Utility Token

A utility token is a token whose primary function is to provide access to particular products, services, or capabilities within an ecosystem.

Depending on the project, a utility token may be used to pay for services, access application features, pay internal fees, receive discounts, or perform other protocol-specific operations.

How utility tokens work

The economic role of the token is defined by the rules of the particular system. The existence of a utility token does not automatically mean that holders receive equity, profits, or governance rights in the underlying company or project.

A utility token can also have a market price and trade on exchanges. Its value may therefore depend not only on practical utility but also on supply, demand, liquidity, and market expectations.

A single asset can combine utility functions with other functions, such as governance.