description |
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Understanding VeChain's transaction/gas token, VTHO |
VTHO Characteristics | Details |
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Type | VIP180 |
Token contract address | 0x0000000000000000000000000000456E65726779 |
Precision | 18 decimal places |
Supply | VTHO is the energy or the cost of carrying out the payment and smart contract transactions on the VeChainThor blockchain. |
Consumption | 70% of the transaction fee paid in VTHO in each block is burned and the remaining 30% is rewarded to the Authority Masternode which produces the block. |
VIP180 is VeChain's implemented improvement proposal defining a fungible token standard. It's a superset of Ethereum's ERC20 standard, making it widely compatible and the most used fungible token standard across blockchains. VTHO, as a VIP180 token, powers the VeChainThor blockchain by:
- Serving as the cost for transactions and smart contract execution
- Rewarding Authority Masternodes for block production and network maintenance
Unlike VET, VTHO doesn't have a fixed maximum supply. Its supply is governed by:
- Generation: VTHO is generated by holding VET
- Consumption: VTHO is used for transaction fees
- Burning: 70% of used VTHO is destroyed
- Rewards: 30% of used VTHO goes to Authority Masternodes
This dynamic supply model allows VeChain to adapt to network demand and maintain economic stability.
VTHO burning serves several crucial functions:
- Supply Control: Helps regulate the circulating supply of VTHO
- Value Stability: Aims to maintain a stable VTHO value for predictable transaction costs
- Flexibility: Allows VeChain to adjust parameters based on network adoption and demand
VET holders automatically generate VTHO at a constant rate, without the need for active staking or node operation. This passive reward system encourages long-term holding and participation in the VeChain ecosystem.
VTHO is generated from holding VET at a constant rate of
Where
On the other hand, for each transaction, a transaction fee must be paid to pay for the computation on the network. Mathematically, we can write it as:
Where
The gas price
This dual-token model, with VET generating VTHO and VTHO powering transactions, creates a flexible, scalable economic system for the VeChainThor blockchain. It allows for transaction cost stability while maintaining the potential for VET value appreciation, making it attractive for both enterprise use and individual investment.