VeChain (VET) is a supply chain management protocol that helps users keep track of logistics inventory. The VeChain platform is designed to monitor the manufacturing process from the point when a product completes its production stage to when it’s delivered to the consumers.
VeChain Platform Now Has Its Own Blockchain
Initially launched as an ERC-20 compliant token called VEN, the platform was rebranded in early 2018 to VeChain Thor. In August 2018, the cryptocurrency network’s developers announced that they had developed their own blockchain. There was also a successful mainnet token swap (from ERC-20 to VeChain’s native token) to what is now referred to as the VET token on a 1:100 ratio (appr. 867 million VEN is now the equivalent of 86.7 billion VET).
In addition to swapping VEN for VET tokens, the new VeChain blockchain supports a second token called “VeThor” which VET investors are able to “earn passively.”
Applications For VeChain
One of the main potential use cases for VeChain is counterfeit prevention. By using the platform’s blockchain-based software program, consumers are able to monitor the life cycle of a product. So, if a user has the tracking information of a particular product (usually a luxury item) that has been registered on VeChain’s blockchain, then the owner of the product can track all the transactions associated with it.
For instance, if the product or item is a genuine Rolex watch, then by scanning the watch’s product code through software supported by VeChain’s platform, users can check all previous transactions associated with it. Some other applications for VeChain’s technology include use cases in the automotive, pharmaceutical and food industry.
As a public blockchain network, third-parties are able to build and deploy decentralized applications (dApp) on VeChain.
How Does VeChain’s Verification System Work?
Unique digital identification numbers are assigned to physical stock by VeChain’s distributed ledger technology (DLT)-based system. The unique numbers are then recorded on the platform’s blockchain. This registration process is implemented using a technology similar to WaltonChain’s Radio Frequency Identification (RFID).
RFID is a type of communications technology that uses radio waves to capture and record data, which is obtained from a tag attached to a product. The tag contains a microchip which stores electronic information related to the product. Other types of technologies VeChain uses to track products include Quick Response (QR) Codes, which are two-dimensional barcodes containing unique tracking numbers for products.
Monitoring Products With NFC, Temperature Controlled Tracking System
Some items on VeChain are monitored using Near Field Communication (NFC), which is a technology that allows users to scan and obtain product information without having to be in close proximity to the product itself. There is also development work being done for creating an in-house temperature controlled tracking system, which allows users to track products that are in transit and check whether their temperature has dropped or exceeded a certain level. This is a useful feature because the temperature of certain food items may need to stay within a particular range, and this can be ensured by smart contracts that accurately and automatically record the temperature data to the blockchain at periodic time intervals.
The immutable data entry, which blockchain technology provides, helps to create a “trustless system.” It’s trustless because once data has been recorded by a user on a blockchain-based platform, the record entry cannot be altered or removed.
Adding Information To VeChain’s Blockchain
Information can be added to VeChain’s immutable ledger through its consensus protocol called proof-of-authority (PoA). This consensus algorithm is essentially a combination of centralized and decentralized consensus. The developers and managers of VeChain select Master Node operators, which are likely to be one of the company’s large enterprise clients.
In order to be eligible for becoming a Master Node candidate, users must hold a stake in VeChain’s platform of at least 25 million VET tokens, an amount currently valued at around $85,000. There are to be a total of 101 Master Node operators on the platform’s network, and each Master Node is authorized and responsible for validating transactions.
Decentralized Nodes Can Stake VET To Earn Passive Income
Other decentralized nodes, which are not under the direct control of VeChain’s management team, can also stake their VET tokens and earn a passive income. Users can choose to become a Mjolnir Master Node by staking 15 million VET, which yield about a 5.81% return on investment (ROI).
Users may also become a Thunder Node by staking 5 million VET, and receive approximately a 5.2% ROI. There’s an option to become a Strength Node, which only requires users to stake 1 million VET, and yields a 4.8% ROI.
Those who can’t afford to stake 1 million VET (or more) can still earn a 3.39% ROI by staking VET tokens, with no minimum amount required. Returns are paid out to stakeholders in VTHO tokens.
How Does Staking Work?
To begin staking VET tokens, users must first create an account by downloading a wallet that supports VeChain. There is an iOS version and a Google Play version (for Android users) of the wallet app which can be easily downloaded and installed. After creating a wallet, users can buy tokens from an exchange and send them to their account.
And, by simply holding VET tokens, users can earn rewards in the form of VTHO tokens (which are generated by VET tokens). VHTO is to be used to pay for transactions involving dApps on VeChain’s network.
There are many strategic business partnerships that VeChain has established including one with Kuehne & Nagel, a Switzerland-based global transport and logistics firm. Notably, one of VeChain’s partners also includes Pricewaterhousecoopers (PwC), which is one of the world’s largest (part of the “Big Four”) accounting, auditing, and professional services firms.
Notably, some of VeChain’s board advisors also have experience working at PwC. Another key partnership secured by the supply chain management platform involves a deal with the Chinese government. The deal involves the People’s Insurance Company of China (PICC), one of the world’s largest insurance firms with over $126 billion total assets.
VeChain’s development team has also established a partnership with DNV GL, a multinational quality assurance, and risk management firm. This partnership involves “using blockchain to improve the transparency of product and supplier information, significantly increasing the efficiency of supply chains.” Some other important partnerships VeChain has entered involves the Chinese tobacco industry and BMW.