If you’ve been keeping an eye on the blockchain industry, you’re well aware that scalability is a pressing issue. With the user base in the sector increasing by as much as 700% over a mere two-year period, the demand for scalable solutions is at an all-time high. Ethereum, despite its widespread popularity, has been grappling with these scalability issues — slow transaction speeds and high fees, among others.
This is where Neon EVM comes into the picture. Neon EVM is an innovative protocol that enables the execution of Ethereum smart contracts on Solana’s blockchain. It’s akin to having the best of both worlds — the robustness of Ethereum coupled with the speed and affordability of Solana. What’s even better? Developers can continue to use the Ethereum tools they’re already familiar with, such as Solidity, Vyper, MetaMask, and Truffle.
This article is dedicated to Neon EVM. We’ll delve into what it is, how it operates, and why it could potentially revolutionize the blockchain industry. Whether you’re a developer or simply interested in blockchain, this guide is designed to provide you with a comprehensive understanding of Neon EVM. So, without further ado, let’s dive in.
What is Ethereum Virtual Machine (EVM)
The Ethereum Virtual Machine (EVM) is a vital part of the Ethereum ecosystem. It’s the space where all Ethereum accounts and smart contracts exist and operate. The EVM’s job is to keep things running smoothly, ensuring operations are consistent and irreversible.
However, the EVM isn’t just a virtual machine. It’s equipped with unique features that bolster the security, transparency, and efficiency of blockchain technology. In essence, the EVM is a virtual computer tasked with running all the smart contracts on the Ethereum network.
What sets the EVM apart is its approach to code. Unlike traditional computers that use common programming languages like Java or C++, the EVM operates on its own language, Solidity. This means that if you’re a developer proficient in Solidity, you can build and deploy decentralized applications (dApps) on the Ethereum blockchain.
The EVM also functions as a robust computation engine for Ethereum. It stores and updates the state of the blockchain and enables smart contract functionality. The EVM is integrated within the client software required to run a node on Ethereum. It processes transaction data to update the distributed ledger, ensuring the data across the Ethereum network is accurate and consistent. This plays a crucial role in maintaining the integrity of the Ethereum ecosystem.
The Rise of Neon EVM
The emergence of Neon EVM is a response to the industry’s need for a solution that revolutionizes smart contract execution and ushers in a future of unparalleled efficiency and scalability. Neon EVM is a brainchild of Neon Labs, a company backed by nine investors, including Everstake Capital, which participated in the seed round.
Neon EVM isn’t just another Web3 product; it’s a solution built on Solana’s robust infrastructure by developers who understand the limitations of the traditional EVM concept. It’s a low-friction solution designed to scale Ethereum dApps on Solana, positioning itself as a game-changer in the blockchain space.
So, why the buzz about Neon EVM? Neon EVM addresses the limitations of the existing EVM and takes it a notch higher. It provides a platform that’s not just efficient and scalable but also user-friendly and cost-effective. That’s what Neon EVM brings to the table.
The Neon Ecosystem and its Components
Neon EVM
The Neon EVM is a smart contract on the Solana blockchain. It processes Ethereum-like transactions on Solana according to Ethereum rules. These transactions, known as Neon Transactions, are a subset of Ethereum’s JSON-RPC specification and can be used as inputs for targeted Neon clients.
Neon Proxy
The Neon Proxy packages a Neon transaction into a Solana transaction, enabling Ethereum dApps to be ported to Neon with minimal reconfiguration. Neon Operators run these proxy servers, accepting payment in NEON tokens and making payments within the Solana Ecosystem in $SOL.
In other words, the Neon Proxy acts as a bridge between Ethereum clients and the Neon EVM, providing an Ethereum-like Web3 API to access the Solana blockchain. This allows Ethereum developers and users to interact with the Solana blockchain using the tools and code they are already familiar with.
The NEON Token
The NEON token is a utility token used for paying gas fees and participating in governance. Neon Proxy Operators accept NEON tokens from users to cover the gas fees required for transaction execution. NEON token holders can also participate in the Neon DAO activities.
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Token Interface
The ERC-20 SPL interface in Neon EVM provides a mechanism for users to interact with their Solana ($SOL) tokens, offering functionality similar to Ethereum ($ETH) on the Ethereum network. This is facilitated by a Factory contract that provides an interface for these interactions.
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Token Bridge
NeonPass, the native bridge of Neon EVM, allows users to easily transfer tokens between Solana and the Neon EVM. It also gives users the ability to transfer and withdraw SPL tokens from the Neon EVM.
Neon DAO
The Neon DAO is a series of contracts deployed on Solana that provide a governance layer to control the functionality of Neon EVM. It assists the Neon Foundation in directing future research and development. DAO participants use a web interface to raise and vote on proposals that impact the functioning of the Neon EVM.
How Does Neon EVM Work
Neon EVM serves as a bridge that allows Ethereum-based applications (dApps) to communicate with the Solana blockchain. Here’s a simplified explanation of a transaction (tx):
Step 1: User Initiates a Transaction
A user starts a transaction using an Ethereum dApp, which passes the request to a Neon RPC endpoint. Think of it as sending a letter to a specific address.
Step 2: Transaction Processing by Neon Proxy
The API then sends the transaction to the Neon Proxy. The Neon Proxy is like a translator that understands both Ethereum and Solana languages. It estimates the gas usage (the fee required to perform the transaction) and wraps the Ethereum-like transaction into a Solana transaction.
Step 3: Execution in Solana
The Neon Proxy passes the transaction to the Neon EVM program that’s hosted on Solana. The Neon EVM program checks the user’s signature, loads the necessary data, and executes the transaction. It then updates Solana’s state to reflect the new Neon EVM state.
Step 4: State Change
Both Solana and Neon EVM update their states to reflect the completed transaction.
Voila; that’s it, the transaction request is complete. This process allows Ethereum dApps to run smoothly on the Solana blockchain, taking advantage of Solana’s speed and low transaction costs.
Understanding The Decentralized Nature of Neon EVM
When the roadmap is complete, the Web3 Proxy will be left ungated so anyone can join the network and run a Proxy. Furthermore, Neon EVM will allow any client to replace the Proxy and rather choose to run their own library.n EVM plans to provide a path to complete decentralization. As a result, the Neon network will operate in a truly decentralized manner since the transactions it receives contain no attributes that would determine their priority.
Parallel Execution of Transactions
Neon EVM has an interesting approach to achieving parallel execution of transactions. It aligns with standard transactions on Solana but also includes a novel way of overcoming some of Solana’s optimization parameters. The key challenge lies in the fundamental differences between Ethereum and Solana’s transaction processing. While Ethereum processes each smart contract one by one, Solana processes multiple smart contracts in parallel.
Neon EVM addresses this by executing contracts iteratively and restricting access to shared data in the Solana state. If a Neon transaction requires more resources than Solana allows, the transaction is queued for execution by Neon’s Proxy. This process involves Neon EVM transferring the deposit in $SOL tokens from the Operator’s account to a separate deposit account, which is then distributed as a reward to Solana validators, paid to the Operator, and sent to the Neon governance treasury.
Standardizing Payments
A general constraint in porting EVM to a non-native blockchain is standardizing payments in such a way that is both in alignment with the native process yet flexible enough to handle various service requests and liquidity.
Neon EVM transaction costs are calculated according to Ethereum rules but are based on Solana fees. So overall, the cost of a transaction on Neon is significantly lower than it would be on Ethereum since, ultimately, the user is paying for Solana gas, not Ethereum gas.
As mentioned above, a portion of the transaction fees are sent to the Neon Operator that executes the transaction. Fee denomination is by default set to NEON, however, the Neon user will soon have the option to choose any ERC20 token to pay for Neon transactions.
Secondary Transaction Execution Market
Finally, Neon has created a secondary transaction execution market to help scale and optimize the network. Neon Operators can signal their terms and rates on the market, allowing Neon clients to choose which Operator they want to service their request. Moreover, any Neon EVM user can deploy Neon Web3 Proxy and execute a Neon transaction using Neon EVM. This can be done entirely permissionlessly and without any help from Neon EVM Operators. One aspect here, however, is that the user has to cover the transaction execution on Solana with $SOL tokens.
How Neon EVM Ensures a Secure and Safe Environment
Neon EVM takes the security of its platform seriously. To ensure the robustness and reliability of its on-chain programs, Neon partnered with Neodyme, a reputable firm known for its in-depth security analysis. The audit conducted by Neodyme revealed several vulnerabilities, including a loophole caused by missing account checks at the entry point of creating new Neon accounts.
To address these issues, Neon adopted a new mechanism that checks whether the code account is zero-initialized. This fix was subsequently verified by Neodyme, bolstering the security of the Neon EVM platform. By taking proactive steps to identify and rectify potential vulnerabilities, Neon demonstrates its commitment to providing a secure and reliable platform for its users. At Everstake, we have conducted a similar audit with Blaize.Security.
The Takeaway
Wrapping things up, Neon EVM is shaking up the blockchain scene. It’s a platform that runs Ethereum-like transactions on Solana. What does this mean for you? Well, if you’re a regular user, you can look forward to super-fast transactions without breaking the bank on gas fees. This is a big deal, especially for folks who are new to the blockchain world.
And if you’re a developer, Neon EVM is a dream come true. It lets you use all the tools and resources from the Ethereum ecosystem on Solana. This means you can build and roll out decentralized apps quicker than ever before. And the faster we can get these apps out there, the quicker they’ll become a regular part of our everyday lives. So, all in all, Neon EVM is not just a game-changer, it’s paving the way for the future of blockchain.
In addition to the exciting advancements brought by Neon EVM, you can also take advantage of Everstake to enhance your blockchain experience. Everstake is a reputable validator across various blockchains, including Solana and Ethereum. By delegating your tokens to Everstake, you can boost your yields and maintain control over your assets.
With Everstake, you’ll have access to a robust platform that optimizes your returns and ensures seamless staking. Whether you’re a regular user benefitting from the super-fast transactions and low gas fees through Neon EVM or a developer leveraging the tools and resources of the Ethereum ecosystem on Solana, Everstake can further enhance your experience. Get in touch!
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