Reddit Kills Crypto Rewards Program

Reddit Kills Crypto Rewards Program

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Due to scaling challenges, Reddit is winding down its “Community Points” program, a blockchain-based rewards system for creators and developers. 

The End Of Community Points

Social networking site Reddit is sunsetting its blockchain-based rewards initiative, Community Points. Launched in 2020, this program aimed to provide Redditors with a stake in their communities, but it's set to be discontinued by early November. 

Community Points were a form of Ethereum tokens stored in Reddit's Vault, designed to incentivize user engagement in select subreddits, fostering improved content and conversations. Once awarded, these tokens were non-refundable, creating a sense of ownership. Users could spend them on memberships, animated emojis, and distinctive badges, with the spent tokens being permanently "burned."

Scaling Challenges on Ethereum

The initial deployment of Community Points on the Ethereum blockchain posed significant challenges. High transaction fees and limited bandwidth on Ethereum hindered the program's growth. In 2022, Reddit transitioned to Arbitrum Nova, aiming to harness its scaling capabilities while retaining Ethereum's core advantages. 

However, this move also failed to address the issues, shedding light on the complexities that businesses face when integrating cryptocurrency incentives into their platforms.

Regulatory Hurdles and Resource Constraints

Tim Rathschmidt, Reddit's director of consumer and product communications, explained the decision, citing resource constraints and evolving regulatory conditions,

“Though we saw some future opportunities for Community Points, the resourcing needed was unfortunately too high to justify. The regulatory environment has since added to that effort. Though the moderators and communities that supported Community Points have been incredible partners – as it’s evolved, the product is no longer set up to scale.”

Other Incentive Programs 

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

This decision to discontinue Community Points is not Reddit's first termination of a rewards scheme this year. The platform previously discontinued a system that allowed users to buy gold to honor others due to community backlash, giving rise to the Contributor Program as a replacement.

Options For Community Governance

Rathschmidt suggested that Reddit's team is actively exploring alternative pathways to enhance community governance. The platform is already investing in products that are easier to adopt, understand, and align with the main goal of the Community Points program. 

In their statement, the Community Points page affirmed Reddit's commitment to finding decentralized, secure, and highly scalable solutions, recognizing that placing all Reddit users on the main Ethereum network is infeasible 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.

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