In this article, we are going to take a look at VeChain, a blockchain platform that was designed to enhance supply chain management and business processes. We will briefly explain some of its features and cover the advantages it comes with.
What Is VeChain?
Founded in Singapore in 2015, VeChain is a blockchain-based project that focuses on supply chains.
The Mainnet was launched in June 2018, and since then, the ecosystem has grown steadily, attracting numerous partnerships.
First of all, VeChain is based on its own blockchain, called VeChainThor.
With this smart contract-compatible blockchain, therefore, on which you can create Dapps, VeChain wants to provide businesses of any size with the tools needed for better digital collaboration. By digital collaboration, I mean primarily supply chain management but also data transfer.
Supply Networks and Their Importance
Since, traditionally and especially when we think of large companies, the whole supply network is extremely complex and involves many parts, there will always be room for optimization.
Moreover, the management of this supply network is essential for the evolution of a company and its profit since an optimized supply network is closely linked to lower costs and faster production cycles.
At the moment, when we talk about many companies, all the data on these extremely important processes are segmented, whether we are talking about the parties involved or storage solutions and access to data.
I’ve mentioned all this because it is necessary to understand exactly where VeChain comes in and what existing problems it solves.
The VeChain platform, in addition to increasing the level of data transparency, creates much easier access to the information needed for businesses.
Vital information in these circumstances may be related to a particular product and some processes, such as storage, transportation, supply, and so on.
For example, VeChain can be used to track the quality, authenticity, storage temperature, storage environment, or the entire distribution route more simply, from the production of a bicycle tire to the final buyer.
In order to achieve these things, VeChain uses, among other things, RFID tags (or radio frequency identification, using radio frequencies for data transfer) and sensors that transmit information to the blockchain, which can then be accessed in real-time by the user.
So all the parameters related to a particular product can be constantly monitored by the parties involved.
Proof of Authority 2.0
Let’s dive into the tech part of the VechainThor blockchain.
The blockchain uses a Proof-of-Authority consensus mechanism, which requires nodes to receive authorization before participating in the creation of new network blocks.
This consensus system, in the case of VeChain, uses 101 nodes in the network, all of which have to go through a KYC process and lock a minimum of 25 million VET through staking.
These nodes are chosen by the VeChain foundation, and in contrast to most Proof-of-Stake networks, the amount of VET staked by a node does not influence the chances of producing new blocks in the network, which are equal for all nodes.
There are certain minuses when it comes to using a network of this type, especially the fact that a single node can manipulate the entire network when it is allowed to create a block.
For this reason, the team is working on Proof of Authority 2.0, which, through certain improvements, will rectify these limitations. An exact date for the new system is not set, but it will likely be released later this year.
VeChain Partnerships
One of VeChain’s big pluses is the very ecosystem they have built and the partnerships they have, including with Walmart, PwC, BMW, Renault Group, and many others that constantly lead the platform and the entire blockchain spectrum to wider adoption.
Tokenomics
VeChain uses an economic model involving two different currencies, VET and VTHO.
The VET currency has a total supply of about 87 billion, with about 65 billion in circulation at the moment.
The currency is used for governance, staking, the creation of VTHO coins, and very importantly, for transactions within Dapps built on VeChain.
VTHO, which stands for VeChainThor Energy, is used for transactions on VeChain, where a standard network transaction costs 21 VTHO.
The purpose of a dual model is to separate fees within the network from the volatility of a primary token, such as VET.
The project does not have a clear roadmap for the future, but what is certain is that it deals with new partnerships, in addition to the launch of the PoA 2.0 consensus system.
Conclusion
VeChain is undoubtedly a successful project in the crypto world but also in the non-crypto area, through a very solid use case, a well-thought-out economic system, and an impressive series of partnerships.
VeChain is competing with massive non-crypto companies such as IBM or SAP, but especially after the launch of PoA 2.0, it will be able to attract even more big names among customers, thus securing a good position in this niche.