May 25, 2024


Get Into Fashion

Token Gating and NFTs for Retailers: What to Know (2022)



Non-fungible tokens (NFTs) have taken the art world by storm by creating ways for musicians, designers, and other creatives to control how their work is distributed. 

Retailers have also begun experimenting with NFTs via token gating, a strategy that gives token holders access to exclusive products, experiences, content, and more. 

In this guide to token gating for retailers, you’ll learn:

What are non-fungible tokens (NFTs)?

“NFTs are non-fungible tokens stored on a blockchain, a form of digital ledger that stores a record of each transaction that takes place,” says Raj Kallem, Head of Development at the 1687 Club, an NFT-based membership club. 

Ethereum and Solana are some of the most popular blockchains for NFTs, and are also the cryptocurrencies you need to purchase NFTs.

It’s become common practice to attach digital content—such as art, music, or videos—to these tokens. Tokens, therefore, grant ownership to this one-of-a-kind, authenticated content. 

Let’s break down the phrase “non-fungible token” to gain a deeper understanding of its meaning. “Fungible” means replaceable or mutually interchangeable. A fork is an example of something fungible because it lacks unique properties and can therefore easily be replicated or replaced by an identical item. 

“‘Non-fungible’ simply means that the token is unique and not interchangeable,” Kallem says. Real estate, land, and diamonds are examples of assets that are non-fungible because they have unique properties.

A token is something that represents something else. In the case of NFTs, tokens represent verifiable ownership of digital content on the blockchain. Art is often linked to NFTs because it’s easy to attach to tokens and is easily verifiable.

Authentication is an important part of NFTs and blockchain technology. Even though people who don’t hold a token may be able to view or access digital content attached to someone else’s NFT, only one person (or a select few) can own the content associated with a token.

👾 GET STARTED: Ready to bring token gated commerce to your store? Shopify’s blockchain partners will help you build exclusive customer experiences around your brand with perks, rewards, or other exclusives based on your customers’ NFT purchases.

What is token gating?

“Token gating is simply adding utility to an NFT. It is incentivizing the ownership of that NFT,” says Harrison Hosking, Marketing Manager of NFT wallet tracker Keak. “Like a membership card or a license, it’s a promise to the holder that they will gain from the purchase in more ways than one. Things like OnlyFans, paywalls to online newspapers, and VIP tickets to concerts are already, in a way, a form of token gating, just not on the blockchain.”

In other words, token gating is “a way of adding more value to an NFT by allowing the holder exclusive access to a community, content, or even physical assets in addition to the digital token,” Kallem says. 

For example, NFT holders may receive perks like special discounts on new products, early access to store openings, or invitations to members-only events.

“The really exciting thing is that token gating can be applied in an infinite number of ways,” Hosking says. “It’s up to the seller to come up with creative ideas that give added value to their customers upon the purchase of their NFT.”

How does token gating work?

Ownership needs to be verified for token holders to receive access to token-gated perks. Terrance Blau, tech lead of decentralized insurance solutions company Blockchainsure, explains the technical side of token gating.

“Network users connect to blockchains using a unique public and private key pair, which is like having a really long and complicated username and password,” he says. “This public-private key pair is called a wallet. If someone has your public key, they’re able to send tokens to your wallet, and they can see what’s in your wallet, but they can’t access your wallet’s tokens without your private key.

“Knowing this, programmers are able to write software that looks into a wallet to see if they have a particular NFT. They’re also able to use that information to allow wallet access to do things based on whether it contains a particular NFT or not. This is called ‘token gating.’ Token gating works by peeking into your wallet to see if you have a particular NFT or not, and then essentially returns a value of yes or no.”

Bring token gated commerce to your store

Only Shopify helps you mint and sell NFTs to customers and give owners exclusive access to in-person events, store activations, products, and collections. Bring your brand to the blockchain today.

Token gating benefits

While applications for blockchain technology are constantly evolving, token gating has already proven to have numerous benefits. Most notably, token gating improves security, is cost-effective, builds buzz, and is a great alternative to traditional forms of fundraising.


Because NFT ownership is verified through the blockchain, there’s no way to forge token ownership. Therefore, only token holders can gain access to an NFT’s perks.


One of the main benefits of token gating, and NFTs in general, is that it puts distribution, and therefore profits, directly in the hands of the token creators. Because there are few “middleman” costs associated with creating, selling, and trading NFTs, creators take home what they earn.

Kings of Leon is a prime example of this,” Hosking says. “They released their album, ‘When You See Yourself’, as an NFT—one of the first in the music industry to do so. For fans of Kings of Leon, purchasing this NFT gave them access to enhanced media and album art (moving, digital album cover), limited edition vinyls, and a code for a digital download of the album. The kicker was that after two weeks of minting, no more NFTs were ever made again—making them a rare and more sought-after collectible. Did it work? They made $2 million from the two weeks of sales alone.”

token gating for retail nft

Image Source: Market Realist

Building buzz

Token gating “yields amazing benefits because of the FOMO (fear of missing out) it can create,” says Ty Daniel Smith, CEO and Co-Founder of crypto brand marketing agency Coinbound. “Word of mouth is one of the most undervalued marketing variables, but token-gating truly proves a case for word of mouth’s ROI potential. When done correctly, NFT projects can go viral with a great concept and utilize token-gating.”


Token gating has created new ways for businesses to raise capital; it’s essentially an alternative to crowdfunding. Similar to stocks, the people who buy tokens invest in a project or business. Stakeholders reap the benefits of an NFT’s success and often have a say in what the project does next.

3 token gating use cases for retailers

The sky’s the limit when it comes to applications for token gating. Here are just a few ways that NFT creators are providing value for token holders.

Exclusive products: Shopify x Doodles

Exclusive product access is one of the most practical token gating use cases for retailers. With this strategy, limited edition items are only available to token holders.

Looking for inspiration? Popular NFT collection Doodles partnered with Shopify at SXSW 2022 to create an immersive experience for festival goers and Doodle token holders. During this collaboration, Shopify “brought URL and IRL together in a first-of-its kind token-gated NFT retail drop with @doodles,” according to a tweet. Doodle holders had exclusive access to apparel and  limited-edition merchandise.

Digital content: Stoner Cats

Stoner Cats is an animated series developed by actress Mila Kunis’ production company. Only people who hold Stoner Cats NFTs can watch the show. 

Through this token-gating model, the Stoner Cats team has complete control over how the show is distributed. In return for their investment, token holders gain access to the series and a community that’s involved in the production process. In other words, NFT holders have a say in what happens on the Stoner Cats show.

Membership clubs: Flyfish Club

“One common example of token gating in the NFT community is the ‘token as a membership card,’” Kallem says. “It functions as an access pass to a private club or exclusive community. In some cases, token holders are invited to real-life events and meet-ups.”

One of the most talked about NFT-based membership clubs is Flyfish Club, the world’s first NFT restaurant, and brainchild of serial entrepreneur Gary Vaynerchuck. Only people who have the Flyfish NFT can dine at this New York City restaurant.

token gating for retail nft

Image Source: NFT Evening

Unlike a traditional members club, token holders don’t have to pay membership dues. Instead, they pay a one-time fee to purchase the NFT. Flyfish Club offers two tiers of membership. These tiers are tied to two types of tokens, which come with different perks. The Flyfish token gives holders general access to the club, while the Flyfish Omakase token gives holders the same privileges as Flyfish token holders, plus access to an exclusive “Omakase room.” 

In addition to restaurant access, Flyfish Club members can participate in a number of exclusive events and opportunities, such as a members-only yacht party. They can also purchase branded merchandise through the club’s members-only, password-protected Shopify store

Is token gating the future of retail?

NFTs are taking the world by storm. Is token gating the future of retail? Only time will tell. With token gating, retailers can reward supporters with exclusive access to products, events, communities, and more. 

Token gating’s security features, profitability, built-in marketing power, and fundraising capabilities make it useful to businesses of all kinds.

Bring token gated commerce to your store

Only Shopify helps you mint and sell NFTs to customers and give owners exclusive access to in-person events, store activations, products, and collections. Bring your brand to the blockchain today.


Source link