As a founder and core developer of Neo, Erik Zhang is responsible for much of the project's early codebase, architecture, and strategic technical direction. With the launch of the Neo N3 MainNet in August, the blockchain-veteran is now able to allocate some time to work on other new projects within the ecosystem.

NNT caught up with Zhang to gather his thoughts on the Neo N3 release, and learn a few more details about his new projects.

NNT: Neo N3 is finally out the door. That has to feel really good, considering how long and how hard you've been working on it. What aspects of the release are you most proud of?

Erik Zhang: Neo N3 was initially designed to serve large-scale commercial applications and the real economy. To meet the demand for large-scale commercial applications, a blockchain should by all means make three major breakthroughs:

First of all, reliability, which is reflected in the irreversibility of transactions in a blockchain system. Once a transaction is committed to the blockchain, it can never be reversed or undone. Typical transaction reversals, such as double spending, sometimes occur in traditional PoW or PoS mechanisms. However, thanks to its unique dBFT2.0 consensus mechanism, Neo N3 has "one block finality" and only one block confirmation (15 seconds) is required to ensure irreversibility of the transaction. Since the transactions in key financial applications should never be reversed at will, this feature is critically important for large-scale commercial applications.

The second is performance. High performance is often required in large-scale commercial applications, which is difficult for existing blockchains to achieve. For the existing blockchain systems, transaction blocking and huge fees may come with growing business volume, hindering the process of implementing large-scale commercial applications seriously.

Fully aware of such significance, we designed Neo N3 with a strong focus on performance and scalability. According to the latest experimental data, the underlying business processing capabilities of Neo N3 can now reach 30,000 TPS, which is quite enough to carry large-scale commercial applications after being extended by Layer2.

Finally, there is big data storage. It is absolutely difficult to store the huge amount of data generated by large-scale commercial applications on the blockchain. Thus was born the idea of NeoFS, a distributed storage system designed to store massive amounts of data. NeoFS is underpinned by the N3 infrastructure, which is capable of providing N3 with nearly unlimited cloud storage space.

And for the real economy, we must provide a mechanism that can bridge the real world and the blockchain world. N3 has native Oracles that allow smart contracts to access the Internet at runtime and get information from the real world.

Beyond what we've mentioned above, N3 has many other new features in other areas, such as exception handling for smart contracts, native contracts, a new governance model and so on. I also developed a new C# compiler that compiles the source code of smart contracts into deterministic bytecode, which is very useful for verifying the source code of contracts.

NNT: You're now working on OneGate, a Neo wallet, and Galaxz, a Neo-based blockchain game. I think this surprised a few people, but we were really glad to see you building products on the chain you created. Has this always been a goal for you – to not only build Neo, but build on Neo? Or are these projects an exercise in experiencing your creation from the application development perspective?

Zhang: Before I continue, let me tell you up front that OneGate is more than just a wallet. It was designed to be a gateway to the blockchain world for normal Internet users.

Furthermore, Galaxz is more than just a blockchain game. More precisely, it is a sci-fi space adventure MMORPG, about which ideas were born early on, including a huge worldview of subtle complexity, improbable plot twists, and many of my own philosophical thoughts.

And of course, Galaxz – or rather, all the projects I build – will have a deep integration with Neo.

NNT: What can you tell us about OneGate? What are the motivations for starting that project, and what is it bringing to the table that was missing from the Neo ecosystem?

Zhang: As I mentioned before, OneGate is a portal specifically designed for normal internet users to enter the blockchain world. Designed for users who have a good understanding of blockchain knowledge, the existing blockchain wallets and clients tend to provide users with DeFi and NFT features, and promote blockchain related news. As for me, I'd like to break the boundaries between blockchain and the internet, to provide users with all the features they need. Users will then be able to use blockchain just like they use the internet.

Neo aims to be the next generation of the Internet.

NNT: Galaxz is a sci-fi space adventure game, and your love of sci-fi culture such as Star Wars is well known. You mentioned to someone on Twitter that you have been waiting 16 years to build Galaxz. Can you describe to us the game concept and explain why now is the right time to bring it to life?

Zhang: When I was in high school, I got very frustrated with the boring missions and poor storylines of the MMOs of the time. Therefore, I started to come up with the idea to build a sandbox space adventure game based on the laws of physics and have already designed some very innovative gameplay.

After graduating from college, I started working on information security, an industry that has little to do with gaming. So the imagination about Galaxz has never been a reality before.

Then I started working on Neo, during which the idea of developing Galaxz was rekindled – this time on Neo chain. Soon I bought the domain name galaxz.com for 10 BTC. Preparations proceeded night and day, until I found It nearly impossible to work on Galaxz and N3 development at the same time. So the plans for Galaxz were laid aside temporarily.

Now that the N3 MainNet was launched, there's nothing to stop me from continuing to develop Galaxz!

NNT: What platforms will Galaxz be available on? Mobile app, browser, desktop client, etc?

Zhang: There will be three different types of clients available for Galaxz.

Full-featured Client: The full-featured client will run on consoles such as PC, PS or Xbox, showing gorgeous battle scenes and cosmic views with their powerful processors and graphics cards. With a full-featured client, you can experience all the features of Galaxz.

Mobile Client: The mobile client requires a game app installed on the phone, through which users can experience almost all of the features, such as planet construction, manufacturing, technology upgrade and so on.

Web Client: With a web client, users can access some of the game features via their browser. For example, designing spaceships, accessing the marketplace, chatting, sending and receiving emails, etc.

NNT: A lot of blockchain games these days are cross chain, and Neo does have Poly Network integration. Will Galaxz only be on Neo, or down the line do you intend to expand the universe into other chains?

Zhang: The core logic of Galaxz will not be on-chain. However, tokens will be issued on Neo with the NEP-17 standard, while props will be issued with the NEP-11 standard as NFTs.

Through PolyNetwork, indeed, anyone can send their tokens and NFTs to other blockchains to build a larger universe.

As to Neo itself, tokens and props of Galaxz can also be used universally in all other Neo-based blockchain games.

NNT: The stage is really set for Neo now. N3 is live, the migration is well underway, new dApps are coming to the platform, the governance system is up and running – What is next, and what are your personal goals for the project over say, the next five years?

Zhang: For me, N3 is complete enough to be called an "all-in-one" blockchain system. In the future, I will certainly continue its optimization and improvement, and may also launch N4 or N5. But for now, I prefer to bring more applications to Neo – not just blockchain applications, but Internet applications as well.

In the next 5 years, I'll mainly focus on N3 and Galaxz.

El Salvador officially mined its first Bitcoins using a volcano. At the same time, geothermal energy now accounts for about 22% of the country's market.
Previously presented as a concept, the project of mining cryptocurrency using volcanic energy turned out to be a surprisingly viable idea. So much so that today the President of Salvador Nayib Bukele shared on Twitter a photo from the monitor showing the number of cryptocurrencies mined in this way. By that time, it was 0.01083 BTC, of which 0.0048 BTC is already awaiting withdrawal.

The country not only actively uses geothermal energy personally, but is also one of its largest producers in the world. It is generated by 20 volcanoes located in the region, which scientists have described as "potentially active". Given their number, this use of natural power is hardly surprising, although Bukele's resourcefulness still amazes many miners. In addition, such energy is classified as environmentally friendly, so the "green miners" will also have no claims against the country.

On September 28, the president shared a video on his Twitter account, which showed the delivery of equipment in the form of ASIC miners, as well as the process of installing and configuring them. The local energy company LaGeo is directly involved in the project, thanks to whose specialists the country's authorities were able to quickly implement the idea.

According to Bukele, the equipment is still in test mode and they are testing it, but it has already given the first results. Of course, it was not without spiteful critics, because in the comments and retweets people shared the opinion that the president should use a period of at least three hours of equipment operation for reports, while others even joked about the level of "home mining".

Recall that the law on the legalization of Bitcoin in El Salvador entered into force on September 7, and by the 27th of the same month, according to Bukele, 2.1 million residents were using the state-owned Chivo cryptocurrency.

While Robert Leshner seemed to briefly threaten users with the IRS, the reality is that he – and the rest of the Compound Labs community – are now relying on the goodwill of users.

If a decentralized finance (DeFi) protocol accidentally gave you millions of dollars in tokens, are you obligated to give it back?

In an interview with CoinDesk following an $80 million exploit, Compound Labs founder Robert Leshner is arguing users should do just that.

On Wednesday night, a bug in money market Compound's code led to an erroneous disbursement of COMP tokens intended for long-term liquidity mining rewards.

The Compound Twitter handle acknowledged the bug shortly after, saying that no user funds were at risk. The bug only applied to Compound's Comptroller Contract, which is responsible for distributing liquidity mining rewards earned over time.

Nearly the entirety of the Comptroller Contract has now been drained, with 280,000 COMP distributed to users incorrectly, according to Leshner.

Despite the eye-popping sums lost to the bug, however, the community is now captivated by a debate as to what users should be obligated to do with their funds.

"This has been, without a doubt, the worst day in the history of the Compound protocol," Leshner told CoinDesk.

He went on:
"What makes it way worse is that I and most folks are completely powerless to do anything besides sit back and watch this moral dilemma play out."
IRS threats
In a Tweet on Thursday night, Leshner seemed to warn recipients of the erroneous tokens that there could be real-world consequences for keeping them – namely, that the U.S. Internal Revenue Service (IRS) might want to hear about it:

Some members of the DeFi community interpreted the comments to mean that Compound Labs was planning to report recipients to relevant tax authorities. Leshner apologized for the tweet shortly after.

Threats of "doxxing" have proven to be effective in dealing with exploits in the past – last month, a non-fungible token (NFT) team memorably threatened to call in the FBI and ordered soup to a hacker's address. The hacker relented, returning stolen funds.

However, in this instance even if an organization wished to pursue claimants, in practicality it may be an empty threat.

Compound Labs is a real-world entity that is working on the protocol, but there's no clear basis for it to pursue legal action – the structure of the decentralized autonomous organization (DAO) is such that it is now just another member of the community, according to a Compound Labs representative.

The representative also said the Compound interface is hosted on distributed file storage protocol InterPlanetary File System (IPFS) and there's no reportable information about users collected in any way.

However, due to the nature of the bug, many of the recipients of the tokens are not sophisticated hackers – they just happened to hit the jackpot.

Their operational security, or opsec, isn't hacker-grade. Some addresses that claimed large sums of the tokens have interacted with centralized exchanges where their real-world information is stored, and the claims could have an impact on their taxes.

Claiming the funds required no knowledge of the bug, and some users might not have been aware there was an exploit underway – they may have received millions while intending to harvest much smaller sums as rewards.

Leshner said the DeFi community has rallied around the protocol in an effort to find solutions. Yearn.Finance and MakerDAO representatives have been active in community channels in finding short- and long-term solutions.

However, Compound has an "extremely rigid" and slow governance process by design – architecture intended to make the protocol more resilient is now acting as a barrier to a fix. It will take another five days before the community can approve any updates to the contract code.

Technical solutions to the initial bug aside, however, the protocol now faces an even bigger problem: trying to convince users who received tokens to return them to the community.

"In my opinion, this is a bank error in a couple people's favor," said Leshner.

The Lisk Mainnet v2 completed the migration to Lisk Mainnet v3 on August 21, which is the biggest protocol change in Lisk blockchain history, Lisk wrote on their website. Features of the 'new era' include an extremely secure new account address system, up to 98.64% cheaper transactions after moving to a dynamic fee system, and ensured full immutability of transactions.

Migration eliminates all weaknesses of the Lisk Mainnet v2
The migration eliminates all weaknesses of the Lisk Mainnet v2 related to accounts, the consensus algorithm, and fees. The blockchain is now almost fully prepared for the upcoming interoperability release.

With v3, the new account address system is extremely secure with built-in error detection for typos. This does away with the need for account initialization. The previous address and ID system was retired and all current accounts were migrated. As a result, addresses have become longer, virtually eliminating the risk of address collisions and making sure such addresses resist preimage attacks.

Account private and public keys and the 12 word mnemonic passphrase have not changed. It's guaranteed that typos of up to 4 characters in the address will be detected.

Almost 100% cheaper transactions
With the newly introduced dynamic fee system under Lisk v3, transactions will be as much as 98.64% cheaper. This is because the minimum transaction fee has dropped from 0.1 LSK to 0.00136 LSK in an effort to make fees more competitive. By setting a higher fee and the same nonce as the transaction a user wants to overwrite, they can do so as long as the transaction has not been included in the block yet.

Transactions are non-reversible
Another important change that goes with Lisk v3 is total immutability. In other words, transactions are 100% non-reversible. This is the way of the future with interoperability and sidechains coming into the Lisk ecosystem as it prepares for v4. When Lisk Core v4 is released, blockchain applications will be able to support transactions across multiple blockchains. Lisk's newly integrated BFT consensus algorithm ensures they can't be reversed.

The Financial Services Agency, Japan's market regulator, is taking its first steps towards drafting a more restrictive policy for regulating digital currency in the country, in a move that looks set to tighten the rules for digital currency sector businesses.

According to reports in local media Jiji Press, the rule changes are being brought in with a view to better protect consumers, with the regulator having already begun to solicit views on how the new policy could shape up.

The regulations are expected to be brought in before summer 2022, with a view to providing greater investor protections as quickly as possible. With an eye on continuing to encourage innovation and development, the FSA has said the new rules would bring much needed stability to the sector.

It follows the creation of a dedicated panel of experts last month to look at the issues of regulation in decentralized finance, joining other ongoing efforts to address developments in central bank digital currencies and digital currency more broadly.

Japan has historically taken a progressive approach to digital currency, encouraging the development of initiatives in digital currency and blockchain technology. Some of the earliest crypto trading platforms and exchanges were founded in Japan, and the country continues to be a regional hub for trading in East Asia.

Following the substantial Coincheck hack in 2019, a series of new regulations were brought in to strengthen the security at exchanges, and to offer investors a better quality of protection against future attacks. As part of the measures, the FSA has required digital currency platforms operating in the country to register and adhere to its compliance requirements.

The measures have failed to prevent repeat attacks. However, with new regulations coming down the track, and in particular the Financial Action Task Force's (FATF) Travel Rule which is expected to be adopted by 2022, the regulator is hoping to provide more robust oversight for the sector.

Last week we launched Neo N3 RC4, which we are hopeful will pass all our stability tests and graduate to become the Neo N3 Formal TestNet. Once we have achieved this milestone, we will begin rolling out the Neo N3 MainNet, along with migration and governance.

While we are not yet ready to finalize dates, we can outline how we intend to move from Neo Legacy to Neo N3. We can also reveal some of the migration options that will be available at a high level.

Essentially, the rollout will occur in three phases: TestNet, MainNet Setup, and Mass Migration. Various tasks will be completed during each phase to ensure that the Neo N3 MainNet is ready to support healthy network operations by the time the public migrates tokens en-masse.

Token holders will have two migration options to choose from, depending on their preferences.

The first option will be "Early Bird" migration, which will closely follow the minting of the Neo N3 genesis block. This will provide token holders with an opportunity to be among the first to participate in voting, potentially offering opportunities for a larger than usual GAS yield for a short period of time.

The second option will follow the start of the Mass Migration phase, and will offer token holders direct bonuses based on the amount of NEO tokens they migrate.

Each option has its own benefits which are expanded on further in this article. Additional information will also be provided as we move closer to kicking off migration.

The phases will be carried out as below:

TestNet
The deployment of the Neo N3 RC4 TestNet was the first step on the final road to Neo N3 MainNet. We have already begun onboarding critical components of the network, such as Initial Council members, NeoFS nodes, and Oracle nodes.

Once we have verified that the network is running with stability, the RC4 codebase will be re-published as Neo v3.0.0 and we will move onto the MainNet launch.

Some of the tasks that will be completed during this phase include:

Governance setup (in progress)
The Neo Foundation recently announced the initial members of the Neo Council, responsible for governance of the Neo blockchain. The initial members of the Neo Council have already onboarded onto the RC4 TestNet to ensure that they are ready and equipped to handle steady operations of Neo before migration to MainNet.

NeoFS & Oracle setup（in progress)
The initial NeoFS and Oracle networks will be operated by Neo SPCC and Neo Foundation, respectively. These are being set up to ensure smooth functionality for the first round of dApps deployed to the Neo N3 network.

Token migration testing (in progress)
The Neo Foundation, community development groups, and exchanges have begun testing NEO and GAS token migration from Neo Legacy using PolyNetwork. Tests have already been completed from Neo Legacy to Neo N3 RC3.

Application testing
The first wave of N3 dApps will begin deploying contracts to the TestNet. Some of these dApps will be participants of the Neo Frontier Launchpad, while others will be projects supported by NGD's Early Adoption Program.

MainNet Setup
Following the graduation of RC4 to Formal TestNet, the Neo N3 MainNet will be launched with the minting of its genesis block - a major milestone for the Neo project. The initial Neo Council members and node networks deployed to the Formal TestNet will begin migrating over to the Neo N3 MainNet.

Early token migration and voting will open during this phase. However, migration options and access to external services, such as exchanges, will be limited.

The focus during the MainNet Setup period will be exactly that - setting up the MainNet. Neo will be laying the foundations to ensure the Neo N3 network can stand up on its own and is ready for mass migration.

Some of the tasks that will be completed during this phase include:

Network setup migration
The initial Neo Council, NeoFS nodes, and Oracle nodes will be migrated to MainNet following a period of smooth operation on the TestNet.

Neo Foundation token migration
The Neo Foundation will migrate its NEO and GAS token supply from Neo Legacy to the Neo N3 MainNet. The Neo Foundation intends to use an allocation of its NEO tokens to vote in the Neo Council, while GAS will be used to support the onboarding of dApps, governance candidates, nodes, and other early setup initiatives.

"Early Bird" token migration / Voting-Starting one week after genesis

Individuals can choose to participate in "Early Bird" token migration via Neo's official website roughly one week following the MainNet launch. Voting will also open alongside migration.

There will be advantages and disadvantages to participating in Early Bird migration.

NEO and GAS can be migrated from Legacy to N3 tokens at a 1:1 ratio. NEO holders who migrate early will have the opportunity to be the first to vote in Neo's new governance system.

Under the rules of Neo's new economic structure, the majority of newly minted GAS is distributed to NEO token holders who have successfully voted for a Neo Council member. As fewer NEO tokens will be used to vote during the Early Bird phase, the GAS will be split among less NEO and may yield a larger than usual GAS generation rate.

However, during this time, there is likely to be very limited N3 support from external service providers such as wallets and exchanges. This may mean that you could find yourself unable to trade your N3 NEO and GAS tokens or store them in your preferred wallet.

Additional migration channels and incentives will be made available in the next phase.

More information on migration will be available in the coming weeks.

Application migration
dApps that intend to be ready for use from day one of mass migration will begin migrating to the Neo N3 MainNet.

Relaunch of Grant programs
Updated versions of the Neo Grants programs will be launched, including the General Grants, Core Developer Grants, and Research Grants. Neo is always looking for talented teams and individuals to join our ecosystem. The Neo Grants programs are a great way to get involved.
 
Mass migration
Upon conclusion of the MainNet setup phase, we will begin the mass migration of NEO and GAS tokens. We estimate that this phase will begin roughly one month after Neo N3 has minted its genesis block.

By this point, all the pieces should be in place for stable MainNet operation, the first wave of dApps should be ready to start accepting users, and most of the ecosystem infrastructure such as explorers and wallets should be equipped to support the migration.

A token migration incentive program will be launched to encourage token swaps from Neo Legacy to Neo N3. Various migration channels will be available, including Neo's official website, alongside selected wallets and exchanges.

We should note that although we are working hard alongside major exchanges to ensure speedy support for the Neo N3 MainNet, we do not have control over the internal timelines of external organizations. We will make every endeavor to ensure wide and speedy adoption of N3, but ultimately, universal support may come gradually.

Some of the tasks that will be completed during this phase include:

Token migration incentive program opens
An incentive program will begin starting the first week of Mass Migration, offering the following bonuses for NEO migration:

Weeks 1 & 2: NEO holders who migrate will be rewarded with a 1% bonus of the amount of NEO migrated
Weeks 3 & 4: NEO holders who migrate will be rewarded with a 0.75% bonus of the amount of NEO migrated
Weeks 4 - 8: NEO holders who migrate will be rewarded with a 0.5% bonus of the amount of NEO migrated
As NEO is indivisible, incentives of less than 1 NEO will not be issued. Centralized exchanges that facilitate migration may choose to offer fractional NEO rewards at their own discretion. All the token incentives will be issued to the appropriate accounts within 1-3 days after users complete the migration. There is no plan for GAS migration incentives at this moment.

More information on migration will be available in the coming weeks.

Neo Legacy GAS generation stopped
The Neo Legacy blockchain will move into long-term support following the launch of Neo N3. However, having two blockchains that continually generate GAS at slightly different rates makes things complicated for providers, such as exchanges who need to calculate circulating supply.

To solve this issue, Neo Legacy NEO tokens will cease to generate GAS tokens at a yet-to-be-specified block height. The final GAS generation block will be selected after Neo N3 migration has been open for a period of time. The block height and estimated date will be communicated with plenty of advance notice to ensure all NEO token holders have ample warning and time to complete migration.

We have already seen some stellar dApp development using N3 during the Neo Frontier Launchpad. In just a short period of time, developers brand new to Neo and its tooling have been able to produce amazing results. It is a testament to the hard work that has gone into making Neo N3 a public blockchain platform that not only stands up to its competitors, but exceeds them in many respects.

As our tooling continues to mature, documentation continues to improve, and more sample code is written, so will the Neo ecosystem continue to grow. We can't wait to see all the amazing dApps you will build on Neo, and we are grateful to have you along for the journey.

A few months back, El Salvador's president announced that he would be making BTC legal tender in the South American country. This move has faced criticism, including from the citizens who have taken to the streets to protest as well as from global bodies. The latest to weigh in is the International Monetary Fund (IMF) which has described the move as "an inadvisable shortcut."

In a blog post, the Washington-based organization noted that there's a need for digital payments across the globe. However, adopting a decentralized digital currency is a shortcut that any country must not be tempted to take, the IMF stated.

"We believe, however, that in most cases risks and costs outweigh potential benefits," the blog post, written by Tobias Adrian and Rhoda Weeks-Brown, stated. Adrian is IMF's marketing director while Weeks-Brown heads the legal department as general counsel.

The two executives believe that digital currencies are unlikely to get any adoption as legal tender in countries with "stable inflation and exchange rates, and credible institutions." In such countries, households would have very little incentive to use them, relative to existing fiat payment systems, the IMF believes.

And even in countries with less stable economies, "the use of a globally recognized reserve currency such as the dollar or euro would likely be more alluring than adopting a cryptoasset."

The IMF, just like many other legacy institutions globally, pointed to volatility in digital currencies as a key reason they can't function as legal tender—but it doesn't end here for the IMF. It pointed to the significant erosion of central banks' power, especially in monetary policy. With digital currencies, central banks would lose their ability to shape the monetary system, IMF believes. "As a result, domestic prices could become highly unstable," it pointed out.

For the IMF, the use of a digital currency also threatens the integrity of the financial system. "Without robust anti-money laundering and combating the financing of terrorism measures, cryptoassets can be used to launder ill-gotten money, fund terrorism, and evade taxes. This could pose risks to a country's financial system, fiscal balance, and relationships with foreign countries and correspondent banks."

The organization, whose mandate revolves around global monetary cooperation and promoting financial stability, didn't mention El Salvador in its blog post. However, it did little to conceal the target of its attack. "Attempting to make cryptoassets a national currency is an inadvisable shortcut," it warned.