A protocol token is a type of digital asset that serves a specific purpose within a blockchain network or protocol. Unlike other cryptocurrencies that might be used primarily as a medium of exchange, protocol tokens often facilitate the operations and governance of a particular platform.

These tokens can be used for various functions, such as paying for transaction fees, staking to earn rewards, or participating in decision-making processes through voting. Their value can be influenced by the demand for the services offered by the protocol they are linked to.

For example, in decentralized finance (DeFi) platforms, protocol tokens may provide access to specific financial services or governance rights that allow holders to influence the development and management of the protocol.

Overall, protocol tokens are integral to the functionality and sustainability of blockchain networks, aligning user incentives with the platform’s growth and success.