What Happens When Reddit Adopts Blockchain Technology
On August 9 2022, FTX revealed a partnership with Reddit to roll out “tokenized community points”. Community points, which are a measure of reputation in communities, are now going to be found on the Arbitrum Nova Blockchain. This partnership represents one of the largest blockchain integration within community features.
“We’re excited to partner with Reddit to continue their work to empower online communities to harness the power of blockchain. FTX Pay’s payment and exchange infrastructure integrates with Reddit Community Points, making the customer experience a more seamless process”.
Sam Bankman-Fried, CEO of FTX
Today we’ll cover
What is the origin of community points?
What is different about a tokenized vs non-tokenized community point system?
Catalysts after the integrations
Origin of Community Points
Before we explain community points, I want to retrace back to 2010 - when Reddit Gold launched. Reddit Gold, is a premium membership for editors to use exclusive stickers and get ranked more favourably by the platform. It was a huge success in resolving the monetization crisis Reddit was encountering. In 2013, Reddit decided to allow Bitcoin as a form of payment, which at the time was processing 40,000 crypto transactions per month.
Reddit was special because, in an internet era when users are viewed equally by the algorithm, it was difficult to identify active contributors and scammers. Users can upvote and downvote comments, as well as purchase subscriptions to display their status and legitimacy around the community. It makes Reddit community-friendly.
In 2019, Reddit introduced Reddit Community Rewards, which is a customizable program for communities to design their own stickers, GIFs, badges, enabling a more congruent expression in line with the culture, jokes and content. The interesting part is the “points”. Users can accumulate points from participating and contributing in the community, through comments, services, donations, challenges, etc.
In 2020, Reddit announced a pilot program to adopt the Reddit Community Rewards program on Ethereum. Users with active contributions will be granted new tokenized community points and when purchases were made with points, tokens will burn to maintain healthy mint-burn ratio.
TLDR: Reddit is very experienced with tokenomics before Crypto is even introduced to it.
What Does The Partnership With FTX Mean For Reddit
Through the partnership with FTX Exchange, users can transact their community points through FTX Pay through Arbitum (a Layer-2 ETH blockchain optimized for low gas fees), community points now are available on secondary markets.
Today, Reddit is testing these features out in two major subreddit communities: (1) r/cryptocurrency, (2) r/fortnite. Reddit will airdrop tokenized community points to active contributors who would be automatically registered a digital wallets associated to their reddit user account. The top contributors in r/cryptocurrency earned 3,774 “Moons” tokens in July, or about $340 at current secondary market prices.
What are the implications behind this integrations:
Pros: Similar to Play-And-Earn concepts, active contributors can realize the output of their effort in monetizable terms
Cons: Influence and Power within the subreddit community can be bought with money, which could dilute the culture from the top.
Catalysts
As FTX Play rewrote the rule of fairness on Reddit’s Community Points System by enabling tokens to be tradable, it means community members with the most tokens would not always be the most active group, but a combination of active members and invested members. Here are some of my thoughts on the future of Reddit
Subreddits will consolidate
Today, there are over 3.4 million subreddits, on average, 45,975 new subreddits are created each month. With this blockchain integration, it would change that trajectory as users are more desired to participate in active growing community because points are more valuable in certain groups over than the other.Rise of Community Investors
When community points represents utility and are assigned with monetary value, it will attract capital. It can create a new user segment who “invest” in communities by holding tokens, and they might or might not be active within the community. In NFT communities, these people are regarded as “Whales”.Top Contributors Turnovers
Back then, the only way to earn community points is by grinding reddit feeds for months. The top contributors are active in their communities for months to achieve their position. However, when alternative like FTX Pay is introduced, the most influential members will not be the creative/insightful commenters, it will be the one who invested the most into the community.
The two groups of people share very different behaviour. When communities point become so easy to transact, the leaderboard for community points is going to change a lot.
Takeaway
For any kinds of product update, there are going to be winners and losers. The integration of FTX Pay will reward large communities and capital owners. This partnership has brewed for an entire year, I’m curious how this will impact culture within the community culture as it introduces a new group of gain-seeking community investors.
💡 This Week's News In the Creator Economy
Photographer Peter McKinnon moved to new social network app Vero
Influencer Club released the State of the Link-In-Bio App Report
Colin & Samir interviewed Reed Hasting, founder of Night Media
Cameo launched a partnership feature with Link-In-Bio startup Koji
Phyllo raised $15M Series A led by RTP Global
Ali Abdaal revealed his $4M Creatorpreneur Business Model
MrBeast looking to expand his team with new 23 Job Postings
Chamberlain Coffee raised $7M from Blazar Capital and angels
✌️ That’s it until next time!
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Very interesting and relevant. Thanks