Blockchain capable of solving many challenges like security, transparency, decentralization, Censorship resistance, etc but there are so many challenges inside the blockchain like a blockchain should be malicious free and super scalable but blockchain developers face a major challenge to keep their blockchain malicious free and super scalable.
For instance, as the Ethereum blockchain grows we realized it has some problems like low throughput, high cost, high latency which means as the blockchain grows the number of nodes also increases that adds value to security but not to scalability.
If you see all the problems in the Ethereum blockchain is happening because of low throughput which means all the nodes of the Ethereum blockchain are validating each transaction or blocks so if transactions grow in numbers then we face slow speed, high cost, and blockchain overload {Reference-1, Reference-2}.
Blockchain developers are approaching differently to solve this problem and the unique solution is blockchain sharding where a single blockchain split into multiple blockchains that runs with their own validators but there are many challenges that also come into place during blockchain sharding like 51% attack, issue of cross-chain communication, the issue in chain coordination, etc.
In the sharding technique, there is a chance to corrupt the validator or block producer so need to put randomness in validator selection, block proposer selection where need to assign the third chain that manages these kinds of stuff with block rewards calculation, and distribution {Reference-1, Reference-2}. In Ethereum 2.0 beacon chain and in Polkadot relay chain created which is a separate chain that manages everything like validator selection, reward calculation, reward distribution, etc.
What is NightShade?
This a kind of blockchain sharding design but same time you can consider it as a single blockchain where each block logically contains all the transactions for all the shards and changes the entire state of all the shards. So no need to create separate infrastructures like beacon chain or relay chain and no network participant needs to download full state but they just need the state that corresponds to the shards that they validate transactions for.
The consensus of NightShade: Basically heaviest chain consensus is used by NightShade to produce a block where the block producer collects the signature of the previous block producer and validator so the weight of the block is accumulative of all validator and block producer signatures.
Additionally, NightShade uses its own BFT finality gadget to get additional slashing conditions for higher chain security that gives combined advantages of Casper FFG used in Ethereum 2.0 (1), Casper CBC, and GRANDPA used in Polkadot.
Block production in NightShade: The first work of NIghtShade is to assign block producers to each shard and to stop corruption by rotating block producers between shards after each epoch (An epoch is a time period that given to a group of miners to serve as the consensus group.).
All the block producer of a shard has needed to fulfill the following goals like they Collectively produce blocks on the main chain, Prevent forks, Ensure that the state transition function applied correctly, and ensure that all the chunks are available for some time after the block produced where a single block producer can't alone ensure these above security properties.
Block production in the NightShade is itself a complex topic but as I want to keep this article very simple, so let me explain this in layman language; in the case of a single block of a blockchain is created by containing transactions but all the blocks created under NightShade contains chunks(chunks are nothing but transaction or block created by shards) so logically the main chain contains records of the entire system and technically you can consider it as a single blockchain or sharded blockchain {Reference}.
Conclusion:
The NightShade is a sharding design created by NEAR Protocol which is a cocktail of a different security model where it act as a single blockchain by nature but sharded blockchain by work and functionality that created to solve challenges of security, scalability, and decentralization. The hybrid consensus model of NightShade is inspired by Ethereum 2.0 and Polkadot but not similar to them but tries to create more advance to them.