VeChain Technical AMA — Business Questions Part 1
VeChainOfficial last edited by VeChainOfficial
Originally published on March 14th, 2018.
Thank you for submitting your questions! VeChain Chief Technology Officer, Gu Jianliang, has taken the time to answer your questions throughout Chinese New Year and is excited to see the curiosity and dedication shown by the community.
Given the abundance of questions and length of Gu’s answers, we will be breaking this AMA into multiple parts. The order the AMA will be released is as follows:
- Hardware related questions (Part 1 | Part 2)
- Software related questions (Part 1 | Part 2)
- Business related questions (Part 1 | Part 2)
- Addressing the concerns of the community on perceived competitors and so-called competing projects.
Below are the links for the Software section and the Hardware section.
Q1: 33 million VETs were purchased by strategic partners during Nov 2017 and Jan 2018. Do enterprises need to buy VETs on the open market?
A1: When we launched our token ICO back in August, we allocated 23% of the total supply to enterprise investors who are, at minimum, committed to using the VET purchased as a key elements in their business activities and network. We plan to gradually sell out this pool as we identify strategic partners. To qualify as a strategic partner we look for a lot more than just capital.
As stated in the financial report, the 33 million VET were deducted from the foundation controlled wallets during the period of Q4 of 2017, but it is not a reflection when they were actually sold. Most of the 33 million VET were sold to strategic partners from August 2017 through Oct. of 2017, i.e during ICO and shortly after, they were merely held by the foundation because some of the enterprise VET buyers did not setup necessary procedures to receive these tokens.
We assessed and selected these partners very carefully based on their contribution to the long term success of VeChainThor and analyzed the ways they plan to utilize the platform in the future. In addition, there is a lockup requirement in the purchasing agreement that every strategic partner has signed. This lockup period is determined on a case by case basis depending on many factors related to the scope and development of the project. As the value of VET increases, we will introduce a more detailed assessment standard and lockup requirement for future strategic partners.
In fact, about 80% of the amount shown in the latest report were for previous quarter partnerships of some of our largest partners dating back to our ICO. The delay in delivering VET to these partners was contributed by the fact that these enterprises were struggling with setting up wallets that meet proper protocols, and/or establishing enterprise level regulations on their procedures. Figuring out how to manage the crypto internally for large enterprises, or government agencies, is a much more cumbersome process than on an individual level.
During these conversations we learned a multitude of different organizational structures and how to make our process adaptable to internal procedures. Ultimately, it was a worthwhile struggle in advancing VechainThor. The conversations around enterprise wallets actually inspired us to resolve the strong need for a enterprise grade cryptocurrency management and security standards. As a result we created a task force internally to work on this specific functionality, these conversations also led to the cryptocurrency disaster recovery plan that was conducted earlier.
As the financial report is a reflection of the foundation wallet balance and movements, it was counted in this report as opposed to the 1st financial report in which the enterprise investment amount was shown as 0.
Q2. The financial report states that both ETH and VET were used for technical development, business development, and operations. Does this mean that the Foundation sold VET on the open market to fund these activities?
A2: The Foundation has never sold VET (priorly known as VEN) on the open market. Some expenses are paid via selling ETH for fiat and then paid out to the needed party. Some expenses were paid via VET transfers directly to the party in which a settlement is owed. These expenses include operational, market promotion and partnership / broker fees (business development uses).
Actually, we are glad that more and more partners, business owners, and our service providers, are willing to accept VET as payments. Some of them actually prefer VET over fiat.
Q3. Based on the financial report, the Foundation paid out about 9.5 million VET to the team during the reported period and the executive team signed off on voluntarily locking up their rewards for two years. Can you provide more details on this?
A3: 5% of the total supply was allocated to the co-founders and the team when we launched our token sale. We promised that we will pay out this portion of VET quarterly over a two-year period of time. This is a reward in which we established for the team’s contribution in founding and running this project, and it is separated from the routine payroll.
In the 1st quarter after the token sale, the Foundation’s operation was to be distributed during the regulation changes in China. As a result the 1st quarterly payment was not executed. (You can find in the 1st financial report the movement of this portion was 0) In addition, the executive team including all the co-founders, C-suite and functional leaders signed up to lock away a large portion of the 9.5M for a two year period to show their confidence in the project despite being given the option to receive it quarterly.
Q4. I make custom knives. Will I be able to buy a VeChain RFID chip for implanting in my product? I want my customers to be able to verify authenticity in the future.
A4: This is something we are working on, as shown in the roadmap. We would like to enable individual or small / medium business owners to use the VeChain blockchain easily and believe that this is critical to achieving mass adoption of blockchain technology. The short answer is yes, but please stay tuned. Please an email to firstname.lastname@example.org and we will get back with you directly.
Q5. What will constitute a transaction on the blockchain in terms of supply chain temperature monitoring? A set time period for an upload in increments perhaps, or will it be updated upon temperature changes only?
A5: Uploading data onto the blockchain will constitute as a transaction. The frequency depends on the implementation and demanded level of assurance set by the user or assurance provider. The temperature data can be uploaded upon temperature change, time, or any recorded piece of data (chemical emissions, sunlight exposure, etc.). We have already established different criteria for different clients and believe VeChainThor can handle the mass amount of variations enterprises, governments, organizations, or individuals may need our solutions for.
We would be happy to answer the question what TPS is expected, rather than what TPS we can achieve following our guideline. Use cases guide quality products, products guide technology development. With the proper governance model, scalability is not really an issue for a public blockchain anymore.
Q6. Do you foresee mergers and acquisitions becoming a more regular feature o\f the crypto space? If so, will it be difficult to integrate other blockchains into the VEN ecosystem?
A6: You may see it, but the reality is, only a handful of projects are worth monitoring, nonetheless acquiring. Many of those companies already have the assets to pursue their vision without the added benefits, and complications, that come from mergers and acquisitions.
VeChain is working on cross-chain technology as part of the VeResearch program with renowned universities. We are pleased with our progress and think that interoperability will become a standard function of VechainThor in the future.
Q7. Which commodity do you think will benefit from VeChain’s technology the most?
A7: We designed VeChainThor as an infrastructure level protocol such as TCP/IP, all commodities will benefit from it. As matter of fact, to be more accurate, all business will benefit from VeChainThor.
Q8. How could a large retail clothing company utilize VeChain?
A8: We are working with some of the largest retail enterprises in the apparel and fashion industry. They benefit from VeChain solutions in four ways:
Enhance the supply chain management and anti-counterfeiting — we have designed waterproof chips that can be embedded into the clothing, shoes and bags.
Provide new customer experiences by enhancing the interaction and making the product unique to the customers.
Providing data solutions that only reliable and unalterable data points can offer in terms of retention, product life, user experience, and many more features that are opted in by clients or managed during the entire supply chain management process.
Any new innovative ideas to create value within VeChainThor coming from business owners within the ecosystem will be welcomed, inspired and amazed by everyone.
Q9. As a forensic scientist, drug standards are very important and EVERY standard needs to have traceability. Do you think you would get into the business with Fisher, Cayman, or Sigma Aldrich?
A9: Of course! We have already been in contact with companies within these industries and they are excited about VeChainThor. We are willing to discuss with companies about how VeChainThor can create solutions that meet the needs of their clients.
Q10. How does the payment work? Does the manufacturer pay to upload data on the blockchain for each product or does the customer pays to verify/explore his product on the blockchain?
A10: It’s free for customers to verify the products. There will be a cost when uploading data onto the blockchain. Enterprises can choose to pay for the cost in the form of VeThor or they can pay a fixed fee in fiat currency through a BaaS service provider who will use their own VeThor. Many people paying to use VeThor, in the future, may never actually know that they are paying for it.
Q11. “Is it possible for enterprise business to use the VeChain’s blockchain x without holding VEN/VET ? I understand that VEN/VET holders who earn VETHOR can sell the VETHOR to whoever they want.
It seems that the documents also indicate that VETHOR can be purchased directly from VeChain. Can you confirm ?”
A11: Similar to the question above, if the enterprise user does not want to hold VET, they may engage with a BaaS service provider that uses VeChain. Through a BaaS they can choose to pay fixed fee in fiat currency for the use of the VeChainThor blockchain platform (e.g. fee per product registered on VeChainThor) to you the VET holder, this would appear like businesses are buying VeThor on the open market.
It will be like as if enterprise is choosing to invest in real-estate for their office rather than pay am monthly rental fee based on demand. Even better, enterprises can make it a combination with both options based on their current business conditions.
Q12. Will there be a VeThor only exchange where companies that use thor can buy directly from there and users generating thor can list it directly to that exchange. Maybe even something integrated into the wallet where with a click of a button you can unload your thor at market price. Or are companies and institutions using thor all going to make binance(or other exchange) accounts and buy their thor like the rest of us? In order to buy from this exchange you have to be registered as an institution or partner of VeChain but anyone could sell to it. This would be the baseline demand price of THOR without speculative investors. It would just be what companies using thor are willing to pay for it. I think something like that would create a lot of stability in the price of thor and give it a real value vs a speculative one.
A12: Yes, not this exactly, but something very similar to this will be put into place and is a plan of ours. More details of that will be released at a future date.
Q13. The details of the various partnerships are not clear. Exactly what kind of services/solutions will VeChain be providing to its partners?
A13: Detailed business arrangements are confidential. Basically, we are working with our partners to help them utilize VeChainThor blockchain to transform their business model and benefit from new technology. VeChain focuses on providing the blockchain infrastructure, smart contract and APIs and the necessary hardware for that to be achieved correctly.
We will open source for VeChainThor as an infrastructure but each business owner has the right to protect their own creations and business values. On the other hand, Blockchain is a kind of protocol technology like TCP/IP, people will use Blockchain everyday but not everyone will feel it.
Q14. Will there be a Whitepaper or something similar come with the rebrand?
A14: Will be released with our mainnet. Whitepapers are for proposing new ideas based on research. It is for that reason we did not release one at ICO. VeChain has had a solution to the correlated problems prior to ICO, we just needed to convert the solutions into a public blockchain. You can expect new ideas within our white paper as well as some of the things that the public believes should be in a white paper, even if out of place compared to a business development plan.
We have been working on the proper documentations along the development from both business and technology. The major challenge for Blockchains, or generally any new technology territory, is that changes happen all the time and we have to iterate ourselves to fit. Please rest assured that we will make true a solid delivery as we always do and keep up to date the proper iterations as well.
Q15. What is done to deal with the increasing number of partnerships? Do you see yourself reaching the limit of total partnerships you can handle anytime soon?
A15: We are engaging with various types of partners including system integration partners that help us with the application development. These partnerships allow us to focus on the development of blockchain infrastructure, smart contracts and APIs.
We are also in the process of onboarding and acquiring new talents to take on more of the demand from potential partners and maintain existing solutions. At present we have not reached our limit, but we have been incredibly selective with who we will work with at the early stages of our ecosystem.
Remember, the major work of VeChain is just cognition and inspiring the innovation for business partners and business owners with the commitment and willingness to change, which will be the key to success. Luckily, we have witnessed more and more business partners with that kind of quality to hop on board and build the new business ecosystem on VeChainThor.