Blockchain technology, with its inherent traits of decentralization, immutability, transparency, and automation, holds immense potential for various business applications. Yet, the cost and complexity of building and maintaining blockchain-powered applications often pose a significant challenge for enterprises. However, several projects, including VeChain, are striving to lower these barriers and foster the adoption of distributed ledger technology. This article provides an in-depth understanding of VeChain, its unique features, and how it functions. It also explains how to purchase VeChain and the intricacies of VeChain staking.
VeChain: A Brief Overview
VeChainThor is a public blockchain designed to facilitate the widespread use of blockchain technology by businesses of all sizes. It serves as the foundation for a robust and scalable enterprise blockchain ecosystem. VeChain contends that Ethereum, despite being a significant technological milestone, is not entirely suitable for running large-scale commercial decentralized applications (DApps). This is mainly due to Ethereum’s lack of a robust governance framework and an appropriate economic model. VeChainThor seeks to address these issues with its unique features, including meta-transaction capabilities, a proof-of-authority (PoA) consensus method, an on-chain governance mechanism, and a two-token system.
VeChain’s Meta-Transaction Features
VeChain’s meta-transaction features are designed to make the development process user-friendly, thereby facilitating enterprise adoption:
- Multi-party payment: VeChain’s innovative fee delegation protocol allows an enterprise to manage the gas fees required to use the network through a smart contract and a designated gas account. This feature enables a freemium model for a decentralized application.
- Controllable transaction lifecycle: Users can specify the execution time of a transaction or when it expires if it is not included in a block, using the Expiration and BlockRef transaction fields.
- Multi-task transaction: This feature allows developers to batch payments and include multiple calls to different contract functions in one transaction. They can also control the order of the calls using multi-function atomic transactions.
- Transaction dependency: Users can set dependencies to prevent transactions from being executed until the relevant transaction has been processed, ensuring that the execution order satisfies business needs.
VeChain’s POA Consensus Mechanism
VeChain has evolved its PoA consensus mechanism from PoA 1.0 to PoA 2.0. The original PoA 1.0 was implemented at the launch of the VeChainThor blockchain in 2018. It relied on Authority Masternodes for block validation, offering efficiency and low energy consumption but facing scalability and financial limitations. The enhanced PoA 2.0, introduced in 2022, improves scalability, security, and data finality, reflecting VeChain’s commitment to continuous technological evolution.
VeChain’s Governance Model
The community-elected Steering Committee, elected by stakeholders, is responsible for strategic decision-making and overseeing VeChain improvement proposals (VIPs). A key advantage of this system is lower organizational and technical development uncertainty due to role-based voting. Furthermore, VeChain’s model encompasses community engagement through tokenholder voting, allowing broader participation in key governance decisions.
VeChain’s Dual Token Economy
The VeChain ecosystem includes two tokens: VeChain Token (VET) and VeChainThor Energy (VTHO). VET is the primary token, used for carrying value within the ecosystem, enabling investment, transactional activities, and stakeholder voting. VTHO is used as the energy or “gas” to power transactions and smart contracts on the VeChainThor blockchain. VTHO is generated by holding VET, and it provides a mechanism to decouple the cost of using the blockchain from the market price of VET, thereby stabilizing transaction costs and facilitating efficient resource allocation within the ecosystem.
Unpacking How VeChain Functions
VeChain’s functioning can be best understood by considering its application in supply chain management.
Creation of Unique Identification
Each product or batch is assigned a unique identification number. This identifier, which could be a near-field communication (NFC) chip, a radio-frequency identification (RFID) tag, or a quick response (QR) code, is crucial for monitoring the product’s progress along the supply chain.
Capture and Recording of Data
At every stage of the supply chain, relevant data is recorded. This data, which includes details about the manufacturing process, batch numbers, expiration dates, storage circumstances, transit information, and other facts, is then stored on the VeChain blockchain.
Entry into the Blockchain
The captured data is stored on the VeChain blockchain. Each record is time-stamped and linked to the preceding one, forming an unchangeable and transparent chain of records.
Activation of Smart Contracts
On the blockchain, smart contracts are pre-written agreements that are automatically executed when specific conditions are met. In the supply chain, this could mean releasing payments, notifying stakeholders when a product reaches a certain location, or automatically updating the status of a product.
Real-Time Tracking and Verification
All parties involved in the supply chain, including customers, distributors, manufacturers, suppliers, and retailers, can track and verify the product in real time. They can access the blockchain to verify the product’s background and other information.
Interaction with End Users
End users can interact with the product’s blockchain record to confirm its legitimacy, provenance, and other relevant information. This enhances consumer confidence and verifies product authenticity.
Continuous Updates and Audits
The product’s record on the VeChain blockchain is continuously updated as it progresses through its lifecycle. This ongoing process ensures that the data is updated and auditable for compliance, quality assurance, and other uses.
In VeChain’s supply chain management, Know Your Customer (KYC) processes are crucial for verifying the identity of businesses and stakeholders, ensuring that only legitimate entities participate in the network.
Various nodes (such as Authority Masternodes and Economic Nodes) on the blockchain record transactions within this ecosystem. This system maintains the integrity and transparency of the supply chain data, with smart contracts automating key processes like confirming deliveries or payments, ensuring efficient and secure transactions without intermediaries.
VeChain works with a number of security companies, including Hosho, SecureWare, SlowMist, and HackenProof, to identify potential vulnerabilities and proactively prevent cyber threats.
An Overview of the VeChain ToolChain
The VeChain ToolChain is a key product offered by the VeChainThor blockchain platform. It is designed for accessibility, catering to businesses of all sizes and enabling them to implement blockchain technology effortlessly. Its applications range from product lifecycle management to carbon credit solutions and environmental sustainability reporting.
VeChain ToolChain provides platform-as-a-service (PaaS), software-as-a-service (SaaS), and blockchain-as-a-service (BaaS) offerings. These help create new strategies for generating value for various stakeholders, promote transparency, and provide insights into product life cycles.
For instance, VeChain’s low-code deployment PaaS allows customers to design process templates and use the built-in tools to avoid creating their own blockchain applications from scratch. In addition, its Food Safety Track & Trace SaaS offers the food and beverage industry a range of easily deployable traceability features, such as quality certificates, to communicate and reliably increase brand recognition.
Through BaaS, VeChain offers a restful API for standardized smart contract services. Two computer systems use the restful API, an application programming interface, to exchange information safely over the internet.
The Genesis and Progression of VeChain
VeChain was founded in 2015 by Sunny Lu, the former chief information officer of Louis Vuitton China, and Changpeng Zhao, the Chinese-Canadian founder and ex-CEO of Binance. VeChain started as a subsidiary of Bitse, an organization that provides blockchain-powered solutions. The VEN token once operated on the Ethereum platform, but in 2018, VeChain switched to its own blockchain and rebranded itself as the VeChainThor blockchain.
VET, the main token, has a fixed max supply, with a portion in circulation and the rest allocated for enterprise investors, the team, and ongoing development. VeChain implements a VTHO burning mechanism to maintain equilibrium, where a portion of VTHO used in transactions is destroyed. This balances the supply-and-demand dynamics and ensures the stability of transaction costs.
VeChainThor is used in various industries, including agriculture, pharmaceuticals, and automobiles, to improve the effectiveness, transparency, and affordability of supply chains. Utilizing RFID sensors, the blockchain tracks goods along the supply chain to ensure proper handling and authenticity. Its adoption by several Fortune 500 companies, including BMW, Walmart, LVMH, Deloitte, Renault, and PricewaterhouseCoopers, attests to its real-world application and effectiveness.
Guiding Steps to Purchase VeChain (VET)
Depending on your jurisdiction, you can choose a crypto exchange that supports VeChain (VET) cryptocurrency and download a wallet to store your tokens. Alternatively, you can store your tokens in the exchange wallet, but this comes with the risk of “not your keys, not your coins.”
VeChain has also developed the VeChainThor Wallet specifically for its own cryptocurrency, which is compatible with both Android and iOS. However, VeChain tokens are incompatible with wallets like MetaMask since VET and VTHO are not based on the Ethereum blockchain. The final step is to purchase VET tokens for the amount you desire and transfer them to the wallet of your choice for safekeeping.
To buy VeChain (VET) on Coinbase, the key steps include the following:
- Account creation: The individual should download the Coinbase app and initiate the sign-up process, providing a valid ID and, if required, proof of address. The ID verification process may vary in duration depending on the user’s location.
- Add a payment method: The user needs to add a payment method by selecting the payment method box in the app. Available options include linking a bank account, using a debit card, or initiating a wire transfer.
- Initiating a trade: On the Coinbase website, the user should select “Buy and Sell.” The mobile app achieves this by tapping the “( + ) Buy” option on the “Home” tab.
- Selecting VeChain: To choose VET, the user should use the “Buy” panel on the website or the search bar in the app to find and choose VeChain.
- Entering purchase amount: The individual must input the desired expenditure in their local currency. The app automatically calculates the equivalent amount in VeChain.
- Finalizing the purchase: The user can review the details by tapping “Preview buy.” They confirm the transaction by clicking “Buy Now” if all is satisfactory.
- Confirmation: After the order is processed, a confirmation screen appears, indicating the successful purchase of VET.
Apart from buying VET, you can also earn passive income with VeChain. Typically, users must first buy other cryptocurrencies like Bitcoin (BTC) and then trade their BTC for VET after locating a wallet or exchange that supports VeChain staking. However, unlike other cryptocurrencies, there aren’t any staking pools where one can combine VET investments to earn more VTHO.
VeChain’s Foray into NFTs
In addition to VeChain’s use cases in the supply chain, its nonfungible token (NFT) ecosystem is also thriving. For creating and trading VIP-181 tokens that are stored on the VeChain blockchain, there is a decentralized NFT marketplace called VeSea. The VeChain Foundation introduced the VIP-181 Standard, which enables basic functionality for tokens within smart contracts.
NFT Marketplaces: VeSea and World of V
VeSea is a decentralized NFT marketplace on the VeChain blockchain where users can buy, sell, and discover VeChain NFT collections, including VeKings, Veysarum, and others. Users require a VeChain-compatible wallet to interact with NFTs on VeSea. VeChain Sync2 and VeChainThor Wallet are among the compatible wallets.
World of V is another VeChain NFT marketplace that is compatible with the Sync2 wallet. This platform facilitates the creation and collection of NFTs with no gas fees. It supports the minting of new NFT projects and allows NFT owners to stake their NFTs in the creator ecosystem.
NFT Collections: VeKings and Paper Project
The VeKings collection initially consisted of 9,999 artworks of vikings and valkyries issued by the creators of the VeSea NFT marketplace. This collection has undergone periodic burn events, reducing the total supply. As per VeChainstats.com, there are 6,866 NFTs in circulation, with 3,133 NFTs burned.
The Paper Project Alpha Collection is an interactive work by Emmet Ahlstrom, an artist residing in Southern California. This collection consists of 11,880 individually generated NFTs.
Introducing VeUSD Stablecoin
The VeUSD stablecoin was created on the VeChainThor blockchain with the aim of providing a stable digital currency option for users within the VeChain network. Announced on Jan. 5, 2022, VeUSD is pegged 1:1 to the United States dollar, ensuring its value remains stable against the fiat currency. This peg is maintained through equivalent reserves of U.S. dollars, which back the stablecoin.
VeUSD was officially launched for public minting on March 14, 2022, marking a significant development in the VeChain platform. It seeks to provide the advantages of cryptocurrencies, such as digital speed, ease of use, and security while avoiding their notorious volatility.
VeUSD enhances the utility and scalability of the VeChain network by being utilized for various transactions inside the VeChain ecosystem, such as payments and remittances, and serving as a reliable medium of exchange for decentralized finance (DeFi) apps.
VeChain (VET) as an Investment
VeChain aims to accelerate the mass adoption of blockchain technology by addressing issues such as the high cost of maintaining an Ethereum-based DApp. Despite VeChain’s use cases in supply chain management and other industries, the choice to invest depends on one’s financial objectives and risk-return profile.
However, investing in a cryptocurrency in which you lack confidence can be risky, and you may lose your hard-earned money. Therefore, base your asset-allocation decisions on your expectations for returns on your investment.
The Path Ahead for VeChain
VeChain is a layer-1 smart contract platform that allows developers to create unique smart contracts and DApps on top of it. Its applications in logistics, supply chain management, and other industries help businesses enhance their operations. However, from an investment perspective, one must always weigh the pros and cons before making portfolio allocations.
The future is unpredictable, and the same applies to VeChain; it cannot be predicted whether VeChain will become the new Ethereum. Regardless, it will be interesting to observe how VeChain competes with its rivals and provides distinct solutions to gain a competitive advantage.
