What is VeChain (VET)?
VeChain is a blockchain technology that was created with the primary goal of making supply chain management easier. It is all about handling important information connected to numerous business operations, such as information relating to stakeholders, various activities, and various items. Initially, it was designed to verify the authenticity of a product and prevent fraudulent activity. VeChain’s business strategy is founded on a recognition of trust as a key element and a common point of interest for both companies and customers. As a result, the VeChain business model is currently being employed by many large organizations, ranging from wine producers to automobile manufacturers.
Jay Zhang and Sunny Lu founded VeChain in 2015. It is headquartered in Shanghai and has offices in France, Hong Kong, Singapore, and other countries, allowing it to integrate projects worldwide. VeChain was created in 2015 as a platform for IoT and supply chain management. It used VEN coins until mid-2018 when it switched to its own blockchain to boost scalability. The platform is being used in a range of different industries.
The VeChain platform’s key components are its VeChain network (VeChainThor) and tokens. The VeChain network employs the Proof-of-Authority consensus mechanism to perform consensus among its entities. Furthermore, it provides two tokens: VeThor (VTHO) token and VeChain (VET) token.
How Does VeChain Work?
VeChain is a blockchain that uses Proof-of-Authority (PoA). The VeChain Foundation evaluates block producers and permits them to create blocks. You are not wrong if you believe this seems like a very centralized structure. Even though there are 101 separate block producers in the system, they are all chosen by a single organization: the VeChain Foundation. Because the Foundation will virtually have complete control of the blockchain, this raises many problems.
Increased blockchain centralization leads to improved performance. VeChain claims that its blockchain can process up to 10,000 transactions per second. This is an excellent transaction throughput compared to Bitcoin and Ethereum, which both have transaction throughputs of less than 50 transactions per second. Additional advantages of VeChain’s significant centralization include more stable blockchain governance and a decreased likelihood of splits. Disputes within the community are quickly resolved when one single body controls the blockchain’s development path. Furthermore, because the Foundation controls who produces blocks, there is almost little possibility of a hard break.
VeChain’s Top Features
VeChain offers a wide range of services to businesses all around the world. It was one of the first blockchain firms to find a middle ground between dependability and efficiency. VeChainThor has integrated numerous technologies, including KYC, to ensure smart contracts support it and give transparency.
Let’s have a look at some of its key features:
Proof-of-Authority (PoA)
VeChainThor employs a consensus mechanism known as Proof-of-Authority (PoA) to manage the process by which transactions between users are confirmed and published to VeChain’s public ledger.
Authority Masternode are users that verify and add transactions to the blockchain. To become one, individuals must stake a minimum of 25 million VET and provide identifying information to the VeChain Foundation. While adopting a PoA method helps to process large transaction volumes quickly, its downside is that it relies on a central authority and approves users who may participate in transaction processing.
The first phase of Proof-of-Authority 2.0 SURFACE was published on the VeChainThor mainnet in 2021. SURFACE is required to fulfill the expectations of future blockchain applications.
The Byzantine Fault Tolerance (BFT) and Nakamoto Consensus types are combined in PoA 2.0 to “remove weaknesses of each”, according to the VeChain team. BFT enables distributed networks to reach consensus and execute based on a majority vote. VeChain 2.0 has three important components:
- The first is a Verifiable Random Function (VRF), which distributes nodes to create blocks safely and randomly. VRF protects transaction processing from corruption.
- The second is a block-creation method that has been approved by a committee, which significantly limited the change of network forking. Forking may create network delays and limit network throughput.
- The third is the passive block finality confirmation process. It finalizes new blocks even when all network nodes are unsynchronized.
Two Token Design
VeChain’s software required the usage of two native tokens: VET, which is used to store and transfer assets, and VTHO, which is used for transactions on its blockchain.
This architecture aims to separate the price volatility of VET currency from the cost of network calculations, allowing VeChain apps to charge predictable fees (since the VTHOR supply can be adjusted to maintain a stable price for transactions). Miners get VTHO fees for calculations executed by the network, similar to how the Ethereum blockchain uses ETH and gas. The more sophisticated the computation, the more VTHO is required for a specific application.
Finally, nodes that stake VET currencies get to vote on network updates and are rewarded with VTHO every block.
What is Chainlink (LINK)?
Chainlink is the product of SmartContract, a blockchain technology business launched in 2014. Chainlink began with a white paper released in September 2017 by Steve Ellis, Ari Juels, and Sergey Nazarov.
The paper presented their concept for a decentralized Oracle network. Chainlink’s solution was created to address one of the primary issues with smart contracts operating on blockchains: supplying blockchains with trustworthy real-world data. The project first offered its services for smart contracts on Ethereum but has now expanded its availability to additional smart contract-capable blockchains.
On blockchains, smart contracts automate contracts and agreements. They are designed to assess information, and if certain circumstances are satisfied, they execute automatically. Smart contracts, however, are not without difficulties. Many require real-world data, such as financial data, to determine whether the conditions needed for execution have been satisfied. This is a concern because even if a smart contract is immutably written on a blockchain, input data from the outside world might be wrong or altered, resulting in undesirable outcomes.
Chainlink has set out to address this “oracle problem” by developing a decentralized oracle service that provides smart contracts with on-chain and off-chain data. An oracle is a software program that links blockchains and the rest of the world.
How Does Chainlink Work?
So, how does Chainlink address the issue of a centralized oracle?
Chainlink makes use of a network of decentralized nodes (oracles) that provide the Chainlink network with off-blockchain data and information. The network structure aims to remove reliability concerns and collect data that is as reliable and accurate as possible. A smart contract requests data from the Chainlink network to begin the procedure (Requesting Contract). In response, the Chainlink protocol develops a Service Level Agreement (SLA) comprised of three contracts.
Reputation Contract: A reputation score is assigned to each node. The reputation contract verifies the nodes’ validity and performance history by checking their track records. Any untrustworthy and unreliable node is filtered out and is not eligible for the data request.
Order Matching Contract: Is responsible for delivering data requests to Chainlink nodes. These nodes then submit their ‘bids’ for supplying the needed information. The contract then chooses the appropriate number of nodes from among the “bidders” who are trustworthy and competent in delivering the desired data. Users can also request that data.
Aggregating Contract: After the specified nodes have gathered the required data from external sources, the Chainlink software converts the data to an on-blockchain language. This is where the strong aggregating contract comes in. It now checks data from each individual source and compares data from various sources. It can sort out incorrect replies (if 7 out of 9 nodes supply the same but two different data) and produce a weighted score based on the total amount of data collected.
Through this process, Chainlink has created a way to provide reliable and accurate off-chain data to smart contracts efficiently.
Chainlink’s Top Features
Let’s have a look at two of Chainlink’s features:
Proof-of-Stake (PoS)
To protect the Oracle network, Chainlink employs an Ethereum-based ERC-20 token. On the other hand, Chainlink is a step ahead of Ethereum since it already has a Proof-of-Stake (PoS) consensus mechanism in place.
The number of LINK tokens staked on the network decides which nodes will approve transactions. With the Ethereum 2.0 version, Ethereum intends to transition to PoS. Part of this motivation is that Proof-of-Stake (PoS) requires less energy than Proof-of-Work (PoW) and can be scaled up more quickly to increase the number of transactions the network can process.
Chainlink Nodes
Anyone with all of the necessary equipment can run a Chainlink node. There are two types of nodes in Chainlink:
- Core: Core nodes are responsible for reading service-level agreements (SLAs) and broadcasting all new assignments and pairings to the Chainlink adapter.
- Adapter: these nodes serve as a link between the node and the outside data. The adapter can read and write new data to smart contracts on the blockchain.
VeChain vs. Chainlink
How is VeChain Different From Chainlink?
Usage
VeChain ensures the flow of authentic, efficient, and reliable data inside its blockchain and the market. Companies can now produce and measure actual value firsthand using this technology and adjust their services and products to provide more value.
Chainlink accepts data, stores it, and can transfer it bidirectionally. It attempts to use the Oracle decentralized network to connect off-chain data into smart contracts.
Tokenomics
VET is VeChain’s main currency, with the VeChainThor Authority serving as its hash authority. It is currently trading at $0.047. Its market capitalization is $3,057,270,435 and its daily trading volume is $221,329,053. The maximum supply of VETs available is 86,712,634,466.
LINK is Chainlink’s main currency, and its hash algorithm are Ethereum tokens. It is currently trading at $11.76. Its market capitalization is $5,497,300,046 and its daily trading volume is $367,242,135. The maximum supply of LINKs available is 1,000,000,000.
Potential
VeChain is on a bearish trend currently. If we compare it to a year ago, when it hit an all-time high of $0.28, it had a price decline of 82.89%. Thus, its current price is $0.0479. However, after some research and market analysis, we can see that VeChain has the potential to grow bullish in the future. As such, it is a great investment for long-term bias.
Chainlink hit its all-time high in May 2021 at about $52. After hitting the highest price ever, LINK has been on a downward trend. It is currently trading at $11.76. Even though it had a decline in the price of 77.76%, LINK has a lot of potential for the future. We advise investors to buy Chainlink and wait until the price breaks the all-time high for a long-term investment.
Performance
VeChain has earned negative risk-adjusted returns over the last 90 days, offering no value to investors with long-term investments. VeChain is not fully exploiting its potential despite some good technical and fundamental signs. The present stock price volatility may add to short-term losses for investors.
Chainlink has earned negative risk-adjusted returns over the last 90 days, offering no value to long-term investors. Despite the recent poor performance, Crypto’s fundamental indicators remain reasonably good, suggesting that shares may rise somewhat in May 2022. The present disturbance may also signify a long-term upswing for Chainlink investors.
Conclusion: Is VeChain Better than Chainlink?
VeChain is better because it offers users real-time information flow, effective collaboration, and rapid value exchange. VeChain is expected to deliver a 1.21X more significant return on investment than Chainlink over a 90-day investing window. It is 1.21X more unpredictable than Chainlink. VeChain has a relatively considerable supply, significantly pulling its price down. VeChain’s systematic risk describes the form of risk that we can mitigate by selecting a matched pair that is not exactly connected to VeChain.
Chainlink is better because it’s architectured with on-chain and off-chain components that are interconnected and upgradable, allowing you to adapt to technological advancement dynamically. Data sources are acquired and processed across various nodes under decentralization. An oracle chain connects a blockchain to external data streams or APIs like weather forecasts or financial market statistics. Chainlink intends to lower transaction fees and make it easier to connect blockchains to payment mechanisms such as Swift and Paypal. Chainlink’s strong market position allows it to offset any losses in the long run. This project is unlikely to face competition, given it is a good investment opportunity.
Despite its solid start to the year, crypto experts predict that both Chainlink and VeChain will climb in price soon. Their companies have done successfully despite being at the forefront of numerous fascinating advancements by deploying their systems in more markets. They get more acceptability. Thus, the greater the acceptance levels of their systems are, the more growth prospects they have in their respective markets. This allows you to identify which currency is worth investing in and which will burst. Overall, Chainlink is preferred for investors, whereas VeChain is preferred for traders.
Takeaways
- VeChain is a blockchain technology that was created with the primary goal of making supply chain management easier.
- VeChain is a blockchain that uses Proof-of-Authority (PoA).
- Smart Contracts in the Chainlink platform consist of three contracts: Reputation Contract, Order Matching Contract, and Aggregating Contract.
- Chainlink uses the Proof-of-Stake consensus mechanism.
- VeChain is better for traders and Chainlink is better for investors.
