doubled in 4 Weeks; Here's Why

NEAR, the cryptocurrency powering layer 1 blockchain Near, has entered the crypto market's historically bullish second quarter with a bang.

The token has doubled to $20 in four weeks, significantly outperforming major coins: bitcoin gained 15% and ether 30% in the same period. Furthermore, NEAR tops the list of biggest gainers with market values of at least $1 billion, according to data source Messari.

Experts said several developments, including the flood of venture capital (VC) money into the Near protocol, appear to have revved up interest in the cryptocurrency.

VC boost

"Recent funding rounds show VCs have high conviction in the blockchain," CK Cheung, an investment analyst at DeFiance Capital, told CoinDesk in a Telegram chat.

Earlier this week, the protocol raised $350 million in a round led by hedge fund Tiger Global to accelerate the decentralization of the NEAR ecosystem. In January, Near raised $150 million from major crypto investment firms. Last month, Trisolaris, a decentralized exchange on the Near protocol, announced a strategic investment worth $4.5 million from Electric Capital with participation from Jump Crypto, Dragonfly Capital, Leminscap and Ethereal Ventures.

The protocol, created by former Microsoft (MSFT) employee Alexander Skidanov and developer Ilya Polosukhin, is a decentralized programmable blockchain that uses a proof-of-stake consensus mechanism. In December, it introduced sharding to boost transaction capacity and speeds and to lower overall costs.

"NEAR has built technology to enable transactions that are fast (~1 second), quick to finality (~1-2 seconds), cheap (less than a penny), and secure," Messari's Tom Dunleavy said in a research post published last month.

So, Near appears ahead of Ethereum, the world's largest smart-contract blockchain, which has yet to complete its transition to a proof-of-stake mechanism. "NEAR seems like the Ethereum 2 roadmap implemented," angel investor Naval Ravikant said during a discussion about layer 1, or base, protocols in January.

Heavyweight buyers

According to Rudy Chen, an analyst at crypto ratings firm TokenInsight, NEAR is one of the most sought-after tokens.

"NEAR's rally has several reasons. First, the gushing VC money and, second, many key opinion leaders and influencers are holding NEAR right now and tweeting about the same," Chen said.

"Time for the big reveal ... DCG's new third-largest crypto holding is ... NEAR," Barry Silbert, co-founder and CEO of CoinDesk's parent company Digital Currency Group tweeted Thursday. Messari's research shows NEAR was one of the most commonly owned crypto assets in fourth-quarter 2021.

According to Zoran Kole, founder of popular Telegram group Crypto Insiders, Near's developer growth statistics are equally impressive. "They have one of the fastest growing ecosystems with a 4x growth of total developers over the last two years. This high developer growth rate is a key indicator that adoption and usage of the protocol will continue into the near future," Kole wrote in a blog post published Thursday.

Stablecoin speculation

Talk about the impending launch on the protocol of a stablecoin offering a double-digit annual percentage yield (APY) could also be driving investor interest in the cryptocurrency, Chen added.

On Thursday, Crypto Insiders' Kole revealed April 20 as the possible launch date of the algorithmic stablecoin called USN. The high yield will rival the near 20% APY offered by programmable blockchain Terra's dollar-pegged stablecoin UST and would be one of the highest in the industry.

"They will offer an extremely attractive ~20% APR [annual percentage rate], which will ignite DeFi capital rotation into the Near ecosystem, siphoning the total value locked from other alternative layer-one protocols," Kole said in a Substack post. "This will lead to a comparison of Near to Terra (LUNA) as the narrative for attractive stablecoin yields proliferates."

Stablecoins, or cryptocurrencies with values fixed to an external reference like the U.S. dollar, help users avoid the price volatility associated with other cryptocurrencies. Stablecoins have become the flavor of the season, thanks to Luna Foundation Guard's decision to accumulate bitcoin as reserve for UST. Frax announced a similar move early Friday.