VeChain is an enterprise-focused smart contract platform designed for IoT integration.
VeChain uses a Proof of Authority (PoA) consensus mechanism, in which a set of Authority Masternodes validate transactions. These masternodes are selected by the VeChain Foundation’s technical and governance councils and are subject to verified hardware requirements, a KYC verification process, and a minimum collateral amount of 25 million VET. The VeChain Foundation selects masternodes associated with five primary categories: enterprise, blockchain developers, business development, community contributors, and academic research. Enterprise users and dApp developers can reduce their application’s transaction costs by running their own masternode. VeChain has formed several prominent partnerships, including the establishment of the Walmart China Blockchain Traceability Platform atop the VeChain network in partnership with Walmart China, PwC, and others in June 2019 as well as a partnership with Shanghai Gas for the development of a blockchain-based energy project in March 2020.
VeChain has a two-token ecosystem; the primary VET token is used for network payments and governance rights, while the VeThor token (VTHO) functions as gas for smart contracts. Holders of VET accrue VTHO according to a daily issuance schedule, in a model similar to NEO and its Gas token. Token holders elect the VeChain Foundation’s Steering Committee, which has input in masternode selection and technical decision making. VeChain dApps can fund transaction fees directly through a smart contract wallet, instead of requiring users to fund these fees themselves; this feature aims to streamline the user onboarding process and experience. Approximately 30% of VeChain transaction fees accrue to the masternodes, while the remaining 70% is burned.
The initial VEN token was released as an ERC-20 token on Ethereum, with the mainnet launching in July 2018. The total supply of VEN is 1 billion, with 64% total allocated to a public sale, private sale, and enterprise investors. All VEN token holders at the time of mainnet launch received VET at a 25:1 ratio. The protocol specifications are based loosely on the Ethereum codebase, with modifications to emphasize enterprise-grade security. Development of VeChain is centered in China, with major investors including Fenbushi Capital and Draper Fisher Jurvetson.