How does token gating work? How do companies use it to drive visibility and growth in Web3? Boardroom breaks it all down.
The term “token gating” itself is newer than the dynamic it represents. Essentially, it boils down to a path for Web3 companies to monetize their content and provide access to their goods through the use of digital tokens.
Think of token gating as Web3’s equivalent to a subscription-based model in Web2. For example, when you want to access exclusive content from your favorite news outlet, typically, you’d subscribe and pay a fee.
In Web3, NFT ticketing is a form of token gating that the world is getting more familiar with through events like VeeCon and Lyrical Lemonade. Token gating could be as simple as making consumers link their crypto wallets to view a website, or it can be as expansive as airdropping special NFTs to an exclusive group of holders.
Here’s a breakdown of token gating and how companies use it for visibility and growth in Web3.
What is Token Gating?
This is the perfect time to remind enthusiasts that NFTs are tokens that live on blockchain networks just like currencies like Bitcoin or Ethereum. NFTs are often used in token-gating mechanisms, but it’s not the only type of token that can be used.
Token gating can be used to grant access to exclusive content, clubs, events, tickets, software, merch, crypto airdrops, and more. The possibilities are endless, as virtually anything under the Web3 sun can be configured to require cryptocurrency-based transactions.
Here’s how token gating works in most cases:
- 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.
Wallet security is an essential aspect of tapping into token-gated experiences. Cybersecurity in the crypto industry is still a big worry, so it’s important to make sure links and offerings are safe first. Before linking your crypto wallet, the best practice is to check verified social accounts and news releases from Web3 projects.
Unlike content gating in Web2, token-gated content in Web3 doesn’t always require you to pay. Sometimes, all you have to do is show proof that you hold a certain NFT or another type of token.
For content creators, token gating is beneficial because it allows them to control access to their goods and create exclusive offerings. Aside from the obvious benefits for consumers, token gating can allow them to acquire ownable assets.
Examples of Token Gating
Here are examples of companies dipping into Web3 with token-gated experiences and offerings.
For the inaugural VeeCon conference, VeeFriends creator Gary Vaynerchuk airdropped NFT tickets to the event for every VeeFriends Series 1 holder. To get into the conference, holders had to show proof of their VeeCon NFT ticket.
This instance of token gating was two-fold since Veecon attendees had to hold a VeeFriends Series 1 NFT and show their VeeCon NFT ticket at the door.
VeeCon NFT ticket holders could either sell their NFT on a secondary marketplace or hold it since it will also grant access to VeeCon 2023 and 2024.
Chicago-based multimedia giant Lyrical Lemonade launched a tech subsidiary, L3mon, which spearheaded its first NFT drop, The Carton NFT Collection.
Holders of Carton NFTs get three years of access to Lyrical Lemonade’s Summer Smash festival. This kicked off for this past summer’s event and will continue in 2023 and 2024. Tickets were airdropped to all holders.
The exclusivity of this sort of ticket gating is noteworthy since The Carton NFT Collection is limited to 500 unique pieces.
The Flyfish Club is an NFT membership-based private dining club that requires members to hold a Flyfish Club NFT. The buzzing project currently has a floor price of roughly $5,100 (3.24 ETH) on OpenSea.
Holders gain access to Flyfish Club’s New York City restaurant and social experiences, which includes exclusive culinary and cultural events. There are 3,035 Flyfish Club NFTs, with more than half listed on secondary marketplaces for resale.
This is another project in Vaynerchuk’s portfolio as he is a founder of the Flyfish Club.
Crypto media company The Block launched a tokenized paywall concept to make some of its exclusive content only accessible with crypto.
The Block is using a framework called the Access Protocol, and issuing Access Tokens to crypto marketplaces for consumers to purchase. These tokens can then be used to access The Block’s exclusive subscriptions. When users hit a paywall on the media company’s website, they can temporarily commit their Access tokens to access the content.
The Block is the first media company to create a robust token-gated system like this.