Neo launches N3 amid high Ethereum gas fees · TechNode
Neo, an Ethereum alternative and one of China’s oldest blockchain protocols, is starting to roll out a third version of its public blockchain infrastructure, dubbed N3.
Why it matters: N3 is a make-it-or-break-it moment for one of China’s most promising and globally recognized blockchain projects. The team has been working on the update for years. On paper, N3 hits all the right notes for becoming a widely used blockchain protocol. But it will need to stand out from an increasingly competitive crowd.
The upgrade comes at an opportune time: The Ethereum network is facing critical capacity challenges, meanwhile the Chinese government highlighted blockchain as a strategically important technology in the latest Five-Year Plan.
Founded in 2013, Neo is one of many Ethereum alternatives looking to attract developers to build decentralized applications on its blockchain.
Details: The original planned launch date for Neo’s third iteration was in 2020, but it was pushed back to Q1 2021 because the system wasn’t ready, Da Hongfei, co-founder of Neo, told TechNode. It is difficult to predict a specific time for a community-driven project, Da said. Like most public blockchains, the code was developed by a small team of core developers and a wider global developer community.
N3 will increase transaction speed on the network from 1,000 per second to 5,000 and reduce transaction charges, known as “gas fees,” by 100 times, according to a Neo press release emailed to TechNode.
Cheap gas is strategically important to compete with the Ethereum network, whose rocketing transaction fees have sent developers looking for greener pastures.
The new version of the chain will also include oracle integration, a decentralized file storage solution similar to Filecoin’s IPFS, and a new governance mechanism.
Oracles like Chainlink and decentralized storage like Filecoin are relatively new, viable blockchain features. When Chainlink and Filecoin broke out with their solutions in 2020, their coin prices soared. Just like a car needs gasoline to run, the Ethereum virtual machine needs gas. Gas fees are essentially transaction fees that users pay to miners to include their transactions in blocks, which make up the ever-growing blockchain ledger. Ethereum miners can pick which transactions to execute, so the higher the demand for execution—reflecting an increase in the number of people wanting to use the network—the higher the gas fees.
Neo’s focus is digital assets, so the co-founder said the community is “encouraged” to build fundamental infrastructure for decentralized finance, such as landing and swap protocols.
Oracles are key to DeFi because they connect the real world to blockchains. Da also sees N3 as a good place to build non-fungible tokens (NFTs), due to the decentralized file storage feature.
Da said that because developers were waiting for the network upgrade, they hadn’t been building many dapps on Neo.
Migration: The migration of Neo tokens to the new network will take place using a consortium interoperability protocol Poly Network developed by the team behind Neo.
Exchanges and wallets take care of token migration, the process by which old tokens are converted into new tokens on the new chain, using smart contracts.
Radical changes to the blockchain protocol such as the ones N3 will implement usually take place through a so-called hardfork: The chain splits in two parts, and the change is implemented in one.
Instead of a hardfork, Neo will use an interoperability protocol, a type of chain that enables the transfer of information from one blockchain to another, to create a completely new chain.
“We will be the first blockchain in the world to do a completely new chain through an interoperability protocol,” Da said.
These protocols are at the frontier of blockchain development and crucial for mass adoption: They promise to connect chains that currently exist as islands to create an internet of blockchains.
The N3 migration will test whether Poly Network can be used to create a blockchain from scratch and correctly transfer all the data from the existing chain.
The Ethereum challenges: The Ethereum network has been facing significant challenges in the last few months, and developers are scrambling to find alternatives for their dapps. Gas fees have been hitting record highs as the network becomes congested.
Da Hongfei, Neo’s co-founder (Image credit: Neo) Ethereum “has reached its maximum capacity,” Da said. Transactions per day have plateaued at around 1.2 million to 1.3 million since August, while alternatives like Binance Smart Chain are reaching record-high transaction volumes.
The update to Ethereum 2.0 would likely solve some of these problems, but has been continuously put off. Da thinks we won’t be seeing it for a few years: “It’s difficult to deal with different interest groups,” particularly miners, he said. The upgrade will hurt their bottom line by drastically changing how they are rewarded.
“At the end of the day, Ethereum is one blockhain but everyone needs to maintain a ledger. The capacity growth of the Ethereum ledger will not outpace the growth of demand,” so there is room for many different protocols to grow, Da said.
Government tailwinds: Blockchain’s inclusion in the 2021-2025 Five-Year Plan will “definitely” bring more investment to the technology, Da said.
Ethereum Price Prediction: ETH Could Fall to $1,400 if This Happens
The Ethereum price is in trouble as the sell-off of cryptocurrencies accelerates. ETH is trading at $1,590, which is 20% below where it was last week. Its market cap has dropped to more than $184 billion. Other currencies like Bitcoin and Binance Coin have also plunged.
What happened: The ETH price has dropped sharply today mostly because of the weakness in BTC. The Bitcoin has dropped substantially as investors react to news that Fidelity was launching a Bitcoin to track the Fidelity Bitcoin index. If accepted, it will be the first Bitcoin ETF in the United States.
Therefore, Bitcoin probably declined as investors exit their holdings in the Grayscale Bitcoin Trust, the best-known BTC investing vehicle in the US. However, the trust is known for its high fees, which makes it undesirable to most traders. Therefore, investors are likely exiting the trust as they wait for the ETF, which will likely be cheaper to invest in.
Advertisement
Ethereum price is also falling because of the challenges facing the Decentralized Finance (DeFi) industry. Recent data shows that the total value locked has dropped to $41 billion. This is lower than the all-time high of more than $45 billion.
Finally, the ETH price is falling because of the rising bond yields. The ten-year, 30-year, and 2-year bond yields have all risen after falling recently.
Ethereum price technical forecast
Looking back, as I had written on Monday, the current price action of Ethereum price was inevitable and easy to see. The four-hour chart shows that the ETH had formed two patterns that are known for being bearish. It formed an ascending wedge pattern and a small head and shoulders pattern. And overnight, the pair moved below the neckline of this pattern at $1,700.
Therefore, in the immediate short term, the ETH price sell-off could accelerate as bears target the second support of the standard pivot point at $1512. A break below this support will open the possibility that the currency will fall to $1400.
Don’t miss a beat! Follow us on Telegram and Twitter.
ETH price chart
More content
Who Created the Ethereum Ecosystem?
Vitalik Buterin, a Russian-Canadian entrepreneur and programmer from Toronto, envisioned second-largest cryptocurrency Ethereum when he was 19 years old.
In 2011, the year Buterin first grew interested in Bitcoin, Buterin co-founded the online news website Bitcoin Magazine, writing hundreds of articles on the cryptocurrency world. He went on to code for the privacy-minded Dark Wallet and the marketplace Egora.
Along this journey, he came up with the idea for the Ethereum ecosystem, a platform inspired by Bitcoin that could go beyond the financial use cases.
Subscribe to , By signing up, you will receive emails about CoinDesk products and you agree to our terms & conditions and privacy policy
He released a white paper in 2013 describing an alternative platform designed for any type of decentralized application developers would want to build. Many developers were drawn to this idea of creating decentralized applications because they would be accessible to a global audience, be free from censorship and would give users more control over their data than most apps, which have intermediaries in the middle managing users’ finances and data.
To accomplish this, Ethereum makes it easy to create smart contracts, or code that automatically creates an outcome when certain conditions are met. For his work, Buterin was named a 2014 Thiel fellow, winning a $100,000 grant to work on Ethereum.
Buterin FAQs
Who helped Buterin create Ethereum?
After Buterin unveiled the Ethereum white paper, several other developers joined the ranks including CEO of IOG Charles Hoskinson, Decentral CEO Anthony Di Iorio and Akasha Founder Mihai Alisie. Buterin also introduced two new co-founders to the team:
Co-founder Dr. Gavin Wood did much of the early programming and architecting of the platform. He wrote the Ethereum yellow paper, the “technical bible” that outlines the specification for the Ethereum Virtual Machine (EVM), which is responsible for handling the state of the ledger and runs smart contracts.
Co-founder Joseph Lubin went on to found the Brooklyn-based ConsenSys, a startup that focuses on building decentralized apps.
How much money does Buterin have?
Since Ethereum data and transaction information is public, users can track how much money Buterin has stored in ether, Ethereum’s native token.
Buterin’s main address is this one, which shows that he owns 333,348 ether, worth approximately $568 million at the time this article was published.
What was Ethereum like in its early days?
To get the project off the ground, Buterin and the other founders launched a crowdfunding campaign in July 2014 where participants purchased ether, the Ethereum tokens that function as shares in the project.
Raising more than $18 million, it was the most successful crowd sale at that time. It took another year, but the first live release, Frontier, launched on 30th July, 2015. It wasn’t a particularly attractive platform, but the command line interface offered developers a platform for creating their own decentralized apps.
The smart contract platform took off, swelling into today’s ecosystem of hundreds of developers and even drawing the attention of tech giants like IBM and Microsoft.