Neo unveils details of EVM-compatible sidechain
Neo founder Da Hongfei has unveiled the details of an EVM-compatible sidechain, with plans for TestNet to launch at the end of the year. Goals for the sidechain include bringing advanced security, privacy, and usability to the growing DeFi space, with the critical objective of robustness to Maximal Extractable Value attacks and manipulation. MEV is a prevalent challenge associated with Ethereum and other chains, and the Neo team aims to achieve EVM compatibility while maintaining MEV protection.
Hongfei made this announcement during his keynote address at the Neo APAC Hackathon grand finale in Hong Kong on Oct. 27, marking the seven-year anniversary of Neo MainNet.
Advanced features for enhanced security
MEV is a sophisticated concept, indicating the total value that can theoretically be extracted from transactions on a block beyond the standard block reward and gas fees. This value extraction can be accomplished by tactically adding, reordering, or even excluding transactions. Initially coined in the realm of proof-of-work as “miner extractable value,” MEV’s significance has persisted in proof-of-stake systems, given validators’ continued ability to manipulate transactions for potential profit.
MEV’s practical extraction often involves “searchers,” independent participants who deploy sophisticated algorithms to identify and exploit MEV opportunities. Extraction methods and strategies include DEX arbitrage, “gas golfing” for efficiency and frontrunning bots.
While certain MEV activities may bolster DeFi’s robustness by correcting inefficiencies, others directly harm regular users through increased slippage and network congestion. Furthermore, extreme MEV prospects could incentivize validators to disrupt block consensus for personal gain, challenging blockchain integrity.
The forthcoming Neo EVM sidechain, set to extend the capabilities of Neo N3, is being aimed at counteracting MEV exploits by employing innovative solutions like transaction “enveloping” and proxy contracts. Combined with Neo’s dBFT consensus mechanism, these features promise to shield transaction details and user identities, respectively, which should foster a fairer and more secure blockchain environment.
Building on Neo’s foundation for a developer-friendly ecosystem
The EVM initiative represents an evolution, not a departure, from Neo’s foundational technology. While core attributes such as dBFT and GAS usage for on-chain fees will remain, Neo is recognizing the need for an even more inclusive developer environment and embracing the maturity of EVM.
This move aims to broaden developer participation by facilitating an easier migration path for existing Ethereum projects and continuing to foster a multilanguage-friendly development atmosphere.
Empowering users, developers, and stakeholders
The EVM-compatible sidechain is poised to redefine the experience for all ecosystem participants. Users can expect wallet compatibility with Metamask, targeted at ensuring hassle-free ecosystem access, and an emphasis on transactional fairness and security. Notably, the sidechain is set to offer free transactions, a feature anticipated to significantly lower the barriers to entry.
For developers, the benefits are multifaceted, ranging from enhanced security protocols to improved scalability support. Moreover, the sidechain promises a simple process for porting Solidity contracts from Ethereum.
If all goes to plan, stakeholders in the Neo ecosystem may expect heightened utility and market dynamism for NEO and GAS tokens, propelled by expanded use cases and increased network activity.
Participate in shaping Neo’s future
Neo is encouraging community involvement in several key activities leading up to the new sidechain’s official launch. These include voting for Consensus Nodes by GAS holders, a call-to-action for developers to bring their innovative projects to the platform, and a community-driven initiative to name the new sidechain.
Neo aims to bolster these participatory efforts with various incentives, signaling a commitment to a collaborative approach in ushering in this next chapter.