NEON — The First Parallelized EVM using Solana

Deep Dive into SVM 🤝 EVM, how Neon EVM works, the booming Neon Ecosystem, and how it’s making an impact on the Solna ecosystem.

9 min readMar 3, 2024

Parallelized EVMs are capturing the interest of many, and one of the pioneers in this space is Neon EVM. It embarked on a mission to bridge the gap between Ethereum dApps and Solana, allowing for seamless deployment of EVM code onto the Solana blockchain.

Despite Ethereum’s transition to a Proof of Stake model, it continues to grapple with scalability issues, primarily due to its capped throughput of around 58 transactions per second (TPS). This bottleneck, combined with escalating gas fees during periods of high demand, can render Ethereum slow and costly for some dApps. In stark contrast, Solana boasts a remarkable throughput, with a record-breaking 5,184 TPS, achieved through several innovative techniques:

Transaction parallelization: This approach enhances horizontal scalability by distributing workloads across various hardware components.
Mempool efficiency: Solana’s system is designed for rapid transaction processing, reducing delays.
Proof of Stake combined with Proof of History: This unique consensus mechanism underpins Solana’s high-speed performance.

While Ethereum has introduced Layer 2 solutions like Rollups to mitigate gas fee issues, they might not be the ultimate fix. Rollups can indeed reduce gas fees significantly, by up to 10 times according to some reports, but they still fall short when compared to Solana’s cost-effectiveness, where transaction fees are roughly 10,000 times lower than Ethereum’s, with an average cost of about $0.0002 per transaction. Early experiments with Neon EVM have been promising, showing that it can leverage Solana’s advantages for Ethereum dApps, presenting an attractive option for developers looking for speed and affordability.

Challenges with Ethereum:

The stark differences in design between Ethereum and Solana pose a challenge for developers. To leverage Solana’s advantages, Ethereum dApp developers typically need to rebuild their applications from scratch (which can be tedious and inefficient resource utilization). This is further complicated by the reliance on Solidity, an Ethereum-specific programming language, which limits their ability to adapt seamlessly to Solana’s environment.

What is Neon EVM? — A Developer’s Boon

Neon EVM seamlessly connects Ethereum and Solana, giving developers the tools to leverage Solana’s capabilities for their Ethereum-based dApps. It serves as a bridge, making it possible for dApps developed in Solidity to make the jump to Solana with only slight tweaks needed. This opens up Solana’s thriving community to Ethereum dApps, fostering a more integrated digital space.

The process greatly reduces the need for major code overhauls. Ethereum dApps that are already well-known, such as Uniswap, SushiSwap, 0x, and MakerDAO, can transition to Solana without significant changes. This move allows these projects to benefit from Solana’s features, broadening their horizons.

For Ethereum developers, Neon EVM creates a comfortable and familiar workspace:

Solidity and Vyper compatibility: There’s no need to start from zero. Developers can stick with their existing knowledge in these Ethereum-specific languages.
Seamless integration with familiar tools: Tools like MetaMask, Hardhat, Foundry, and Remix continue to work smoothly, making it easy to deploy dApps on Solana.
Ethereum RPC API and standards adherence: The transition is made smoother by keeping things compatible with well-known interfaces and token standards like ERC-20 and ERC-721.

On the flip side, Neon EVM taps into the strengths of Solana’s framework:

Blazing-fast transactions: With a high throughput of over 2,000 TPS, dApps run swiftly and efficiently.
Minimal transaction fees: The low transaction costs on Solana (just 0.000015 SOL per transaction) make it a more economical choice compared to Ethereum, easing the worry about fees for users.
Parallel processing capability: Thanks to Solana’s design, transactions can be processed in parallel, making the most out of available resources.
Connection to the Solana community: DApps not only works on Solana but also gets to reach its fast-expanding user base, opening up new opportunities within the Solana ecosystem.

How does Neon EVM work?

The Neon EVM program is a smart contract on Solana that processes Ethereum-like transactions called Neon Transactions. Here are the steps involved:

1. User Initiates Transaction: When a user interacts with an Ethereum dApp, they start as they normally would by initiating a transaction that’s signed just like any Ethereum transaction. This particular transaction is then sent off to a specific Neon RPC endpoint dedicated to handling such requests.

2. Bridging the Gap: Neon Proxy in Action: Here, the Ethereum API plays a crucial role as a go-between, taking the user’s transaction and passing it on to the Neon Proxy via the Neon API service. Once the Neon Proxy gets this transaction, it has two important jobs to do:

Gas Estimation: It figures out how much gas the transaction will need to run on Solana, even before the transaction starts.
Transaction Wrapping: It takes the Ethereum-style transaction and packages it up in a way that Solana can understand, effectively turning it into a Solana transaction.

3. Neon EVM Takes the Stage: After that, the Neon Proxy sends this Solana-ready transaction over to the Neon EVM program, which is like a smart contract living on the Solana blockchain. This move sets off a couple of important steps:

Receipt Generation: Both the Solana system and the Neon EVM create receipts for the transaction, which serve as a formal record of what just happened.
Neon Smart Contract Processing:
Unwrapping the Transaction: The Neon smart contract opens up the transaction to get to the Ethereum-style content inside.
Signature Verification: It carefully checks the user’s signature to make sure everything is legitimate.
State Loading: Neon EVM pulls up all the data it needs from Solana’s storage, including details about accounts and the smart and relevant contract code.
Transaction Execution within Solana BPF: The smart contract gets down to business, running the transaction in Solana’s Berkeley Packet Filter (BPF) setup.
State Updates: If the transaction leads to any changes, those are recorded by updating Solana’s state so it matches the new state in Neon EVM.

4. State Synchronization: The whole process wraps up with making sure that Solana and Neon EVM are on the same page, state-wise. This step is all about keeping everything consistent across the board.

State of the Neon EVM Ecosystem:

Neon is now a rapidly growing ecosystem like:

Neon Tools:

Block explorers like NeonScan provide a platform for exploring and analyzing Neon transactions within Solana.
NeonPass facilitates the transfer of ERC-20 tokens between Solana and Neon EVM. The ERC-20 SPL wrapper enables these transfers through non-custodial wallets.
NeonFaucet supplies NEON test tokens and other ERC-20 test tokens for application testing on DevNet.
Oracles such as Pyth and Chainlink allow the decentralized Web3 ecosystem to access price feeds and other external (off-chain) data sources. Neon EVM supports data queries from Solana-deployed oracles.
Neon EVM is compatible with EVM wallets like MetaMask’s non-custodial wallet and integrates with WalletConnect, a decentralized standard for connecting Web3 wallets and dApps.
Neon’s Tracer API, an extension for Neon Proxy, aids developers in testing, debugging, and understanding their smart contracts’ behavior on Neon EVM. It offers a complete trace of Neon transactions executed on the Solana blockchain. The Tracer API enables the rerunning of historical transactions, execution of transactions on historical states, and analysis of the Solana blockchain’s state post-execution of each instruction.
Development tools such as Hardhat, Remix, and Foundry are also available on Neon EVM.
NFT Projects like Liteflow
DeFi projects like Kuma,

Major Development: deBridge deployment on Neon EVM:

Recently, debridge, one of the most popular bridges went live on Neon EVM Mainnet to transform cross-chain native value transfers. It leverages deBridge’s Infra-as-a-service.

Neon DAO:

Neon DAO is currently a principal ally of the Neon Foundation, which champions the development, expansion, and adoption of Neon EVM and its surrounding ecosystem. The Neon DAO functions as a decentralized governance layer for Neon EVM, utilizing an SPL governance program. It operates through a set of contracts active on Solana and earns fees for its services. DAO community members, namely NEON holders, use a web interface to initiate and cast votes on proposals that influence Neon EVM, employing an SPL governance program enhanced with additional features.

Neon DAO actively votes on, makes decisions, and offers recommendations regarding the design and functionality of Neon EVM. This encompasses deliberations on establishing Neon EVM parameters and reaching a consensus on redesigns and updates to the Neon EVM Program.

NEON also has a points program, which aims to quantify crucial actions on-chain and within the community with evolving point-earning activities.

Neon Ecosystem Impact on Solana:

Making it easier for EVM builders to build on Solana is one of the biggest ecosystem impact Neon is trying to make.

The Aave Proposal

The Aave governance forum is currently evaluating a proposal to introduce Aave v3 on Neon EVM. This proposal, put forward by the Neon Foundation and the Aave Chan Initiative, is currently in the “temperature check” phase, where members of the Aave community are invited to express their opinions and provide feedback on the suggested integration.

The governing body of Aave is considering a proposal from the Neon Foundation and the Aave Chan Initiative to launch version 3 on Neon EVM. This proposal aims to extend Aave’s lending services to the Solana blockchain, initially as a minimally viable product (MVP).

The proposal advocates for a cautious approach, starting with a limited selection of assets and conservative risk parameters. It specifically identifies three forms of collateral — SOL, mSOL, and jitoSOL — and one borrowable asset, USDC.

Should it receive approval, this deployment would enable Aave to tap into Solana’s liquidity for its lending operations. The proposal notes that a version of Aave v3 has been successfully deployed on the developer-oriented testnet (devnet) of Neon EVM.

Once a blue-chip project like Aave deploys via Neon EVM, the impact can be massive for the Solana ecosystem as it will lead to much higher credibility and network effects for the Solana Ecosystem.

Neon EVM Trends and Prediction:

Here are a few themes that will explode around the Neon Ecosystem:

EVM games start coming to Solana: Gaming use cases need high throughput, which is only possible on Solana. Bigger EVM games that are facing scaling issues can deploy their EVM code on Neon and start running the execution-heavy components leveraging Solana.

2. Parallelized EVM competition with Monad and Sei: The space is now heating up with new upcoming players like Monad and Sei, which are garnering huge attention from the EVM community. The Neon Ecosystem needs to act fast and build a sizeable community, which builds a moat and keeps attracting developers to build on Neon.

3. RWAs can be a niche — RWAs are huge on EVM and all RWAs want to go multi-chain to tap capital from all chains. We can see RWAs like Centrifuge deploying on Solana via NeonVM soon.

4. Solidity on Solana becomes cool — EVM apps will start exploring “Only Possible on Solana” features like Token Extensions, and Compressed NFTs which can be a massive UX improvement and unlock a whole set of features, without much additional work.

Closing Thoughts: SVM 🤝 EVM

As the emergence of parallelized EVM L1s intensifies competition, Neon holds an early mover advantage that could be pivotal in attracting more applications and establishing a robust ecosystem. Additionally, leveraging the buzz surrounding Solana, Neon could begin onboarding premier EVM dApps, encouraging them to deploy and adopt a multi-chain approach to engage a larger community.

Furthermore, Neon should intensify its focus on the Solana community, known for its resilience, which could significantly contribute to Neon’s efforts in nurturing a dynamic ecosystem. Despite the challenges, Neon stands out as one of the most intriguing crypto projects, especially within the Solana x EVM domain.