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- VeChain (VET) has disclosed in its latest post that the much-anticipated upgrade dubbed VeChain Renaissance would align rewards with impacts through four major changes.
- One of the changes would be the new VTHO distribution model, which would ensure that validators, builders, and “X-Nodes and Economic Nodes” remain the groups that receive network rewards.
CNF recently reported on the upcoming holistic upgrade of VeChainThor through a technical roadmap called VeChain Renaissance. According to the details, this initiative aims to position stakeholders above all technical and regulatory trends while leveraging the contributions of users and developers to subject the network to significant growth.
As we explained, one of the main goals of this upgrade is to reimagine tokenomics. Today, VeChain released a comprehensive post explaining the new tokenomics for the next-generation consensus.
Firstly, VeChain highlighted the success of its two-token model, where VET serves as a utility token while VTHO operates as a gas token. The post also explained how the separation of these functions has enabled them to to deliver scaled commercial applications while solving unpredictable challenges of transaction fees. However, intelligent tokenomics is crucial for the long-term success of a blockchain. For this reasons, its decision to elevate the tokenomics would position the platform to achieve these objectives:
- Staying ahead of evolving regulations.
- Long-term growth and ecosystem scaling.
- Community at the core.
- Balancing stakeholders’ needs.
Aligning Rewards with Impact
According to VeChain, VTHO is generated at the rate of 0.000432 daily in the current token model, regardless of the contributions to the network. Additionally, a significant portion of VET is held in an exchange wallet, which generates a massive amount of VTHO. However, this is not distributed to users. For the sake of economic sustainability, this tokenomic model would be subjected to change through Optimized VTHO Issuance, New VTHO Distribution Model, New Opportunities in PoA 3.0, and Dynamic Fee Mechanism.
Optimized VTHO Issuance
According to VeChain, the total generation of VTHO would be reduced, and rewards would be distributed to active stakeholders. Additionally, VeChain Renaissance would ensure that the VTHO issuance rate is made dynamic. This would better manage inflation and improve the network’s supply dynamic.
New VTHO Distribution Model
Under this model, those who actively support the VeChain ecosystem would receive the network rewards. In the post, three categories of stakeholders were highlighted:
- Validators.
- Builders.
- X-Nodes and Economic Nodes.
New Opportunities in PoA 3.0
Proof of Authority (POA) 3.0 is the third consensus model of VeChain. According to the report, it would provide new staking opportunities and greater decentralization, which include Validator Delegation, Upgraded Validator Mechanics, and New Economic Node Tiers.
Dynamic Fee Mechanism
The dynamic fee mechanism feature, which would be unlocked by the VeChain Renaissance, would ensure that key security challenges are addressed on the network including:
- Adaptive fees: This would ensure that transaction costs are adjusted based on demands.
- Congestion Management: This would regulate fees to maintain optimal performance and availability on the network.
According to VeChain, this technical upgrade was designed to empower the community.
As always, our incredible community remains central to our vision, and we build towards our macro-objectives. Through highs and lows, we’re grateful to have built such an engaged, passionate, and dedicated following and this transition, in part, is an homage to you. Our core protocol team has designed a roadmap to deliver more opportunities at every level of our ecosystem.
At press time, VET was trading at $0.057 after declining by 8% in the last 24 hours.