- The much anticipated VeChain Renaissance has been said to significantly reduce VTHO inflation by 72.2% while transforming the existing network operation from passive investment to active network guardianship.
- Based on the reward model, validators are reported to earn 30% of the block reward, while delegators split 70% based on their stake size.
The official rollout of VeChain Renaissance was recently announced with the start of a stakeholders’ voting of one of the three major phases called the Galactica upgrade.
As we reported last month, this was supposed to be the foundational upgrade to the protocol with the introduction of the Dynamic Gas Fee Market for transactions. Fascinatingly, an analyst identified as CryptoBusy has, in a latest post, provided fresh insight on the significant changes and integration expected from this groundbreaking upgrade.
Firstly, CryptoBusy believes that the VeChain Renaissance is the most powerful upgrade in the history of VeChain. According to him, this upgrade would convert passive investment to active network guardianship. Additionally, it would significantly reduce the VTHO inflation by 72.2%, as detailed in our last news piece.
Further explaining his point, CryptoBusy disclosed that the upgrade would ensure that staking becomes mandatory for earning rewards while 100% of transaction fees are burnt.
Interestingly, the native token of the project, VET, becomes the main “gateway” for governance, staking, and earnings. Meanwhile, these are achieved through two main paths – becoming a delegator and becoming a validator. With the former, users who stake the token get NFTs in return.
According to the analyst, these NFTs represent the stake that can be assigned to any validator, contributions to the network, reward share, and above all, can be moved every 14 days.
The Reward Structure of the VeChain Renaissance
Delving into the reward structure, CryptoBusy highlighted that the validators stand a chance of earning 30% of block rewards. Meanwhile, delegators would share the remaining 70% depending on their stake size.
Amidst the backdrop of this, a clear hierarchy of rewards will be created by the Node Tier. According to the post, Economic Nodes Delegators would have standard 1.0x rewards. Also, X Node Delegators would have a 1.5x reward multiplier in addition to enhanced governance, while validators get the highest returns coupled with 2.0x governance weight.
Per his observation, the diminishing inflation model presents an opportunity for the early stakers to access the highest Annual Percentage Yield (APY). As indicated in our earlier discussion, 12.8% APY exists as the initial projection and would be accessed once 10 billion VET is staked. His reason is based on the fact that the reward automatically decreases as more VETs enter the system.
CryptoBusy also lauded the implementation of the Early Bird Program, which would see a 3 billion VTHO incentive pool ($10 million at launch) with special bonuses. For now, he suggests that the VeChain community stay passive and become network guardians.
Two paths forward for all VET holders: Stay passive = No more VTHO rewards under the new model. Become a network Guardian = Secure VeChainThor + earn substantial rewards. Your stake = your influence, your validator choice = your alliance.
While this is happening, VET is struggling to hold above a crucial support level as it declined by 15% in the last seven days to trade at $0.023.
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