Why You Need to Understand "Token Velocity"

Token velocity refers to how quickly a token changes hands within an ecosystem. If a token has high velocity—meaning people only buy it to immediately spend it or sell it—the price will struggle to rise even if the project is successful. On the other hand, if a project has mechanisms that encourage holding (like staking, lockups, or governance utility), the velocity decreases, which can lead to a sustained price increase as demand grows. When researching a project, always ask yourself: "Why would someone want to hold this token for more than five minutes?" If there’s no good answer, the tokenomics might be flawed