🧠 Tokenomics for Dummies: Types of Tokens Explained

🧠 Tokenomics for Dummies: Types of Tokens Explained

Jun 11, 2025

Web3 Transition

5 minute read

(Utility, Security, Governance & More)
TL;DR

Not all tokens are created equal. In Web3, tokens serve different purposes:

  • 🔓 Some unlock access

  • 📈 Some represent ownership

  • 🗳️ Some enable governance

The most common categories are utility tokens, security tokens, governance tokens and NFTs—each with its own use case and legal implications.

💡 Blubird’s Tokenomics Module supports all major token types—letting founders explore, model and launch the most effective structure for their ecosystem.

🐾 The Token Zoo: Understanding the Species

If you're building in Web3, you’ll eventually face the question:
“What kind of token does my ecosystem need?”
Here’s a breakdown of the most common types—and how to use them.

1. 🔧 Utility Tokens

“Fuel for your platform”

These tokens grant access to features, services or benefits within your product.

🧪 Examples:
  • Pay gas fees (e.g., ETH)

  • Unlock premium features

  • Stake to earn rewards

📌 Use Case:

A DeFi app might let users hold or spend utility tokens to reduce trading fees or unlock higher APYs.

⚠️ Risk:

If your platform’s utility fades or never materializes, the token becomes irrelevant—fast.

🛠️ Blubird helps validate utility by modeling real usage loops and economic flows before launch.

2. 🗳️ Governance Tokens

“Your say in the system”

Governance tokens allow holders to vote on upgrades, decisions or treasury allocations.

🧪 Examples:
  • UNI (Uniswap)

  • COMP (Compound)

  • MKR (MakerDAO)

📌 Use Case:

A DAO could allow token holders to vote on funding grants or protocol parameter changes.

😬 Gotcha:

Low voter turnout can lead to “governance capture”—where whales control everything.

Tip: Blubird’s governance modeling can help prevent this by simulating participation rates and power dynamics.

3. 🏛️ Security Tokens

“Like stocks, but tokenized”

Security tokens represent ownership in assets, profit rights or debt instruments.

🧪 Examples:
  • Tokenized equity shares

  • Revenue-share tokens

  • Tokenized debt instruments

📌 Use Case:

A startup might issue a security token that entitles holders to a percentage of future revenue.

Security tokens must follow securities laws (e.g., SEC, ASIC, etc.).

⚖️ Callout: Always consult a legal advisor before issuing a token—even if you think it's “just a utility.”

4. 🎨 NFTs (Non-Fungible Tokens)

“Digital uniqueness”

NFTs are unique tokens that prove ownership of a specific item—digital or physical.

🧪 Examples:
  • Digital art

  • Game characters/items

  • Real estate or event tickets

📌 Use Case:

A metaverse game might offer rare NFT gear that players can buy, sell or upgrade.

🔑 Key Feature:

They’re non-fungible—each token is unique and not interchangeable like ETH or USDC.

🧱 Blubird integrates NFT tokenomics too—whether you're managing supply, rarity or royalties.

5. 🌀 Hybrid Tokens

“Why pick one?”

Modern projects often combine features from multiple token types.

🧪 Examples:
  • Governance token that also pays fees

  • Utility token with embedded staking and voting

  • NFT with yield-bearing mechanics

📌 Use Case:

Projects like Balancer (BAL) use one token for both rewards and governance—maximizing function per unit.

💬 "The best token designs often combine multiple roles—carefully."

🧭 Picking the Right Token Type

Ask yourself:

  • What role does the token play in my ecosystem?

  • Will it be actively traded or passively held?

  • Does it require legal compliance?

  • Is it essential to product usage or just governance?

🎯 Good token design isn’t just about what the token does—it's about how it fits into your long-term ecosystem goals.

Even if your token is “utility-based,” regulators might disagree. Laws vary by region.

Always consult a crypto-savvy legal advisor.

🧠 Final Thought

“Tokens are tools. Pick the right one—or build the right mix—for your ecosystem.”

Understanding token types helps you:

  • ✅ Stay compliant

  • ✅ Build lasting utility

  • ✅ Attract aligned stakeholders

  • ✅ Avoid costly redesigns later

With tools like Blubird, designing, modeling, and deploying token structures that fit your ecosystem has never been easier.

🧭 Coming up next:

"Tokenomics for Dummies: Token Supply: Fixed vs Inflationary vs Deflationary"

Need help designing your token model? Check out Blubird and start building with confidence.

We can’t wait to

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