NEAR Protocol: Scaling the Next Frontier in Blockchain and AI-Driven Commerce

In the race to build scalable, high-performance blockchain infrastructure, NEAR Protocol has emerged as a formidable contender. Over the past two years, the Layer 1 blockchain has executed a series of technical upgrades and strategic partnerships that address critical pain points in decentralized systems-namely, scalability, token economics, and institutional adoption. For investors, these developments signal a repositioning of NEAR as a top-tier infrastructure provider, particularly in the burgeoning fields of AI-native applications and autonomous commerce.

Scalability Innovations: A Technical Leap Forward

NEAR's scalability roadmap has entered a new phase with the activation of Protocol Version 81 in October 2025. This upgrade reduced the annual inflation rate from 5% to 2.4%, slashing staking yields from 9% to 4.5% to curb token dilution and realign on-chain incentives, according to Messari. While the change initially faced resistance-a failed community vote failed to meet the required approval threshold-the move reflects a long-term strategy to stabilize the NEAR token's value proposition.

Complementing this economic adjustment is Nightshade 2.0, a "sharding 2.0" implementation that slashed block times to 600 milliseconds and finality to 1.2 seconds, according to Messari. These improvements are not merely technical benchmarks; they enable real-time use cases such as AI model training, high-frequency DeFi trading, and interactive decentralized applications (dApps). Testnet environments have already demonstrated throughput of up to 1 million transactions per second (TPS), a figure that rivals or exceeds competitors like Solana and Ethereum, according to Coinlaw.

Institutional Adoption: From Staking ETPs to AI-Cloud Infrastructure

Institutional interest in NEAR has surged, driven by both financial products and infrastructure partnerships. In 2024, 21Shares launched staking ETPs (exchange-traded products) on European exchanges, allowing institutional investors to gain exposure to NEAR's staking rewards without holding the token directly, according to Messari. This was followed by Bitwise Asset Management listing a NEAR-based ETP on Deutsche Börse Xetra in Q3 2025, and CoinShares launching an ETF that includes NEAR in October 2025, according to Messari. These products signal growing confidence in NEAR's token economics and network security.

Beyond financial instruments, NEAR has forged strategic alliances to anchor its role in AI and autonomous commerce. The SovereignAI initiative, a $120 million private investment in public equity (PIPE) deal led by OceanPal and the NEAR Foundation, aims to build blockchain-native AI-cloud infrastructure using NVIDIA's technology, according to Messari. This partnership is particularly significant as it positions NEAR as a backbone for AI workloads that require decentralized data governance and compute resources. Meanwhile, THORSwap's integration of NEAR enables cross-chain swaps with Bitcoin, Ethereum, and Solana, expanding NEAR's interoperability and user base, according to Messari.

Competitive Positioning: A Layer 1 for the AI Era

NEAR's dual focus on scalability and institutional adoption places it in direct competition with Solana and Ethereum. While Solana has long touted its high TPS and low fees, its recent outages and governance controversies have raised questions about reliability. Ethereum, despite its dominance, remains constrained by its monolithic architecture and high gas costs for complex applications. NEAR's sharded architecture and Nightshade 2.0 offer a compelling alternative, particularly for developers building AI-driven dApps that require rapid finality and predictable costs.

Moreover, NEAR's institutional partnerships are creating a flywheel effect. The SovereignAI project, for instance, not only leverages NVIDIA's AI expertise but also taps into NEAR's low-cost, high-throughput network to host decentralized AI models. This synergy between blockchain and AI infrastructure could attract enterprises seeking to avoid vendor lock-in with centralized cloud providers.

Implications for Investors

For long-term investors, NEAR's trajectory suggests a transition from a "Layer 1 contender" to a "Layer 1 leader" in specific niches. The reduction in token inflation and the introduction of institutional-grade financial products (ETPs, ETFs) are stabilizing forces that could reduce volatility and attract capital from traditional asset managers. Meanwhile, the SovereignAI and THORSwap partnerships indicate a strategic pivot toward enterprise and cross-chain use cases, which are critical for mass adoption.

However, risks remain. The success of Nightshade 2.0 and SovereignAI hinges on execution-particularly in maintaining network security while scaling. Additionally, regulatory scrutiny of AI and blockchain convergence could introduce headwinds. Investors should monitor on-chain metrics (e.g., TPS, active addresses) and institutional inflows into NEAR-based ETPs as leading indicators of progress.