- The VeChain Renaissance has introduced groundbreaking upgrades that transform VTHO tokenomics, enhancing sustainability, efficiency, and decentralization across the ecosystem.
- Dynamic fees, deflation, and a new staking model create VTHO scarcity, encouraging participation and bolstering VeChainThor’s long-term prospects.
The VeChain Renaissance is here, and it’s bringing in a new era for the ecosystem with groundbreaking protocol upgrades. One of the most outstanding transformations in the suite of game-changing protocol upgrades is reimagining VTHO tokenomics.
This isn’t just a tweak; it’s a supercharging, a fundamental shift that aligns network value with active participation.
Among the major changes in its tokenomics in upgrade is VTHO issuance. Previously, VTHO was generated uniformly at a rate of 0.000432 per VET daily. This was regardless of network activity. With the new upgrade (Renaissance) VTHO generation now follows an issuance curve directly. This issuance will be linked to the total VET staked across Delegator and Validator nodes.
This shift in issuance is to bolster active participation. Notably, those who secure the network in which validators and delegators receive the majority of the rewards. Additionally, a dramatic 72.2% reduction in initial inflation introduces an even greater deflationary pressure, therefore balancing supply and demand.
Also, annual value inflation will now start at 0.6% and scale up to 2.9% as network staking reaches 70% of the total VET supply.
Fuelling Scarcity: 100% Burn and the Gas Fee Market
As earlier mentioned, the Galactica upgrade is bringing in a revolutionary deflationary mechanism. This means a 100% base-free burn model. With this system, every VeChainThor transaction permanently burns all VTHO used as gas, totally removing it from circulation.
This upchange drives scarcity a notch higher VTHO’s scarcity, ensuring that as network activity grows, VTHO demand will outpace its controlled issuance, driving long term value.
Moreover, the dynamic fee market optimizes transaction costs based on demand, automatically adjusting the base fee during high-usage periods.
Notably, Validators and Delegators are further rewarded through a new priority fee system, where users can pay tips to speed up their transactions. In contrast to burned base fees, 100% of these tips are directly distributed to those who secure and operate the network.
The VTHO/VeBetter Synergy: Compounding Growth and Deflation
The VeChain Renaissance forges a powerful alliance between VTHO and VeBetter, the platform’s sustainability-focused application layer. Powered by the B3TR token, every interaction within VeBetter triggers on-chain transactions, directly accelerating VTHO burn rates.
Notably, as VeBetter’s adoption grows, so does the demand for VTHO, fostering a sustainable, long-term positive feedback loop.
Rewarding Active Network Contribution
Additionally, a major improvement over the previous model is the elimination of passive VTHO accumulation. Previously, idle holders and exchange wallets could accrue VTHO without contributing to network security. The Renaissance changes this; the upgrade ensures that only Validators and Delegators, the active participants, are rewarded. This fosters a more engaged and secure ecosystem.
Validators are the backbone of VeChainThor, processing transactions and producing blocks. With 101 Validators at launch, they receive 30% of all VTHO block rewards. Staking requirements, ranging from 25M to 600M VET, directly influence governance power and block production probability. Higher stakes translate to greater influence and increased chances of block validation.
On the other hand, delegators are rewarded with 70% of VTHO block rewards. To broaden accessibility, three new Economic Node tiers have been introduced:
- Dawn Node (10,000 VET): Offers a 1.0x reward multiplier.
- Lightning Node (50,000 VET): Provides an enhanced 1.15x multiplier.
- Flash Node (200,000 VET): Delivers a premium 1.3x multiplier.
These tiers open up VeChain’s economic ecosystem to a wider audience, allowing more users to participate and contribute.
Meanwhile, at the time of writing, VET is swapping hands with $ 0.03005, marking a 4.79% surge in the past 24 hours.