Vether Asset
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Vether Asset

Revisiting the Value of Vether

Photo by Jez Timms on Unsplash

As we approach Vether’s one year anniversary on May 12th, I wanted to return to the basics of what makes Vether special. I hope you all enjoy!

Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.

– Vitalik Buterin, co-founder of Ethereum

If you’re like me, you saw Vether as “digital gold” on Ethereum due to its intrinsic properties (scarce, fair distribution, etc.). But while the technical properties are important, what if we’ve missed a deeper level to its potential?

According to Investopedia, currencies have value for six reasons:

  1. Scarcity
  2. Divisibility
  3. Utility
  4. Transportability
  5. Durability
  6. Inability to be counterfeited easily

Many cryptocurrencies are scarce, divisible, can be transferred, are durable, and can’t easily be counterfeited but few are seen in the same way as cryptocurrencies like Bitcoin. Why? Because they don’t have the same utility and social acceptance.

Bitcoin is accepted in many places and hence, has usefulness. It stores value and you can trade it for all sorts of things. People are willing to pay a lot for it.

So why bother with Vether? Why try to create another store of value? Do we really need multiple types of digital gold? It seems silly to try to recreate something that’s already well proliferated throughout the crypto world.

The only way Vether makes sense is if it has some redeeming quality or characteristic that differentiates itself from other stores of value such as Bitcoin, some kind of special utility and/or social value.

And that’s what we’ll explore here.

Let’s start with how Bitcoin and Vether are different.

Proof-of-Work vs. Proof-of-Value

Photo by Tim Foster on Unsplash

Proof-of-Work: In order to mine Bitcoin, you have to use hardware to solve complex problems. You prove your work. The better your hardware, the greater the likelihood of “mining” some Bitcoin as a reward. Typically, the cheaper your electricity, the greater your profit. Burn energy, gain Bitcoin.

Proof-of-Value: In order to “mine” Vether, you need to burn Ethereum. Depending on what everyone puts in by the end of the Vether day, you’ll receive some Vether. You prove its value by how much you’re willing to burn.

Proof of Value is unique properties in two ways:

  1. Fair value: It distributes daily at its true fair value (the price to “mine” it)
  2. Accessibility: it is much easier to obtain at “fair” prices for more people.

Actual at-cost “fair” value:

Bitcoin and Vether have value based on whatever the market sets.

However, due to how Vether works, Vether’s market price is much closer to the cost to obtain it.

Do you know off the top of your head the average cost to mine one Bitcoin? Probably not. But I can easily calculate or check Twitter right now to see how much people value Vether each day. No fancy calculator needed, only basic division skills (amount of ETH burned divided by the amount emitted that day).

If there’s a large difference between Vether’s cost to acquire (burn price) and price on the market, it can quickly be arbitraged away.

While this makes Vether less speculative in certain ways, it means its day to day value is much closer to what it costs to mine.

Think of the pricing this way: When you buy something from a store, its price is marked up. Why? So the store and distribution chain can make some money. Vether cuts out the store by allowing you to purchase at the price it was produced (plus whatever gas fees there are).

Accessibility:

In order to burn for Vether you just need a wallet and the ability to use a dapp; it’s much more accessible compared to Bitcoin which requires hardware and additional knowledge on how to set things up.

If you know how to use Uniswap then you should be able to figure out how to burn for Vether.

In short, Proof-of-Value means:

  • Vether is more tightly drawn to its at-cost value than Bitcoin.
  • More people can participate in obtaining Vether at a fair value, further decentralizing its “mining” process.

Why is this important?

Proof-of-Value means we can have a fair price available to a much larger group. Bitcoin’s valuable because people want it and because it’s scarce. But what if we had something that was not only (more) scarce, but also carried the ethos of decentralization and distribution embedded in its very code and functions? What if on an intrinsic level, Vether more fully embodies the ethos of Ethereum than Bitcoin? What if Ethereum could have a more innate store of value found within its own ecosystem?

Short history lesson:

Photo by Natalia Y on Unsplash

On July 30, 2015, Ethereum was launched as a medium for decentralized applications, a way for people to write programs that could not be censored and that could also be used by anyone.

Take a brief glance at the Ethereum organization’s website and you’ll see the following statements:

“A fairer financial system… Today, billions of people can’t open bank accounts, others have their payments blocked. Ethereum’s decentralized finance (DeFi) system never sleeps or discriminates.”

A fairer financial system… fair because people have access and no one is blocked from participating.

“Today, we gain access to ‘free’ internet services by giving up control of our personal data. Ethereum services are open by default — you just need a wallet.”

You just need a wallet… sound familiar?

Vitalik Buterin, co-founder of Ethereum, stated that when he saw the word ether,

I immediately realized that I liked it better than all of the other alternatives that I had seen; I suppose it was the fact that [it] sounded nice and it had the word ‘ether’, referring to the hypothetical invisible medium that permeates the universe and allows light to travel.

He wanted to make Ethereum an invisible backbone to decentralized applications.

Ethereum was created for builders to reimagine the world in a way that could not be censored and that distributed power to more people, the direct workers and creators, and not just some centralized entity.

Now imagine if Ethereum could store value in a scarce asset native to itself. Instead of using BTC or wrapped Bitcoin (wBTC), what if Ethereum used a store of value that was fairly mined and only required a wallet? And what if this store of value even helped increase the value of Ethereum itself?

Increased Scarcity & Useful for Building

Photo by Chris Rhoads on Unsplash

Vether not only captures the ethos of Ethereum, but also adds value to Ethereum.

In order for Vether to sustainably appreciate in price, more Ethereum needs to be burned for it on a regular basis. This lowers the total supply of Ethereum. In addition, Ether burned for Vether doesn’t go to anyone. It is burned, retaining a strong sense of decentralization where power is not centralized but dispersed.

In addition, due to its distribution mechanism, Vether may be incorporated into other projects to encourage fairly priced distribution and decentralization. This is true of projects such as the Vader Protocol which uses Vether as a distribution system for full participation in its system.

Like gold used in circuit boards, Vether can be used to power decentralized applications with its unique properties.

If any Vether related project works well and finds an audience, then Vether itself gains more utility, and in turn, draws in more value. In this way, builders can pull the ethos of decentralization and fair distribution into their projects while also storing value in that same asset.

Vether is not only a store of value — Vether is a mechanism for fair distribution that holds the value of what you create from it.

If Ethereum is the backbone of a decentralized and distributed world, then Vether could become the container of its creative value. Imagine the possibilities of an asset whose utility comes not only from social acceptance but also from what’s created with it.

So, what would you rather have: a store of value based solely on social demand and scarcity, or a store of value with the potential to store the utility of its builders, accessible at a fair price each day?

Obviously, dollar-wise, many would choose the one that they can sell for more, but when we think of the ethos, I believe the intrinsic possibilities for Vether’s value are much more intriguing and exciting.

Cynic’s corner:

Photo by Rod Long on Unsplash

Why not just use Ethereum as a store of value?

As Strictly-Scarce once put it, Ethereum’s supply is not fixed and it also is not fairly distributed. Pulling an inflationary asset into a fixed supply helps bring clarity to its value. And similarly to Bitcoin, mining for Ethereum is not accessible to larger groups. Vether helps open the door for more “mining” participants.

Isn’t Vether just trying to produce value by being scarce? As DegenSpartan once put it, “that’s a broken understanding of value”.

If Vether is only about being a fixed, low supply ERC-20 token, then yes, it would be a broken understanding of value. But it’s more than just a scarce asset. It has people building on it.

Consider this: What gives Ethereum value? Is it that it involves cryptography or some other property? It’s not only the technical properties, but that people build on it within its ethos. In the same way, Vether does not gain value merely by having a limited, small supply. It gains value by the people who build upon its ethos of fair distribution and accessibility.

Join our Discord channel and ask questions; let me know if you disagree or if I’ve misrepresented something or made some bad assumptions. I’m here to learn just as much as I am to share. While you’re at it, come join us and build upon Vether as your method of distribution or in some other way; we’d love to see more builders and creators join. Don’t know how to code? That’s ok, come share your ideas!

And an additional note if it sounds like I’m bashing Bitcoin: Bitcoin broke the doors open for cryptocurrencies, opening up the entire field to the larger public. Bitcoin deserves all the acclaim it has and more.

At the same time, isn’t it exciting to imagine an asset that not only has similar properties to Bitcoin, but is also accessible to more people at a fair value and which can naturally be integrated into new ideas and protocols on Ethereum? This is more than “digital gold”. Imagine an asset that contains dynamic value from builders and creators, which is fairly distributed each day.

That, to me, is something worth writing about and building on.

Another note during these times: During this time in crypto some people are making a lot of money and some people are losing a lot of money. Please take care about what you do with your money.

The way Vether’s built, large price increases won’t sustain without some form of sustainable value backing it.

Come join the community and dream up ideas and help build into this unique asset. Let’s not be like Attilius’s colosseum. Let’s build up something that’s useful and strong enough to last for the long run and not for just a big spike on a chart.

Want more information now? Check out our Vether FAQs or Vether docs.

Want to start burning Ether for Vether? Check out the Vether DApp here or swap for it on Uniswap.

The above article references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

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Vether is a strictly-scarce Ethereum-based asset. Limited to a max supply of one million, Vether is designed to be a store-of-value with properties of strict scarcity, unforgeable costliness and a fixed emission schedule.

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