- Token gating enables access to various services and perks for a certain token’s holder.
- NFT projects commonly use this tool to create value and reward users who own their specific token.
Token gating is the process by which a token holder gets access to several benefits for holding a certain token. Here, the key to using a particular content or feature is not just the process of purchase; instead, the user needs a certain number of non-fungible tokens (NFTs) or cryptocurrency to unlock and leverage restricted features. This feature is beneficial for NFT creators and projects to increase their asset’s value while strengthening the community.
What is a Non-fungible Token?
Non-fungible tokens (NFTs) are indivisible because of their uniqueness. Basically, they hold data in the form of assets that are non-replicable.It could be understood as any asset you hold that’s registered in your name and is not accessible to others due to its specific data. Non-fungible tokens work the same way.
NFTs are set apart from one another by unique identifiers stored in the form of metadata. Their prototypes are also referred to as colored coins, which define experimental assets developed over specific blockchain networks. NFTs are also created when a user wants to trade a digital creation like art-work, music, content, photographic images, etc.
What is Token Gating?
Token gating is a tool that leverages NFT projects and creator teams to generate increased value for community enhancement. Generally, this phenomenon enables NFT projects to distribute rewards on behalf of holders of particular tokens in a certain amount.
Holding NFTs helps in accessing unique contents, media, events and other perks available only to token holders. While some NFT projects are open to accessing Discord servers, there are some projects that give access only to their holders.
Benefits of Token Gating
Meanwhile, it is more beneficial for content creators if exclusive contents are available only to those who are allowed. This helps in collecting revenue through the passive sale of royalties. Consumers profit from gaining ownership of an ownable asset that they may later sell whenever they want to.
Token Gating is not that difficult. Users can leverage unlimited access because of the tie-up of credentials with particular tokenized applications. Being low overhead and cost-effective, it becomes an economical and convenient feature. Sometimes, preferred NFTs can be purchased from marketplaces, so users who want access to gated channels have to buy them first from the traded marketplace.
How Does Token Gating Work?
It helps to enhance or level up NFT projects. Project management becomes easy for token holders with full access. The content owner or project management department decides the services to be available on their platform to enable access via holders. To authenticate a token’s holding, users have to verify their NFT ownership by connecting their digital wallet.
Content or benefits will only be available after verification. These platforms or content owners decide on a certain limit of token holding on behalf of which users can access these communities benefits.
Conclusion
Token gating is a beneficial tool to monitor or put restrictions on exclusive contents. With a certain amount of token, holders can gain access to different contents. This method provides digital ownership with blockchain security. Some no-code solutions are still under development so that artists can tokenize their artifacts and content.
