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What’s going on with Reddit NFTs?
They say a picture tells a thousand words but…
I’d say a chart tells even more and this chart below is the most significant chart in web3 right now.
NFTs have been around since 2017 and have accumulated 3.4 million unique users (wallets) over that time (across all relevant marketplaces on Ethereum, Polygon, BNB, Arbiturm, Optimism, and Avalanche).
Reddit almost doubled the total NFT market with its collectible avatars since launching in May of 2022. That’s 9 months total for Reddit versus 6+ years for the entire NFT market! 🤯
Are we witnessing the inflection point for NFTs right in front of our eyes?
Is Reddit in the process of taking NFTs mainstream or what is really going on here?
In this report, we are going to 👀🔛⛓️ to see what’s really happening with Reddit NFTs and combine that with insights into what Reddit is doing to see such incredible growth.
Buckle up friends, this PRO report is a banger.
The trojan horse of web3 has arrived and its name is Reddit.
Reddit Collectible Avatars TL;DR
PRO members, let’s start this one off with some Reddit context.
Reddit is a social news website and forum where content is socially curated and promoted by users through voting. The last numbers publicly published by Reddit suggest that there are 430 million monthly active users on Reddit.
In May of 2022, Reddit launched “Collectible Avatars”, which are limited-edition avatars that provide owners with unique benefits on the Reddit platform (used as a profile picture, for community access, etc.).
The Creator Collections were made by independent creators in partnership with Reddit and are powered by NFTs on the Polygon blockchain.
Reddit also launched its own collection of free avatars for users which have surpassed a specific activity threshold (~2,500 Reddit Points). All Avatars, regardless of the collection, are minted within Reddit’s platform using the Reddit non-custodial digital wallet called a “Vault”.
Currently, the Reddit Vault doesn’t have the functionality to integrate across other web3 dApps.
However, the Reddit NFTs are on the Polygon blockchain and can still be sent to another web3 wallet and sold across any NFT marketplace, such as OpenSea or Magic Eden.
Reddit’s On-Chain Footprint By The Numbers
To date, Reddit users have minted a total of 8.5 million collectible avatars, making it one of the largest web3 activations ever.
In total, 6,522,000 unique Reddit users have minted at least 1 Reddit Avatar. 🤯
But the interesting thing about the number of unique minters for Reddit Avatars (which differs from all other unique NFT user stats in web3) is that these are mostly all real, unique people, not just a unique wallet.
What I mean by this is that in order to create a vault on Reddit and mint an Avatar NFT you must have a legitimate account on Reddit that has also achieved a high enough activity level.
Whereas to interact with any NFT collection directly on Ethereum or other blockchains one person can create as many unique wallets as they want with no friction. 🤷
So in this instance, ‘unique wallets’ actually refers to unique people (not exclusively, but almost). If we go back to the first chart above, it means that in terms of unique humans interacting with Reddit NFTs, it’s likely far greater than double the entire NFT market.
In the chart below we can see the amount of free vs. paid mints on Reddit.
Other than a small test month of free mints in May, Reddit, in partnership with its creators, launched exclusive avatar collections for a mint price between $9.99 and $99.99.
During that time, Reddit users paid to mint and collect almost 4 million NFTs, showing that there’s some serious interest in owning these avatars.
In December 2022, Reddit reignited the minting craze with its free avatar collection, driving more than 3 million users to mint its avatars in less than 2 months! 🚀
The numbers here are massive for web3, yet interestingly there isn’t a big buzz across Twitter, the web3 industry, or mainstream media.
I tweeted a chart about these numbers a few weeks ago and it went viral, almost like it was breaking news to most of the industry.
However, 2 interesting findings came from this tweet:
Some people are brushing these numbers off as irrelevant since most wallets have never executed a second transaction on the blockchain (aka they aren’t active web3 users).
The Reddit web3 people who are on Twitter are pumped about their avatars (love to see it).
Let’s talk about the Reddit holders and the secondary markets.
First of all, because the NFTs are minted in the Reddit Vault, users don’t have the ability to execute other web3 transactions (other than send their existing NFT to another wallet), so of course most users have only one transaction (more on why this is a good thing in my key takeaways at the end).
Secondly, most of the users don’t actually know or understand that their avatar is an “NFT”.
They know that they own the asset and have the ability to trade or sell it if they choose, but that’s about it. Otherwise, the minting of these avatars looks and feels like a typical web2 experience.
As an experienced web3 user looking to mint my own NFT, I was almost confused trying to do it because I was overthinking it trying to figure out what the gas price was and looking to confirm what blockchain it was on. Ironically, the process was much simpler. 😂
None of that information was there nor was it needed, since Reddit pays for all gas fees on Polygon anyway. Though, there was a link to the block explorer to verify the transaction.
In my opinion, this is the exact UX we want for web3 technology. Users understand the value and features of what they have, with the technology powering it hidden underneath.
This is the famous “DeFi mullet” thesis playing out for web3.
More on this in a minute though, let’s finish up the on-chain analysis of Reddit Avatars before we discuss the impact this may or may not have on the industry.
So buckle up, because we’re about to dive into some charts and data that’ll show us just how well Reddit has managed to execute this NFT strategy. They’re writing the playbook and all other major mass-market technologies are taking notes.
Reddit Secondary Sales, Revenues, and Expenses
The other interesting data we’re finding on-chain is the “limited” amount of activity on secondary sales for Reddit NFTs. To date, there have been 305,796 sales on the secondary market, which seems pretty low considering there are 8.5 million available.
Though, if we put that among the top sales across NFT collections on OpenSea, Reddit Avatars would sit in 2nd place behind only Crypto Kitties and just ahead of ENS.
Keep in mind that this is combining all sales across all Reddit collections.
These sales have accumulated $13.5 million USD (around 8,996 ETH) in volume.
But in terms of volume, Reddit would sit all the way back in 236th place on OpenSea’s all-time volume (again, combining all collections).
From that $13.5 million USD of volume, Reddit takes a 5% creator royalty. Though this number is not on-chain, we can assume that Reddit has earned $675,000 for royalties thus far (it’s uncertain if or what amount is shared with the creators themselves).
In contrast, we can also see that Reddit has paid 16,513 MATIC (approx $18,000 USD) in gas fees to use the Polygon blockchain and subsidize all fees for its users.
In total, Reddit has generated a profit of $657,000 USD since launching its avatar collections 8 months ago.
In addition, Reddit also helped 50+ creators earn significant revenues while also creating value for many of its top users in terms of the NFTs they now hold, all while creating a new and fun experience for those who participated—an impressive performance to say the least.
Finally, a total of 28,873 unique wallets have interacted with Reddit NFTs during secondary sales.
This brings the total amount of unique wallets to have ever interacted with a Reddit NFT up to 6,550,922.
In case you’re interested in understanding the top collections from Reddit, you can see the top 9 collections by sales volume below.
We can also see which collections the largest individual NFT sales came from—the biggest being a 30 ETH ($40,451 USD) sale back on October 24, 2022, from The Senses Collection.
Ok, so there's a lot to take away from what we’re seeing on-chain from Reddit. In my opinion, this is a much bigger deal for web3 than most people are giving it credit for.
Kyle’s Key Takeaways From Reddit’s Web3 Strategy
This is likely the largest web3 activation by any company in terms of interacting with unique individuals to date (probably by a landslide).
It appears that Reddit NFTs still have plenty of steam left to onboard millions more into web3. Currently, Reddit has activated about 1.5% of its monthly active users and 11.9% of its daily active users. As more utility and “clout” are built into these Reddit Avatars, I see no reason why those numbers won't increase significantly.
Reddit has already shown that using web3 technology can be profitable for its business and create value for its users, a win/win for everyone involved.
While 99% of the users have only minted their avatars and done nothing else in web3, I believe this is strategically planting an early seed for many of these users. Remember, this is 6.5 million people with a wallet that don’t even realize it. Once Reddit creates additional utility and experiences for users holding these NFTs and opens their wallets to the web3 ecosystem, its power will be unlocked.
Speaking of the Reddit Vault, I believe that this is a closed wallet by design. By removing the ability for the Reddit wallet to interact with any other web3 application or sign any transactions outside of the Reddit platform, it prevents all phishing and hacks from users' wallets, ensuring a seamless and riskless experience for its users. However, this structure still allows users to move the assets to their own wallet to enter the wild wild west of web3 for the full experience.
Reddit is doubling down on web3 and has recently launched its beta Community Points platform on the blockchain, allowing subreddits to put their social points on-chain (powered by Arbitrum). These points will also be held in the same Reddit Vault that the NFTs are in and will be accessible across web3 for trading and other experiences. This will only further Reddit and their users' on-chain footprint and unleash more and more potential for what they are creating.
I believe Reddit is currently writing the playbook for how to onboard the next billion users into web3. With this, I mean creating a web2-like experience while offering the properties of web3. Web3 gaming, ticketing, social media, and other potential mass-market technologies should take note.
My guess is that Reddit soon launches its own custom marketplace to buy, sell, and trade Reddit Collectible Avatars as well as Reddit Community Points (think OpenSea + Uniswap) while taking a fee on all trades. This furthers its footprint into web3 technology, creating a second source of revenue.
I wouldn’t be surprised if companies like Snapchat, Instagram, Twitter, Google, and Amazon (owner of Twitch) are watching what Reddit is doing closely. Holder numbers are reaching a relevant size to these platforms and they definitely do not want to be left behind. This could quickly turn into a race from the tech giants to transition their users from online to on-chain.
The Web3 Academy PRO team will be keeping a keen eye on Reddit activity in terms of the NFTs and its newly launched Community Points. 👀
We’ll be sure to keep you updated as new and relevant data emerges.
Until then, we believe that what we are seeing with Reddit Collectible NFTs is the start of something very big for web3.
If you have minted a Reddit NFT, please share your experience in the comments below. Part of the Web3 Academy PRO experience is to learn from each other!
Thanks for reading Web3 Academy PRO. 🙏
As usual, if you have any feedback, criticism, or suggestions, please share them in the comments below or in the Web3 Academy PRO discord channel.
Thanks, friends!
ABOUT THE AUTHOR
Kyle Reidhead
Founder of Web3 Academy and Impact3
Find him: Twitter
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