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Everything you need to know about Neon EVM

Published · Updated

Richard Bagshaw

A virtual machine functions like a physical computer, allowing applications and operating systems to be run on it. The largest smart contract development platform, the Ethereum Virtual Machine (EVM), utilizes the computational power of a network of nodes distributed worldwide.

The Ethereum network is by far the biggest and most popular smart contract network, so there is immense utility in developing EVM-compatible applications. By creating an EVM-compatible blockchain, a lot of developer attention can be captured, allowing some of these dApps to be ported over from the Ethereum network.

Neon EVM is an Ethereum virtual machine on Solana, developed by Neon Labs, that allows Ethereum-based smart contracts and dApps to take advantage of Solana native functionalities.

Neon EVM

The Ethereum virtual machine (EVM) does not exist as a tangible machine but as an entity maintained by all the nodes running the Ethereum client. More than a decentralized ledger typically used to define blockchains, the EVM defines the rules by which changes happen from block to block. In essence, the EVM functions as a decentralized computer which allows smart contracts to exist on the Ethereum Network. From DeFI to games and other dApps in the ecosystem, the EVM allows these to function.

While Ethereum bolsters the biggest on-chain economy of any blockchain, gas fees and transaction speeds can be counterproductive to the development of its ecosystem. In comparison, Solana allows users to transact at low cost and at faster rates thanks to its ability to process transactions in parallel. A highly optimized EVM chain can process up to 1,500 transactions per second (TPS), whilst Solana can reach upwards of 50,000 TPS.

One of the challenges when developing a blockchain ecosystem is attracting developers to work on it. The difference in programming languages and developing tools used by both chains makes porting popular Ethereum-based applications to the Solana network a difficult task. By making Solana EVM compatible, Ethereum developers can make use of their already existing code base and expertise on the Solana network.

How does Neon EVM work?

Neon EVM is an on-chain solution that works by wrapping Ethereum-like transactions into Solana transactions and then sending them to the Solana network. One of Ethereum's limiting factors is how transactions are processed. Solidity smart contracts need to be executed sequentially so that only one contract at a time can modify the blockchain state.

In contrast, Solana allows for parallel execution of transactions through a functionality called Sealevel, which uses as many cores as are available to the validator. Because Solana transactions describe all the states a transaction will read or write during its execution, they can be processed in parallel, thus avoiding unwanted overlaps.

Neon EVM enables any Ethereum native application to run on Solana without requiring any changes to its codebase. Developers can continue to write smart contracts in Solidity, and users can continue to use MetaMask. Anyone using Neon EVM can port over Ethereum transactions to Solana. This approach allows popular applications such as Uniswap, Curve and MakerDAO to be built natively on Solana with much less friction and resources. This reduces development requirements and time savings while granting access to Solana's large liquidity.

What are Neon EVM key features?

  • For each Solana token, an ERC20 SPL-Wrapper contract can be deployed and Ethereum wallets such as Metamask can be used to transfer funds in Solana tokens.
  • The ERC20 SPL-Bridge can generate a Solana token representing the corresponding ERC20 token in the SPL-token contract.
  • Neon EVM operators can be paid in an ERC-20 token designated by the user for completing transactions, which adds an extra layer of flexibility.
  • Gas consumption is done according to Ethereum rules.
  • Neon EVM keeps track of any hard forks and upgrades on Ethereum and Solana. This is a crucial aspect since any potential changes to the network codebase could be disruptive.

Neon Web3 Proxy

Neon EVM Proxy operators are key players in the Neon EVM ecosystem. They run special servers, known as Neon Proxies, that enable Ethereum-based applications (dApps) to function seamlessly on the Solana network with minimal reconfiguration. The primary task of a proxy operator is to set up and manage these Neon Proxy servers. They provide an interface that accepts transactions formed according to Ethereum rules, transform Ethereum-like transactions into a series of Solana transactions, and ensures these transactions are successfully executed on the Solana network, enabling dApps to benefit from the speed and efficiency of the Solana network.

Neon EVM proxy operators are crucial in enabling Ethereum-based applications to run smoothly on Solana's network. As they manage Neon Proxy servers, they incur transaction costs on Solana, paid in lamports, for executing the Solana portion of Neon EVM users' transactions. To compensate for these costs, Neon EVM automatically retrieves an equivalent amount of ERC-20 tokens from the users plus a small additional fee, which is shared between the operators and the Neon treasury. Initially, users will only pay these fees in Neon tokens, but as per the project roadmap, they will eventually be able to choose from any supported ERC-20 tokens. While these fees are minimal from a user's perspective, they can accumulate to a significant sum for proxy operators, depending on the number of Neon EVM users and their activity level. Therefore, this fee structure covers the operational costs of the proxy operators and serves as a revenue stream for the Neon proxy operators and the Neon DAO treasury, making it a pivotal part of the Neon EVM economy.

Why is P2P.org working with Neon Labs?

  1. P2P.org endorses Neon EVM and supports its crucial role as a proxy operator, enabling Ethereum-like transactions to be efficiently executed on the Solana network. Recognizing the importance of cross-compatibility, P2P.org provides a robust infrastructure to facilitate the smooth operation of the Neon EVM, thereby ensuring seamless interaction of Ethereum-based applications on the Solana network.
  2. P2P.org backs Neon EVM as it empowers Ethereum developers to build brand-new blockchain products, only possible on Solana, with much less friction and resources using familiar tools, such as Ethereum wallets and Solidity smart contracts. We believe that Neon EVM widens Solana's appeal, stimulates advanced dApp development, and fuels broader network adoption and evolution of DeFi space. In promoting competition across networks, P2P.org aims to drive the creation of superior end-user products.
  3. Aligning with P2P.org's mission to increase blockchain technologies adoption and enhance user's DeFi experience, Solana-based Neon EVM's high throughput, low transaction costs, and user-friendly features, such as choosing a wrapped ERC-20 token for fee payment bring more flexibility, adaptability, speed, and a superior user experience to the blockchain ecosystem.

How Neon EVM could benefit the Solana ecosystem

  • Drives liquidity: Neon EVM could create an additional inflow of liquidity to Solana, enhancing the robustness of its financial ecosystem.
  • Expands user base: bringing existing large Ethereum DeFi protocols to Solana can significantly increase its user base, enabling users to leverage their established understanding of these protocols in a new environment.
  • Promotes cross-compatibility: Neon EVM, by transforming Ethereum-like transactions for execution on the Solana network, contributes to enhancing the cross-compatibility between different blockchain protocols. This fosters a more interconnected and efficient blockchain ecosystem, paving the way for a more cooperative future in the decentralized world.
  • Enhances dApp development: it enables the development of new high-load and sophisticated dApps on Solana using familiar tools. This opens up new possibilities for applications that can leverage Solana's high transaction speed and low costs.
  • Boosts developer flexibility: Neon EVM provides more flexibility for smart contract developers, enabling them to deploy Ethereum-compatible applications on Solana without altering their codebase.
  • Enables scalability: by leveraging Solana's ability to process transactions in parallel, Neon EVM provides an environment where Ethereum applications can be deployed and scaled effectively. This enhancement in performance is opening new avenues for the existing Ethereum protocols to operate at greater capacities.

Projects that are supporting Neon EVM

  1. Sobal: Sobal is a project focused on forking the Balancer V2 protocol for deployment on Neon EVM. After thorough testing on Devnet, Sobal is advancing to the Neon EVM on Solana Mainnet.
  2. Elk Finance: As a decentralized cross-chain liquidity network, Elk Finance enables users to conduct token trades and earn rewards.
  3. Lever Finance: Acting as a multifunctional decentralized platform, Lever Finance offers leveraged trading, liquidity provision, farming, lending, and borrowing in the DeFi ecosystem.
  4. Thetanuts: Thetanuts Finance is a front-runner in DeFi structured products protocol designed to generate diverse, organic yields. The platform caters to DAOs for treasury management and aids retail traders in earning organic yields on their assets.
  5. DxSale: DxSale, a decentralized launchpad, can conduct token crowd sales with zero coding. It offers features such as presale setup and decentralized locking.
  6. Protofire (Safe): Protofire, a development partner of Gnosis Safe, has helped develop the technology behind Gnosis Safe Multisig—a customizable Ethereum-based crypto wallet. This wallet allows access to DeFi apps and secure asset management through multi-signature confirmation requirements.
  7. Robonomics: Robonomics is a unique open-source platform for IoT applications. It facilitates the exchange of technical and economic information through atomic transactions among user applications, IoT services, and robotics.
  8. Kana Labs: Kana Labs offers a DeFi super app designed to demystify DeFi for all users. The app allows users to send/receive tokens, swap, stake, lend, and borrow across multiple blockchain networks such as Solana, Aptos, Neon, and Polygon.
  9. xDAO: xDAO provides an easy-to-use platform for creating and managing decentralized autonomous organizations (DAOs) and the joint management of crypto assets.
  10. Moraswap: MoraSwap, the first automated market maker (AMM) built on Neon EVM, brings high-speed, low-cost transactions to its users.
  11. Powerpool: Powerpool is a unique protocol that allows governance token (GT) holders to lend, pool, borrow GTs, and generate income from it.
  12. GhostNFT: GhostNFT is at the forefront of the NFT 2.0 standard, which enables asset-backed NFTs. This includes features such as sustainable NFT royalties backed by tangible assets and additional revenue streams for NFT collection creators.
  13. Yin Finance: YIN Finance is a versatile NFT liquidity management platform. It allows users to utilize the project's strategy for effective high-yield liquidity management across different public chains and decentralized exchanges.
  14. Poolz Finance: Poolz Finance is a decentralized swapping protocol empowering startups and project owners with the ability to auction their tokens to bootstrap liquidity.
  15. Math Wallet: Math Wallet is a comprehensive, multi-platform cryptocurrency wallet that supports storage for all major blockchain tokens.
  16. Etherspot: Etherspot offers an Account Abstraction SDK, promoting a seamless Web3 user experience. It caters to the needs of decentralized applications, game, and wallet developers through its multi-chain, self-custody smart contract wallet platform.
  17. Zerion: Zerion Wallet is a secure, open-source, non-custodial cryptocurrency wallet. It acts as a Web3 Crypto Wallet with NFT and DeFi Portfolio Tracker.

How to start using Neon EVM?

NEON token is necessary to make transactions in the Neon EVM as it is used as gas required for covering the Neon EVM transaction fees (more tokens will be supported in the future), so ensure you have enough NEON tokens for your planned activities. Here's an instruction on how to get Neon tokens and transfer them to Neon EVM:

1. Purchase NEON tokens: buy NEON tokens from CEXes such as Gate.io, ByBit, or CoinList.

2. Transfer NEON tokens to a Solana-compatible wallet: create or open a Solana-compatible wallet like Phantom / Solflare / Key App and copy the wallet address. Withdraw NEON from your CEX wallet to the Solana wallet following the instructions provided by the CEX platform.

3. Setup an EVM-compatible wallet: install an EVM-compatible wallet like MetaMask in your browser and set up your wallet:

Option A: Automatic Setup with Chainlist.org

  1. Install MetaMask extension and create a wallet.
  2. Go to https://chainlist.org/?search=Neon+EVM+MainNet&testnets=false.
  3. Click "Connect Wallet" to allow Chainlist to automatically select the Neon Proxy operator for you or choose an operator you prefer from the dropdown list and click the "Connect Wallet" link near its RPC server address.
  4. Follow MetaMask prompts to connect.

Option B: Manual Configuration

  1. Install MetaMask extension and create a wallet.
  2. In MetaMask, click the circle in the top right and select "Settings".
  3. Select "Networks", then "Add Network".
  4. Fill in the fields:

5. Click "Save".

4. Use NeonPass to transfer NEON to Neon EVM: once the NEON tokens are in your Solana-compatible wallet, use the NeonPass (https://neonpass.live) transfer interface to move your tokens to Neon EVM. You can cover the transaction cost in NEON or SOL tokens. After completion, your funds will be available on the Neon EVM network, i.e., in your EVM-compatible wallet.

5. Start Using NEON on Neon EVM: now that your NEON tokens are in your EVM-compatible wallet on the Neon EVM, you can start using them for transaction costs or other uses in the Neon EVM ecosystem (you will be able to interact with the protocols deployed on the Neon EVM via corresponding dApps using Metamask). You can find the protocols that are supported by Neon EVM here: https://neonfoundation.io/ecosystem

Richard Bagshaw

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