“Reddit Shuts Down its Cryptocurrency Rewards Program”

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“Reddit Shuts Down its Cryptocurrency Rewards Program”

The Demise of Community Points

Social media giant Reddit is bringing the curtain down on its innovative cryptocurrency-based rewards system, Community Points. Launched in 2020 with the aim of giving Redditors a sense of ownership and community engagement, this program is scheduled for discontinuation in early November.

Ethereum Tokens in Reddit’s Vault

Community Points took the form of Ethereum tokens securely stored in Reddit’s Vault, designed to incentivize user engagement within specific subreddits, ultimately fostering higher-quality content and discussions. Once received, these tokens became non-refundable, establishing a sense of vested interest among users. These tokens were redeemable for memberships, animated emojis, and unique badges, with each spent token permanently “burned.”

Challenges on the Ethereum Network

The initial deployment of Community Points on the Ethereum blockchain faced significant obstacles. High transaction fees and limited network bandwidth on Ethereum hampered the program’s expansion. In 2022, Reddit transitioned to Arbitrum Nova in an attempt to leverage its scalability while retaining Ethereum’s core benefits.

Unfortunately, this transition did not resolve the challenges, highlighting the complexities that arise when businesses introduce cryptocurrency incentives into their platforms.

Regulatory and Resource Roadblocks

Reddit’s Director of Consumer and Product Communications, Tim Rathschmidt, explained that the decision to discontinue Community Points was due to resource constraints and the evolving regulatory landscape.

“While we saw the potential for Community Points in the future, the resources required were ultimately too high to justify. The changing regulatory environment has only added to these challenges. Despite the invaluable support from moderators and communities, the product is no longer positioned for scalability.”

Alternative Incentive Programs

Throughout its history, Reddit has explored various incentive programs. The Contributor Program, for instance, allowed users with either 10 gold awards in a month or those with over 5,000 karma to initiate monthly withdrawals, effectively converting Reddit gold and karma into real currency.

The termination of Community Points is not Reddit’s first foray into ending a rewards program this year. The platform had previously discontinued a system that allowed users to purchase gold awards to honor others due to community backlash, leading to the introduction of the Contributor Program as a replacement.

Exploring New Paths for Community Governance

Rathschmidt revealed that Reddit’s team is actively exploring alternative avenues to enhance community governance. The platform is currently investing in products that are more user-friendly, easier to understand, and better aligned with the core objectives of the Community Points program.

In their statement, the Community Points page affirmed Reddit’s commitment to finding decentralized, secure, and highly scalable solutions, acknowledging that placing all Reddit users on the main Ethereum network is impractical and cost-prohibitive.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.