

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.

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 August 2016, no pre-set price or cap, and raised $2.5 million USD in two weeks

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 Time Blocks per Minute Blocks per Hour Blocks per Day Blocks per Month Blocks per Year 15 seconds 4 240 5,760 172,800 2,102,400

Current Block Number Explorer

Days since Genesis Block Current Block Number / Blocks Per day

Genesis Date Today's Date - Days Since Genesis Block



Current Block # Days since Genesis Genesis Date NEO Total NEO Total year 1 GAS Total 1,146,750 199 12/26/2016 100,000,000 50,000,000 100,000,000

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



Year Blocks Start Date End Date GAS Reward per Block 1 2,000,000 12/26/2016 12/9/2017 8 2 2,000,000 12/9/2017 11/21/2018 7 3 2,000,000 11/21/2018 11/3/2019 6 4 2,000,000 11/3/2019 10/15/2020 5 5 2,000,000 10/15/2020 9/28/2021 4 6 2,000,000 9/28/2021 9/10/2022 3 7 2,000,000 9/10/2022 8/23/2023 2 8 2,000,000 8/23/2023 8/4/2024 1 9 2,000,000 8/4/2024 7/17/2025 1 10 2,000,000 7/17/2025 6/30/2026 1 11 2,000,000 6/30/2026 6/12/2027 1 12 2,000,000 6/12/2027 5/24/2028 1 13 2,000,000 5/24/2028 5/6/2029 1 14 2,000,000 5/6/2029 4/19/2030 1 15 2,000,000 4/19/2030 4/1/2031 1 16 2,000,000 4/1/2031 3/13/2032 1 17 2,000,000 3/13/2032 2/23/2033 1 18 2,000,000 2/23/2033 2/5/2034 1 19 2,000,000 2/5/2034 1/19/2035 1 20 2,000,000 1/19/2035 1/1/2036 1 21 2,000,000 1/1/2036 12/13/2036 1 22 2,000,000 12/13/2036 11/25/2037 1 23 2,000,000 11/25/2037 11/8/2038 0 24 2,000,000 11/8/2038 10/21/2039 0 25 2,000,000 10/21/2039 10/2/2040 0

Year GAS Generated per Year GAS in Circulation NEO in Circulation 1 16,000,000 16,000,000 50,000,000 2 14,000,000 30,000,000 100,000,000 3 12,000,000 42,000,000 100,000,000 4 10,000,000 52,000,000 100,000,000 5 8,000,000 60,000,000 100,000,000 6 6,000,000 66,000,000 100,000,000 7 4,000,000 70,000,000 100,000,000 8 2,000,000 72,000,000 100,000,000 9 2,000,000 74,000,000 100,000,000 10 2,000,000 76,000,000 100,000,000 11 2,000,000 78,000,000 100,000,000 12 2,000,000 80,000,000 100,000,000 13 2,000,000 82,000,000 100,000,000 14 2,000,000 84,000,000 100,000,000 15 2,000,000 86,000,000 100,000,000 16 2,000,000 88,000,000 100,000,000 17 2,000,000 90,000,000 100,000,000 18 2,000,000 92,000,000 100,000,000 19 2,000,000 94,000,000 100,000,000 20 2,000,000 96,000,000 100,000,000 21 2,000,000 98,000,000 100,000,000 22 2,000,000 100,000,000 100,000,000 23 0 100,000,000 100,000,000 24 0 100,000,000 100,000,000 25 0 100,000,000 100,000,000

For Wallets with 1 NEO Share

Year GAS Dividend per Block GAS Dividend per Day GAS Dividend per Month GAS Dividend per Year 1 0.00000016 0.0009216 0.027648 0.32 2 0.00000007 0.0004032 0.012096 0.14 3 0.00000006 0.0003456 0.010368 0.12 4 0.00000005 0.0002880 0.008640 0.10 5 0.00000004 0.0002304 0.006912 0.08 6 0.00000003 0.0001728 0.005184 0.06 7 0.00000002 0.0001152 0.003456 0.04 8 0.00000001 0.0000576 0.001728 0.02 9 0.00000001 0.0000576 0.001728 0.02 10 0.00000001 0.0000576 0.001728 0.02 11 0.00000001 0.0000576 0.001728 0.02 12 0.00000001 0.0000576 0.001728 0.02 13 0.00000001 0.0000576 0.001728 0.02 14 0.00000001 0.0000576 0.001728 0.02 15 0.00000001 0.0000576 0.001728 0.02 16 0.00000001 0.0000576 0.001728 0.02 17 0.00000001 0.0000576 0.001728 0.02 18 0.00000001 0.0000576 0.001728 0.02 19 0.00000001 0.0000576 0.001728 0.02 20 0.00000001 0.0000576 0.001728 0.02 21 0.00000001 0.0000576 0.001728 0.02 22 0.00000001 0.0000576 0.001728 0.02 23 0 0 0 0 24 0 0 0 0 25 0 0 0 0

For Wallets with 1,000 NEO Share

Year GAS Dividend per Block GAS Dividend per Day GAS Dividend per Month GAS Dividend per Year 1 0.00016 0.9216 27.648 320 2 0.00016 0.9216 27.648 320 3 0.00007 0.4032 12.096 140 4 0.00006 0.3456 10.368 120 5 0.00005 0.2880 8.640 100 6 0.00004 0.2304 6.912 80 7 0.00003 0.1728 5.184 60 8 0.00002 0.1152 3.456 40 9 0.00001 0.0576 1.728 20 10 0.00001 0.0576 1.728 20 11 0.00001 0.0576 1.728 20 12 0.00001 0.0576 1.728 20 13 0.00001 0.0576 1.728 20 14 0.00001 0.0576 1.728 20 15 0.00001 0.0576 1.728 20 16 0.00001 0.0576 1.728 20 17 0.00001 0.0576 1.728 20 18 0.00001 0.0576 1.728 20 19 0.00001 0.0576 1.728 20 20 0.00001 0.0576 1.728 20 21 0.00001 0.0576 1.728 20 22 0.00001 0.0576 1.728 20 23 0 0 0 0 24 0 0 0 0 25 0 0 0 0

For Wallets with 1,000,000 NEO Share

Year GAS Dividend per Block GAS Dividend per Day GAS Dividend per Month GAS Dividend per Year 1 0.16 921.6 27,648 320 2 0.16 921.6 27,648 320 3 0.07 403.2 12,096 140 4 0.06 345.6 10,368 120 5 0.05 288.0 8,640 100 6 0.04 230.4 6,912 80 7 0.03 172.8 5,184 60 8 0.02 115.2 3,456 40 9 0.01 57.6 1,728 20 10 0.01 57.6 1,728 20 11 0.01 57.6 1,728 20 12 0.01 57.6 1,728 20 13 0.01 57.6 1,728 20 14 0.01 57.6 1,728 20 15 0.01 57.6 1,728 20 16 0.01 57.6 1,728 20 17 0.01 57.6 1,728 20 18 0.01 57.6 1,728 20 19 0.01 57.6 1,728 20 20 0.01 57.6 1,728 20 21 0.01 57.6 1,728 20 22 0.01 57.6 1,728 20 23 0 0 0 0 24 0 0 0 0 25 0 0 0 0

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.

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.

Tip Jar