These represent different token classifications based on their primary function: Utility Tokens:
Provide access to a product or service within the ecosystem
Examples: ETH for gas fees, LINK for oracle services, BNB for trading fee discounts
Value derives from network usage and demand for the underlying service Security Tokens:
Represent ownership in an asset or company, similar to traditional securities
Often subject to securities regulations
May provide dividends, profit sharing, or voting rights in traditional corporate structures
Examples: Tokenized real estate, equity tokens Governance Tokens:
Grant voting rights in protocol decisions and upgrades
Allow holders to participate in decentralized governance
Examples: COMP (Compound), UNI (Uniswap), AAVE
Often combined with utility features for added value proposition Many modern tokens are hybrid, combining multiple functions to create stronger value propositions and network effects.
Rewriting in plainer words…
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