GAS (NEO) Definition
What is Gas on the Neo Platform?
GAS tokens are the monetary incentive for bookkeepers to keep the blockchain up to date. The Neo platform employs “bookkeepers” who must maintain a minimum balance of NEO. Their job is to verify the blocks on the blockchain, for which they receive the GAS fee.
The Neo platform operates using two types of tokens–NEO tokens and GAS tokens. Both are capped at 100 million tokens each. NEO holders have voting rights on the network as well as the right to receive dividends in the form of GAS tokens.
In addition to functioning as a dividend payout, GAS tokens act as fees that accumulate on the network. Users pay fees in GAS whenever they want to implement smart contracts. The amount of GAS that is charged is proportional to the processing power required to execute the contract.
For example, if a bookkeeper owns 1,000 NEO coins ($73,220 if one NEO is $73.22), they will generate the following GAS reward by verifying the network’s blocks:
- If one GAS token = $36.62 USD,
- And the Block Generation Rate is 24.59s,
- Then the bookkeeper will earn approx. 102.6 GAS per year, or $3757.21
In this case, the GAS dividend rate is 5.13% per year.
By keeping the blockchain up to date, bookkeepers allow Neo platform users to store and exchange digital assets through the implementation of smart contracts which automate these processes. A crucial component of this is the concept of a digital identity.
Digital identities serve as a reliable bridge between digital and physical entities. This will help meet regulatory statutes and allow authorities to track network violations to a legally-binding identity.
In order to keep up with the growth of the blockchain, GAS tokens are generated at 8 GAS per block. This rate is reduced by one token for every 2 million blocks. Once all 100 million GAS tokens are in circulation, production will stop.