Dialogue with the Neon Team: Promoting Synergies between Ethereum and Solana

Original Title: 《A Deep Dive into Neon: Scaling Ethereum dApps on Solana》

Author: Deep Dive

Compiled by: Biscuit, ChainCatcher

Earlier this month, Neon announced that it will conduct a community round sale on CoinList on June 8, 2023.

Neon EVM is the Ethereum Virtual Machine on Solana, allowing developers to scale Ethereum dApps by using Solana as a settlement layer, thus opening Solana's user base to Ethereum dApps.

This week, Deep Dive sat down with the Neon EVM team to understand the real problems they are solving, their target audience, use cases, token utility, and their views on the future prospects of the Ethereum and Solana ecosystems.

Let’s dive in.

1. What is Neon EVM, and what problems does it solve?

The Neon EVM protocol provides two solutions to significant challenges faced by Ethereum dApps: transaction challenges and ecosystem access challenges.

Problem 1: Transaction Challenges

According to the current protocol, Ethereum's throughput is limited, recording a maximum of 58 TPS at the time of writing, while the highest record for sidechains like Polygon is 470 TPS. Additionally, as the network becomes busier, gas prices rise as transaction initiators bid against each other. This makes transactions very slow and expensive, rendering Ethereum unviable for certain types of dApps.

In contrast, Solana is designed to support large-scale distributed applications, with a maximum recorded real-time throughput of 5,184 TPS. Solana can offer:

• Transaction parallelization technology, optimizing resources to ensure horizontal scalability on CPUs and SSDs;
• An optimized Mempool system that accelerates throughput. In Solana's innovation, its voting consensus system based on prior history has been reinforced.

"Sure, but if I want something faster and cheaper, I can just use Rollups or sidechains, right?"

The Ethereum native solutions for low throughput and high gas fees are L2 scaling. L2 scaling technologies detach transactions from the L1 Ethereum mainnet and submit them as bundles. So far, the preferred series of L2 scaling solutions, Rollups, have effectively reduced gas fees. However, while reports suggest fee optimizations can reach 100 times, the actual reduction is around 10 times.

Yes, you can use Rollups or sidechains; however, Solana outperforms such L2 solutions. For example, at the time of writing, the average transaction fee for sending ETH on the Ethereum network is $2. During the same period, the L2 ecosystem ranges from $0.5 to $0.1, which is a 4-20 times gas fee optimization. In contrast, the average transaction fee for Neon EVM is about 0.00001 SOL ($0.0002) per transaction, saving 10,000 times in fees. Preliminary tests of Neon EVM indicate that the protocol achieves these optimizations in practice, with results consistent with load testing.

Problem 2: Ecosystem Access Challenges

Because the Ethereum and Solana blockchains are fundamentally different in design and structure, there has never been a meaningful solution for Ethereum dApp developers to leverage the transaction innovations offered by Solana.

Thus, just as mobile app developers once had to develop applications for both Android and iOS to access both markets, Ethereum dApp developers must custom develop new versions of their dApps to access other L1 ecosystems. Since many Ethereum dApp builders are only familiar with the Solidity programming language and tools related to Ethereum's native tools, many find it challenging to adapt their dApps to Solana's different technical and transaction requirements.

The Neon EVM protocol addresses this issue. Neon EVM provides dApp developers with a powerful cross-L1 blockchain development solution, allowing them to reconfigure their dApps from Ethereum to Solana with minimal codebase changes. This will open Solana's user base to Ethereum dApps.

2. What are the use cases for Neon EVM?

Once the builder community realizes the importance of low transaction costs and fast settlement speeds, we expect to see the deployment of dApps that heavily rely on these attributes.

We also predict that those dApps that have succeeded in the Ethereum ecosystem will want to test the Solana community's response to their value propositions. Popular dApps (such as Uniswap, AAVE, Curve, Saddle Finance) have already been successfully deployed on the devnet with minimal reconfiguration of their codebases.

This is just the beginning; we have established partnerships with innovators across the industry and expect to launch several active DEXs, such as Moraswap, Sobal (a Balancer fork for custom curves), Onomy, and Powerpool. Similarly, several DeFi services will be ready at launch, such as LeverFi's leveraged trading dApp, Midas Capital and Yin Finance's lending solutions, Poolz and DxSale's issuance platforms, Elk Finance's cross-chain swaps, and don't forget the NFT collections that will be launched on Neon EVM by GhostNFT.

3. What is the utility of NEON?

The Neon EVM economy is fee-based, so the NEON native token is an SPL utility token with two functions:

• Fee Payment: Neon EVM operators accept users paying fees required to execute transactions using NEON tokens.
• Governance: NEON holders 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. An overview of the Neon EVM technical architecture and features can be found in the whitepaper available at NeonEVM.org/whitepaper.pdf.

To execute Neon transactions, payments must be made to operators in NEON. The challenge is that the NEON token is an SPL token used to pay fees in EVM-compatible systems. To achieve this, SPL tokens are transferred to Neon EVM via NeonPass. NeonPass serves as a UI tool and can be programmatically accessed from the NeonPass npm package.

5. What is Neon’s view on the future prospects of the Ethereum and Solana ecosystems?

A common feature of the Web3 community is the perception of being divided into two camps: Ethereum and Solana. The current mindset is to discuss which one will survive. We do not agree with this notion. In fact, Neon EVM believes that both L1s play important roles in meeting different user needs. For example, in Solana, storage and smart contract logic are separated, and Solana does not retain data history beyond 2 days. In the EVM, accounts store all data. This difference can affect the use cases of each chain; we need both ecosystems. That’s why we emphasize that both ecosystems will continue to thrive.

We do recognize the genuine divide that has emerged within the Ethereum community (i.e., Optimistic vs. ZK Rollup supporters). Neon EVM balances this divide by providing a third path.

Ethereum can benefit from engaging with the Solana community, and vice versa. The Solana community is very active. In recent days, a meme token on Solana completed more transactions than Ethereum. Solana continues to grow in the NFT and gaming application space as well.

We believe that the ecosystems and communities of Ethereum and Solana complement each other: Solana's high throughput, low gas fees, and vibrant, evolving ecosystem combined with Ethereum's large, experienced community—this is the synergy that Neon EVM offers.

6. What is the governance model of Neon EVM? How will decisions be made in the future to drive its development?

Neon DAO is a key partner of the Neon Foundation, responsible for driving the development, growth, and adoption of Neon EVM and its ecosystem. Neon DAO serves as the operational platform for the distributed governance layer of Neon EVM, utilizing an SPL governance program. It consists of a series of contracts deployed on Solana and charges service fees. DAO community participants, i.e., NEON holders, propose and vote using a web interface, making decisions on proposals related to Neon EVM using an SPL governance program with additional components.

Neon DAO will vote, make decisions, and form recommendations regarding the design and functionality of Neon EVM. This includes issues related to setting Neon EVM parameters and negotiating redesigns and updates of the Neon EVM program.

7. What is the best way to get involved in the Neon community?

You can find us on Twitter and join the very active Neon Discord community to connect with some long-term loyal community builders. If you are interested in the Neon Protocol, please visit NeonEVM.org for more information.