How the Velo blockchain works and its advantages

How does the Velo platform work?

The Velo blockchain protocol is based on the Stellar consensus mechanism, which ensures reliable and fast transaction processing as well as the security of a decentralized network.

To power the Velo network, developers implemented a novel consensus method called the Federated Byzantine Agreement (FBA). FBA enables significantly faster consensus among nodes in a decentralized network compared to many other mechanisms like Proof-of-Work (PoW) and Proof-of-Stake (PoS). This allows for the creation of scalable and high-performance blockchains with minimal transaction latency.

One of the features of the FBA mechanism is the division of network nodes into so-called "quorums". This enables parallel transaction processing, as it is sufficient for a quorum of nodes to reach consensus for validation. Furthermore, FBA is resistant to forks (divergences from the main blockchain) and minimizes the risk of their occurrence — one of the key challenges of earlier blockchain generations.

One application of the Velo blockchain is digital credit issuance. Any Velo user can issue their digital credits using autonomous smart contracts, which provide both security and high blockchain performance.

Other features of the Velo blockchain include:

Use of Directed Acyclic Graph (DAG) — a specific data structure that links individual data fragments into a single cluster, enabling blockchains to process transactions in parallel. The DAG architecture is increasingly used in next-generation blockchains such as Fantom, IOTA, and Nano;
Two-layer encryption — implemented to enhance blockchain network security by adding an extra layer of data protection against potential cyberattacks;
Interoperability with other blockchain networks. The Velo blockchain is designed to allow seamless interaction with other decentralized networks. According to Velo's developers, this is crucial for executing cross-border transactions.

Velo Coin token

A central component of the ecosystem is the native utility token Velo (VELO). The VELO token was launched and listed on exchanges in September 2020, coinciding with the start of the altseason (a period when altcoin prices grow faster than Bitcoin's). As a result, within just two months of listing, the cost of VELO increased more than fourfold — from $0.44 to $1.80.

A total of 24 billion VELO tokens have been issued, of which 17.5 billion (~73% of the max supply) are already in circulation. One of the primary uses of the VELO token is to collateralize digital credits. Additionally, VELO is required for investor participation in the ecosystem and for gaining access to credit services. It is also used to issue the native stablecoin USDV, which is backed by both fiat and cryptocurrency.

Other functions of VELO include staking for passive income by temporarily locking tokens and delegating them to validators.

After the crypto market downturn in late 2021, investor interest in digital assets declined significantly, affecting VELO as well. After reaching its all-time high (ATH) in March 2021 at $2.07, the VELO token price collapsed by nearly 16x by the end of the year, to $0.13. VELO continued to fall until December 2022, when it hit an all-time low of $0.001.

This sharp drop indicates low investor demand despite the strong technical foundation of the Velo project. Experts suggest that, in addition to the general crypto market decline, contributing factors may include:

Intense competition among blockchain projects due to the launch of new protocols such as Sui, Aptos, Starknet, Celestia, Hyperliquid, and many others;
The ecosystem faces limited support and a lack of significant partnerships, which are key drivers for any ecosystem's development.

As of August 2025, the VELO token price stands at $0.014, which is over 99% below its ATH. Its market capitalization is $255 million, placing the altcoin 173rd in the CoinMarketCap rankings.

Given the increasing competition in the crypto market, the development prospects of the Velo blockchain project remain uncertain. Experts believe that its growth will depend on factors such as broadening service offerings, expanding into diverse economic regions (Asia, Latin America, etc.), and technological innovation that allows it to stand out among other blockchain protocols.