The utility of the XION token is similar to most Layer-1 tokens.
Proof of Stake Security
XION is a proof-of-stake network which means it is secured through the staking of the $XION tokens by validators, whose job it is to maintain the state of the chain and process the transactions. Validators are rewarded for their work, and if they misbehave, their staked tokens are slashed.
Network Usage Fees
XION is a public ledger, and transactions are sent to the chain to alter its state. The network charges platform fees for making these changes to the state. XION uses the fees that have been collected in a block, and offsets how many new tokens need to be minted in the block. This means that higher usage of the network increases fees earned, which further incentivizes validators to secure the network. When fee accrual exceeds the number of tokens per block necessary to distribute to stakers, then the extra tokens are burnt, and the token will naturally become deflationary.
The token is used for voting and governance on proposals put forth by the XION DAO, a fully decentralized organization. The XION DAO will control the funds held by the XION Community Treasury and vote on any proposals to alter the network.
Medium of Exchange
The $XION token is used to transfer value across the Layer 1 applications and accounts in a peer to peer fashion without the need for trusted third parties to clear and settle payments.