Education 7 min read

Understanding VTHO: VeThor Token Explained

VeThor Token (VTHO) is an important part of the VeChainThor blockchain ecosystem, supporting its operations and functionality. The blockchain is designed to improve supply chain management and other business processes and uses a dual-token system, with VTHO playing a key operational role.

In this article, we’ll break down what VTHO is, how it works within the VeChain ecosystem, and its relevance for users and investors.

Key takeaways

  • VeThor Token (VTHO) is the ‘gas’ for transactions and smart contracts on the VeChainThor blockchain.
  • VTHO is generated automatically by holding VeChain Tokens (VET) and is consumed during blockchain operations.
  • Its price is influenced by network usage, supply-demand, market sentiment, and overall cryptocurrency trends.
  • VTHO ensures stable transaction costs and supports the smooth functioning of the VeChainThor network.

What does VTHO stand for?

VTHO stands for VeThor token and is a key part of the VeChainThor blockchain. It acts as the ‘gas’ needed to process transactions and run smart contracts on the network. VTHO is created by holding VeChain Tokens (VET). Each VET generates a small amount of VTHO over time, encouraging users to hold VET and support the network.

How is VTHO used in the VeChain network?

In the VeChainThor blockchain, VTHO is used to pay for transactions and run smart contracts. Whenever users transfer tokens or interact with smart contracts, they pay a fee in VTHO. The amount of VTHO needed depends on the size and complexity of the transaction. This system helps keep the network running smoothly and reduces spam activity.

VTHO is automatically generated by holding VET. For every VET token held, a small amount of VTHO is created daily, which supports network activity. When VTHO is used in a transaction, 70% of it is burnt, meaning it is permanently removed from circulation. The remaining 30% is given to Authority Masternodes as a reward for validating transactions.

This dual-token setup separates transaction costs from the market value of VET. It helps keep transaction fees steady, even when VET’s price changes.

What is the purpose of VTHO?

VTHO is used as the ‘fuel’ for the VeChainThor blockchain. Its main purpose is to pay for transactions and process smart contracts on the network.

Key uses of VTHO:

  1. Transaction fees:
    VTHO is needed to pay transaction fees on the VeChainThor blockchain. Each transaction consumes a certain amount of VTHO, which is then burnt or permanently removed from circulation.
  2. Smart contract execution:
    VTHO is also used to execute smart contracts. This makes sure that the blockchain can handle complex operations without slowing down or overloading.
  3. Stable network costs:
    The VeChainThor blockchain separates the cost of transactions (paid in VTHO) from the market value of VET. This approach keeps transaction costs predictable and stable, making the system more reliable for businesses and developers.

How do you earn VTHO?

You can earn VTHO mainly by holding VET. Here’s how you can accumulate VTHO:

  1. Hold VET
    Holding VET tokens in a compatible wallet generates VTHO automatically. For every VET token you hold, you earn approximately 0.000432 VTHO daily. For instance, if you hold 10,000 VET, you earn about 4.32 VTHO each day. This process rewards long-term holders of VET.
  2. Use compatible wallets
    To receive VTHO rewards, store your VET in wallets that support VTHO generation. The VeChainThor Wallet and Sync Wallet are popular choices. Some third-party wallets, like Exodus, also allow VTHO generation. Keep in mind that not all exchanges distribute VTHO, so confirm with your platform if they support this feature.
  3. Earn through exchanges
    Some exchanges, like Binance.US, distribute VTHO to VET holders. On platforms like Binance.US, you can earn VTHO without locking your VET, giving you flexibility while earning rewards. Check with your exchange to see if they offer VTHO distributions.
  4. Run a node
    If you hold a large amount of VET, you can run a node to earn additional VTHO. VeChain offers different types of nodes, such as Economic Nodes and Authority Nodes. Running a node increases VTHO rewards and contributes to the network’s security and governance.
  5. Join staking programs
    Some platforms let you stake your VET to earn higher VTHO rewards. Review the terms of these programs, including any lock-up periods, before staking.

What distinguishes VTHO from VET?

VeChain’s dual-token system includes VET and VTHO, each with a different role on the VeChainThor blockchain. Here’s how they differ:

VeChain Token (VET)

  • Main role: VET is used as the primary currency on the VeChain network. It transfers value and serves as a medium of exchange.
  • Market value: VET’s price depends on market demand and speculation, like other cryptocurrencies.
  • Governance rights: Holding VET gives voting rights on the network, letting users participate in decision-making.

VeThor Token (VTHO)

  • Main role: VTHO is the ‘gas’ of the VeChainThor blockchain. It pays for transactions and runs smart contracts.
  • Generation: VTHO is automatically created by holding VET. The more VET you own, the more VTHO you earn over time.
  • Usage: VTHO is burned when used in transactions, reducing its supply. A small portion of the burned VTHO is rewarded to Authority Nodes for validating the network.

Key differences

  1. Purpose: VET is for holding value and transferring it, while VTHO is used for operating the network.
  2. Market behavior: VET’s price changes with demand and investor interest, while VTHO’s value depends on how much the network is used.
  3. Supply: VET has a fixed supply, making it scarce. VTHO is continuously generated and burned, balancing its supply with network activity.

Is VTHO a token or a coin?

‘Coins’ and ‘tokens’ have different meanings. A coin works on its own blockchain, like Bitcoin on the Bitcoin blockchain or Ether on the Ethereum blockchain. A token operates on an existing blockchain, using its technology and network.

VTHO is a token, not a coin. It works on the VeChainThor blockchain and follows the VIP-180 token standard used in the VeChain ecosystem. When someone performs an action on the VeChainThor blockchain, VTHO pays for the computational cost.

Can I buy VTHO on exchanges?

Yes, you can buy VTHO on several cryptocurrency exchanges. Some popular platforms where VTHO is available include Binance, Coinbase Exchange, Gate.io, Bitget. These exchanges offer trading pairs like VTHO/USDT, VTHO/USD, VTHO/BTC, making it easy to trade using other cryptocurrencies or stablecoins.

Binance is one of the largest platforms where VTHO is actively traded. It provides a user-friendly interface and high liquidity for trading VTHO. Coinbase Exchange also supports VTHO, making it a good option for users who prefer its security and simplicity.

Before purchasing VTHO, check the supported trading pairs on your preferred exchange. You’ll typically need to deposit a compatible cryptocurrency like USDT or BTC to trade for VTHO. Review the platform’s fees and trading rules before proceeding.

If you don’t already have an account, sign up on one of these exchanges, complete the identity verification process if required, and fund your account to start trading VTHO.

What factors affect the price of VTHO?

  1. Network usage and demand
    VTHO is used as ‘gas’ on the VeChainThor blockchain for transactions and smart contracts. When the network sees more activity, the demand for VTHO increases, which can raise its price. Lower network usage often reduces demand and lowers the price.
  2. Token supply and consumption
    VTHO is generated by holding VET and is burnt during transactions. This creates a balance between supply and demand. If VET holdings increase or network activity decreases, this balance may change and affect VTHO’s price.
  3. Market speculation and sentiment
    The price of VTHO is also influenced by investor sentiment and speculation. Positive developments in the VeChain ecosystem, like partnerships or new projects, can boost confidence and demand. On the other hand, negative news or a general downturn in the crypto market can lead to price drops.
  4. Exchange listings and trading volume
    Where VTHO is listed and its trading volume impact its price. Exchanges like Binance, Coinbase, and KuCoin offer VTHO, increasing accessibility and liquidity. When a new exchange lists VTHO, the added exposure can lead to price increases.
  5. General cryptocurrency market trends
    The overall crypto market affects VTHO’s price. During bull markets, VTHO’s price often rises as investor interest grows. Bear markets can have the opposite effect.

How does VTHO facilitate transactions?

  1. Paying transaction fees
    Transactions and smart contracts on VeChainThor require VTHO as a fee. Simple transactions use less VTHO, while complex operations consume more. This fee system helps prevent spam and keeps the network running efficiently.
  2. How VTHO is created and used
    VTHO is generated by holding VET. For every VET held, a small amount of VTHO is produced daily. When a transaction occurs, the required VTHO is consumed.
  3. Keeping transaction costs stable
    The VeChain network uses a dual-token model with VET and VTHO to maintain stable transaction costs. Even if VET’s price changes, the cost of transactions in VTHO remains consistent.

Where can I find more information about VTHO?

To find reliable information about VTHO, you can use the following sources:

  1. VeChain official documentation
    The VeChain Documentation explains VTHO’s role in the VeChainThor blockchain. It covers how VTHO is generated, used, and consumed for transactions.
  2. VeChain Foundation’s Medium blog
    The VeChain Foundation Medium blog shares updates and articles about VTHO and other aspects of the VeChain ecosystem. It’s a useful resource for detailed insights.
  3. VeChain Community forums
    You can join discussions on Reddit’s VeChain Community to learn from other VTHO enthusiasts. Community forums are great for asking questions and staying updated.
  1. 01.

    What is the use of VTHO?

    VTHO is used as the ‘gas’ for transactions on the VeChainThor blockchain. VTHO ensures that the network functions smoothly by processing and validating transactions while preventing spam.

  2. 02.

    Can VeThor reach $1?

    The possibility of VTHO reaching $1 depends on several factors, including increased adoption of the VeChainThor blockchain, higher demand for transactions, and broader use cases for VTHO. However, the large supply and the token’s specific role as gas make such price movements uncertain.

  3. 03.

    Is VeThor a good investment?

    Whether VeThor is a good investment depends on individual goals and market conditions. As VTHO is primarily a utility token for covering transaction fees, its value is tied to the activity and adoption of the VeChainThor blockchain.

Vignesh Karunanidhi @ CryptoManiaks
Vignesh Karunanidhi

Vignesh is an experienced crypto journalist with more than six years in the digital asset and Web3 industry. In his career, he has collaborated with platforms like Watcher.Guru, Milk Road, BeInCrypto, Captain Altcoin, and Coin Edition.

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