Reddit to Discontinue Blockchain-Based Rewards Initiative
Reddit has announced that it will be discontinuing its blockchain-based rewards program, Community Points. The decision is attributed to the challenges of scaling the program and evolving regulatory conditions. This highlights the complexities businesses face when integrating cryptocurrency incentives into their platforms.
How Community Points Worked
Community Points, launched in 2020, rewarded active participation within specific subreddits. These Ethereum tokens were stored in Reddit’s Vault, acting as a crypto wallet. Once allocated, the points were irreversible and could not be reclaimed by Reddit or its moderators. Users could spend these tokens on exclusive features, and once used, the tokens were permanently removed.
The presence of Community Points next to usernames showcased a user’s reputation within active subreddits and allowed them to demonstrate their reputation universally online.
Scaling Challenges
The initial implementation of Community Points faced obstacles due to high transaction fees and limited bandwidth on the Ethereum network. In an attempt to overcome these challenges, Reddit transitioned to Arbitrum Nova in 2022. However, this solution also proved ineffective for the platform’s scalability.
“Though we saw some future opportunities for Community Points, the resourcing needed was unfortunately too high to justify. The regulatory environment has since added to that effort. Though the moderators and communities that supported Community Points have been incredible partners – as it’s evolved, the product is no longer set up to scale,” said Tim Rathschmidt, Reddit’s director of consumer and product communications.
Past and Future Incentives
Reddit has experimented with various incentives in the past, including the Contributor Program, which allows users to convert Reddit gold and karma into real currency. However, the previous rewards system, which involved buying gold to honor others, was discontinued after community backlash. The Contributor Program was introduced as a replacement.
“We’re still working on ways to improve community governance and empower communities and contributions. Part of why we’re moving past this product is that we’ve already launched, or are actively investing in, several products that accomplish what the Community Points program was trying to accomplish, while being easier to adopt and understand,” Rathschmidt added.
Hot Take: Impact on Token Prices
Following the announcement, Reddit’s tokens MOON and BRICK experienced significant price declines. MOON, associated with r/Cryptocurrency, dropped 84% to $0.035, while BRICK from r/FortniteBR saw a 59% decrease to $0.041.
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