NEO is a highly scalable smart contract platform created by Da Hongfei and Erik Zhan in 2014. Unlike Ethereum or Bitcoin, the NEO cryptocurrency uses a dBFT consensus mechanism that prevents forks and provides fast finality on transactions.
The blockchain specializes in on-chain digital identities and ownership titles for physical assets. More information about all of the unique features on NEO is available on the community website.
Although NEO was a popular platform in 2017, as we’ll see it has since lost many of its users and has a long road ahead of it to compete in 2022 and beyond.
Dapps and NFTS using the NEO cryptocurrency
According to DappRadar there are fewer than 10 Dapps on NEO with any significant value locked, i.e. how much money users have deposited tokens in the protocol. Based on a quick look at the stats, there isn’t much activity currently happening on NEO.
Flamingo is the most popular Dapp on NEO, as measured by the number of users. In the last twenty-four hours, 85 people have interacted with the Flamingo protocol. Flamingo is an AMM perpetual contract trading protocol (similar to Uniswap on Ethereum) that uses the FLM token for decentralized governance and for incentivizing/rewarding liquidity providers.
After Flamingo the second most popular protocol on NEO is Blockchain Cuties, an adventure game with collectible cards. Blockchain Cuties has reached 50 active users in the last twenty-four hours with a negligible amount of trading volume.
While a dozen or more dapps are running on top of NEO, most have zero value locked and no users.
The NEO Ecosystem
Although there is little on-chain activity on NEO, that doesn’t mean that the ecosystem is completely dead. There is still a group of builders and developers working to launch new and interesting products.
For example, BurgerDAO recently went live on NEO. Anyone who holds NEO is automatically entitled to receive GAS, and BurgerDAO is a new protocol to help NEO holders earn more GAS tokens.
Users stake their NEO in the BurgerDAO smart contract and the protocol looks for the best opportunities to maximize GAS returns. The protocol will distribute 75% of its NoBug tokens to users, and the remaining 25% of the tokens are withheld for contributors.
BurgerDAO is a similar idea to a protocol like Yearn, which helps its users earn interest on their assets. BurgerDAO has had 5,000 transactions in the last seven days.
The iMe messaging protocol is another new addition to the NEO ecosystem. iMe is unique in that it’s a messaging app that incorporates cryptocurrency wallets and DeFi protocols. The platform is already integrated with Ethereum and Binance Smart Chain, and will be working with NEO going forward. Since iMe is already working with other DeFi applications, it could support Flamingo in 2022.
Is NEO Still Relevant?
Given the state of the NEO economy, it appears that at this time the blockchain is no longer a major contender. With less than $1 million of TLV (Total Value Locked) in its decentralized applications, NEO is nowhere near as popular as other smart contract platforms.
One thing we’ve learned in the last few years is that having great technology doesn’t necessarily guarantee success. NEO has ultra-fast finality, an efficient consensus mechanism and is almost completely immune to the types of contentious hard forks that have afflicted Bitcoin (Bitcoin Cash) and Ethereum (Ethereum Classic).
Despite these technological advantages, NEO has failed to gain the strong network effect that it needs to thrive. As Raoul Pal and others have pointed out, the network effect is one of the most consistent and useful ways to value a blockchain.
The more users a blockchain has, and the faster its userbase is expanding, the more likely that platform is to succeed. Growth begets growth, which is why Ethereum is so valuable even though, arguably, it doesn’t have the best technology. In NEO’s case, a lack of growth has hurt the protocol’s chances of competing with other layer one smart contract platforms.
It doesn’t help that, to the extent that any blockchain can ever “belong” to a nation, NEO is considered a Chinese smart contract platform. Although the Chinese government seems to have bestowed its blessing on NEO, the government has been much less friendly to the blockchain industry as a whole, as evidenced by their most recent crypto ban. Having a thriving ecosystem of users is an essential part of a blockchain’s success, so to the extent that it’s a Chinese platform NEO is operating at a significant disadvantage.
The Future of NEO and the NEO cryptocurrency
It’s encouraging to see that developers are continuing to build on the blockchain and there is a small but active community of people participating in the ecosystem. The NEO developers also recently released the N3 mainnet upgrade which introduces new on-chain governance features and could help drive more growth for the NEO cryptocurrency in the future.
This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.