NEON: Solana Begins to Embrace EVM

Source: Rhythm Research Institute

On November 9, Neon Labs completed a $40 million financing round led by Jump Capital, with participation from Three Arrows Capital, Solana Capital, IDEO CoLab Ventures, and others. The project stated that the funds will be used for research, development, marketing, and business development, as well as for expanding the Neon Labs team.

Subsequently, on November 11, the German blockchain incubation company Advanced Blockchain AG announced that it had invested in Neon Labs through its subsidiary. What is the magic that attracts venture capitalists to invest in this company one after another?

Neon Labs is a company that builds secure blockchain solutions and is the developer of Neon, a software environment on Solana that allows developers to build applications using the Ethereum Virtual Machine (EVM). In other words, Neon EVM is the Ethereum Virtual Machine on Solana, enabling dApp developers to use Ethereum tools to scale and gain liquidity on the Solana blockchain.

This is Solana's first embrace of the EVM ecosystem.

As the largest blockchain application platform currently, Ethereum has many public chains actively compatible with EVM, all of which benefit from EVM: first, they can quickly "acquire" the same ecosystem as Ethereum, thus expanding their own ecosystem; second, they can attract more users and developers; third, the more projects that develop on their chain, the more assets will settle in their ecosystem.

Specifically for this project, it hopes to achieve three points: first, Solana users can write dApps in Solidity using a unique Ethereum toolkit; second, Ethereum dApps will be deployed on Solana, attracting a large number of Ethereum users to the Solana blockchain; third, Ethereum users can significantly increase transaction speed and reduce execution costs by using Solana.

NEAR achieves EVM compatibility through Aurora, and other underlying public chains like BSC, HECO, Polygon, Fantom, Avalanche, etc., have also quickly entered EVM, becoming EVM-compatible chains. Similarly, NEON is an important channel for Solana to become an EVM-compatible chain. So how does it operate?

Project Overview

Operating Model

NEON creates a code execution environment similar to EVM, in other words, it creates a compatibility layer for Ethereum on the Solana blockchain, allowing anyone to run Ethereum contracts on Solana. Its working principle involves bringing incentivized Neon EVM operators into the Solana blockchain, who facilitate transactions on behalf of Ethereum dApp users.

These operators receive Ethereum-like transactions from dApps using Neon EVM. They then package them into Solana transactions and finally send these transactions to the Solana blockchain for execution.

Here’s a brief explanation of the proprietary terms in the above diagram:

N-trx: Neon transactions formed according to the Ethereum network, executed within Neon EVM.

S-trx: Transactions formed according to Solana network rules.

Neon Web3 Proxy: A tool that packages Neon transactions into Solana transactions, with the main function of providing APIs for external clients.

Neon EVM: A simulator implemented in Rust, running internally on Solana, processing parallel transactions with low transaction fees.

BPF: A technology used in computer operating systems to analyze network traffic. It provides a raw interface for the data link layer, allowing the sending and receiving of raw link layer packets, essentially functioning as a packet filter.

From the diagram, we can clearly understand this process: first, the user has a demand, then a transaction is formed according to the Ethereum network, packaged into a Solana transaction via Neon Web3 Proxy. Solana has a BPF virtual machine installed, which allows developers to embed other virtual machines within Solana. Through BPF, a contract named Neon EVM is created in Solana, loading the EVM into it.

Project Features

According to the official statement, the advantages of the Neon project lie in six aspects: scalability, multiple programming languages, minimal contract changes, familiar tools, a growing Solana market, and an attractive Solana ecosystem.

Specifically, Neon EVM fully leverages Solana's native capabilities, allowing dApps to operate with Solana's low gas fees, high transaction speeds, and high throughput. Currently, the specific low gas fee is 0.000005 SOL per transaction, and the high throughput is 4500 TPS.

Through Neon EVM, developers can write dApps using familiar programming languages (such as Solidity or Vyper) and deploy Ethereum dApps like Uniswap, SushiSwap, 0x, and MakerDAO without any reconfiguration of smart contracts (no changes to the codebase).

Users can utilize familiar Ethereum-based tools (such as MetaMask, Truffle Suite, etc.), pre-built asset integrations (like ERC-20 tokens), and access infrastructure services (such as Chainlink and TheGraph).

Any client can run a proxy to deploy contracts within Solana. The interface for client interaction will be the same as that for dApps running on Ethereum. Through this project, users can also directly access the growing Solana market, which is a developing ecosystem with potential, making it attractive to users.

Unlike Ethereum, Neon EVM can be updated at any time, meaning new features can be added whenever needed, simply by uploading them as new smart contracts for code updates.

Image source: YouTube---Uniswap x Neon Demo 2, from the video, it can be seen that there is no difference in usage compared to other EVM-compatible chains.

From the user experience perspective, switching to Neon on dApps is no different from switching to other public chains; the entire process is still relatively quick and convenient.

Economic Model

Using Neon EVM incurs fees, and the project's token is NEON, a utility token that will have voting rights and be used for governance and staking.

At launch, governance will be handled by a multi-signature contract, which has a clear process for suggesting and voting on product improvements. However, the project has not yet issued tokens.

Team Background

Marina Guryeva (CEO)

Holds an MBA from INSEAD and a degree in radio electronics, with extensive experience in team operations and blockchain project development.

Andrey Falaleyev (CTO)

Holds a master's degree in computer science and control systems, with rich experience in designing and developing blockchain systems.

Semen Medvedev (Software Engineer)

Holds a master's degree in computer science and information technology, with a high level of expertise in leading and developing blockchain and dApps.

Project Roadmap

Neon is now live on the Solana testnet and devnet, with plans to launch Neon EVM on the Solana mainnet in the fourth quarter of this year.

Neon Labs states that Neon EVM features scalability, access to the Solana ecosystem and market, built-in integration of ERC-20, ERC-677, ERC-721, and the ability for users to deploy DApps without reconfiguring smart contracts.

Summary

The implementation of Neon allows Solana to run Ethereum smart contracts through bridging networks for the first time, significantly enhancing Solana's appeal. The project has over 18,200 followers on Twitter and shows 10,738 members on Discord, clearly attracting considerable attention.

NeonSwap is a branch of Uniswap V2, currently running on Solana devnet through Neon EVM. The official aims to demonstrate that the Neon EVM product allows clients to transfer applications from Ethereum to Solana and ensure their reliable operation.

Moreover, the decentralized trading platform DODO has indicated in its roadmap for the next three quarters that it plans to deploy on Ethereum scaling solutions based on NEAR, such as Aurora, Avalanche, Boba, Moonriver, Neon, or Optimism. This also reflects the level of attention the project is receiving.

However, this is just the beginning stage of chain-to-chain interaction; the future will undoubtedly be an era of multi-chain parallelism.