Simplifying the Neo Whitepaper
Here we’ll quickly breakdown what Neo is and the system’s consensus protocol, potential vulnerabilities, and projected future state — all straight from the whitepaper in a way we call can understand!
What is Neo?
NEO is a Chinese smart contract and digital identity focused blockchain technology. It’s core focused can be divided into the following components:
- Digital Assets — On the NEO blockchain, users are able to register, trade, and circulate multiple types of assets through a validated digital identity are protected by law. NEO has two forms of digital assets: (1) global assets and (2) contract assets. Global assets can be recorded in the system space and can be identified by all smart contracts and clients. Contract assets are recorded in the private storage area of the smart contract and require a compatible client to recognize them.
- Digital Identity — Digital identity refers to the identity information of individuals, organizations, and other entities that exist in electronic form. The more mature digital identity system is based on the PKI (Public Key Infrastructure) X.509 standard. In NEO, they will implement a set of X.509 compatible digital identity standards.
- Smart Contracts — The NeoContract smart contract system is the biggest feature of the seamless integration of the existing developer ecosystem. Developers do not need to learn a new programming language but use C#, Java and other mainstream programming languages in their familiar IDE environments (Visual Studio, Eclipse, etc.) for smart contract development, debugging and compilation.
The NEO Token Economy
- NEO has two native tokens, NEO (abbreviated symbol NEO) and NeoGas (abbreviated symbol GAS).
- Total Token Volume: 100 million tokens (represents the right to manage the network). Management rights include voting for bookkeeping, NEO network parameter changes, and so on. The minimum unit of NEO is 1 and tokens cannot be subdivided.
- GAS is the fuel token for the realization of NEO network resource control, with a maximum total limit of 100 million. The minimum unit of GAS is 0.00000001.
- Token distribution follows decay algorithm in about 22 years time to address holding NEO.
NEO Token/Gas Distribution Mechanism
- NEO’s 100 million tokens is divided into two portions. (1st 50M to token sale supporters of NEO, 2nd 50M goes to NEO Council to support NEO’s long-term development, operation and maintenance and ecosystem w/ 1 year vesting period)
- GAS is generated with each new block. The initial total amount of GAS is zero. With the increasing rate of new block generation, the total limit of 100 million GAS will be achieved in about 22 years. The interval between each block is about 15–20 seconds, and 2 million blocks are generated in about one year.
Neo Consensus Protocol
- NEO uses dBFT, the Delegated Byzantine Fault Tolerant, a Byzantine fault-tolerant consensus mechanism that enables large-scale participation in consensus through proxy voting. dBFT has good finality, meaning that once confirmations are final, the block can not be bifurcated, and the transaction will not be revoked or rolled back.
- NEO dBFT consensus mechanism CLAIMS 15 to 20 seconds to generate a block, the transaction throughput is measured up to about 1,000TPS, which is excellent performance among the public chains. Through appropriate optimization, there is potential to reach 10,000TPS, allowing it to support large-scale commercial applications.
- NEO’s Universal Lightweight Virtual Machine, NeoVM, has the advantages of high certainty, high concurrency, and high scalability. NeoVM can be ported to any blockchain or even non-blockchain system used, increasing the utility of the smart contracts.
- NEO will also use the blockchain to replace the Online Certificate Status Protocol (OCSP) to manage and record the X.509 Certificate Revocation List (CRL).
- The NEO network will set a threshold by voting to exempt GAS from a certain amount of transfer transactions and smart contract operations to enhance the user experience. When a large amount of spam transactions occur, NeoID can be used to prioritize transactions and smart contracts with qualified identities. Transactions and smart contracts with no qualifying digital identities can get priority by paying GAS.
- On-chain governance is managed by token holders (much like in a PoS system). Off-chain network governance is managed by the NEO Committee (responsible for strategic decision-making, technical decision-making and specific implementation)
- Neo uses NeoX, a protocol that implements cross-chain interoperability. NeoX is divided into two parts: “cross-chain assets exchange protocol” and “cross-chain distributed transaction protocol.”
- Neo uses NeoFS, a distributed storage protocol that utilizes Distributed Hash Table technology
- Many claims, but team doesn’t delve into the implentation details
- Technology restrictions due to it being a Chinese native team (legal and nation state restrictions to decentralization)