Utility Token

A utility token is a token whose main purpose is to be used within a specific platform — to pay for, access or unlock its services — rather than to represent an ownership stake.

How it works

Utility tokens are spent or held to do something inside their ecosystem: paying network fees, accessing features, getting discounts, or participating in a service. Their value is meant to come from demand for that usage. They are often contrasted with security tokens, which represent an investment stake and carry different legal treatment, and with governance tokens, which confer voting rights.

Why it matters

The “utility” label is partly about function and partly about regulation, since how a token is classified affects the rules that apply to it. In practice the lines blur, and many tokens combine utility, governance and speculative roles.

Example

A token you spend to pay for computation or storage on a network is acting as a utility token.