What is a Native Token?

Native tokens represent the most fundamental tokens of blockchain ecosystems. At this, users can exchange value on a peer-to-peer basis with their help.

Each independent blockchain features its own native token with its balances being stored right on the L1 (layer-1).

Ethereum with its native token ETH is, perhaps, one of the most prominent examples. 

As ethers represent the value of the network, users may rely on these native tokens to make peer-to-peer transactions. To pay gas fees, they convert ETH into gas. Node validators, in turn, get ETH as a reward for their work.

Native Token vs Non-Native Token

The fastest way to understand a native token is to see it next to what it is not.

👉 Quick takeaway: Native tokens are issued by the blockchain protocol itself, always pay gas fees, and carry no issuer confiscation risk. Non-native tokens live inside smart contracts, can exist across multiple chains, but may carry admin control risks depending on how the contract is written.

This table covers the core distinction. The sections below go deeper on each use case.

The Use Cases of a Native Token

Following the native token definition, it’s worth giving more details about its primary use cases. At this, native tokens can help to perform the following key tasks.

• Incentive mechanism for validators. Network validators get rewards for their work in the form of native tokens. Thus, these tokens are essential to the stability and security of any blockchain.
• Transaction fees. In order to send funds from one wallet to another, users have to pay network fees. For that, they use native tokens of the blockchain where they operate.
• Network governance. Blockchains running on the proof-of-stake consensus mechanism, require users to stake native tokens to perform network governance. At this, it is possible to vote on any proposed changes proportionate to the amount at stake. Thus, the more governance tokens one has at stake, the higher his or her influence.

All these aspects make native tokens the most liquid and, therefore, the most reliable and stable assets within any given blockchain infrastructure. 

This leads to another important use case.

With all the features mentioned above, native tokens represent the best solution to back algorithmic stablecoins. 

In the case of PulseChain, its native token PLS is the key asset to maintain another digital asset USDL stable. Regardless of the market conditions, there will always be a sufficient amount of the native token to guarantee a stable price of USDL.

Native Token List (Examples)

Every major blockchain has exactly one native token. The roles are consistent across all of them: pay fees, reward validators, enable staking. The differences show up in the details of supply, inflation schedule, and governance design. Here are four examples worth knowing.

Ethereum Native Token

Ethereum blockchain features ether (ETH) as its native token. Users can make peer-to-peer payments within the network and also cover gas fees with its help.

Thanks to smart contracts, Ethereum has given an impulse to the development of the whole blockchain industry in general and decentralized applications in particular. 

With many DeFi applications being fuelled by the Ethereum token, the importance of ETH is difficult to underestimate.

Solana Native Token

Solana’s native token is SOL. It covers transaction fees on the Solana network and is used to stake with validators, who in turn earn SOL rewards for processing transactions.

SOL is also required to pay rent on Solana accounts. Any wallet holding data on-chain (including SPL tokens like USDC) needs a small SOL balance to keep that account active. This makes SOL structurally essential for anyone operating on Solana, not just those staking or trading it directly.

Tokens built on Solana using the SPL standard (the Solana equivalent of Ethereum’s ERC-20) are non-native. They cannot pay fees and cannot be staked. SOL is the only asset that does both.

Fantom Native Token

Fantom launched as a high-speed, low-cost alternative to Ethereum. Its original native token was FTM. In late 2023 the network began a significant transition, rebranding toward the Sonic network with an updated token structure.

If you are researching FTM specifically, verify the current token name and ticker with Fantom’s official documentation, as details were still evolving at the time of publication.

Avalanche Native Token

Avalanche features a unique architecture powered by the subnets. Each of these subnets comes with independent native tokens and a fee structure.

Also, it comes with a unified native token AVAX. Aside from network payments, it helps to perform atomic swaps and covers transaction fees.

PulseChain

PulseChain is a full-system state copy of Ethereum 2.0. The native token of PulseChain is PLS.

You can think of PLS is to PulseChain as ETH is to Ethereum. They are both the gas tokens used for the blockchain. However, PLS has a much greater supply which has helped alleviate unit bias. 

PulseChain has other native tokens on it as well. Since USDL is created when PLS is locked in a vault, and it does not rely on any activities off-chain, it is also a native token. 

How Solana’s Native Token Works in Practice

Solana’s native token, SOL, is one of the clearest real-world examples of how a native token functions day to day.

Every transaction on Solana requires a small amount of SOL to pay the network fee. Validators who process and confirm those transactions earn a share of those fees plus newly issued SOL as a staking reward. Holders who want to participate in governance or earn yield can delegate their SOL to a validator without giving up custody of the asset.

SOL is also used to pay for rent on Solana accounts. When you store data on-chain (for example, holding an SPL token in a wallet), the network requires a small SOL deposit to keep that account open. This is a mechanic specific to Solana’s architecture and does not exist on Ethereum in the same form.

The contrast with non-native SPL tokens on Solana is direct. USDC on Solana is an SPL token. It cannot pay transaction fees. It cannot be staked for validator rewards. It cannot vote on protocol changes. SOL does all three. That is the practical gap between a native token and a token built on top of the chain.

Examples of Non-native Tokens

Wrapped versions of digital assets such as wBTC, wETH, or wSOL are, perhaps, the best examples of non-native tokens.

These tokens can be bridged onto other blockchains, but they cannot be issued on these blockchains straight away. For that, only specific smart contracts can be used.

Fiat-backed stablecoins represent another example of non-native tokens. At this, they rely on fiat or other digital assets as collateral that helps them to maintain a stable rate.

Can a Blockchain Have More Than One Native Token?

From a technical perspective, a blockchain can have only one native token. There are situations when a network may feature two different tokens. Yet, only one of them will be native.

The most popular scenario implies the following.

One token of a given blockchain acts as a stablecoin, and the other one is used as collateral to maintain the first one stable.

With PulseChain, these are USDL and PLS correspondingly.

USDL is directly redeemable and fully backed by PLS. At this, PLS is the key native token of the network. At the same time, USDL can be considered a native stablecoin of the same network.

Why Native Tokens Should Be Used as Collateral

The native token of a blockchain typically carries the deepest liquidity and the lowest relative volatility of any asset on that chain. Both properties matter when a protocol uses a token as collateral.

Lower volatility reduces the chance that a sudden price drop forces mass liquidations across the protocol at once. Higher liquidity means that when a liquidation does happen, the market can absorb it without catastrophic slippage. A thinly traded collateral asset can spiral: one liquidation drives the price down, which triggers the next, which drives it further.

This is why Liquid Loans uses ETH on Base or PLS on PulseChain. The didn’t picked the most exciting asset, they picked the most structurally sound one.

How to Evaluate Any Native Token Before You Use It

Not all native tokens are equal. Before using one for fees, staking, or collateral, run through these four checks.

1. Is it the true base-layer asset? Confirm the token pays gas fees directly on its chain without any wrapping or bridging step. If you need to convert it first, it is not the native token.
2. What is the staking or validator reward rate? Networks publish this. A higher nominal rate does not always mean better returns if inflation is also high. Compare the net real yield, not the headline figure.
3. How deep is the liquidity? Check the token’s trading volume on its home chain. Thin liquidity means larger price slippage when you need to exit a position or when a liquidation event occurs.
4. What does the tokenomics model look like? Fixed supply, inflationary, or deflationary? Ethereum moved to a deflationary burn model after the Merge. Solana runs a declining inflation schedule. PulseChain operates with its own emission design. Each has different long-run implications for holders and for protocols that use the token as collateral.

These four questions will not give you a price prediction. They will tell you whether a native token is structurally sound enough to serve as the backbone of the activity you have in mind.

Regulatory Status of Native Tokens

In May 2025, the U.S. Securities and Exchange Commission published formal token-information guidelines that reference native DLT tokens as a distinct category. This matters for anyone holding, trading, or building on top of a native token.

The SEC’s guidance outlines disclosure expectations for projects involving digital assets, including how native tokens may be treated for investor protection purposes. The document does not declare all native tokens to be securities. It does, however, create a framework that exchanges, projects, and issuers must now navigate when listing or marketing tokens in the United States.

The practical implication for holders is straightforward. Native tokens that power open, decentralized networks (ETH, SOL, AVAX, PLS) have historically been treated differently from tokens issued by centralized entities to fund specific projects. The SEC’s 2025 guidance reinforces that distinction in formal regulatory language for the first time.

This is an evolving area. The guidance represents a policy reference point, not a final legal determination. Check the SEC’s official documentation for the most current position before making compliance decisions.

Bottom Line

A native token is the one asset a blockchain cannot function without. It pays fees, secures the network through validator rewards, and anchors any governance system built on top of the chain

Non-native tokens are useful. They are not foundational. They depend on the native token’s infrastructure to exist at all.

If you are choosing collateral for a DeFi protocol, evaluating a network’s long-term security, or just trying to understand why ETH and SOL behave differently from the tokens built on top of them, start with the native token. Everything else is downstream of it.