Reddit, the popular social media platform, is bidding farewell to its blockchain-based rewards initiative known as Reddit’s Community Points. The decision to discontinue the program was announced by Tim Rathschmidt, Reddit’s director of consumer and product communications. This move highlights the intricate challenges that businesses face when attempting to integrate cryptocurrency incentives into their platforms, compounded by evolving regulatory conditions.
Community Points, launched in 2020, were designed to reward active participation within selected subreddits. Functioning essentially as Ethereum tokens, these points were stored in Reddit’s Vault, effectively serving as a crypto wallet. Once allocated, these tokens became irreversible, immune to reclamation by Reddit or its moderators.
Users had the option to spend their tokens on exclusive features such as memberships, which granted access to animated emojis and distinctive badges. Once spent, these tokens were permanently “burned.” Furthermore, these Community Points served as a symbol of “reputation,” prominently displayed next to usernames in active subreddits, celebrating the platform’s most significant contributors. Their presence on the blockchain allowed Redditors to showcase their “reputation” across the internet.
However, scaling the program encountered significant hurdles. Initially built on the Ethereum network, high transaction fees and limited bandwidth constrained the growth of Community Points. Reddit sought to address these limitations by transitioning to Arbitrum Nova in 2022, with the aim of capitalizing on its scaling capabilities while preserving Ethereum’s foundational benefits. However, this strategy also proved ineffective for the social platform.
Explaining the decision, Tim Rathschmidt stated, “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.”
Throughout its history, Reddit has experimented with various incentives, including the Contributor Program, which allowed Reddit gold and karma to be transformed into real currency. This initiative permitted users with 10 gold earned within a month or those with over 5,000 karma to initiate monthly withdrawals.
Interestingly, this isn’t Reddit’s first termination of a rewards program this year. A previous system that enabled users to buy gold to honor others was discontinued after significant backlash from the community, leading to the emergence of the Contributor Program.
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Tim Rathschmidt clarified that the goal is not to replace Community Points with the Contributor Program, but rather to focus on scalable, beneficial programs, emphasizing, “Many benefits of Community Points have been integrated into the platform.”
Following this announcement, Reddit’s tokens, MOON and BRICK, experienced sharp declines in their prices. MOON, associated with r/Cryptocurrency, plummeted by 84% in a single day, reaching a value of $0.035. Meanwhile, BRICK from r/FortniteBR saw a 59% decrease over the last day, with a current value of $0.041.
This development serves as a testament to the complex and evolving nature of integrating cryptocurrency into mainstream platforms, where challenges and regulatory considerations play a pivotal role in shaping the outcome.
