Utility Token
In short: Utility tokens are tokens designed specifically for carrying out transactions and actions within a particular network or application.
Utility tokens are tokens designed specifically for carrying out transactions and actions within a particular network or application. Their main role is to give access to a product or service rather than to represent ownership of a company.
Why it matters
Platforms use utility tokens to pay fees, unlock features, reward users or take part in governance. A token's usefulness depends on people actually using the platform, so a project's tokenomics show what the token is really needed for. The label also matters legally: regulators and courts decide whether a token is a utility token or a security, and in the United States the Howey test is often central to that analysis. A project calling its own token a utility token does not settle the question.
Example
A decentralized file-storage network charges users in its own token for each gigabyte they store, and storage providers earn the same token for keeping files available. A user who never trades the token still needs some of it, because it is the only way to pay for storage inside that network.