What is a utility token

Utility token is a type of token that provides access to services, functions, or products within a blockchain project.

These tokens are used for interacting with a platform and typically do not represent investment rights or ownership.

Key facts about utility tokens

provide access to platform services
created using smart contracts
run on existing blockchains
widely used in DeFi and Web3 applications

Utility token explained simply

A utility token is a token used to access services within a crypto platform.

They are sometimes called application tokens.

How utility tokens work

Utility tokens are created by developers of a blockchain platform.

They can be used for:

paying for services within the platform
accessing certain features
participating in the project ecosystem

Example of a utility token

The BNB token is used to pay transaction fees and access services within the Binance ecosystem.

Where utility tokens are used

cryptocurrency exchanges
Web3 platforms
blockchain games
DeFi protocols

How utility tokens differ from other tokens

Governance tokens allow users to participate in protocol governance.
Security tokens represent investment rights.
RWA tokens represent real-world assets.
LP tokens represent liquidity pool shares.
Meme tokens are driven by internet culture.

Utility tokens are primarily designed to provide access to services within a platform.

How utility tokens relate to the blockchain ecosystem

Utility tokens are often used alongside:

Learn more about token types

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