Inside the VeChain Ecosystem Flywheel: Utility, Gas, and Reward Token

The VeChain ecosystem operates through a three-token flywheel that integrates utility, gas, and reward mechanisms to support network security, transaction processing, and user incentives. 

This system includes VET as the foundational token for staking and governance, VTHO as the gas token for powering operations, and B3TR as the reward token for promoting sustainable actions. Together, these tokens create a circular economy where network participation drives value creation and scarcity.

Evolution of the VeChain Token Model

The protocol has progressed through distinct phases to refine its token interactions. In its initial stage, automatic VTHO generation for all VET holders ensured sufficient liquidity for transactions, supporting early growth. This approach mirrored a broad distribution of resources to build momentum.

As the network matures, the shift to staking-based VTHO generation via StarGate represents a more targeted strategy. Legacy node holders are migrating to this new system, with over 13,000 nodes minted and more than 6 billion VET staked. This migration prepares the ecosystem for the Hayabusa phase, where stakers receive boosted rewards.

The combination of staking incentives, fee burning, and reward distribution creates a self-reinforcing cycle. Increased network activity leads to more VTHO burns, which in turn supports VET's value through reduced inflation and enhanced security. B3TR extends this by tying rewards to external behaviors, broadening the ecosystem's reach.

The Role of VET in Network Security and Governance

VET serves as the core token in the VeChain ecosystem, providing the structure for network security and user participation. Holders can stake VET through the StarGate platform, which contributes to the blockchain's consensus mechanism and overall stability. In return, stakers receive VTHO rewards based on their staked amounts.

The circulating supply of VET is 85.98 billion tokens, with a total supply of 86.71 billion. This fixed supply model ensures predictability in the token's economics. Staking VET also grants users voting rights in VeChain's governance system, allowing them to influence protocol updates and decisions.

In the ecosystem's design, VET acts as the anchor that ties together other tokens. When users stake, they not only secure the network but also generate VTHO, which is essential for transaction fees. This interconnection forms the basis of the flywheel, where holding and staking VET support the broader operational flow.

VTHO as the Gas Token for Transactions

VTHO serves as the gas token on the VeChainThor blockchain, covering transaction and smart contract execution costs. Each operation on the network consumes a specific amount of VTHO, ensuring efficient resource allocation. This mechanism prevents spam and maintains performance across decentralized applications.

With the implementation of the Hayabusa upgrade, part of VeChain's Renaissance series, all transaction fees paid in VTHO will be burned entirely. As network usage increases, this burning process reduces the overall supply of VTHO, linking its value directly to adoption levels.

“With the Hayabusa upgrade, 100% of all transaction fees will be burned, which means each time the network is used, a small amount of $VTHO is permanently removed from circulation. This process reduces supply over time and ties the token value directly to network activity. The more the ecosystem is used, the more $VTHO becomes scarce, creating a natural balance between activity and value,” VeChain X post read. 

Historically, VTHO was generated automatically for all VET holders to bootstrap network activity. However, the ecosystem is transitioning to a model where VTHO generation is limited to staked VET via StarGate. This change aims to reduce VTHO inflation, focus rewards on active participants, and enhance economic efficiency.

B3TR and Incentives for Sustainable Behaviors

B3TR operates as the reward token within the VeBetter ecosystem, a subsystem of VeChain focused on encouraging positive real-world actions. Users earn B3TR by completing sustainability-related tasks, such as using reusable items or adopting eco-friendly practices. These actions are verified and recorded on the blockchain.

Earning B3TR requires consuming VTHO for the underlying transactions, which integrates it into the flywheel. As VTHO is burned during these processes, it reinforces the scarcity mechanism. The VeBetter platform has attracted over 5 million users who have completed actions leading to measurable environmental and social impacts.

Access to B3TR rewards is available through the VeWorld wallet, which serves as an entry point for users to engage with sustainable applications. This setup connects blockchain activity to tangible outcomes: recording an action triggers a reward payout after VTHO handles on-chain operations.

Integration and Practical Applications

In practice, the flywheel operates as follows: 

• A user stakes VET on StarGate to earn VTHO. 
• They then use VTHO to pay for transactions, such as recording a sustainable action in VeBetter. 
• VeBetter burns the VTHO and grants B3TR rewards. 

This sequence ensures that each step contributes to network health. Meanwhile, the StarGate platform facilitates this by allowing users to claim nodes, which represent staked positions. With the upcoming Hayabusa upgrade, these nodes will play a central role in governance and reward distribution. Users who have not yet migrated are encouraged to do so to access the enhanced benefits.

Beyond individual users, organizations can participate in VeBetter by tracking corporate sustainability efforts. Actions like photographing a reusable mug or charging an electric vehicle demonstrate how the system quantifies and rewards everyday behaviors. The VeWorld wallet simplifies entry, enabling direct B3TR earnings without complex setups.

Overall, the VeChain ecosystem flywheel demonstrates a structured approach to blockchain tokenomics, where VET provides stability, VTHO enables operations with built-in scarcity, and B3TR incentivizes external engagement. This model supports ongoing network activity and user involvement without relying on speculative elements. It underscores the importance of integrated token roles in maintaining a functional decentralized system.

Sources:

• Vechain Ecosystem Token Flywheel: https://x.com/vechainofficial/status/1982794758050246773 
• VeChain Website: https://www.vechain.org/