Reddit Ends Community Points Program Due to Scalability Issues
In 2020, Reddit introduced Community Points, an initiative that rewarded users with Ethereum-based tokens for their high-quality posts. However, the program has now come to an end as Reddit found it to be too costly and lacking scalability.
Looking for Alternatives
Reddit’s director of consumer and product communications, Tim Rathschmidt, announced that the program would be terminated by early November. He stated that the cost of maintaining the system outweighed its benefits. Only a few subreddits would be significantly affected by this decision, as the original plan to connect all Reddit users with blockchain technology was deemed too expensive.
In an attempt to reduce costs, Reddit moved the project to Arbitrum Nova in 2022. However, even Layer-2 solutions proved to be too costly. As a result, Reddit is now searching for alternative methods of rewarding its users.
Uncertain Regulation Factors into the Decision
The uncertain regulatory environment surrounding cryptocurrencies also contributed to Reddit’s decision. Rathschmidt mentioned that while there were potential opportunities for Community Points, the required resources were too high to justify. The perceived unpredictability of regulators like the SEC further complicated matters.
Following the news of the program’s termination, cryptocurrency tokens associated with Reddit experienced significant declines. For instance, r/CryptoCurrencies MOON token is down 86.4% and DONUT, the EthTrader subreddit’s community points token, has plunged over 50%.
Hot Take: Reddit Ends Community Points Program Due to Scalability and Regulatory Concerns
Reddit has decided to discontinue its Community Points program due to scalability issues and uncertainty surrounding cryptocurrency regulations. The initiative, which rewarded users with Ethereum-based tokens, proved to be too costly to maintain and lacked the necessary scalability for Reddit’s entire user base.
Despite attempts to reduce costs by utilizing Layer-2 solutions, such as Arbitrum Nova, the expenses remained high. The uncertain regulatory environment, including the perceived unpredictability of regulators like the SEC, also influenced Reddit’s decision.
As a result of this announcement, cryptocurrency tokens associated with Reddit experienced significant declines. The MOON token is down 86.4%, while DONUT has plunged over 50%. Reddit is now exploring alternative methods of rewarding its users moving forward.
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