Token Hierarchy and Naming Convention
Primitives
Primitives is the highest level of token hierarchy. This is the "What" of the future design system, and contains properties and values that exist within the entire design.
Primitives include all colors, all spacing variables, all fonts and their parameters, all round corner settings etc.

Semantic
Semantic is "How" and "Where" the tokens should be used.
Semantic names convey meaning, purpose, and how and where the asset should be used.

Component
Component tokens are specific to individual components and generally refer to semantic tokens. Depending on the narure of the project and the team set up I might create this layer that defines tokens to be used for specific components explicitly.

Now that all properties and variables were defined as tokens it is time to start building UI elements.
Check my approach of creating design system below:
PenPal Design SystemOr you can download this token system on Figma on the "Resources" page.