CRYPTO ACADEMY SEASON3 WEEK8-BEGINNERS COURSE / UNDERSTANDING TOKENS

I am glad to be taking part in this task given by @reminiscence01 professor and my research is below.

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1 What do you understand by a token and give an example of 5 tokens, identify the blockchain they are built on(give 3 different blockchains

The term token is frequently used in crypto currencies and each has a blockchain it is built on.
Tokens are digital assets that reside on their blockchain. They are used for investment purposes and to purchase.

Blockchains are databases that store information in blocks that are they are chained on. They work with a decentralized network to simply the transaction process.

Tokens and their blockchains they are built on

Tokens	Blockchain
Revain	Tron
Nexo	Ethereum
PancakeSwap	Binance Smart Chain
Tether	Ethereum
Chainlink	Ethereum

2 What is the difference between tokens and coins

Tokens	Coins
Gained popularity through ICOs	Gain popularity through mining
Are built on the existing blockchain	Are based on their native blockchain network
They are suitable for multiple needs	Used for making payments
Easy to build because they rely on existing blockchain networks	Difficult to create because they need native blockchain networks

3 Explain the different categories of tokens below and explain their features

• Utility tokens
They are a type of tokens used in financing projects for startups or project development groups. They are usually surrounded by a lot of speculation which increases risks in them since they are strategically used in financing.
In crypto currencies, utility tokens are associated with projects in development.

• Security tokens
These are digital tokens that represent ownership or shares in traditional financial assets in a company that issues them.
For example usually it’s the government or businesses that distribute shares to their investors and also give them dividends.

• Equity tokens
These are a little similar to security tokens though these ones represent equity. These tokens are used in the collection of data which is needed on equity certificates.
An equity token entitles its holder to voting rights, dividends, subscription rights and other benefits of holding shares in a company.

• Non fungible tokens
These are unique tokens that can never be replaced. They are used to represent real life things such as photos, videos, audios...
Having ownership to a non fungible token is often associated with a license to use the underlying digital assets.

4 Make your research and write about any token that you listed on the first question( include its features and aims)(use cases)

There is a large number of tokens but I love the PancakeSwap token and it’s the one am going to explain about.

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It is a decentralized exchange built on the Binance Smart Chain which facilitates the swapping of different coins in a safe way.
It is the largest token on the Binance Smart Chain and so it offers very many opportunities to its users.

currently on the CoinMarketCap

Benefits of using the PancakeSwap
• It eliminates challenges faced when transacting since it operates in the decentralized blockchain networks.

• It makes streamlining easy. It provides a cost effective platform for users which attracts many more people hence almost outcompeting traditional exchanges.

• It introduces its users to very many new tokens because of its possible to swap.

• Transaction costs on the PancakeSwap are very low hence affordable compared to other exchanges. It facilitates carrying out transactions at low rates.

Features of the PancakeSwap
• Liquidity pools
Users create liquidity pools so as to earn tokens. When the token liquidity rises, its value as well rises which brings a return of profits.

• Dex
PancakeSwap provides a user friendly decentralized exchange which is effectively used by new traders to trade with ease.

• Staking
Through this, PancakeSwap users are entitled to rewards in tokens. Stalking is done using “cake” and it doesn’t require any skills or monitoring hence making it easy to use.

• Yield farming
Through this, users are able to lend their tokens to others in hopes of great returns through utilizing smart contacts.

Aims of the PancakeSwap
• It aims at eliminating challenges that are still being faced in the crypto industry during the process of carrying out transactions by making the whole system decentralized.

Conclusion
In Conclusion, some people confuse tokens for coins but they are different as seen in the answers on the second question. There are many tokens that any trader can choose to invest in but it is important to know the tokens features and aims and also make proper research on it so that you don’t fall a victim of fraud.

Cc:@reminiscence01