What Is VeChain (VET)?
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What Is VeChain (VET)?

6 months ago

CoinMarketCap takes a deep dive into VeChain, an ultra-efficient blockchain platform and a SaaS product suite aimed at bringing the benefits of blockchain technology to enterprises.

What Is VeChain (VET)?

Table of Contents

In the last decade, blockchain technology has proven to be a remarkably capable tool with applications in practically every industry you can think of.

But actually taking advantage of its benefits can be a challenging and expensive task for businesses, due to the costs of developing and running blockchain-powered applications. 

VeChain aims to lower barriers to entry and allow established businesses to digitize their operations, creating value and solving real-world economic problems using VeChain’s comprehensive array of smart contract-powered off-the-shelf solutions.

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What Is VeChain (VET)?

VeChain is an enterprise-grade blockchain platform built to support both private and mass-market decentralized applications (DApps). 
The platform was founded in 2015 and has since risen to become one of the best-established enterprise-oriented blockchain platforms, with a market capitalization of $11 billion — at the time — making it the 22nd largest cryptocurrency platform

VeChain is designed to help businesses boost efficiency in their supply chain and leverage the unique properties of the VeChainThor blockchain to build and use applications that otherwise benefit their business operations. It is primarily concerned with providing solutions that enable businesses to connect their real-world operations with blockchain-based services and has been applied to an impressive range of use cases, ranging from medical to energy, carbon, logistics, FMCG, gaming, and NFT ecosystems, and more. 

Two tokens form the basis of the VeChain ecosystem. VET is used for transferring value to other VeChain users (e.g. payments, salaries, remittances), and for generating the second token, VTHO. This second token is used as the platform’s gas token and settling transaction fees or used to pay for the creation of smart contracts. The benefit of this system is that the protocol layer token, VET, is not used to pay for transactions as done in other networks.
As a globally-focused enterprise blockchain platform, VeChain currently has headquarters spread in more than half a dozen countries — including France, Singapore, China, Japan, and the US. The project is supported by an accomplished team led by co-founder and CEO, Sunny Lu — a well-known figure in the blockchain space with an extensive history working in IT infrastructure. 

How Does VeChain Work?

VeChain is built on the VeChainThor blockchain, a high-speed, general-purpose smart contract distributed ledger platform that is designed to host enterprise-scale dApps
The platform leverages a unique consensus algorithm known as Proof of Authority (PoA) to help maintain the blockchain and secure transactions. This leverages a network of 101 Authority Masternode operators who maintain the protocol and uphold the VeChainThor governance policy while securely processing transactions and executing smart contract operations. To become a Masternode operator, users need to pass stringent KYC checks under the guidance of the steering committee and be able to contribute to the growth of the network in some form — either as a developer, KOL, company, or some other entity of net benefit to growth.
The VeChainThor blockchain uses a two-token economy system to separate speculation from operating costs. The first token, VeChain (VET), is the main transactional unit used in the VeChain ecosystem, whereas VeChainThor (VTHO) is used to pay for gas costs (including transaction fees and smart contract execution costs). This ensures businesses can be more certain of their operating costs, rather than being subject to the whims of speculators and excess market volatility. 
VeChain’s main product offering is known as VeChain ToolChain. This is a robust blockchain application platform that features a variety of blockchain-as-a-service (BaaS), platform-as-a-service (PaaS), and software-as-a-service (SaaS) solutions — helping both small and larger businesses build and deploy blockchain-powered solutions in record time. 
The PaaS version of VeChain ToolChain provides developers with a range of tools that can be used to create powerful DApps with limited coding required. It also includes a few off-the-shelf services, including a food traceability platform, a digital carbon footprint solution, and a risk self-assessment application known as VeTrust. Overall, VeChain ToolChain helps businesses leverage the benefits of blockchain technology, without having to build everything from scratch. 
Since VeChain launched back in 2016, it has completed a large number of substantial roadmap items, including launching its mainnet (VeChainThor) in June 2018, introducing the VeVote platform, launching solutions for the food safety, automobile, retail, logistics, and agriculture industries, and announced enterprise NFTs (eNFTs) in May 2021. 

As of September 2021, VeChain’s next major upgrade is the initial implementation of the second iteration of its Proof of Authority (PoA) consensus, as well as deployment of the blockchain-based voting platform — VeVote.

 
VeChain maintains a comprehensive list of all of its recent milestones on its website — here

What Makes VeChain Unique?

VeChain is a platform built to provide a holistic solution to businesses looking to improve their efficiency and develop new ways to do business and manage their operations. To help it accomplish this, VeChain has built a wide range of tools and features that make it an attractive option for businesses. These include: 

Fee Delegation Protocol (VIP 191)

VeChain’s unique fee delegation protocol allows a company to have the gas fees required to use the network handled by a smart contract and designated gas account. This means a company can pay to use VeChain’s one-stop-shop service platform, ToolChain, and utilize the network as they would use any other digital service and pay for the data they use/produce. This drastically enhances the attractiveness of the network as a company no longer has to manage the crypto aspect themselves but still benefits from its public blockchain as a service.

Turnkey Offerings

Building new blockchain-backed solutions can be a challenging endeavor, which could require firms to hire blockchain engineers, smart contract developers, security specialists, and more. 

But with VeChain, firms can easily leverage a range of turnkey software and hardware solutions that can be rapidly deployed with almost no experience. This helps businesses get up and running with their projects as fast as possible and at a minimal cost. 

High Efficiency

Unlike many smart contract-capable blockchains, the VeChainThor platform is incredibly efficient and uses just a fraction of the energy that competing platforms use due to its masternode-based consensus system. It achieves this while maintaining a similar level of security. 

According to VeChain, the VeChainThor blockchain’s annual energy usage is equal to just 2.4% of the energy expense of producing a single bitcoin. 

This efficiency also translates to the cost of operating on the blockchain, which is several-fold lower than on Ethereum, helping to maximize the cost-efficiency of running blockchain-enabled applications. 

Dual Token Economy

As we previously touched on, VeChain operates on a two-token economy. The first token is the VeChain token (VET). Each VET generates a fixed amount of VeChainThor (VTHO) tokens over time, which can then be used for paying transaction costs. This helps keep costs down when executing smart contracts and making transactions since transaction fees can remain roughly constant due to the less speculative nature of VTHO. Stable transaction costs in dollar value.

Each VET generates a total of 0.000432 VTHO per day. This means you would need around 2,300 VET to earn 1 VTHO per day. 

Sustainable Tokenomics

VeChainThor features a sustainable reward system for node holders. 

In total, 70% of all transaction fees are burned (reducing the circulating supply) while the remaining 30% is paid to masternode operators. 

Trusted by Giants

VeChain has established strategic partnerships and business relations with a huge number of prominent firms — many of which are using its technology to improve their business efficiency. Just some of the many names on its list of partners include BMW, Grant Thornton, Trusted Food, Walmart, and Copper Dog.

Furthermore, VeChain’s channel partners DNV and PwC use white-labeled versions of VeChain’s technology, repackage it and utilize it for their own client networks. Solutions such as DNV’s MyStory and PwC’s AirTrace use VeChain’s underlying infrastructure while packaging their respective platforms as their own service offerings. 

NFT Capabilities

VeChain has featured NFT functionality since 2018 when nodes were minted as NFTs using the VIP-181 token standard built into VeChain’s protocol. 

Later, the audit and certification giant DNV began issuing their ISO certificates and other types of certificates as NFTs on the VeChainThor blockchain. 

VeChain’s NFT ecosystem is now flourishing with commercial applications as well as gaming projects and metaverses currently being developed on the platform. 
In April 2021, VeChain also launched a $1 million fund for eNFT development in a bid to spur enterprise adoption and development of the technology.
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