Vechain Review and Rating

Vechain whitepaper (v., 2018.5) contains 113 pages and includes two paragraphs (20 pages in total, named “Governance Model and Design” and “The Board of Steering Committee”), which describe a multi-level administrative pyramid of what authors call “Vechain ecosystem”.

Although this piece also includes 22 pages of “Architecture and Applications Development” section, reading its provided me with only a very vague picture of the proposed system design. It also produced an impression that authors just stitched several “technical” texts (with “sound” names like, “Standard API Gateway”, “Hashed Storage Service”, “Digital Ownership on Blockchain” etc) together.

Citing: “The vision of VeChain is to build a trust-free and distributed business ecosystem platform to enable transparent information flow, efficient collaboration, and high-speed value transfers.”

Basically, Vechain is supposed to be an on-line “business cooperative”, which, besides “Business Owners”, includes “Application”, “Smart Contract” and “Infrastructure” services providers. VeChain Foundation is, by the words of its authors, “… the centralized organization formed by the decentralized VeChain community to carry on day to day operations.” All of that must be run on (citing) “The ‘Blood’ in the Distributed Ecosystem: VeChain Token — VET (ERC 20) and VeChain Energy — VTHO (‘gas’)”.

The way authors expect Vechain Tokenomics to work can be approximated as the following: a) for about 133 million VETs (70% of initial supply) are supplied to the system trough ICO; b) the rest of VETs are dedicated to various “funds”, which main purpose is to support Vechain’s administrative structure; c) Vechain’s main governance body uses “the VTHO generation model” to project the issuance of VTHO, which then has to be injected into the system and purchased by users to conduct their day-to-day transactions.

Citing: “Based on the VTHO generation model, we can estimate the supply and demand of VTHO for each given day and dynamically for one year after the VeChain mainnet is officially launched.”
To rank this type of “scientific-socialism” tokens’ model objectively I need to take into consideration that those kinds of centrally planned monetary systems still exist (in their modern form, of course) and that its “Sustainability” (due, mostly, to the strong administrative support) might be surprisingly high (at least in a short run). Result: “b-”. Also, “Engagement” of this kind of “Tokenomics”, specially with some categories of users, might also be stronger than expected. Result: “b-”.

However, I refuse to be optimistic about VET tokens’ “Value” (“c”), which will likely to regress, whilst Vechain administrators are tempted to issue more and more VTHO into the circulation in order to convert it to fiat. Furthermore, because VTHO are supposed to be the main source of income for Vechain’s multiple committees’ members that might negatively affect their “Transaction” policy’s decision making process (regardless their model). Result: “c”.

Tokenomics”: Sustainability-Value-Engagement-Transactions sub-rating: b-cb-c