Within two days, Near officials announced two controversial actions in succession. First, the foundation announced a 40% layoff, and then released an updated roadmap for 2024.
On January 11, the Near Foundation announced that it would reduce its team members by 40%, mainly affecting the marketing, business development and community teams, involving a total of 35 employees. This layoff will reduce the Near Foundation team members from the initial 90 to about 55.
The next day, Near released its 2024 update roadmap, introducing stateless verification, developing zkWASM, improving data availability, etc. to improve the usability, scalability and decentralization of the NEAR protocol.
The current crypto market is at a critical juncture of transition from bear to bull. Most Web3 projects are recruiting and expanding their teams to welcome the next bull market. However, the Near Foundation, contrary to mainstream expectations, has laid off a large number of employees and reduced the size of its team.
Why did Near announce a large number of layoffs at a critical moment in the crypto market cycle? Is this the long-rumored "team infighting" or "self-rescue behavior"?
Foundation cuts 40% of staff
At present, users and the market have more positives than negatives about the layoffs at the Near Foundation. Most community users believe that the layoffs are the result of Near founder Illia Polosukhin (Illia for short, translated as "Yilong" in Chinese) returning to the foundation to reorganize the team, which not only streamlines expenses and saves costs, but also eliminates unnecessary personnel, which is a great benefit to Near's future development.
The reason for this conclusion is that two key pieces of information were released in the Near layoff announcement. One was the result of a thorough review of the foundation's activities in order to improve its efficiency; the other was the disclosure of the foundation's financial situation, with assets currently valued at more than $1.3 billion.
Yilong said in the layoff announcement that the Near Foundation, together with its Council (NFC), conducted a thorough review of the Foundation's activities, during which feedback was received that the Foundation was not always effective, sometimes moving too slowly and trying to do too many things at the same time. After this review, the team decided to significantly integrate the core Foundation team, narrow the scope of work, and focus on more impactful activities.
It said that as part of the reorganization, the NEAR Foundation will reduce its team by about 40%, affecting 35 colleagues, mainly in marketing, business development and community teams.
The layoff announcement stated that the Near Foundation's financial position remains strong and healthy, with more than $285 million in fiat currency, 305 million NEAR tokens (valued at more than $1 billion), and $70 million in investments and loans.
After Near’s layoff announcement, some community users expressed optimism about Near’s layoffs, which streamlined the staff, improved efficiency and reduced expenses, and solved the long-standing complaints of users about the foundation’s low efficiency and lack of attention to the development of the ecosystem. The solid financial data also indirectly clarified the long-standing rumor that "Near Foundation is short of money."
In this regard, a community user commented that Near has finally begun to pay attention to the foundation issue. As an important organization to promote the ecological development of blockchain projects, the foundation not only manages huge treasury funds that determine the future of the project, but also needs to formulate development and marketing strategies that are in line with its own tone and support high-quality early ecological projects. Today, the Near Foundation has publicly stated that it manages more than 1.3 billion US dollars in crypto assets, and most of this money will be used to support the development of the ecosystem or vigorously support ecological projects. This is a great benefit to the future ecological growth of Near.
On the day the layoffs were announced, the price of NEAR tokens surged from $3.19 to $3.69, a daily increase of more than 15%. On January 22, the price of NEAR fell back to $2.9 and fluctuated around that level.
Three changes of top leaders within two months
Behind the appearance of layoffs at the Near Foundation, there is an important reason for users' concern: whether the layoffs are related to the return of the founder Yilong to the foundation.
Since September 2023, the senior management of the Near Foundation has undergone three major changes.
Last September, Marieke Flament, who had served as CEO of the Near Foundation since the first quarter of 2022, announced her resignation.
The foundation was then led by legal counsel Chris Donovan.
On November 7, Near founder Yilong announced his return to the foundation as CEO, responsible for leading the Near ecosystem into the next stage of building an open network, and Chris Donova was transferred to the position of chief operating officer.
In January 2022, Yilong stepped down from the Near Foundation after the foundation announced the appointment of former Circle and Mettle executive Marieke Flament as CEO.
In less than two months, the CEO of the Near Foundation has experienced three personnel changes. Users have different opinions on the reasons for the frequent personnel changes in the foundation, and there are constant rumors of internal strife in the team.
What really exposed the problems of the Near Foundation was the "Wintermute USN exchange controversy".
On November 8, 2023, Wintermute founder Evgeny Gaevoy publicly posted on social media to blast the Near Foundation and Aurora Labs (the developer of Near's EVM chain Aurora, and the founding members are also from the Near team) for breach of trust, claiming that they did not abide by the contract and refused to fulfill the promised agreement to redeem the stablecoin USN worth US$11.2 million.
To put it simply, Aurora previously told Wintermute that it could redeem any amount of USN for USDT without providing a source of funds. Under this promise, Wintermute purchased $11.2 million worth of USN stablecoins from FTX assets, but when Wintermute redeemed USN for USDT, Near and Aurora refused.
In response to this matter, Illia and the foundation responded and explained that after the USN was closed due to insufficient collateral, the USN Protection Program (USNPP) was established and operated by Aurora Labs to protect affected individuals. Wintermute rejected the request because it may have used the USN purchased from FTX for price arbitrage, which would cause losses to ecological users.
However, this incident once again pointed the finger at the Near Foundation and the aborted stablecoin project USN, raising questions about the relationship between them.
Some users commented: "The Near Foundation is even more shady than hackers. It originally promised that USN could be exchanged for USDT, but now it does not support that, swallowing up tens of millions of dollars in one go." "The stablecoin USN was not officially launched by Near at all, but the operations of the Near Foundation seem to have a special relationship with USN, like an officially incubated project. The management is really chaotic." The rumor that "Near Foundation has no money" also came from here.
Public data shows that the stablecoin USN is a project issued by Decentral Bank on Near in 2022. Although Decentral Bank claims to be an independently operated community-run project without direct financial assistance from the Near Foundation, since the stablecoin is mainly generated by NEAR token collateral and received public support from the Near Foundation in the early stage of its launch, users have the illusion that USN is officially operated by the Near Foundation.
In October 2022, after USN announced its closure due to insufficient collateral, the Near Foundation immediately set up a $40 million fund to support the conversion of USN to USDT. This exchange support operation made users suspect that there was an unspeakable relationship between USN and the Near Foundation.
As of January 22, there has been no clear conclusion to the dispute between Wintermute and the Near Foundation, and the founder of Wintermute has not stopped accusing it. He has stated that if the Near Foundation continues to do so, he will take legal action.
The controversy with Wintermute revealed problems such as chaotic management of the Near Foundation team and unclear boundaries between the team and stakeholders in the ecosystem.
Yilong's return at this critical juncture is also considered to be an effort to rectify the chaotic management of the Near Foundation team. Two months after returning to the foundation, he announced a 40% layoff, which was a purge of the team.
Near’s development dilemma: stagnant TVL growth and poor on-chain applications
Since Yilong announced his return to the foundation, Near has also announced a series of new actions in terms of products.
First, the Near Foundation announced a partnership with Polygon Labs to develop the zero-knowledge proof ZK virtual machine zkWASM; secondly, it launched a new project, Near DA data availability layer, to enter the field of modular blockchain; then, it partnered with Eigen Labs to build a fast finalization layer for Ethereum Layer2, shortening transaction time and reducing costs by one four thousandth of the original.
As the overall crypto market recovered, the price of NEAR coin also rose all the way, from a high of US$1.5 on November 8 to US$4.6 on December 6, with a cumulative increase of more than 200%. It fell back to US$2.9 on January 22.
However, judging from the on-chain operation data, this series of actions did not bring any turning point to the development of the Near ecosystem. The number of on-chain applications stagnated and TVL did not grow.
According to the DeFiLlama data platform, the TVL on the Near chain has been hovering around US$30 million since April 2023, and it did not improve until the end of December. On January 22, the value of crypto assets locked on the Near chain was US$88.27 million. The TVL ranked 31st among many public chains, and there were only 22 applications on the chain.
Community user Moli (pseudonym) regards the series of actions taken by Yilong after his return to the fund as Near's self-rescue behavior. Currently, Near's development is in trouble, and the on-chain ecology has been stagnant for a long time. There are no new applications and user activity is not high, so it needs to be injected with new vitality.
He explained that Near is always slower than other chains such as Solana, Polygon, and Avlanche, and the gap between them is getting bigger and bigger. In the last round of EVM network hype, Near was the last to launch EVM network Aurora until the end of the bull market. Now, Solana has completely emerged from the shadow of FTX's collapse by virtue of its ecological wealth creation effect; Polygon has successfully transformed into a top Layer2 project by firmly grasping the Layer2 narrative and has attracted a group of developers; although Avlanche has not fully recovered, the hype of the local dog on the chain has not stopped.
Correspondingly, the status of the Near network has always been unstable and unpopular. There are basically no new applications on the chain, and there are only a few old DEX, lending, and liquidity staking protocols for participation.
During the hype of public chain inscriptions in November last year, Near also launched the inscription project NEAT, which was retweeted and supported by Yilong and many Near ecosystem KOLs, attracting a large number of users to participate, and even causing Binance and OKX to temporarily stop withdrawing coins. On November 30, the number of transactions on the chain exceeded 10 million, setting a single-day transaction record, and the number of new wallet addresses on the chain exceeded 170,000.
Although the emergence of the NEAT inscription has brought a huge amount of popularity and attention to the Near ecosystem in a short period of time, the ecological applications are unable to keep up. Apart from speculating on the price of inscriptions, users seem to be unable to find more interesting applications.
As the popularity of inscriptions faded, the price of NEAT coin also began to fall. In the past 14 days, it has fallen by more than 50% and is currently priced at $0.1. At the same time, Near's on-chain transaction data also began to decline.
On January 17, ChainCatcher reported that the Near ecosystem re-staking platform Linear announced that it would airdrop the governance token LNR to community users. This attracted a wave of traffic to Near again, and interactive Near ecosystem applications once became a new topic in the crypto community. However, after entering the ecosystem, users found that there were very few playable applications on the Near chain.
In this regard, community user Kai (pseudonym) said that although Near has made innovations in the sharding technology architecture, the current public chain competition has entered a white-hot stage. It is no longer a competition in early technology, but a competition in the on-chain application ecosystem and the project's operational capabilities, including users, developers and communities.
He suggested that the most important thing for Near now is to focus on developing the ecosystem, especially applications such as DeFi, and not wait until there are no applications to take over every time traffic comes. In addition, ecological prosperity is not achieved in one cluster, and the official needs to continuously provide resource support and empowerment to developers and the community.
Focusing on Web2 chain reform, is Near trying to "save itself"?
Regarding the stagnation of on-chain TVL data, Nick, a long-term NEAR holder, said that the high or low TVL data cannot truly reflect Near's on-chain activity today. This is mainly related to the ecological development strategy adopted by Near. Currently, Near encourages cooperation with Web2 applications with a user base to help them rebuild their business models with the help of blockchain technology.
The strategy of "actively supporting chain reform of Web2 applications" can be confirmed from Yilong's interview with DeFiant in January.
When it comes to the development of Near's ecological applications, Yilong said that at present Near hopes to help Web2 applications that already have a user base to find their own commercial monetization model with the help of blockchain, rather than focusing on whether the project can bring TVL.
He gave an example, saying that Sweatcoin, a currently active project on the Near chain, was originally a Web2 sports project. Through cooperation with Near, it was successfully transformed into a Web3 walking coin earning project. The SWEAT coins earned by users through sweating during exercise can not only be used for trading to earn the difference, but also for purchasing products from cooperative brands, such as yoga classes, daily necessities, etc.
The KaiKai application, which caused a surge in Near's on-chain transaction data in September 2023, is not a native crypto project on the Near network. It is a "chain-revised" shopping platform under Cosmose AI, a consumer shopping data analysis platform in which it co-invested. With the help of Near, it launched the US dollar-pegged stablecoin KAI-Ching. Users can earn additional KAI-Ching tokens by using the KaiKai App to shop, play, or write product reviews.
According to the ecological data compiled by Near Daily, KaiKai and Sweatcoin have become the projects with the most active users in the Near ecosystem in the past 30 days. The number of active users of KaiKai has exceeded 2 million, and the number of Sweatcoin users has exceeded 1 million.
Although these applications did not directly bring TVL growth to Near, their arrival also brought existing users into the Near ecosystem, allowing Web3 technology to be used by more users outside the circle, and the number of on-chain interactions and wallets are also increasing.
Perhaps it is by becoming a chain-changing tool for Web2 applications that Near has benefited from the traffic dividend brought by its cooperation. At present, Near's development strategy is also focused on providing developers and users with a high-performance, good-experience underlying network, which has realized the vision of the Near network being adopted by the mainstream.
This can also be seen from the 2023 work results and Q4 update roadmap released by Near.
In 2023, the Near network has two functional improvements that greatly reduce the threshold for using and entering the Near ecosystem. Among them, a new meta-transaction function has been added to support gas-free transactions, that is, users do not need to use NEAR tokens to pay gas fees when using Near chain applications; in addition, zero-balance accounts have been added, allowing users to create wallet accounts without holding NEAR tokens, solving the problem that users have complained about in the past that they need to hold more than 0.1NEAR tokens to create wallet accounts, allowing new users to easily use applications.
In the 2024 roadmap, in terms of product performance, the stateless verification function introduced by Near can not only improve the security of the network and avoid the implementation of fraud proofs, but also improve the throughput and performance of each shard; zkWASM developed in cooperation with Polygon can be used as the EVM execution environment for the L2 network, and the launched data availability layer NEAR DA can help developers build L2 networks more easily.
In terms of user experience, the proposed account aggregation function will allow users to use one Near account to control accounts on different chains, which is also an important step in the Near chain abstract vision plan. In addition, the problem that Ethereum wallets such as MetaMask, which has caused headaches for users, cannot support the Near network will also be solved.
Currently, Near's data availability layer product NEAR DA has been integrated with developer stacks such as Polygon CDK and Arbitrum Orbit. Developers can use it to build their own L2 or L3 networks, etc.
However, regarding this updated roadmap, some community users commented that this is in line with Near's consistent "imitation" style, which modifies the roadmap every quarter. First, it copied Ethereum sharding, then this year after the AI craze such as FET, it turned to AI things, and now after the modular TIA and Layer2 became popular, it copied the DA layer again. I hope that from now on, Near's imitation strategy will end and it can take a different path on its own.
