Deep Dive
1. Protocol Upgrade for Enhanced Staking (February 2026)
Overview: This upgrade optimized the staking mechanism, allowing users who stake VET to generate more VTHO than before. It directly boosts rewards for those securing the network.
The update fine-tuned the economic parameters of the StarGate staking platform. By adjusting the reward distribution algorithm, it increased the yield for participants without requiring them to stake more tokens. This is a backend improvement aimed at sustaining high participation rates after an initial bonus period.
What this means: This is bullish for VTHO because it strengthens the incentive to lock up VET, which can reduce selling pressure on the main token and increase consistent demand for VTHO to power transactions. Users benefit from higher passive income for supporting the network.
(VeChain)
2. Hayabusa Upgrade to Delegated Proof-of-Stake (December 2025)
Overview: This was a major consensus change that moved the network from Proof-of-Authority to Delegated Proof-of-Stake (DPoS). It tied all new VTHO creation directly to staking activity.
The upgrade eliminated the old system where simply holding VET in a wallet generated VTHO. Now, VTHO is only minted as a reward for VET that is actively staked and delegated to validators. This change approximately halved the rate at which new VTHO enters circulation, creating a built-in supply constraint.
What this means: This is bullish for VTHO because it makes the token supply more responsive to actual network use. With issuance cut significantly, increased transaction activity can lead to a deflationary effect, potentially increasing scarcity and value over time.
(Bullish)
3. Galactica Upgrade with Fee Burning (July 2025)
Overview: This upgrade overhauled the network's fee structure, modeling it after Ethereum's EIP-1559. It ensures that the base fee paid in VTHO for every transaction is permanently destroyed or "burned."
The change splits transaction fees into a base fee that is burned and a priority tip for validators. This mechanism directly removes VTHO from circulation with every smart contract interaction and token transfer, applying constant deflationary pressure that scales with network usage.
What this means: This is bullish for VTHO because it creates a continuous burn mechanism. As more enterprises and dApps use the VeChain blockchain, more VTHO is consumed and destroyed, which can counterbalance new supply from staking and increase token scarcity.
(MEXC News)
Conclusion
VeChain's codebase is evolving to make VTHO a more deflationary and utility-driven asset, with recent upgrades strategically reducing its supply growth and tying its economics directly to network security and activity. Will rising on-chain usage now outpace the new, slower rate of VTHO creation?