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The purpose of this article is to share with you what the real function of Ethernet token pass or token is. The editor thinks it is very practical, so I share it with you to learn. I hope you can get something after reading this article.

It is time to introduce a deeper concept-the Token pass is also known as tokens. Many of the dApp built on Ethernet Square have their own cryptocurrency or Token. In order to interact with dApp, users need to buy dApp's own Token pass (token). Generally speaking, a pass (token) represents a specific thing in a given ecosystem. This may be economic value, dividends, equity, voting rights. Concrete things in reality. It is important to understand that Token, the token, is not limited to a specific role; it can perform a variety of different roles in its own ecosystem.

If we have an ether, why do we need Token?

After understanding the ethernet and how it works in the ethernet network, a natural question we have to ask is, why don't we use Ether to pay for every transaction in these dApp? Why do we need our own currency? The answer to this is very simple, because in the real world there are many places where we also use tokens instead of traditional currencies.

One of the simplest examples is arcade games that are common in places of entertainment.

If you want to play in an arcade game, you must first deposit your money in a slot machine or ask a waiter to change it into an arcade token. Once you have tokens, you can play games.

Different types of Token

The Yi Tai Fong ecosystem is developing, changing and expanding rapidly. New innovations may emerge in a minute. There will be various Token passes (tokens) based on blockchain in the future. But for now, we will discuss three kinds of blockchain-based passes (tokens):

Usage tokens: tokens required to use a service.

Work tokens: a token that entitles users to contribute to DAO and to benefit from the exchange of work results

Security tokens: a token that serves externally traded assets and represents the value in the system.

Usage tokens

These Token tokens function just like the currencies in their respective dApp. This is usually the simplest and most straightforward application of Token. These tokens have monetary value; however, they do not have any form of rights or privileges in a particular network. In short, think of Token as money. The use of Token is sometimes called a "medium-of-exchange" token.

Example: Golem,0x,Civic,Raiden,Basic Attention Token and so on.

Work tokens

The work pass gives users the right to contribute to the organization to help it play its role. In this model, the user (or service provider) uses the network's own pass to gain the right to perform work for the network. A cool thing about the work pass model is that as the demand for services grows, more revenue will go to service providers. In view of the fixed supply of passes, the service provider will reasonably provide more rights for each pass to obtain a portion of the growing cash flow. We will delve into the concepts of bonding, calculating valuations, and network incentives. The important thing to understand at this stage is the work pass to grant access to the network and the potential to provide cash flow, provided that the work is delivered using the pass.

Example: Augur,Keep,Truebit,Gems and so on.

Security tokens

Securities tokens, also known as tokens or investment tokens, are financial securities that comply with the regulations of the Securities and Exchange Commission. Although regulations and compliance will not be involved, the simple thing to understand is that these tokens provide a range of financial rights to token holders.

Examples of these financial rights include equity, dividends, profit sharing, voting rights, etc. Simply put, these tokens represent rights to related assets, such as real estate, cash flow or shareholdings. What makes securities tokens so transparent (and potentially revolutionary) is that rights are written into smart contracts and tokens are traded on blockchain-driven exchanges.

Sort them out.

Although many new concepts about Token passes or tokens have been introduced here, it is important to remember that the dApp built on Ethernet Square is like arcade games. Using them, interacting with them, and even playing with them starts with having an Token pass or token. As the ecosystem matures, developers will try and continue to come up with ideas and build on them. Over time, we will certainly find new and creative ways to capture the value of various network native Token certificates or tokens, continue to enhance the user experience and make something new possible.

The above is what the real function of Token pass or token is. The editor believes that there are some knowledge points that we may see or use in our daily work. I hope you can learn more from this article. For more details, please follow the industry information channel.

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