Utility tokens give people the right to vote on upcoming improvement proposals on a dApp. Technically, if a utility token gives people this privilege, it's known as a "governance token." While every dApp has different rules for blockchain governance, one of these tokens typically represents one vote.

Many blockchain-based games have utility tokens that can be used to buy in-game items like NFTs (non-fungible tokens). Also, these utility tokens often serve as a rewards mechanism in play-to-earn games like "Axie Infinity."

Some centralized crypto exchanges (CEXs) like Binance, KuCoin, and Crypto.com offer utility tokens to reward holders with perks like discounted trading rates.

Utility tokens may serve as a dApp's built-in tipping mechanism. In addition to rewarding content creators, this function may influence the ranking of comments or videos on a social media dApp's main page..

People have to pay transaction fees using a smart contract blockchain's native utility token. For instance, people who want to use a dApp on Polygon have to use the MATIC token to confirm transactions.