VeChain: Defined and Explained

VeChain

What Is VeChain

VeChain is a blockchain platform that is intended to improve supply chain management and business operations. Its purpose is to leverage distributed ledger technology to simplify these operations and information flow for complicated supply chains (DLT).

VeChain Token (VET) and VeChainThor Energy (VCE) are two separate tokens on the Vechain network (VTHO). The former is used to send currency over the VeChain network, while the latter is utilized as energy or “gas” to fuel smart contract transactions.

Important Notes:

  • VeChain is an enterprise blockchain platform that seeks to deliver a comprehensive perspective of a business by removing information silos.
  • VeChain also intends to establish itself as a leading platform for initial coin offerings (ICOs) and transactions between Internet of Things (IoT)-connected devices.
  • VeChain employs two tokens: VeChain token (VET) for the value layer and VeChain Thor Energy (VTHO) for the smart contract layer.

Breaking Down VeChain

According to VeChain, their mission is to “create a trust-free and distributed business ecosystem platform to allow transparent information flow, efficient cooperation, and high-speed value transfers.”

Currently, supply chain data for business operations is compartmentalized in silos among many stakeholders. This has an impact on information flow, which is once again fragmented among stakeholders.

Blockchain technology, according to VeChain’s white paper, can solve “this asymmetric information dilemma and enable ownership of data to return to and empower its owner.” The VeChain platform promises to give authorized parties a 360-degree view of critical information related to a product and its business activities (such as storage, transit, and supply) and to increase market transparency.

Examples on How To Use VeChain

For example, from the production facility through the final delivery to the end client, the platform may be used to monitor the quality, authenticity, storage temperature, transportation medium, and last-mile delivery of a medication pack or an alcohol bottle. To achieve this purpose, VeChain employs smart chips or Radio Frequency Identification (RFID) tags and sensors that broadcast vital information into the blockchain network, which authorized stakeholders may access in real-time.

The use of sensors allows all product characteristics to be continually monitored and any issues to be relayed back to the appropriate stakeholders. If a medication package is kept outside of a defined temperature range, manufacturers and customers are notified, allowing for service enhancements and greater quality control.

In another case, the VeChain platform allows car owners to control their data and use it to negotiate better terms and policies with their insurance carriers.

History of VeChain

Sunny Lu, the former chief information officer (CIO) of Louis Vuitton China, established VeChain in 2015. It began as a subsidiary of Bitse, one of China’s major blockchain startups, and is one of the few blockchains with a significant client base among established organizations.

The VEN token first operated on the Ethereum platform. In 2018, VeChain migrated to its own blockchain and rebranded. The VEN blockchain was rebranded as the VeChainThor (VET) blockchain as part of the rebranding.

The VeChain blockchain platform’s goals are detailed in its white paper. The company’s primary goal was to disrupt the supply chain sector by making data actionable and transparent. It also intends to be a pioneer in VeChain-based dApps and initial coin offerings (ICOs), as well as an Internet of Things (IoT) intermediate.

VeChain has formed strategic partnerships with a number of organizations over the years to assist reach this aim. Among them is a deal with PricewaterhouseCoopers (PwC) to deploy VeChain’s blockchain-powered solutions to enhance product verification and traceability for the accountancy firm’s clients.

VeChain has also collaborated with Renault, developing a digital automobile maintenance book that cannot be tampered with in collaboration with Microsoft and Viseo, and is the government technology partner for Gui’an, a Central Chinese Government economic development zone.

The Blockchain Platform of VeChain

VeChainThor is a public blockchain platform designed for “mass business adoption.” There are two tokens: VET and VTHO. The VeChain token, VET, is used to transport value or “smart money” from smart contracts. In other words, transactions on VeChain’s blockchain involving decentralized apps will utilize VET. It is open to the general public for investment.

The VTHO token is an abbreviation for VeChainThor Energy, often known as VeThor Energy. It is used to fuel VeChain transactions and is equivalent to the cost of completing transactions on its blockchain.

Similar to Ethereum’s ether and NEO’s “gas,” developers must budget for a specific amount of underlying tokens (which are not visible to the public) in order to perform transactions for their decentralized apps. According to VeChain’s white paper, the two-token system was designed for effective governance and to provide decentralized application developers with a predictable economic model.

Ethereum currently lacks such a model since the price of ether, its native gas currency, is erratic. As a result, developers must estimate the quantity of ether needed for a transaction. If their estimate is inaccurate, the transaction fails. VeChain’s white paper describes many technological upgrades made to its platform to address this issue.

For example, the VET blockchain enables Proof of Work (PoW) for every transaction. This implies that if a transaction’s original estimate was incorrect, the persons involved may mine extra VTHO.

Protocol on Governance

As a consensus mechanism, the VeChainThor blockchain employs Proof of Authority. Votes are distributed in accordance with this procedure based on VET holdings and disclosure. VET holders who do not have know-your-customer (KYC) credentials and have 1 million tokens in their account are liable for 20% of all votes, whereas VET holders who do have KYC and the same amount in their accounts are accountable for 30%.

In VeChain’s blockchain, 101 master nodes are in charge of obtaining agreement on transactions. Unlike Bitcoin, which needs all nodes to vote on a transaction before achieving consensus, this system does not require all nodes to vote on a transaction before reaching consensus.

Anonymous nodes are not permitted, and revealing one’s identity is a requirement for becoming an authority master node. According to the white paper published by VeChain, this system consumes less power and does not need a minimum number of validators to attain an agreement.

The economic master node is the other sort of master node in VeChain. These do not generate blocks or ledger entries and are used as a power check. This is accomplished by distributing a predetermined amount of votes to each economic master node depending on their VET holdings. Each 10,000 VET owned by an economic master node entitles it to one vote.

In a decentralized system, the master node mechanism centralizes voting privileges. The creators of VeChain, on the other hand, have said that their goal in building this protocol is to strike a balance between centralization and decentralization.

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Amber Watson