During the NYC Meeting Vechain’s COO Kevin announced that Vechain will have a coin split during its token swap. The token swap will occur when we move to our own blockchain at the end of June.

During the token swap, 1 VEN will be converted to 100 VET. The total value (in dollars, euro’s, bitcoin, etc) will remain the same, an example:

• You now have 100 VEN, worth $4 per Ven. So you have 100 x $4 = $400 worth of Vechain.
• After the swap, you will have 10.000 VET. Since this still is worth $400, one VET will become $0,04. 10.000 x $ 0,04 = $400.

Reason for the split

With the increase of adoption and demand for the Vechain token, the VEN token has seen a huge increase in value.

This would mean that in the future when using the Vechain token we would have to deal with a lot of calculations using fractions, which is not very user-friendly.

Or in the words of Kevin, as reported by CryptopherWalken:

Then, he announced the 1 VEN to 100 VET token split. The example he gave was talking to friends about buying Bitcoin – some responded “it’s already $8000, I can’t buy a bitcoin I can’t afford it”. Kevin would respond, well actually you can buy .001 bitcoin if you want… and then they’d lose interest. I think what he’s getting at is they want to be prepared for years down the road when demand is enormous – they don’t want people dealing in fractions. Yes, I’m also sure they are aware of the implications for this in terms of price and the attractiveness of a 5 cent token verses a 5 dollar token.

And yesterday Vechain released an official statement about the split on Twitter:

Due to the rate of adoption, we recognize that VET would primarily be calculated using fractionals in smart payments. With the mainnet launch’s token swap, we will conduct a 1:100 coin split to alleviate this concern. At that time, every 1 VET owned will be exchanged for 100.

— VeChain Foundation (@vechainofficial) May 18, 2018

Impact on the value of the Vechain token

In theory, the token split should not have an impact on the value of your Vechain holdings.

However, in practice, we expect the token split to have a positive impact on the value of your Vechain holdings, for two reasons:

1. A token split is seen as a positive sign to investors. A coin split takes place when a coin has substantially increased in value. New investors will assume that this price increase will continue and thus are more likely to invest, increasing demand.
2. Uninformed crypto buyers, like to buy “cheap coins”. It just feels better when you can buy 1.000 coins of $0,05, instead of 1 coin that is worth $5000. For this reason, we have seen various altcoins with huge circulating supplies and with a price <$0,10 outperform those.

Vechain will, by my knowledge, be the first cryptocurrency that will do a coin split, so we have no way to see how other cryptocurrencies performed after a coin split. But we can take a look at how traditional stocks performed after a split.

We can see a gradual price increase after the stock split had occurred, with a 5% increase in three months. The traditional stock market moves much slower compared to the crypto market, so the price increase will likely happen much faster for Vechain.

Impact on node requirements and Thor generation.

The first question that came to my mind after the split was announced, was how the split would impact the node requirements.

According to Vechain, nothing has changed and the dollar value needed to get a node remain the same:

• Strength node: 10.000 VEN or 1.000.000 VET needed.
• Thunder node: 50.000 VEN or 5.000.000 VET needed.
• Mjolnir node: 150.000 VEN or 15.000.000 VET needed.
• Thrudheimd node: 250.000 VEN or 25.000.000 VET needed.

And what about Thor generation?

My assumption is that the Thor generation has not changed: 1 VEN or 100 VET will still produce 0.00042 Thor (instead of 1 VET producing 0.00042 Thor, increasing the amount of Thor generation with a factor 100 as well).

This still needs to be confirmed by Vechain, and this post will be updated once we know more about the coin split.