Reddit Shuts Down Blockchain-Based Community Points Service
Reddit recently made the surprising announcement that it will be shutting down its blockchain-based rewards service, known as “Community Points,” due to scalability issues. The service, which was launched in May 2020, aimed to reward users with Ethereum-based ERC-20 tokens for their positive engagement within specific subreddits. However, as of November 8, 2023, the Community Points service and its associated special membership feature will cease to exist.
The Scalability Issues
In a statement shared on the r/CryptoCurrency subreddit, Reddit cited scalability issues as the main reason for discontinuing Community Points. While the platform acknowledged the potential of this feature, it revealed that there was no viable strategy to scale the entire platform. This decision surprised many in the crypto community who saw integrating blockchain technology with a platform as vast as Reddit as a game-changing opportunity.
Initially, Community Points used Ethereum-based ERC-20 tokens stored in Reddit’s proprietary cryptocurrency service called “Reddit Vault.” However, to address scalability problems, the service migrated to the Arbitrum layer-2 scalability solution. This move was expected to enhance scalability and improve the user experience.
Each subreddit had its own token within Community Points. For example, r/CryptoCurrency introduced “Moons” (MOON) as its native cryptocurrency, while r/FortNiteBR introduced “Bricks” (BRICK). Users could earn and spend these tokens for exclusive items and badges for their avatars, promoting positive engagement within their respective communities.
Reaction from Reddit’s Crypto Community
The decision to close down Community Points did not sit well with the crypto community. The r/CryptoCurrency moderator known as “CryptoMods” expressed disappointment and clarified that users’ MOONs would not be burned. The transfer functionality within the smart contract would remain operational, and Reddit would no longer have control over it. Despite these assurances, the value of MOON and BRICK tokens plummeted after the announcement.
Cryptocurrency enthusiasts and Reddit users voiced their dissatisfaction and anger regarding this decision. Some criticized Reddit for undermining the very community it sought to empower. The sudden move by Reddit triggered strong reactions from the passionate crypto community.
One trader, Byzantine General, took to Twitter to express their perceived betrayal by Reddit, comparing it to a “rug pull” – a term used when creators suddenly withdraw support or funds from a project. The price of MOON dropped by approximately 90%, further fueling frustration among users.
Reddit user u/Bunker_Beans exemplified the sentiment of many by expressing discontent with the platform’s actions and even wishing ill on those responsible.
Conclusions
The decision to discontinue Community Points due to scalability issues has shaken Reddit’s cryptocurrency community. With tokens like MOON and BRICK losing value and users expressing frustration, this move raises concerns about integrating blockchain technology into platforms of this scale. It serves as a cautionary tale for the cryptocurrency and blockchain industry, emphasizing the need to address scalability challenges before implementing ambitious projects on such a large scale. While blockchain-based rewards hold promise, they must be supported by robust technical infrastructure.
Hot Take: Lessons Learned from Reddit’s Community Points Shutdown
The closure of Reddit’s Community Points service due to scalability issues highlights the importance of addressing technical challenges before implementing blockchain-based projects on a large scale. While integrating blockchain technology into platforms like Reddit can offer exciting opportunities, it is crucial to ensure that the infrastructure can handle the demands. Scalability remains a significant hurdle in realizing the full potential of blockchain applications. The crypto community’s reaction to Reddit’s decision demonstrates the passionate engagement and high expectations surrounding blockchain-based rewards. Moving forward, developers and platforms must prioritize scalability solutions to avoid disappointing users and damaging trust in the technology.
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