NEAR Protocol Surges 57% as Sharding Implementation Boosts Adoption

The native token of the NEAR Protocol, NEAR, has seen a significant price surge over the past few weeks, climbing 57% from its September 6 low of $3.41 to reach an 8-week high of $5.36 on September 24. As of this writing, NEAR is trading at $5.21, up 2.3% in the last 24 hours.

Several factors appear to be driving NEAR’s strong performance:

Sharding Implementation Enhances Scalability

On August 12, NEAR Protocol completed its NEAR 2.0 update, implementing blockchain sharding on its network. This makes NEAR only the second blockchain after Elrond to achieve sharding in production.

Sharding allows the network to split its workload across multiple node groups or “shards”, enabling linear scalability. This solves the so-called “blockchain trilemma” by offering enhanced scalability and security without compromising decentralization.

The sharding implementation positions NEAR as a faster, more scalable, and lower-cost alternative to Ethereum for decentralized applications (dApps). Industry observers note this could drive increased developer and user adoption of the NEAR ecosystem.

Growing Network Activity and TVL

On-chain data shows significant growth in network activity on NEAR Protocol over the past month. Daily transactions increased 42% between August 25 and September 24, while new address creation rose 30.8% in the same period.

This heightened activity has translated to an increase in total value locked (TVL) on NEAR-based protocols. According to DeFiLlama, TVL on NEAR has grown 34% from $183.7 million on September 7 to $246.5 million on September 24.

Rising Futures Open Interest

Derivatives data from Coinglass indicates growing trader interest in NEAR futures. Open interest in NEAR futures contracts has surged from $114.9 million on September 7 to $279.2 million on September 24 – the highest level since June 7. This suggests new capital entering the market and increased buying activity.

NEAR/USD Technical Analysis

From a technical analysis perspective, NEAR’s price action is showing strength. The token has broken above its descending trendline and is now trading above key moving averages including the 50-day, 100-day and 200-day EMAs.

The relative strength index (RSI) reading of 70 indicates buyers are in control of the market. Analysts suggest the next key resistance levels to watch are $6 and the June high of $6.45.

However, traders should remain cautious of potential volatility. A daily close below the 50-day EMA at $4.40 could invalidate the current bullish outlook.