In a short space of time NEO has proven itself to be one of the top cryptocurrency projects in the world, NEO serves as a smart asset platform. Similar to Ethereum they use blockchain technology to provide the development of smart contracts and Dapps on top of the NEO blockchain. These developments are collectively known as NEP5 tokens and are the Ethereum equivalent of ERC20 tokens. This article will delve into what is an NEP5 token and provide an incite into the rise of NEP5 tokens
What is an NEP5 token?
So what is an NEP5 Token? An NEP5 token is a token on which does not have a blockchain of its own, instead it is created on the NEO blockchain. The NEO blockchain will the process the transactions for any NEP5 tokens in the same way it will process NEO transactions.
NEP stands for ‘NEO Enhancement Protocol’, in simple terms this means that any project which operates on the NEO blockchain as a NEP5 token will have to follow a certain standard of rules or ‘protocols’. The minimum protocols which must be followed in order to operate as an NEP5 token are: TotalSupply, Name, Symbol, Decimals, BalanceOf, and Transfer as well as some optional functions… To see a full list click here
What are some NEP5 tokens?
As NEO itself is a relatively new project, NEP5 tokens are also a very new addition to the cryptocurrency space. With the first NEP5 token being created on 08/10/2017, since then only another 18 NEP5 tokens have been created, however this number will increase steadily throughout 2018.
The first NEP5 token was Red Pulse (RPX), and after selling out in just 1 hour and 7 minutes they managed to raise an incredible $15 million. RPX then went on to increase by over 1300% in the next couple of months before returning back down to roughly double the ICO price in April 2018…
Ontology (ONT) is by the most successful NEP5 token for investors so far… the token was created on 26/02/2018 however the ICO was completed at the beginning of January, the token has increased from $0.20 and reached $3.97 by early April.
Almost all of the NEP5 tokens have increased in value following their ICO which is leading to a lot of hype around new and upcoming projects… To see a full list of all the registered NEP5 tokens click here.
Why are the NEP5 tokens performing so well
There are a number of theories as to why NEP5 tokens are such an attractive proposition for investors.
The first, and most simple explanation is that NEP5 tokens have only just been introduced to cryptocurrency sphere. As a result of this, NEP5 tokens are gaining a lot more hype following on from the first few successful ICO’s and investors are flooding in.
The second explanation and probably a much more accurate one, is that NEP5 tokens are a lot more scarce than ERC20 tokens. Anyone can create an ERC20 token and you only need 32,000 Gas to deploy the contract. This means on average, it costs anywhere between $0.25 and $5.00 to deploy a ERC20 smart contract. On the NEO blockchain this is the same in as much as anyone can create a smart contract… However, the similarities stop there, to deploy a smart contract on the NEO blockchain it costs 500 GAS. This amount in fiat currency obviously fluctuates with the price of GAS. At its’ peak GAS was around $85 meaning a smart contract would have cost $42,500 to deploy.
One of the benefits to having this initial costs is that the projects are deemed a lot more serious when they have an initial cost to setting up. This also keeps the network usage down on the NEO blockchain, as there are less smart contracts clogging up the network. And the obvious advantage is; there is a far lower chance that an ICO which has paid an initial sum of money is going to be a scam.
There is a third explanation and this is simply that, most of the the first NEP5 tokens all seem to have a clear project which influences or benefits the overall ‘NEO smart economy’ in someway. For example; Trinity (TNC) is an off chain scaling solution for the NEO blockchain (similar to lightning network) Switcheo and NEX will be the first decentralized exchanges on the NEO blockchain. If you look at the list of the NEP5 tokens, the majority of them are created to assist or benefit the overall NEO smart economy.
Neonexchange (NEX) is one of the upcoming NEO ICO projects check it out here