The lesson on understanding tokens by prof @reminiscence01 gave insights and a better understanding of what a token is, the misinterpretation of the term crypto token and coin due to their similarities, and the fact that they are both digital assets but highlighted their difference and more. I will be doing the homework tasks from the lesson,

1)What do you understand by Token and give an example of at least 5 tokens and identify the blockchain it is built on. ( give at least 3 different Blockchains)

Tokens

A token or crypto token is a type of digital asset built on an already existing blockchain, by platforms to represent a utility or a service. To paint a clear picture of what tokens are we look at tokens like DAI, LINK these are tokens of platforms built on the Ethereum blockchain. Ethereum native cryptocurrency is ether (ETH).

Mostly used by decentralized platforms like DApps, tokens are platforms in house currency used to represent an asset/utility or used to perform transactions. An example is the BCUG token for the DApp game blockchain cuties used to buy Cuties, gears from the games marketplace. The BCUG token can be called a utility token and the game's character and gears are Non-fungible tokens (NFTs).

Unlike cryptocurrency coins that require you to create a blockchain which is very expensive and requires lots of coding and programming experience, Tokens do not need so much to create.

For instance, if I want to create a BEP20 token on the binance smart chain network all that is required is to visit the cointool site fill out the necessary details of your token, click on create token and approve the transaction and you’re on your way to creating a token.

Examples of tokens

There are a bunch of tokens available in the cryptocurrency world right now. A few of them are highlighted below;

Tokens	Details
CAKE	A token issued by the Decentralized exchange DApp Pancakeswap is built on the Binance Smart Chain price at about $21
LINK	Link is a token issued by Chainlink a framework for building decentralized oracle networks built on the Ethereum Blockchain priced at about $28
AAVE	AAVE is a token issued by Aave a decentralized money market protocol built on the Ethereum blockchain priced at approximately $380
COMP	This is s token of Compound a protocol that allows the lending and borrowing of selected cryptocurrency by users. Built on the Ethereum blockchain is priced at $499
JST	JST is a token issued by JUST a decentralized lending ecosystem built on the TRON network priced at $0.075
BTT	BTT is a token of BitTorrent a peer-to-peer protocol that allows users to transfer files built on the TRON blockchain with a present price of about $0.0048

2)What is the difference between a token and a coin?

Tokens and coins are similar in lots of ways as they are both digital asset that holds value and can be traded on various exchanges, but they have differences in some certain areas and these are what separates them.

Tokens	Coins
Tokens are built on already existing blockchains	Coins are natives of their blockchain e.g BNB on the binance blockchain
Tokens don't require much programming experience to create, also it requires little cost when compared to coins	Requires lots of costs to set up also require a lot of programming expertise to create a coin
Tokens are pre-mined and new tokens can’t be mined anymore	coins are mined daily.
Tokens serve the purpose of the platform or service that created them	Coins are usually built for payment purposes or as a currency

3) Explain the different categories token listed below and explain its features.

• Utility token

Utility tokens are tokens startup developers of products (e.g DApps ) issue to investors during ICOs. The investors can use these purchased tokens as a means of payment for products and transactions present on the developers' platform.

These tokens are limited to their purpose of creation, for instance, a DApp game token like BCUG can be used to pay for character gears on the game but can't be used for anything else outside the game.

• Security Tokens

Security tokens act as a digital representation of a company shares or stock, given to investors. Security tokens are designed to be investment tokens, as holders of the security tokens have rights to the dividends of the company and decision-making. STO (Security Token Offering) is the process of a company issuing security tokens to investors.

• Equity Token

Equity token is similar to security tokens, in that they both are digital representatives of stock or shares of a company. Equity token holders have ownership percentages, and they also partake in the decision-making and sharing of the company dividends.

• Non-Fungible Tokens

Non-fungible tokens also known as NFTs are a digital representation of unique assets like photos, audio, videos, etc.NFTs are digital ownership of the represented assets. NFTs are not interchangeable as each NFT has its unique value as no two NFTs are the same.

Features of a Token

• Decentralization

Tokens are decentralized cryptocurrencies as no one has control over the value and can be owned by anyone, without permission. Also, token transactions are immutable as they cant be reversed or altered.

• Valuable

Tokens are valuable, as they are a representation of an asset or a platform's means of transactions. An example of a token value is AXS, a token of the online DApps game Axie Infinity priced at $66.32 as of this writing with a market cap above $4 billion

• Tradable

Tokens just like coins are tradable on exchanges, peer-to-peer transactions and used to purchase things online. Tokens can be traded on sites like binance, pancakeswap among many others.

• Investment

Tokens can be used as an investment. Security tokens and equity tokens are key examples as they are a digital representation of financial stocks or shares. The value of the startups issuing security tokens can grow to make it a good investment.

4. Make your research and write extensively on any token you listed in question one. (Must include features of the token, the aim of the project, Use cases)

AAVE is a native token of Aave a decentralized money market protocol built on the ethereum blockchain network. Founded by 29 individuals with Stani Kulechov as the CEO. AAVE was founded in November 2017 as ETHLend and later rebranded as Aave in September 2018.

Aave Timeline

source

Aave allows its users to borrow and lend 20 supported cryptocurrencies on its platform. Providing a medium where lenders earn from loan interest rates. Examples of cryptocurrency supported

Borrowers can decide if they want the interest rate to be fixed or variable.

Features of the AAVE Token

• Governance

AAVE can be used for governance as it gives the holders the right to vote and decide on upgrades.

source

• Incentives

Aave can be used as an incentive. When users stake AAVE within the protocol, the staking rewards and fee can be earned.

• Mitigation Tool

AAVE can be used as a mitigation tool. Staked AAVE can be used as insurance to cover deficits when there is a shortfall.

Conclusion

Tokens are digital assets that hold value and can be tradable. Tokens share huge similarities with coins but differ in some key aspects. Different tokens are created for different reasons. They are also used for investment e.g security tokens.