Overview of the upcoming Solana EVM compatible network Neon EVM

*Original Title: 《 Scaling in a Multichain World: Why We Invested in Neon Labs */
Authors: Saurabh Sharma and Rahp Maganti, General Partners and Vice Presidents at Jump Capital
Translated by: Lu Jiangfei, Blockbeats Rhythm

Neon Labs plans to launch the Ethereum-based smart contract layer Neon EVM on the Solana chain on December 12. Jump Capital led the latest private token sale round for Neon Labs, and this article is a related piece published by Jump Capital titled "Why We Invested in Solana EVM-Compatible Development Team Neon Labs."

The future belongs to multichain. For a long time, Jump Capital has believed that a competitive blockchain ecosystem/platform can provide users and builders with more choices to better adapt to their personalized needs, goals, and user experiences. However, many blockchains are isolated from each other, leading to user isolation—clearly, this is far from the vision of building interconnected applications based on privacy and decentralization.

We believe that for the future of cryptocurrency and blockchain, to bring more benefits to the public, it is essential to focus on three main areas/technologies:

• Scalability: The ability of blockchain networks to validate/process transactions (usually measured in transactions per second, or TPS)
• Interoperability: The ability for users and developers on different blockchain networks to communicate (i.e., to build applications and transact)
• Developer Tools: Applications specifically designed to help and support builders

To this end, Jump Capital is pleased to lead the latest private token sale round for Neon Labs and support their cross-chain Ethereum Virtual Machine (EVM) solution for the Solana blockchain.

Regarding the three main areas/technologies mentioned above, the solutions provided by Neon EVM include:

• Lower gas fees and higher transaction throughput;
• Support for cross-chain communication;
• Allowing Ethereum developers to build on the Solana blockchain.

Beyond Scalability

As stated in the Neon EVM white paper, "Ethereum remains the primary blockchain protocol for smart contract transactions and settlements, and it currently provides the most advanced infrastructure for DApp developers and end users."

That said, with the continuous surge in Ethereum gas fees, it has become difficult for some small and medium market participants to benefit, which inevitably leads to centralization of the network. Therefore, over the past two years, "scalability" has become one of the most focused areas in the blockchain industry, with key Layer 2 projects like Arbitrum, Optimism, and Starkware attempting to solve Ethereum's scalability issues through various means, including Optimistic Rollups, zero-knowledge proof Rollups, and sidechains.

On the other hand, some projects focus on developing better Layer 1 solutions, with Solana gaining widespread attention for its ability to offer low transaction fees. Over the past few years, Jump Capital and its affiliate JumpCrypto have made many contributions to the Solana ecosystem, such as:

JumpCrypto's active participation in Wormhole, particularly as a guardian of the Wormhole network;

JumpCrypto as a data provider for the oracle Pyth network;

Active investments in projects built on the Solana blockchain.

Jump Capital firmly believes that the rapid growth trend of the Solana ecosystem will continue.

Without Neon, building scalability technologies on Ethereum still has significant limitations.

Neon and Solana provide a game-changing alternative solution for these existing projects by bringing Solana optimization directly to key stakeholders (users + developers) without the need for additional Layer 2 infrastructure (such as dispute resolution, sequencers, etc.). This effect goes beyond scalability, allowing developers to create products for multiple different communities and expand their businesses into larger markets without worrying about maintaining multiple complex codebases and associated infrastructure.

How Does Neon EVM Work?

There are many technical details behind the Neon EVM stack, but from a higher-level analysis, the Neon EVM architecture can be summarized into three main components:

The EVM itself—it's a complete EVM simulation on the Solana blockchain;

Web3 Proxy—it's a tool that packages Neon transactions into Solana transactions;

EVM Governance—it's a complete governance system for managing Neon EVM resources.

Neon EVM also has a key technical feature: it allows developers to leverage the superior performance and high throughput of the Solana blockchain to support Berkeley Packet Filter (BPF) bytecode compilation.

A Brief Overview of BPF

Developed in 1992 as a special-purpose operating system for filtering packets, BPF has now become an essential part of the pnux kernel, with Solana supporting BPF bytecode compilation;

In particular, BPF integration allows:

Other virtual machines to be loaded onto the Solana blockchain;

Parallel execution of transactions;

Easy updates for the Solana blockchain virtual machine: even after Solana hard forks, Neon EVM can easily execute updates.

In short, Neon EVM can support Neon transactions as native entities executed on the Solana blockchain. In this case, we can leverage the excellent performance innovations on the Solana blockchain to handle Ethereum transactions, including parallel execution of transactions, which has been one of the biggest bottlenecks hindering Ethereum's scalability.

Moreover, dApps built on the Ethereum blockchain can seamlessly run on the Solana blockchain, with developers needing only minimal modifications to their existing codebases, or even no changes at all! For developers, this is the holy grail of interoperability.

A New Multichain Era and Its Impact on the Ecosystem

Since the birth of Bitcoin, the number of Layer 1 blockchains has exploded, with many offering more powerful performance. Ethereum was the first blockchain to connect a Turing-complete state machine with BFT consensus, but other blockchains (like Kadena) have avoided Turing completeness and proof-of-stake consensus mechanisms (PoS). However, the explosive growth of the blockchain industry has also led to a "fragmentation" problem similar to the early development of the internet, where many blockchains are small, and transaction activities are clustered in isolation.

Neon provides a unique integration capability that combines two of the most core functionalities:

• Supporting the execution of battle-tested smart contracts on EVM-compatible blockchains;
• Accessing transaction parallelism and extremely fast execution speed on the Solana blockchain.

Ultimately, every stakeholder benefits greatly, including:

Users—who can enjoy lower transaction fees, higher throughput, and the composability of multichain applications;

Developers—who can deploy applications on the Solana blockchain, enjoying efficient execution performance while accessing Ethereum's (or Sopdity, Rblockquoteix, Truffle, and other platforms) rich on-chain tools and DApp infrastructure services;

Validators / Miners—who, while performing the same on-chain duties as before, will see higher transaction volumes across both networks generating higher MEV.

Cross-chain interoperability will fundamentally promote transactions, leading to more ecosystem advantages, such as: (1) increased knowledge sharing; (2) longer product lifespans; (3) specialization opportunities; (4) better products and services for more users.

These flywheel effects may draw more traditional Ethereum developers into the Solana ecosystem while influencing the creation of newer and better infrastructure/tools on Ethereum. If you are a newcomer to the Solana blockchain and enjoy building on Ethereum, you might want to check out Neon first.