Capital velocity in digital assets measures how frequently capital changes hands within a specific cryptocurrency or blockchain ecosystem over a period. It indicates the rate at which tokens are spent and recirculated, reflecting the activity and liquidity of an asset. A higher velocity suggests more frequent transactions and potentially greater utility or demand for the digital asset. This metric provides insight into the economic dynamism of a protocol.
Context
Capital velocity is a significant metric often discussed in crypto news when evaluating the health and adoption of various blockchain networks and their native tokens. Analysts consider it a key indicator of economic activity and user engagement within a decentralized application or platform. The current discourse examines how different protocol designs and economic incentives influence the speed at which capital moves through their systems.
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