What Is VeChain? All You Need to Know About VET

What Is VeChain (VET)?

Over the years, blockchain technology has demonstrated its versatility in a variety of use cases for many types of businesses. Speaking of the supply chain, this technology has convinced some companies that are active in this sector to innovate their production and distribution mechanisms. Due to its indisputable qualities such as decentralization, immutability, and transparency, the blockchain can certainly solve the problems related to the lack of trust that afflicts many companies, and can facilitate direct business-to-business transactions without the use of a middleman.

VeChain is a blockchain platform created specifically to improve corporate operations and supply chain management. It uses distributed ledger technology (DLT) to streamline these procedures and information flow for intricate supply networks.

Vechain was co-founded in 2015 by Sunny Lu, the former CIO of Louis Vuitton China, and Jay Zhang, an engineer who worked for PwC China and Deloitte UK as a senior manager in finance and risk management. VeChain’s development began as a modified fork of Ethereum with a design focus on Internet of Things (IoT) and supply chain management, before launching its own mainnet in 2018.

As the supply chain industry will require real-time and trustworthy data sharing between numerous parties, VeChain is creating the digital infrastructure that will support it, by expanding its focus to multi-purpose functionality with customizable support for a range of enterprise uses. The innovative idea behind this project is to combine blockchain technology with IoT systems to ensure that the data transmitted during each single process is accurate and secure. In a nutshell, VeChain aims to provide a 360-degree view of necessary information linked to a product and its business processes such as storage, transportation, and supply.

How Does VeChain Work? Proof of Authority (PoA) and Meta Transactions

Since VeChain’s goal is to achieve mass adoption, its operating mechanism must be as fast and efficient as possible. To comply with this, the development team decided to rely on the Proof of Authority (PoA) consensus method. This consensus method, while not considered to be fully decentralized, allows the chain to function in a scalable and usable way. Generally, the Proof of Authority has quite restricted governance, because it uses identity rather than the digital assets each user owns (as happens for the Proof of Stake mechanisms); in practice, validators earn their position thanks to their reputation. The governance system is made up as follows:

• 101 Authority Masternodes: These nodes are responsible for validating blocks and transactions, and they effectively govern the network. Each of the node operators must hold at least 25,000,000 VET tokens in order to be eligible, and must undergo KYC (Know Your Customer) managed by the VeChain Foundation. The KYC is not made public, but it is still widespread within the VeChain network, which means that all nodes know each other. As a reward for their services, Authority Masternodes are rewarded with 30% of the transaction fee in each block.
• Economic X Nodes: These nodes are ‘low tier’ versions of Masternodes, meaning they have lower requirements. They do not act as validators, but they still have an important role in the network because they have voting power. In order to become an Economic X Node, holders must stake a minimum amount of VET tokens, in accordance with the type of node they wish to become and the tier they choose. Once the node has been created, it can only upgrade its node tier, therefore, the total number of Economic X Nodes will only decrease over time.
• Economic Nodes: These nodes, unlike those described above, can increase, because any VET holder can apply to become an Economic Node at any time, as long as they stake the minimum amount of tokens required. As with the Economic X Nodes, they also have voting power, in proportion to their tier and the number of VETs held.

Source: VeChain - Whitepaper

Another key feature of the VeChainThor blockchain platform is that it enables businesses of all sizes to collaborate on the development of new services and products, effectively making it a so-called blockchain-as-a-service (BaaS). VeChain’s meta-transaction features are very suitable for enterprises, because the development is very user-friendly. The core services are listed below:

• Multi-party payment: In order to efficiently onboard customers, VeChain offers an innovative fee delegation mechanism, which would be that enterprises are equipped with smart contracts and designated gas accounts to manage as they wish, based on network usage.
• Multi-task transaction (MTT): By using multi-function atomic transactions, developers can batch payments, incorporate numerous calls to different contract functions in a single transaction, and manage the order of the calls.
• Controllable transaction lifecycle: Users can set the time when a transaction is executed or expires if it is not included in a block.
• Transaction dependency: To ensure that the execution order meets the business need, users can specify dependencies to prevent transactions from being executed until the relevant transaction has been processed.

According to the VeChain Foundation, these functions are of fundamental importance to tackle some of the problems that hinder the adoption of blockchain technology.

What Are VET and VTHO tokens?

VeChain Token (VET) and VeChainThor Energy (VTHO) are the two tokens on the Vechain network.

VET is considered to be the network’s store of value, as it is utilized to transmit value throughout the VeChain network. As we have already covered above, this token is used to determine the voting power of the stakeholders who contribute to the governance mechanism. Moreover, it is used for financial transactions on the VeChainThor blockchain and market speculation, as it represents the value of the entire network. Its maximum supply is 86,71 billion units, of which 85,98 (84%) are already in circulation (December 2022). Initially, the token was called VEN, and it was an Ethereum-based ERC-20. Later, when the VeChainThor blockchain was introduced as a mainnet, the team abandoned VEN in favor of VET. Users could exchange VEN for VET at a 1:100 ratio through a token swap. The token VEN is no longer in use.

VTHO is considered to be the “gas token”, as it is utilized to execute smart contracts and transactions on the VeChain blockchain. While the VET token has a fixed supply, the VTHO token has an unlimited one, because users who hold VET automatically generate VTHO every day. In addition, the VTHO tokens that are used to interact with the blockchain are burned. This adds an interesting component to the whole mechanism, as the more tokens are destroyed, the closer we get to a potentially deflationary dynamic for the supply of the token itself.

In a nutshell, the interdependence of the two tokens means that if applications built on VeChain become heavily used, demand for VTHOR should increase, and this could result in a rise in the price of VET tokens.

VeChain Ecosystem and Use-Cases

As already mentioned, VeChain was developed primarily to enhance business operations and supply chain management and, thanks to its versatility and simplicity of application, it is suitable for several purposes. Below are some of the most popular use cases involving the VeChain ecosystem.

• Supply Chain Management: VeChain can play an important role in tracking goods along their long journey from creation to use, whether it is confirming that meals are free of inorganic toxins or making sure that import duties are paid correctly at national borders. Indeed, manufacturers, retailers, and consumers all have an interest in making this process as transparent as possible. Walmart is just one of the large companies in the food sector that has started using the services offered by VeChain for the traceability of their products: customers can obtain detailed information by scanning desired products, including the origin of the scanned products and the area where Walmart got them, the logistics procedure, a product inspection report, and many other data points.

• Anti-counterfeiting: Especially in the luxury goods industry, the problem of counterfeiting is very serious. VeChain is able to solve these inconvenient problems. Customers that want to be certain of the authenticity of an item, can attach an encrypted chip and use it to log and trace deliveries, warehousing, maintenance, and resale.

  The French multinational automobile manufacturer Renault has recently signed a partnership with VeChain to develop a digital car maintenance book, which will allow the company to store data for each automobile and thus prevent problems such as Car clocking. This will surely create trust between buyers and sellers.

• Health records: It is now well known that blockchain technology is able to revolutionize healthcare, by granting people exclusive ownership over their medical records. Lab data can be securely saved on the VeChain blockchain with only patients and other authorized parties having access, replacing ineffective and unsafe record-keeping procedures. In this way, both the excessive disclosure of personal data and the manipulation of the data itself can be prevented.

  In 2020, VeChain and I-Dante worked together to create the E-HCert App, an archival solution for COVID-19 RT-PCR and antibody test records, as part of their joint effort to build blockchain-enabled medical solutions. The Mediterranean Hospital of Cyprus recorded the test results of over 8,000 patients who then used them as part of the flight arrival procedure at the International Airport of Larnaca.

• Tracking carbon emissions: Another solution that VeChain can provide is the tracking of the carbon-emitting activities conducted by individuals and companies. Once certified data on carbon emissions are available, a government can decide whether to reward or fine entities based on their carbon footprint.

  The Chinese government has created a carbon banking mechanism to lower CO2 emissions, and BYD, the world’s largest manufacturer of electric automobiles and batteries, announced that they have completed a carbon banking solution for the car models. A system created by VeChain and DNV GL will be installed in more than 500.000 automobiles, allowing users of the BYD automobiles to earn carbon credits.

These are just some of the many use cases of VeChain technology. The list can also be extended to voting, gaming, real estate, and many others, demonstrating the fact that the blockchain will be an integral part of future business solutions.

Is VeChain a Good Investment?

VeChain has demonstrated its ability to assist businesses in developing valuable blockchain applications by having on its side its incredible versatility and its many possible applications in real life. The list of companies that have signed partnerships or are actively using the services offered by VeChain is already very extensive, and shows no sign of stopping. This demonstrates the validity and solidity of the project, which was created specifically to improve the company’s way of doing business.

Most likely, over time, many other companies or governments will realize that blockchain technology is here to stay, and that its use will be essential to keep up with the times. Some of these will surely be faced with the decision of whether or not to use the services offered by VeChain, as, for now, it is one of the leaders in the blockchain-as-a-service sector.

How to Own VET and VTHO?

To own VET and VTHO, you can use the services of a centralized crypto exchange. Start by creating a Gate.io account, and get it verified and funded. Then you are ready to go through the steps to buy VET and VTHO.

News on VeChain

In November, 2022, the VeChain Foundation announced the successful upgrade of the VeChainThor blockchain to ‘Proof of Authority 2.0’ (PoA2.0), occurring at block height 13815000. PoA2.0 is a protocol-level upgrade that introduces additional security mechanisms to VeChainThor. According to the Foundation, VeChainThor has undergone this upgrade and is now the industry’s most reliable, scalable, and secure public blockchain, adhering to high regulatory data-protection standards. This occurred thanks to the fact that the development team was able to combine the strengths of Nakamoto and Byzantine Fault Tolerance (BFT) architectures while eliminating their individual weaknesses, resolving a key blockchain architecture trade-off between scalability and data finality.

Useful References

For the latest updates about VeChain, you can visit:

• The official website
• Twitter
• Telegram
• Discord
• Reddit
• GitHub

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