Everything on Token Gating
What is Token Gating?
Token gating is the practice of limiting certain materials, perks, or access to those who own a certain cryptocurrency token, or NFT. In a way, tokens function as a set of keys that are kept in a user’s cryptocurrency wallet. The user will lose access to the material as soon as he no longer has the token in his possession.
What’s the big deal about this new invention called “token gating” then? And why is it being hailed as a revolution for content producers and how they make money off of their work by so many people?
You’ve probably heard of “content gating” before, right?
You know, the kind where you have to pay a fee before you can access the material? Token gating is exactly what it sounds like, but your key to access content or restricted areas is no longer just a simple purchase.
Instead, you must have a certain number of NFTs or a set amount of cryptocurrency tokens to gain access, and these tokens basically serve as a sort of access control.
You may be asking why somebody would use this approach to do something that could easily be accomplished with current technology.
The primary distinction is that token gating converts your offering (content, access, etc.) from a consumable to a commodity.
As a result, if you decide you no longer require the product, you may sell it on the open market just like any other asset.
This is game-changing for both the buyer and the creative.
What Are The Benefits of Token Gating?
By employing tokens to gate content, artists have greater control over who may access their products and collect recurring revenue through secondary sales royalties. Consumers profit from not having to pay recurrent fees; instead, they gain ownership of an asset that they may later sell.
Formerly, access was normally connected to a single user account; however, token gating requires you to confirm that your crypto wallet holds a certain token.
User accounts are typically shared among group purchasers, which is extremely inequitable to the author. Yet, because bitcoin wallets are rarely shared by more than one individual, piracy becomes more difficult.
That truly is the best of both worlds for both parties.
On listing technical bullet
Token Gating features include:-
Exclusivity
Memberships have typically been offered to anybody willing to pay the costs. While this provides a second source of income, the exclusivity of this membership dwindles with time.
Yet, NFTs frequently issue a limited number of tokens into the market. This maintains a sense of exclusivity for all members, ultimately driving up secondary market pricing.
Authenticity
Brands may use blockchain technology to identify and authenticate ownership histories. Moreover, because NFTs are housed in digital wallets, token holders are unlikely to misplace their digital tokens.
Cost-effective strategy
One of the key benefits of token gating and NFTs, in general, is that they provides you total control over your distribution because there are less middlemen expenses connected with manufacturing and selling NFTs.
As a result, significant portions of revenue are directed directly to NFT inventors.
Security
There is no way to forge token ownership because NFT ownership is confirmed via the blockchain. As a result, token holders are the only persons who can gain from an NFT.
Ease of access
Because their confirmed credentials are linked to the token-gated website or app, users have constant access to content. A new revenue stream for companies and creatives. Royalties can be applied to NFTs, allowing the original inventor to get a portion of any subsequent sales.
This is not simply how to connect producers’ and buyers’ incentives.
How Does Token-Gating Work?
In layman’s terms
- Visitors begin the process by signing in to the website using their bitcoin wallets, such as Metamask, Ledger, or Trezor.
- The web 3.0 technology on the website then authenticates the visitor’s ownership of the wallet, confirming that they are the genuine owner of the wallet.
- Access to the restricted material is permitted if the wallet includes the specified NFT collection.
Understanding NFT-based gated content flow:
Step 1: Login process using a cryptocurrency wallet
Visitors must first join the website using a cryptocurrency wallet, such as Metamask, Ledger, or Trezor, in order to access NFT-based gated content.
The wallet is used to store and manage the visitor’s NFTs, as well as to validate the visitor’s ownership of the given NFT collection. Visitors can log in to the website using one of three methods.
One method is to utilize the QR code, which is provided on the website and can be scanned by programs such as WalletConnect.
Second, if the visitor has a wallet extension loaded with the browser, such as MetaMask, access can be allowed immediately.
The third method is to use a hard wallet such as a Ledger or Trezor.
Step 2: Web3.0 authentication process
When a visitor registers in to the website using their bitcoin wallet, the web 3.0 technology on the page is utilized to authenticate and validate the visitor's wallet ownership.
Web 3.0 technology confirms that the visitor is the real owner of the wallet by checking the wallet's ownership status.
Step 3: How to access to restricted content is granted based on possession of the specified NFT collection
The website owner defines the needed NFT collection for accessing the gated content when the visitor’s wallet ownership is validated.
The web 3.0 technology examines the wallet to determine if it includes the requested NFT collection. If the visitor possesses the necessary NFTs, they will be permitted access to the restricted material.
If the visitor does not have the necessary NFTs, they will be led to a smart contract address where they may buy the NFTs from the website owner or other NFT markets such as OpenSea, Rarible, and Mintable.
Third-party API can be used to configure token gating?
GetOnwersForCollection, isHOlderOfCollection, and getNFTs are the three API endpoints that creators can use to implement token gating.
The following list highlights the specific function of each:
- getOwnersForCollection — gets all owners for a given NFT contract
- isHolderOfCollection — checks whether a wallet holds an NFT in a given collection
- getNFTs — gets all NFTs currently owned by a given address
Creating a token-gated NFT purchasing platform
- Create a smart contract that can manage NFTs and token transactions on a blockchain network. Ethereum is the most popular platform for this purpose right now.
- Build an NFT marketplace or integrate it with an existing marketplace so that customers may browse, buy, and transfer NFTs using the tokens.
- Add token-gating techniques to limit user access to certain NFTs based on token balance. This may be accomplished through the use of smart contract features that check the user’s balance before enabling them to make a purchase.
- Build a platform user interface that lets users to see their token balance, buy NFTs, and transfer them to other users.
- Before launching, extensively test the platform to ensure that all functionality is operational and that the platform is stable.
- Lastly, in order to attract users and expand the community, you will need to advertise your platform.
Real-life examples
Here are a few examples of token gating with NFTs and other tokens:
- Friends With Benefits (FWB): Friends With Benefits is a private discord server. Think of it as a social network, with the exception that it’s exclusive, just like a country club. To gain access to FWB, you must own at least 75 $FWB.
- Stoner Cats: Stoner Cats is an adult animated series created by Mila Kunis and Ashton Kutcher. In order to watch each new episode of the series, you need to be a holder of one of the Stoner Cats NFTs.
- VeeCon: VeeCon is a multi-day mega-conference hosted by GaryVee and that is only accessible to VeeFriends token holders. Every VeeFriend holder has airdropped a unique VeeCon ticket that they can use to visit the conference or sell on the open market.
- FlyFish Club: FlyFish Club is a first-of-its-kind seafood restaurant that combines NFTs, high-end cuisine, and country clubs all rolled into one exclusive business model. The very first FlyFish Club will open in New York City in 2023.
Conclusion
Token gating is a novel method of controlling and restricting access to exclusive content by forcing customers to get a specified number of tokens.
The NFT or token serves as an access key, which is validated by linking your cryptocurrency wallet.
This new mechanism for monetizing content or access offers several advantages to artists and customers, not just by aligning incentives but also by transforming services and products into assets that can be owned and exchanged.
Despite the fact that the technology is still in its early stages, there are several real-world instances of corporations and creators employing tokens to control content and access.
A number of firms are already concentrating on developing no-code solutions that will allow artists to tokenize their work.
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