Verification Fees

Design Objectives

The Velocity Network is designed to support long-term, enterprise-grade usage while allowing the $VELOCITY token to appreciate as network adoption and economic value grow.

The verification fee pricing model is therefore designed to satisfy four core objectives:

1. Preserve $VELOCITY appreciation as the network becomes more valuable.

2. Prevent runaway verification fees that would price out real users.

3. Avoid fiat-pegged pricing, so fees remain natively connected to the $VELOCITY economy.

4. Remain predictable and contract-friendly for enterprises.

To achieve this, Velocity uses a sub-linear, usage-aware, and capped fee model.

Overview of the Model

The fiat value of a verification fee increases as:

• The price of $VELOCITY increases, and

• The overall usage of the network increases,

but in both cases at a diminishing rate, and with a hard upper bound.

Fees are not fixed in fiat, but they are also not allowed to grow without limit.

Reference Values

At protocol relaunch or governance reset, the following reference values are defined:

• Reference token price R₀​: $VELOCITY price at the reference point (e.g. launch)

• Base verification fee PER CREDENTIAL F₀​: fee in $VELOCITY tokens at R₀

• Base fiat cost: C₀=F₀⋅R₀

This establishes the economic starting point of the system.

Dynamic Variables

At any time t, the protocol observes:

• Current $VELOCITY price R_t​, computed using a time-weighted average price (TWAP)

• Current network usage U_t​, measured as a rolling average of verification volume

Two normalized growth ratios are then computed:

x=R_t/R₀(price growth)

y=U_t/U₀(usage growth)

Where U₀​ is the reference usage level.

Sub-Linear Fee Growth

To prevent fees from scaling linearly with either price or usage, the model applies dampening exponents:

• α∈(0,1): price dampening factor

• β∈(0,1): usage dampening factor

Value defaults:

• α=0.5

• β≈0.3

Fiat Fee Calculation

The uncapped fiat cost of a verification is:

C_t^raw=C₀⋅x^α⋅y^β

This means:

• Fees increase as $VELOCITY appreciates

• Fees increase as the network becomes more widely used

• Both effects are sub-linear, so growth slows over time

Enterprise Safety Cap

To ensure predictability and enable long-term enterprise contracts, a maximum fiat fee is enforced:

C_t=min⁡(C_t^raw, C_max⁡)

Where:

• C_max⁡ is a governance-defined upper bound. The protocol enforces a maximum verification fee (e.g. equivalent to $15) in today’s purchasing power, indexed to inflation over time.

This guarantees that verification fees never exceed an economically sane level, regardless of $VELOCITY price or usage growth.

Token Amount Paid per Verification

The actual fee paid on-chain is denominated in $VELOCITY:

F_t=C_t/R_t

As $VELOCITY appreciates:

• The fiat cost per verification rises gradually

• The number of $VELOCITY tokens required per verification decreases

This reflects the increasing value of each token, while maintaining stable economic behavior for users.

Price-Scenarios

Updated parameters (authoritative)

• Token: $VELOCITY

• Reference price:

  R₀=$0.15

• Base verification fee PER CREDENTIAL at reference:

  F₀ = 9

• Base fiat cost:

  C₀=F₀⋅R₀=9⋅0.15=$1.35

• Dampening exponent:

  α=0.5

• Usage factor: held constant (no usage multiplier)

• Fiat cap:

  C^max⁡=$15

---

Formulas used (for clarity)

Let:

x=R_t/R₀

Uncapped fiat fee:

C_t^raw=1.35⋅√t

Capped fiat fee:

C_t=min⁡(C_t^raw, 15)

Tokens paid per verification:

F_t=C_t/R_t

When does the $15 cap activate?

Solve:

1.35⋅√x=15⇒√x≈11.11⇒x≈123.5

The fiat cap starts at ~123× price appreciation That corresponds to $VELOCITY ≈ $18.50

Table: verification fees across $VELOCITY price scenarios

$VELOCITY price Rt	Price multiple xxx	Fiat fee (raw)	Fiat fee (capped)	Tokens paid
$0.15	1×	$1.35	$1.35	9.00
$0.30	2×	$1.91	$1.91	6.36
$0.75	5×	$3.02	$3.02	4.03
$1.50	10×	$4.27	$4.27	2.85
$3.00	20×	$6.04	$6.04	2.01
$7.50	50×	$9.55	$9.55	1.27
$15.00	100×	$13.50	$13.50	0.90
$18.50	123×	$15.00	$15.00	0.81
$30.00	200×	$19.09	$15.00	0.50
$75.00	500×	$30.19	$15.00	0.20
$150.00	1000×	$42.70	$15.00	0.10

---

How to read this (plain English)

• At launch ($0.15), a verification costs:

  • 9 $VELOCITY

  • $1.35

• As $VELOCITY appreciates:

  • The fiat fee rises slowly (square-root growth)

  • The number of tokens required drops

• Once $VELOCITY reaches ~$18.50:

  • The fiat fee is capped at $15

  • Further appreciation makes verifications cheaper in token terms, not more expensive in fiat

One-sentence takeaway

With a $0.15 reference price and a 9 $VELOCITY base fee, verification costs rise smoothly with token value up to a hard $15 ceiling, ensuring strong value capture early while remaining permanently enterprise-safe.

Economic Interpretation

This model ensures that:

• Early in the network’s life, fees are low and adoption-friendly.

• As adoption and importance grow, the network captures more economic value.

• At maturity, fees remain bounded and predictable.

Crucially, value capture shifts over time from:

• “more tokens per transaction” to:

• “more transactions, higher usage, and greater stake-based demand.”

Why This Is Not Fiat-Pegged

Although a fiat cap exists, the fee is not pegged to fiat:

• Fees respond dynamically to $VELOCITY price and network usage

• There is no fixed exchange rate or external pricing oracle

• $VELOCITY remains the native unit of account and settlement

The cap acts only as a safety boundary, not as a pricing anchor.

Summary

The Velocity verification fee pricing model:

• Aligns fees with $VELOCITY value and network usage

• Applies sub-linear growth to avoid fee shocks

• Enforces a hard fiat ceiling for enterprise confidence

• Preserves long-term $VELOCITY value capture

This design enables Velocity to function as real economic infrastructure, not a speculative network vulnerable to its own success.