How Does Token Staking Directly Reduce Token Velocity? ▴ Learn

How Does Token Staking Directly Reduce Token Velocity?

Token staking directly reduces velocity because the staked tokens are locked up for a specified period, making them illiquid and unavailable for immediate trading. This effectively removes them from the circulating supply used for transactions, decreasing the rate at which the average token changes hands.

The higher the percentage of the total supply that is staked, the lower the token velocity, which supports a higher price for the remaining liquid supply.

What Is the Relationship between Circulating Supply and Fully Diluted Valuation (FDV)?

How Does the Introduction of Token Lock-up Periods Affect the Supply-Side Dynamics of Velocity?

What Is the Risk to the Treasury If Vesting Tokens Are Not Properly Accounted for in the Circulating Supply?

How Can a Decreasing Token Supply Be Modeled in a Multi-Period QTM Valuation?