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NEO’s senior R&D manager, Malcolm Lerider, recently participated in an extended video conference with Australian YouTuber, Brad Laurie, also known as “Blockchain Brad”. The interview lasted nearly 100 minutes and covered questions posed by Tyler Swope, a.k.a. “Chico Crypto” and “Blue Collar Crypto”, as well as other lingering concerns raised by the community following the recent AMA with NEO founders, Da Hongfei and Erik Zhang.

The two covered a wide range of topics that included the roles of NEO founders, Hongfei and Erik, allocation of funds, NEO’s relationship with the Ontology blockchain, NEO Global Capital, the expansion of NEO’s Shanghai offices, enterprise development, forked blocks, decentralization, dApps, consensus nodes, and marketing.

Due to the interview’s extended length, direct links to the topics discussed are provided throughout this article, and some of the topics broached in the video are not summarized here.

Communications

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On the topic of communications, Laurie asked Lerider why he felt the NEO community had been dissatisfied with NEO’s efforts in recent months. Lerider answered by stating that the core NEO team of approximately 20 employees previously worked very closely in a tiny two-story office, where any significant conversation was heard by the entire group, and feedback between the team was quite effective.

He then went on to say that around April 2018, the NEO team had reorganized and grown to the point where it was no longer possible for all team members to stay informed about everything that happened within the organization. Lerider stated that “part of the reorganization was that too much was handed over to Da Hongfei and Erik [Zhang].”

Having the founders “take a step back” from daily operations, by delegating decisions and focusing on “vision” and community relations was the intent; He reports that Zhao “Johnson” Chen has taken over daily operations at NEO, although Da and Erik still lead the project.

NEO Team

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Laurie inquired about the growth of the NEO team, and a perceived lack of transparency regarding the roles of the team. Lerider mentioned that some of the gulf is cultural; for example, use of LinkedIn is not common in Chinese culture.

Lerider stated that expectations of the Western and Chinese communities are very different: “My experience in the West is…the trading community has been quite large…and in China it has mainly been the developer community that is quite interested”.

Lerider also highlighted that the Chinese development community is very mature, and pointed to NEO developer competitions, such as the NEO.Game competition, and their large amounts of Chinese entries as evidence. He also mentioned that trading NEO tokens is not possible for most Chinese.

Blockchain Fork

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NEO’s recent forked block was discussed, with Lerider stating that the NEO team had identified the “bug”, discussed a fix on Github, and was two days away from updating the code when the issue happened again. When queried about possible bad actors amongst the consensus nodes, Lerider said that “more than ⅔ of the consensus nodes” and “70 to 80 percent of all the tokens” would be necessary for a malicious actor to cause an issue.

Lerider added, “When this bug occurred, the good thing about this happening is that we actually do get a confirmation that we cannot have these 2 branches [competing chains after a fork incident]. Technically it is a fork in the sense that there are two blocks created at the same height, but it stops there. Neither one of them are actually being continued.”

Lerider further added that the finality of NEO’s blockchain was preserved, as no transactions had to be rolled back after the incident. The forked blocks contained valid transactions, so the NEO blockchain was simply directed to produce blocks on top of one of the forked blocks after the consensus nodes were restarted.

Ontology

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Lerider stated that Ontology and NEO are “completely separate entities, and the teams are completely separate as well”. He said that the two projects have cooperation on technical research, and have an MOU that outlines the terms of their cooperation. Lerider mentioned Ethereum as the primary target for NEO’s competitive efforts. He further elaborated that NEO is focused on “digital assets and digital identity”, while Ontology is focused on “data exchange and ownership of data”.

When asked about NEO’s smart contract system, Lerider said that “the target use cases are the main difference between the two smart contract platforms” [NEO and Ontology], and they both use the same virtual machine (VM). Smart contracts written for one platform can largely be used on the other, which is expected to greatly aid cross-chain interaction in the future. Lerider said that, “a key component of NeoX [a cross-chain interoperability protocol] that we are developing is actually NeoVM”, NEO’s virtual machine.

Lerider opined that “it’s fair to assume that there has been [retail investors’] money moving from NEO to Ontology”. He said that “from my perspective, I would see that as the speculative money moving from NEO to Ontology…think about ‘how much does this actually matter?’, because speculative money will leave sooner or later.” He further stated that “we are working for long-term, that has to be very clear to everybody…NEO is operating for the long term”.

Laurie then asked “Is it true…that there are any team members at all moving from NEO to Ontology?” Lerider answered that he joined in August 2017, and from that time, “there has not been one single person” moving from NEO Global Development or NEO moving to Ontology.

Development and Expansion

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When asked about the state of NEO development, Lerider said that NEO is traditionally seen as an open-source, community-driven initiative, which he compared to Linux. He added that “There are people here that are very fond of the open-source mindset” but the NEO team has seen that certain aspects of development, such as Java smart contracts, have not been picked up by the open-source community.

Lerider added that around the time of NEO’s reorganization in March “it was decided that we do need to have a large development team here in NGD [NEO Global Development, in Shanghai] as well, and…I would assume, that part of the reason is that we can have that is that we have NEO Global Capital to back us up”. Lerider claimed that their profits provide “a sustainable model to grow the NGD team to a quite large team without having to use the [unlocked] NEO tokens for that”.

Laurie then asked “if they walked in to the office, would they see empty seats?” and asked how large the development community is surrounding NEO. Lerider said that “the NGD team is about 40 people right now” and “the office was completely full until Wednesday last week” at which point NEO Global Capital was moved from their shared office space to a newly rented space next door. The two agreed that “any suggestion that NEO team is diminishing is completely untrue”, with the NEO team having already moved into its third office, and is preparing to expand further due to lack of desks for employees.

NEO Development Goals

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Laurie asked Lerider about Da Hongfei’s ambitious goals that were revealed at the first NEO DevCon in San Francisco, specifically to reach 100,000 transactions per second (TPS) without sharding by the year 2020. Lerider quickly answered that “we are on track to achieve that” and pointed to NEO 3.0, which he claims will address scaling restrictions present in the current version. Lerider stated that “this is an effort, jointly…from Erik [Zhang] and also NEO Research which are…in Brazil, also funded by NEO.” Lerider further said that City of Zion (CoZ) is also responsible for contributions towards the ambitious goal.

Laurie then asked “Is NEO 3.0 meant to be enterprise-centric?” to which Lerider answered that NEO 3.0 is designed for both public and private use cases. He went on to claim that NeoX development has already started and they plan to release a NeoX prototype by the end of 2018. Lerider mentioned City of Zion’s neo-sharp project as being important to help drive enterprise adoption in the short term. Lerider estimated that the initial version of the project, an optimized and modular core and node implementation of NEO, is 2 or 3 months away.

When asked about the NeoFS distributed file storage protocol, Lerider reported that NEO Global Development has chosen to outsource the development to a Russian research group, which they are funding.

NEO token expenditures

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Lerider confirmed that approximately 4 million of the 15 million NEO tokens that were unlocked in October 2017, have been spent “as investment in ecosystem projects”. A member of NGD is collecting all the transactions and investment information for public release in September or October.

NEO congestion

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Lerider addressed concerns voiced by dApp leaders and Laurie about slowdowns, congestion and bottlenecks on the NEO blockchain. Lerider shared that “we did a change to prevent spam attacks 3 or 4 weeks ago, which means that every block there are 21 transactions at most can be without a transaction fee”. A transaction fee grants a transaction priority to be added to the blockchain, meaning that transaction will always go through.

This means that if dApps do not attach transaction fees to their transactions, they will be queued during periods of spam attacks and the dApps will function more slowly. He also shared that empirically, he has gotten reports that “certain invocations with transaction fees are not prioritized” and the NGD team is performing internal testing to see if there is an issue, and if so, a fix will be prepared.

Sharding

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“We are going to be sharding”, Lerider answered in response to a question from Laurie. Lerider reiterated the goal of 100,000 TPS on the main chain is without scaling technologies. “But we will have sharding on top of that as well because 100,000 transactions per second is still not enough”. Lerider revealed that CoZ co-founder Fábio Canesin was in Shanghai the previous week discussing NEO 3.0, and it was proposed that NEO 2.X (the current blockchain) could be placed as a shard on NEO 3.0 for seamless data migration of current smart contracts.

dApp Migration

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“For some projects to chose to have their own chain, it’s a valid choice”, Lerider opined in response to a question from Laurie about dApp migration off the NEO blockchain. Laurie mentioned that many dApps may need to have control over their own consensus nodes because they are building a consortium blockchain, or they expect to handle an extremely high volume of transactions.

Lerider also mentioned that the majority of chains he has seen build their own blockchains are running a version of NEO and NeoVM, which means that they will still interact with the main chain using NeoX. “We can actually achieve a smart economy, because the smart economy will be a chain of chains”, Lerider said, and added that, “the platform that can build the longest or the most useful chain of chains, that’s the most valuable blockchain platform, in my opinion.”

Marketing

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Laurie forwarded criticism of NEO’s marketing efforts and asked Lerider: “What’s going to change, and how will it change?” Lerider agreed that marketing “is a weak area in NEO” and shared that there are different views of the issue being discussed in Shanghai. Lerider claimed, “the consensus is that the marketing will change radically” with restructuring of roles in the NEO organization.

Laurie further shared community criticism of NEO’s marketing strategy by saying “their experience has been that see a lot of meetups happening around the world, a lot of tweets about those locations, but not a lot of real explanations about core tech that’s really public, a real dearth of speakers in the NEO ecosystem delivering the educational information that they essentially need”. Lerider agreed completely and reiterated that NEO is taking action on a new marketing strategy.

Consensus Nodes

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Laurie asked about criticism that NEO does not currently have a fully decentralized system. Lerider brought up two aspects of decentralization: ownership and geographical distribution of nodes, and ownership of tokens. Lerider claims that NEO has already achieved geographical decentralization of its consensus nodes.

For node ownership, independent programming group, City of Zion, controls one of seven consensus nodes on the MainNet. Fenbushi Capital and telecom provider, KPN, are running trials on TestNet, and are expected to be voted into the MainNet in 2018. Lerider cited three more companies larger than KPN that have expressed interest in running a consensus node. Lerider says that the exact number of consensus nodes deployed on NEO’s MainNet will be controlled by voters on the NEO blockchain

NEO Indivisibility

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When Laurie referenced Github discussion on the possibility of making NEO divisible, Lerider said “it shouldn’t be divisible in my opinion, and I have very strong opinions about that”.  He added that debate over NEO’s future divisibility is part of its open-source spirit, and that proposals from Zhang carry a lot of weight but are the beginning, not the end, of a discussion.

Parting Words

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Lerider: “I’m very happy to have the community that we do have, and I’m also very happy to have critical feedback. So I appreciate both you for taking the time to collect all this feedback and I also appreciate all opinions that the community have put forward. So I feel a little bit humbled that we also have this good community that we do have.”

Laurie: “Well, just to acknowledge two of them, I also would like to give Tyler Swope a plug again, Chico Crypto, and also to Jeremy, both of them have worked tirelessly to really elicit some of the concerns also from the community, and they continue to do so…and once again, thank you for acknowledging the work that the community does.”

Lerider: “I’m really excited…The last few weeks have been healthy in terms of prioritizing the things that the community also are prioritizing, so I’m very confident that the community will be happy with what we are producing in the coming few weeks, and even in the next monthly report, I’m certain that you will already then see the improvements that have been made.”

The full interview can be seen on Brad Laurie’s Youtube channel.