VeChain Renaissance Upgrade

• VeChain has explained the Renaissance upgrade that maintains VET as a core utility token of VeChainThor.
• This upgrade will significantly reduce VTHO inflation by 72.2% starting with an annual inflation of 0.6%.

In a recent update, we examined the much-anticipated VeChain’s (VET) upgrade called VeChain Renaissance. This upgrade aims to ensure stakeholders stay aligned with regulatory and technical trends. Two months after the initial announcement, VeChain revealed that this upgrade would subtly alter the functionalities of VTHO and VET.

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> — VeChain (@vechainofficial) February 17, 2025

Overview of VTHO and VET in VeChain Renaissance

The upcoming upgrade will introduce a new reward model through staking NFTs, where the generation of VTHO is directly correlated with staked VET. This will apply greater deflationary pressure while reducing overall inflation. Both VTHO and VET are expected to benefit from the VeChain Renaissance.

It’s crucial to highlight that VTHO will now exclusively be earned as a staking reward in the VeChain Renaissance, which means it will no longer be generated at a rate of 0.000432 per VET daily. This ensures that VTHO is distributed based on active network participation.

VTHO will be generated according to an issuance curve linked to the total number of VET staked across all Delegator and Validator Nodes, which will help reduce VTHO inflation by 72.2%. The starting point for annual value inflation will be set at 0.6%, and when total staked VET reaches 60 billion, the annual value will be 2.9%.

Enhancements in the Upgrade

One major addition in the VeChain Renaissance will be a burning mechanism that eliminates 100% of VTHO transaction base fees from circulation, which is expected to reduce inflation further.

Additionally, a ‘gas fee market’ will be implemented, transitioning from a flat transaction rate to a dynamic one. There will also be a priority fee reward introduced, allowing users to prioritize their transactions with block producers.

On VET, VeChain confirmed that it will retain its role as a core utility token for VeChainThor but will now allow tokens staked as Economic/X Nodes to be used as collateral for Delegator Staking NFTs. These NFTs can, in turn, be delegated to Validator Nodes.

Overall, the VeChain Renaissance is projected to represent an upgrade in both “ethos” and “strategy.” This upgrade will also transform governance functions within VeChainThor, including the removal of Know-Your-Customer (KYC) requirements from the validator selection process.

> The primary objective of VeChain Renaissance: to enhance the economic security and adoption of the VeChainThor ecosystem through an upgraded rewards model and advanced technology, facilitating improved compatibility and onboarding via EVM upgrades and JSON RPC.

VeChain CEO Sunny Lu has expressed that this year, three key initiatives—VeBetterDAO, VeChain Renaissance, and VeWorld—will strengthen the ecosystem, as previously noted in our report.