Warrior guild tokens are obtained in various activities found in the Warriors' Guild, with their use being for entry to the 2nd floor[UK]3rd floor[US] Cyclops chamber and basement where the monsters drop defenders. To enter the area, players need a minimum of 100 tokens in their inventory (will not be consumed upon entry).
Upon entry, 10 tokens are taken from your inventory immediately. Every minute, 10 tokens will crumble away. When you run out of tokens, you are asked to leave, and if you stay, you will be teleported out in another minute.
The warrior guild token is the item Falo requires players to show him when he sings about: A token used to kill mythical beasts, in hopes of a blade or just for an xp feast.
For an exhaustive list of all known sources for this item, see here