New token types – everything you need to know about them

Maciej Zieliński

02 Feb 2021
New token types – everything you need to know about them

Which tokens are the most popular? What new token types are worth watching in 2021? 

Although cryptographic tokens are created from just a few lines of code, the potential they hold is gigantic. We are already using them today to create digital equivalents of real assets such as shares and real estate or to create innovative product tracking systems in the supply chain. And as digitisation continues, the list of their applications continues to grow.

Currently, the most popular type of token is created in Ethereum ERC-20. However, the continuous development of Blockchain technology in recent years has resulted in the creation of numerous alternatives. New types of tokens are characterised by innovative technological solutions and adaptation to specific business needs. Which of them are particularly worth taking interest in?

Types of tokens 

To better understand the possibilities of this technology, it is worth taking a closer look at its types. Among the many ways to distinguish tokens, the most basic is the division into fungible tokens and non-fungible tokens.):

Fungible tokens 

They make up the vast majority of all tokens. The term fungible means that a single token is indistinguishable from other tokens in the same blockchain ecosystem. This allows it to find uses as a cryptocurrency, credit or exchange of value. A great example of such a token is the well-known Bitcoin: no Bitcoin is more valuable or scarcer than another. If it were otherwise, their free exchange would not be possible, which would disrupt the entire system. 

Convertible tokens are analogous to conventional currencies in this respect: all euros, zlotys, or dollars have exactly the same value. It is precisely the fungibility that makes them useful. Thanks to it we do not have to individually estimate the value of each zloty during a transaction. 

There are 3 categories of fungible tokens:


Bitcoin, Litcoin or Dash - this is what they are. Convertible payment tokens were created to be used for transactions between parties instead of or alongside fiat currencies. Their value is determined by the number of people who wish to use them and the number of merchants.

Utility Tokens:

These tokens work in exactly the same way as tokens in an arcade. You exchange tokens for the entertainment available there, but you can use tokens to access services, products or other value on the platform they power.  

The most common example of such a token is Ether. ETH is used to pay for the execution of smart contracts on the Ethereum network. Of course, Ether can be used to make other payments as well, but powering contracts, dapps and DAOs is its primary purpose. 

It is Utility tokens that are used during ICOs, where they serve as a tool to raise funds for the creation of a project in which they can later be used. 

Security tokens

Security tokens are primarily distinguished from Utility tokens by securing the value of the former in real assets. By buying Utility tokens we can of course earn from the increase in their value, but in reality we own nothing - they are worth what the market pays for them and can always fall to zero.

Such tokens are the digital equivalent of real assets. Primarily stocks, bonds and real estate. It is these that are issued during STO and it is these that allow for the tokenisation of precious metalsor luxury cars

New token types

Non-fungible tokens

In opposition to fungible tokens are non-fungible tokens. Non-exchangeability in their case means that each token in a given system is unique. Such tokens have no standard value and often do not allow equivalent exchange of one for another. Each token represents different, unique ownership or identity information. The primary uses of non-fungible tokens are:


This is potentially the most important application of this type of token. A token can be used to prove the origin of a document, a piece of data or any physical object in the real world. And because such tokens cannot be duplicated and the information they contain cannot be manipulated, we can be sure that such a token - a certificate of authenticity - will never be counterfeited. 

Securing the authenticity of works of art, luxury fashion or exotic cars - the possibilities of such tokens go much further. If land records were transferred to the blockchain, ownership would just be a matter of having a token corresponding to the property. The same goes for resource extraction rights, or water rights. Non-fungeable tokens have countless potential applications wherever certification of ownership is important. 

 Identity of the things

Like people, products, machines and raw materials can also have a digital identity.  IDoT is a key component of blockchain-based supply chains and IoT applications. 

For example, by assigning unique tokens to products, it becomes possible to trace their entire journey in the supply chain - from raw material extraction to production to sale to retail customers. This not only makes it possible to secure their origin, but also to control transport conditions, especially important in industries such as food. If a spoiled chicken ends up in a supermarket, tokens make it easy to determine at which point in the chain the problem occurred and which party is responsible..  

New token types

What new types of tokens can be used in your project?

  • ERC-721
  • ERC-223
  • ERC- 777
  • ERC-1155 
  • FabToken


The most important advantage of the ERC-721 standard is the ease of creating unalterable tokens. Introduced in 2018, it finds its use wherever distinguishable assets need to be tracked. 

This type of token has gained buzz with the rise in popularity of Ethereum-based collectible game CryptoKitties.

New token types
Source: CoinMetrics Blog


This token is intended to solve the UX shortcomings of other ERC tokens. Occasionally a user will send the token to the wrong wallet address or worse, a smart contract, thus losing it forever. This feature of other standards can effectively deter less familiar users and limit the widespread adoption of a solution. 

ERC-223 solves this problem by alerting users who accidentally send tokens to a smart contract address and cancelling the transaction. 

ERC- 777

The aim of implementing ERC-777 was to improve on the basic ERC-20 standard. What makes it unique is that it introduces a wide range of transaction handling mechanisms while being backwards compatible with ERC-20. 

Among other things, the standard allows for the definition of operators to send tokens on behalf of a given user and gives holders far greater control over their tokens. One of its most innovative features is the option to mint or burn tokens. It also has the potential to significantly simplify token transfers compared to other standards. 


ERC-1155 is a multi token standard. This means that it allows any combination of fungible and non-exchangeable tokens to be managed under a single contract, including the transfer of multiple token types simultaneously.


Unlike ERC standard tokens, which are created using the Ethereum protocol, FabToken runs on the Hyperledger Fabric Blockchain. 

This system provides a simple interface to tokenise resources on the Fabric protocol, using the security and validation mechanisms that the Fabric protocol provides. Importantly, users do not need to use smart contracts to create or manage tokens. Tokens can establish immutability and ownership of a resource without requiring the user to write and validate complex business logic. Owners can use trusted partners to execute and validate transactions, without having to rely on partners from other organisations. 

Want to know which token will best suit your project needs? Our experts will be happy to answer all your tokenization questions!

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Token Engineering Process

Kajetan Olas

13 Apr 2024
Token Engineering Process

Token Engineering is an emerging field that addresses the systematic design and engineering of blockchain-based tokens. It applies rigorous mathematical methods from the Complex Systems Engineering discipline to tokenomics design.

In this article, we will walk through the Token Engineering Process and break it down into three key stages. Discovery Phase, Design Phase, and Deployment Phase.

Discovery Phase of Token Engineering Process

The first stage of the token engineering process is the Discovery Phase. It focuses on constructing high-level business plans, defining objectives, and identifying problems to be solved. That phase is also the time when token engineers first define key stakeholders in the project.

Defining the Problem

This may seem counterintuitive. Why would we start with the problem when designing tokenomics? Shouldn’t we start with more down-to-earth matters like token supply? The answer is No. Tokens are a medium for creating and exchanging value within a project’s ecosystem. Since crypto projects draw their value from solving problems that can’t be solved through TradFi mechanisms, their tokenomics should reflect that. 

The industry standard, developed by McKinsey & Co. and adapted to token engineering purposes by Outlier Ventures, is structuring the problem through a logic tree, following MECE.
MECE stands for Mutually Exclusive, Collectively Exhaustive. Mutually Exclusive means that problems in the tree should not overlap. Collectively Exhaustive means that the tree should cover all issues.

In practice, the “Problem” should be replaced by a whole problem statement worksheet. The same will hold for some of the boxes.
A commonly used tool for designing these kinds of diagrams is the Miro whiteboard.

Identifying Stakeholders and Value Flows in Token Engineering

This part is about identifying all relevant actors in the ecosystem and how value flows between them. To illustrate what we mean let’s consider an example of NFT marketplace. In its case, relevant actors might be sellers, buyers, NFT creators, and a marketplace owner. Possible value flow when conducting a transaction might be: buyer gets rid of his tokens, seller gets some of them, marketplace owner gets some of them as fees, and NFT creators get some of them as royalties.

Incentive Mechanisms Canvas

The last part of what we consider to be in the Discovery Phase is filling the Incentive Mechanisms Canvas. After successfully identifying value flows in the previous stage, token engineers search for frictions to desired behaviors and point out the undesired behaviors. For example, friction to activity on an NFT marketplace might be respecting royalty fees by marketplace owners since it reduces value flowing to the seller.


Design Phase of Token Engineering Process

The second stage of the Token Engineering Process is the Design Phase in which you make use of high-level descriptions from the previous step to come up with a specific design of the project. This will include everything that can be usually found in crypto whitepapers (e.g. governance mechanisms, incentive mechanisms, token supply, etc). After finishing the design, token engineers should represent the whole value flow and transactional logic on detailed visual diagrams. These diagrams will be a basis for creating mathematical models in the Deployment Phase. 

Token Engineering Artonomous Design Diagram
Artonomous design diagram, source: Artonomous GitHub

Objective Function

Every crypto project has some objective. The objective can consist of many goals, such as decentralization or token price. The objective function is a mathematical function assigning weights to different factors that influence the main objective in the order of their importance. This function will be a reference for machine learning algorithms in the next steps. They will try to find quantitative parameters (e.g. network fees) that maximize the output of this function.
Modified Metcalfe’s Law can serve as an inspiration during that step. It’s a framework for valuing crypto projects, but we believe that after adjustments it can also be used in this context.

Deployment Phase of Token Engineering Process

The Deployment Phase is final, but also the most demanding step in the process. It involves the implementation of machine learning algorithms that test our assumptions and optimize quantitative parameters. Token Engineering draws from Nassim Taleb’s concept of Antifragility and extensively uses feedback loops to make a system that gains from arising shocks.

Agent-based Modelling 

In agent-based modeling, we describe a set of behaviors and goals displayed by each agent participating in the system (this is why previous steps focused so much on describing stakeholders). Each agent is controlled by an autonomous AI and continuously optimizes his strategy. He learns from his experience and can mimic the behavior of other agents if he finds it effective (Reinforced Learning). This approach allows for mimicking real users, who adapt their strategies with time. An example adaptive agent would be a cryptocurrency trader, who changes his trading strategy in response to experiencing a loss of money.

Monte Carlo Simulations

Token Engineers use the Monte Carlo method to simulate the consequences of various possible interactions while taking into account the probability of their occurrence. By running a large number of simulations it’s possible to stress-test the project in multiple scenarios and identify emergent risks.

Testnet Deployment

If possible, it's highly beneficial for projects to extend the testing phase even further by letting real users use the network. Idea is the same as in agent-based testing - continuous optimization based on provided metrics. Furthermore, in case the project considers airdropping its tokens, giving them to early users is a great strategy. Even though part of the activity will be disingenuine and airdrop-oriented, such strategy still works better than most.

Time Duration

Token engineering process may take from as little as 2 weeks to as much as 5 months. It depends on the project category (Layer 1 protocol will require more time, than a simple DApp), and security requirements. For example, a bank issuing its digital token will have a very low risk tolerance.

Required Skills for Token Engineering

Token engineering is a multidisciplinary field and requires a great amount of specialized knowledge. Key knowledge areas are:

  • Systems Engineering
  • Machine Learning
  • Market Research
  • Capital Markets
  • Current trends in Web3
  • Blockchain Engineering
  • Statistics


The token engineering process consists of 3 steps: Discovery Phase, Design Phase, and Deployment Phase. It’s utilized mostly by established blockchain projects, and financial institutions like the International Monetary Fund. Even though it’s a very resource-consuming process, we believe it’s worth it. Projects that went through scrupulous design and testing before launch are much more likely to receive VC funding and be in the 10% of crypto projects that survive the bear market. Going through that process also has a symbolic meaning - it shows that the project is long-term oriented.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.


What does token engineering process look like?

  • Token engineering process is conducted in a 3-step methodical fashion. This includes Discovery Phase, Design Phase, and Deployment Phase. Each of these stages should be tailored to the specific needs of a project.

Is token engineering meant only for big projects?

  • We recommend that even small projects go through a simplified design and optimization process. This increases community's trust and makes sure that the tokenomics doesn't have any obvious flaws.

How long does the token engineering process take?

  • It depends on the project and may range from 2 weeks to 5 months.

What is Berachain? 🐻 ⛓️ + Proof-of-Liquidity Explained


18 Mar 2024
What is Berachain? 🐻 ⛓️ + Proof-of-Liquidity Explained

Enter Berachain: a high-performance, EVM-compatible blockchain that is set to redefine the landscape of decentralized applications (dApps) and blockchain services. Built on the innovative Proof-of-Liquidity consensus and leveraging the robust Polaris framework alongside the CometBFT consensus engine, Berachain is poised to offer an unprecedented blend of efficiency, security, and user-centric benefits. Let's dive into what makes it a groundbreaking development in the blockchain ecosystem.

What is Berachain?


Berachain is an EVM-compatible Layer 1 (L1) blockchain that stands out through its adoption of the Proof-of-Liquidity (PoL) consensus mechanism. Designed to address the critical challenges faced by decentralized networks. It introduces a cutting-edge approach to blockchain governance and operations.

Key Features

  • High-performance Capabilities. Berachain is engineered for speed and scalability, catering to the growing demand for efficient blockchain solutions.
  • EVM Compatibility. It supports all Ethereum tooling, operations, and smart contract languages, making it a seamless transition for developers and projects from the Ethereum ecosystem.
  • Proof-of-Liquidity.This novel consensus mechanism focuses on building liquidity, decentralizing stake, and aligning the interests of validators and protocol developers.


EVM-Compatible vs EVM-Equivalent


EVM compatibility means a blockchain can interact with Ethereum's ecosystem to some extent. It can interact supporting its smart contracts and tools but not replicating the entire EVM environment.


An EVM-equivalent blockchain, on the other hand, aims to fully replicate Ethereum's environment. It ensures complete compatibility and a smooth transition for developers and users alike.

Berachain's Position

Berachain can be considered an "EVM-equivalent-plus" blockchain. It supports all Ethereum operations, tooling, and additional functionalities that optimize for its unique Proof-of-Liquidity and abstracted use cases.

Berachain Modular First Approach

At the heart of Berachain's development philosophy is the Polaris EVM framework. It's a testament to the blockchain's commitment to modularity and flexibility. This approach allows for the easy separation of the EVM runtime layer, ensuring that Berachain can adapt and evolve without compromising on performance or security.

Proof Of Liquidity Overview

High-Level Model Objectives

  • Systemically Build Liquidity. By enhancing trading efficiency, price stability, and network growth, Berachain aims to foster a thriving ecosystem of decentralized applications.
  • Solve Stake Centralization. The PoL consensus works to distribute stake more evenly across the network, preventing monopolization and ensuring a decentralized, secure blockchain.
  • Align Protocols and Validators. Berachain encourages a symbiotic relationship between validators and the broader protocol ecosystem.

Proof-of-Liquidity vs Proof-of-Stake

Unlike traditional Proof of Stake (PoS), which often leads to stake centralization and reduced liquidity, Proof of Liquidity (PoL) introduces mechanisms to incentivize liquidity provision and ensure a fairer, more decentralized network. Berachain separates the governance token (BGT) from the chain's gas token (BERA) and incentives liquidity through BEX pools. Berachain's PoL aims to overcome the limitations of PoS, fostering a more secure and user-centric blockchain.

Berachain EVM and Modular Approach

Polaris EVM

Polaris EVM is the cornerstone of Berachain's EVM compatibility, offering developers an enhanced environment for smart contract execution that includes stateful precompiles and custom modules. This framework ensures that Berachain not only meets but exceeds the capabilities of the traditional Ethereum Virtual Machine.


The CometBFT consensus engine underpins Berachain's network, providing a secure and efficient mechanism for transaction verification and block production. By leveraging the principles of Byzantine fault tolerance (BFT), CometBFT ensures the integrity and resilience of the Berachain blockchain.


Berachain represents a significant leap forward in blockchain technology, combining the best of Ethereum's ecosystem with innovative consensus mechanisms and a modular development approach. As the blockchain landscape continues to evolve, Berachain stands out as a promising platform for developers, users, and validators alike, offering a scalable, efficient, and inclusive environment for decentralized applications and services.


For those interested in exploring further, a wealth of resources is available, including the Berachain documentation, GitHub repository, and community forums. It offers a compelling vision for the future of blockchain technology, marked by efficiency, security, and community-driven innovation.


How is Berachain different?

  • It integrates Proof-of-Liquidity to address stake centralization and enhance liquidity, setting it apart from other blockchains.

Is Berachain EVM-compatible?

  • Yes, it supports Ethereum's tooling and smart contract languages, facilitating easy migration of dApps.

Can it handle high transaction volumes?

  • Yes, thanks to the Polaris framework and CometBFT consensus engine, it's built for scalability and high throughput.