Blockchain technology is a certain way to store data.
In order to store data on the VeChainThor blockchain you need VTHO to pay the transaction costs.
The Authority Nodes (“miners”) will receive 30% of these transaction costs, 70% will be burned.
Walmart, Givenchy, DNVGL, PwC, BYD, San Marino, Deloitte and everyone else who wants to use the VeChainThor blockchain needs to pay the Authority Nodes VTHO to store their data. There is NO way to use the blockchain without paying VTHO.
So where is $VET
We need to know the origin of VTHO to answer this question.
- Every $VET generates a certain amount of $VTHO/block.
- $VTHO has a certain value in Dollar, based on supply/demand.
- So, $VET generates a certain amount of value in Dollar/block.
In a normal situation, if the demand for a coin rises, the price will increase.
BUT, enterprises can't work with variable/ unpredictable transaction costs for their data storage. That's the reason the VeChain Foundation came up with the 2-token model.
To prevent fluctuations of TX costs; The higher the demand for VTHO, the higher the generation rate of VTHO by VET, causing an equilibrium.
The $VET token generates more value in Dollar. Which increases the demand for VET -> The VET value increases.
There are also other use-cases of VET and other ways to control the transaction costs but this is the main reason why there are 2 tokens.
$VET = Smart Money/Value
$VTHO = Cost of carrying on the payment transactions and smart contract transactions.