The possibilities of blockchain tech are enormous and can cause disruptions across industries. It is fuelling many new business models like decentralized networks, open-source ledgers, etc. The use of tokens is one of the significant factors that have contributed to the success of blockchain tech. Such tokens are utility tokens. Let’s discuss them in great detail and grasp the top 5 utility tokens globally.
What are Utility Tokens?
As the name suggests, utility tokens are developed with a specific utility or purpose. They are digital assets created for spending on various stuff in a blockchain ecosystem. These tokens are used to create unique incentive schemes and increase the utility of the ecosystem by enabling users to perform unique actions for which they are compensated. They also help raise money for the project through ICO(initial coin offerings). Some advantages of utility tokens include:
- Helps projects with good intentions raise funds through ICO
- Increase the value of a project by bringing in utility
- Help compensate users for helping the blockchain
- Help blockchain tech gets applied to traditional industries.
- Increase Decentralization
How Do Utility Tokens Work?
There can be many applications of utility tokens; some of them include:
- PROFIT-SHARING: Most decentralized exchanges (DEXes) incentivize users to deposit their assets into liquidity pools. This is done by generating Liquidity Provider (LP) tokens representing each depositor’s pool share. These are utility tokens
- VOTING: Aside from offering rewards, some utility tokens also provide governance features. They give token holder’s a right to vote on decisions that shape the future of a protocol. It works like a democracy, where each token has an equal value.
These summarise the most common uses of utility tokens; now let’s discuss the top 5 utility tokens.
It is the world’s second-largest token by market cap. It is what people refer to as the bitcoin killer. It is a decentralized software platform that enables smart contracts and dApps(decentralized apps) to be built and run without any downtime, fraud, or control of any interference from any third party
It aims to provide a decentralized suite of financial products that anyone can freely access. ETH is the token of the Ethereum blockchain. It is used to perform all transactions in the ecosystem. The ecosystem also allows people to ‘stake’ their assets to earn a reward. This process helps to secure the network and process the transactions that occur.
Just like ETH, Solana also supports Dapps. It can process transactions at a much faster rate than ETH and even charges lower transaction fees than Ethereum. SOL is the native token of the Solana blockchain. Both SOL and ETH can create smart contracts, which are essential for running cutting-edge applications, including decentralized finance (DeFi) and non-fungible tokens (NFTs). However, unlike ETH, Solana uses the proof of stake blockchain, which is supposedly better for the environment. Solana is pretty popular among artists for selling their NFTs
Like Solana Cardano, aka ADA, works on the ‘proof of stake’ blockchain. It was developed with a research-based approach by engineers, mathematicians, and cryptography experts. Cardano aims to be the world’s financial operating system by establishing DeFi products and solutions for chain interoperability, voter fraud, legal contract tracing, etc.
Polkadot (DOT) is a unique PoS(point of sale) crypto aiming to deliver interoperability with other blockchains. The protocol is designed to connect to all blockchains seamlessly and oracles to allow systems to work together under one roof. It allows the interoperability of varying networks
Polkadot allows developers to create their blockchains while using the security that Polkadot’s chain has already provided. Unlike ETH, it believes in the concept in Polkadot of shared security.
Binance Coin (BNB)
BNB is the utility token of the Binance Blockchain. It operates as a payment method for the fees associated with trading on the Binance Exchange. In addition, Binane compensates its customers for using the token by offering them a discount. It was initially an ERC-20 token built on the Ethereum blockchain, which eventually had its main net launch. The network also uses a PoS consensus model.
One of the prominent reasons these coins are on the list of TOP 5 Coins today is utility-driven. It is evident that for any cryptocurrency to be successful, it should solve the problem of the general user and the customers. However, as we have learned in the previous article, developing a crypto coin involves multiple steps involving
- Complete understanding of the web 3.0
- Understanding the process of Auditing crypto tokens
- Marketing of the token etc.
Enterprise Legion Management (ELM) can help in those tasks as they are a specially designed team of individuals with expertise in the domain of crypto creation. The coin developed will be according to the needs of the community and the client. The project owner has to fill out a form of 4 steps, and the team will contact you. They also offer a 24 X 7 service and can rest assured of a prompt reply.
Check more about their project at the below links:
Article on ELM : https://www.coinverse.co.in/post/enterprise-legion-management