Utility Token
A token designed to provide access to a product, service, or functionality within a specific ecosystem.
In-Depth Explanation
Utility tokens grant holders the right to use a protocol or access features—think of them as arcade tokens for a specific platform. Examples include Filecoin (storage), BAT (advertising), and protocol governance tokens. The utility token classification was often used to argue tokens weren't securities, though regulators increasingly scrutinize this distinction.
Related Terms
Governance Token
A token that grants voting rights over protocol decisions, parameters, and treasury allocation.
Security Token
A blockchain token that represents ownership of a real-world asset or investment contract.
Token
A digital asset created on an existing blockchain, as opposed to a native cryptocurrency like ETH or BTC.
More in Tokenomics
View all →Emissions
New tokens distributed by a protocol as incentives, typically to liquidity providers or users.
Liquidity Mining
Earning token rewards by providing liquidity to a DeFi protocol.
Token Buyback
When a protocol uses revenue to purchase its own token from the open market, reducing circulating supply.
Dividend
Direct distribution of protocol revenue to tokenholders, typically in ETH, stablecoins, or the protocol's native token.