What is VeChain (VET)?

VeChain is a public blockchain platform designed to enable transparency, efficient collaboration, and high-speed value transfer for enterprise business applications. Originally established in 2015 with the vision of overcoming the barriers to major enterprise adoption of blockchain technology, VeChain developed key features to address common blockchain limitations around governance, economics, regulation, and integration. This includes innovations like its two-token economic model using VET and VTHO, the Proof of Authority 2.0 consensus algorithm, and tools to simplify developing on VeChain.

Now in the governance consensus phase of its evolution, VeChain continues improving its decentralized governance to give individuals and institutions a role in steering the platform's advancement. With a focus on creating real economic value, VeChain has formed partnerships across industries, like supply chain, healthcare, and sustainability, resulting in enterprise blockchain solutions running on its network.

History of VeChain (VET)

Who created VeChain

VeChain was founded in 2015 by Sunny Lu, former CIO of Louis Vuitton China. It started as a subsidiary of Bitse, one of China's largest blockchain companies, but was spun off in 2017.

History

2015

• VeChain project established

2017

• VeChain ICO
• VeChain Foundation formed
• 1st Steering Committee formed
• Anchored 4 POCs with enterprise clients across Europe and China

2018

• Launched VeChainThor blockchain with two token model (VET and VTHO)

2019

• VeChain Summit, ToolChain launched
• Applications using ToolChain grow steadily
• VeVote voting mechanism introduced

2020-2021

• Digital COVID test solution E-HCert launched
• Bayer, DNV continue building solutions on VeChainThor

2022

• Upgrade to PoA 2.0 consensus
• VeUSD stablecoin, Ireland tech centre
• Accelerator programs, carbon ecosystem growth

Design

Vechain was founded in 2015 with the goal of becoming the leading blockchain platform for sustainability initiatives. It utilizes a unique Proof of Authority 2.0 (PoA 2.0) consensus mechanism that combines the strengths of both Byzantine Fault Tolerance and Nakamoto Consensus. This provides security, scalability, and transaction finality, meeting the needs of enterprise use cases.

The PoA 2.0 consensus relies on only 101 authority nodes to validate transactions and blocks. This is extremely energy efficient, with Vechain using just 0.000216 kWh per transaction, 99.96% less than comparable blockchains. The carbon footprint was estimated at 4.46 tons of CO2 emissions per year. The efficiency and low resource requirements make Vechain well suited for sustainability applications.

Vechain is also highly accessible and open, providing developers with tools and resources to build decentralized applications. This includes open source software, blockchain-as-a-service solutions, and turnkey packages to make development easier. The goal is to empower builders to create viral decentralized apps that enable sustainable ecosystems, such as platforms for citizens to earn and spend carbon credits.

The technology roadmap for 2023 and 2024 focuses first on developer tools, then user experience, interoperability with other chains, decentralised finance protocols, NFT marketplaces, and integration with legacy Web2 systems. The aim is to become the platform of choice for sustainability by meeting the changing needs of users and encouraging mass adoption. Continuous feedback and refinement ensures the platform stays cutting edge over time.

Vechain Governance

Vechain aims to evolve its governance model to enable rapid innovation while complying with regulations and meeting the needs of users, developers, and enterprises. The goal is to progressively decentralize by implementing DAO principles to reduce intermediation and make ecosystems more efficient. Vechain established a Steering Committee elected by node holders to provide adaptable oversight. This constitutes a first step towards decentralization, with decision-making becoming more distributed over time.

Internally, Vechain is expanding teams across technology, business development, community engagement, and governance functions to support its mission. It releases quarterly financial reports and monitors regulations to ensure compliance. Looking ahead, Vechain will continue improving its organizational structure by taking inspiration from DAO best practices. The governance model will keep evolving to serve the growing sustainability community on its blockchain. Through leading by example, Vechain hopes to demonstrate dedication to the Biosphere's long-term success.

Tokenomics

Utility

VeChain uses an innovative two-token economic model consisting of VET and VTHO. This model stabilizes costs on the network and separates the tokens based on utility and incentives. VET serves as the primary value transfer token on VeChain and provides holders with voting rights in platform governance. By contrast, VTHO is used to pay for transactions and smart contract execution. Generating VTHO essentially incentivizes holding VET.

This two-token design shelters enterprises building on VeChain from volatility in the broader crypto markets. It allows transaction costs to remain predictable independently of VET price fluctuations. The VTHO generation rate and amount required per transaction can be adjusted through community voting to maintain balance. This calibrated model facilitates adoption by giving businesses assurance around costs over time unlike single-token blockchains.

The differentiation and balance between VET and VTHO also simplifies using VeChain's public blockchain. Enterprises and developers do not need to purchase VET to pay gas fees like on Ethereum. Instead, holding VET generates the separate VTHO resource to power applications. This removes friction and provides flexibility in how partners utilize the network. Overall, the tokenomics stand out for their stability, control, and ease-of-use - all geared towards making VeChain the go-to blockchain for real business solutions.

Supply

The maximum supply of VET is fixed at 86,712,634,466 tokens. As of 2023, more than 80% of the total VET supply has entered circulation through initial coin offering sales, foundation rewards, business partnerships, and community incentives. The foundation holds the remainder to fund long-term platform development, operations, and grants.

VTHO has a dynamic maximum supply that adjusts based on the amount of VET held on the network. It is generated by VET holders at a set rate and is burned when used to pay for VeChain transactions and smart contracts. This allows the cost per transaction in VTHO terms to be governed on-chain through community voting. The expanding VTHO supply and adjustable generation rate/burn rate ensures enough tokens exist to power network activity. So while VET holdings denote authority and rights in VeChain, VTHO facilitates usage and adoption.

Highlights

2018

• Partnerships with PwC, DNV GL, BMW
• Ecosystem growth with brightfoods, DNV MyStory built on VeChainThor

2019

• Walmart China traceability platform

2022

• Establishing a new Headquarter in San Marino