What is Neon EVM and how does it work? Everything you need to know

What is Neon EVM?

Neon EVM combines Ethereum's dApp and smart contract ecosystem with Solana's fast and cost-effective network. It maintains Ethereum's infrastructure, allowing developers to use familiar tools like Solidity and MetaMask with minimal adjustments. Its standout feature is parallelized transaction execution, enhancing throughput and reducing costs, powered by Solana's architecture.

As the primary EVM on Solana, Neon EVM extends Ethereum's reach and leverages Solana's efficiency. Developers benefit from Ethereum's tools and Solana's performance. The NEON token is central to Neon EVM, serving transactional utility and governance within the Neon DAO, ensuring platform evolution aligns with community needs.

How does Neon EVM work?

Neon EVM serves as a conduit between Ethereum and Solana, preserving Ethereum's familiar development environment while harnessing Solana's speed and cost-effectiveness. Here's a simplified breakdown of its operation:

1. Transaction Initiation: Developers trigger Ethereum-like transactions using well-known Ethereum tools and languages, intended for dApps or smart contracts originally designed for Ethereum.
2. Neon Proxy: These initiated transactions are directed to a Neon Proxy, acting as an intermediary. The Neon Proxy packages these Ethereum transactions into Solana's transaction format, estimating gas usage and preparing them for execution on the Solana blockchain.
3. Execution on Solana: The wrapped transactions are processed by the Neon EVM program on the Solana blockchain. Here, transactions adhere to Ethereum rules but benefit from Solana's speed and lower costs via Sealevel parallelization. Tasks include checking user signatures, loading EVM state from Solana, and updating the state post-transaction.
4. Neon Transactions and Results: After execution, results are relayed back as Neon transactions, offering users receipts and details akin to the Ethereum network.

Throughout this process, the NEON token plays a pivotal role, facilitating transactions and governance. Users pay gas fees in NEON tokens, and the token is utilized for governance decisions within the Neon DAO.

What issue does Neon address?

Neon EVM tackles the issue of Ethereum's high transaction costs and slower speeds by facilitating Ethereum dApps to operate on Solana's blockchain. This approach permits developers to utilize Solana's reduced fees and enhanced transaction throughput without requiring a complete reconstruction of their applications. Essentially, Neon EVM offers a scalable, cost-effective, and seamlessly integrated solution for Ethereum developers aiming for better performance and broader user reach, while retaining the familiar Ethereum development environment.

NEON tokenomics

NEON tokenomics are structured to serve a dual role as both a utility and governance token within the Neon EVM ecosystem:

1. Utility Function: NEON functions akin to ETH in Ethereum, serving as payment for transaction fees on the Neon platform. Users transact in NEON, streamlining payments to operators and enhancing user experience.
2. Governance Function: NEON grants holders participation in the Neon DAO, allowing them to propose and vote on protocol changes, empowering the community in shaping Neon EVM's trajectory.

NEON operates as an SPL token on Solana, with a fixed total supply of 1 billion, divisible into smaller units known as Alans. This allocation ensures equitable distribution of transaction fees between Solana Validators and the Neon DAO Treasury.

Token allocation:

• Public sale: 5% allotted to ensure liquidity and encourage active community involvement.
• Early purchasers and contributors: A significant portion reserved to acknowledge the support of initial backers and contributors.
• Advisors & service providers: Allocated to entities offering expert guidance and services.
• Founders: 15% reserved for project initiators, aligning their interests with the ecosystem's success.
• Ecosystem development and growth: Over 55% dedicated to incentivizing ecosystem expansion, innovation, and collaboration, including a substantial allocation to the Foundation Treasury for strategic initiatives.

Through varied lockup and vesting schedules for different stakeholders, the allocation strategy promotes sustained commitment and ecosystem growth. This community-centered, innovative, and efficiently governed approach ensures Neon EVM's enduring focus on community needs and long-term viability.

Who were the founders of Neon?

Led by Director Marina Guryeva, Neon Labs played a pivotal role in developing Neon EVM, fostering synergy between the Ethereum and Solana ecosystems. Their vision and execution facilitated a successful $40 million fundraising effort aimed at accelerating Neon EVM's development and adoption. The funds will be used to expand the Neon Labs team, enhance research efforts, bolster core development activities, and augment Neon EVM's capabilities to deliver Ethereum's computational prowess on Solana's efficient network.

In summary, Neon EVM represents a major breakthrough, connecting Ethereum and Solana to provide developers with a powerful solution to tackle high transaction fees and sluggish speeds. Its seamless integration enables developers to retain their familiar tools while enjoying improved scalability and cost-effectiveness. Supported by a robust community and strategic funding, Neon EVM is set to propel the decentralized application sector forward, embodying a blend of Ethereum's familiar features with Solana's performance, all overseen and enhanced by NEON token holders.