NEO Review by FIMA Plus Company

1. Overview

NEO uses blockchain technology to create ”smart economy” by digitizing traditional physical assets. Digitization of assets via blockchain can be decentralized, trustful, traceable, highly transparent, and free of intermediaries. NEO wants to create a digital assets marketplace where users will be able to register, trade, and circulate multiple types of assets. Digital identity enables users to prove their connection between digital and physical assets by validating their assets and identifying information regarding individuals, organizations and other entities. Digital identity system is based on X.509 standard. NEO also features the use of independent smart contract system called NeoContract. Smart contracts are a set of commitments that are defined in digital form, including the agreement on how contract participants shall fulfil these commitments. Therefore, NEO uses smart contracts, which feature certainty, high performance, and expandability for digital assets to be self-managed within a distributed network. Unlike Ethereum’s own smart contract programming language Solidity, NEO uses other mainstream languages such as C#, VB.Net, F#, Java, and Kotlin to program smart contracts. It also plans to support C, C++, Golang and JavaScript in the future. Virtual machine that NEO uses to execute smart contracts code is NeoVM.

NEO’s platform features two tokens, NEO and Neogas (GAS). NEO token represents the right to manage the network, which includes voting for bookkeeping, NEO network parameter changes, etc. NEO token total supply is 100 million tokens with minimum unit of 1 and it cannot be subdivided into decimals. GAS token is used for the realization of NEO network resource control, which includes network charges for the operation and storage of tokens and smart contracts. Maximum total supply of GAS is 100 million tokens and the minimum unit is 0.00000001.

NEO uses Delegated Byzantine Fault Tolerant (dBFT) consensus mechanism that enables large-scale participation in consensus through proxy voting. This means that the holder of the NEO token can, by voting, pick the bookkeeper it supports. Due to digital identity technology, bookkeepers can be a real name of the individual or institution. The selected group of bookkeepers reach a consensus and generate new blocks through BFT algorithm.  Currently, NEO dBFT consensus mechanism takes about 15 to 20 seconds to generate a block and the transaction throughput is measured up to about 1,000TPS (transactions per second). The team claims that with appropriate optimization, there is potential to reach 10,000TPS, which would allow to support large-scale commercial applications.

2. NEO Distribution

NEO’s 100 million tokens are divided into two portions. The first portion is 50 million tokens distributed proportionally to supporters of NEO during the crowdfunding. This portion has been distributed. The second half of tokens, 50 million, are managed by NEO Council to support NEO’s long-term development, operation and maintenance and ecosystem. The other half had a lockout period lasting 1 year until October 16, 2017 and will not enter the exchanges.

The plans for the second half are as below:

  • 10 million tokens (10% total) will be used to motivate NEO developers and members of the NEO Council
  • 10 million tokens (10% total) will be used to motivate developers in the NEO ecosystem
  • 15 million tokens (15% total) will be used to cross-invest in other block-chain projects, which are owned by the NEO Council and are used only for NEO projects
  • 15 million (15% total) will be retained as contingency
  • The annual use of NEO in principle shall not exceed 15 million tokens

GAS Distribution:

Theory calculation   Actual calculation  
Time GAS Time GAS
Per Day

0,0403

Per Day

0,0277

Per Week

0,2822

Per Week

0,1938

Per Month

1,2499

Per Month

0,8584

Per Year

14,7000

Per Year

10,1000

Holding 100 NEO in your wallet, at the time of writing (100 NEO = $3.383,31), generates 14,7 GAS (in theory) which results 4,57% return on investment annually and 10,1 GAS (in actual) which equals 3,14% ROI annually. You can calculate your own GAS reward anytime on neotogas.com.

The Actual Calculation, shows your GAS Rewards based on the actual block generation rate, which is typically a bit lower than in theory. The actual block generation rate can vary and depends on the nodes & network. That’s why the actual GAS Reward is a bit lower than in Theory. For every performed call on the blockchain GAS is charged and then distributed to NEO holders. The more action, the more GAS.

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 approximately 2 million blocks are generated in one year. 8 GAS per block are generated. After every 2 million blocks there will be a reduction of 1 GAS per block, which will ultimately result that after the 44 millionth block the total GAS generated will reach 100 million and there will be no further generation of GAS from new blocks. Accordingly, 16% of the GAS will be created in the first year, 52% of the GAS will be created in the first four years, and 80% of the GAS will be created in the first 12 years.

3. NEO Use Cases

The main usage of NEO platform, which also represents a differentiation factor in comparison with projects like Ethereum, is that NEO is focused on making a smart economy by digitizing traditional real-world assets via digital identity. Also, you can program or run dApps and smart contracts on the platform.

Some dApps:

  • Qlink – decentralized mobile network offering global Wi-Fi with incentivized hotspot sharing
  • Imusify – free, blockchain based, incentified and decentralized platform for music related digital content such as audio, video, apps, images, and blogging where anyone can join, contribute and get paid $IMU
  • Moonlight – a distributed workforce and analytical project management platform featuring a global public ledger of contributor work experience and a new matchmaking algorithm to effectively fulfil project needs.
  • Red Pulse – market intelligence platform covering China’s financial and capital markets
  • Jarvis+ – a decentralized service of conversation in any IM, web-page, or App. A personal token assistant. And A powerful AI conversation infrastructure that could be embedded into any use scenario of Blockchain
  • NEX – decentralized cryptocurrency exchange in the making
  • Zeepin – an innovative solution for creators, distributors and manufacturers to protect the value of copyright, boost productivity and growth using revolutionary Blockchain technology

Potential use cases – NEO platform can be used to fuel Decentralized app development – Smart fund, AI-assisted legal smart contract, Social networking, Automated tokens liquidity providers, Decentralized exchange, Secure communication protocol, Data exchange market, Intellectual property trading market, Prediction market, Advertising market, Hashpower market, NeoGas market

4. Team Behind NEO

NEO was founded by Da Hongfei and Erik Zhang in 2014. known as AntShares (ANS), until it got rebranded in 2017 to NEO. Today, Erik Zhang as the author of the dBFT (Delegated Byzantine Fault Tolerance) consensus mechanism, main algorithm upon NEO blockchain is based, still leads NEO’s core development. Both Zhang and Hongfei play a major leading role, as Hongfei leads NEO in terms of growth, popularity, compliance and regulations, whereas Zhang has the main focus on product development. Team is reputed as responsive due to very often releases of updates. The NEO council which oversees the NEO blockchain framework, also releases their report once a month.

The team is very well balanced, and they have sort of back support from City of Zion, a global, independent group of open source developers, designers and translators formed to support the NEO core and ecosystem. They are working on a lot of various projects, dApps, wallets and more.

To point out, Hongfei established a constructive line of communication with Chinese government officials, so this is going to be among top projects globally if China starts to support cryptocurrencies. On the other hand, blockchain is more than welcome in China´s industry and economy, according to the authorities.

Pros:

a) Supported by China’s Government
b) Pretty enviable number of supporters
c) Strong development in field of smart contracts
d) Dividends in GAS by stacking NEO

Cons:

a) Not distributed nodes make NEO to be pseudo-centralised due to these few nodes having easy control (NOTE: this is planned to be changed in the future)
b) Limited number of wallets that support NEO when compared to ETH or BTC

Potential risk Project Transparency Token Liquidity Project Development Marketing and PR Decentralization

3,5

4,0

4,0

4,0

3,5

2,0*

Overall Score*

3,5

Potential risk Project Transparency Token Liquidity

3,5

4,0

4,0

Project Development Marketing and PR Decentralization

4,0

3,2

2,0*

Overall Score*

3,5

*1 – Very bad / 5 – Excellent
*Decentralization makes the Overall Score look bad, but we are looking forward for further steps in NEO’s decentralization process such as recent City of Zion consensus node election

Sources:

[1] „What is NEO Cryptocurrency? | NEO Coin Explained | What Is Antshares?“ [Na internetu]. Dostupno na: https://kryptomoney.com/what-is-neo-cryptocurrency-neo-coin-explained/. [Pristupljeno: 10-srp-2018].
[2] ‘NEO White Paper’. [Online]. Available: http://docs.neo.org/en-us/. [Accessed: 24-Jul-2018].
[3] ‘NEO Smart Economy’. [Online]. Available: https://neo.org/. [Accessed: 24-Jul-2018].