GM. Here Is What Happened In Neo The Past Week:

• 531 new wallet addresses were added - 📉 down 31% week over week

• 4,970 average daily transactions - 📉 down 46.6% week over week

• 687 average daily active addresses - 📉 down 9.1% week over week

Binance, the world’s largest cryptocurrency exchange, announced that it will offer NEO trading options on Binance Futures. It will launch NEO/USDC perpetual contracts with up to 50x leverage.

Neo Global Development announced the onboarding of two new core developers. Welcome to Anna Shaleva and Vang1ong7ang! It’s great to see NGD promoting and supporting more core devs.

Neo Box, a new project from the Pixudi team, announced its launch. The project aims to “build a cutting edge data storage solution to rival industry giants like Dropbox and Google Drive.” Neo Box is powered by NeoFS and is an exciting development for decentralized storage on Neo!

Neo launched the NEO X Beta TestNet. It’s awesome to see the launch of the beta testnet so soon after Da Hongfei appeared in Hong Kong and Paris Web3 events. However, I’d be remiss in neglecting to point something out about the announcement.

What a missed opportunity:

I don’t want to be a “Salt Boy” here because I am genuinely happy to see the rate of progress on NEO X, but that being said, the announcement seemed like NGD seizing the opportunity to miss an opportunity.

Why do I describe it as a missed opportunity?

The announcement was made at 21:00 on a Monday night in Hong Kong and Shanghai, or 09:00 EST. Given the time in the UTC +8 timezone, I can only presume that the time was for the benefit of the Western market.

While I understand the timing from a “first thing Monday morning” standpoint in the US, it was a poorly timed announcement that was completely lost within the news cycle. By the end of the day, I had not seen the announcement make any of the crypto news aggregators.

It’s been only a few weeks since the Paris Blockchain Week and Hong Kong Web 3 conferences. Da Hongfei spoke at both and specifically highlighted NEO X. The announcement of Beta Testnet was a great opportunity to build on the momentum from those conferences.

How could it have been better? The announcement could have been made on Friday or Saturday when the crypto world was paying much more attention because of the Bitcoin halving news. I could get into the memeological genius that Saturday would have been, especially with the right “inspiration,” but not everything has to be about 420 on 4/20.

Even if Monday had been the choice of day, a coordinated announcement with a press release to crypto news outlets would have been better than a medium post shared on X.

Last cycle, NGD fumbled the timing of the release of N3. The announcement of Beta Testnet was an opportunity to show that not only is NEO X progress moving along quickly, but the timing is good for this cycle.

Too bad more people didn’t hear about it.

The Cost of Doing Business

Are GAS fees too high? This question has popped up within the Neo community more these past few months. It makes sense, too; with GAS hitting a high price of $7.98 on March 13, the average transaction fee has gotten more expensive in dollar terms. While the GAS price year to date is down over 17%, the price is up nearly 80% compared to a year ago. This means that the costs for regular transactions are up in terms of dollar costs by nearly 80% over the past year.

Just before writing this, I claimed 4.52 GAS on Neo Burger. The dollar value of the GAS at the time of claiming was $25.32. The GAS fee for the transaction was 0.03091148 GAS, or $0.1749. Around seventeen and a half cents to claim twenty-five dollars and thirty cents worth. Barely 0.69% of the value of the amount claimed.

In the context of the fee to the value of the claimed GAS, it was not high enough to make me think about it. However, my thinking would change if considering a $0.17 cost for a transaction claiming just 1 GAS.

Using the GAS price shared above, a $0.17 transaction fee on claiming 1 GAS valued at $5.66 equals a 3% fee. That’s an amount I would stop to think about.

The last time the Neo Council considered the issue of GAS fees was in September of 2021 when the fees were reduced by 80%. In mid-September of 2021, the price of GAS fluctuated between $9 and $10. Much higher than the price today.

The question of GAS fees comes up now for what I belive are two main reasons. The first is that the price of GAS is expected to rise with the introduction of NEO x. The second is that the Neo transaction fees are expensive when compared to other chains.

GAS Fees Compared To Other Chains

As to the latter of the two reasons, the average GAS fee on NEO is on the pricier end of the spectrum. Over the past 7 days, these were the average gas fees on popular Layer 1 and Layer 2 chains:

ETH is disproportionately high compared to the other chains. Below is a chart comparing the fees of the different chains but excluding Ethereum.

If Neo were added to that list, it would likely rank in the top 25 percent for average transaction cost.

Quick note: Neo does not have the same data availability as many other chains via resources like Dune, Artemis, and others. I’m really looking forward to the Flamingo Dashboard and expanded data visualization on Dora and One Gate.

Why Lower Fees Are A Good Idea

The last time the Neo Council considered fees was nearly two and a half years ago. At that time, Arbitrum was barely a month old. Optimism, Scroll, zkSync, and Base were all launched between May 2022 and August 2023.

Despite being launched after N3, the activity on those chains far exceeds that of Neo. Just looking at Monday, April 22nd, this is the activity on some of the chains mentioned above:

The flywheel of the Layer 2 chains and Solana, mentioned above, are well established. They all have large numbers of daily active addresses, and those translate into a large amount of transactions.

Lowering the GAS fees on Neo, especially now when the price of GAS is not above $9, would help incentivize potential growth on the network. The worst possible combination that could happen for Neo would be the launch of NEO X and a resurgence in GAS price driving the dollar value of transaction fees up. It will be hard to convince people to come and use the network if the average transaction fee is equivalent to $0.25, which would happen if GAS is around $9.

The transaction fees come more into focus when considering the topic of stablecoins on Neo. Imagine wanting to transact $5 of UST or FDUSD and finding that the cost of the transaction is $0.27. That’s simply too high.

Incentives

Asking for lower fees is, of course, easier said than done. The 21 Neo Council members are financially incentivized to keep fees higher. Many projects derive income and livelihood from those fees as well. So, the issue is not simple.

Neo Council members will have to decide if lower fees will serve as a form of stimulus to incentivize people to use the Neo network as much as possible. More usage means more transactions, which in turn means more fees. However, lower fees are not a guarantee that more transactions will take place.

Therein lies the dilemma of incentives. Keep the revenue from the existing transactions now, or lower the fees and potentially suffer financial loss (temporary or long term) in the hopes of spurring new activity on Neo.

Other Good Reads

WAGMI - Get Ahead In Crypto. Join 15,000+ subscribers and the free 5-min daily newsletter

Digital Assets Insights  - The latest news and developments in the digital asset industry delivered straight to your inbox.

Flamingo Joe Finance - Last issue of the Flamingo Joe newsletter