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What Is VeChain (VET)?
VeChain (VET) is a versatile enterprise-grade L1 smart contract platform.
VeChain began in 2015 as a private consoritium chain, working with a host of enterprises to explore applications of blockchain. VeChain would begin their transition to public blockchain in 2017 with the ERC-20 token VEN, before launching a mainnet of their own in 2018 using the ticker VET.
VeChain aims to use distributed governance and Internet of Things (IoT) technologies to create an ecosystem which solves major data hurdles for multiple global industries from medical to energy, food & beverage to sustainability and SDG goals. By leveraging the power of trustless data, VeChain is building the digital backbone that will underpin the fourth industrial revolution, which demands real-time and trustless data sharing between many participants.
The platform uses two tokens, VET and VTHO, to manage and create value based on its VeChainThor public blockchain. VET generates VTHO and acts as the store of value and value transfer medium. VTHO is used to pay for GAS costs, separating the need to expend VET when writing data. This has the additional benefit of ensuring costs of using the network can be kept stable by tweaking certain variables such as the amount of VTHO required to service a transaction, or by increasing the VTHO geneation rate. Such actions first require all-stakeholder community votes.
VeChain has been able to demonstrate massively boosted efficiency, traceability and transparency across data trails, supply chains and within novel kinds of ecosystems, such as those in San Marino targeting UN SDGs, among others.
Corporations that have started using the VeChain blockchain include:
- BMW, which uses VeChain to prevent odometer fraud in automobile sales
- LVMH, which uses VeChain to track luxury leather goods
- Walmart, which uses VeChain to track food provenance.
VeChain states that its goal is “to build a trust-free and distributed business ecosystem platform to enable transparent information flow, efficient collaboration, and high-speed value transfers.1
Supply chain data for business processes are currently compartmentalized in silos among multiple stakeholders. This affects information flow, which is again divided among stakeholders.
According to VeChain’s white paper, blockchain technology can break “this asymmetric information problem and allow ownership of data to return to and empower its owner.” The VeChain platform claims to provide a 360-degree view of necessary information linked to a product and its business processes—such as storage, transportation, and supply—to authorized stakeholders and create greater market transparency.
History Of VeChain
VeChain was founded in 2015 by Sunny Lu, the former chief information officer (CIO) of Louis Vuitton China. It started as a subsidiary of Bitse, one of China’s largest blockchain companies, and is among the few blockchains that already have a substantial customer base among established companies.
Goals for the VeChain blockchain platform are outlined in its white paper. Its initial target was to disrupt the supply chain industry by making data actionable and transparent. It also plans to be a leader in dApps and initial coin offerings (ICOs) made using VeChain as well as being an Internet of Things (IoT) intermediary.
VeChain has inked strategic partnerships over the years with several companies in order to help achieve this goal. Among them is an agreement with PricewaterhouseCoopers (PwC) for VeChain’s blockchain-powered solutions to be used by the accounting firm’s client base to improve product verification and traceability.
VeChain has also partnered with Renault, creating, in conjunction with Microsoft and Viseo, a digital car maintenance book that cannot be tampered with and is the government technology partner for Gui’an, an economic development zone for the Central Chinese Government.
Who Are the Founders Of VeChain (VET)?
VeChain is the product of creator and co-founder Sunny Lu, an IT executive who was formerly CIO of Louis Vuitton China.
Lu has since become a well-known name within the cryptocurrency industry. He has drawn attention to the ability of blockchain technology to solve transparency in particular, arguing that it can create “trust-free” enterprise/business structures that do not suffer from information corruption thanks to close working collaborations with key auditing/certification consultants such as PriceWaterhouseCoopers and DNV who verify data quality and certify industrial processes.
Fellow co-founder Jay Zhang, who directs VeChain’s global corporate structure, governance, and financial management, previously worked for both Deloitte and PriceWaterhouseCoopers in the finance and risk management sphere.
Having originally begun life in 2015, VeChain is one of the oldest dedicated smart contract platforms on the market, with reflected prestige among enterprise clients.
How Does VeChain Work?
VeChain aims to give any company the ability to launch new kinds of dapps.
In order to facilitate the creation of dapps, the VeChain team built a component called the VeChain ToolChain, a software development kit.
Proof of Authority
To regulate the process in which transactions between users are verified and added to VeChain’s public ledger, VeChain Thor uses a consensus mechanism known as proof of authority (PoA).
Users who verify and add transactions to the blockchain are known as Authority Masternodes, and, to become one, users must stake a minimum of 25 million VET and submit identifying information to the VeChain Foundation.
While using a PoA mechanism helps process large transaction volumes rapidly, the disadvantage of its approach is that it relies on a central authority to check and authorize users who can take part in processing transactions.
Of note, VeChain is working to improve its PoA to ensure a more randomized and distributed block creating mechanism.
Two Token Design
In order for it’s software to work, VeChain uses two native tokens, VET, used to store and transfer value, and VTHO, used for transactions on its blockchain.
This design is intended to isolate the price volatility of VET coin from the cost of computations on the network, allowing applications on VeChain to charge stable fees (since the VTHOR supply can be adjusted to maintain a stable price for transactions).
Similar to how the Ethereum blockchain uses ETH and gas, miners earn VTHO fees for computations processed by the network. The more complex the computation, the more VTHO a given program will require.
Lastly, nodes staking VET coins gain the ability to vote on network upgrades, and are rewarded with VTHO every block.
What Makes VeChain (VET) Unique?
VeChain exists to disrupt traditional business models, and is best known for its work in supply chain, an industry that has changed little over the decades. Its work in providing a decentralised trust layer for multi-party ecosystems has already seen major sucesses with high profile clientele and government bodies.
Using transparent technology with no single point of weakness or control allows for greater security, efficiency and ease of tracking for all kinds of data, while reducing costs through trustless automation via smart contracts. Carbon, supply chain, international logistics, incentivised ecosystems, automobile passports and more all greatly benefit from the digitisation of trust and colaboration it enables.
VeChain’s platform accordingly has very wide appeal to many different clients of clients and industries.
VeChain’s official literature notes that its unique proposition lies in its dual-token setup alongside transformative protocols such as ‘fee delegation’ and it’s one-stop ‘ToolChain’ platform that means crypto-wary companies can pay in fiat for VeChain’s Blockchain-as-a-service, while smart contracts handle gas payment costs, ensuring frictionless use of the network, even in strict jurisdictions.
VeChain’s Blockchain Platform
The VeChainThor blockchain platform is a public blockchain intended for “mass business adoption.” It has two tokens: VET and VTHO. VET is the VeChain token that is used to carry value or “smart money” from smart contracts. In other words, transactions on decentralized applications occurring on VeChain’s blockchain will use VET. It is available for investing by the general public.
The VTHO token stands for VeChainThor Energy and is also known as VeThor Energy. It is used to power transactions on VeChain and is equal to the cost of conducting transactions on its blockchain.
The concept is similar to that of Ethereum’s ether and NEO’s “gas” in that developers need to budget for a certain number of underlying tokens (which are not exposed to the public) in order to conduct transactions for their decentralized applications. Per VeChain’s white paper, the two-token system was devised for effective governance and to have a predictable economic model for decentralized applications developers.
In its current form, Ethereum lacks such a model because the price of ether, its native gas token, is volatile. As such, developers have to estimate the amount of ether required for a transaction. The transaction fails if their estimate turns out to be incorrect. VeChain’s white paper outlines several technical enhancements that its platform has made to overcome this problem.
For example, the VET blockchain allows Proof of Work (PoW) to be conducted for every transaction. This means that the people conducting a transaction can mine more VTHO if their initial estimate was wrong.
How Many VeChain (VET) Coins Are There In Circulation?
VeChain has two in-house tokens: VeChain (VET) and VeThor (VTHO). Described as a unique offering for such a platform, the dual-token system is designed to avoid fee fluctuations and network congestion.
VET is the token used for transactions and other activities, while VTHO provides fee payments and thus functions as a “gas token,” similar to how gas functions for Ethereum (ETH) transactions.
VET holders automatically generate a small amount of passive income in VTHO, while 70% of the VTHO used in a VET payment is destroyed.
VTHO is generated based on VET holdings, while VET itself has a maximum fixed supply of 86,712,634,466 tokens.
At the time of writing (07/12/2021) – there are 66,760,741,299 tokens in circulation according to VeChainStats
How Is the VeChain (VET) Network Secured?
VeChain (VET) is a Proof of Authority (PoA) token, requiring relatively low computing power to achieve network security versus a protocol such as Bitcoin. A recent CTI report showed that VeChain’s annual carbon footprint is incredibly small at just 2.4% of the emissions of mining a single Bitcoin, thus making PoA an incredibly efficient consensus mechanism for securing the network.
Proof-of-authority, is a process wherein authority masternode operators are selected by an independent Steering Committee, thus giving them ‘authority’ to run a masternode. This model is particularly attractive for enterprises who want assurances about the integrity and quality of validators running the network, and assurances bad actors can be ejected if needed.
VeChain Strategic Partnerships
VeChain involvement among companies is not limited to logistics but happens to be a diverse gamut of industry mix for signing partnerships. VeChain has been proactive in signing up strategic alliances and sealing crucial deals with companies of repute.
Some of the companies with whom VeChain has struck partnerships are listed hereunder :-
- DNV GL into audit and certification services for vessels and offshore structures signed up with VeChain in January 2018 for a digital assurance solution for the food and beverage industry and audits and data collection.
- PriceWaterhouseCoopers (PwC), a significant auditing and consulting firm, has signed up with VeChain since May 2017 to provide its clients improved product verification and traceability.
- Kuehne & Nagel, a renowned name in Transport and Logistics, has been a doting partner with VeChain since September 2016 for blockchain technology to smartify parcels and assets. Especially luxury goods, by furnishing them with a chip containing a private key that reflects ownership information on the blockchain.
- BMW Group has partnered with VeChain for implementation and POC on blockchain storage to store vehicle data and secure, controlled provision to third parties. Groupe Renault, a French MNC automobile manufacturer, has tied up with VeChain since July 2017 for its data privacy and protection tools.
- BIOS Middle East, a leading UAE Cloud Service Provider, has tied up with VeChain for a partnership since December 2018 for encryption.
- Haier, a leading Consumer home appliance from China, has partnered with VeChain since April 2019 to use blockchain and IoT technology.
- Shanghai Gas, into energy segment tied up with VeChain since March 2020 for Tracking delivery information and LNG quality on the VeChainThor blockchain. The solution significantly eliminates information barriers in the supply chain, contributes to a transparent product process, and provides a reliable LNG risk management database.
- PlatformXChain, a Singapore-based company into toy manufacturing setup, relies on VeChain to list their collectibles since April 2020.
- H&M, A Luxury Fashion Brand, the second-largest clothing retailer with over 5000 stores worldwide, relies on VeChain for collecting supply chain data from its product lines since April 2020.
- Sarah Regensburger, a Fashion Designer from the UK for her renowned fashion label since April 2020, using VeChain to ensure traceability in handmade production, allowing customers to recognize the master behind the brand.
VeChain Analysis: Gizmos Making Impossible Possible
a) Internet-of-Things (IoT)
VeChain has been a torchbearer of IoT and DLT technologies. The seeds of VeChain were sown, as aforementioned, primarily with the objective of integration of IoT. It alludes to the network of billions of smart devices currently in use globally for new IoT devices. These devices or machines are called wise as they own the capability or surveillance expertise during online data exchange. Giving a live example of today, these gadgets may cover a vast range, say from TVs to doorbells, to the cell phone you are glued to all the time.
The integration of IoT and blockchain technology goes hand in hand and perfect synchronization. As conveyed hereinabove, the revolutionary Blockchain technology facilitates authentic, efficient, and affordable tools for data monitoring and real-time. Undoubtedly, VeChain emerges as a pioneer with exemplary expertise to assimilate both technologies providing excellent integrational benefits.
b) Two-in-one Token Vantage
It would not be inappropriate to say that VeChain has inherited some helpful strategic steps from Ethereum, especially its dual token system significantly influencing its VET price. This specific blockchain ecosystem allows one token to be used as the public investment and/or digital cash, and the other serves the benefit of brilliant contract execution and programming. Reflections of this kind of dual strategic system can be found in Ethereum’s ether and NEO’s GAS.
However, this strategy is not emulated by VeChain for no reason. The first and foremost intention behind borrowing this system is to enable efficient control. The sole objective of Blockchains is to structure supervision models in an all-encompassing and all-risk-free environment. Another firm ground that appears for this intentional imitation strategy is to have a stale foreseeable economic model for blockchain and a strong market cap.
c) VeChain Tokens (VET)
As known to many, the cryptocurrency VET token is the cynosure in the trading platform wherein VET tokens are invested in an exchange in the crypto market. It serves as an increment of VET price action as well as a value within the VeChain blockchain. VeChain has immense potential for positive VET price changes. It can carry value across the blockchain project and, at the same time, enable smart contracts. It is just like how users pay for transaction price on dapps that function on the blockchain of VeChain in the cryptocurrency market. Currently, there are almost 66,760,741,299 VET tokens in circulation. VeChain’s system is set up to issue a total amount of 86,712,634,466 VET as trading volume, and its market capitalization is around $ 5,691,479,805.
With the kind of fame rising and VeChain VET price reaching new highs at regular intervals, it is but no surprise that the VET currency ranks among the top 15 cryptocurrencies globally based on the market cap being the mega crypto price attraction.
d) VeChainThor Energy (VTHO)
Another token used in the VeChain system is the VeChainThor blockchain (VTHO). It is known to operate as fuel to fire for smart contract transactions in supply chain. However, an important fact here is that these VTHOs are not present publicly. Solution providers or developers use these tokens of VET to cover up costs for their contract implementation. Ideally, payments are expected to come from developers using blockchains while uploading contracts. This is a potent tool in the world of safety as it makes sure that only public-ready coding reaches the blockchain, thereby decreasing any spam posts.
VTHO is available for investing by the general public. The VTHO token stands for VeChain Thor Energy (VTHO). It is used to power transactions on VeChain and is equal to the VET price of conducting transactions on its blockchain. VTHO is designed to get its value solely from use and not speculation.
e) VeChain Consensus
It is of paradigm importance that enterprises are accorded. To make good on all of its promises, VeChain must provide business with appropriate, well-timed, and reliant consensus. VeChain initiates to this effect a proprietary consensus mechanism known as Proof-of-Authority (PoA). This is intended to accord a highly effective source towards the upkeep of system continuity.
The nodal objective behind the constitution of the PoA consensus mechanism lies in its capability to address the errors found in Proof of Work (PoW), Proof of Stake (PoS), and Designated Proof of Stake (DPoS) mechanisms. Ideally, Proof-of-Authority calls for lesser energy and so it eliminates the requirement for communication between nodes to reach consensus on the unique blockchain of VeChain.
101 Masternodes serve as an integral source of validation of consensus for VeChain. A significant advantage of this system is saving on transaction time, thereby improving efficiency. Another crucial part of this mechanism is that it requires KYC and AML ID verification before blocks are validated in the system. This kind of tool plays a pivotal role in achieving a market strategy in tandem with the competition.
Another significant factor is VeChain is equipped with the utilization of economic masternodes. These nodes are empowered with voting on matters concerning the VeChain biome. For every 10,000 VET and economic masternode holds, they get one vote.
VET Price Analysis:
The VET coin started its journey in August 2018, and achieved an all-time high of $0.2782 on 17 April 2021. Only a week earlier, on 10 April 2021, VET had been trading at $0.1335.
However, the price retreated to $0.1589 on 25 April, dropping to as low as $0.07553 on 23 May. This is somewhat of a sharp drop considering that the coin had hit its all-time high just 37 days earlier.
The VET price then consolidated, trading within the $0.06 to $0.09 range until 7 August 2021, when it climbed to $0.1031, hitting $0.1556 on 6 September 2021. The rally was short lived, and the trend reversed when the price dropped to $0.08642 on 29 September 2021.
It’s currently (3rd March) trading at around $0.056.
VET ranks 41st on the list of cryptocurrencies by market capitalisation at $2.97bn. There are more than 64.32bn VET coins in circulation from a total supply of 86bn, according to CoinMarketCap.
Technical analysis provided by CoinCodex shows that short-term sentiment on VET remained bearish, with one indicator displaying bullish signals compared with 25 bearish.
The daily simple and exponential moving averages are giving strong sell signals, according to data from TradingView, while the relative strength index (RSI) was at 62.25, as of 3rd March. RSI readings of 30 or below indicate an oversold or undervalued condition. Generally, when the RSI drops below the 30 reference level, it could be interpreted as a bullish signal.