Definition
A type of cryptocurrency that provides access to a specific product, service, or platform. Utility tokens are used within an ecosystem to pay for services, access features, or participate in governance.
Why It Matters
Not all tokens are the same. Utility tokens have defined purposes within their ecosystems, which can support demand. Tokens with no utility are often pure speculation.
Example
Chainlink's LINK token is used to pay node operators for providing real-world data to smart contracts. It has a clear utility within its ecosystem.
Related Terms
Token
Tokenomics
Governance
Smart Contract