Understanding of different token types is limited even among regular investors. This is because there is a lack of clearly defined terminology.
The Untitled INC team developed a framework (Token Classification Framework, or TCF) that:
- Reflects various exiting token types
- Allows to classify & analyze tokens in various relevant dimensions
- Fosters a better, nuanced understanding of crypto tokens
Classifying Tokens in 5 Dimensions
- Cryptocurrencies, network tokens, investment tokens
- Usage tokens, work tokens, hybrid tokens
- Legal status
- Utility tokens, security tokens, cryptocurrencies
- Underlying value
- Asset-backed tokens, network value tokens, share-like tokens
- Technical layer
- Blockchain-Native tokens, non-native tokens, (d)App tokens
Two potential dimensions that were ultimately not included are the Issuance Approach & Supply Structure.
After using this classification framework, patterns emerge, forming archetypes:
2. Tokenized Asset
3. Tokenized Platform
The Wider Context
Despite TCF's usefulness, it isn't enough to merely analyze a token. In any DLT system, there are three layers: governance, token & technology.