Token Types
Four categories of crypto tokens and their economic models
| Type | Purpose | Examples | Supply Model |
|---|---|---|---|
| Utility | Pay for services on the network | ETH for gas fees | Often inflationary |
| Governance | Vote on protocol decisions | UNI, AAVE, MKR | Fixed supply |
| Security | Represents ownership stake | Tokenized stock | Regulated |
| Stablecoin | Pegged to fiat currency | USDC, DAI, USDT | Backed by reserves |
Every blockchain project has an economic model built around its token. Understanding tokenomics, how tokens are created, distributed, and used, is essential for evaluating any Web3 project, whether you're a user, investor, or builder.
Token Value Drivers
Five factors that determine whether a token accrues value
UtilityToken is required to use the protocol (gas, staking, governance)High
ScarcityToken burns, halving events, fixed supply capsHigh
Revenue ShareProtocol distributes fees to token holdersVery High
Network EffectsMore users = more value for all participantsHigh
SpeculationMarket sentiment and trading activityVariable