VeChain Two-token Model
VeChain adopted a two-token model once it created its own blockchain in 2018: the VET token and the VTHO token. The two-token economic model of the VeChainThor blockchain is designed to detach the cost of transacting on the blockchain with market volatility, thereby stabilizing the cost associated with transactions or executing smart contracts on the VeChainThor blockchain. VET is the primary token of VeChain, and it has several uses. VET’s main use cases are to govern the network, store and transfer value, and generate the VTHO token. Each VET generates VTHO at a rate of .000432 VTHO per day. Some users like to “stake” larger amounts of VET in nodes in order to speed up their VTHO generation rate. VeChain users may purchase VET on the open market to generate VTHO for their applications or directly purchase VTHO.
VTHO is the secondary transaction token or ‘gas’ token of VeChain. When executing transactions, a small amount of VTHO is required for the transactional cost. Companies and developers utilizing the blockchain must use VTHO to add data to the blockchain and create smart contracts. This is similar to Ethereum, only Ethereum is a single token blockchain and just uses ether for its gas payments. However, in Ethereum’s case, as token prices and network adoption increase, transaction fees also increase. Network congestion causes fees to rise and makes interacting with the blockchain impractical for some use cases. VeChain’s dual-token model aims to eliminate that issue and provide stable prices for their enterprise business environment. If fees become too high, the VeChain Foundation and Steering Committee are able to adjust the minimum amount of VTHO needed for a transaction (currently 21) and/or increase the issuance of VTHO per VET. This allows the market for VTHO to stay predictable for the companies using the chain. However, this is inarguably a centralized, top-down system where a small group can make dramatic changes to the protocol. All VET holders, enterprise and retail, are trusting the VecChain Foundation with their funds. It is no different than relying on a bank or central bank.
Optionally, the user may set the amount of VTHO to be used in a transaction, varying the priority of a transaction's validation. The VeChain Foundation monitors the market, estimates the VTHO demand, and adjusts the fees accordingly to maintain VTHO stability against fiat. On use, 70% of the VTHO gets destroyed while the remaining 30% is paid out to the Authority Node as a reward for validating the transaction.
The total addressable market for VeChain is as large as the global supply chain of luxury goods. This includes everyone involved, from large businesses to manufacturers to the consumer. VeChain’s goal is transparency, traceability, and quality assurance at each phase of the supply chain.
ICO
In the original VeChain (VEN) raise, the VeChain Foundation distributed its native token to private investors, enterprises/corporations, and crowdsale investors in 2017. Once the team built their own VeChainThor blockchain in 2018, they removed VEN in favor of VET at an exchange rate of 1:100. VeChain initially minted 1 billion VEN tokens which, after the new Thor blockchain, became 100 billion VET. Of that original 1 billion, 410 million VEN was sold in a public sale, with a smaller 90.0 million sold in a private sale. Enterprise investors were given 14% of the VEN tokens, while the team received 5%. 120 million VEN have been allocated for the operational cost of running the network and Foundation.
It should be noted that following the initial token sale, VeChain was forced to refund all Chinese citizens that participated in the ICO. This meant the team ultimately had to burn ~13% of the total token supply (~133 million VEN), thereby reducing the total supply to 867.2 million VEN. As of Q1 2021, there is a circulating supply of ~64,316,000,000.
Metrics
With an all-time high of $0.280991 USD (April 19, 2021) and an all-time low of $0.00194 USD (March 13th, 2020), the reported volume is ~$104 million a day while the real, verifiable volume is ~$20 million. The reported market cap is about $1.4 billion, while the liquid market cap is $1.7 billion. VeChainThor (VET) is traded on 152 active markets, with the highest volume pairs being USD, BTC, and ETH.
Vechain’s ICO was held on the Ethereum platform between August 18th to 31st, 2017 raising just over $60 million in order to release VeChainThor on its mainnet. Currently, the VET token is held by 622,827 different accounts. As a PoA consensus ecosystem, the majority of the assets are held by the authority voters (main node owners).
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