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Velocity is a game mechanic that changes the speed of a projectile dependent on which projectile is used. Velocity only effects Crossbows, Bows and Compound Bows. It changes dependent on which arrow is used, generally increasing parallel to the quality of arrow.
It is important to note however that velocity is not perfectly parallel with quality as the Explosive Crossbow Bolt has the lowest velocity for bolts and the Flaming Arrow has the lowest for arrows despite both being the top of their classes in damage and features.