A Comprehensive Guide to Neon EVM

Up until today, blockchains have been working independently, with developers having to rewrite their smart contracts’ code so they could work on another blockchain. That era is over, as Neon EVM has arrived to seamlessly bridge Ethereum and Solana smart contracts, so developers have to make no changes. This article will discuss how it works and its potential to revolutionize blockchain technology as we know it.

What is Neon EVM?

Source: https://coincu.com/203512-neon-evm-now-supports-ethereum-on-solana/

Neon EVM is a virtual machine created on Ethereum and designed to operate on the Solana network. It can harness the integration capability of Ethereum smart contracts and Solana’s fast and cheap network. Neon EVM is famous for its ability to handle multiple transactions simultaneously. This is made possible by Solana’s architecture, which reduces costs and increases transaction throughput.

Since the project has access to Ethereum’s infrastructure, developers can use tools like Solidity and MetaMask, and their applications can be integrated with minimal changes. Moreover, the project is compatible with Ethereum’s Web3 API, so existing tools and frameworks can interact with it.

History of Neon EVM

Neon EVM was developed by Neon Labs in 2021. Its founder and CEO, Marina Guryeva, previously served as the Director of CyberFund, an investment platform for blockchain startups. Other leading team members include CTO Andrey Falaleyev, Yuriy Yurchenko, who serves as the CPO, Arkadii Irincheev, the Product Manager, and Semen Medvedev, the Head of Development.

In 2021, the project raised $40 million in a token sale fundraising round. The fundraising round was led by Jump Capital and featured participation from companies, including IDEO CoLab Ventures and Solana Capital.

How Does Neon EVM Work?

Essentially, the major disparity between the Ethereum and Solana systems created a big obstacle for developers. On the one hand, Ethereum offers a conducive environment for smart contract development and a large developer community. Still, these smart contracts are not easily scalable due to Ethereum’s slower transaction speed and high fees. Solana, on the other hand, boasts lightning-fast transactions and lower fees due to its unique proof-of-stake consensus mechanism and parallel processing architecture. However, its ecosystem and developer tools are still evolving.

This disparity meant that an Ethereum dApp moving to Solana would have to be rewritten entirely, with the code adapted to Solana’s specific architecture and programming language. Neon EVM transcends this limitation by replicating the Ethereum Virtual Machine (EVM) environment within the Solana ecosystem. The EVM manages and executes all smart contracts on Ethereum, ensuring they are processed and deployed smoothly. It also defines the guidelines for handling Ethereum transactions. As such, we can look at Neon EVM as an on-chain solution that wraps Ethereum transactions into a Solana-compatible format and forwards them to the Solana Layer 1 blockchain for parallel processing. Below is a walkthrough of a transaction conducted with Neon EVM.

A user signs an Ethereum-like transaction, which will be sent to Neon Proxy via the Neon API service. The Neon Proxy is the dedicated gateway for receiving transactions, and forwards them to the Neon EVM program on Solana. The transaction then undergoes an authentication process when it gets to Solana, where a Neon smart contract unwraps it to confirm the user’s signature. After confirmation, the Solana BPF executes the transaction. After successful execution, Solana and Neon EVM update their states, guaranteeing synchronization.

With Neon EVM, developers can continue writing smart contracts with Solidity, fund dApps with Metamask, or utilize the truffle environment to deploy dApps on Solana. At the moment, Neon EVM can process up to 4,500 transactions per second, with gas fees of 0.000015 SOL per transaction.

As stated earlier, the NeonEVM can process up to 4,500 transactions per second. This is possible due to its architecture and innovative features. Some of these features include:

Security

Since it deals with not one but two blockchains, the need for good transaction security is heightened. Neon EVM’s security protocol is enforced in three significant ways. First, the Neon EVM smart contract code is routinely audited and easily accessible for anyone to review. Also, transactions broadcasted to the Solana Virtual Machine (SVM) are validated by independent Solana validators. Finally, any updates to the Neon EVM contract are the responsibility of decentralized Neon EVM governance.

Independence of Operations

Neon EVM features an open infrastructure that allows anyone willing and capable to run Neon Proxy. This eliminates reliance on centralized authorities and guarantees the independence of its operations. Additionally, Neon EVM doesn’t limit users to the Proxy, as any client interacting with the platform can choose to use a custom client library instead.

Neon EVM prioritizes fairness and security, so every transaction receives equal treatment, free from discrimination based on arbitrary attributes. This fosters a level playing field for all users and ensures consistent execution. Additionally, the user signature fields help prevent anyone from tampering with transactions or executing them multiple times.

Neon EVM’s Main Features

Neon EVM is home to a bustling ecosystem with several innovative products and features. At its core, Neon EVM offers products with cutting-edge technology like the Neon Proxy, and NeonScan, amongst others. Here is a breakdown of its most popular products:

Neon Proxy

Neon Proxy is the gateway that channels Ethereum transactions to the Solana blockchain with little to no changes. This solution works by wrapping Ethereum transactions on the Solana network. The packages are then sent to the Solana blockchain, leveraging its parallel execution capability and high throughput to process and execute them.

Proxy operators who act as nodes in managing the Neon Proxy servers are an essential factor in the bridging process. Proxy servers provide an interface that accepts transactions that follow Ethereum rules, converts them into Solana transactions, and executes them on the Solana blockchain. This enables dApps and smart contracts to leverage the speed and efficiency of the Solana blockchain.

As Neon Proxy servers handle transactions for Neon EVM users on the Solana network, the operators are responsible for paying the transaction fees. To cover these expenses, Neon EVM automatically deducts the same amount of ERC-20 tokens from the users’ accounts, along with an additional fee. This additional fee is divided between the operators and the Neon treasury.

Customers can currently use NEON tokens to pay for services, but according to the project’s roadmap, payments with ERC-20 tokens will soon be accepted. Transaction fees are lower for the users since they are based on Solana’s transaction expenses. However, based on the number and activity of Neon EVM users, these fees may accumulate to a larger amount for proxy operators. As such, the fee structure covers the operational costs of the proxy operators and serves as a revenue stream for both the Neon treasury and the proxy operators.

NeonScan

NeonScan is a solution that provides analytics for both developers and users and also functions as a block explorer. With NeonScan, users can critically examine transactions, blocks, and even tokens associated with the Neon EVM on Solana. This increased transparency gives users a clear outlook on all activities happening within the network. As such, they can confirm transactions, track the movements of tokens, and understand block details.

Neon Faucet

This service provides test tokens for application testing in a risk-free environment before they are released on the mainnet. This is especially beneficial for developers working on the Neon devnet. Additionally, the Neon testnet enhances its cross-chain compatibility by offering a feature where users can replace native tokens with other supported tokens. Customers only need to link their wallets to use the Neon Faucet.

Neon DAO

The Neon DAO is the governance layer that oversees the smooth operation of the Neon EVM. It is powered by Solana-based smart contracts. Any member of the Neon DAO can propose modifications to the Neon EVM’s operations, which the members then vote on.

Neon EVM Ecosystem

Neon EVM comprises an inclusive ecosystem full of products and services that cater to the needs of both its users and developers. Some of these include:

Sobal

Sobal is a fork of Balancer V2, acting as a decentralized exchange specifically for the Neon EVM. It uses Balancer’s powerful and flexible smart contracts to provide liquidity pools, swap tokens and also allow users to develop custom pools. It was launched in November 2023 and currently offers pools with NEON, USDC, and SOL tokens.

Moraswap

Moraswap is the premier automated market maker built on the Neon EVM. It was launched on July 17th, 2023, and has grown to become the leading DeFi service, and it is very particular about transparency, safety, and innovation.

Moraswap allows users to swap tokens directly on the platform, with access to multiple trading pairs. It also supplies assets to liquidity pools and distributes a share of trading fees to users.

Pyth Network

The Pyth Network is a decentralized oracle network that provides real-time market data to smart contracts across over 50 blockchains and 95 major market participants, including Jane Street, CBOE, Binance, OKX, etc.

Pyth relies on exchanges, market makers, and financial service providers to contribute price data feeds directly, ensuring accuracy and reliability. This data covers a wide range of assets, such as cryptocurrencies, equities, and foreign exchange pairs.

Over 300 apps use Pyth Network, and the project releases up to 90 million updates daily to provide the most accurate and up-to-date information for their smart contracts.

Covalent

Covalent is a leading blockchain data platform founded in 2017. It bridges the gap between users and the complex data stored on various blockchains, offering an API that brings visibility to billions of blockchain data points.

Blockchains process vast amounts of data comprising transactions, wallets, smart contracts, DeFi activity, and more. But accessing and making sense of it can be an overwhelming task. Covalent solves this issue by pulling information from multiple blockchains like Ethereum, Polygon, and Avalanche, and transforming the raw data into structured and searchable formats, making it easier to analyze and understand. Developers and users can then interact with this data through a user-friendly API, enabling them to build applications, track investments, or conduct research.

What is NEON?

NEON is the native utility token of the NEON ecosystem. It is an SPL token that serves two primary functions. First, payment for gas fees is made in NEON tokens to the Neon Proxy operators for a transaction to be successfully executed. Its second function is as a governance token, allowing holders to participate in voting and submit proposals for the development of Neon EVM’s ecosystem.

NEON Tokenomics

NEON has a total supply of 1 billion tokens. Its current circulating supply is 57.7 million tokens, with a market cap of $73.67 million. The token was distributed as follows:

• 5% was sold in a public sale
• 31.50% was reserved for incentivizing ecosystem development.
• 16.12% was set aside for early buyers
• 1.02% was reserved for advisors and service providers
• 1% went to early contributors
• 24.31% was allocated to the foundation treasury and ecosystem growth
• 6% was allotted to Solana Capital Ventures International
• 15% went to Neon’s founders

News on NEON

On December 25, 2023, Neon EVM announced the launch of Neon Community Points. The program aims to recognize the contributions made by community members, both on and off-chain, that are important to Neon’s success. There are three ways to earn community points: creating, engaging, and participating. For now, however, users can only earn points by creating memes, tweets, threads, and YouTube videos. Soon, users can engage (such as liking Neon tweets and following official Neon accounts) and participate (in events such as hackathons and conferences).

All tracking and earning of community points will happen on Discord using XP, so users are advised to join the project’s channel and report their activities.

Is NEON a Good Investment?

Neon bridges two mammoth blockchains and offers users the best of both worlds- the security of Ethereum and the liquidity and speed of Solana. Because of Neon EVM, users and developers can now move their smart contracts from Ethereum to Solana without having to rewrite their code.

Despite this breakthrough in blockchain technology, it is essential to remember that the crypto market is volatile. As such, the general public is advised to do extensive research and consult a qualified financial professional before investing in cryptocurrency.

Take Action on NEON

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