VeChain Docs
  • Welcome to VeChain
  • Blockchain Basics
    • Introduction to blockchain
    • Introduction to digital property
    • The evolution of the internet
  • Introduction to VeChain
    • About the VeChain blockchain
      • Consensus Deep Dive
      • Governance
    • Dual-Token Economic Model
      • VeChain (VET)
      • VeThor (VTHO)
    • Acquire VeChain Assets
    • Sustainability
  • Core Concepts
    • Networks
      • Thor Solo Node
      • Testnet
      • Mainnet
    • Nodes
      • Node Rewards Programme
    • Blocks
      • Block Model
    • Transactions
      • Transaction Model
      • Transaction Fees
      • Transaction Calculation
      • Meta Transaction Features
        • Transaction Uniqueness
        • Controllable Transaction Lifecycle
        • Clauses (Multi-Task Transaction)
        • Fee Delegation
          • Multi-Party Payment (MPP)
          • Designated Gas Payer (VIP-191)
        • Transaction Dependency
    • Block Explorers
    • Wallets
      • VeWorld
        • User Guide
          • Setup
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        • FAQ
      • Sync2
        • User Guide
          • Setup
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        • FAQ
      • Sync
        • User Guide
          • Wallet
          • Ledger Device
          • Browser dApps and web
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          • Contributing
        • FAQ
    • EVM Compatibility
      • VeChain Modifications
      • Methodology
      • Test Coverage
        • Gas model
        • Raw transaction
        • hardhat specific
          • Ganache failures
          • evm_increaseTime
        • Failures in constructor
        • eth_sign
        • Contract address prediction
        • BadBeacon proxy address at 0x1
      • How to Recreate
      • Additional Information
        • Using Governance Contracts
        • ERC1820/ERC777 Testnet
        • Delegate Options
    • Account Abstraction
      • UserOperation
      • Bundler
      • EntryPoint Contract
      • Account Factory Contract
      • Paymaster Contract
    • Token Bound Accounts
  • How to run a node
    • Nodes
    • How to run a Thor Solo Node
    • Custom Network
    • Connect Sync2 to a Thor Solo Node
  • Developer Resources
    • Getting Started
    • How to build on VeChain
      • Connect to the Network
      • Read Data
        • Read Blocks
        • Read Transactions
        • Read Accounts
        • States & Views
        • Events & Logs
        • VET Transfers
      • Write Data
        • Transactions
        • Fee Delegation
      • Listen to Changes
        • Events
        • VET Transfers
        • Transactions
        • Blocks
        • Beats
      • Build with Hardhat
      • Utilities
        • BigInt and Unit-Handling
        • Name Service Lookups
    • Example dApps
      • Buy me a Coffee
      • Token Bound Accounts
      • PWA with Privy and Account Abstraction
    • EVM Compatibility for Developers
      • Key Architectural Differences and Optimizations
      • Practical Implications for Developers: Key Considerations
      • RPC Methods (Detailed Breakdown)
      • Frequently Asked Questions (FAQs)
      • VeChain Blockchain Specifications
      • Key Differences Between VeChain and Ethereum (Summary)
      • Best Practices for Developing on VeChainThor
    • How to verify Address-Ownership
      • Next.js Session Verification
    • Debug Reverted Transactions
    • Account Abstraction
    • VIP-191: Designated Gas Payer
      • How to Integrate VIP-191 (I)
      • How to Integrate VIP-191 (II)
      • How to Integrate VIP-191 (III)
    • Index with Graph Node
      • Setup with Docker
      • Index with OpenZeppelin
        • Create Subgraph Project
        • Configure Contracts
        • Deploy Subgraph and start Indexing
        • Track Subgraph Indexing
        • Access Subgraph
        • Update Subgraph
    • SDKs & Providers
      • SDK
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        • Accounts
        • Bloom Filter
        • Certificates
        • Contracts
        • Cryptography
        • Debug
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      • Thor DevKit
        • Installation
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          • Cryptography
          • Accounts
          • Encoding
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          • Certificates
          • Bloom Filter
      • DApp Kit
        • v2
          • Installation
          • React
            • Installation
            • Usage
          • Vanilla JS
            • Installation
            • Usage
          • Core
            • Installation
            • Usage
          • Theme Variables
          • i18n
        • v1
          • Installation
          • React
            • Installation
            • Usage
          • Vanilla JS
            • Installation
            • Usage
          • Core
            • Installation
            • Usage
          • Theme Variables
          • i18n
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          • V0 to V1
        • v0
          • Installation
          • Usage
          • React
            • Installation
            • Usage
          • Vanilla (UI)
            • Installation
            • Usage
          • Styles (UI)
          • i18n
      • DevPal
      • Web3-Providers-Connex
        • Installation
        • Usage
      • Connex
        • Installation
        • API Specification
    • Frameworks & IDEs
      • Hardhat
      • Remix
    • Built-in Contracts
    • VORJ
    • Useful Links
  • How to contribute
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On this page
  • Blockchain Token Economic Models: An Overview
  • The Importance of a Well-Designed Economic Model
  • VeChain's Innovative Dual-Token Approach
  • Rationale Behind the Dual-Token Model

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  1. Introduction to VeChain

Dual-Token Economic Model

Understanding VeChain's innovative dual-token economic model.

Blockchain Token Economic Models: An Overview

Public blockchain networks rely on economic systems to govern token behavior and distribution. These models encompass the design, issuance, distribution, and management of tokens, as well as the incentives and mechanisms driving their value and utilization.

The Importance of a Well-Designed Economic Model

The choice of economic model has far-reaching implications for a blockchain ecosystem:

  • Proper incentives enhance network security

  • Ethical distribution builds trust

  • Open governance increases confidence

  • Clever design improves overall robustness

VeChain's economic model has been carefully crafted with these principles in mind.

VeChain's Innovative Dual-Token Approach

Through extensive collaboration with business partners, particularly corporations and enterprise owners, VeChain identified a major obstacle to blockchain adoption: the unpredictability of usage costs due to cryptocurrency volatility. To address this challenge, VeChain implemented a dual-token model:

  • VeChain Token (VET): Serves as a value-transfer medium (utility token)

  • VeThor Token (VTHO): Represents the cost of using VeChainThor blockchain resources (transaction/gas token)

This unique two-token design effectively separates the cost of using the blockchain from market speculation.

Rationale Behind the Dual-Token Model

During cryptocurrency bull markets, token prices often inflate, leading to increased transaction costs on single-token networks. VeChain's dual-token model aims to mitigate this issue by:

  • Cost Predictability: VTHO helps stabilize transaction fees, making it easier for enterprises and individuals to forecast network usage costs.

  • Decoupling from Market Volatility: By separating the value-transfer token (VET) from the transaction cost token (VTHO), the model reduces the direct impact of market speculation on network usage costs.

  • Flexible Governance: The two-token system allows for more nuanced economic governance, enabling adjustments to transaction costs without directly affecting the main value token.

  • Encouraging Long-term Holding: VET holders generate VTHO over time, incentivizing long-term investment in the ecosystem.

  • Enterprise-friendly Design: The predictable cost structure is particularly appealing to businesses that require stable operational expenses.

By implementing this dual-token model, VeChain addresses one of the key barriers to widespread blockchain adoption in enterprise environments. It offers a more stable and predictable cost structure, making it easier for businesses to integrate blockchain technology into their operations without the fear of unpredictable expenses due to market volatility.

This innovative approach positions VeChain as a blockchain solution that's not only technologically advanced but also economically designed for real-world, enterprise-level adoption.

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