The MV = PQ tension in token economics
The equation money velocity times supply equals price times quantity. On a blockchain, velocity measures how often a token changes hands per unit time. If a token is used for paying transaction fees and spending happens fast, velocity is high. If tokens are primarily held as assets, velocity is low.
High velocity reduces the token's value prop as a store of value. If users never hold the token, its market cap must be lower to justify the price. Conversely, low velocity (people hold longer) means less total supply is needed to move the same volume of value.
Why token designs try to suppress velocity
Many projects introduce friction to reduce velocity: staking locks, governance voting, or fee burns. By making tokens harder to spend, they increase the duration tokens are held, which inflates their effective value. This is economically subtle and often backfires. Tokens held reluctantly (because fees are high) are less useful than tokens held voluntarily (because they're valuable).