Common types of blockchain token

2022/12/10 22:50

The type of token

Today we will introduce the two most commonly used tokens.

YET (Fungible Token)

The so-called ‘homogenization’, that is to say, these tokens are 1:1 from each other, which means that similar tokens are the same as other similar tokens in function and value. A common example of a real-world fungible token is government-issued fiat currencies such as RMB. The 100 RMB in your hand can be exchanged for the 100 RMB in my hand, and the value of these two RMB is the same.

Native/protocol tokens

The original blockchain token was Bitcoin (BTC), a fungible token native to the Bitcoin network. We can transfer tokens through wallets, centralized exchanges. These types of tokens are part of an incentive structure (mining rewards) that encourage users who may not know or trust each other to work together to facilitate the proper functioning of the blockchain, data storage (mining). The value of the currency depends on the size of the network, the number of tokens in circulation, and the demand for those tokens. For example, Bitcoin BTC, Ethereum ETH/ETC, etc.

Security tokens

Security tokens are also fungible, and you can compare them to a company’s stock. The main features of the coupon token are: 1. The token is issued by an ordinary enterprise as an investment contract, 2. The purchase of the token issued by the company is considered an investment in the project. For example, the CRV token of Curve (a decentralized exchange), you can get a part of the platform’s profits if you hold the CRV token (you can understand it as the dividends brought by the purchase of a certain fund or stock).

Governance tokens

Governance tokens are generally used for the governance of DAOs (decentralized organizations) or decentralized projects (apps), which you can understand as the traditional corporate system, shareholders make decisions on the direction of the company’s development, and the weight of decisions is determined by their shareholding, and the larger the shareholding, the greater the rights.

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