Reddit's popular blockchain-based rewards initiative Community Points is being discontinued. Tim Rathschmidt, Reddit's director of product and consumer communications, highlighted the challenges in scaling the program, compounded by evolving regulatory conditions.
The decision underscores the complexities for companies in integrating cryptocurrency incentives into their platforms.
Reddit to suspend community points on Ethereum
Launched in 2020, Community Points rewarded proactive participation in chosen subreddits. Essentially Ethereum tokens, these points resided in the Reddit Vault, acting as a crypto wallet.
Once assigned, they were irreversible, since neither Reddit nor its moderators could claim them.
Users could spend these tokens on exclusive features like memberships, which awarded animated emojis and distinctive badges. After their expenditure, the tokens were irrevocably “burned.”
Community points, which serve as a “reputation” emblem, appeared next to usernames within active subreddits, celebrating the platform's most important contributors.
Their presence on the blockchain meant that Redditors could display their “reputation” universally online.
However, the expansion posed significant obstacles. Initially anchored to Ethereum, high transaction fees and restricted bandwidth limited the growth of Community Points.
Reddit's solution, which will move to Arbitrum Nova in 2022, aimed to take advantage of its scalability capabilities while maintaining the fundamental benefits of Ethereum. However, this also proved ineffective for the social platform. Rathschmidt explained:
“Although we saw some future opportunities for Community Points, the resources required were too high to justify them. Since then, the regulatory environment has joined that effort. Although the moderators and communities that supported Community Points have been incredible partners, as it has evolved, the product is no longer set up to scale.”
During his tenure, Reddit has experimented with numerous incentives. Among them stands out the Collaborator Program, a system that transforms Reddit gold and karma into real currency.
Reddit's explanation for stopping rewards
This program allows Redditors with 10 gold earned in a month or users with more than 5,000 karma to start monthly withdrawals.
Interestingly, this is not the only termination of a bounty plan by Reddit this year. The previous system, which allowed users to purchase gold to honor others, was discontinued after significant community backlash. The Collaborators Program emerged later.
"We are working on ways to improve governance and empower communities and their contributions. Part of the reason we are shelving this product is that we have already launched, or are investing in, products that achieve what the Community Points program was trying to achieve, while making them easier to adopt and understand."
Price evolution of Moon and Brick, which caused Reddit's reward brake. Source: Trading View
Rathschmidt also clarified that the goal is not to replace Community Points with the Collaborator Program. The focus is on scalable and beneficial programs.
“Many advantages of Community Points have been integrated into the platform.”
Following the news, Reddit's MOON and BRICK tokens experienced a sharp drop in their prices. MOON, associated with r/Cryptocurrency, has fallen 84% today, settling at $0.035.
Meanwhile, r/FortniteBR's BRICK has seen a 59% decline over the past day, now valued at $0.041.
