A token glossary

dApps is a term used to describe decentralised applications. dApps are built using smart contracts on top of blockchains like Ethereum and Solana. The token ecosystem hosts thousands of dApps covering decentralised finance, NFTs, gaming, and other niches.

Blockchains and cryptocurrency tokens champion decentralisation by removing the need for relying on third parties such as banks. Decentralisation is the core tenet of the cryptocurrency movement as it empowers individuals to take control of their destiny with tokens. 

In the decentralised finance ecosystem, exchanges help people swap tokens, earn yield, and other activities. Decentralised exchanges, also known as DEXs, are a popular alternative to centralised services, letting users swap tokens and NFTs when they connect their cryptocurrency wallet. Since DeFi boomed, many different DEXs have emerged across a variety of application-focused blockchains. 

Arguably the most promising use case for tokens today is decentralised finance, otherwise known as DeFi. This nascent space seeks to disrupt the traditional finance system by offering activities like lending and borrowing in a decentralised manner with tokens. DeFi has world-changing potential as it could empower millions of people by making finance more accessible. Ethereum is currently the token ecosystem’s main DeFi hub.

While cryptocurrency tokens often see their circulating supplies increase over time, some have mechanisms that can slow down or prevent inflation. Often implemented through token burns, deflationary mechanisms are typically used to preserve a token’s value. 

Derivatives are a type of financial instrument based on another type of asset. In the cryptocurrency ecosystem, derivatives can take the form of tokens. Derivatives are popularly traded on both centralised and decentralised exchanges. 

In the token ecosystem, NFTs are often referred to as “digital collectibles”—content such as digital art or playing cards that live on the blockchain in token form. NFT technology is powerful as it can be used to prove the owner of any kind of asset. 

The token universe is frequently described as an “ecosystem” as it is composed of many different elements that interconnect with one another through blockchains. The token ecosystem is home to many networks that are considered ecosystems in their own right, such as the Ethereum and NFT spaces.

ERC-1155 is a type of token developed by Enjin. ERC-1155 tokens can manage multiple token types, making them flexible. ERC-1155 tokens offer many use cases, such as allowing for different types of tokens to be transferred in one transaction.