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Utility NFTs

1 min read
Pronunciation
[yoo-til-i-tee en-eff-tee]
Analogy
Think of a utility NFT like a VIP membership card that also doubles as a collectible souvenir.
Definition
NFTs designed to grant holders specific functional benefits—such as access rights, discounts, or governance privileges—beyond mere collectibility.
Key Points Intro
Utility NFTs combine collectible value with practical on-chain utilities.
Key Points

Access rights: gates to events, content, or features

Redeemable perks: discounts, airdrops, or token burns

Governance: voting or proposal privileges

Metadata hooks: on-chain logic triggers utilities

Example
A gaming project issues utility NFTs that unlock exclusive in-game items and grant holders early access to beta releases.
Technical Deep Dive
Contracts implement ERC-721/ERC-1155 with `tokenURI` metadata linking to utility parameters. Utility logic resides in helper contracts that verify ownership and execute functions like `redeem()`. Off-chain backends listen for `Transfer` events to trigger off-chain utilities.
Security Warning
Utility functions must enforce strict ownership checks to prevent unauthorized usage.
Caveat
Overly broad or poorly defined utilities can raise regulatory scrutiny as securities.

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