- VeChain has, in its latest report, explained all the details surrounding the Renaissance upgrade as it claims VET would continue to operate as a core utility token of the VeChainThor.
- This upgrade would significantly reduce the VTHO inflation by 72.2% with annual value inflation starting point of 0.6%.
In a recent update, we examined the much anticipated VeChain’s (VET) upgrade called VeChain Renaissance. According to that report, this upgrade is meant to ensure that stakeholders stay on top of regulatory and technical trends. Two months after that disclosure, VeChain announced that this upgrade would subtly modify the functionalities of VTHO and VET.
— VeChain (@vechainofficial) February 17, 2025
Reviewing the report, we found that the upcoming upgrade would introduce a new dimension of the reward model in the form of staking NFT. Specifically, the generation of VTHO is directly correlated to the staked VET. In this case, greater deflationary pressure would be added while reducing the overall inflation. Fascinatingly, both VTHO and VET are reported to benefit from the VeChain Renaissance.
VTHO and VET in VeChain Renaissance
It is important to note that VTHO is exclusively earned as a staking reward in the VeChain Renaissance. This implies that the asset is no longer generated at 0.000432 per VET per day. This approach also ensures that VTHO is distributed based on active network participation.
Additionally, VTHO is generated based on the issuance curve directly correlated with the total number of VET staked on all the Delegator and Validator Nodes. According to the details, this will ensure VTHO inflation is reduced by 72.2%. Meanwhile, 0.6% would be the starting point of the annual value inflation of VTHO. When the total amount of VET staked reaches 60 Billion VET, the annual value would reach 2.9%.
More About the Upgrade
Another thing to expect in the VeChain Renaissance is the implementation of a burning mechanism that would eliminate 100% of VTHO transaction base fees from circulation. In the long run, this is expected to lower inflation according to the report.
Also, the upgrade would introduce what is called the gas fee market. This is expected to change the transaction pricing model from a flat rate to a dynamic one. Most importantly, there will be an introduction of priority fee reward where users would have the option to have their transactions prioritized by block producers as indicated in our earlier discussion. .
Speaking on VET, VeChain disclosed that this asset would maintain its status as a core utility token of the VeChainThor. The main change is that the token staked as an Economic/X Node could be used as collateral for Delegator’ Staking NFTs. Meanwhile, the Delegator Staking NFTs could also be delegated to Validator Nodes.
Generally, VeChain Renaissance is expected to operate as an upgrade in “ethos” and “strategy.” Based on the report, it would also change how governance functions within VeChainThor. One notable example is the removal of Know-Your-Customer (KYC) from the validator selection process.
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.
VeChain CEO Sunny Lu has also indicated that VeBetterDAO, VeChain Renaissance, and VeWorld would be the three key initiatives used to strengthen the ecosystem this year, as noted in our earlier report.
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