VTHO: The Gas Token of VechainThor, Maybe VET isn't King after all!
Just like Ethereum needs ETH for gas, VechainThor requires VTHO to power transactions and smart contract executions. However, unlike other networks where the gas token reigns supreme, VTHO's role in VechainThor creates a unique dynamic.
Holding VET Generates VTHO, But Not Enough for Large Operations
While holding VET generates VTHO, the rate might not be sufficient for massive deployments. Imagine a major brand using VET for constant supply chain tracking. They would either need:
- Two Large Pools of VET: One for transactions and another to generate enough VTHO. This is impractical and costly.
- Constant VTHO Purchases: This ensures a steady supply but adds recurring expenses.
VTHO Holders Have the Upper Hand in High Demand Scenarios
In such high-demand situations, companies will prioritize buying readily available VTHO from existing holders. This could push the price of VTHO significantly higher than VET, even though everyone currently holds VET for VTHO generation.
Converting VTHO to VET? Think Twice.
Exchanging VTHO for VET at the current price might not be wise. For example, converting 81,000 VTHO to 9,600 VET only generates 20 VTHO in a week, barely enough for a few transactions. It would take a long time to recoup the lost VTHO potential.
Transaction Costs and VTHO Burn Mechanism:
- Each basic transaction (e.g., VET transfer) requires 21,000 gas.
- 1,000 gas equals 0.1 VTHO, making a basic transaction cost 0.21 VTHO.
- 10,000 VET tokens generate 4.32 VTHO per day, enough for 20.5 basic transactions.
- However, complex supply chains might involve thousands of transactions per second.
Unlimited VTHO Supply with a Catch:
While VTHO's supply is technically unlimited, 70% of each transaction's fee is burned, effectively reducing the overall supply. The remaining 30% goes to validators, further impacting availability.
Conclusion:
VTHO's unique role in VechainThor creates a scenario where its price might surpass VET's, especially during periods of high network usage. While holding VET for VTHO generation is valuable, consider the long-term implications before converting VTHO itself. Remember, the demand for readily available VTHO could be immense in the future.
