NEAR future application chain network: Octopus

Original source: NEAR China Community

In recent years, various ecosystems built on blockchain have made significant progress in robustness, interoperability, and customization. The NEAR protocol is often referred to as a third-generation blockchain network.

It is a PoS chain that employs sharding technology, with a particular focus on scalability and usability. Although NEAR is often described as a ready-made scaling solution for existing Ethereum applications, the protocol can also handle many other types of decentralized solutions.

In this context, Octopus Network officially launched its first application chain protocol in the NEAR ecosystem. This move will significantly reduce the platform costs for applications and ensure their security, providing a substantial competitive advantage for NEAR to attract numerous applications and developer teams, marking a remarkable achievement.

Application Chain Overview and Its Importance

An application chain is an independent blockchain designed for a specific application or set of applications. Unlike smart contracts that typically run on public or private chains, application chains allow developers to customize their applications regarding governance structure, cryptocurrency economic models, and even the underlying consensus algorithms.

Technically, application chains provide developers with dedicated transaction processing capabilities while benefiting from the security of the parent chain. This means that applications on the application chain do not have to compete with other applications on the network for this performance. A dedicated set of validating nodes is responsible for ensuring the transaction security of a specific application chain.

Application chains have flexible security levels (depending on the number of validating nodes supporting a specific application chain), possess their own tokens, economic models, incentive models, and customized codebases.

In simple terms, the benefits of running an application on a customized blockchain can now be fully realized with just one application chain, while also enjoying the advantages of lower transaction congestion and state validation services from the parent chain.

Introducing application chains into the NEAR ecosystem means that all significant stakeholders within the ecosystem will gain additional opportunities regarding their products, services, and interests. Validating nodes have the ability to ensure the security of application chains and thus receive additional rewards.

Developers can freely build and launch application chains, allowing for flexible parameters in terms of economic models and governance to suit different use cases.

Ultimately, a series of new solutions will leverage the security and transaction load capacity of the larger parent network to support users and allow them to benefit. As the blockchain ecosystem continues to evolve, application chains on Polkadot and Cosmos have already validated this concept, and the future of cryptocurrency will be closely related to the efficient deployment of such protocols.

Introduction to Octopus Network

Octopus Network is about to deploy a decentralized protocol, allowing any developer, project team, or entrepreneur to quickly and efficiently create their own application chain on NEAR at a lower cost. Octopus Network founder Louis Liu explains: "Octopus provides immediate security and services such as interoperability and on-chain governance for projects that wish to create customized blockchains for their open network applications."

More specifically, the Octopus Network relay operates as a smart contract on NEAR, providing infrastructure for the validating node market of application chains launched through Octopus. Validating nodes stake OCT tokens to validate a specific application chain.

In return, validating nodes can earn the tokens of the application chain they are responsible for: each application chain has its own economic model and associated inflation rate.

It is worth noting that each validating node is responsible for running an independent node, and each node has its own BFT consensus mechanism for the application chain it is responsible for. However, since every chain launched through Octopus is connected to NEAR securely, assets and contracts can communicate seamlessly between NEAR and any application chain.

From an economic perspective, validating nodes stake OCT tokens and earn rewards from various application chains within the Octopus Network. The OCT token is non-inflationary. From a governance perspective, holders of the OCT token do not participate in the governance of application chains; this opportunity is reserved for the holders of the native tokens of each application chain.

Octopus founder Louis Liu and the Octopus team believe that the next wave of innovation in the cryptocurrency space will revolve around scalable and cost-effective application chains:

"We gradually believe that both smart contracts and application chains have unique value propositions. In other words, they have a special advantage. They can be applied to different scenarios. I think especially for DeFi, smart contracts are a better choice because all smart contracts on a platform have the same level of security, and they have excellent composability.

For other Web3.0 use cases, such as gaming, digital collectibles, NFTs, and the broader creator economy, including music, broadcasting, even blogging, DAO platforms, IoT platforms, etc., application chains are a better choice because they can achieve a delicate balance between decentralization and performance.

Moreover, on-chain governance allows application chains to evolve appropriately in a legitimate manner. If this work cannot be carried out within smart contracts, it will become very cumbersome."

How Octopus Network Works

Octopus Network is built around the OCT token. The OCT token is a fungible, non-inflationary utility token that different application chains built on this protocol need to use for staking. This design comes with a large number of prerequisites and many functions built within the Octopus Network.

First, building an application chain requires accumulating enough OCT tokens from ecosystem stakeholders for staking; only by reaching the minimum security level can the application chain be launched, with its genesis block coming from the configuration parameters of the parent chain.

Second, as more validating nodes choose to stake for a specific application chain, the validating node set for that application chain is updated in the smart contract of the parent chain and propagated to the application chain.

This is the basis for gradually increasing the security level of the application chain, which can effectively be built as "shared security as a service" (SSaaS). Similar to how AWS provides data storage services for software companies, Octopus can provide security services for blockchain ecosystems seeking to quickly onboard users and streamline development.

Once fully launched, Octopus application chains and parent chain assets can achieve complete interoperability. The OCT token can also be used as collateral for cross-chain assets between application chains and the parent chain. Lastly, and most importantly, the application chain itself is governed by the holders of that token, not by the validating nodes staking OCT tokens.

As shown in the figure above, to ensure its legitimacy on the Octopus network, the launch of a new application chain must follow specific procedures:

The application chain to be launched needs to queue up, waiting for validating nodes to support it by staking OCT tokens.

Once support is obtained, their application chain can be activated and fully launched.

If a validating node goes offline, the application chain is considered to be in a "fault state" until the number of validating nodes exceeds the minimum threshold, at which point the state will return to normal.

If there are no assets left on the application chain due to cross-chain transactions, the application chain is considered to be in a "frozen state."

Reasons for Octopus Network Choosing NEAR

After extensive analysis of existing L1 protocols, Octopus Network decided to build its platform on NEAR. Octopus founder Louis Liu stated that the choice of NEAR is due to NEAR's good scalability, high interoperability security, and user-friendly design.

"Last year, we reached cooperation with several public chains, so we are very familiar with the public chain space. After comparison and investigation, we believe that NEAR has high security, fast finality, is a scalable L1 protocol, and has good usability, making it our best choice.

Additionally, NEAR's Rainbow Bridge enables trustless interoperability between NEAR and Ethereum, making it our first choice."

Compared to other L1 platforms like Cosmos or Polkadot that can accommodate application chains, NEAR stands out due to certain key technical advantages. Launching an application chain on NEAR is simpler than on Cosmos. The complete Octopus solution simplifies the process of finding validators, staking, and deployment.

As a result, developers can create chains on NEAR that can launch fairly, as the purpose of issuing tokens for native application chains is solely to introduce services and not for staking, which is entirely different from the OCT tokens used for staking.

Compared to Polkadot, the cost of security leasing for application chains provided by NEAR is much cheaper, and there is no limit on the number of application chains that can be launched. Polkadot's limit is 100 parachain slots, and fewer than 10 will be operational this year. Moreover, NEAR does not set auctions or require large fees for access like Polkadot.

Overall, Octopus chooses NEAR because the deployment costs on NEAR are lower compared to other existing L1 solutions, its scalability is better, it is more user-friendly, and its interoperability with public chains like Ethereum is outstanding.

Short-term/Long-term Potential: What Resources Can Octopus Network Bring to NEAR?

Although the Web3.0 revolution is still in its early stages, NEAR is continuously expanding its domain, extending into different fronts of cryptocurrency innovation. The Octopus application chains built on NEAR are expected to accelerate the development progress of the NEAR protocol in both the short and long term.

Many applications wish to develop their chains on a secure, cost-effective, scalable, and user-friendly L1 platform. In the short term, NEAR has a unique value proposition for such applications. This proposition will not only enhance the overall value of products and services within the NEAR ecosystem but also bring many new assets and users to NEAR.

"For Octopus Network, the system will assign a cross-chain smart contract for each Octopus application chain on the NEAR platform. This means that their native cryptocurrencies can be transferred to the NEAR blockchain without additional coding work.

We want to transfer all application chain assets to the NEAR platform to further promote the prosperity of the NEAR DeFi ecosystem. This DeFi ecosystem will provide additional liquidity and utility for various assets."

In the long term, Octopus Network will act as a composable way, allowing various applications on NEAR to adopt different security levels. Some applications may not need the high security provided by validating nodes to thrive, while others may require higher security over time.

With Octopus Network, NEAR developers can quickly build some applications with slightly lower security at a lower cost. If an application needs higher security in the future, Octopus can attract more validating nodes through rising token prices or issue more tokens for security service providers through native application chains to achieve scalability in security.

For future applications launched on NEAR, Octopus application chains provide flexibility for project teams and developers in scaling individual applications.

Octopus Network can accommodate NEAR's account model, and any application chain will respond to contract calls like other applications on NEAR.

This means that applications can transition from a contract to an application chain or from an application chain to a contract, as a project may require lower-cost transactions or the application starts managing more assets, needing higher security and faster finality than what the NEAR parent chain can provide.

Octopus Network Team

The team behind Octopus Network consists of members with outstanding technical abilities and rich experience in cryptocurrency and mainstream software development. This team of only 8 engineers has received grants from multiple L1 protocols, including Cosmos, Solana, Flow, Oasis, PlatON, and ChainLink.

Additionally, they have successfully developed IBC for Substrate and collaborated with other Substrate enthusiasts (many projects have come from their efforts) to develop a domestic version of the Substrate online training course. Notably, they are also active participants and co-organizers in the domestic Rust community, such as organizing the China Rust Conference.

From this perspective, it is clear that the Octopus team will not only open up new development paradigms for NEAR but also bring rich Chinese Rust community resources for developing and deploying application chains.

Conclusion: A New Frontier of Innovation

The application chains deployed by Octopus Network on NEAR will significantly drive the growth of the NEAR ecosystem, with a large number of new applications, cryptocurrency economic models, governance mechanisms, and decentralized solutions expected to be launched on NEAR in the future.

NEAR will operate Octopus application chains in an efficient, scalable, and cost-effective manner, while Octopus Network is expected to bring a wealth of developer community resources to NEAR.

As Web3.0 continues to evolve, new decentralized applications are emerging one after another. The collaboration between Octopus Network and NEAR is expected to greatly enhance the development process of open networks, ultimately benefiting users, developers, and entrepreneurs.