Token

What is Token?

A token is a digital asset created and managed on an existing blockchain via smart contracts. Unlike coins that power their own chains, tokens are built on top of platforms like Ethereum and follow standards like ERC-20 or ERC-721.

How does Token work?

1. A smart contract defines total supply, transfer rules, and holder rights.
2. ERC-20 tokens are fungible each unit is identical and interchangeable.
3. ERC-721 tokens are non-fungible each has a unique ID.
4. The contract tracks balances and authorizes transfers between addresses.

Why does Token matter?

Tokens enable new economic models governance rights, protocol ownership, in-game assets, and yield-bearing instruments all without a centralized issuer.

Key features of Token

• Exist on existing blockchains, not independent chains
• Standardized for wallet and exchange compatibility
• Transferable globally without intermediaries
• All transactions permanently recorded on-chain

Examples of Token

USDC is an ERC-20 token representing US dollars. UNI is Uniswap's governance token.

LINK compensates Chainlink oracle operators. Each follows the ERC-20 standard, making them compatible with every Ethereum wallet and exchange automatically.