Ethereum is the most popular blockchain network for smart contracts and decentralized applications. In fact, it is the network that brought about web3.
This doesn’t mean there are no other competent networks in this area. There are many of them, one of which is Neo blockchain. The network was launched specifically to offer similar services as Ethereum, but better.
In this guide, we will compare the two networks in terms of major characteristics to see which one is better for smart contract and decentralized applications developers. We will also highlight their strengths and weaknesses to help you decide on which one is best for you.
What Is Ethereum (ETH)?
Ethereum is the second largest crypto project by market capitalization. The network is the foremost in terms of developing smart contracts and decentralized applications which support things like gaming, non-fungible tokens (NFTs), DeFi, etc.
The network was first created as a proof-of-work network, but has changed to become a proof-of-stake network. The change was necessary partly because the PoW network was unscalable, slow, and expensive to use.
However despite the change to PoS, the network still struggles with these issues. Although there have been several upgrades to solve the problems, these upgrades haven’t helped much, but there are more to come which experts believe will help.
Ethereum’s native utility token, ETH, is used to power the Ethereum ecosystem. It is for paying transaction fees for all activities on the network. Validators also stake it to secure the network, and they are also rewarded with more ETH for their role.
Since Ethereum is now a PoS network, the tokens are all pre-mined, that is they don’t need to be mined as in PoW networks. All 120 million tokens are in circulation, and there are no more tokens to be released.
The supply is quite small, considering that it is a utility token. This could be the reason why investors find it attractive as an investment asset.
What Is Neo (NEO)?
Neo is a blockchain network created with the vision of digitizing everything towards building a smart economy. The network is one of those referred to as “Ethereum Killer”. It was also created as a more effective version of Ethereum, and has found a place particularly in China.
Just like Ethereum, developers use it to create decentralized applications and deploy them using smart contracts. It is also highly scalable, processing a whopping 10,000 transactions per second.
The network also allows developers and other users to create digital identities, through tokenization to allow Anti Money Laundering and Know Your Customer compliance. Neo also hosts a decentralized file storage, an oracle system.
The entire ecosystem is powered by two tokens, NEO and GAS. NEO is a governance token that plays a critical role in running the network. Holders can vote on proposals for the growth of the network. They can also stake their NEO balances to secure the network and get rewarded with more of the token in return.
GAS on the other hand is used to pay for computational power on the network. It is also the token used to pay for other transaction fees on the network, hence the name GAS which refers to gas fees in Ethereum for example.
Neo is a proof-of-stake network that has in addition, a unique consensus mechanism known as delegated Byzantine Fault Tolerance (dBFT). This is the protocol behind the network’s ability to maintain a throughput of 10,000 TPS. This makes the network fast, smooth, and cheap to use.
There are 70 million NEO in circulation, with a total and maximum supply of 100 million tokens. This means there will never be more than 100 million tokens.
Which Is Better?
In terms of scalability and cost of transactions, Neo is a better network. However for some reason, Ethereum remains more popular both as a network and as an investment asset.
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