DEVELOPMENT PLAN AND WHITEPAPER - cdn.vechain.com

1 1 DEVELOPMENT plan AND WHITEPAPER VERSION 2 3 Preface The VeChain team and the VeChain blockchain and platform has been running for more than two and half years. During our journey, we have met many people who share our goals. Our business partners, both enterprises and individuals, dare to explore this new technology with passion, dreams, and strong beliefs. Moreover, we have accumulated experience with use cases from different industries to adjust and resolve any necessary corrections during this process.

2 We will continue defining the right path to take when implementing this disruptive technology that will change the world. Our original vision has never changed. The dream is still the same as before, that is: Building a trust-free and distributed business ecosystem platform to enable transparent information flow, efficient collaboration, and high-speed value transfers. Nine months have passed since the release of the VeChain ICO. The vision stays the same but our various missions have been reshaped gradually along with the rapid DEVELOPMENT of the entire blockchain industry.

3 VeChain aims to be THE PLATFORM to support blockchain-based business applications offering real economic and social value. After a comprehensive study of existing public blockchain platforms (including Ethereum) and countless discussions and debates with multiple business partners, we identified reasons in which enterprise and large consumer-focused applications are not yet on blockchain. The largest identified hurdles are NOT about the technology, but instead are related to other critical aspects of the blockchain s operational design.

4 We ve identified four key hurdles to enterprise adoption of blockchain. First, most public blockchains lack a proper governance model. Although decentralization is the well-known cornerstone of blockchain technology, it has obvious defects leading to inefficiency and poor capacity to conduct fast iterations. We believe scalability issues relating to blockchain are not linked to technical problems but to consensus concerns of governance. It is hard to imagine a world-wide used software or system like Bitcoin, with a valuation of more than 140 billion dollars, conduct very few upgrades in the past 10 years.

5 Of course, Satoshi s original vision was brilliant, and the Bitcoin blockchain functions as originally designed and intended. But as the use cases for blockchain have evolved, and continue to evolve, changes to the features and functions of a blockchain are inevitable. A proper governance system, with transparency and operational efficiency, will enable continual and rapid innovation. Second, the economic model of almost every existing public blockchain directly or indirectly links the transaction costs to the total valuation of the respective blockchain, resulting in unpredictable and unnecessarily high transaction costs.

6 In most public blockchains there exists a paradox: the greater the use of a blockchain, the higher the value of tokens, but additionally the higher the cost to use that blockchain, which discourages use and lowers total network value. No business owners would accept running applications or generally running a new business on 4 blockchain, or anywhere, at an unstable cost. An additional complication is present. Token holders want the value of a token to increase, and enterprise users want it to be stable and/or low.

7 A proper economic model has to be introduced to the next generation of public blockchains in order to resolve these conflicts. Third, an ecosystem will require many participants other than just technical blockchain experts. As a matter of fact, more business players than expected care about appropriate solutions other than merely technology. Usually, they expect to see solutions require combinations of a number of technologies such as blockchain, IoT, Big Data and Current blockchain ecosystems also require each business owner to be motivated, deeply involved and innovative to create new business values out of blockchain technology.

8 The current blockchain world lacks those who can connect the technology to business use cases by providing such solutions. Therefore the common infrastructure services natively on blockchain must allow technical and business developers to assemble solutions to add value to their business. Last but not least, the capacity to comply with regulation and changes will be one of the key requirements for any utilized blockchain solutions. This is necessary as regulators and governments follow the massive adoption of blockchain knowledge and understanding by the general public and business owners.

9 To address all the above, VeChain has created the VeChainThor Blockchain. This innovation represents the next generation of public blockchains, called Blockchain X. It includes the following key features: 1) New Governance Model 2) New Economic Model 3) Regulation and Compliance capabilities 4) VeChainThor Mainnet and Matching Infrastructure Services 5 Table of Contents 1 Background 9 Kick-off 9 The Understanding of Blockchain Technology 11 Synergy and Value Transfer 11 Data Availability and Transparency 12 The vision of VeChain and the VeChainThor Blockchain 14 Distributed Business Ecosystem 14 The "Blood" in the Distributed Ecosystem VeChain Token (VET)

10 And VeChain Energy - VeThor (VTHO) 15 VeChain Perspective about Blockchain Technology 17 2 Governance Model and Design 18 Principles and Philosophy of Governance Structure 18 Governance Structure 19 Stakeholders with Voting Authority 20 Stakeholders 20 Stakeholders, Blockchain Operation nodes and multilayer certification 20 Voting Authority Model 20 VET holders (VE) 20 Smart Contract Owners (SO) 21 Active Authority Masternode holders (AN) 21 Aggregation 21 General Voting 22 Subject 22 Voting authority counting day and voting day 22 Voting platform and procedure 22 The Board of Steering Committee 24 Mission 24 Membership 24 Size, Composition and Criteria 24 Term, Retirement and Termination 26 New Board Nomination and Election 26 Conduct of the Board of Steering Committee Meetings 27 Number of Meetings 27 Selection of Agenda Items 27 Attendance 28 Distribution of Materials.