Is $NEO dead? No. Is it failing? Yes. Will it finally wake up? Perhaps.

Jun 4, 2024 1:11:35 AM

Is $NEO dead? No. Is it failing? Yes. Will it finally wake up? Perhaps

Neo is one of the oldest blockchains and one of the first to support smart contracts. However, many people argue that it’s a dead project. Is it dead?

Is the $NEO blockchain dead?

To answer this question, we need to define ‘dead.’ If the idea behind this word is that the network is not being maintained or new features are not added, then the answer is no. Neo is alive and well.

Understandably, this word is being used to represent dissatisfaction with the slow adoption of new projects and teams’ lack of communication.

Is $NEO failing?

Considering that Neo has been losing market share and has a severe problem with developer adoption and retention, Neo may be failing.

This doesn’t mean it’s in an unrecoverable state or unable to reinvent itself. The new exemplifies the Neo network’s resilience and capability to change.

$NEO Market Performance

The Neo network was once one of the top 10 networks in the world. Now, it’s almost out of the top 100 tokens.

The price is also far from its ATH. According to Coinbase, it was once priced at $196.85. Over the last few years, Neo’s price stayed between U$7 and U$14. That’s only 7% of its all-time high. ETH and SOL are around 50% and 40%, respectively. Neo has lost almost 10 times more market share than its direct competitors. This is not something unique to NEO. Other coins like $EOS suffered from even bigger losses.

What could be the reasons behind this?

It’s impossible to know all the exact reasons, but we can consider a few hypotheses, including external factors.

The Bitcoin Ban and other restrictions in China

China banned Bitcoin mining and crypto in general. Neo only exists because it was developed years before it happened. However, despite not being blocked from operating, the risks of being sanctioned increased drastically.

This could have affected the organization’s autonomy and risk-taking activities. Without the ability to advertise to its huge internal market, Neo had to compete in other territories it had yet to master.

No Regulation

Another external factor to be considered is the lack of regulation by global authorities. Neo Foundation and NGD are authentic institutions that must obey the laws and rules. Without it, these institutions are unable to develop legally secure initiatives.

Unique Development Stack

Neo invested heavily in the development of custom tools and frameworks. In its vision, Neo was targeting the general developer audience. These people are attracted by the opportunity to code using common programming languages like C# and Python and other demanding features such as internet access (oracles) and file storage. Technically speaking, all these features exist and work, but using them wasn’t possible.

Instead of allowing developers to work like they were used to, Neo demanded a very specific setup. It required multiple manual steps, one of which would often fail, making it impossible for developers to start coding on Neo.

No Planning or Communication

A few people may believe the problem is how Neo handles its public relations and marketing. That is not the issue. The NNT team is one of the few elected validators for which you can see results.

The communication issues you see on Neo are just a symptom of a broader issue: Neo doesn’t make or share their plans. A few communities communicate their project roadmap, but that doesn’t apply to the platform. All the communities didn’t share a bigger goal.

The communication issues are just a symptom of a lack of planning. It’s impossible to expect improvements in Neo’s communication without plans.

Poor Governance

The Neo blockchain does little to award those who contribute to the network. Instead, it rewards those who vote for the already elected nodes. This developed a situation similar to a cartel, where members colluded to protect their part of the business.

The most bizarre incident related to the Neo system was the sudden election of a new validator node — before it was announced as a candidate. In less than 3 hours, the node received over 700.000 votes. That change was so abrupt that $GAS calculators broke. It wasn’t developed considering such abrupt changes in the number of votes.

External actors, including the Neo Foundation, aided this. This may not be bad from an investment perspective, but it is from a governance point of view.

No Core Dev Treasury or Stability

Neo Core Developers don’t have the right to a consensus node — but some ‘ghost communities’ have. Neo is probably one of the few networks where the core developers do not receive rewards from the network.

If nothing changes, core developers are rewarded by merged pull requests. They are not awarded for planning or making discussions. They are also not eligible for any stability. As many can imagine, the lack of stability drives away many seasoned developers.

Without stability, teams are unable to build solid processes and share responsibilities. With the ‘pull request reward model,’ developers have no incentives to improve the network or participate in discussions. The only thing that pays their bills are PRs. This model also doesn’t have room for project managers, product owners, or other activities that don’t produce code.

Unprofessional Development Environment

Another barrier for professional developers is an unfair and unprofessional environment. Neo has lost good developers and will struggle to retain any of them.

Good developers want more than just money. They want a challenging, stable, professional, and rewarding working environment. Neo is failing to deliver most (if not all) of these.

No Interest in Results

Another issue caused by poor network governance was that nobody was interested in tracking or improving results. What numbers do they care about? Nobody knows. It was common to read that “the Neo team doesn’t care about prices.” If they don’t care about prices, what do they care about? What other metrics are they trying to improve? “All of them” is not an answer.

High Fees

Despite announcing its low fees, the Neo network is far from cheap. A simple Transfer costs around $0.33 (0.056 $GAS), almost 1000x more than Solana or Polygon. Could the validators vote to reduce the fees? Yes, but they never did. There is also a conflict of interests. Validators are paid in $GAS, and it’s in their interest to keep the prices high. Lowering transaction fees may affect their funding (although not directly related).

Who do you think owns the largest $GAS reserves? Do your research about this.

The Good News: $NEO is reinventing itself

Admitting its failures

It’s not possible to improve if you don’t recognize the problems. The first step to improving the Neo ecosystem is understanding where and why it’s failing.

Neo has been failing to attract developers and drive network adoption. Without developers, almost no dApps were developed. Without dApps, investors lost interest, making the price drop.

With prices dropping and the tools unusable, Neo put itself in a tough situation.

It’s worth noticing that the author is part of this failure.

New Development Tools and Documentation

Since we identified the biggest bottlenecks related to developer retention, our community, Linkd Academy, decided to rework the existing Neo docs and development tools. These docs and tools are compatible with all existing programming languages on Neo. This could fix Neo’s ‘developer leakage’.

Is a Roadmap Coming?

Many conversations are happening around the development of a roadmap. This initiative, led by COZ, is working with other communities to build a roadmap that network builders can share.

EVM Sidechain

If fixing all the problems is impossible, then an easier solution would be using pre-existing tools and technologies. By adopting EVM in their sidechain, Neo is trying to solve the problem of developer attraction and retention. It will be easier for seasoned developers to deploy dApps on Neo.

By using the EVM stack, developers will also be able to use existing tools that have proven to work.

Time for Improvements

Neo has gotten into this situation due to many internal and external factors. However, it has likely hit the bottom. For the first time in many years, we see bugs being fixed and a roadmap being built. If all of this fails, there is still the new sidechain that, by being EVM-compatible, will make it easier for anyone to deploy their existing (or third-party) applications.

What can you do for $NEO?

At least two things that an investor can do may help drive these network improvements. First, visit Neo’s social media channels and make your requests. The second and most important is to vote for good validators. Instead of voting purely based on $GAS rewards, consider voting for the communities that will increase the overall network value. This is a better alternative than trying to chase short-term gains.