Token gating is the supreme NFT use case. Bold statement? Sure. But it holds up. Ultra-successful NFT communities like BAYC, Stoner Cats, and RTFKT all use token gating. And so does any utility NFT that’s interested in being more than a flash in the proverbial web3 pan. So what is it, why does it matter, and how can you use it?
What is token gating?
Token gating is the virtual security around your private NFT community. To get in and enjoy the exclusive perks, you have to prove that you have a set number or type of NFTs in your crypto wallet. If you don’t, security will keep you out.
NFT token gating protects the integrity of everyone’s experience. This web3 bouncer secures the shared space so that only people with the right credentials can get in. You can set a single-tier checkpoint everyone has to pass. Or, you can set multi-level token gating so folks can access different perks based on the tokens they hold. So why does this matter and what can you do with it?
What are the benefits of token gating?
Let’s get real: traditional memberships come with a lot of baggage. For starters, it’s tied to you. This means that everyone — from your local gym to Netflix — has access to sensitive details like your address, birthday, banking information, and more. While web2 security is meant to keep that information under tight wraps, it doesn’t always work that way. Every time you hand over your details, you’re taking a risk.
And it’s not just a bad deal for the end user. If you run one of these services, you have to protect confidential data and constantly improve security measures. Token gating provides a great alternative for everyone involved. You can use token gating to gate content, special Discord rooms, gym memberships, physical events, and (almost) anything else you can think of. Here’s where it gets interesting.
Instead of tying it to a person, access is tied to a type of token or a number of tokens. As a creator, you can clearly set fair perks for each membership level. And as a user, your personal data is no longer at risk. Security isn’t the only boon either: if you don’t want the perks the NFT gives you, you can sell it on an open market exchange like OpenSea. So how does this work in practice?
How does token gating work?
As I mentioned, token gating is the web3 equivalent of a secret passcode. Only, instead of a tough-looking bouncer asking for the password after you walk down a dodgy-looking side street and knock four times, the verification involves zero danger.
Here’s how it works. The digital ‘bouncer’ asks you to connect your crypto wallet and grant the security app read-only access. The system then checks if you have the right tokens to access the space you’re trying to get into. If you do, you get in. If you don’t, you get politely turned out.
This is just the basics though: you can take things to the next level by using multi-level token gating. Instead of just running a simple check, the ‘bouncer’ checks if you have the type or number of tokens to access specific tiers and then grants you the relevant access. This gives you complete granular control over where users get to go and what they get to see or do.
Token gating use cases
So how can you put token gating to use in the real world? Let’s talk about three of the most common use cases. The NFT space is young and growing so these are anything but exhaustive. Still — they’re a good start.
Running a Decentralized Autonomous Organization (DAO)
Token gating and DAOs go together like avocado and sourdough toast. Because DAO membership comes with set rights and privileges — like voting, influencing community direction, and secure communication between members — controlling access is paramount.
In the Nouns DAO community, for example, each Noun gives you one vote. If you want to submit a proposal for other community members to vote on, you need two nouns. Token gating secures that process by consistently verifying NFT ownership every time a member uses that privilege. Proper security like this helps preserve the democracy-like process that makes DAOs attractive and maintains community integrity.
Creating irresistible NFT Communities
Great NFT communities tend to be built around shared passions or common goals. Stoner Cats holders are united around the creation of the Stoner Cat TV series. LoFi holders connect around music. Woodies token holders are in it for the conservation and the character stories.
When used properly, token gating helps these types of communities thrive by controlling community and benefits access and creating safe shared spaces where people can discuss ideas. This prevents outsiders and trolls from rolling in and taking over the conversation.
B2B Business Security
NFTs and the token gating capabilities that come with them aren’t just for B2C brands. NFT gating opens up a lot of cool use cases in the B2B space. Imagine being able to control identity and access without leaning on traditional MFA and passwordless authentication. Instead, you can use token verifications — your team can secure databases, portals, and documents behind ‘walls’ only openable by owning a specific combination of NFTs. This makes controlling access to sensitive information easy and improves user security.
Examples of token gating in practice
Talking about the potential of token gating is easy, so let’s go a step beyond theory and take a look at a few NFTs using token gating right now.
This investor fund for crypto start-ups is busy going where no NFT startup has gone before. Funded by strategic investors Algorand and Near and over 1000 Y combinator alumni, Orange DAO is quickly building an impressive portfolio.
While the DAO and the fund have to be legally separate to comply with SEC rules, access to the token gives members the right to vote on how fund profits get invested. This way, investors get to participate in supporting promising companies without the need for accreditation. Token gating helps secure the transactions so that only investors vote.
Access to VeeCon, Gary Vee’s crypto conference, was gated through the VeeCon NFT ticket. Holders of Series 1 VeeFriends NFTs got the ticket airdropped as a community bonus. If you were one of the lucky holders you could attend the conference or you could sell the ticket on an open exchange. This gave NFT holders the freedom to choose what to do with their assets — something traditional memberships don’t tend to do.
If you want to see how you can do real exclusivity with an NFT gating, you don’t need to go further than Lyrical Lemonade. Holding the Caron NFT, gives you access to the Lemonade Summer Smash festival. However, only 500 of these NFTs were minted, making the pass intensely exclusive.
Looking for a great example of content gating? This is it. Only people that own the Stoner Cats NFT can access the series and the behind-the-scenes community. The benefit is dual: access to a show no one else can see through commercial means and a say in its development through the community side.
Want an example of tiered membership? FWB does a great job. They use token gating to protect their local and global memberships. To access each one, you need to hold a set amount of FWB tokens that match a real-world currency amount. This gives you access to different tiers — global members get access to all Discord channels, early release sneak peeks, event invitations, and voting rights. Local members get access to local-only channels based on their area. However, before you can buy the token, you have to fill in an application that’s approved by the current committee. This keeps the community aligned around a shared vision and prevents dilution.
Token gating solutions
We talked about why NFT gating matters. But how do you implement it? The easiest way is by using a token-gating solution like SlashAuth.
SlashAuth makes gating using tokens quick and easy. All you have to do is designate the token (or tokens) users need to access your API and we’ll set the rest up. Security and access control are paramount. We can help you get up and running in 15 minutes and secure your sensitive data so you can focus on working your magic. Request an invite so you can see how it works for yourself.