Here’s a post from Alex Evans on how velocity effects value in On Value, Velocity and Monetary Theory
The core thesis of current valuation frameworks is that utility value can be derived by (a) forecasting demand for the underlying resource that a network provisions (the network’s ‘GDP’) and (b) dividing this figure by the monetary base available for its fulfillment to obtain per-unit utility value. Present values can be derived from future expected utility values using conventional discounting. The theoretical framework that nearly all these valuation models employ is the equation of exchange, MV=PQ.
Given how important value has become in most attempts to value crpyto assets, it’s an important discussion:
The uniting argument in the above articles is that tokens that are not store-of-value assets will generally suffer from high velocity at scale as users avoid holding the asset for meaningful periods of time, suppressing ultimate value. My claim here is that this thesis is directionally correct, but hard to operationalize.