Hongfei give an in-depth walkthrough of 5 new aspects about Neo3 at the 2nd Nova Global Blockchain Investment Institutions Summit in Sanya, China.
In 2020, mainstream projects represented by BTC and ETH have achieved breakthroughs in scale, and new forces represented by Polkadot, IPFS and Chainlink are also developing rapidly.
We are going to witness a new pattern in 2021, as core infrastructures of existing blockchains have taken shape. Within this new pattern, there will be value storge protocols represented by BTC (whose market value has surpassed US$400 billion), high-performance public blockchains represented by ETH2.0, homogeneous cross-chain networks represented by Polkadot, storage protocols represented by Filecoin, and Oracle solution such as Chainlink running on Layer 2. The next-gen Internet (web3.0, NGI) puzzle is almost complete. As an important infrastructure of NGI, Neo is also coincided with the most important upgrade in Neo’s development process at this juncture. With this all-new pattern in sight, Neo has launched a new set of “Solutions 3.0”with Neo3.
Neo3 will be a full migration of the Neo MainNet, which means that Neo3 will be an entirely new blockchain generated from the genesis block. New improvements are taking place from the underlying structure to the functionality, from the economic model to the ecosystem development. Over 3 years of development and experience accumulation, we have strengthened the ability to solve problems surfaced earlier and achieved comprehensive improvements in security, stability, efficiency and governance. The new changes in Neo3 can be summarized in the following 5 main points:
1. New features (Oracle, NeoFS, NeoID)
Neo will provide developers and users with a complete suite of ALL-IN-ONE blockchain experiences. The Neo3 MainNet will integrate three important functional modules, including a built-in oracle, a decentralized storage network and a decentralized ID solution.
2. New architecture (UXTO changed to account system, Neo VM, dBFT2.0, node and contract upgrades)
Neo is adopting a new underlying architecture to develop Neo3 into a safer, more effective and more reliable network infrastructure. First of all, Neo3 has moved away from UTXO. The new NEO and GAS contract will embrace the account system and operate as Neo’s native contracts, using the new asset standard NEP17, which was developed for easier realization of Dapp functionalities and would significantly enhance development friendliness. Neo has created a completely blockchain-based VM, which is a faster, lighter and more versatile VM solution. Moreover, the security of the dBFT2.0 consensus algorithm has been proven mathematically, which guarantees the single-block finality on Neo, and greatly enhances the stability and security of the network. Finally, the new block synchronization mechanism and data compression mechanism would also ensure the performance and reliability of the network as well as the nodes.
3. New economic model (GAS allocation model, transaction costs are significantly reduced due to the increase in TPS, and network deployment costs are also significantly reduced)
To reduce the costs for Neo users and increase the economic incentives for NEO holders, Neo3 adopts a brand-new economic model. Developers and users will experience a significant decrease in development costs and transaction costs on Neo3. The contract would only charge for incremental storage spaces, and the cost of deploying a new contract is as low as 1/100 of that in Neo2. Also, there will be 5 GAS block incentive generated in each block and will be distributed to the Neo Council (consisting of consensus nodes and candidate nodes), voters of the Neo Council members and also all NEO holders. Neo aims to provide ecosystem builders and participants with ample economic incentives.
4. New ecosystem (Poly Network cross-chain ecosystem, Flamingo-based Defi ecosystem)
Neo is actively developing the external cross-chain and native on-chain ecosystems. Neo has achieved a cumulative transaction value of US$2.1 billion across the Poly Network in 2020 and successfully achieved interoperability with public chains such as Ethereum and Ontology. Neo3’s upgraded StateRoot will also make it easier for Neo to undertake cross-chain transactions, and Neo will leverage on Poly Network to realize on-chain ecosystem interoperability with more and more heterogeneous public chains. In the second half of the year, the full-stack DeFi protocol — Flamingo was incubated by the Neo Foundation, and is currently undergoing steady development. The final Perp module will be launched soon. By implementing the basic DeFi modules on Neo, developers are continuously welcomed to contribute to the growth of the ecosystem.
5. New governance mechanism (a flexible and manageable mechanism based on dynamic comprehensive democratic voting)
This is the most important and sophisticated change in Neo3: a new dynamic on-chain governance mechanism. Neo’s consensus nodes and Neo Council members will be voted by NEO holders and the seats will be dynamically refreshed. Any registrar, informal organization, anonymous organization or individual can become a candidate, and seek votes from the voters. The top 21 candidates with most votes will form the Neo Council. The top 7 nodes will become consensus nodes of the network and are responsible for generating blocks. The results of the vote will be updated every 21 blocks. The election will be open to the community, and NEO holders will be able to get more incentives by engaging in the governance process. Theoretically, the term of office of the council is 21 blocks, and voters can adjust their voting strategies flexibly.
Under the new governance framework, Neo will implement an important function: Elastic Manageability, which makes it possible to interact between the blockchains and the social jurisdiction system. The identities of Neo Council members will be diversified, and some of them may be compliance agencies in particular sovereignties or legal jurisdictions so that they will be subject to compliance restrictions in their regions when processing transactions. Some council members will face diverse policy systems, regulatory structures and compliance requirements, while anonymous nodes will not be impacted. When processing transactions, different nodes will respond differently to various transactions which will have an influence over the outcomes of services running on Neo. For example, in the case of a particular type of transaction, more than 1/3 of the consensus nodes are influenced by local jurisdiction and cannot pass this type of transaction. The effect of regulation on this particular type transaction is simultaneously reflected in the Neo network. Under the framework of dynamic elections, NEO holders will then decide whether to continue to vote for the affected nodes in the next term. Node candidates can also make adjustments according to the voter’s strategy. Gradually, Neo’s business attributes and the shape of the council are continuously being shaped in a recurring game-theory between voters and node candidates. The Neo community will determine Neo’s future direction by actively participating in governance and expressing their views. This is also a manifestation of Neo’s unique community value, experimented in an elastic manageable network.
To facilitate a smooth Neo3 MainNet launch in the near future, the team is now focusing on the preparation and deployment of the MainNet migration. The migration of token assets to Neo3 will be completed via the Poly Network, and contracts will be gradually deployed in order to connect to these assets. The long-term focus of Neo is still to empower the smart economy, enrich on-chain assets and build financial infrastructures of the future. At the same time, we will also launch new incentive programs for community members and developers to reach out to the broader blockchain ecosystem.
This is a brand-new beginning, and we are looking forward to everything new in Neo3.