# NEAR Sharding Splits Network Processing Across Separate Shards By Simon Yoon Canonical URL: https://www.tokenpost.com/news/technology/44502 Published: 2026-10-30T10:05:34.000Z Updated: 2026-10-30T10:05:34.000Z Section: Technology > Nightshade brings shard-specific transaction chunks together in blocks. NEAR’s 2.5% annual reward parameter is a protocol ceiling, not a fixed return for individual holders. NEAR Protocol (NEAR) divides network state and transaction processing among shards, allowing separate parts of the network to handle work in parallel. Its 2.5% annual reward parameter sets a protocol-level ceiling tied to issuance, not a guaranteed return for each token holder. Nightshade splits the network’s state across shards. Each shard handles activity for its portion of that state, and a block can bring together a transaction chunk from every shard. This structure lets work on separate parts of the network proceed in parallel. The design is intended to expand capacity as shards are added. A 2024 upgrade to Nightshade introduced stateless validation on mainnet. Under the 2024 mainnet upgrade, validators verify state changes with network-provided witnesses, so they no longer need to store shard state locally. This changes what validators need to store while the block structure coordinates transaction chunks from across the shards. NEAR’s protocol configuration sets a maximum annual reward rate of 2.5%. It assigns 10% to the treasury, with the remainder available for validator rewards. Eligible transaction fees reduce net issuance, so the maximum rate does not by itself determine how many new tokens are issued after fees. Rewards are calculated in proportion to stake and validator uptime. NEAR holders can stake directly by operating a validating node or delegate tokens to a validator. An individual holder’s return depends on the stake involved, validator performance and how rewards are distributed across staked tokens; the 2.5% parameter is not an individual yield rate. A 2025 upgrade cut NEAR’s maximum annual inflation rate by half. TokenPost’s [earlier coverage of NEAR’s staking share and issuance vote]() discussed how issuance and staking participation relate to the network’s token economics. ## Links in this article - [earlier coverage of NEAR’s staking share and issuance vote](https://www.tokenpost.com/news/technology/37599)