What is VeChain? How Does It Work? A Comprehensive Overview

What Is VeChain (VET)?

VeChain is a layer-1 smart contract blockchain platform that aims to improve supply chain management and business processes through the use of distributed ledger technology. The platform is designed to streamline information flow for complex supply chains and offers low-carbon transactions.

Key Takeaways

  • VeChain plans to become a leading platform for initial coin offerings (ICOs) and for conducting transactions between Internet of Things (IoT) connected devices.
  • VeChain uses two tokens: VeChain Token (VET) as a value layer and VeChainThor Energy (VTHO) as a smart contract layer.
  • VeChain is a proof-of-stake (PoS) layer-1 smart contract blockchain that offers multiple use cases, including supply chain management and low-carbon transactions.

What is the History of VeChain (VET)?

VeChain was established in 2015 by Sunny Lu, the former CIO of Louis Vuitton China1. It was initially a subsidiary of Bitse, one of China’s largest blockchain companies, and was among the few blockchains that already had a substantial customer base among established companies.

At its inception, VeChain’s goal was to disrupt the supply chain industry by making data actionable and transparent. It also aimed to be a leader in dApps and ICOs made using VeChain and being an IoT intermediary.

VeChain transitioned onto its own blockchain and rebranded itself in 2018. As part of the rebrand, the VEN blockchain became the VeChainThor (VET) blockchain2. This smart contract blockchain is designed for fast transactions and scalability with a minimal carbon footprint.

VeChain has inked strategic partnerships over the years with several companies to help achieve its goals. Among them is an agreement with PricewaterhouseCoopers (PwC) for VeChain’s blockchain-powered solutions to be used by the accounting firm’s client base to improve product verification and traceability.

VeChain has also partnered with Renault3, creating, in conjunction with Microsoft and Viseo, a digital car maintenance book that cannot be tampered with, and is the government technology partner for Gui’an, an economic development zone for the Central Chinese Government.

VeChain has established itself as a leader in the blockchain industry, with a growing list of partnerships with established companies. The VeChain (VET) crypto has seen its market capitalization grow to nearly $2 billion in 2023 and has established itself as a top 50 crypto, according to CoinGecko data.

How Does VeChain Work? What are its use cases?

VeChain is a blockchain-based platform that aims to create a trust-free and distributed business ecosystem that enables transparent information flow, efficient collaboration, and high-speed value transfers. It has multiple use cases and can be implemented to enhance existing commercial processes related to dozens of fields, including supply chain management, logistics, and data storage.

Monitoring Supply Chains and Goods with VeChain

VeChain can be used to track quality, authenticity, storage temperature, transportation medium, and last-mile delivery of a product, such as a medicine pack or an alcohol bottle, right from the manufacturing facility through to the final delivery to the end customer.

This is accomplished through smart chips, or Radio Frequency Identification (RFID) tags and sensors that broadcast key information onto the blockchain network that authorized stakeholders can access in real time4.

The use of sensors means that all parameters related to the product can be constantly monitored, and any problems can be communicated back to the relevant stakeholders. For example, if a drug packet is stored outside a prescribed temperature range, manufacturers and customers are informed, allowing for service improvements and better quality control.

Improving the Car Industry with Vechain

Another example of how VeChain can be used is to enable automobile owners to manage their data and use it to negotiate better terms and policies with their insurance companies. This can be achieved by using VeChain’s blockchain technology to provide a secure and transparent platform for storing and sharing data related to a car’s maintenance history, driving habits, and other relevant information.

Environmentally Friendly Blockchain Transactions

VeChain (VET) is one of the most carbon-friendly blockchains on the market. One of the project’s core aims is to provide a blockchain where transactions can be executed without emitting large amounts of carbon. This issue has become particularly important as criticism of energy-demanding proof-of-work (PoW) blockchains such as Bitcoin have grown louder5. The official VeChain tracker suggests that the average emissions of a VeChain transfer are almost non-existent.

VeChain is a low-carbon blockchain that prides itself on providing an environmentally sustainable smart contract platform.
VeChain is a low-carbon blockchain that prides itself on providing an environmentally sustainable smart contract platform. Source: VeChain

In summary, VeChain is a blockchain platform that can be used to enhance supply chain management and business processes by providing a secure, transparent, and efficient way to track and share information among multiple stakeholders.

How Does VeChain’s on-chain governance work?

On-chain governance in blockchain technology entails the decentralized decision-making process that occurs directly on the blockchain itself. This approach ensures transparency and accessibility for all stakeholders and community members, as proposals, votes, and implemented changes are immutably recorded within the blockchain’s ledger. Blockchain networks should prioritize on-chain decision-making whenever possible to foster a truly decentralized and community-driven governance system.

VeChain employs on-chain governance to empower stakeholders and its governing body to participate in crucial on-chain decision-making processes and their subsequent execution. This mechanism allows for the management of critical functions like authorization or revocation of consensus validators (Authority Masternodes), modification of network parameters such as base gas price and block reward ratio, and implementation of any on-chain operations orchestrated by smart contracts deployed on the VeChainThor blockchain.

VeChain governance unfolds in three distinct phases:

1. Decision Making: The initial stage where consensus is reached on executing specific on-chain actions. This decision-making process is typically conducted through voting, which can occur either on-chain via a dedicated voting contract or off-chain within the governing body.

2. Authorization: The second phase involves presenting the voted-on-chain action to the governing body for final endorsement. Each proposal must garner approval from a majority of the governing body members to proceed.

3. Execution: The culmination of on-chain governance, where the proposed on-chain action, having secured the requisite majority approval, can be executed by any authorized entity, activating the specified actions defined within the proposal.

The VeChain governance model has three clear phases.
The VeChain governance model has three clear phases. Source: VeChain

How has VET traded in 2023, and what are the VET price predictions?

VeChain has rallied along with the rest of the crypto market in 2023. Tradingview data shows that it started the year changing hands at around $0.016 and has since gained over 60% as of writing in December 2023. Zooming out on the chart reveals that VeChain (VET) crashed severely in 2022, but it has surged by over 580% in the past five years.

Looking ahead, the VeChain (VET) price predictions are generally optimistic. Changelly expects VeChain to rally by a further 40% in 2024 and almost double its current price by the end of 20256. CoinCodex also expects VeChain to post considerable returns, but there’s a considerable gap between its minimum and maximum price targets for the coming years, which suggests they expect plenty of volatility7. Remember that price predictions in crypto are impacted by price volatility, so always do your own research.

VeChain (VET) has rallied by 60% in the past six months and over 500% in five years.
VeChain (VET) has rallied by 60% in the past six months and over 500% in five years. Source: TradingView

The Bottom Line

VeChain is an excellent example of a layer-1 blockchain designed to solve real-world problems and increase the adoption of decentralized technology. Despite the market volatility, the team has continued to improve the network and add to VeChain’s growing list of high-profile partnerships. The VeChain (VET) coin has enjoyed a considerable rally in 2023, and most price predictions expect more growth in the coming years.

Frequently Asked Questions

Where can you buy VeChain (VET)?

VeChain (VET) can be purchased on various exchanges, including Binance, Bitfinex, and Huobi.

What is the Relationship Between VeChain and the UFC?

VeChain has partnered with the Ultimate Fighting Championship (UFC) to provide blockchain-based solutions for the sports industry. The partnership aims to enhance fan engagement and improve the authenticity of merchandise by using VeChain’s blockchain technology.

How to Interpret VeChain’s Price Chart?

VeChain’s price chart can be interpreted by analyzing the historical price movements and volume of the cryptocurrency. Traders and investors can use technical analysis tools to identify trends, patterns, and support/resistance levels.

Who is the Founder of VeChain?

VeChain was founded by Sunny Lu in 2015. Before founding VeChain, Sunny was the CIO of Louis Vuitton China and has extensive experience in supply chain management and business development.

Peter Barker


Peter Barker

Peter is an experienced crypto content writer and a DeFi enthusiast with more than 3+ years of experience in the space. Previously a journalist and news editor at a leading European news sourcing agency.

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