Token

Unlike a coin, a token does not need its own blockchain to exist. It is a digital asset created and managed by a smart contract that runs on top of a host chain, most commonly Ethereum. The contract defines the token's total supply, how balances are tracked, and how it moves between wallets, while the underlying network still handles the actual transaction processing and security. Because a developer only has to write and deploy a contract rather than build and secure an entire consensus network, launching a token is far faster, cheaper, and more accessible than launching a new coin.

This ease of creation is exactly why thousands of tokens exist. On Ethereum, most follow the ERC-20 standard, a common set of rules that lets wallets, exchanges, and decentralized applications interact with any compliant token in a predictable way. Other chains have their own equivalents, such as BEP-20 on BNB Chain or SPL on Solana. Tokens serve very different purposes depending on their design:

• Utility tokens grant access to a specific product or service, such as paying network fees or unlocking platform features.
• Governance tokens give holders voting power over a protocol's future decisions, often within a DAO.
• Stablecoins track the value of a fiat currency like the US dollar.
• Security tokens represent ownership in a real-world asset and may fall under securities law.

Because deployment requires no approval, token quality varies enormously, and a project's economic design, or tokenomics, is essential to assess before relying on or investing in one. Anyone evaluating a token should also check whether it has genuine utility and adoption, since anyone can create a token in minutes.