Vechain – Redefining Transparency
Vechain is currently ranked as the 22nd largest cryptocurrency of the world. We believe it still has enormous potential to flourish even more, but what are key factors to let the project thrive further in order to become an established Blockchain provider?
Vechain is a Chinese Blockchain startup working in the supply-chain-management sector which includes all processes from harvesting/raising, transporting, packaging and verifying things until its ready-made product in the store. The sector is gigantic and offers a wide range of opportunities. Every product no, matter if it is food, cars or clothes, has its own supply-chain and could therefore take advantage of Blockchain technology. Vechain developed IoT-based solutions for several supply-chains such as a cold-chain-logistics solution for Chinese grocery stores and a decentralized car history in cooperation with Renault. Despite this success, Vechain is aiming for more than „just“ making supply-chains more transparent.
Not “Just” A Cryptocurrency
Vechain - Partnerships
If you have not followed Vechain’s partnerships just lay back and enjoy the line-up: PWC, DNV GL, Renault Groupe, BMW, Chinese Government, Kühne & Nagel, Microsoft Azure, LVMH, China Unicom, Brightfoods and Oxford University are just a few to name. Recently Vechain has formed a partnership with Shanghai Gas in order to implement a digitally hosted quality assurance process provided and performed by the VechainThor Blockchain. Another collaboration link has arisen with Arket a subsidiary of H&M manufacturing goods. Arket is already selling one of their products with a Vechain QR-code for quality assurance. It is clear that these enterprises will ensure to realize Vechain’s vision of worldwide real-world adoption.
In this context, we have to highlight DNV GL and PWC as the key strategic partners. Those companies have already positioned themselves as true supporters and are helping to acquire new partners with their influential status in the accounting and assurance sector. With PWC and DNV GL on board, Vechain is gaining access to the business world. Both companies have also clearly stated that they are willing to outlay parts of their own business activities onto the Blockchain and they found the best fitting Blockchain provider in Vechain. The collaboration with PWC and DNV GL enables Vechain to profit directly from two of the biggest networks in the assurance and accounting segment offering nearly endless opportunities to form new partnerships and technological synergies.
The mainnet launch was successfully completed in June 2018. The project earned credits from the community as everything was organized and communicated in the most professional manner possible. Vechain has stated that lots of enterprises were already using their services in a so-called „Consortium Blockchain“. Due to NDAs, the public does not yet know to which companies Vechain is referring to. Anyway, all activities of the „Consortium Blockchain“ should have been gradually transferred to the VechainThor Blockchain.
The issue? All these pledges have not been redeemed yet. Even though Vechain has recently formed new great partnerships in the name of BYD or Shanghai Gas there is still no mainnet activity visible. The question remains why this is the case. Vechain has not yet given any clear explanation about this topic. We simply assume that migration takes longer as initially intended. However, an official statement from Vechain would be highly pleasing for the whole community and could silent critique and FUD around the project.
Public Blockchain & Platform
A public Blockchain can basically be compared to a public good, referring to the accessibility and usability for everyone. A lot of people have still not realized why this is an extremely important condition to be met in order to unleash the full potential of a Blockchain.
I ask you, what is the benefit of an open source technology if every single company would create its own, separate private Blockchain? The answer to this question is simple, there is none. The whole network effect which makes this technology incredibly valuable and efficient would disappear. In fact, private Blockchains, at least in the private sector, create more borders instead of breaking them down. Moreover, Vechain is representing a platform. As a result, third-parties are able to develop their own Dapps on top of the VechainThor Blockchain. Just imagine the positive externalities arising if enterprises, insurances, banks, local authorities, and governments are all starting to build Dapps on the same platform. A hyperconnected economy is suddenly no longer an illusion but in our reach.
Vechain has developed a unique governance model in collaboration with PWC. The model is satisfying all different kinds of stakeholders. During the development phase, PWC was able to address current Blockchain threats of enterprises. As a result, Vechain was able to create a tailor-made solution for everybody. The startup consistently underlines the importance of their governance model. Governance is the base to guarantee their partners a safe business environment.
We know that Vechain has implemented a steering committee. It consists out of the CEO and COO of Vechain, a member of PWC, 2 members of DNV GL and one member with external expertise. The steering committee will be responsible for maintenance of the VechainThor Blockchain, reform programs and technological issues. Smart Contracts, authority- & economic nodes will be equipped with a voting right to have a say in relevant topics such as (e.g.) electing new members of the steering committee. This democratic approach is a novelty, especially in contrast to other projects like Bitcoin, letting decision power completely in the hands of programmers.
Furthermore, Vechain is the only cryptocurrency publishing financial reports on a regular basis. The startup’s openness and transparent strategy is building trust among their partners and the community as a whole. Existing and potential partners appreciate this refreshingly new and transparent way of reporting things of financial significance.
Vechain is running on a unique two-token economic model. Even tough two-token-systems are nothing revolutionary, Vechain has once again created its own special solution.
They have built an incentive-based economic model designed for enterprises and smaller retail investors. The model is still being tested and inspected by the Mathematical Institute of Oxford University. Vechain has clearly stated that one of the biggest concerns of institutional clients is the unpredictable price volatility. Enterprises need stable or at least predictable prices to calculate budgets and costs in order satisfy their stakeholders. As a result, Vechain created a stable second token called „Thor“. Through holding Vechain-tokens you will automatically generate Thor in a certain generation rates. Logically the more Vechain-tokens you hold, the more Thor you will generate. Thor is a utility token used to pay transactions costs or smart contracts within the Blockchain. Due to adjustable generation rates, the price of Thor may be changed due to high or low demand of the token.
Coincidentally Vechain-tokens (VET) are completely exposed to the market law of supply & demand and therefore eventually increase or decrease in price.
Centralization vs. Decentralization
Sunny Lu, the CEO of the Vechain Foundation clearly stated that Vechain is not „believing“ in complete decentralization. Huge companies would need some kind of securities and would have to know certain facts about their counterparty. It is illusionary that a Fortune 500 company would transfer all business activities onto a completely decentralized network, not knowing who is verifying transactions or responsible for issues, data breaches or leaks. Sunny explained that Vechain is trying to take the best out of both systems, trying to find an equilibrium in between centralized and decentralized aspects.
Centralized aspects are the 101 Vechain Trudheim authority nodes. These nodes have to possess a stake bigger or equal to 250’000’000 VET. These nodes will perform essential verification processes within the VechainThor Blockchain and in return receive the highest possible voting right and Thor generation rate. In order to get a Trudheim authority node, all interested parties had to undertake an application procedure, being examined and evaluated by Vechain. Moreover, all nodes had to go through a full KYC procedure. Therefore, owners will be publicly known and identified. Vechain has not yet published who is in possession of a Trudheim authority node.
Even though validation is performed by selected nodes all data and transactions are taking place on-chain. Decentralization enables Vechain to establish trust within transactions of different third parties and is probably the most important feature in all of their elaborated and ongoing pilot projects.
New Level Of Transparency
We have shown you various factors bringing real value to the VechainThor-Blockchain. Close collaboration with some of the most reputable companies on the planet is allowing Vechain to develop an exceptional tailor-made platform for enterprise mass adoption. Not only fortune 500 companies are backing Vechain, furthermore some of the most prominent Venture Capitalists among Tim Breyer and Tim Draper are officially invested in Vechain. It remains further unclear when Vechain will finally be able to present mainnet activity. Migration seems to take more time than originally planned. Nevertheless, as soon as this obstacle has been vanquished it is merely a matter of time until Vechain will set new standards within the Blockchain industry. Real-world partnerships, a unique governance model, sophisticated token economics and great knowledge and professionalism are enabling Vechain to create custom-made Blockchain enterprise solutions. The project has the potential to lead us into a new era of transparency.
Written by Ato Herzig