Neo (NEO)

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Neo
TypeSmart Contract Platform
Ticker symbolNEO
Consensus mechanismDelegated Byzantine Fault Tolerance (DBFT)
Total supply100,000,000 NEO and GAS

Basics

  • Chinese, Developed by Shanghai-based blockchain company ONCHAIN
  • Founded in 2014, open-source on Github since 2015
  • Mainnet of N3 launched on 2-8-2021.
  • Decentralized smart contract platform
  • NEO is a blockchain project “that utilizes blockchain technology and digital identity to digitize assets, to automate the management of digital assets using smart contracts, and to realize a “smart economy” with a distributed network.
  • Intended Uses: Asset digitization and trading (digital stock exchange and real estate market for example), business blockchain solutions.

History

  • FKA Antshares (ANS/ANC)
  • From this article (30-10-2017):

"The NEO project dates back to 2014, when the Antshares blockchain was conceived and became China’s first open source public chain project. The Antshares technology was used as a foundation for the DNA blockchain framework for permissioned networks, developed by Antshares creators and their company, Onchain. In mid 2017 Antshares rebranded itself as NEO, projecting an image of newness punctuated with a second, all new “initial” coin offering. At the same time the network was upgraded to NEO 2.0, signalling an intensified focus on smart contracts to build what the project calls the Smart Economy. This shift was likely influenced by the advances in technology to support smart contracts that occurred between 2014 and 2017, most notably in the Ethereum community, and led to NEO being labeled “Chinese Ethereum.”

Audits & Exploits

  • Bug bounty program can be found [insert here].
  • CertiK claims to have done an audit for them, according to their website (12-6-2020). 

Bugs/Exploits

Governance

"Despite it’s long life (in blockchain years), the project is less mature than Ethereum in some ways; major pieces of functionality are still being developed and the consensus mechanism remains highly centralized. However, the project is evolving at a healthy pace thanks to a thriving open-source developer community and an organized steering committee, the NEO Council, that sets and funds project initiatives.

NEO has been criticized for calling itself a public blockchain while creating significant barriers to public participation in the consensus process. The process for becoming a consensus node involves staking a large amount of money, obtaining an identification certificate from a government-authorized Certificate Authority, and then getting elected by voters. The NEO Council’s response to this criticism is that, because NEO uses delegatedByzantine Fault Tolerance (dBFT) consensus, where validator nodes are elected by users who have stake in the NEO coin, users will have a say in determining who the validating entities are and thus serve as a check against abuse of power.

At the present time, NEO provides no mechanism for users to vote, and most, if not all, operating consensus nodes appear to be affiliated with projects funded by the NEO Council."

  • Seems NEO has only just now (10-2-2020) started to allow other entities to become nodes:

"A highlight of January was the addition of a consensus node hosted by Everstake, a Kyiv-based staking service platform, to the Neo3 Preview1 TestNet. The Everstake node marks the beginning of decentralization on the Neo3 TestNet, and as more Neo3 Preview versions become available, the current Neo 2.x consensus node hosts will gradually join the Neo3 TestNet."

  • From their blog (22-12-2020):

"This is the most important and sophisticated change in Neo3: a new dynamic on-chain governance mechanism. Neo’s consensus nodes and Neo Council members will be voted by NEO holders and the seats will be dynamically refreshed. Any registrar, informal organization, anonymous organization or individual can become a candidate, and seek votes from the voters. The top 21 candidates with most votes will form the Neo Council. The top 7 nodes will become consensus nodes of the network and are responsible for generating blocks. The results of the vote will be updated every 21 blocks. The election will be open to the community, and NEO holders will be able to get more incentives by engaging in the governance process. Theoretically, the term of office of the council is 21 blocks, and voters can adjust their voting strategies flexibly.

Under the new governance framework, Neo will implement an important function: Elastic Manageability, which makes it possible to interact between the blockchains and the social jurisdiction system. The identities of Neo Council members will be diversified, and some of them may be compliance agencies in particular sovereignties or legal jurisdictions so that they will be subject to compliance restrictions in their regions when processing transactions. Some council members will face diverse policy systems, regulatory structures and compliance requirements, while anonymous nodes will not be impacted. When processing transactions, different nodes will respond differently to various transactions which will have an influence over the outcomes of services running on Neo. For example, in the case of a particular type of transaction, more than 1/3 of the consensus nodes are influenced by local jurisdiction and cannot pass this type of transaction. The effect of regulation on this particular type transaction is simultaneously reflected in the Neo network. Under the framework of dynamic elections, NEO holders will then decide whether to continue to vote for the affected nodes in the next term. Node candidates can also make adjustments according to the voter’s strategy. Gradually, Neo’s business attributes and the shape of the council are continuously being shaped in a recurring game-theory between voters and node candidates. The Neo community will determine Neo’s future direction by actively participating in governance and expressing their views. This is also a manifestation of Neo’s unique community value, experimented in an elastic manageable network."

DAO

Token

ICO

"In mid 2017 Antshares rebranded itself as NEO, projecting an image of newness punctuated with a second, all new “initial” coin offering."

Token allocation

Utility

Token Details

  • Per the rebrand, not only does Antshares become NEO, but Antcoin (ANC) becomes ‘GAS’. “So, it is no longer a ‘dividend interest’ sort of asset, but a utility sub-token for network functionalities. “NEO holders earn GAS at a constant rate based on the amount of NEO owned. GAS generation is finite and gas rewards stop in a few years. GAS rewards are essentially dividend payments for owning NEO. This is because GAS is generated at a predictable rate and NEO holders do not have to do any work to receive GAS. As such, NEO is easily classified as an equity security under securities laws in the US, South Korea, and certain EU countries. This makes it illegal for non-certified exchanges to trade NEO in these countries.”
  • NEO has a unique structure in that NEO are indivisible and intended to act as shares which give voting rights and pay dividends in the form of GAS which is used for transactions and extra services.
  • The NEO token is like partial ownership of the NEO platform. NEO token holders are entitled to vote for bookkeepers. NEO’s use as a share in the company rather than a token is furthered by the fact that NEO is non-divisible. NEO is not meant to be transacted with — that’s why there is GAS.
  • GAS is used for all operations on the NEO network. Now when a company registers or changes assets on the NEO blockchain, they pay in GAS — this GAS is then distributed to all NEO holders. Anyone can claim this GAS by just holding their NEO in a personal wallet. Such as this one: NEON
  • Bookkeepers are entitled to charge a transaction fee (in GAS) for general transactions on the blockchain that only they (the bookkeepers) receive. However, by decoupling NEO and GAS, there is an incentive to keep transaction fees low; here’s why: High transaction fees, which only benefit the bookkeepers, will prevent people from wanting to register their assets on the blockchain. The less assets registered, the less rewards NEO holders will get. Thus, NEO holders are incentivized to vote in bookkeepers who will keep transaction fees low.
  • Has announced (6-2019) it will change their fee model in their upcoming NEO3 update.

Stablecoin

Tech

  • Whitepaper can be found [insert here].
  • open-source on Github since 2015
  • Programming language used: supports many common programming languages such as C#, Java and Python. From this article (30-10-2017): "NEO is building bridges to existing developer communities by allowing smart contracts to be written in a number of popular general purpose programming languages, such as C#, VB.NET, F#, Java, and Kotlin."

Transaction Details

How it works

"Neo has finality in blocks, which practically means: it cannot fork. It has implemented a new iteration of its consensus algorithm, the Byzantine Fault Tolerance mechanism (dBFT 2.0), on its mainnet, according to a press release on June 4.

The new algorithm purportedly provides immediate transaction finality. dBFT 2.0 includes a new procedure for reintegrating failed nodes back into the network, and also adds a “commit phase” of consensus, which alleviates forking issues by including a step that forces node assignment to new blocks."

  • Will have (6-2019) a big change in its protocol called NEO3. This will change their VM (it will decouple from the blockchain), their smart contract structure, their account model, their transaction types (from 9 different types towards only 1), blocksize ("Currently, we add MaxSize for block and block witness (to better prevent spam attacks), and changed the time unit of the block timestamp to milliseconds for IoT use cases.") and their fee model.

Fees

Upgrades

" It delivers big features, such as platform native decentralized storage and oracles. It brings many fundamental upgrades from Neo Legacy, including a revamped governance system, an all new architecture, and an improved economic model. It’s multi-language support and best in class tooling make Neo a compelling choice for blockchain developers."

Staking

  • Seems NEO has only just now (10-2-2020) started to allow other entities to become nodes:

"A highlight of January was the addition of a consensus node hosted by Everstake, a Kyiv-based staking service platform, to the Neo3 Preview1 TestNet. The Everstake node marks the beginning of decentralization on the Neo3 TestNet, and as more Neo3 Preview versions become available, the current Neo 2.x consensus node hosts will gradually join the Neo3 TestNet."

Liquidity Mining

Scaling

Interoperability

Different Implementations

Other Details

Oracle Method

  • Started supporting oracles in N3 (2-8-2021).

Privacy Method

Compliance

"According to the NEO white paper “Assets registered through a validated digital identity are protected by law.” To take advantage of such protections, NEO users will need to be issued a digital identity from a Certificate Authority that is recognized within the jurisdiction of the legal system in which they seek protection."

Their Other Projects

  • “Nest is a whole new form of smart fund written in Antshares smart contracts,” writes NEO about its new ‘DAO’ style fund called Nest Fund, which uses NEO smart contract technology.
  • Other than its parent, ONCHAIN, NEO leads projects including blockchain-based browsers,  a web-based crypto-asset wallet, as well as an online crowdfunding fund that is not the aforementioned Nest.

Roadmap

  • Can be found [Insert link here].
  • From their blog (22-12-2020):

"Neo3 will be a full migration of the Neo MainNet, which means that Neo3 will be an entirely new blockchain generated from the genesis block. 

  1. New features (Oracle, NeoFS, NeoID)
  2. New architecture (UXTO changed to account system, Neo VM, dBFT2.0, node and contract upgrades
  3. New economic model (GAS allocation model, transaction costs are significantly reduced due to the increase in TPS, and network deployment costs are also significantly reduced
  4. New ecosystem (Poly Network cross-chain ecosystem, Flamingo-based Defi ecosystem
  5. New governance mechanism (a flexible and manageable mechanism based on dynamic comprehensive democratic voting)

The migration of token assets to Neo3 will be completed via the Poly Network, and contracts will be gradually deployed in order to connect to these assets." 

Usage

Projects that use or built on it

"The NEO Council is funding numerous projects to support smart contract development, parallel execution, stakeholder voting, cross-chain asset exchange, distributed storage, a standard for token issuance, secure messaging, offchain order matching, and the incorporation of quantum resistant cryptography."

Pros and Cons

Pros

Cons

“The price to deploy a smart contract on NEO at this moment is 500 GAS (or $30,000 at $60/GAS). Because it’s so expensive to deploy smart contracts on NEO, there are very few smart contracts on the main net right now. In fact, as of last week, there were only 10 smart contracts. 3 of which are test smart contracts deployed by Erik Zhang. 6 of the rest are cookie cutter ICO smart contracts. There is one smart contract for Hash Puppies, an upcoming game on NEO similar to CryptoKitties."

"It’s also interesting to note that there are 27 dApps listed on NEO’s website, yet many of them are from a CoZ competition held in November last year that will probably never be deployed on the main net. Each winner of the competition won 1350 GAS but none of them have used it to deploy their smart contract. Would you consider the listing of demo, test net smart contracts as dApps on NEO dishonest? At the very least, it doesn’t increase my confidence in the team.”

  • Using Delegated Byzantine Fault Tolerance (dBFT) for its blockchain operations. “Specialized bookkeeping nodes” reach consensus via “delegated voting” per NEO’s dBFT model. It takes a two-thirds vote for approval of a current copy of a blockchain. (see dBFT for more) The disadvantage with this system is a lack of decentralization. In its purest sense, instead of thousands of validators being scattered all across the world, governance is concentrated in a few dozen validators. The majority of these nodes are currently operated by the NEO team. However, as of Quarter 1, 2018, NEO will hold less than 2/3 and will continue to hold fewer as time progresses. Regardless, NEO will never be as decentralized as other pure PoS platforms.
  • NEO is undergoing a process (2015) of decentralizing the location of their validator nodes, but they still maintain full control over the nodes. They are not in a process of decentralizing control, as many would like to think. NEO’s team currently sets the total validator count to be at 7 and they operate all 7 nodes. They have claimed to decentralize the network by placing validator nodes in different locations such as in a Swiss bunker and a Dutch telecommunications company’s (KPN) server farm. However, the NEO’s team still owns and operates these nodes, so it’s decentralization of location but still a centralization of control.
  • In a blow to the NEO network, major machine learning Dapp Effect.AI has announced its intentions to migrate to EOS following directional concerns; Effect.AI specifically cited the free transactions on NEO leading to overwhelming numbers of malicious attacks; the move is set to happen in April

Competition

  • Often touted as “The Ethereum of China”. While NEO uses Smart Contracts and provides a platform for the creation of Dapps it has an added clear focus on connecting the real world with the digital and supports many common programming languages such as C#, Java and Python. It aims to achieve this by combining legally binding digital certificates of assets with digital identities and smart contracts to create what they call “The Smart Economy”.

Coin Distribution

"One of the glaring issues is that 50% of all NEO (i.e. voting power) is currently held by the NEO Council."

Team, investors, partners, etc.

Team

Investors

"NEO development and community support is well-funded by token sales and the venture capital backing of Onchain."

Partners

  • Partners include crowdfunding platform WINGS, e-commerce giant Alibaba and multinational technology corporation Microsoft
  • With Ali Cloud and ONCHAIN, NEO is working on a proof of existence e-mail repository
  • KPN voted in as NEO MainNet consensus node to speed up decentralization (this means now as of 12-2018, 1 of the 6 nodes is not from the NEO team and 2 nodes are not of the NEO team on testnet)
  • "NEO joined (24-9-2019) the .NET Foundation, the Microsoft-created, globally leading open-source foundation, during the .NET Conference 2019, as the latter’s first-ever blockchain project."

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