A crypto token is a digital asset that blockchain developers build on top of an existing blockchain network. It’s a unit of value that can be used for investment purposes, to store value, and make purchases.
Unlike coins born on a proprietary blockchain, tokens are digital assets or cryptocurrencies created on a host blockchain.
For example, Ether is the coin of the Ethereum blockchain used as gas to pay networks’ fees; instead, UNI is a token created on the Ethereum blockchain to cover use cases within the Uniswap dApp. Its purpose is to be useful within the Uniswap platform but living on the Ethereum blockchain.
The creation of token results from executing a smart contract, which includes the name and the acronym that identifies the token on the main chain and its related economic aspects. (For what concerns the Ethereum blockchain, the standard is expressed by ERC-20).
Anyone can create a token, but its value depends on its utility and demand.
There are different kinds of tokens, such as utility, security, governance, and CEX token.
The most used tokens are token utilities, very popular in DeFi platforms as a tool of governance and CEX tokens.
Holding a CEX token allows the user to invest directly in the centralized exchange and enjoy several benefits, such as reduced fees or the possibility to participate in promotions and sales of new tokens (launchpad).
One of the most famous CEX tokens is BNB, the Binance token. Initially, BNB was born as an ERC-20 token on the Ethereum blockchain, but after the creation of the BNB Chain, it was converted into a real coin. The same thing happened to CRO, now Crypto.com’s coin.