Utility Token

Cryptocurrency is a digital asset based on blockchain technology that can be used for decentralized transactions and value transmission. Utility Token (English Utility Token) is a special type of cryptocurrency that not only has the function of transaction, but also has the function of providing or using certain services or resources. Utility tokens are integrated into existing protocols on the blockchain and used to access that protocol’s services. They are not created for direct investment like security tokens, but can be used to pay for services within their specific ecosystem. The relationship between the platform and utility tokens is synergistic, as the platform provides security for the utility tokens, while the tokens provide the network activity needed to strengthen the platform’s economics. For example, Dai is integrated into Axie Infinity, a digital pet world with a player economy that provides players with a stable in-game currency. Other projects, such as Cryptocup, leverage Dai’s stability to provide users with a better experience.

Features of Utility Tokens

• Utility tokens are usually associated with a specific blockchain platform or application, such as Ethereum and Filecoin.

• Utility tokens usually need to be consumed or used on their related blockchain platforms or applications to obtain corresponding services or resources, such as smart contracts on Ethereum, decentralized storage space on archive coins, etc.

• Utility tokens typically do not carry equity or dividend rights and are not regulated by traditional financial regulators, so they are not considered securities or investment vehicles.

• Utility tokens are generally freely tradable on cryptocurrency exchanges, and their prices are affected by supply and demand and market sentiment, and may also be subject to volatility and risk.

Uses of Utility Token

Utility tokens have many different uses, mainly depending on the functions and goals of their associated blockchain platform or application. The main ones are:

1. As fuel or payment for blockchain platforms or applications, such as Ether on Ethereum, Bitcoin on Bitcoin, etc.

2. As governance rights or voting rights on blockchain platforms or applications, such as governance tokens on decentralized finance (DeFi) projects, such as UNI on Uniswap, MKR on MakerDAO, etc.

3. Membership rights or preferential rights as a blockchain platform or application, such as reward tokens on social media or content creation platforms, such as STEEM on Steemit, BAT on the Brave browser, etc.

4. As collateral or margin for blockchain platforms or applications, such as decentralized lending or mortgage tokens on oracle projects, such as COMP on Compound, LINK on Chainlink, etc.