Solana's growth has caught the attention of many investors especially considering that its price has risen quite significantly in the second half of 2023.

Increased investor interest can also be seen from the transaction volume in the DeFi and NFT sectors moving up, even beating the transaction volume on the Ethereum Blockchain for just a few days at the end of 2023.

However, it is likely that the competition will continue to be intense, given the narrative that transaction fees on Ethereum are still relatively high, making it difficult not only for investors but also developers who want to build projects.

Solana has emerged as a strong contender due to its much lower transaction fees that make transactions easier not only for investors but also developers who continue to test their applications.

This has created a new wave of change where many developers from the Ethereum blockchain are now trying to move to Solana to build new projects or even run their applications on both blockchains.

To accommodate this phenomenon, a team of developers has successfully built an application in the Solana ecosystem called Neon EVM.

Apa Itu Neon EVM?

Neon EVM is an application built in the form of smart contracts on the Solana Blockchain to help decentralised applications or DApps that have been launched on the Ethereum Blockchain to move or move simultaneously on the Solana Blockchain.


The idea of this application was developed starting from 2021, where the initial research related to this application arose because of two problems that wanted to be solved according to the whitepaper from Neon EVM.

The first problem is related to Ethereum's scalability, which is still lacking to accommodate the growth of the crypto industry.

Neon EVM's founding team, Neon Labs, created the app to combat the high transaction fees and slow verification process on the blockchain.

In the Neon EVM whitepaper, Neon Labs acknowledges that their research found that despite the help of second-layer blockchains such as Polygon, the transaction validation speed of these blockchains is still lower than that of newer blockchain generations, such as Solana.

Neon Labs compared the maximum transaction speeds of Ethereum and Polygon and found that under real-world, non-test conditions, Ethereum's maximum speed averaged 58 transactions per second and Polygon's averaged 470 transactions per second despite the fact that Polygon averaged 1,000 transactions per second.

Coupled with Ethereum's average transaction fee of $1 to $2, Neon Labs wanted to find a solution where users of the blockchain ecosystem could have a more pleasant transaction experience, especially developers.

Neon Labs continued its research and found that Solana was the right solution due to its transaction fees of only $0.0002 per transaction as well as its average speed in real-world conditions at around 5,000 transactions per second and maximum speed at 60,000 transactions per second.

In addition, what makes Solana optimal is that it moves without the need for side blockchains or second-layer blockchains because it can complete all transactions on its own.

As a result, Solana became the main centre for Neon Labs to find solutions for Ethereum ecosystem users, especially developers, to solve their scalability problems.

While it was notorious for a few temporary network outages in 2021 to 2022, in 2023 Solana showed that with updates, the blockchain was still stable and active without experiencing any temporary outages.

Unfortunately, there is one problem that makes it difficult for developers to adopt Solana if the background of the application is the Ethereum Blockchain, namely language barriers.

Solana uses the Rust language while Ethereum uses the Solidity language, creating a limitation where developers have to learn a new language.

The good news is that the solution to this problem has been solved by Solana through the creation of Solana in 2023, a tool to help build applications on the Solana Blockchain with languages other than Rust, such as Solidity.

But unfortunately Solang does not solve the problem for developers who have already launched their applications on the Ethereum Blockchain and want to move them to Solana.

With Solang, these developers have to write and launch their applications from scratch again to adjust to some of the shortcomings that Solang has and adjust to the Solana standard.

From this problem, the role of Neon EVM becomes very important, because developers do not need to build their applications from scratch and can migrate directly with the tool.

This convenience not only makes it easier for developers to reduce transaction fees, but also for loyal users of these applications who previously objected to the burden of transaction fees from Ethereum.


Currently, Neon Labs is staffed by 11 individuals with diverse backgrounds in technology, finance, law, and blockchain.

The CEO of Neon Labs, Marina Guryeva, has over 15 years of experience in finance and technology, making her well suited to oversee Neon Labs into a successful company.

Neon Labs itself is currently based in the Cayman Island in terms of legality, but the majority of its employees work remotely.

The Neon EVM Ecosystem

To understand the concept of Neon EVM, what must be understood is its ecosystem of components, of which there are currently several, namely Neon EVM User, DApp, Neon Proxy, Neon Proxy Operators, Neon EVM Programs, Neon DAO, and NEON Tokens.

Here is a brief explanation:

• Neon EVM User is the owner of a decentralised application or DApp that wants to use Neon EVM and has NEON to pay transaction fees.
• A DApp in this context is an application that is already launched on the Ethereum Blockchain but wants to migrate completely or wants to move concurrently on Solana.
• Neon Proxy is software or software that helps process DApp transactions on the Ethereum Blockchain to be executed and recorded on Solana, like a bridge client software or software used by validators to process the transfer of transactions.
• Node Proxy Operators are operators or managers of Neon Proxy, just like validators or nodes on a blockchain. Their function is to ensure that transactions from Ethereum can be recorded in Solana without errors.
• Neon EVM Programs are temporary smart contracts that represent transactions on the Ethereum Blockchain so that they can be launched and processed on the Solana Blockchain through Neon Proxy.
• Neon DAO is a DAO that is engaged to maintain the decentralised Neon EVM system by involving the community and NEON Token owners to approve or reject updates and manage the Neon DAO reserve fund.
• NEON Token is a token used for transactions in the Neon EVM ecosystem as well as for voting within the Neon DAO.

How Neon EVM Works

After understanding the components and ecosystem of Neon EVM, the next step is to understand how Neon EVM works.

In essence, Neon EVM moves as a bridge so that the Solana Blockchain can become the blockchain where transaction execution occurs for DApps that move on the Ethereum Blockchain.

So indirectly, Solana moves as a second layer blockchain for Ethereum Blockchain transaction execution, but only for transactions from some DApps that request to use Neon EVM.


To understand how it works, the flowchart above can be a guide to explain the entire process of using Neon EVM.

The first step that will occur in using Neon EVM is that the Neon EVM User, or DApp manager on the Ethereum Blockchain will request access to the Neon Proxy Operator to use Neon EVM.

The operator will then manage to examine the transaction and create the Neon EVM Program through the Neon Proxy Software.

Once the Neon EVM Programme is created, there will be transaction fees charged by the Solana Blockchain and by the Neon EVM which must then be paid by the Neon EVM User using NEON Tokens.

Upon successful payment, the Neon Proxy Operator will forward the Neon EVM Program in the form of a Solana-native smart contract containing a transaction request on the Solana Blockchain with data from the DApp transaction on the Neon EVM User's Ethereum Blockchain.

Next, the Neon Proxy Operator will pay the transaction validation service on the Solana Blockchain to the Solana Blockchain validator through the NEON received from the Neon EVM User but in the form of SOL.

After paying the Solana Blockchain fees, the remaining NEON will be kept by the Neon Proxy Operator, partly to reward the operator's services, and partly to send to the Neon DAO as a form of reserve fund. .


Once the process is complete, there are two possibilities regarding where the transaction data is stored.

If the Neon EVM User has an application that wants to run simultaneously on Ethereum and Solana, then the transaction data will be stored on both blockchains with the help of the Neon EVM Operator.

But if the DApp owned by the Neon EVM User wants to utilise Solana only because it has been completely migrated, then the data will only be stored on the Solana Blockchain.

The second possibility is still very rare, because if you want to utilise Solana alone, then over time the DApp will move to move directly on Solana, and if that happens, then the services of Neon EVM are no longer needed, because transactions are directly related to the Solana Blockchain validator.

Project Development

Since 2021 to date, Neon EVM has successfully invited 20 major projects to use its application. While this may seem like a small number, it is a significant achievement considering that the official launch of the application will only happen in the second half of 2023.


To date, Neon EVM is also developing several plans that will happen in 2024. There are three aspects of the project that are being developed: decentralisation, optimisation, and interoperability.

In terms of the decentralisation aspect, Neon EVM is developing ways to eliminate the need for Neon Proxy Operator with the aim of making its users or Neon EVM Users who have a DApp, can move without waiting for the intermediary, namely the operator.

By eliminating the need for operators, decentralisation will be achieved and the transaction process will be faster because all processes are more efficient where the direct connection between the Ethereum DApp owner using Neon EVM can be directly connected to the Solana validator through Neon EVM automatically.

This update is also part of the optimisation aspect so that developers using Neon EVM can adjust their interaction needs with Neon EVM so that they do not need to follow the entire process currently implemented.

The result is a faster and more efficient transaction process because everything has been customised according to needs.

Lastly, interoperability is a key aspect of Neon EVM where in the future, this application not only wants to help bridge Ethereum to Solana but also vice versa and to connect with other blockchains as well.


Neon EVM is also focusing on getting more people into its ecosystem which is evident from the launch of the test network or testnet along with a faucet or a place to collect NEON Tokens for free on the test network.

Through these faucets, more and more people will recognise the Neon EVM app because they can try the app without having to spend or use real money.

As a result, users can determine in advance whether the app is suitable for their needs or not, especially for developers.


Neon EVM is also encouraging the adoption of NEONPASS which is a bridge that can be used to exchange SOL for NEON or vice versa. The aim is for more users of the Solana ecosystem to easily try out Neon EVM.


To encourage transparency, Neon EVM has also developed neonscan which is a data platform to view all activities that occur within the Neon EVM platform and its ecosystem.

Beyond all of this, for now there are no other plans except for the development of applications that can be used for all EVM-based blockchains. For 2024 itself, the Neon EVM team does not specify specific dates regarding any updates or other plans.

NEON Token

One major component of the Neon EVM ecosystem is the NEON Token which has been launched since 8 June 2023 through a public sale of 5% of its total supply or approximately 50 Million NEON.

The price at the time of the public sale was around $0.10 which has now risen significantly to around $1.3 at the time of writing. Unfortunately this figure is relatively disappointing as it has just corrected from around $3 in early January 2024.

The launch of the NEON Token was done on the Solana Blockchain with a supply of 1 Billion NEON which is the maximum supply as there is no burn mechanism or plan to increase the amount in the market by the DAO or its team.


The allocation of the tokens seems quite fair with 5% going to the public, 16.12% going to early investors, 1% going to early contributors, 1.07% going to advisors and support services, 6% going to Solana Capital Ventures International, 15% to the founders, 31.5% to ecosystem building, and 24.31% to the reserve fund.

A slight concern that may affect market sentiment towards the token is that the vesting period is only one year, meaning that after launching for one year, most of the supply can already be sold.

In addition, Solana Capital Venture International, has a lock-up period of four years which is a good but worrying number given the instinct of typical venture capital firms to sell tokens quickly for profit.

So there is a potential that after four years the company will sell its entire stake to make a profit if the price goes up or return the capital if the price stagnates.

Another thing to consider is the allocation of ecosystem development funds and reserve funds that are still controlled by the team.

Such allocations may trigger price manipulation if the team decides to move with ill intent. The result is the potential for high volatility given that the allocation is more than 50%.

However, this potential is very small, given that the community can see all token movements on neonscan and can comment or criticise to prevent rapid buying and selling by the team to manipulate the price.

So seeing that Neon EVM also has to maintain its good name, the possibility of price manipulation will occur because the internal team is still very small, although there is still a possibility given the instinct of new projects in the crypto market in general.

NEON Price Prediction

Looking at the current price, it appears that Neon EVM has become one of the major players in the Solana ecosystem, which can be seen from its price appreciation which is still holding strong at $1.3 at the time of writing this article despite having gone up from $0.10 at launch.


Unfortunately for now it appears that the selling volume is still stronger as the price has risen significantly in the last four months and this month opened with a correction movement.


This correction is seen to be due to negative feedback from users regarding the declining speed of Neon EVM to process transactions due to the increasing number of users and busy transaction requests on the app.

While the team is currently creating solutions and continuing to develop the app to improve its quality, this issue was the main trigger for the correction.

While this correction movement is normal for price normalisation, in the short term it may affect market sentiment, especially for this month and next month.

This is because a correction that has just started after several months of price appreciation will generally lead to a correction of several months that is relatively long but shorter than the appreciation if the project conditions are still positive.

For example, for NEON, if the project is still positive and growing, seeing that the appreciation occurred for four months, there is a possibility that the correction will occur for two months at least, seeing that generally corrections occur for half the period of a token's appreciation in the crypto market.

However, this theory is not always true, so investors and traders must always look at the conditions of the project's movement and the overall movement of the crypto market.

Given that its current transaction volume is lower than when it rose significantly, it is possible that a full price recovery is still yet to happen or even happen at a slow pace.

However, this week NEON has been on an upward trajectory which seems to be supported by new investors who see the current situation as an opportunity to buy.


This statement is supported by data from Solscan, which shows that while the overall number of investors is rising, the number of active investors is falling, signalling a potential influx of new investors into the NEON ecosystem.


The statement is also supported by the number of wallets that hold less than $0.1 NEON, which continues to increase. However, at the same time, compared to the previous few weeks, the number of investors who own more than $1,000 NEON has also continued to increase.

This could signal a large number of new adoptions which may be a sign of potential buying from some investors including whales, during a price correction.


Unfortunately, NEON is still whale-centric as 83.61% of its tokens still revolve around just 10 wallets, so with this data there is a possibility that NEON is still vulnerable to market manipulation and high volatility.

Also, considering that more than 50% of its allocation is still controlled by the team and the number of NEON holdings in the 10 largest wallets has increased from 83.16% to 83.61% since the beginning of January 2024, the potential for volatility is still very high so investors need to consider this before buying.

But considering NEON is still new, this movement is still very reasonable because it is also possible that the team is moving to save NEON's price from falling too much which is common for new tokens.

On the social side, according to data from Social Blade, the number of followers on Twitter (X) for me Neon EVM is currently on the rise, signalling the potential for many new investors to be interested in this project.


But unfortunately the number of tweets on Twitter mentioning Neon is moving down in early January 2024, which adds to the possibility that the price recovery will still take a long time to happen.

Therefore, for now, NEON still needs a positive push that will likely arise from new positive news that can reignite investor interest in its project and its tokens.

The good news is that the Neon EVM Team has just made a publication regarding a potential airdrop that could possibly restore interest in its tokens.

Unfortunately, this news may not be enough as there are still scheduled token releases by early investors as well as the team that could affect the overall market sentiment which is also the reason why the price is currently moving down.

Conclusion

Neon EVM has the potential to be one of the biggest players in the Solana ecosystem and the crypto market as a whole as it can unite developers from some blockchains to others at a cost that provides more convenience for its users.

Some things to consider at this point are the project's early stage, token allocation, and its high dependency on Solana.

Given that Neon EVM is still in its early stages of development, there are some things that are still uncertain and unpredictable.

This means that investors should be prepared for potential volatility if things don't go according to plan, because while the plan is well-organised, the execution may not be.

An example is what is currently happening, where the speed of the application is seen to decrease after being flooded with users who exceed its capacity so that the team needs time to fix and affect market confidence in the project.

The allocation of NEON Tokens is also one thing that can reduce the trust of the market, because more than 50% is controlled by the team and early investors while the public only has 5% of the public sale allocation.

But this is not a big problem if the early investors do not sell suddenly and simultaneously or try to manipulate the price. As long as the team and early investors follow the vesting schedule and try to maintain price conditions, NEON's future could be very positive.

Last but not least is its dependence on Solana, which is currently popular. Considering that NEON is still relatively new and there hasn't been much development, at the moment the potential for price appreciation is still highly dependent on SOL's movements.

It is possible that if SOL's fame fades again, NEON will also fade. But looking at the current conditions it seems that the possibility is still very small.

Overall, NEON has the potential to be a good project if all goes according to plan.

But investors looking to buy for a long-term investment will need to maintain risk management to stay calm during the price volatility that is likely to come during the early days of NEON EVM.