Since the first use case debuted more than a decade ago, blockchain technology has continued to play an instrumental role not only in the decentralised finance (DeFi) space, but also across other industries ranging from hospitality to transportation and health, among others.
VeChain is one of the major drivers in this regard as it seeks to bridge the gap between businesses and blockchain technology by providing them with new tools for efficient data transfer and supply-chain management.
With more and more companies looking for a way to run their decentralised apps and maybe get a piece of this lucrative cryptocurrency market, platforms like VeChain appear to offer a great value proposition.
Brief history of VeChain
VeChain was co-founded by Sunny Lu, the former CIO at Louis Vuitton China, alongside Jay Zhang in 2015. Essentially, VeChain was part of a broader Blockchain-as-a-Service (BaaS) venture – BitSE – which is based in Shanghai.
Although VeChain started by focusing on integrating businesses on the blockchain network, specifically by resolving supply chain management issues, it has since expanded to provide a wider range of data solutions in general.
This undoubtedly led to the rebranding that created the current name “VeChainThor Blockchain”.
Likewise, the initial token offered by the blockchain protocol was rebranded from VEN token to VET token and, as such, new configuration and updates to the pre-existing infrastructure were introduced.
What is VeChain?
As briefly explained already, VeChain is a blockchain protocol with the primary aim of helping businesses use decentralised applications on the Blockchain network.
Essentially, VeChain emerged as a solution for issues relating to supply chain management, but they have since expanded to offer a wider range of data solutions in general. VeChain enables seamless collaboration between businesses, giving them access to a suite of tools for efficient data transfer and supply-chain management
A few prominent names that have incorporated this platform include LVMH, BMW, and Walmart. BMW leverage the platform in preventing odometer fraud in automobile sales, while LVMH, and Walmart, on the other hand, use the platform as a tool for tracking luxury leather goods and food provenance respectively.
Other notable use cases for VeChain include IoT, Food safety, anti-counterfeiting systems, health records systems, tracking systems, and many more.
How does VeChain work?
Because VeChain is enterprise-centric, it provides businesses with a business-as-a-service (BaaS) product called ToolChain which can be employed in building a blockchain-based solution.
Notably, ToolChain offers support for smart contracts that enable businesses to host their decentralised applications on the network. Moreso, because VeChain makes use of the Proof-of-Authority (PoA) consensus mechanism which enables randomisation, it is able to execute transactions faster.
In addition, by adopting the PoA consensus mechanism, the blockchain protocol delegates random nodes to execute transactions within the network which makes the validation process faster for hosted applications and end-users.
That said, validation on the VeChainThor blockchain is only executed by the master nodes which according to the network’s white paper, must hold at least 25,000,000 VET tokens.
Just like most decentralised protocols, governance is highly essential to the overall growth of the VeChain network. In this case, Vechain Foundation a Singapore-based non-profit organisation is responsible for the network’s governance, development, and growth.
Notably, the VeChain Foundation adopted the ‘board’ principle in the execution of its responsibility. Specifically, this principle reflects the governing body’s commitment to ensure the fairness and effectiveness of policy and decision making for the foundation
While the VeChain foundation doubles as the Board Of Steering Committee, it consists of members that are randomly selected by stakeholders with Voting Authority – those who stake VET tokens, for example.
The Stakeholders With Voting Authority, on the other hand, are categorised into three three-node executioners including master nodes, Economic Nodes, and Economic X Nodes. You can learn more about their respective roles here.
VeChain native asset – VET token and VTHOR
There are two major tokens native to the VeChain network; the VET token and the VTHOR. The VET token on one side is used as a utility token, especially to facilitate transactions on the VeChainThor blockchain. Currently, VET tokens have a maximum supply and circulation that is limited to 86.7 billion VET.
On the other hand, the VTHOR – otherwise known as the VeTHOR token – functions as the energy token, often used in the network’s reward system. Notably, VET owners are able to generate VTHOR either as a reward for staking or for participating as a validation node.
VTHOR token is also required to pay for transactions on applications that are built on the VeChain which implies that the supply for VTHOR largely depends on the utilisation of hosted applications.
Ultimately, the VeChain platform offers services that are beneficial to companies looking to expand and join the cryptocurrency scene. It is one of the most capable and reliable under most situations and more often than not, it is sure not to disappoint in the end.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.