VEN, soon to be known as VET, is the native token used to interact with the Vechain network. Along with other ERC-20 switchers like EOS, TRX and ONT, VEN has seen a surge in its trading volumes due to anticipation surrounding the launch of its own Mainet. From an initial listed price of 0.25088 in August 2017, VEN has offered returns of 1,542% for early investors.
Exchanges/Pairs
Like most Alt-coins, VEN volumes are dominated by crypto-to-crypto pairs, VEN/BTC, VEN/ETH and VEN/TETHer.
The most popular exchange for trading VEN is Chinese exchange LBank. It is known for listing a number of smaller coins and having low transaction fees (0.1% of the transaction value). The token is also popular on other Asian exchanges like Binance, Huobi and Kucoin.
The Vechain network
Founded in 2015 by Sunny Lu, former CIO of Louis Vuitton China, Vechain markets itself as the ultimate product management token. It aims to build a platform that revolutionizes the much-discussed idea of products moving through a blockchain managed supply chain.
The blockchain platform will work by enabling manufacturers to assign unique identities to products, tying them to the Vechain blockchain. This will then allow the manufacturers, supply chain partners and consumers to interact with products, in a transparent, interactive way via smart-contract, as they move through the supply chain.
Offering this Internet-of-things style solution does have its challenges. To allow for the monitoring of products, they will have to be physically attached to the network. This means inserting NFC chips, RFID and QR codes to each individual product. The ability of Vechain to secure partners within the manufacturing and supply chain ecosystem will be key to their success.
This considered, what the service may do for brand protection, anti-counterfeit and food safety for all stakeholders, could pique some interest. There should be demand to use Vechain if it operates as planned and the new VETHOR protocol has a successful launch.
Vechain Thor
On June the 21st, Vechain switches from being an ERC-20 to operating on its own network and offering its own specific style of blockchain. The way this new network will work is that owning VET (new ticker being used), permits access to use the blockchain. The amount of access to the network or the complexity of the smart contract used within the network, will be dependant on the amount of VET owned.
Each day a voucher, called a VETHOR, is credited to VET holders. Depending on the complexity of the smart contract the participant intends to enter, more VETHOR vouchers are required. These vouchers can be freely transferred between users of the network. At launch 1 VET will mean access to 0.000432 VETHOR tokens. The vouchers are based on the number of VET tokens held, not on the price.
The purpose of the voucher system is to create network-wide stability. VETHOR vouchers will be the practical gas for Vechain to operate smart contracts between business and consumers, and the supply chain. By having a two-token system, with VET and VETHOR, even if the price of VET (the external currency) was to fluctuate, the number of tokens remains stable, so VETHOR and the smart contract ecosystem should maintain its integrity.
Vechain controls the supply of THOR vouchers by changing the access rate of VET to VETHOR tokens monthly. Theoretically, therefore, the Vechain smart contract ecosystem should maintain its stability and smart contract cost-of-entry for participants.
Some of Vechain’s major announced partners include: DNVGL accreditors, PWC SEA and Kuehne & Nagel. The PWC deal has PWC Hong Kong and PWC Singapore jointly purchasing stakes in Vechain, and they will offer trust services via the Vechain platform.
This two-token system is designed to allow Vechain to sell its solutions to enterprises, who would be interested in a blockchain based product management solution but are concerned with participating in volatile, unpredictable public blockchains.
But, if an enterprise is participating in a Vechain smart contract and the network is doing poorly because of some external factor like a crypto-wide market uncertainty. The value of VET will drop, and because they need to hold VET to have access to VETHOR and participate in smart contracts, the price drop is reflected on the balance sheet of the enterprise.
Vice versa if there is greater activity and the network is popular, VET prices should increase and there is an additional benefit for smart contract participants.
Vechain says that there will be additional tools for larger enterprises and smart contract owners to protect their exposures when acquiring VETHor to participate with services on VeChain, such as borrowing, and utilizing VETHor Futures. Nothing formal has been fleshed out in this regard, however.
There will also be Dapps hosted on Vechain designed to complement the blockchain solutions, such as enterprise product management interfaces.
Recent price movements
While the crypto market and major tokens generally had a difficult May (BTC falling 15.19% since the start of May), the VEN token has held sTron (available on Binance)ger in the bear market. The price has fallen from $4.4278 on May 1st to currently trading at $4.0602, an 8.30% fall in the same period.
VEN has also had a sTron (available on Binance)g week as its mainet launch begins to pick up steam, rising 20.69% since the 31st of May.
As with Tron (available on Binance), Ontology and Zilliqa, the phenomenon of an increase in market interest surrounding tokens soon to be transitioning into their own native networks, is benefitting VEN holders.
It is straightforward to understand why. Once a coin shifts away from its host’s smart contract protocol, it is essentially transitioning away from public crowd-funding and has launched its ‘product’. Operating as it normally would based on its whitepaper.
Before it can begin to tie deals with major manufacturers and supply chain companies, there will be a long testing and trialling period. Many enterprises may wait for market-wide consensus and their own investigations before deciding to join the network.
However, there is still likely some profits to be made for traders looking to capitalize on the hype and speculative buying as the Vechain Mainet launch approaches and begins.
Consensus Protocol
Vechain plans to use a Proof-of-Authority(PoA) consensus system, where there will be a 101 Authority masternodes at the launch of the VeChainThor platform. Masternodes will be vetted to ensure legitimate identity, they will also need a stake (25M VET) and a server with minimum processing power.
There is also a political element, where Masternodes will need to prove how they will provide a ‘significant contribution to the Vechain ecosystem in their respective fields’. For example, if an enterprise applies to be a Masternode it would need to show evidence of its capacity to ‘run significant applications and business activities on the platform.’
Proof-of-Authority may not be as egalitarian as other consensus models but it does put a check on agents acting in their own self-interest. Adding a layer of transparency to who the major nodes on the network are, creates accountability and this prevents issues like 51% attacks from occurring.
There are also other node tiers below the authority masternodes, with each having their own stake buy in and own VETHor creation reward.
Technical analysis
VEN’s recent surge in price and sentiment has seemingly been driven by the upcoming release of its Mainnet. As with other ERC-20 switchers, this price ramp can be viewed as irrational FOMO, rational “pump” expectations, or long term conviction for network growth. Regardless, since April 2018, the price trend has been positive.
Exponential Moving Averages (EMA) with Long Term Trends
On the daily chart, the bullish EMA recross, or Golden Cross, using the 50/100 day EMA, has occurred (not shown), thus confirming the positive uptrend. Also, price recently broke above the 50 day moving average, which may provide price support to VEN in the near term.
Price Wedges and Channel Breakouts
Using the daily chart, the price range has been narrowing within a sideways wedge (see black lines), with previous channel breakouts occurring to the upside (see purple channels and black arrows). Thus, if the historical path continues, an upward price breakout is expected (see orange arrows).
Ichimoku Clouds with Slow Wave Trend Oscillator (SWTO)
The Ichimoku Cloud uses four metrics to determine if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, Lagging Span (Chikou), and Senkou Span (A & B).
The status of the current Cloud metrics on the daily time frame with singled settings (10/30/60/30) for quicker signals is mixed; price is in the Cloud, Cloud is bullish, the TK cross is bearish, and the Lagging Span is in the Cloud and below price.
A traditional long entry would occur with a price break above the Cloud, known as a Kumo breakout, with price holding above the Cloud. From there, the trader would use either the Tenkan or Kijun as their trailing stop.
VEN has found consistent support around $3.30 and has formed new support ~$1 above each previous support level, thus forming an uptrend with higher highs and higher lows (black trend line) since April. Price attempted to break above the Cloud, but failed to hold the level after meeting resistance at $5.71, which resulted in the positive TK cross reversing and price falling back beneath the Cloud.
However, the SWTO recently turned bullish from oversold territory (black circle) which enabled a price bounce, and VEN is currently retesting a Kumo breakout with the key resistance level to watch being ~$4.70. A breach and hold above ~$4.70 would signal a long entry with potential price targets of $5.71 (previous failed resistance), $6.19 (flat Senkou B), and $6.65 (flat Senkou A). If price fails the Kumo breakout attempt, the key support levels to watch on the downside are $3.50, $3, $2.50, and $2 (critical to hold).
The status of the current Cloud metrics on the daily time frame with doubled settings (20/60/120/30) for more accurate signals is bearish; price is beneath the Cloud, Cloud is bearish, TK cross is bearish, and the Lagging Span is in the Cloud and below price.
Again, price attempted to breach the Cloud but failed at $5.71, but is still making higher highs and higher lows. Also, SWTO has turned bullish from oversold territory, thus price is re-attempting a Kumo breakout. Currently, price is testing the Senkou A resistance level of ~$4.24. Ultimately, price will need to breakthrough the Cloud and hold above $5.89 (flat Senkou B) to ignite a sTron (available on Binance)g, upward trend. Price targets after a successful Kumo breakout are $6.15, $6.50, $7, and $8 (longer term).
Lastly, on the daily chart, by combining the sideways wedge, price channels, and the Ichimoku Cloud (10/30/60/30), we can visualize a potential price path for VEN. Price may fail to breakthrough the Cloud and hit off the Senkou A resistance at ~$4.70, but bounce off support between $4 and $3.50 before finally breaking above the Cloud with strength, and reigniting a positive uptrend.
Conclusions
Vechain takes a novel approach to entice enterprises to enter into its public blockchain. The two token system does add a layer of stability to its smart contract network and Vechain has already made deals with some major multinational corporations.
A fully integrated product management blockchain does appear to be an ambitious project and will probably require baby steps in the short term as the new network builds steam.
With any Chinese blockchain, there is always a question of what will happen if the PRC government ever decides to reopen its market to crypto operating and trading. Because of the preference of Chinese enterprises and consumers to favour local solutions, this sort of shift in regulatory attitude may greatly benefit Vechain. Many long term token holders are banking on this happening
In the short-run, one would expect that the sTron (available on Binance)g start to June will continue as hype surrounding the mainet launch continues. The technicals for VEN are mixed and bearish, but price is currently forming a positive trend while re-attempting a Kumo breakout from an oversold bounce.
The prudent short term trader (10/30/60/30 settings) will await a positive TK cross, Kumo breakout, and price hold above $4.70 before entering a long position. The prudent longer term trader (20/60/120/30 settings) will await a positive TK cross, Kumo breakout, and price hold above $5.89 before entering a long position.
Given the current oversold bounce and uptrend, price targets of $4.25, $4.50, and $5 are likely. Additionally, given the wedge and channel breakout trends, a failed Kumo breakout would probably be short-lived until a successful breakout occurred with price targets of $6, $7, and $8 (longer term). However, awaiting a successful Kumo breakout may help avoid a “head fake” and the accompanying downside risk of $3.50, $3, and $2.50.
Disclaimer: This analysis has been designed for informational and educational purposes only. Readers are advised to conduct their own independent research into individual assets before making a purchase decision.
About the authors
Christopher BrookinsChristopher Brookins is the founder and CEO of Pugilist Ventures, a quantitative investment firm focused on digital assets and blockchain technology. Chris has a deep knowledge and unique perspective on digital assets formed by his polymath experience in equity trading, credit investing, and business development at two West Coast startups (one acquired). He has been involved in the blockchain community since 2014. Follow @chris__brookins
Aditya DasAditya Das is Brave New Coin’s in-house market analyst. Raised in Dubai, UAE, he holds a post-graduate honors degree in Economics from the University of Auckland and a BA in Economics from the University of Sussex. Prior to joining BNC his most recent roles were as a researcher and Economics tutor at the University of Auckland. Follow @Quartlifecrypto