Understanding Neon in Six Questions: Scaling Ethereum dApps on Solana

Neon on Solana: Scaling Ethereum dApps in Six Questions

Source: CoinList, Translation: Blocking0xxz

Earlier this month, Coinlist announced the launch of the Neon Community sale on CoinList on June 8, 2023 at 17:00 UTC.

Neon EVM is an Ethereum virtual machine running on Solana, which allows developers to extend Ethereum dApps by using Solana as a settlement layer, opening the door to Solana users for Ethereum dApps.

This week, we sat down with the Neon EVM team to learn more about the real-world problems they are working to solve, their target audience, use cases, token utility, and their views on the future prospects of the Ethereum and Solana ecosystems.

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1. What is Neon EVM? What problems does it solve?

The Neon EVM protocol provides solutions to two major challenges faced by Ethereum dApps, namely the transaction challenge and the ecosystem access challenge.

1. Transaction challenge

Under the current protocol, Ethereum’s throughput is limited, with a record high throughput of 58 TPS at the time of writing, compared to Polygon’s record high throughput of 470 TPS on other sidechains. In addition, as the network becomes more congested, each transaction sender tries to outbid the other, causing gas fees to rise. This makes transactions extremely slow and expensive, making Ethereum unsuitable for certain types of dApps.

In contrast, Solana is designed to support large-scale scaling of decentralized applications, with a maximum real-time throughput record of 5184 TPS on the mainnet. Solana provides the following features:

· Optimized resource transaction parallelization technology for horizontal scalability across CPUs and SSDs;

· Optimized memory pool system for faster throughput.

One of Solana’s major innovations is the Proof-of-History protocol, which strengthens the proof-of-stake consensus system.

“Yes, but if I want it faster and cheaper, I can just use Rollup or sidechains, right?”

L2 scaling is a low-throughput, high-gas-fee Ethereum-native solution. L2 scaling technology extracts transactions from the L1 Ethereum mainnet and submits them in packages. So far, the popular L2 scaling solution – Rollup – has effectively reduced gas fees. However, although reports claim that fees can be reduced by 100 times, in practice, fees are only reduced by about 10 times.

So, yes, you can use Rollup or sidechains; however, Solana is more competitive than these L2 solutions. For example, at the time of writing this article, the average transaction fee for sending ETH on the Ethereum network is about $2. During the same period, transaction fees in the L2 ecosystem were between $0.5-$0.1, which is a savings of 4-20 times. In comparison, Solana’s average transaction fee is about 0.00001 SOL per transaction (0.0002 USD), which is a savings of 10,000 times. As load testing has shown, the initial tests of the Neon EVM protocol demonstrate that the protocol successfully implements these optimizations in practice.

2, Ecological entry challenge

Because Ethereum and Solana blockchains are completely different in design and structure, there has never been a truly meaningful solution for Ethereum dApp developers to take advantage of the transaction innovation that Solana brings.

Therefore, just as mobile application developers once had to develop Android and iOS to enter these two markets, Ethereum dApp developers must customize the new version of their dApp to enter other L1 ecosystems. As many Ethereum dApp developers are only familiar with the Ethereum native Solidity programming language and tools, they cannot easily adapt their dApp to Solana’s different technologies and transaction requirements.

The Neon EVM protocol changes this. The Neon EVM provides a powerful cross-L1 blockchain development solution for dApp developers, allowing them to migrate dApps from Ethereum to Solana with just minor tweaks to the codebase. This opens the door for Ethereum dApps to reach the Solana user base.

II.What are the use cases for Neon EVM?

Once the developer community clearly sees the properties of low transaction costs and fast settlement, we expect to see the deployment of dApps closely related to these properties.

We also predict that dApps that have been successful in the Ethereum ecosystem will want to test the Solana community’s reaction to their value proposition. Popular dApps (such as Uniswap, AAV, Curve, Saddle Finance) have already been successfully deployed on devnet with only minor reconfigurations to the codebase.

And this is just the beginning; we have partnered with innovators in various fields, hoping to collaborate with several active DEXes to launch services, such as Moraswap, Sobal, Onomy, and Powerpool. Similarly, several DeFi services are about to launch, such as LeverFi’s leverage trading dApp, lending solutions from Midas Capital and Yin Finance, release platforms from Poolz and DxSale, cross-chain exchange from Elk Finance, and of course, GhostNFT, which is about to release an NFT series on Neon EVM.

3, What is the utility of NEON tokens?

The economic model of Neon EVM is based on fees. The Neon token (NEON) is a SPL utility token with two functions:

· Fee payment: Neon EVM operators accept NEON tokens from users to pay for the fees required to execute transactions.

· Governance: Owners of NEON can participate in Neon DAO governance activities.

4, How to get started with Neon EVM?

Neon EVM has been deployed as a closed beta on the Solana mainnet. For more information on how to use Neon EVM, please refer to the documentation on the Neon Foundation website. For an overview of the technical architecture and features of NeonEVM, please visit NeonEVM.org/whiteBlockingper.pdf to read the whitepaper.

To execute Neon transactions, fees must be paid to the operator with NEON. The challenge is that the NEON token is an SPL token used to pay fees in EVM-compatible systems. To do this, use NeonBlockingss to transfer SPL tokens to Neon EVM. NeonBlockingss is a UI tool that can be programmed from the NeonBlockingss npm package.

5, What is your view on the future prospects of the Ethereum and Solana ecosystems?

The Web3 community is often divided into two camps: Ethereum vs. Solana. The debate over which will beat the other is endless. We do not endorse this view. In fact, Neon EVM believes that both L1s play important roles, and they are suitable for different needs. For example, in Solana, storage and smart contract logic are separated, and Solana does not retain data history for more than 2 days. In the EVM, accounts store all data. This difference will impact the use cases for each chain; neither ecosystem can do without the other. This is why we assert that both ecosystems will continue to thrive.

We acknowledge that the Ethereum community is going through a real split (i.e., optimistic vs. ZK Rollup supporters). Neon EVM balances this divide by offering a third path.

Ethereum has greatly benefited from the Solana community, and vice versa. Solana has a very active community. Given that a meme token on Solana recently had more transaction volume than Ethereum in the same period (in three days). Solana also continues to see growth in NFT and gaming applications.

We believe that the Ethereum and Solana ecosystems and communities complement each other: high throughput, low gas fees, and Solana’s vibrant and growing ecosystem combined with Ethereum’s large and experienced community – this is the synergy that Neon EVM provides.

6. What is the governance model of Neon EVM? How will future decisions affect its development?

Neon DAO is the main partner of the Neon Foundation, which is responsible for promoting the development, growth, adoption, and expansion of the Neon EVM ecosystem. Neon DAO operates as a decentralized governance layer for Neon EVM using the SPL governance program. It is a series of contracts deployed on Solana and charges for its services. DAO community participants, i.e. NEON holders, use a web interface to make proposals and vote, thereby influencing the NEON EVM that uses the plugin-based SPL governance program.

Neon DAO will vote, decide, and make suggestions on the design and functionality of Neon EVM. This includes issues related to Neon EVM parameter settings, as well as reaching consensus on the redesign and updates of the Neon EVM program.

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