VeChainThor Primer: Why Fee Delegation as a Service (DaaS) is a game-changer

Brot KnoblauchHaus
Jan 16 · 5 min read

The other day, Peter Zhou, Chief Scientist at VeChain Foundation, penned a brilliant article on the upcoming VeChain Improvement Proposal (VIP)-201, which builds upon fee delegation (VIP-191), and introduces the concept of Fee Delegation as a Service (DaaS). While Peter’s article explains the technical aspects of the proposal, this article attempts to break it down into non technical examples to demonstrate its possibilities.

Fee delegation itself is easy enough to understand. We see examples of this every day in our real life. Think of a product like Office 365 . If you purchase a personal license for home use, you’re responsible for paying the license fee when it’s due. However, if you’re working for a company that has an enterprise deal for Office 365, you as an employee never have to worry about when the license payment is due and how much it costs. You just use the software.

This is fee delegation in a nutshell. We accept fee delegation as part of our daily lives, but when it comes to Blockchains, it was mostly unheard of. However, this is exactly what #VeChain offers with VIP-191, which is a significant step towards enterprise adoption.

Coming back to the example above, now imagine if the company is using a variety of Microsoft products, not just Office. That’s a lot of different enterprise contracts that they need to maintain with Microsoft, with different pricing models, contract durations, and so on. This adds a huge deal of complexity, not just for the company who wants to use the Microsoft products, but also to Microsoft themselves.

This is where the Microsoft Authorized Resellers come in.

These are companies who procure enterprise licenses for various products from Microsoft in bulk, and configure them in ways that suit the needs of the end customer. So the end customer only receives one invoice from the reseller for all the Microsoft products they use. This greatly reduces the adoption barrier for Microsoft enterprise products.

The DaaS module and VIP-201 aims to replicate exactly this for VeChain adoption.

Let’s look at a few examples to see what this actually means in practice:

Use case 1: Health insurance

A health insurance company decides to offer a reward to its customers for staying fit. They launch an app for their customers. Every customer can check-in using the app at participating fitness clubs. After every 100 check-ins, the customer receives a monetary reward in their bank account.

How this can be built using VeChain and DaaS:

Every customer who logs into the app receives a VeChain wallet address unique to them in the background. Every check-in the customer makes triggers a smart contract that checks for certain conditions (e.g. Is the user at the geographical location of the fitness club? Is he there during the operating hours of the club? Has the contract already been triggered on this day?) and broadcasts a transaction to the VeChainThor network.

The insurance company engages a DaaS operator, who pays VTHO on behalf of the customers, every time the smart contract is triggered by a customer wallet. The DaaS operator invoices the insurance company in Fiat, based on the amount of VTHO that has been used.

When a customer wallet triggers the smart contract 100 times, a second smart contract is triggered, which releases a payment to the customer’s bank account. This contract too, is paid for by the DaaS operator.

Thanks to the elegance of DaaS, neither the insurance company, nor its customers have to ever hold/ use VTHO or any digital asset. In fact, the customers don’t even need to be aware that a VeChain wallet address has been assigned to them.

Use Case 2: Streaming payouts

A music streaming company wants to pay its artists in real-time. It releases a “Wallet” app for its artists. Every time a subscriber pays a song, the artist responsible receives a fixed payment in their wallet app. When the artist redeems the payment, money is sent to his bank account.

How this can be built using VeChain and DaaS:

Similar to the insurance example, every subscriber of the streaming service is assigned a unique VeChain wallet address. The artists who download the wallet app and log in with their credentials are also assigned their unique VeChain addresses.

A relational database stored on the VeChainThor blockchain assigns each song in the streaming company’s catalog a unique ID, and associate the songs with the VeChain wallet address of the artist.

The DaaS operator engaged by the streaming company issues a stablecoin (Let’s call it $STRM) on VeChainThor, backed 1:1 by the budget set aside by the streaming company for artist payouts.

Every time a subscriber plays a song, a smart contract looks up the artist’s wallet address associated with the song ID and sends a preset amount of $STRM to the artist’s wallet address.

When the artist chooses to redeem their $STRM, another smart contract with a price oracle calculates the exchange rate between $STRM and the artist’s local currency and releases payment to the artist’s bank account.

The VTHO required for all these operations is paid by the DaaS operator, who invoices the streaming company in Fiat.

Again, thanks to the elegance of fee delegation and DaaS, neither the streaming company nor its subscribers and artists need to know anything about blockchains or digital assets.

Use Case 3: Cross platform loyalty rewards

The music streaming company and an online shopping company decides to do a cross-platform promotional offer. For every $1000 that a customer spends on the shopping platform, they receive 10 days of free listening on the streaming platform.

How this can be built using VeChain and DaaS:

The streaming company and the shopping company engage a DaaS operator, who issues two tokens on VeChainThor on demand(Let’s call them $SHOP and $MSIC). As soon as a user links their shopping account and streaming account, they are assigned their unique VeChain wallet address. For every $1000 that the user spends on the shopping platform, a smart contract is triggered, which generates and sends one $SHOP to their wallet.

When the user logs into the streaming service and redeems their shopping credits, a DEX built by the DaaS operator performs a swap via a smart contract, which withdraws the $SHOP from the user’s wallet and sends one $MSIC in return. When the user decides to redeem their free days, a smart contract destroys the $MSIC and credits the user with 10 days of free listening.

As in the use cases before, the DaaS operator pays the VTHO required for all these operations and invoices the shopping and streaming companies in Fiat. The users of the platforms do not need to know anything about $SHOP, $MSIC, or the DEX to enjoy the benefits of cross-platform loyalty points.

Conclusion:

VIP 191, VIP 201, and the DaaS module facilitate the implementation of VeChainThor into real-life use cases seamlessly; something that up until now was next to impossible for Blockchain. These improvements enable everyday people to enjoy all the benefits that #Blockchain provides (Immutability, Single source of truth, ownership of data) without having to know anything about the technology. Therefore, I believe that this is truly a game-changer and an important step towards taking Blockchain mainstream.

And of course, it goes without saying; $VTHO is the fuel that will power all these scenarios, and the only way to generate VTHO is by holding $VET.

VET/ VTHO Tip Jar: 0x22e0820aC11F093e317446458f79C11CFaf58084

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