An Introduction to Token-Gating
As you have probably noticed, we haven’t posted on our blog in quite a while. Well, it certainly wasn’t because we didn’t have much to say, but rather because we’ve been developing a lot of other exciting things lately. You’ll get to unwrap a few surprises in no time!
Today’s article is an introduction to a concept that revolutionizes the way we’ve been doing many things in the traditional economy: Token-Gating.
A Paradigm Shift
When it comes to NFTs, we’ve dedicated more than a few articles to explaining how their underlying utility can take a number of fields by storm, and how it was only a matter of time before we started realizing that there is more to them than speculative and expedient transactions.
While many people would construe the gradual evaporation of –the once stratospheric– NFT hype as bad news, it’s actually not, at least in the areas that matter most. The news of NFTs selling for millions of dollars surely made them famous, but that’s as far as they went. On the other hand, NFTs were presented in a way that caused a large portion of people, who could really make use of this technology, to view them as inaccessible and only utile as a short-term investment. In other words, the “hype” eclipsed the most important part of NFTs: Their utility.
Today, we are finally seeing the initiation and expansion of concepts that leverage the true utility of NFTs. When it comes to creating extensive monetization and engagement models, whether it be for creators, retailers, brands, or even average users, Token-gating has become the number one solution to optimize such processes. The premise of token-gating isn’t foreign to METACARD, we’ve actually put it at the core of our value proposition ever since the beginning of our journey of merging the world of digital assets with that of gifts. So, what exactly is Tokengating, why is it important, and how are we using it to take gift experiences to the next level?
What is Token Gating?
Token gating is a process that runs on the public blockchain, it serves to gate exclusive content, clubs, events, tickets, software, merch, crypto airdrops, and basically any form of offer to which the provider wishes to moderate access. It is done by linking this access to the condition of holding a certain token (usually an NFT, but it can be fungible tokens in other cases) in the user’s wallet.
Similar concepts, like content gating, have been around for quite a while in the Web2 ecosystem. However, they merely require paying a certain amount before a user can actually get access to the content, which is more of a digitalized simulation of the traditional payment for access model, rather than an innovative way to sustainably monetize content and create new experiences. On the other hand, token-gating turns the product (or content, access, etc) from a consumable to a commodity, this means that it can be resold and still hold the same utility and value, if not more.
To put it simply, here’s how token-gating works:
- Users link their crypto wallets to receive token-gated benefits.
- The NFT or crypto token needed is verified in the wallet to allow access.
- Access is granted, and content is unlocked.
Token-gating systems can be built in-house, meaning that the brand or creator builds a portal on their own website or store where token holders connect their wallet to gain further access. In other cases, it can be outsourced to other entities that ensure the smooth functioning of the process while eventually leading to access on the original issuer’s platform.
This article comprised a general presentation of token-gating. Make sure to stay tuned for a second part where we lay out the benefits of this mechanism from different angles, as well as how we integrate it into our platform to create innovative gifting experiences.
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