Native Token
A native token is the primary cryptocurrency of a blockchain network. It is designed to power the ecosystem by facilitating transactions, governance, and other functions. Native tokens often act as the base currency for fees and rewards, ensuring the smooth operation of the blockchain.
Key Features of Native Tokens:
- Transaction Fees:
Users pay gas fees in the native token for sending assets or interacting with smart contracts (e.g., ETH on Ethereum). - Staking and Rewards:
Native tokens are used for staking to secure the network, with stakers earning rewards in return (e.g., SOL on Solana). - Governance:
Holders of native tokens may vote on network upgrades and protocol changes, playing a crucial role in decentralized governance. - Use as Collateral:
Native tokens can often be used as collateral in DeFi applications for loans and liquidity pools.
Examples of Native Tokens:
- Bitcoin (BTC) – Native token of the Bitcoin blockchain.
- Ether (ETH) – Powers the Ethereum network.
- BNB – Native token of the Binance Smart Chain.
- ADA – Runs on the Cardano network.
Benefits and Risks of Native Tokens:
- Benefits: Enable decentralized operations, reward network participants, and support governance.
- Risks: Price volatility, regulatory uncertainties, and changes in token utility can impact value.