It is among the top 20 cryptocurrencies on the market and has now officially launched its live software.
At 0:00 UTC this Saturday the first block of the VeChain blockchain was removed. Its symbolic supply is valued at $1.46 billion. This is a milestone for this type of project. And it aims to convince companies to adopt a code linked to a publicly traded crypto-asset.
What Is It About?
VeChain aims to address the alleged problems that public blockchains such as Ethereum (ETH) and Bitcoin (BTC) have, including governance inefficiencies, problems with economic models and difficulties in application design. The project also hopes to provide solutions with Hyperledger, which until now have been the reference platforms for companies.
Founded by former Louis Vuitton CIO in China, Sunny Lu, VeChain hopes to be the first to put real business applications on a public blockchain.
Most existing public blockchains have a common economic model such as bitcoin. Trying to motivate more people to join the network, the cost of using public platforms is directly linked to the symbolic valuation in the blockchain.
In addition, it can be considered a problem for the execution of more exotic features in a blockchain, such as smart contracts and decentralized apps, the fact that it generates a kind of paradox typical of: the more useful, the more cases of use, the greater the value of the token. This means a higher cost for using the platform, and in turn, no one will use it if the cost is too high.
VeChain is using a double token system to solve this type of problem. In which your VET asset functions as a store of value and the VeThor token represents the underlying cost of using the blockchain.
The project is not the only one using this system. Both NEO and Ontology also support twin tokens that seek to address user behavior. However, VeChain is looking to differentiate itself by emphasizing this, in what Lu calls “ready-to-use” software that reduces development time and costs.
Partners And Features
What distinguishes VeChain from its competitors is the extent to which companies are already participating in these processes. VeChain has partnerships with the automobile manufacturers BMW and Group Renault, as well as with the global quality assurance and risk management company DNV GL.
Some partners, such as DNV GL, have even taken on a more technical role in the implementation of the project, specifically within their governance system. This is a key part of VeChain's offer to companies. Primarily, the project uses a system called “proof-of-authority” (PoA) to govern and test changes in the rules of a particular blockchain. This provides companies with an accurate measure of a balance between decentralization and centralization.
VeChain is not the first project to try to follow this line. For example, EOS and TRON have also experimented with new governance models in which software users position themselves as community members. This allows them to use their tokens to choose “delegates” (nodes) to validate blocks.
Governance: Centralization And Decentralization
As such, the VeChain consensus system has two components. The decentralised part consists of the fact that the holders of the tokens have the capacity to vote, and that the weight of their vote corresponds to the number of VET cards they hold and whether or not they complete a KYC process.
Some tokens holders, such as DNV GL, also run nodes and must meet certain requirements to do so. Each node must have specifications, not only about the hardware, but also about the level of security and the process. For this it is important to establish the knowledge of how to manage the nodes and their contribution in the community.
The centralized part offered by VeChain will be that voters will use their voting authority to have a say in decisions on technical changes to the blockchain and to elect the “Steering Committee”. This is what will be known as the seven-seat governing body of the VeChain Foundation and its blockchain.
While decentralization lovers have been critical of the DPoS and PoA systems, companies do not seem to share their concerns.
Renato Grottola, senior vice president of digital transformation and M&A at DNV GL, said VeChain's governance model makes it easier for DNV GL to develop specific supply chain solutions:
“An optimal balance between centralization and decentralization, reducing the uncertainty related to future developments. VeChain has been conceived as a platform; it combines blockchain technology with IoT and AI, thus offering the possibility of developing supply chain solutions at both product/asset and enterprise level,” said Grottola.
Also, Danny van de Griend, CEO of MustangChain, a startup that aims to use VeChain technology to create a more transparent horse industry with better data accessibility, agrees.
“If you want to decentralize completely, it can become a disaster. You need a good balance between the centralized and the decentralized. You no longer have to think about the basics. These basic protocols are ready to be used, so you can think more now about – What can I develop for stakeholders now?” said de Griend.
The Adventure Begins
Saturday's launch does not mark the end of VeChain's development. Once the creation of the genesis block and the start of the VeThor token generation are set, the blockchain will not be fully functional for some time.
Before the technology can be truly operational, VeChain must migrate its tokens from the Ethereum platform to its mainnet. Which is scheduled for July. In these cases, the company recognizes that mainnet releases, in which large amounts of cryptocurrencies are handled and transferred by teams of developers, always come at risk.
For this reason VeChain has hired several cybersecurity companies to test its code prior to launch. The project also has an Emergency Response Team (ERT), which will oversee the entire launch of the main network to respond to problems. VeChain's allies, such as DNV GL, are confident that VeChain's measures will be sufficient to ensure a smooth launch.
Finally, Kurt Connolly, senior vice president of business development at sports and gambling platform Decent.Bet, which plans to use VeChain's technology, said the company believes “the odds of a successful launch are in VeChain's favor”.