What is the issuance volume and circulation volume of VET coins

VeChain's tight control over VET coin issuance and circulation through pre-mine, ICO, reserves, and smart contracts aims to ensure scarcity, support long-term value, and promote ecosystem growth.

Nov 17, 2024 at 10:54 pm

The Issuance Volume and Circulation Volume of VET Coins

Understanding VET Coin Issuance and Circulation

VeChainThor (VET) is a blockchain platform designed to enhance supply chain management and business processes. At its core is the VET coin, which serves as a medium of exchange and value transfer within the VeChain ecosystem.

The issuance volume refers to the total number of VET coins created, while the circulation volume represents the portion of those coins that are currently available in the market. These two metrics provide insights into the supply dynamics of VET and its potential market capitalization.

Issuance Volume of VET Coins

The total issuance volume of VET coins is capped at 86,712,254,890. This fixed supply ensures scarcity and helps maintain the value of the coin over the long term.

The issuance process of VET coins involved two notable events:

• Pre-mine (2017): Approximately 25 billion VET coins (28.8%) were pre-mined and distributed among VeChain's founders and early investors.
• ICO (2018): The remaining 53 billion VET coins (61.2%) were sold to the public through an initial coin offering (ICO). The ICO raised over $160 million, providing funds for the VeChain project's development.

Circulation Volume of VET Coins

The circulation volume of VET coins fluctuates over time, influenced by factors such as market demand, trading activity, and token burns. It is estimated that around 64 billion VET coins are currently in circulation, accounting for approximately 73.8% of the total issuance volume.

The remaining 22.7 billion VET coins (26.2%) are held in reserve or locked in smart contracts for various purposes:

• VeChain Foundation Reserve: VET coins are allocated to the VeChain Foundation for ongoing research and development, ecosystem growth, and strategic initiatives.
• VeChain Ecosystem Reserve: VET coins are reserved for partnerships, projects, and other ecosystem initiatives to foster collaboration and adoption.
• Smart Contracts: VET coins can be temporarily locked in smart contracts for specific use cases, such as decentralized applications (dApps) or staking mechanisms.

Implications of Issuance and Circulation Dynamics

The constrained issuance volume and the significant portion of VET coins held in reserve and locked in smart contracts indicate that VeChain is actively managing the supply dynamics to support long-term value appreciation.

• Scarcity and Value: The fixed issuance volume limits the supply of VET coins, contributing to its potential for value preservation and appreciation as demand increases.
• Ecosystem Growth: The reserves of VET coins allow VeChain to invest in its ecosystem's growth, fostering innovation, partnerships, and business adoption.
• Controlled Circulation: By managing the circulation volume through smart contracts and reserves, VeChain can mitigate sudden swings in supply, promoting market stability and preventing excessive volatility.
• Token Burn Mechanism: VeChain also employs a token burn mechanism that reduces the circulating supply over time, further enhancing the scarcity of VET coins and supporting price appreciation.

Conclusion

The issuance and circulation dynamics of VET coins play a crucial role in understanding the tokenomics and potential value of VeChain's ecosystem. With a fixed issuance volume, a substantial portion of coins held in reserve, and a managed circulation volume, VeChain aims to foster long-term value and support the sustainable growth of its blockchain platform.