What Factors Primarily Influence a Token’s Velocity in a Decentralized Application?

A token's velocity in a decentralized application (dApp) is primarily influenced by its holding incentives and utility design. If the token is required for staking, governance, or as collateral, users are incentivized to hold it, which lowers velocity.

Conversely, if the token is mainly used as a medium of exchange for a single transaction (e.g. a payment token that is immediately sold), its velocity will be high. The frequency of utility usage and the lock-up periods associated with staking or vesting also play a critical role.