How Is Token Velocity (V) Measured and How Does It Impact the QTM Valuation?

Token velocity is the average number of times a token changes hands over a specific period, often calculated as the total transaction volume divided by the average token supply. High velocity suggests tokens are primarily used for quick transactions rather than holding, which implies a lower required market cap (M) for a given level of economic activity (PQ).

Conversely, low velocity, often due to staking or illiquid holding, suggests a higher potential market cap and price. Velocity is a critical, and often volatile, variable in the QTM model.