What is NFT token gating?

Written by Alchemy

Reviewed by Brady Werkheiser

Published on 2022-10-194 min read

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Non-fungible tokens are digital assets that can be used to provide access to exclusive web3 communities and platforms through a token gating verification system.

This article explains why token gating is an effective marketing strategy for strengthening web3 communities, introduces Alchemy's NFT API that developer teams can use to set up token gating, and explains how creators can manage their project.

What is token gating?

Token gating is a verification method whereby communities can provide exclusive access to spaces, events, content, and communities to people who own specific digital assets in their wallet.

Why is token gating a good web3 marketing strategy?

Token gating is essential to the success of any web3 marketing strategy because it is one of the most effective ways to strengthen a community among token holders. Some benefits of token gating include:

1. Creates Exclusivity

Token gating generates exclusivity for token holders, and allows project creators to grant access to content, events, and merch exclusively to token holders. 

Token gating benefits both creators and token holders:

• Creators have greater control over who can access their community's products and content

• Token holders benefit by getting preferential access based on their level of support

The exclusivity that token gating creates is exemplified by The Block’s tokenized paywall access to exclusive articles. The Block uses Access Protocol and issues Access Tokens on crypto marketplaces for consumers to purchase. Access Token holders are then able to access The Block’s exclusive subscriptions. 

2. Strengthens Community

Token gating builds community among token holders. By providing access to token holders-only communication channels like Discord and content like Alchemy University's free Ethereum Developer bootcamp, token gating allows holders to congregate and develop a sense of community.

An example of effective community-building with token gating is VeeCon.

VeeCon is a multi-day mega-conference hosted by GaryVee, which is only accessible to VeeFriends token holders. Every VeeFriend holder is airdropped a unique VeeCon ticket that they can use to visit the conference or sell on the open market.

3. Rewards Holders

Token gating allows token holders to access special rewards. For instance, token holders can receive exclusive merch or acquire entrance into special festivals and events. 

An example of token holders rewards, is Lyrical Lemonade, a Chicago-based multimedia giant. Lyrical Lemonade launched a tech subsidiary, L3mon, which spearheaded its first NFT drop, The Carton NFT Collection. There are only 500 holders of this NFT, and holders of Carton NFTs get three years of access to Lyrical Lemonade’s Summer Smash festival. Tickets are airdropped to all holders.

How does token gating work?

Token gating tools check the contents of a user's wallet to see if they are the owner of a specific asset, and once ownership is verified, the owner is able to access the gated areas. Different projects use various NFT verification tools like Collab.Land on Ethereum.

What are examples of token gating?

An example of token gating is the access restrictions and roles assigned to a user determined by the quantity or utility of a token in their crypto wallet. The following are two examples of how token gating functions:

1. Discord

A private communication channel is restricted by a token gated portal, and requires users to log into Discord and connect their crypto wallets. Token gated Discord works with both hot wallets and cold wallets.

Once a user connects their crypto wallet, web3 tools like Matrica on Solana verifies if the user holds the required token in their wallet. Depending on the collection or token owned in the wallet, access to Discord channels and roles will be assign with Discord's API.

Users who do not hold the necessary token can purchase an NFT from a popular NFT marketplace like OpenSea, Rarible, or Magic Eden.

2. Shopify

Token creators can partner with Shopify on token gated merchandise by adding a token gating app to their online store and deciding which products, collections, and experiences will be available exclusively for token holders.

Currently, Shopify’s gated merch shop is in beta, open by invitation only to select merchants with an NFT collection. Some brands token gating on Shopify include World of Women, Stapleverse, and Doodles.

What API endpoints can be used to set up token gating?

There are three API endpoints creators may use to set up token gating with Alchemy's NFT API: getOnwersForCollection, isHOlderOfCollection, and getNFTs. 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

What chains does Alchemy's NFT API support?

Alchemy’s NFT API offers comprehensive NFT API support that lets you instantly find, verify, and display any NFT  across all major blockchains. Currently supported chains include: Ethereum, Polygon, Arbitrum, and Optimism.

Alchemy's NFT API also supports the following testnets:

• Goerli

• Mumbai

• Arbitrum Goerli

• Optimism Goerli

Start Token Gating Your Web3 Communities

Token gating is an effective web3 marketing strategy for creating value and strengthening communities through exclusivity and rewards. Token gating uses API endpoints to read the data of a digital wallet to verify the necessary token that will grant or deny the token holder access into an online community. Token gating is an important tool for project teams to develop marketing strategies that allows for greater control over their projects, while also providing token holders a valuable asset.