GM DOers! 😎
Here at Web3 Academy, we're all about learning and growing.
Sure, we love a good pat on the back when we nail a prediction, but we're also humble when things don’t turn out the way we predicted. *hiding the pain* 😓
Back in July, we predicted for Reddit to:
Expand access to Community Points beyond the 2 subreddits at the time ($MOON & $BRICK) 🌕
Kickstart buy, sell, and trade options for these points, right on the blockchain. 🤝
Spice up Reddit's avatars with some onchain in-app purchases. 🛍
Unfortunately, Reddit shattered our dreams by shutting down their Ethereum-based Community Points, effective 8th of November.
PLUS, Reddit admins apparently tipped off moderators in certain token-holding communities, giving them a chance to sell before the wider community caught wind. 😬
So today, we’ll talk about…
Why onchain community points made so much sense 🤔
Why did Reddit decide to hit the cancel button? ❌
Did Reddit commit insider trading? 😲
Let's get into it! ⏬
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Why Onchain Community Points Made So Much Sense 🤔
Launched three years ago, Community Points were envisioned as a way to empower Reddit users within their communities.
By rewarding users for positive contributions, like creating quality content or engaging in meaningful discussions, Community Points aimed to foster a more connected and active community.
Here's how they were intended to be used:
Recognition: Community Points could serve as a recognition of a user's contributions and engagement within a community.
Users earning more points could be seen as valuable members.
Voting Power: They could potentially be used to grant users more voting power on community decisions, thus giving active contributors more say in the community's direction.
Access to Special Features: Points could be used to token-gate access to special features or areas within a community, like premium content or members-only areas.
Redeemable Rewards: They could be redeemable (burned) for awards, badges, or even real-world goods and services, depending on the community's arrangement.
And, by putting Community Points onchain, Reddit communities could provide a more transparent & fair environment for their members.
Plus, they could buy, sell, and trade community points in highly liquid markets. Much better than basic web2-type points.
So, if the benefits are so large, why did Reddit sunset Community Points? 🤷
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Why Did Reddit Sunset Community Points? ❌
There are 4 reasons:
Scalability: Even after moving to a more scalable blockchain (L2 Arbitrum Nova), the program still faced scalability issues which made it infeasible and expensive to run.
Resource Intensive: Reddit is always trying to abstract away the clunky web3 tech, so they were covering things like gas fees to provide a pleasant experience.
Although the gas fees weren’t huge because they used an L2, the costs were apparently significant.
Regulatory Challenges: The uncertain regulatory landscape was, in my opinion, the biggest hurdle for Reddit.
The fear of getting into trouble might have made them think, 'This isn’t worth the risk.' But I'm just guessing here. Reddit hasn’t actually said this.
Alternative Programs: Reddit introduced other reward programs like the Moderator Rewards Program and the Contributor Program over the years, which were easier for users to adopt and understand.
Users getting their heads around web3 & crypto is tougher, especially now when the entire world hates this industry because they’re seeing all the scams circulating. 🤦
These challenges outweighed the benefits of the Community Points program, leading to its discontinuation.
What are the consequences of this shutdown? And did Reddit perform insider trading? 👀⏬
Reddit All In On Web3 w/ TPan
It’s still likely that Reddit’s community points will return at some point in the future.
I therefore encourage you to listen to our conversation with Tpan from a couple of months back, where we dive deeper into how Reddit can use onchain Community Points.
Did Reddit Commit Insider Trading? 😲
Naturally, due to the discontinuation of Community Points, the existing tokens started to dump. Hard.
This was expected, however, some evidence suggests that Reddit administrators have tipped off the moderators of certain communities that had a token, before the announcement.
Check this out… The $MOON token was heavily sold moments before the Reddit announcement.
And if you read this thread 👇, you’ll see the onchain transactions of specific community moderators that sold. I guess you can’t hide onchain. 😅
Unfortunately, many feel betrayed by Reddit's actions. Reddit had the challenging task of informing moderators about discontinuing Community Points.
While the moderators were supposed to inform their communities about the discontinuation, they sold tokens using the inside information.
However, I believe that anyone in the moderators’ position would’ve done the same. Nobody wants to go down with the ship.
With that said, the bottom line is that many people, who solely wanted to participate in various communities, have lost money.
Meanwhile, some people in charge of these communities dumped on regular people because they got access to information ahead of time.
Not a great look for neither Reddit nor the web3 industry. Such a bummer. 😕
Thanks for reading. And remember, you're strong, you’re powerful, you’re alpha! ❤
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Disclaimer: This article is for informational purposes only and not financial advice. Conduct your own research and consult a financial advisor before making investment decisions or taking any action based on the content.
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