Low Velocity Impact
DeFi Strategies • Yield Models • Token Income
Low Velocity Impact refers to a tokenomics design outcome where token supply remains constrained through staking, locking, or holding mechanisms—while utility and ecosystem activity continue to increase. This reduces the rate at which tokens circulate (velocity), creating upward price pressure by limiting available supply even as demand grows. Low velocity impact is a key goal in sustainable token design, as it balances utility with scarcity.
Use Case: A DeFi protocol requires users to stake $FLR for access to premium analytics tools. The tokens aren’t spent or burned—just locked. As more users join, circulating supply shrinks while platform utility expands, creating low velocity impact that supports token value without inflation.
Key Concepts:
- Token Velocity Control — Mechanisms designed to slow token circulation and reduce sell pressure.
- Stake-to-Access Models — Utility frameworks requiring tokens to be locked rather than spent.
- Preserved Ownership — Users maintain full asset control while participating in protocol activities.
- Non-Spending Gatekeeping — Access granted through holding or staking, not consumption.
Summary: Low Velocity Impact is a tokenomics success metric indicating healthy supply constraint paired with rising utility. It signals that a protocol is successfully retaining value while scaling adoption—creating long-term sustainability over short-term speculation.