Jesse Powell Criticizes Reddit’s Handling of Community Points
Jesse Powell, co-founder and Chairman of the Board at Kraken, has expressed his disagreement with Reddit’s decision to discontinue its crypto-powered Community Points without offering a redemption path for token holders. In a post on Reddit, Powell stated that he did not see the regulatory problems cited by Reddit as valid reasons for sunsetting the program. He suggested alternative ways for users to redeem their tokens, such as converting them to Karma or allowing them to purchase Collectible Avatars.
The Reasons Behind Reddit’s Decision
According to Reddit, the regulatory environment and scalability limitations were key factors in winding down the Community Points program. The platform stated that these challenges, along with an excessive commitment of resources, made it impractical to continue the program.
Impact on Token Prices
Following the announcement, the price of Reddit’s MOON token plummeted by more than 80%, while BRICK, the token associated with Reddit’s Fortnite community, dropped by over 50%.
What are Community Points?
Reddit’s Community Points are ERC-20 tokens initially built on Ethereum but later migrated to the Arbitrum Nova layer-2 network. These tokens could be exchanged for various perks on Reddit, including badges, emotes, GIFs, and other features.
Reddit’s Shutdown Plan
Reddit plans to completely shut down the Community Points program by November 8. After that date, community points will no longer be visible on the platform. Additionally, any tokens stored in community tanks or ecosystem pools will be burned by the end of the year. Approximately 40% of MOON’s supply was allocated toward community tanks.
Community Points vs. Collectible Avatars
While Reddit’s decision to sunset Community Points has caused significant disruption, it does not affect its Collectible Avatars. These avatars are non-fungible tokens (NFTs) issued by Reddit on the Polygon network and have been well-received by users since their launch in July 2022.
Hot Take: Jesse Powell Calls for Redemption Path
Jesse Powell, co-founder of Kraken, criticized Reddit’s handling of the discontinuation of Community Points. He argued that Reddit should have offered a redemption path for token holders instead of completely devaluing their holdings. Powell suggested alternative options, such as converting the points to Karma or allowing users to purchase Collectible Avatars. This controversy highlights the challenges faced by platforms integrating cryptocurrencies and the importance of considering user interests when making significant changes to token programs.
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