NEO has been quietly innovating behind the scenes for over a year, with developers working hard to upgrade the platform. Now, as the new year rolls on we have a better idea of how those upgrades are impacting the cryptocurrency's ecosystem. So, what's going on with NEO?
Previously known as Antshares, NEO was one of the first ever cryptocurrencies to emanate from China; a blockchain smart economy upon which developers can create decentralized apps, and smart contracts, sound familiar? … understandably, it derived the nickname “Chinese Ethereum” for these very reasons.
Inspired by Ethereum’s desire to create a platform upon which any number of blockchain-based applications could be built, NEOs founders, Da Hongfei and Erik Zhang took Ethereum fundamentals and fine-tuned them in order to resonate with a wider demographic of developers.
2018 and beyond
2018 proved a difficult year for the entirety of the crypto industry, and NEO was by no means exempt from this. However, bear markets often conversely provide ample breathing room for innovation to take place, without the distraction of hype or speculation.
“2018 was a tumultuous year for us but we have been holding on to the vision of smart economy and will make NEO the most developer-friendly public chain.” - Da Hongfei
2018 saw NEO’s developer community go from strength to strength, bolstering their numbers, ushering NEO into 2019 with eight developer communities working tirelessly on various projects within the ecosystem.
As a result of this exposure to further development, the number of Dapps on the NEO platform increased by a massive 3000% in 2018, with Dapps numbering almost 100.
This number appears set to increase with the annual NEO developer conference (NEO Devcon) in February 2019:
Developer friendly attitude
NEO is primed to further incentivize developers from all walks of life by integrating entry-level programming languages. The first supported languages are C#, VB.Net, F#, Java, and Kotlin. NEO provides plug-ins for these languages, which are used to compile high-level languages into instruction sets supported by NEO virtual machines.
The platform is also expanding outside of itself, with the introduction of interoperability from the NEO virtual machine (NeoVM); opening up an avenue for contemporary blockchains, and their developers, to build and deploy their own smart contracts on networks that are incapable of such features. The NeoVM is an integral part of a NEOs infrastructure, allowing the platform the ability to create and execute smart contracts in a safe and secure way.
Announced back in 2018, NEO 3.0 is set to be one of the most integral upgrades to the NEO smart economy. However, rather than the archetypical fork we’re used to seeing within crypto upgrades, this is thought to involve a more incremental approach, offering periodic updates to the protocol as a whole, alongside a hardfork.
Co-Founder of NEO, Erik Zhang, speaking on NEO 3.0:
“NEO 3.0 will be an entirely new version of the NEO platform built for large scale enterprise use cases. It will provide a higher TPS and stability, expanded APIs for smart contracts, optimized economic and pricing models, and much more. Most importantly, we will entirely redesign NEO’s core modules”.
Scalability will be a core focus of NEO 3.0, with a particular focus on increasing the network's transactions per second (TPS). In order to do this, the development teams plan to refactor the code and core modules, optimize the network protocol, and prepare for dynamic sharding. On top of all this, it was announced that NEO would overhaul its economic and pricing models, starting with making NEO divisible.
Hongfei reiterated in a recent interview on Candid Crypto, that NEO 3.0 would most likely involve a hard fork, adding that it's possible that they might even need to “start from the genesis block,” migrating current Dapps over to an entirely new blockchain.
Erik, @neoerikzhang is the founder & core developer of #NEO, author to dBFT consensus mechanism and blockchain technology expert. He will shed light on NEO 3.0 at #NEODevCon2019 in Seattle on Feb.16-17. Secure your spot now! https://t.co/UV3hKsnIdD pic.twitter.com/nDsfZe3yJ6— NEO Smart Economy (@NEO_Blockchain) January 23, 2019
In the same interview, Hongfei reiterated his belief that NEO would reach 10000 transactions per second, without sharding. Hongfei asserted that he didn't believe that sharding was the best solution to scalability, citing several problems. Rather than sharding, Hongfei offers Layer 2 solutions as a potential fix all for the scalability issue.
Bitcoin has the lightning network, Ethereum has Raiden, NEO has Trinity. A second layer protocol devised to foster scalability utilizing state channel technology. The system allows transactions to be completed off chain via a smart contract; lightening the load on the blockchain and allowing for faster transactions and lower fees.
Trinity network also has its own utility token, dubbed the Trinity Network Credit (TNC). This will be used for the opening of state channels, a qausi ‘gas’ - or fee - to transport NEP-5 tokens between wallets, as well as a plethora of other services.
One of the key developments and perhaps one of the more interesting undertaken by the Trinity network in 2018 was its Cross-chain converter; allowing the conversion of TNC tokens between NEP-5 and ERC-20 standard, enabling cross chain development on both Ethereum and NEO platforms.
David Li the founder of Trinity, wrote an open letter in late 2018 noting that the team was re-planning a new roadmap for the new year. Li elaborated upon a focus on network health - specifically the implementation of more nodes, adding that the success of Trinity will be built upon “genuine adoption”:
“Our strategy is simple: to provide with the community the layer-2 infrastructure that future crypto-economy applications are built upon and to provide easy-to-use highly-customizable tools and gadgets for project teams so they can focus on their core business logic instead of wasting time on building their own layer-2 solution,” the letter read.
NEO consensus algorithm: dBFT
Among the many technological advancements of NEO, one of the most integral is Delegated Byzantine Fault Tolerance (dBFT). after being labored over for the better half of a year, dBFT is apparently near completion according to NEO’s co-founder Erik Zhang:
After half a year of development, the improved NEO consensus algorithm dBFT is about to be completed. dBFT will become the best consensus mechanism for blockchains.— Erik Zhang (@neoerikzhang) January 3, 2019
dBFT works along the same lines as proof of work or proof of stake, which was developed and popularized by the NEO project team. The point of all consensus algorithms is to overcome one major problem that plagues all decentralization: The Byzantine Generals Problem.
This particularly perplexing problem gave rise to consensus algorithms - such as dBFT - as a way to avoid the Byzantine Generals Problem; which is, effectively - and in fairly reductive terms - proof of honesty within a decentralized protocol.
The NEO team developed dBFT as a way to combat this problem. The designed system comprised of nodes, delegates, and a speaker and works much like the infrastructure of a country and its government. The citizens, (nodes) vote for delegates (bookkeeping nodes), much like how state representatives are chosen for Congress during elections.
Delegates implement the will of the citizens (ie. keep track of a transaction and record them upon the ledger). Delegates are also chosen, at random, to become the speaker. Speakers verify the transactions on the ledger, creating a block; this then gets sent back delegates of which 2/3rds are required to ensure the speaker's proper verification of said block before it gets added to the network. If less than 1/3rd of delegates agree on the speaker verified block a new speaker gets elected at random and the cycle continues.
Zhang believes that this new consensus algorithm will pave the way towards NEO’s goal of running “large scale commercial applications”:
NEO's goal is to have the ability to run large-scale commercial applications. To achieve this goal, we are doing two things. The first is to improve NEO's infrastructure so that it has higher tps and a more reliable dBFT consensus algorithm.— Erik Zhang (@neoerikzhang) January 10, 2019
Another such goal is to increase the amount of data that applications can store. Zhang asserts that work on the development of a distributed storage network, known as NeoFS, will be completed in Q3 of 2019.
As of right now, it appears the next few big steps for both the development of both the NEO network and its community will be revealed at the NEO Devcon 2019 on the 16 – 17th of February