(Almost) Everything you wanted to know about NEO (Part 2 of 2)

in #cryptocurrency4 years ago (edited)

neo-part-2.png
Part 2 of our analysis on the NEO Smart Economy, follow the link to catch up on Part 1. Today’s focus shifts to the Economics of the NEO Blockchain and is targeted for those interested in how rewards are generated and the schedule it will follow.

Blockchain Assets

Every blockchain has a different ecosystem and NEO is no different. As discussed in part 1, NEO grants shares (what you would buy on an exchange) that give you voting rights and the right to dividends in the form of GAS. Which in turn allows the holder to pay for their use of a NEO share. Here is a brief list of what holding each asset is good for.

  • NEO
    • Bookkeeper election
    • Right to GAS as dividends
    • Voting power over major issues of the NEO blockchain
  • GAS
    • Service Charge Payment
    • Basic Fee Payment
    • Bookkeeper Nominee Deposit as Collateral

To help understand the interaction between NEO and GAS Reddit user /r/Encephalomagna has put together the following infographic.

NEO vs GAS

Fees

  • Accounting Fees collected by Bookkeepers
    • It is not stated and unclear as to what the actual fee is, but it’s pointed out that as long as two-thirds of the bookkeepers agree, transactions can be free.
  • Service Fees
    • Charged when needing to perform advanced functionality on the blockchain, i.e. asset creation, registering a bookkeeping node and, in the future, altering, writing off, and freezing assets.

NEO Shares

At the Genesis block 100,000,000 shares were pre-mined and split up amongst the defined parties in the whitepaper.

  • 10% (10 Million Shares) designated to early supporters
    • 400,000 yuan of the seed fund was from several individual investors under an overall valuation of 5 Million
    • 200,000 yuan of the seed fund was from a VC, PreAngel, under an overall valuation of 10 Million
  • 17% (17 Million Shares) designated to ICO Phase I
    • October 2015, in exchange of 2,100 bitcoins
      • 1,200 bitcoins were from individual investors
      • 900 bitcoins from one institutional investor
  • 23% (23 Million Shares) designated to ICO Phase II
  • Remaining 50% (50 Million Shares) to be held by the Antshares team
    • Locked for 1 year via a smart contract after the MainNet launch
    • After the 1-year vesting period the shares will be allocated for supporting the long-term operations of the Antshares NEO

Shares are Whole Numbers (Counting or Natural Numbers if you are getting technical)

What does this mean? It means that while BTC, ETH, LTC, and pretty much every other cryptocurrency ever created has the notion of splitting a coin into many small chunks with the beauty of decimal places. NEO uses the idea of shares, much like the fact that you cannot own fractions of shares in Amazon, Google, etc. you cannot own fractions of shares of NEO. To complicate matters, exchanges allow you to trade in fractions of NEO shares and most charge a fee to withdraw your shares in FRACTIONAL amounts! Long story short, be sure to plan for your exchanges fees and don't get caught sending fractional shares to your wallet as they will be lost forever!

Here is an example to illustrate how you would lose your decimal shares from exchange to wallet:

  • Amount of NEO bought on Exchange: 10 NEO
  • Bittrex Fee: 0.35 NEO
  • Transfer to Wallet: 10 - 0.35 = 9.65 NEO
  • Amount Received in Wallet: 9 NEO
  • Amount Lost to Rounding: 9.65 - 9 = 0.65 NEO

Shares Generate Dividends

To continue the analogy of NEO shares to Stock shares, there are still a handful of stocks that pay a dividend that are typically proportional to profits. For a stock, the dividend distribution can be in cash, a reinvestment plan, or even be paid out in more stock of the underlying. In the NEO realm, a dividend is paid in GAS, which can ONLY be generated by holding coins in a wallet address, not an exchange. If you are not generating GAS then you will not be able to pay for services on the NEO blockchain. It is possible to buy and sell GAS on exchanges if you are short on the asset, but be sure to ALWAYS control your crypto keys.

Blockchain Breakdown

This section is intended to break down the mechanics of the NEO blockchain. One interesting section in the whitepaper, that is not expanded upon, is that the block time is 15 seconds but can be altered if sufficient network effects are met to handle shorter block times and increase network throughput. They anticipate in the future that most blocks will be generated every 1 second (completely altering/speeding up the time frame presented below). Here is the quote for reference:

At the moment, the block generating rate is manually set at 15 seconds. With low enough latency in inter-nodes connection in the future, most blocks will be generated by every 1 second. With the bandwidth at 100Mbit/t and external cryptographic computing hardware, the Antshares Blockchain is capable of handling thousands, if not tens of thousands, of transactions per second.

Block TimeBlocks per MinuteBlocks per HourBlocks per DayBlocks per MonthBlocks per Year
15 seconds42405,760172,8002,102,400
  • Current Block Number
  • Days since Genesis Block
    • Current Block Number / Blocks Per day
  • Genesis Date
    • Today's Date - Days Since Genesis Block
Current Block #Days since GenesisGenesis DateNEO TotalNEO Total year 1GAS Total
1,146,75019912/26/2016100,000,00050,000,000100,000,000
  • Based on the whitepaper it should be noted that 50% of NEO are being held for 1 year in a smart contract that will be released back to the development team.
    • It is unclear if this 50,000,000 NEO is also generating GAS for the first year, but based on the fact that these must be in a wallet to generate GAS, I will assume that they are not generating GAS for only the first year.

NEO GAS Analysis

Based on the whitepaper each share is entitled to dividends generated during every block processed. Based on the specifics in the whitepaper we have put together the following analysis to estimate how much GAS can be generated in each year of NEO's existence.

We have also put together this handy spreadsheet that you can copy and use for your personal use when analyzing the amount of GAS your wallet should be generating by entering your NEO balance. NOTE: As discussed above, it is required to have your main shares in a wallet outside of an exchange for this to take affect.

NEO Gas Calculator - Google Sheet

The third tab of the spreadsheet provided above is covered below to give you an idea of what kind of dividends can be generated. We are not going to speculate on the price of GAS or the underlying and will leave that to your own analysis.

  • GAS Generated per Year
    • GAS Reward per Block * Blocks in a Year
  • GAS Dividend per Block
    • ( NEO Shares Held in Wallet * GAS Reward per Block ) / NEO Shares in Circulation
YearBlocksStart DateEnd DateGAS Reward per Block
12,000,00012/26/201612/9/20178
22,000,00012/9/201711/21/20187
32,000,00011/21/201811/3/20196
42,000,00011/3/201910/15/20205
52,000,00010/15/20209/28/20214
62,000,0009/28/20219/10/20223
72,000,0009/10/20228/23/20232
82,000,0008/23/20238/4/20241
92,000,0008/4/20247/17/20251
102,000,0007/17/20256/30/20261
112,000,0006/30/20266/12/20271
122,000,0006/12/20275/24/20281
132,000,0005/24/20285/6/20291
142,000,0005/6/20294/19/20301
152,000,0004/19/20304/1/20311
162,000,0004/1/20313/13/20321
172,000,0003/13/20322/23/20331
182,000,0002/23/20332/5/20341
192,000,0002/5/20341/19/20351
202,000,0001/19/20351/1/20361
212,000,0001/1/203612/13/20361
222,000,00012/13/203611/25/20371
232,000,00011/25/203711/8/20380
242,000,00011/8/203810/21/20390
252,000,00010/21/203910/2/20400
YearGAS Generated per YearGAS in CirculationNEO in Circulation
116,000,00016,000,00050,000,000
214,000,00030,000,000100,000,000
312,000,00042,000,000100,000,000
410,000,00052,000,000100,000,000
58,000,00060,000,000100,000,000
66,000,00066,000,000100,000,000
74,000,00070,000,000100,000,000
82,000,00072,000,000100,000,000
92,000,00074,000,000100,000,000
102,000,00076,000,000100,000,000
112,000,00078,000,000100,000,000
122,000,00080,000,000100,000,000
132,000,00082,000,000100,000,000
142,000,00084,000,000100,000,000
152,000,00086,000,000100,000,000
162,000,00088,000,000100,000,000
172,000,00090,000,000100,000,000
182,000,00092,000,000100,000,000
192,000,00094,000,000100,000,000
202,000,00096,000,000100,000,000
212,000,00098,000,000100,000,000
222,000,000100,000,000100,000,000
230100,000,000100,000,000
240100,000,000100,000,000
250100,000,000100,000,000

For Wallets with 1 NEO Share

YearGAS Dividend per BlockGAS Dividend per DayGAS Dividend per MonthGAS Dividend per Year
10.000000160.00092160.0276480.32
20.000000070.00040320.0120960.14
30.000000060.00034560.0103680.12
40.000000050.00028800.0086400.10
50.000000040.00023040.0069120.08
60.000000030.00017280.0051840.06
70.000000020.00011520.0034560.04
80.000000010.00005760.0017280.02
90.000000010.00005760.0017280.02
100.000000010.00005760.0017280.02
110.000000010.00005760.0017280.02
120.000000010.00005760.0017280.02
130.000000010.00005760.0017280.02
140.000000010.00005760.0017280.02
150.000000010.00005760.0017280.02
160.000000010.00005760.0017280.02
170.000000010.00005760.0017280.02
180.000000010.00005760.0017280.02
190.000000010.00005760.0017280.02
200.000000010.00005760.0017280.02
210.000000010.00005760.0017280.02
220.000000010.00005760.0017280.02
230000
240000
250000

For Wallets with 1,000 NEO Share

YearGAS Dividend per BlockGAS Dividend per DayGAS Dividend per MonthGAS Dividend per Year
10.000160.921627.648320
20.000160.921627.648320
30.000070.403212.096140
40.000060.345610.368120
50.000050.28808.640100
60.000040.23046.91280
70.000030.17285.18460
80.000020.11523.45640
90.000010.05761.72820
100.000010.05761.72820
110.000010.05761.72820
120.000010.05761.72820
130.000010.05761.72820
140.000010.05761.72820
150.000010.05761.72820
160.000010.05761.72820
170.000010.05761.72820
180.000010.05761.72820
190.000010.05761.72820
200.000010.05761.72820
210.000010.05761.72820
220.000010.05761.72820
230000
240000
250000

For Wallets with 1,000,000 NEO Share

YearGAS Dividend per BlockGAS Dividend per DayGAS Dividend per MonthGAS Dividend per Year
10.16921.627,648320
20.16921.627,648320
30.07403.212,096140
40.06345.610,368120
50.05288.08,640100
60.04230.46,91280
70.03172.85,18460
80.02115.23,45640
90.0157.61,72820
100.0157.61,72820
110.0157.61,72820
120.0157.61,72820
130.0157.61,72820
140.0157.61,72820
150.0157.61,72820
160.0157.61,72820
170.0157.61,72820
180.0157.61,72820
190.0157.61,72820
200.0157.61,72820
210.0157.61,72820
220.0157.61,72820
230000
240000
250000

Engineering Overview

One way that NEO establishes itself from Ethereum is the fact that it doesn't require engineers/coders to learn a new language (Ethereum requires knowledge in Solidity). Neo achieves this by being compatible with all of the major coding languages. From our perspective this will drive adoption by lowering the barrier to entry (learning curve) for developers. The current supported languages are:

  • JSON-RPC
  • C#
  • Visual Basic
  • .Net
  • JAVA
  • C
  • C++
  • Python
  • Go
  • JavaScript/TypeScript

While this is important, it is also worth noting that as long as the code has an interpreter/converter it would appear the above list is expandable. The following picture is a great introduction to the NEO Virtual Machine.

NEO VM

The NEO team is certainly not without a sense of humor as their whitepaper on the topic of VM's and which is the best design, I found this gem!

Naturally enough, we are faced with a question: Is it possible to have a new design that has the all the pros of the aformentioned VMs?

Of course, an absolute perfection absolutely exists in nowhere, otherwise why would we have such differentiation. But we can start with a design that has all the aforementioned pros under certain scenarios.

Another aspect of running the NEO Virtual Machine are the platforms they are designed to run on. While the majority of enterprise grade deployments are running more and more on the Linux OS, it is important to note how many options the NEO team offers and has plans to offer in the future.

  • Docker
  • Red Hat 7.1 / CentOS 7.1
  • Ubuntu
  • Windows 7 SP1
  • Windows Server 2008 R2
  • Future support
    • Debian
    • FreeBSD
    • Linux Mint
    • openSUSE
    • Oracle Linux
    • OS X
    • Fedora

Engineering Links

Conclusion

NEO provides a framework for the digitalization of real world assets and is set on the goal of making it accessible to everyone.
Combining this with the fact that it is the first blockchain technology coming out of China clearly has the cryptosphere excited and baffled at the same time, figuring NEO does the same thing as already established technology. Hopefully this has helped introduce key concepts to the architecture and ecosystem that NEO is offering to the digital world.

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Great Post. Thanks for sharing.

Thanks for sharing! Keeps me up to date :-)

Good post, thanks.

Interesting blog. I was about to post a similair thread. It's surprising how much uneducated investors the crypto space has. You still see people invest in this shady and scammy coins. I was researching a way to do better investment analysis on the current cryptos. I really advice people to take a look at: https://www.coincheckup.com I'm using this site that gives in depth reports on every tradable cryto in the market. On: https://www.coincheckup.com/coins/Neo#analysis To see the: Neo Investment research report.

Mof* bada* post.

The column for annual earnings for a 1 million NEO holding are wrong.

Another great post thanks so much for sharing I look forward to reading more of you thoughts. Cheers J

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