Reddit has announced the discontinuation of its blockchain-based rewards initiative, Community Points. The decision, outlined by Tim Rathschmidt, Reddit's director of consumer and product communications, comes as a response to the escalating challenges in scaling the program, exacerbated by evolving regulatory conditions.
Evolution and Features of Community Points
Launched in 2020, Community Points aimed to reward proactive participation within selected subreddits. Functioning essentially as Ethereum tokens, these points resided in Reddit's Vault, effectively serving as a crypto wallet. Once allocated, they became irreversible, beyond the reach of both Reddit and its moderators.
The utility of these tokens lay in enabling users to access exclusive features, such as memberships, offering animated emojis and unique badges. Upon expenditure, the tokens were permanently "burned." Acting as a marker of "reputation," Community Points adorned usernames in active subreddits, celebrating the platform's most influential contributors. Their blockchain presence allowed Redditors to showcase their "reputation" universally online.
Scaling Challenges and Attempted Solutions
Scaling, however, presented significant challenges. Initially tethered to Ethereum, Community Points faced hurdles in the form of high transactional fees and restricted bandwidth, hindering its growth potential. In an attempt to address these issues, Reddit transitioned to Arbitrum Nova in 2022, aiming to leverage its scaling capabilities while retaining Ethereum's foundational benefits. Unfortunately, this move proved ineffective for the social media giant.
Rathschmidt explained, "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."
Reddit's Ongoing Efforts and Previous Terminations
Reddit has been experimenting with various incentive programs over the years. Notable among them is the Contributor Program, a system converting Reddit gold and karma into real currency. This program enables Redditors with 10 gold earned within a month or users with over 5,000 karma to initiate monthly withdrawals.
Interestingly, this marks Reddit's second termination of a rewards scheme this year. The previous system, allowing users to buy gold to honour others, faced significant backlash and was subsequently replaced by the Contributor Program.
Tim Rathschmidt clarified that the intention is not to replace Community Points with the Contributor Program. Instead, Reddit aims to focus on scalable and beneficial programs. "Many benefits of Community Points have been integrated into the platform," Rathschmidt concluded.
Market Impact: MOON and BRICK Prices Decline
Following the news, the market witnessed a sharp decline in the prices of Reddit's tokens MOON and BRICK. MOON, linked with r/Cryptocurrency, experienced an 84% drop, now standing at $0.035. Meanwhile, BRICK from r/FortniteBR saw a 59% decrease over the last day, currently valued at $0.041.
As Reddit navigates challenges in integrating cryptocurrency incentives, this move underscores the complexities businesses face in adopting such systems within their platforms. The focus remains on exploring alternative, scalable incentive programs that align with evolving regulatory landscapes and user needs.