On July 10th, the NEO development team published a blog post detailing the changes and upgrades coming to the network in the next few months. Today, we will be talking about NEO 3.0, and the benefits and details that come with it.
What’s Next for NEO?
Here’s a sneak peek unveiled by NEO Core Dev Erik Zhang. https://t.co/Ln5NHZzKcs
— NEO Smart Economy (@NEO_Blockchain) July 10, 2018
The 3.0 update is one of the biggest upgrades to the NEO Smart Economy. It is going to be a completely new platform, focusing mainly on large-scale enterprise customers. The main intention of this update is to introduce better scalability as well as an optimized economy. Erik Zhang, the co-founder of NEO, stated;
NEO3.0 will be an entirely new version of the NEO platform, built for large scale enterprise use cases. It will provide higher TPS and stability, expanded APIs for smart contracts, optimized economic and pricing models, and much more. Most importantly, we will entirely redesign NEO’s core modules.
One of the most important upgrades in NEO 3.0 is the increase in TPS (Transactions per second). Currently, NEO is able to process 1,000 transactions per second. Compared to Ethereum (25 transactions per second) and Bitcoin (7 transactions per second), Neo has already blown them out of the water. However, if NEO wants to enter the large-scale enterprise market, this number isn’t enough. Traditional finance companies such as VISA, are able to process more than 20,000 transactions per second during peak times.
The NEO development team will work toward increasing the TPS in the following ways:
One of the most debated changes in NEO 3.0, is the big changes to the NEO economic model. As it stands, the NEO currency is indivisible. This means if you’re looking to invest in NEO, you have to fork up the money to buy a whole coin. GAS, the token used for transactions on the NEO network, is also indivisible. Since system fees are rewarded as GAS to all NEO holders, there is a tendency for these coins to get stuck in “black holes” as a result of lost NEO private keys.
In order to combat these problems, the NEO development team proposed these upgrades;
The senior research and development manager at NEO, Malcolm Lerider, suggested that increasing the supply of GAS and rewarding consensus nodes will shift their interests. Consensus nodes face the risk of becoming misaligned with NEO users’ interests as a result. Instead, they will become economically incentivized. This could lead to consensus nodes manipulating the price of GAS for maximum profits.
As it stands, consensus nodes are the bookkeepers of the NEO network. With no economic incentive, these nodes generate blocks for the chain and determine the price of service fees. Since these consensus nodes are voted in by NEO users, people are more likely to vote for nodes that offer the lowest service fees, whilst voting out any nodes that start to increase prices.
Despite these upgrade proposals being disputed by the majority of Neo’s userbase, not everyone thinks it’s a bad thing. A user by the name of ‘saltyskip‘ actually agrees with these changes. Saltyskip stated that the GAS tokens that are stuck in “black holes” causes the supply of GAS to depreciate, consequently making the price of GAS go up. The deflationary aspect of GAS tokens gives holders a reason to store their tokens as opposed to spending it. However, this is somewhat detrimental to NEO holders as they benefit from an increase in GAS usage seeing as GAS is their intended utility token.
Saltyskip believes that GAS tokens should be circulating amongst the NEO ecosystem in a high velocity. This is because he believes the NEO token is meant to be held, and the GAS token is meant to be spent. With an increase in the supply of GAS, the token should increase in velocity within the network, benefiting NEO holders in tandem.
Coupled with the increases in transactions per second, and the reworked economic model, NEO 3.0 also works toward making cross-platform smart contracts. The goal of this is to allow smart contracts function outside of the NEO blockchain, with other compatible blockchains. This will greatly increase the ease of use regarding different blockchain’s interoperability.
To see the details of the NEO 3.0 update, refer to their GitHub page.
What do you think the NEO 3.0 update will offer to the cryptocurrency industry? Could this be a step forward for the industry as a whole? Or will Neo users be the main demographic to benefit from this? With better scalability in blockchain technology, implementing cryptocurrency in our everyday lives will be far easier than it is in its current state. Tell us your thoughts below.
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