In 2015, Ethereum launched one of its core components, the Ethereum Virtual Machine (EVM), which is used to execute smart contracts and process transactions. Over the past 8 years, the EVM has had a profound impact on the development of the blockchain industry, making important contributions to the diversity and maturity of the blockchain ecosystem.

According to DefiLlama data, regardless of whether active address count, total locked value (TVL), or 24-hour network fees are used as sorting criteria, EVM-compatible networks account for over 60% of the top ten networks. With the changing market demand, EVM itself has different directions of evolution.

Meanwhile, Neo announced plans to release an EVM-compatible sidechain. Looking at the current blockchain market, it seems that there is no shortage of EVM-compatible chains, which makes one curious about the layout and future development direction of the main chain.

Bankless co-founder David Hoffman once said that the era of EVM equivalence has arrived. The design concept of EVM equivalence is based on building an Optimistic Rollup with the "minimum dif" of Ethereum, which is completely consistent with the EVM specification. Perhaps for this reason, Neo has chosen to launch a compatible EVM sidechain to capture the value of the EVM ecosystem.

Neo Mainnet 7th Anniversary, a New Chapter

On October 27th, 2023, Da Hongfei, the founder of Neo, announced during his keynote speech at the Neo Asia-Pacific Hackathon Hong Kong Finals that Neo is developing a sidechain compatible with EVM to resist Miner Extractable Value (MEV) attacks. The testnet is expected to be released by the end of 2023.

Neo can be traced back to 2014, when Da Hongfei and Erik Zhang co-founded AntShares. AntShares was dedicated to solving the challenges of the future economy through blockchain technology. By 2017, when AntShares was renamed Neo, it had already attracted a large number of developers and established a vibrant developer community.

Now, Neo has been established for nine years and this is also the seventh year of brand reshaping. During this time, Neo has experienced multiple bull and bear tests and still maintains its competitiveness. The reason why Neo can stand out in the fiercely competitive cryptocurrency industry is not only because of its early involvement in the field of cryptocurrency, but also because of its continuous exploration of technology.

Before Facebook's Libra popularized the BFT (Byzantine Fault Tolerance) consensus mechanism, Neo had already proposed dBFT (delegated BFT) based on PBFT (Practical BFT) and became the first blockchain to apply dBFT consensus. PBFT can solve the problem of distributed node consensus, but the larger the number of nodes participating in consensus, the lower the performance will be. dBFT adopts a compromise solution in terms of performance and security by selecting representative nodes through voting, which are responsible for verifying transactions and generating blocks, and has the advantages of low latency and high performance.

Three months before the release of the Libra white paper, Neo launched dBFT 2.0. dBFT 2.0 added a three-phase consensus mechanism and a recovery message mechanism to the consensus protocol. The three-phase consensus mechanism defines the definition and rules of each phase, ensuring the security and consistency of the consensus. The recovery message mechanism ensures that the consensus process can still be effectively carried out in the event of problems or failures in the network. dBFT 2.0 further enhances algorithm robustness and security.

In the era of smart contracts, before the GameFi concept exploded, Neo made an attempt in the history of public chains by separating the governance of the public chain from network fees. Neo gained industry recognition with its dual token mechanism. Well-known projects such as Axie Infinity, Helium, and StepN have adopted the dual token mechanism after Neo.

Moreover, Neo is the first non-EVM smart contract system that supports mainstream programming languages, including C#, Go, Python, Java, TypeScript, etc. This move by Neo has lowered the entry barrier for those dedicated to Web3 development, laying a solid foundation for the formation of a technical community. This has also helped Neo gain a reputation for being "developer-friendly" in the technical community.

Looking back at the development process of Neo in the past few years, it is obvious that Neo has played a key role in exploring cutting-edge technologies in the industry. Neo N3 represents Neo's latest achievements, introducing new governance mechanisms and natively integrating components including decentralized storage NeoFS, built-in oracle Oracle, and decentralized identity system NeoID. Neo will also provide more answers for technological exploration in the upcoming sidechains.

Although late, it has arrived, but it is different

Neo's sidechain is coming late, but it is quite different upon closer inspection. Supporting EVM is just one of its features. From the currently publicly released documents, the addition of Neo's sidechain will greatly improve the user experience of Neo and provide more usage scenarios for GAS.

After announcing the launch of sidechains, Dahongfei was asked whether he regretted Neo's N3 upgrade and missing out on DeFi Summer. He stated that although missing the opportunity was regrettable, the N3 upgrade was a necessary step for Neo's development.

Now, it is necessary and correct to release the Neo sidechain.

With the increase in on-chain transaction activity brought about by DeFi Summer, the negative impact of MEV is expanding, and even the Ethereum Foundation has suffered losses due to MEV. Flashbots, an operator of MEV, shows that in the 14 months since Ethereum completed its merger, REV (which Flashbots believes is a better measure of the actual situation of MEV) has reached 342,000 ETH, worth more than $600 million.

In fact, with the popularity of DeFi and Web3, on-chain transactions will grow into a market worth tens or even hundreds of billions of dollars. This also means that the losses caused by MEV each year will reach billions or even tens of billions of dollars.

In the field of encryption, hotspots and trends change rapidly, and the bull and bear markets shift quickly. Chasing short-term benefits is an easy thing. What's difficult is how to do something that requires long-term and useful for the industry. From its inception, Neo has been committed to solving industry problems. Today, Neo's sidechain solution has proposed a fundamental solution to address the MEV problem.

There are also many teams in the industry trying to address the MEV problem through different means, such as Flashbots' MEV-Geth, which attempts to "preemptively" solve this problem, and some protocols use privacy transactions to avoid MEV during transactions. However, none of these methods can fundamentally solve the problems caused by MEV.

Neo's sidechain solution takes a unique approach by proposing a consensus layer solution. This solution uses "sealed transactions" to encrypt transaction content and metadata, and "proxy contracts" to hide user identities, giving them the ability to resist malicious MEV attacks. Compared to Flashbots, which needs to detect MEV in the mempool and race to execute transactions, Neo's solution is more helpful in fundamentally solving the problem, ensuring fairness and allowing all users to benefit equally.

Meanwhile, the Neo sidechain has also restored the free transactions that Neo Legacy previously had, which means users can initiate transactions without owning GAS. The Neo sidechain will strive to reduce transaction friction and lower the entry barrier, providing users with a smooth experience. In a conversation between Da Hongfei and BlockBeats, they mentioned that the sidechain's gas-free transactions will help new users join Web3, form asset precipitation, and create a positive flywheel, attracting more industries and enterprises to join.

In the rapidly changing cryptocurrency industry, Neo has always been focused on solving industry problems. The launch of N3 upgrade and sidechains once again demonstrates its key role in technological innovation. As the future unfolds, Neo will continue to drive the forefront of blockchain technology and provide users with even better experiences.

Sidechains are just the beginning of Neo's embrace of Web3

Old players may still remember the era when many public chains were called Ethereum Killers. After several rounds of bull and bear markets, it seems that only Neo is still building in the industry. Neo's ability to continue to attract a lot of attention in the industry during multiple bull and bear markets and industry changes is inseparable from following the development trend of the industry, insisting on putting technology first, being developer-friendly, and iterating from the needs of users and developers. Those projects that went against the industry's rules and cycles, although once popular, are no longer talked about today.

If NeoVM's compatibility with multiple programming languages is aimed at attracting more Web2 developers, then the launch of EVM-compatible sidechains signifies its active embrace of Web3.

Compatibility with EVM sidechains will make Neo's ecosystem more attractive, allowing developers to easily migrate their smart contracts and DApps. This not only helps to lower the barrier to entry for development, but also makes the Neo ecosystem more diverse and rich. Of course, Neo is not satisfied with just EVM compatibility. It is reported that Neo is also moving towards a larger goal of achieving Multi-VM compatibility to improve the openness and interoperability of the blockchain and build seamless connections between different networks.

Overall, Neo is leading the way in the blockchain industry in its unique way, actively embracing Web3. Sidechains are just the beginning of Neo's embrace of Web3, and there will be more innovation and development in the future. Neo will continue to lead the industry into the era of full-chain and promote the realization of the smart economy.

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