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The Bullish Case for NEO
Two thousand two hundred and eighty. That is the number of days that have passed since NEO hit the all-time high price of $198.38. That was on January 14, 2018, more than six years ago now. In crypto, that timeframe feels like a couple of lifetimes. Nearly two-thirds of crypto projects born in the last cycle have died. Meanwhile, Neo has managed to survive and, in its third cycle, is still BUIDLing. It has been so long that the fact that Neo is still around may be surprising to some people.
The NEO token was in the news this past week because of an unexpected price surge. Over the past seven days, NEO is up over 50%, and other Neo ecosystem tokens like GAS (+ 18.5%) and FLM (+23%) also experienced significant price appreciation. Da Hongfei, Neo co-founder and CEO of Neo Global Development (NGD), spoke at the Hong Kong Web3 Festival in a speech titled “Rethink Layer 1,” sharing his vision for the future of Web3. At that same conference, Neo sponsored a booth, and the head of business development for NGD participated in a panel. Additionally, Neo and Item Systems collaborated on a booth at the Paris Blockchain Week, featuring NFI activations. The visibility of Da Hongfei and Neo generated a buzz that translated to token price activity.
Despite the price exuberance, the NEO token is down eighty-eight percent from the all-time high price established six years ago. At one time, NEO was a top 10 blockchain by market cap. Now, it generally hovers at the bottom quarter of the top 100. At times, it is below that top threshold. It is a blockchain that is often forgotten by the market focused on the top assets. With everything happening in Neo now, it would be a mistake to overlook the blockchain.
The market may forget about NEO, and that is your opportunity. I think NEO is poised for a comeback. An overnight success story years in the making. Can a layer 1 blockchain from 2017 thrive in this bull market and return to the top 10 list? Yes, it can.
This is the bullish case for NEO. A better tech layer 1 blockchain with “proof of time”, positive geo-regulatory positioning, a new EVM sidechain that will bring the largest crypto ecosystem to Neo, and the confluence of narrative and timing.
All in One - All in NEO
Neo is a complete layer-one blockchain. Since the launch of N3 in 2021, better tech has been available in Neo. It is often perplexing for members of the Neo community to see features and capabilities announced for other chains with hyperbolic enthusiasm when Neo has had the same tech for years.
As a smart contract platform, Neo has decentralized storage, identity tools, data oracles, interoperability, a domain name service, a delegated Byzantine Fault Tolerance consensus mechanism, and is the first public blockchain to adopt a dual token mechanism. Additionally, the blockchain’s features of single-block finality, turing completeness, and developer language flexibility make it a chain that will stand the test of time.
Neo is poised and ready for the moment of this market cycle. The All in One blockchain is a layer 1 platform that offers the performance and infrastructure that developers are looking for.
“Proof of Time”
Things that have stood the “test of time” are often things you can rely on. The Lindy Effect states that the future life expectancy of a non-perishable item, such as tech, is proportional to its current age.
Just looking back at the last cycle, Neo is among the less than one-third of projects still around. There were at least 2,383 crypto coins that died between 2013 and 2023. Over half of the coins launched in 2017, the year Neo rebranded from Antshares, have failed.
Why is it so important that Neo has “proof of time”? The fact that Neo has survived thus far, through two full cycles, is very important. It shows that the chain is capable of withstanding a bear market. Despite the pains and perceived lack of movement, projects have continued to build on Neo and prepare for the next cycle.
Neo has “been here” since 2016. It’s taken on different iterations but has continued to grow from the launch of Antshares mainnet to the current N3. Now we are on the cusp of NEO X, the Neo EVM sidechain, launch. Adding further utility and interoperability to the ecosystem.
In many ways, it reminds me of a scene in the movie “The Founder”, the biographical drama about Ray Kroc and the creation of the fast-food restaurant chain McDonald’s. The scene is about creating the “Speedee system,” the revolutionary fast food kitchen. A lot of time, effort, experience, and lessons were employed in creating that system. When implemented, the timing was awful, and the market didn’t understand. Despite this, it prevailed, and the people embraced the concept. As the quote goes, “We are an overnight sensation 30 years in the making.”
Neo announced the plan to create Neo3, or N3, in 2018. N3 mainnet did not launch until the end of 2021. The timing was poor. It was right at the end of the last bull market, and there was no exuberance behind the features of the new chain. Then, 2022 happened, and the crypto market generally experienced massive implosions and meltdowns of major projects. Much like the swarm of locusts in the movie scene, the timing and conditions were biblically bad.
Now in the beginning stages of a new bull market, Neo is positioned to finally enjoy the success from the effort, experience, and vision put into N3. NGD is building upon it by introducing NEO X. When the price of NEO and GAS pump, and they will, it will be sudden overnight success years in the making.
Geography and Regulation
Earlier this year, Neo Global Development opened an official office in Hong Kong. NGD has been establishing itself in the HK Web3 community for longer than a year now. They sponsored the 2023 NEO APAC Hackathon that culminated with a grand finale ceremony in Hong Kong. Last week, Neo was a sponsorship partner of the Hong Kong Web 3.0 summit. In late December, Haskey Cloud, the first licensed Web3 exchange in HK for retail investors, became a Neo Council member. Today, HashKey Cloud is on the verge of receiving regulatory approval for a spot BTC ETF.
Neo is a growing member of Web3 in Hong Kong. Hong Kong itself is a growing Web3 location. From a regulatory perspective, Hong Kong is a global financial market ready and willing to accept the retail adoption of crytpo. The Chinese government has labeled Hong Kong a Web3 center, and I do not think it is coincidental that Hong Kong embraces the “Web 3” narrative rather than the “crypto” narrative that the Chinese government so publicly and thoroughly distanced itself from in 2021-2022. Hong Kong is the financial sandbox that the CCP has designated as acceptable for the intersection of Web 3 and Chinese investors.
Unlike the US and, to a lesser extent, Europe, the Hong Kong authorities are purpose-driven and focused in their approach to regulation. The process in which they have taken on the task and moved from concept to regulation has been light years faster than the United States. Where the SEC appears to be interested in regulation by enforcement in the US, the Hong Kong Monetary Authority and Financial Services and the Treasury Bureau are more proactive in ensuring regulatory guidance to the market.
The combination of the physical presence in a growing Web 3 location, along with robust regulatory guidance, is positive for investment. When capital enters the Web3 space via Hong Kong investments, Neo will be among the more visible projects there. A prominent Chinese blockchain that has proof of time. Additionally, the partnership with Hashkey Cloud is an important one that will likely become more visible as the market in HK grows.
I think an underappreciated aspect of Neo is how NGD has managed to survive a harsh government approach to crypto in China. The Shanghai offices of NGD have managed to comply with the law and stay ahead of the politics of the CCP. The “smart economy” is a technology narrative and not a “currency” narrative competing with the government. We are not privy to the behind-the-scenes work of politics and blockchain in China, but I am sure they are very complicated. This is perhaps one of the many reasons why NGD was not as visible from a “wen maketing” perspective over the past few years.
In Hong Kong, Neo has the opportunity to become a prominent member of the local Web 3 industry open to investors and developers alike.
NEO X
NEO X is an EVM-compatible side chain that will serve as a bridge between Neo N3 and the EVM network, which is the largest ecosystem in crypto by far. From a technical perspective it will incorporate many of the distinctive features of Neo (read more here and here).
The importance of this side chain to the future of Neo cannot be understated. It opens the possibility to many more developers joining the Neo ecosystem because of solidity. Stablecoins with the transaction volume and liquidity accompanying them will become available to Neo (read more about that here).
From a price perspective, the biggest price pumps for NEO during the past year have come on the heels of NEO X announcements and presentations. Both in November, when NEO X was announced, and this past week.
Unlike last cycle, NGD is working to launch this side chain within the coming months. During the current bull market. The timing is perfect.
Narrative and Timing
Crypto is about narrative and timing. We often see blockchain projects capture the imagination of investors with fantastic stories of an imagined future. Some deliver, others dissipate into the archives of crypto “would be” stories. We often see projects that appeal to the general “narrative” of a particular cycle do well.
In this cycle, the big narratives taking shape in crypto are DePINs, RWA (real-world asset) tokenization, and AI. Neo is a blockchain that can not only meet the requirements of those narrative use cases but, in the case of DePINs, already has an existing project.
Timing is equally important as narrative. The launch of the side chain, the regulatory and political context of Hong Kong, and the current financial market conditions of mainland China are a perfect mix for Neo. Spot bitcoin exchange-traded funds could unlock up to $25 billion in demand from Chinese investments. Spot Ethereum exchange-traded funds are in the works in HK, and in the near future, it would not be surprising to see a spot NEO exchange-traded fund become available to meet demand - especially given the relationship between Neo and Hashkey Cloud.
TL;DR
Neo stands at a unique crossroads, presenting a compelling case for its resurgence. Despite its prolonged period of price decline since its all-time high, Neo has demonstrated resilience and innovation, continually upgrading its technology and expanding its ecosystem. While the price was at times a rollercoaster ride, N3 kept its chin up and its coding hand strong.
With its "proof of time" survival through multiple market cycles, Neo offers a solid foundation for investors and developers alike. Its upcoming NEO X side chain opens the doors to a wider developer base and access to the extensive Ethereum ecosystem. NGD's strategic presence in Hong Kong, with its favorable regulatory environment and growing Web3 industry, positions it well for future growth and adoption.
A better L1, proof of time, NEO X, and Hong Kong. It’s all coming together nicely at the right time.
Long story short, NEO bags đź’° pump soon!
*NOT FINANCIAL ADVICE
As I said in my first newsletter, I’m not an expert, and this isn’t financial advice. I’m bullish on NEO and the future of Neo ecosystem tokens like GAS and FLM, and I enjoy writing about them, but I urge you to do your own research if you are considering purchasing any of these assets.
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