A guide to NEO
NEO Background
There’s a great confusion regarding NEO, its origins, purpose, and potential evolution.
NEO was the first big independent blockchain project coming out of China, originally named Antshares.
NEO was launched as Antshares (ANT) in 2014 by Da Hongfei and Erik Zhang, and it is commonly referred to as China’s first Blockchain Platform.
In 2016, due to regulatory pressures and the need to meet private business interests, both founders incorporated On-Chain, a venture-backed company providing financial services. Shortly after that, Antshares was renamed NEO in 2017.
Both NEO and On-Chain are based in Shanghai.
NEO is a smart contract ecosystem that allows the storage and exchange of digital assets, much like Ethereum, but with two differentiating features; a) while Ethereum can only be programmed in Solidity (specific computer language for the Ethereum platform), NEO is compatible with a large set of programming languages, and, b) where Ethereum uses a Byzantine Fault Tolerance consensus algorithm, NEO makes use of Delegated Byzantine Fault Tolerance.
NEO Consensus & Delegated Byzantine Fault Tolerance
In NEO’s system, some actors or nodes are designated as bookkeepers, qualifying for this task when such node keeps a minimum balance of NEO tokens and meets certain performance requirements.
The mission of the bookkeepers is to verify the blocks that are written in the system’s blockchain. Consensus is achieved when two-thirds of the nodes in the network agree with a bookkeeper’s version of the blockchain and is thus validated. Were consensus to fail, an alternate bookkeeper is called and the process repeated.
This mechanism may prove to be more efficient than Etherum’s one regarding the number of transaction that can be processed but comes with a cost to the level of decentralization, whereby dBFT may serve to limit control of the system to a select group of actors.
NEO Blockchain Assets
The NEO ecosystem has two native tokens, NEO and GAS.
NEOs work in a similar way to shares, granting voting rights and the right to dividends in the form of GAS, which in turn allows the holder for the use of a NEO share.
NEOs are used for Bookkeeper election, the right to receive GAS as dividends and voting power over major issues pertaining to the NEO ecosystem. GAS is used as a service charge payment, basic fee payment and Bookkeeper nominee deposit as collateral.
NEO tokeneconomics
100 million NEO tokens were issued in the Genesis block. These were pre-mined and split up in the following way; a) 10% designated to early supporters, b) 17% to ICO Phase I, c) 23% to ICO Phase II, and d) 50% to be held by the Antshares team (locked for 1 year via a smart contract – this lockup expired on October 16 2017).
GAS token is generated at a rate of 8 GAS per block with the construction of the blockchain. GAS token production is reduced by 1 token for every 2 million blocks generated. It is forecasted that around the year 2039 approximately GAS circulation will reach 100 million and production will cease.
NEO can’t be divided, whilst GAS can.
GAS dividends also accumulate as fees to the network, where users par GAS to deploy and run smart contracts. Such fees are proportionate to the computing resources consumed by a contract. These fees are then distributed to bookkeepers as a reward for their activity on the network.
NEO ICO claiming controversy and delays
Some of the early Antshares investors in NEO ICO I & II have seen their claims delayed because of the changing regulatory landscape in China regarding cryptocurrencies in general and ICOs in particular. This fact, together with manual revisions from the NEO team for ICO claims produced a bottleneck and prevented many ICO investors from gaining control of their tokens.
In light of the above, NEO put forward the Sponsor Giveback Plan, first outlined in a blog post by the NEO Council on October 30th, 2017.
Details of such plan were subsequently shared in another blog post dated December 5th, 2017.
The plan basically allows for ICO backers to receive either CYN (Chinese Yuan) or a mix of NEO and GAS tokens according to certain calculations as put forward in the above-mentioned blog post. Prices for such calculations will be provided from OKCoin.com
ICO contributors can stake their claims up to the March 15th 2018. Rewards will be released between the March 16th and 31st.
NEO price has seen a positive evolution since its ICO, with price peaking at $200, with a market cap in the $9bn range. Its a highly liquid token, traded in major exchanges with an aggregate 24h trading volume in the $400m range.
Further Reading
https://bitcoinmagazine.com/articles/op-ed-chinas-ico-ban-characteristic-not-catastrophic/
https://cryptoinsider.com/byzantine-fault-tolerance-blockchain-systems/
https://steemit.com/neo/@basiccrypto/neo-s-consensus-protocol-how-delegated-byzantine-fault-tolerance-works