Vechain(VET): VeBetterDao!

By Andy Wang | Crescent City Capital Market Analyst Intern

VeChain is a smart contract blockchain offering software solutions for businesses. It is best known for its enterprise supply chain product that traces shipped goods. This gives VeChain real-world uses across a variety of industries, including the food and beverage, fashion, and automotive sectors. It quickly established partnerships with several major businesses, and its native crypto token, VET, is among the 40 largest by market cap.

Where VeChain came from

Sunny Lu, the former CIO at Louis Vuitton China, founded VeChain in 2015. He is also the CEO of the VeChain Foundation, which launched in 2017.

VeChain started out as a crypto token built on the Ethereum blockchain. VeChain raised funds in an initial coin offering (ICO) in 2017. In February 2018, VeChain rebranded as VeChainThor (VET), its own blockchain. In June 2018, Ethereum VEN tokens were exchanged 1:100 for VET tokens, and the VeChainThor blockchain network officially began operation.

How VeChain works

The VeChain ToolChain product tracks goods using a combination of its blockchain and smart tags, which can use near-field communication (NFC), radio frequency identification (RFID), or QR codes. The sensors send information to the blockchain network during a product’s entire lifecycle.

Since this information is saved to the blockchain, it can’t be deleted or changed. The business and the consumer can review the product’s information on VeChain.

Both VeChain’s crypto tokens play an important role in how it works. The function of VET is to serve as a value-transfer medium, or, in other words, smart money that enables rapid value circulation within the ecosystem. VTHO, meanwhile, represents the underlying cost of using the VeChainThor blockchain.

To validate transactions, VeChain uses a different consensus algorithm than most cryptocurrencies. The most popular consensus algorithms are proof of work, first used by Bitcoin, and proof of stake, which is more efficient.

VeChain uses proof of authority. A fixed number of known validators, called Authority Masternodes, are responsible for confirming transactions. Any party who wants to be an Authority Masternode must disclose their identity, go through a know-your-customer (KYC) procedure, and complete any other minimum requirements set by the VeChain Foundation.

What Is Proof of Authority?

Proof-of-authority (PoA) is a blockchain consensus mechanism that offers fast transactions by relying on a limited number of trusted validators instead of a decentralized network. These validators are chosen based on their identity and reputation, ensuring they meet specific criteria, such as having a good reputation and a formal identification on the chain. Unlike proof-of-work (PoW), PoA doesn’t require mining, making it more energy-efficient. It’s ideal for private or enterprise blockchains where centralization is less of a concern. Finally, like in proof-of-stake (PoS) consensus mechanisms, they also have to invest money that would be put at risk if they break the rules.

Advantages:

  • Speed and Efficiency: PoA can process transactions faster than PoW or PoS, making it suitable for applications that require high-speed data processing.
  • Energy Efficiency: PoA is more energy-efficient as it does not require mining or high computational resources.
  • Trust and Security: Given that validators are known entities with their reputation at stake, they are incentivized to act honestly and maintain the network’s integrity.

Disadvantages:

  • Centralization: Unlike PoW or PoS, PoA is more centralized since only pre-selected validators can generate new blocks. This may lead to power concentration within a small number of validators and a lack of transparency.
  • Potential for Manipulation: With the identities of validators being publicly known, there’s a risk of third-party influence or manipulation.

What makes VeChain unique?

While many blockchains are all-purpose platforms that do just about anything you can program into them, VeChain is much more specialized. The basic idea is that it provides both a unique ID and a sensor to track a physical product. It then records information as the product passes through the supply chain.

Here’s a few examples of how this technology can be used by businesses:

  • A luxury fashion designer can install VeChain chips in its handbags so that buyers can verify if bags are real or fake.
  • A grocery store can track food products with VeChain. If there’s a disease outbreak related to a specific product, the store can use tracking data to determine which products it needs to recall.
  • Auto manufacturers can store data related to specific cars on VeChain. Future buyers will then be able to look up information related to the car and confirm that nothing has been tampered with such as the mileage.
  • In addition to supply chain solutions, VeChain has continued to diversify and modernize its ecosystem capabilities, including adding support in 2022 for a fiat-backed stablecoin (VeUSD) to support DeFi and Web3 projects.

VeChain is also unique in that it has two native tokens. Most blockchains have one — for example, Ethereum uses ETH tokens as its native cryptocurrency, and Cardano uses ADA tokens. The primary token on VeChain is VET, which is used for storing and transferring value. It also has VeThor Token(VTHO), which is used for transaction fees. VeChain separated the two so that the token used for transaction fees would have a stable price.

Partnerships

Even before its mainnet launch, VeChain had already established partnerships with several well-known businesses, and it has continued to build relationships. Here are some of the bigger names that are working with VeChain:

  • Accounting giant PricewaterhouseCoopers has partnered with VeChain to offer blockchain solutions to clients.
  • Walmart China started working with VeChain in 2019 to track its packaged meat, vegetables, and seafood.
  • Multiple brands under LVMH Moet Hennessy Louis Vuitton are working with VeChain to use blockchain technology as an anti-counterfeiting measure.
  • BMW began a partnership with VeChain through the BMW Startup Garage Program to store vehicle data on the blockchain.
  • French automaker Groupe Renault has partnered with VeChain to create a digital car maintenance book.

Market Recap

The VeChain price today as of March 2nd, 2024 is $0.050013 USD with a 24-hour trading volume of $126,888,940 USD. We update our VET to USD price in real-time. VeChain is up 2.97% in the last 24 hours. The current CoinMarketCap ranking is #36, with a live market cap of $3,636,062,361 USD. For the last 7 days, VET has been in a good upward trend, thus increasing by 10.55%. VeChain has shown very strong potential lately, and this could be a good opportunity to dig right in and invest.

During the last month, the price of VET has increased by 69.37%, adding a colossal average amount of $0.03 to its current value. This sudden growth means that the coin can become a solid asset now if it continues to grow.

Analysis

As the screenshot above has shown, from the launch of VET on the VeChainThor blockchain in 2018 to the first few months of 2021, the price hovered around the $0.005 mark. Starting in January 2021, the price shot up, reaching its all-time high of $0.28 first on April 16th 2021 and then at $0.2338 on May 9th, 2021. This is because the local government of Suzhou, China, announced the introduction of a risk self-assessment application called VeTrust, backed by VeChain and built on VeChainThor blockchain and combined with DNV’s to help in infection risk management.The price dropped significantly again and has failed to reach its former peak. The altcoin remained on the back foot relentlessly for three years showing little to no signs of growth. VET has also stopped attracting bullish sentiments as it is tightly held under the bearish grips.

Here, I utilized “Trading View” to draw three resilience for VET. The first will be around $0.05481, second one will be $0.06380, and the one after will be $0.08955. The price movement seems convincing, because the RSI is above 70, which means the sentiment is pumping up. When we look at the MACD, however, two lines seem to be converging to a death cross in near time since the token volume is dropping. Nevertheless, by looking at the Crypto Fear & Greed Index, it’s at 80, indicating extreme greed sentiment, thanks to the broad investing sentiment. I would say this token can be considered as a short-term speculation since the price today($0.05) is almost marking the highest price in a year. And I would suggest closely paying attention to the price movement over the next 2 months, right before BTC Halving. Below, I attached a fib retracement screenshot in the 4-hour movement version.

I plotted today’s price to its most recent low at $0.02483 to form this Fibonacci retracement. The most commonly used Fibonacci retracement levels are 61.8%, 50%, 32.8%. Therefore, investors should look at $0.04060, $0.03759, $0.03458, in order to protect the loss once the token price starts dropping. Same applies to its extension, $0.06594 would be a good point for taking profit, which aligns with my suggestion if the price breaks the first resilience at $0.05481.

Other than the technical analysis, from a more fundamental and macro perspective, only concern I would think of is, although the pandemic eased, the Russia-Ukraine war, Middle East conflict is disrupting global supply chains, this coin’s fundamentals are not lending enough support. 

Overall, the network has signed numerous partnerships in 2024 so far, with one of its latest partnerships being with Boston Consulting Group (BCG).The partnership aims to help reduce carbon emissions in the textile industry. Consequently, these partnerships and collaborations have positively affected VeChain’s native token, VET.

Reference:

https://www.vechain.org//wp-content/uploads/2023/10/vechain-whitepaper-3-0.pdf

https://www.investopedia.com/terms/v/vechain.asp

https://cointelegraph.com/tags/vechain

https://coinmarketcap.com/currencies/vechain/

https://alternative.me/crypto/fear-and-greed-index/