17 types of Blockchain Tokens
From Algorithmic Tokens to Virtual Financial Assets, there are 17 types of Blockchain Tokens.
From Algorithmic Tokens to Virtual Financial Assets, there are 17 types of Blockchain Tokens.
1. Algorithmic Tokens
Tokens that use an algorithm to vary the supply in order to stabilize price / volatility e.g. UST (now defunct) a so-called algorithmic stablecoin of the Terra ecosystem. Interestingly, Algorithmic Tokens are prohibited by the Dubai Financial Services Authority (DFSA) - the independent regulator of financial services conducted in or from the Dubai International Finance Centre (DIFC).
2. Asset-backed Tokens
Tokens that are backed by off-chain assets such as fiat currency, agricultural commodities, and precious metals e.g. USD Coin (USDC), and PAX Gold (PAXG).
3. Crypto Currencies
Tokens that can be used to buy and sell products & services or which can be quickly converted to 'cash' e.g. Bitcoin (BTC), Litecoin (LTC), Bitcoin Cash (BCH).
4. Crypto-backed Tokens
Tokens backed by on-chain assets such as cryptocurrencies e.g. Wrapped Bitcoin (WBTC).
5. DeFi Tokens
Tokens that are part of Decentralized Finance (DeFi) protocols such as Collateralized Debt Positions (CDP). For more about DeFi, see this post: What is DeFi?
6. DFSA Recognized Crypto Tokens (Dubai)
Tokens recognized by Dubai Financial Services Authority (DFSA) - the independent regulator of financial services conducted in or from the Dubai International Finance Centre (DIFC):
Bitcoin (BTC),
Litecoin (LTC), and
Ether (ETH).
7. Exempt NFTs (India)
Tokens that are exempt from taxation as NFTs in India - whose transfer results in the enforceable transfer of ownership of underlying tangible assets.
8. Exempt Virtual Digital Assets (India)
Tokens exempt from taxation as VDAs in India - gift cards & vouchers, mileage points, reward points, loyalty cards, and subscriptions to websites, platforms, and applications.
9. Fractional Licenses of Intellectual Property (FLIPs)
Tokens that represent the whole or part of licenses relating to copyright, industrial designs, patents, and trademarks.
10. Governance Tokens
Tokens that give holders a vote in a project’s development e.g. Uniswap (UNI).
11. Non-fungible Tokens
Tokens that relate to off-chain collectibles and digital art.
12. Open Blockchain Tokens (Wyoming, US)
Tokens issued under Wyoming, US law HB0070 - Open blockchain tokens-exemptions e.g. Wrapped Asset Project (WRAP).
13. Privacy-enhanced Currencies
Tokens that are either private by default or which allow the activation of privacy functionality e.g. Monero (XMR). Interestingly, Privacy-enhanced Currencies are prohibited by the Dubai Financial Services Authority (DFSA) - the independent regulator of financial services conducted in or from the Dubai International Finance Centre (DIFC).
14. Public Blockchain Natives
Tokens that are used for paying fees for usage of a public blockchain e.g. Ether (ETH).
15. Security Tokens
Tokens that represent equity or ownership of a company.
16. Utility Tokens
Tokens that are part of a specific use case e.g. Filecoin (FIL) which is the incentive layer of the IPFS decentralized storage ecosystem.
17. Virtual Financial Assets (Malta)
Tokens that are recognized under the Virtual Financial Assets Act of Malta e.g. Chiliz (CHZ).
Hi, Rohas! 👋
Thanks for the info.👌
Great piece