VeChain Renaissance — Game-Changing Tokenomics Upgrades — Key Details

VeChain Renaissance — Game-Changing Tokenomics Upgrades — Key Details

Hey VeFam! It’s time to share more details about how VeChain’s tokenomics change for the better in the Hyabusa stage of VeChain Renaissance — as well as how you’ll interact with the VeChainThor economy in the future.

VeChain Renaissance is one of the most significant upgrades to the protocol since its launch in 2018 — if you need to catch up on what that entails, you can read our Medium post, here.

As outlined in the Web3 for Better whitepaper — a central tenet of our approach to mass adoption is using incentive-based models, as seen in the VeBetterDAO sustainability dapp ecosystem, to drive adoption. An idea reinforced in Boston Consulting Group’s recent paper: Decentralized Networks Can Incentivize Behaviour Changes.

In VeChain Renaissance, we apply this philosophy to the core protocol, more efficiently distributing rewards to those who actively participate in securing and decentralizing the network.

Our goal? Delivering an economically secure blockchain that optimally serves stakeholders in all their forms — from builders to institutional investors. Ultimately, effort should be rewarded, and those who take a stake in our future deserve the most.

So, let’s dive in to how we’re tuning opportunities to reward active participation and setting the foundations for the next decade of VeChainThor.

Upgraded Tokenomics

VeChain Renaissance modifies the way VET and VTHO function, introducing new dimensions to the reward model in the form of Staking NFTs.

Under this updated framework, VTHO generation is directly correlated to VET staked, reducing overall inflation and adding greater deflationary pressure to synchronise protocol growth with long-term value creation. This model better incentivizes those who actively contribute to network security by acting as Validators or Delegators.

$VET

VET remains the core utility token of VeChainThor — the asset powering and securing the network. It retains its general functionalities, including its use as the pathway to generating VTHO rewards.

A key change is that VET tokens staked as an Economic/X Node can become collateral for new ‘Delegator’ Staking NFTs. Delegator Staking NFTs, in turn, can be delegated to Validator Nodes, earning a share of block production rewards. Definitions of the Delegator/Validator Staking model are detailed below.

$VTHO

VTHO is the biggest beneficiary of change from VeChain Renaissance. Major updates include:

Exclusive Staking Reward: In VeChain renaissance, VTHO is exclusively earned as a staking reward by Validators and Delegators, and is no longer generated at the rate of 0.000432 per VET per day.

This approach sees VTHO distributed based on active network participation, preventing idle VTHO generation in inactive wallets or exchange wallets, which dilute rewards without network benefits.

Reduced Inflation, Smarter Distribution: VTHO will be generated based on an issuance curve directly correlated with total VET staked across all Delegator and Validator Nodes. At launch, VTHO inflation will be cut 72.2%.

Based on staking projections, the annual value inflation of VeChainThor VTHO will start from 0.6%, reaching 2.9% if total VET stake reaches to 60 Billion VET (70% of total supply). Those who stake early stand to benefit most from the new tokenomic model.

Increased VTHO Burn: 100% of VTHO transaction base fees will be burned, which, in combination with lower inflation, accelerates the transition to a deflationary model for VTHO. This mechanic builds on the original tokenomic thesis of VeChainThor, helping develop long-term value for the protocol as a proxy of adoption and transaction volumes.

Dynamic Gas Fee Market: The introduction of the gas fee market changes the transaction pricing model, moving from a flat rate to a dynamic one that optimizes fees to balance network load. The outcome is greater overall consumption of VTHO, contributing to deflationary mechanisms.

Priority Fee Rewards: With the gas fee market, users can opt to pay a ‘tip’ and have their transaction prioritized by block producers. 100% of tips will be paid to Staking Nodes as block reward bonuses.

Greater Rewards & Incentives

The modifications to VTHO dynamics have allowed us to optimize the core protocol to deliver greater rewards in a more targeted manner — all while retaining key benefits such as stable, adjustable transaction fees.

Based on conservative simulations, current VET/VTHO ratios and expected dynamics between the Validator/Delegator Staking model, we modelled averaged potential APYs based on different scenarios:

• 10B VET Staked: average APY >12.8%
• 20B VET Staked: average APY >8.9%
• 30B VET Staked: average APY >7.3%
• 60B VET Staked (Cap): average APY >5.1%

Based on an initial value of 101 Validators, each with 25M VET representing a network stake of 2.525B VET, Validator APY is expected to begin at 20%.

*Values subject to change based on market dynamics.

Bolstered by $B3TR

A new interplay on the VeChainThor blockchain arrived with the introduction of the VeBetter ecosystem — our sustainability app platform and newest vehicle for adoption. At its core, VeBetter is an incentive-based platform that tokenizes and rewards user actions with $B3TR tokens.

When transacting and writing to the VeChainThor blockchain, whether to pay for user/dApp transactions, deploy/interact with smart contracts etc, VET and VTHO are utilized, generating demand. With the addition of $B3TR, we introduce a new vehicle to drive growth in transaction volumes. This, in turn, accelerates deflationary pressure and creates value at the protocol level.

Staking NFTs, New Economic Node Tiers

Staking NFTs are the new method of generating rewards in VeChain Renaissance.

These protocol-level Non-Fungible Tokens leverage staked VET and represent a user’s contribution toward decentralizing and securing the network. Collateral held in X Nodes and Economic Nodes can be leveraged to generate a Delegator Staking NFT once live.

As per the current VeChainThor rewards model, the tier of your Economic Node or X Node determines the amount of VTHO rewarded.

The new staking model sees Economic Nodes able to earn VTHO rewards once again and introduces new tiers of Economic Node (detailed below) catering for greater participation and onboarding new users to the Node program.

The VeChain Renaissance Node program commences from June 2025 — prepare your stake and be ready!

Validators/Delegators — New Roles In VeChain

Validators are VeChainThor’s Block Producers under VeChain Renaissance, replacing Authority Masternodes in the lexicon.

Validators run the physical servers and hardware needed to maintain and secure the VeChainThor blockchain. At launch, the total number of Validators maintains its original cap of 101, subject to change in the final phases of VeChain Renaissance.

A key difference for Validators is that the staking cap has been lifted from 25M VET to a maximum value of 600M VET — a value arrived at through a combination of both Validator and Delegator staked VET.

Validator Summary:

• Capped at 101 at launch
• Earn 30% of block rewards
• Run physical servers, mine blocks, secure VeChainThor blockchain
• Comprised of a minimum stake of 25M VET, up to 600M VET maximum

Governed by weighting system for both BP Reward selection and governance:

• Higher cumulative staking weight in Validator Nodes means greater governance weighting and block production chance:
• Validator Staking Weight: 2.0
• X-Node Delegator Staking Weight: 1.5
• Eco-Node Delegator Staking Weight: 1.0

More details about the onboarding process for Validators will be shared in a future article.

Delegators consist of Economic Node and X Node holders who stake their VET in exchange for a Delegator Staking NFT, subsequently delegating their Staking NFT to a chosen Validator.

This new form of Staking NFT generates rewards at ratios relative to the tier and type of Economic/X Node.

Delegator Summary:

• Split 70% of block reward
• Stake VET with chosen validator, sharing block reward pool
• Earn majority of newly minted VTHO
• Have a weighted reward system (Ref. Table below)
• Are capped, Tier dependent (Ref. Table below).

Three new tiers of Economic Node will be introduced to encourage greater participation and maximize decentralization. Staking NFTs have a cap, as below — so prepare your stake ahead of time and be ready for the launch event!*

*We will launch promotional activities to accompany the launch of the Staking NFT program in June to motivate ‘Early Bird’ staking.

An overview of VET requirement, reward weighting and NFT supply caps.

A New Phase For VeChainThor Decentralization/Governance/Security

VeChain Renaissance is an upgrade in ethos as well as strategy. Alongside tokenomics, the Renaissance introduce changes to how governance functions within VeChainThor, for example, by removing the KYC mechanism from the validator selection process and giving more power to those who have direct stakes in the blockchain.

Conclusion — and a Call to Action:

VeChain Renaissance has a major objective: Increasing the economic security and adoption of the VeChainThor ecosystem through an upgraded rewards model, as well as technology enhancements that increase its compatibility and ease of onboarding via EVM upgrades and JSON RPC.

And while there is much work to be done at the VeChain Foundation — we have an ask of you, too.

Very soon, we will launch VIPs to begin the process of upgrading mainnet. Here’s what you can do:

• Lend your support to the first phases of this transformation by joining our upcoming AMA on 19th February with Sunny Lu, asking questions, learning the key details, and joining the voting process.
• Engage, Innovate, and Lead: Join discussions across social media, contribute your ideas on Discourse, and become a driving force behind VeChain’s success.
• Consider steps to being a Validator, or Delegator: Review this document, discuss with VeFam, and evaluate your next moves as we launch the new staking system in June!

These game-changing tokenomics, enhanced staking rewards, and shift toward full decentralization, we believe, places us in an incredibly promising position to attract new users and thrive in an age of accelerated blockchain adoption.

Get ready to stake, secure, and power VeChain like never before by joining the Renaissance — the power truly is in your hands!

About VeChain

Founded in 2015, VeChain built a world leading enterprise smart contract platform, VeChainThor, helping deliver blockchain adoption apps to hundreds of enterprise partners.

Building on this expertise, VeChain, in close partnership with Boston Consulting Group, launched the ‘Better’ ecosystem — comprised of sustainability apps that use tokenization and incentivization to reward users, businesses and other stakeholders for sustainable actions.

To learn more, including how you can build apps of your own, grants, documentation and more, visit vechain.org — or vebetter.com to explore.

VeChain Renaissance — Game-Changing Tokenomics Upgrades — Key Details was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.