VeThor (VTHO): Gas Token for the VeChain Ecosystem

VeChain, which began as a supply chain blockchain platform, has grown into a Layer 1 (L1) blockchain with a wide range of applications. It stands apart from most blockchains by employing a dual token model, rather than relying on a single native token. In this article, we look at the VeChain Thor Energy (VTHO) token, mainly used for gas in the VeChain ecosystem.

Key Takeaways:

• VeChain’s dual-token system, with VET for value transfer and VTHO for gas, maintains a predictable transaction cost for users.

• Holding VET generates VTHO as a reward. Seventy percent of VTHO used for gas is burned, and the other 30% is rewarded to authority master nodes.

• Upcoming changes to VTHO tokenomics will reward active network participants and link token generation to staked VET, enhancing ecosystem sustainability.

What Is VeThor?

The VeChain token (VET) is used to transfer value across networks. Meanwhile, VeChain Thor Energy (VTHO) is used for gas to execute transactions on the network. On other L1 networks like Ethereum or Solana, the native token is used for both gas and transfer of value. However, VeChain decided to split these functionalities into two different tokens. 

Dual Token Model

VeChain believes this dual-token model allows its network to provide predictable transaction costs over the long term. Because VTHO only works for gas, and not as a value transfer token, its price is less volatile as compared to the VET token. This is crucial for the VeChain network, since it wants to attract large businesses that require stable and predictable operational expenses. Additionally, VTHO is also used to incentivize VET holders, as holding VET generates a steady supply of VTHO rewards over time.

How Does VTHO Work?

VTHO acts as VeChain’s gas token. In other words, it’s used for the cost of carrying out payment and smart contract transactions on the VeChainThor blockchain. The token is awarded to those holding VET at a constant rate of 5.10^-9 per second. For example, if a wallet holds 10,000 VET, it’s likely to generate 4.32 VTHO every 24 hours. 

As a gas token, VTHO doesn’t have a maximum supply. Its generation depends entirely upon the number of VET tokens currently held by other wallets. 

When users want to transact on the VeChainThor network, they need to pay the required gas in VTHO. The cost of a transaction is determined by the amount of gas required for the transaction, multiplied by the gas price in VTHO, which is a constant value equal to 1.10^-5. For example, if an individual were to carry out a transaction that costs 21,000 in gas, they would need to pay 21,000 × 10^-5, which is 0.21 VTHO.

Since the supply of VTHO is unlimited, its tokenomics includes a burn mechanism to keep its supply-and-demand dynamics in balance. Seventy percent of the VTHO that’s used to pay for gas is destroyed by the network. The remaining 30% is used to reward authority master nodes who execute the transactions. Through this mechanism, VeChain is able to regulate the circulating supply of VTHO and maintain a stable VTHO value for predictable transaction costs.

VeChain can also adjust burn parameters, based on network adoption. The burn rate can be lowered or raised, depending upon the number of transactions taking place on the network. This gives VeChain the ability to stabilize VTHO’s price during either peak or slow demand.

VTHO Market Performance

The VTHO token was launched on Jun 30, 2018, along with the VeChain mainnet. VTHO was airdropped to all holders of VET, both on-chain and on centralized exchanges (CEXs). Following the launch, the token’s price largely remained stable at between $0.0003 to $0.0006 for over two years. It witnessed a sharp increase during the 2021 bull market, going as high as $0.023, but lost more than 90% of its value in the ensuing bear market.

On Jan 21, 2025, the VTHO token witnessed a sharp increase in price following its listing on the Korean exchange Upbit. Its price surged over 300% and is trading at $0.005 as of Jan 27, 2025. 

Source: CoinGecko

VTHO has a total supply of almost 86 billion tokens, and its current market cap hovers around $337 million. The most recent 24-hour trading volume for the token is around $15 million.

Future Developments and New VTHO Tokenomics

In December 2024, the VeChain team announced a new tokenomics model that’s aimed at improving VTHO and the VeChain ecosystem. As we discussed above, in the current model VTHO is generated uniformly across wallets holding VET tokens, including exchange wallets. But with the proposed new model, VTHO will no longer be generated at the VET token level. Instead, it will be generated by groups actively supporting the network, such as:

• Validators, who are responsible for block production and securing the network

• X-Nodes and Economic Nodes, the backbone of governance and economic stability for the network

• Builders, in order to support app development, user growth and fee delegation 

VTHO issuance will also become dynamic, and will be linked with the quantity of VET staked at the given time. These changes are likely to be implemented in Q3 2025, and are part of a larger vision to revamp the entire VeChain network. The exact road map includes two main phases, named Galactica and Hayabusa. 

Galactica is scheduled for Q1–Q2 2025. It will bring a dynamic gas fee model and Shanghai EVM upgrade. Hayabusa is scheduled for Q3–Q4 2025, and is set to bring new VTHO tokenomics to the ecosystem. 

Trade VTHO on Bybit Now

VTHO has served its primary purpose of providing a predictable operational cost on the VeChainThor blockchain. With additional features and new tokenomics set to launch in 2025, the VTHO token is set for an eventful year ahead that will change the way the token is generated and distributed. 

You can now trade the VTHOUSDT Perpetual contract with up to 25x leverage on Bybit.

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