NEO, or Ethereum of China, as it’s known within the crypto community, is catching a lot of attention lately. Ever since it got on the market, NEO has been challenging Ethereum’s domination.
One of the ways it’s doing that is releasing NEP-5 tokens. You see, by adding these tokens to the ecosystem, NEO allows other platforms to have their own, customized tokens.
So, in today’s guide, we’ll focus on what the NEP-5 protocol is, how it works, and how it is different from ERC20 tokens?
Let’s get started.
What exactly is NEP-5 protocol?
NEP stands for NEO Enhancement Protocol, while 5 is the number of revisions. You can say that NEP-5 is NEO’s answer to Ethereum’s ERC20 protocol.
But why does NEO need its own protocol in the first place? Because with protocols, tokens maintain a necessary level of security and can interact with other cryptocurrencies on the blockchain platform.
In other words, this protocol allows smart contracts to act like cryptocurrencies on the NEO platform. For example, if you’re building a DApp on top of the NEO blockchain, thanks to NEP-5, you can create your own, native tokens.
How to buy and sell with NEP-5 tokens?
NEP-5 tokens can be stored only in wallets that are compatible with NEO platform. And if you want to trade with the tokens, you can do that on NEO-based exchanges such as:
- Switcheo Network, which is a decentralized exchange running on NEO blockchain.
- NEX, also a decentralized exchange, plus wallet app and payment service.
Some of the tokens can also be traded on other crypto exchanges like Binance, Huobi, Kucoin, OKEx, etc.
ERC20 vs NEP-5
Despite their purposes being similar, some differences between ERC20 and NEP-5 tokens exist. Let’s take a look at them:
- Compared with ERC20, NEP-5 tokens require a significant layout in GAS before being forged
- NEO platform is faster, with cheaper transactions and a flexible ecosystem. This relates to NEP-5 tokens as well
- Number of exchanges supporting ERC20 tokens is much bigger compared with NEP-5
Now, let’s take a look at some projects built using the NEP-5 protocol.
Here is the shortlist of some of the projects using the protocol:
- Ontology, a platform that allows projects to deploy their own blockchain solutions, without being too technical
- PickioChain, a startup using the power of blockchain to provide people full control over their personal data
- RedPulse, a company that bridges the gap between China and the rest of the world, by providing market analysis
- Narrative, the world’s online journal, and a member-run network
- Novem Gold, a gold trading platform that created gold-backed stablecoin, which has an active airdrop open right now
Can NEP-5 compete with ERC20? The crypto community said yes. Especially since it turned out that ERC20 isn’t perfect.
For instance, in April 2018, some crypto exchanges like OKEx suspended the placement and withdrawal of ERC-20 tokens because of the batchOverflow bug.
It’s clear that the market needs a better solution. And with more projects using the protocol, and big exchanges listing the tokens, NEP-5 can be that solution.
More information on NEO on their official website.
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