• Cryptoasset Report
  • December 21, 2018

NEO (formerly called Antshares) is an open-source smart contract platform intended to facilitate a ‘smart economy’ in which digital assets are managed through digital identities and smart contracts.


NEO is an open-source smart contract platform intended to facilitate a ‘smart economy’ in which digital assets are managed through digital identities and smart contracts. Based in Shanghai through the financial venture studio OnChain, it is often described as a Chinese version of Ethereum, positioning itself as a versatile platform supportive of multiple mainstream programming languages. NEO’s blockchain uses Delegated Byzantine Fault Tolerance to achieve consensus and features a two token ecosystem. The project was founded by Da Hongfei and Erik Zhang in 2014 under the name ‘Antshares’, rebranding as NEO in 2017. The project was funded through two crowdsales, the first held in 2015 and the second in 2016, which collectively raised over $4 million for development.

Protocol Details

NEO’s approach to facilitating a ‘smart economy’ utilizes several key technologies: a delegated Byzantine Fault Tolerance protocol for network security and transaction throughput, a lightweight virtual machine enabling smart contracts, two cross-chain interoperability protocols, a distributed file storage protocol (NeoFS), and anti-quantum computer security mechanisms (NeoQS).

Delegated Byzantine Fault Tolerance (dBFT). In this method of consensus, a group of bookkeeper nodes, selected by NEO token holders through real-time voting, participates in network consensus through NEO’s Byzantine Fault Tolerance algorithm. NEO believes that, fully optimized, this method can support 10,000 transactions per second, making the chain suitable for commercial applications. NEO combines digital identity technology with dBFT, so that bookkeepers can be identified and their behavior be made subject to judicial oversight, a move intended to facilitate the registration of compliant financial assets in the network.

NeoContract Smart Contracts. Smart contracts on the NEO network are executed using NeoVM, a lightweight, general-purpose virtual machine, whose architecture is similar to JVM or .NET Runtime. NEO claims that NeoVM can be ported to any blockchain or non-blockchain system. A key difference between NEO’s and Ethereum’s smart contracts is that NEO’s contracts can be written in many high-level programming languages, while Ethereum’s must be written in Solidity. NEO supports mainstream languages such as C#, VB.Net, F#, JavaScript, and Kotlin, and uses Microsoft Intermediate Language (MSIL) as its compiler, which theoretically allows smart contracts to be written in any programing language translatable into MSIL.

Cross-Chain Interoperability. NEO implements cross-chain interoperability through its NeoX protocol, which supports cross-chain asset exchanges. NEO addresses the challenge of syncing transaction processes across independent chains by utilizing NeoContract smart contract functionality, which is claimed to be compatible with any blockchain that can provide simple smart contract functionality. Additionally, the network supports ‘cross-chain distributed transactions’—essentially smart contracts where different parts are performed over multiple chains.

Distributed Storage Protocol. NeoFS is a distributed storage protocol capable of dividing large files into fixed-size data blocks distributed and stored across many nodes—a protocol comparable to Filecoin or Storj. The storage protocol is intended to allow smart contracts to store large files on the block chain, and to manage access to such files without a central server. NEO utilizes token incentives and flexible, user-set reliability requirements to maintain a balance between redundancy and reliability.

Anti-Quantum Mechanisms. NEO believes that quantum computers, which can quickly solve a large number of the decomposition problems or elliptic curve discrete logarithms that RSA and ECC cryptographic mechanisms rely on, represent a challenge to network security. Thus, NEO has implemented a lattice-based cryptographic mechanism, called NeoQS, to enable its network to use Shortest Vector (SVP) and Closest Vector (CVP) Problems, which are more resistant to quantum computing.

Asset Details

NEO has two tokens: NEO and NeoGas (abbreviated GAS). The NEO token primarily offers holders governance rights, including the right to elect the bookkeeping nodes responsible for network consensus and to adopt network parameter changes. NEO holders can vote via graphical user interfaces. To become a node, one must submit an application to the NEO Foundation; those whose applications are accepted then begin a six month trial period during which they act as nodes on the NEO testnet before transitioning to the mainnet.

The NEO token also allows holders to passively earn GAS. GAS is used to pay for smart contract execution: the NEO network charges for the operation and storage of tokens and smart contracts. However, subject to changes in governance, the NEO network votes to set a threshold exempting a certain amount of transactions and smart contract operations from GAS fees—a mechanic intended to improve user experience. When network usage surpasses the defined threshold, priority is given those willing to pay fees in GAS or those with qualified NeoID’s.

NEO and GAS tokens have an ultimate fixed supply of 100 million each. 50 million NEO tokens were distributed through a token sale, and the remaining 50 million have been allocated to long-term development efforts. The latter allotment is managed by the NEO Council and, after a lockout period of one year, was unlocked in October of 2017; a maximum of 15 million NEO tokens may be used by the council per year. GAS is generated and distributed to NEO token holders with the creation of each new block, of which roughly 2 million are created each year. GAS rewards, initially 8 GAS per block, are reduced by 1 GAS per year for 22 years before eventually dropping to zero, at which point block height 44 million will have been reached. The GAS from these rewards is distributed to NEO token holders in proportion to their holdings (using the NEO holding ratio).