- VeChain Renaissance introduces major reforms tying VTHO issuance to active network usage, cut inflation by 72.2%, and add deflationary pressure by burning 100% of transaction base fees.
- Validators now replace Authority Masternodes as block producers, requiring stakes between 25M and 600M VET, while Delegators stake VET for Staking NFTs to earn rewards.
VeChain launched VeChain Renaissance, a key upgrade of tokenomics that rearranges staking rewards, tamps down inflation, and raises decentralization. The update introduces Staking NFTs, the new Validator/Delegator staking system, and the revamped reward disbursement model meant to augment economic security.
VeChain Reveals Tokenomics Reformation & Staking Rewards
VeChain Renaissance makes significant reforms to VET and VTHO, as noted in our previous article. VET is still the utility token at its core but will now act as collateral for Delegator Staking NFTs, which can be delegated to Validators in return for staking rewards.
The adjustments affect VTHO issuance the most. “VTHO is exclusively earned as a staking reward by Validators and Delegators and is no longer generated at the rate of 0.000432 per VET per day,” VeChain explained. This removes passive VTHO generation, ensuring issuance is associated with active network usage instead of dormant wallets, as reported earlier.
VTHO inflation is also being reduced. “At launch, VTHO inflation will be cut 72.2%,” the team revealed in an article on X. The new model ties VTHO issuance to the overall VET staked, with annual value inflation of 0.6% to 2.9%, depending on total stake levels. Moreover, 100% of VTHO transaction base fees will be burned, adding deflationary pressure.
Amid this announcement, the VET price struggled with significant losses. As of writing, the VET token price plunged 5.32% to $0.03204 on Tuesday, February 18. Nonetheless, there’s a chance of a rebound as the latest rewards program gains traction with the token’s utility growing.
Validator & Delegator Staking Model
Moreover, Validators take over from Authority Masternodes in the new paradigm as block producers for VeChainThor. In the initial phase, 101 Validators will confirm the network and must stake in the range of 25M to 600M VET. “Validators run the physical servers and hardware needed to maintain and secure the VeChainThor blockchain,” said VeChain. Validators will get 30% of block reward.
In the meantime, Delegators are holders of Economic and X Node and stake their VET for Delegator Staking NFTs, which they can then delegate to a Validator to receive a portion of 70% of block rewards. Staking rewards are tiered, with the earliest participants receiving the greatest benefits. “Staking NFTs have a cap… so prepare your stake ahead of time and be ready for the launch event!” VeChain explained.
VeChain is also launching a Dynamic Gas Fee Market, changing transaction fees from a fixed fee to a dynamic model depending on network usage. This will help enhance fee efficiency while boosting VTHO usage.
A new Priority Fee mechanism will enable users to include tips for quicker transaction processing. “100% of tips will be paid to Staking Nodes as block reward bonuses,” VeChain confirmed.
Furthermore, VeChain Renaissance also changes governance by eliminating KYC for Validators, enabling more users to help secure the network. The new staking mechanism will roll out in June 2025, with the team inviting users to get ready in advance. VeChain has planned an AMA with CEO Sunny Lu on February 19, inviting the community to question and discuss the new changes.
