Token Utility Disclosure Metrics

Token utility disclosure metrics are the standardized data points that projects provide to explain the actual functional use of a token, which helps regulators determine its legal classification. By clearly defining how a token is used within a protocol ⎊ such as for governance, staking, or as a medium of exchange ⎊ projects can provide evidence that their token is a utility token rather than an investment contract.

These metrics are essential for building a strong legal defense and for providing transparency to potential users and investors. As regulators demand more clarity, these disclosures are becoming more rigorous, often requiring detailed technical and economic analysis.

For derivative protocols, understanding the utility of the tokens they list is critical for assessing the risk of those tokens being reclassified as securities, which could have a cascading effect on the derivative markets.