What is VeChain and VET?

VeChain is a blockchain platform that offers B2B solutions for supply chain management, counterfeit product detection, and the automation of other business processes. How does it work, and why is it so beneficial? Let’s see!

The project uses two cryptocurrencies: VeChain (VET), the native coin, and VeThor (VTHO), which is required to pay transaction fees.

Founded in 2015, VeChain is a pioneer in the development and implementation of blockchain solutions for tracking the authenticity of goods and retail sales, with offices in China, the European Union, the United States, Japan, and Singapore. The company has long-term partnerships with major international corporations such as BMW, BYD, and Walmart, as well as government agencies in China and other countries.

Who created VeChain and supported it financially?

Sunny Lu, a former top-manager at Louis Vuitton China, and Jen Zhang, a former Deloitte and PricewaterhouseCoopers employee, founded the VeChain startup in Singapore in 2015.

In 2017, the VeChain Foundation was established as a non-profit organization to take over the development and support of the blockchain platform, as well as the involvement of partners and the development of the VeChain ecosystem.

VeChain raised $22 million during the VET native coin tokensale, which took place the same year. Several major partnerships already in place at the time, including one with the German automaker BMW, aided in attracting investors’ attention.

PricewaterhouseCoopers (PwC), DNV GL, Haitao Capital, BlockVC, and IOSG Ventures invested in VeChain in three corporate rounds during the spring of 2018.

The VeChain prototype initially worked on the Ethereum network, but in the summer of 2018, the developers released VeChainThor. Over the years, the project established subsidiaries in China, the European Union, the United States, and Japan. In February 2022, the VeChain Foundation’s headquarters were opened in San Marino, emphasizing the importance of the European market for the company.

Why does VeChain need 2 cryptocurrencies?

The creators of VeChain issued 1 billion native tokens called VEN on the Ethereum network in 2017. A closed tokensale for early investors sold 9% of them, while an open ICO raised $20 million. Following the launch of the VeChainThor blockchain, VEN was exchanged for native VET coins at a 1:100 ratio.

Currently, two native cryptocurrencies are used in the VeChainThor blockchain — VeChain Token (VET) and VeThor Token (VTHO).

The total offer of VET is approximately 86.7 billion tokens, nearly 70% of which were distributed to early investors and tokensale participants, and the remaining 30% were used to develop the VeChain ecosystem and reward developers.

The VeChain coin has four basic functions:

• Calculation tool: VET is used for transfers in the VeChainThor blockchain;
• Collateral — this cryptocurrency is needed to launch any VeChain node;
• Staking — while in the node wallet, VET generates a VTHO token. For every 10,000 VET, 4.32 VTHOS are produced at node addresses per day;
• Management — nodes get the opportunity to participate in network management according to the number of VET held. All 101 trusted masternodes share 40% of the total number of votes.

Source: CoinMarketCap

The VeThor Token (VTHO) is used to pay transfer fees on the VeChainThor network. 70% of all paid VTHO commissions are burned, with the remaining 30% becoming a reward for trusted master nodes.

VeChain Token (VET) is one of the top 50 crypto assets in terms of capitalization. Both cryptocurrencies are traded on all major cryptocurrency exchanges.

What is VeChainThor?

The VeChainThor blockchain, which is based on the original Proof-of-Authority consensus mechanism, serves as the foundation for all VeChain solutions. This is a modified Proof-of-Stake algorithm in which network nodes are assigned the tasks of block generation and transaction approval (nodes).

Authority Masternodes in VehainThor cannot be anonymous: before contributing to the blockchain’s stability, security, and efficiency, each candidate is checked by the VeChain Foundation for compliance with technical requirements and identification procedure. The VeChain blockchain supports 101 such nodes, each requiring a 250 million VET stake.

VeChainThor has three types of economic nodes and four types of X-nodes. They do not verify transactions, do not generate blocks, and do not require high-performance equipment, but they do ensure the ecosystem’s stability and produce VTHO (the second asset of the ecosystem).

The minimum steak requirements (from 600,000 to 15 million VET), the time of “maturation” of awards in the form of VTHO (from 10 to 90 days), and related bonuses vary depending on the type of node.

The number of nodes is limited: there were 1,665 economic nodes and 2,430 X-nodes as of August 2022. The right to maintain the node is confirmed by the corresponding NFTs, which are traded on a special marketplace.

Every 10 seconds, new blocks are added to the VeChainThor blockchain. According to the developers, with these parameters, network performance can reach 10,000 transactions per second. However, VeChain Foundation will be able to adjust the block generation time and network performance as needed.

There is a virtual machine on the VeChainThor blockchain. It is built on the Ethereum Virtual Machine (EVM) and supports the execution of smart contracts written in the Solidity programming language. The network supports the issuance of user tokens, such as NFT, as well as the operation of decentralized applications.

How do VeChain-solutions help business?

Vechain has established itself as a pioneer in the development and implementation of blockchain solutions for logistics, tracking the authenticity of goods, retail sales, and other business processes.

The operation of VeChain solutions is based on the digitalization of physical objects: each tracked object is assigned a unique identifier (Vechain ID). The smart contract generates a corresponding entry in the VeChainThor blockchain. On the object itself, there is a carrier (NFC chip, RFID tag, or QR code) with a recorded Vechain ID, or IoT sensors that register data on the object’s location and condition..

Interaction with the VeChainThor blockchain and stored data is possible through the API that Vechain provides to its partners. It allows you to track the path of items in real time, including their movement through distributor warehouses, the date and location of their sale, and other actions.

Enterprises can select various types of blockchain products based on their requirements:

• The basic platform for which you need to develop applications yourself;
• A medium-level low-code platform that can be assembled from ready-made software blocks;
• A ready-made application, fully adapted to the needs of the client and ready for implementation.

VeChain has completed pilot projects with over 200 companies worldwide since its inception. Here are a few of the most impressive examples:

• In partnership with BMW, a VerifyCar application has been developed that records vehicle usage data (mileage, insurance and service marks) in the blockchain, which facilitates interaction with car service centers.
• In 2018, the BrightCode platform was introduced, built on the VeChainThor blockchain for Bright Food Corporation. With the help of a QR code, consumers can receive verified information about the origin of food.
• In 2019, Walmart China announced a joint project with VeChain aimed at tracking the authenticity and safety of food.
• In the same year, the authorities of the Chinese province of Shuangjiang approved the use of the VeChain network to track tea supply chains;
• At the beginning of 2021, the manufacturer of PuffBar electronic cigarettes decided to use the VeChain platform to combat counterfeiting.
• VeChain is developing a platform for tracking agricultural products commissioned by the government of the Chinese province of Inner Mongolia. Several enterprises in the region are already using this system.

Which decentralized apps are based on VeChain?

Although VeChain was initially focused on B2B solutions, the emergence of many decentralized ecosystems stimulated the development of the field of decentralized finance (DeFi) based on VeChainThor, which has high performance.

According to the VeChainStats service, at the time of August 2022, about 30 user tokens were issued in the VeChain ecosystem. The VeChain network hosts a number of DeFi applications, including the decentralized crypto exchange VexChange, as well as the virtual world of Vulcan Verse and blockchain games. VeChain has also released more than 30 NFT collections, many of which are clones of popular collections on Ethereum.

In May 2022, VeChain, in cooperation with Stable, an asset tokenization company, launched the VeUSD native stablecoin, fully backed by the US dollar. The security for VeUSD is stored in a trust account that is managed by Prime Trust. As of August 2022, VeUSD’s capitalization is about $5.5 million.

How is VeChain evolving?

VeChain has been actively working with universities around the world to develop blockchain solutions for healthcare and environmental protection since its inception. Tsinghua University, Stanford University, the Massachusetts Institute of Technology, the Oxford Mathematical Institute, and the City University of Hong Kong are among the research collaborators.

One of the most notable examples was the use of the VeChainThor blockchain in the healthcare sector to prevent the spread of COVID-19.

In September 2020, VeChain, in partnership with DNV GL, launched the VeTrust application. It includes a checklist to ensure cleanliness and safety, which hotels can use when processing premises and cooking for guests. In China, more than 200 hotels and public places have been linked to this system.

In addition, municipal authorities in a number of Chinese provinces used Ve Trust to visualize the process of infection risk management in 95 residential complexes with a total population of more than 300,000 people.

In early 2022, the VeChain Foundation announced the launch of the VeCarbon platform for calculating and controlling carbon dioxide emissions. The product helps businesses achieve carbon neutrality, emissions targets and achieve sustainable Development Goals. The product is used in several enterprises. It was also tested in electric vehicles of the Chinese automaker BYD: car owners could receive small rewards by selling their carbon credits.

Since August 2022, the Amazon Web Services (AWS) cloud service has become VeChain’s partner for the VeCarbon project.

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