VeChain (VET) Definition: VeChain is a public blockchain designed for supply-chain tracking and business data, in which companies record product histories on-chain so that anyone can verify them. It uses two tokens: VET, which stores value and secures the network through staking, and VTHO, a separate token generated for stakers and spent on transaction fees so that fee costs stay decoupled from VET’s market price.
What Is VeChain?
A bottle of French wine sold in Shanghai may pass through a vineyard, a bottler, a shipping firm, customs and a distributor before it reaches the shelf. Each party keeps its own records, and a counterfeiter only needs to fake one label. VeChain’s idea is to give every step a shared, tamper-resistant log. The producer attaches an NFC chip or QR code to the product, and each handler writes a record to the chain that a buyer can check with a phone.
Sunny Lu, a former chief information officer of Louis Vuitton China, founded VeChain in 2015. The project first issued an ERC-20 token called VEN on Ethereum, then launched its own chain, VeChainThor, in June 2018 and swapped each VEN for 100 VET. The total supply of VET is about 86.7 billion. Enterprise pilots have included Walmart China’s food traceability platform, BMW’s VerifyCar mileage records and product certificates issued with the assurance firm DNV.
For a beginner, that is the whole pitch: a public ledger that businesses can use without exposing themselves to volatile, unpredictable fees. The rest of this article looks at the token design that makes that possible.
How Does VeChain’s Two-Token Model Work?
Most blockchains charge fees in their main coin. When that coin’s price doubles, the cost of using the network roughly doubles too, which makes budgeting impossible for a company that sends thousands of transactions a day.
VeChain splits the roles. VET is the asset people buy, hold and stake. VTHO (VeThor) is the fuel: every transaction burns gas, and that gas is priced in VTHO.
Under the original design, every VET balance produced VTHO automatically at a fixed rate of 0.000432 VTHO per VET per day, and a simple transfer cost roughly 0.21 VTHO.
Consider a logistics firm that writes 20,000 tracking records a day at about 0.21 VTHO each, for a daily fuel bill of 4,200 VTHO. At the original rate, holding about 9.7 million VET would generate exactly that much every day, so the firm could run its application indefinitely without buying fuel on the open market. If VET’s price rose, the firm’s fuel supply did not change, because generation depended on the number of VET held, not on their dollar value.
Two further features serve business users. Fee delegation lets an app pay the VTHO for its customers’ transactions, so a shopper scanning a product never needs a wallet balance. Multi-clause transactions bundle several operations into one, which cuts cost for batch updates such as recording a whole shipment at once.
How Does VeChain Reach Consensus?
From 2018 VeChain ran on proof-of-authority. Only 101 Authority Masternodes, each operated by an identified entity that passed KYC checks and held 25 million VET, could produce blocks. That kept blocks fast and predictable every 10 seconds, but it concentrated control in a small, vetted group.
Two upgrades in 2025 changed the model. The Galactica hard fork introduced an EIP-1559-style fee market, in which a base fee is burned and a priority fee goes to the block producer. The Hayabusa upgrade, activated on 2 December 2025, moved the network to delegated proof-of-stake. VET holders can now run validators or delegate to them, and VTHO generation shifted from every wallet to staked VET only, scaled by how much VET the network has locked in total.
VET vs. VTHO
| VET | VTHO | |
|---|---|---|
| Role | Value, staking and governance | Gas for transactions |
| Supply | About 86.7 billion, fixed | Generated for stakers, burned by usage |
| How you get it | Buy on the market | Stake VET or buy on the market |
| Price driver | Demand for exposure and staking | Balance between generation and burn |
Why Is VeChain Important for Traders?
VeChain shows how token design can separate an asset’s investment role from its utility role. For a trader, that means VET and VTHO respond to different forces. VET trades on expectations about adoption and staking demand, while VTHO trades on the balance between how fast stakers generate it and how fast network activity burns it. A surge in transactions can tighten VTHO supply without directly lifting VET.
The main limitation is the gap between partnership headlines and paying on-chain demand. Many enterprise projects stayed at the pilot stage, and supply-chain records generate small, low-value transactions. If activity stays low, little VTHO is burned and the fee market does little to support either token.
Governance concentration is the second risk. Even after Hayabusa, validators with large VET holdings and the VeChain Foundation carry heavy weight in decisions, and the project’s history as a permissioned network means its decentralisation is still being tested. Traders comparing VET with other Layer 1 networks should weigh that alongside the enterprise story.
Key Takeaways
- VeChain is a public blockchain aimed at supply-chain tracking, where businesses record verifiable product histories on-chain.
- Its two-token model separates value from fuel: VET is held and staked, while VTHO pays for gas, so fee costs do not rise with VET’s price.
- Fee delegation and multi-clause transactions let businesses sponsor users’ fees and batch many records into a single transaction.
- The network moved from 101 permissioned Authority Masternodes to delegated proof-of-stake, and VTHO generation shifted from all holders to stakers.
- VeChain’s main risks are thin paid demand behind enterprise partnerships and governance power that remains concentrated among large holders.
What is the difference between VET and VTHO?
VET is the value and staking token of VeChain, while VTHO is the token spent on transaction fees. Separating the two lets businesses budget for fees in VTHO without selling their VET holdings.
Do you still earn VTHO just by holding VET?
Not since the Hayabusa upgrade in December 2025. Before it, every VET wallet generated VTHO automatically; afterwards, generation was tied to VET that is staked or delegated to validators.
Can someone else pay my VeChain transaction fees?
Yes. VeChain supports fee delegation, which lets an app or business sponsor the VTHO cost of its users' transactions. This is why many VeChain apps feel free to end users.
Is VeChain fully decentralised?
For most of its history it was not, because only 101 approved Authority Masternodes could produce blocks. The move to delegated proof-of-stake opened validation to more participants, although large holders and the VeChain Foundation still carry outsized influence.
