VET is one of two tokens on the VeChain network (the other being VTHO). It acts as the store of value and value transfer medium of the network.
A brief history
VeChain was founded in 2015 by Sunny Lu, the former chief information officer (CIO) of Louis Vuitton China. VeChain is a smart contract platform focused on providing supply chain management solutions to enterprises using blockchain technology and Internet of Things (IoT) devices. Its goal is to streamline these processes and information flow through the use of its distributed ledger technology (DLT)- a protocol that enables the secure functioning of a decentralized digital database. The VeChain blockchain uses a Proof of Authority (PoA) consensus protocol where votes are disbursed based on VET holdings. Only VET holders with certain credentials and with 1 million tokens in their account are assigned votes. Because of these standards, there are around 100 master nodes responsible for reaching a consensus on transactions in VeChain’s blockchain. This PoA system is very different from other blockchains such as Bitcoin, which require all nodes to vote on a transaction before reaching a consensus.
VET in practice
Like Ethereum, VeChain adopted a dual token strategy, where one token (VET) serves as the public investment and/or digital cash and the other is for smart contract execution and programming (VTHO). VET is the cryptocurrency of the VeChain platform that you would invest in on an exchange, and serves as an increment of value within the blockchain. The VET token can transfer value across the blockchain and trigger smart contracts. It is also how users pay for transactions on Dapps. VeChain users can also stake their VET to earn some passive income. Staking requires you to hold your VET in a network wallet that remains online for a preset time period. The longer you stake your VET, the more you earn. However, staking is limited, as mentioned before, only those with a strong reputation and large VET holdings may be elected as validators on the platform.