Differences Between Governance and Utility Tokens
Adekunle Joshua
Cryptocurrencies often start with a purpose before becoming subjects of financial speculation on exchanges
The two common types of tokens are governance and utility tokens
Governance tokens are issued by DAOs or projects with DAOs, allowing holders to vote on improvement proposals
Utility tokens, on the other hand, are application tokens used in a project's system
DeFi platforms use utility tokens creatively, from fueling attention economies to serving as the only acceptable payment option for services
Governance tokens represent stakes in administration, while utility tokens act as gateways to technology or services
Both governance and utility tokens operate on the blockchain and hold financial value