TL;DR
Utility tokens are now the biggest category in a lot of crypto portfolios. But “utility” in the name doesn’t actually mean much on its own most of these tokens were built to be traded, not used, and the data on how people actually hold them backs that up.
Utility Tokens Are Winning the Portfolio War
A recent report on Gen Z investing habits from WazirX turned up something that, at first glance, looks like genuinely good news. Nearly 59% of Gen Z crypto portfolios are now allocated to utility-focused categories — DeFi, Layer-2 ecosystems, payment tokens according to data from Indian crypto exchange WazirX. Blue-chip crypto made up another 25%, and memecoins were down to just 16%.
That’s the kind of stat that makes for a nice headline: young investors growing up, moving past pure speculation, putting their money into things with actual products behind them. But there’s a question hiding underneath that framing that almost nobody asks how many of those “utility” tokens are actually being used? Versus just held, under a label that sounds a lot more respectable than “memecoin”?
What “Utility Token” Was Supposed to Mean
The term isn’t made up it has a real, specific meaning. A utility token is supposed to grant access to something: paying network fees, unlocking a feature, voting on governance, powering some function inside an app. That’s different from a security token (which represents ownership or a financial claim) and different again from a pure memecoin, which holds value purely because people pay attention to it.
The theory goes like this: if a token’s value is tied to real usage, then more people using the product should mean more demand for the token. Simple enough. It’s also the exact pitch that got thousands of these projects funded over the past several market cycles.
Where the Theory Breaks Down
Here’s the problem. Most tokens wearing the “utility” label never come close to the level of real product usage that would actually justify it. A few patterns keep showing up in the ones that didn’t make it.
The token was optional, not required
A lot of projects bolted a token onto their app without making it genuinely necessary. Users could pay with regular currency instead, and unsurprisingly most of them did. If nothing about using the product actually requires the token, then “utility” is really just a marketing choice sitting on top of something that worked fine without it.
Trading volume showed up way faster than actual usage
This one’s almost a cliché at this point: a utility token launches, lands on an exchange, and within weeks its trading volume dwarfs anything happening inside the product it was supposedly built for. That’s a pretty strong tell. It means the token found a home as a speculative asset long before — or instead of finding one as an actual tool.
The product itself never got real traction
You can’t have a token demonstrate genuine utility if the app or protocol behind it never pulled in enough real, sustained users. No usage, no demand the token’s “utility” was theoretical from day one.
Governance tokens rarely see anyone actually vote
Worth calling out on its own: governance tokens, which are supposed to give holders a say in a protocol’s future. In practice, turnout on most governance proposals is low, and what voting does happen tends to be dominated by a handful of large holders. CoinGecko’s own breakdown of governance tokens backs this up it’s not a fluke or a one-off, but a structural pattern across the category, with low voter turnout and whale concentration showing up again and again even as some of these tokens climb in price alongside genuine protocol growth.
Why This Matters for the Gen Z Shift Specifically
This is exactly why that portfolio data deserves a second look instead of a straight victory lap. A young investor putting 59% of their crypto into “utility” categories isn’t automatically protected from the same speculative pull that drives memecoin trading — they might just be riding the same wave under a more reassuring name.
To be clear, this isn’t a knock on the investors. Gen Z investors on the platform have a median age of 25, and nearly 80% report annual incomes between ₹1 lakh and ₹5 lakh — this is a group genuinely trying to build something with limited capital, and doing it carefully. More than half keep buying during mild market corrections, and over 40% keep buying even on the worst trading days, which points to conviction, not panic. That instinct toward research and diversification is a real, healthy shift. The issue isn’t how these investors are behaving — it’s that “utility token” as a category doesn’t do the verification work people assume it does. It sounds safer than it is.
How to Actually Tell If a Token Has Real Utility
Forget the category label. A few direct questions get you there faster:
- Does using the core product actually require the token — or can people just pay normally and skip it entirely?
- Does on-chain transaction volume look like real, repeated usage — or mostly transfers between exchanges and wallets?
- Has the underlying product reached real, sustained users, independent of what the token’s price is doing?
- For governance tokens — is voting actually spread out, or is it a handful of large holders making every call?
If a token comes up short on most of these, it’s probably following the same script as the ones before it: a label that sounds functional, attached to something that’s still, underneath it all, a speculative bet.
Past the Label
The shift toward “utility” categories in crypto portfolios is real, and mostly a good sign more research, more caution, less of the pure speculation that defined the memecoin years. But the word “utility” sitting in a token’s category doesn’t verify anything on its own. Most tokens that claim it never actually earn it. The only way to know which ones did is to skip the label and check whether the token is actually required, actually used, and actually governed by more than a small circle of large holders.
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