What is Neo?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 5 min
In short
Neo is a smart contract blockchain that began as AntShares in 2014 and was renamed in 2017. It finalises transactions with a consensus method called dBFT, so a confirmed block cannot be reversed. It uses two tokens: NEO for holding and GAS for fees.
Key points
- dBFT (delegated Byzantine Fault Tolerance) gives finality: a confirmed block cannot be reverted
- NEO is held in indivisible units, and holding it generates GAS
- Fees and contract execution costs are paid in GAS
- Digital identity and regulatory compatibility have been stated design goals from early on
Definition
A smart contract blockchain characterised by instant finality through dBFT and a two-token model of NEO for holding and GAS for fees.
Neo opted for deterministic rather than probabilistic finality. On proof-of-work chains, certainty grows as blocks stack up; Neo finalises a block once more than two-thirds of the elected consensus nodes agree, after which it cannot be reverted.
Those consensus nodes are elected by NEO holder votes. The limited set makes confirmation fast, but the fact that many nodes have been tied to a small number of organisations has been a recurring decentralisation criticism.
The two-token model is also distinctive. NEO is held in indivisible whole units and represents participation and voting rights. Simply holding it generates GAS over time, and GAS pays for transfers and contract execution. Separating the fee token from the held asset means usage costs can be covered without moving NEO.
The N3 upgrade in 2021 folded distributed storage, a name service and oracle functionality into the protocol itself. Support for mainstream languages — C#, Python, Java and TypeScript among them — has been a stated goal since the beginning.
Watch out for
- · The consensus node set is small, and who operates those nodes is a recurring decentralisation concern
- · NEO is indivisible, so amounts smaller than one unit cannot be sent
- · Material from around 2017 describes the old Neo Legacy design, which differs from N3 in places
Frequently asked questions
Does holding NEO automatically produce GAS?
Yes, GAS is generated in proportion to the NEO held. If your NEO sits on an exchange, however, each exchange has its own policy on passing that on, so it may not work the same as self-custody.