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Token Classification System

system overview

Token Classification System ÔÇö A Framework for Understanding Digital Assets

This system categorizes digital tokens by their technical structure, economic role, and real-world backing. It helps users distinguish between native protocol tokens, smart contract-issued tokens, real-world redeemables, and derivatives like synthetics and stablecoins. Each category informs how the token behaves, what risks it carries, and where it fits in a layered Web3 ecosystem.

Use Case: Provides a master index to understand where tokens belong across DeFi, NFT, payment, staking, and real-asset systems.

Key Concepts:

  • Tokenomics
  • Asset Classification
  • Technical Origin
  • Use Case Layers
  • On-Chain Structure

Token Classes:

  • 1. Native Asset
    • Issued by the base layer of a blockchain (e.g., $BTC, $ETH, $XRP, $FLR)
    • Used for transaction fees, security, staking, or network consensus
  • 2. Non-Native Asset
    • Issued via smart contract or IOU on a host chain (e.g., $USDC, $BAD, $EXFI)
    • Follows standards like ERC-20, XLS-20, or SPL
  • 3. Wrapped Asset
    • Represents a token from another chain, locked and re-issued on the host chain
    • Examples: $wBTC, $wETH, $WXRP
  • 4. Synthetic Asset
    • Tracks the price of a real-world or crypto asset without owning the underlying
    • Minted via collateralized smart contracts (e.g., $fXRP, $sUSD, $sBTC)
  • 5. Redeemable Asset
    • Backed 1:1 by physical assets like gold or silver
    • Redeemable for physical delivery (e.g., $KAG, $KAU, $PAXG)
  • 6. Stablecoin
    • Designed to maintain a fixed value, usually $1
    • Includes fiat-backed ($USDC), crypto-backed ($DAI), and algorithmic ($FRAX)
  • 7. Governance Token
    • Grants voting power over protocol decisions and upgrades
    • Examples: $COMP, $UNI (planned governance extensions)
  • 8. Utility Token
    • Used inside a specific dApp or platform for access, fees, or services
    • Examples: $ACH, $LOOKS, $AUDIO, $PNF
  • 9. Meme Token
    • Created for cultural, social, or viral appeal, not technical use
    • Examples: $DOGE, $SHIB, $BAD, $FUZZY
 
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