Today, cryptocurrencies are primarily traded on centralized exchanges where user
funds are at risk to hackers and platform managers. Decentralized exchanges
(DEXs) allow users to retain control of their funds as trades are mediated by smart
contracts on a blockchain, but on-chain computation is generally too slow to keep
up with high volume order books. This paper describes Neon Exchange (NEX),
a new decentralized exchange on the NEO blockchain that applies a publicly
verifiable off-chain matching engine to handle massive trading volume and support complex orders (such as limit orders) that are not possible on existing DEXs. NEX also introduces a payment service and funds management layer that enables thirdparty smart contracts on NEO to send and receive global assets as part of their computation. To fund developments and future expansion into related services, NEX will issue 50 million tokens that give holders a share of profits in its services.