Reddit to phase out Community Points — The blockchain-based program that was designed to reward creators and developers on the platform.
An update post from Reddit's Community team.
Community Points allowed users to "own" a part of their respective communities, promoting better content and discussions.
Once earned, these Ethereum-based tokens resided in Reddit's Vault, serving as a cryptocurrency wallet.
Notably, neither Reddit nor moderators had the authority to retract a user's Community Points.
These tokens, introduced in 2020, were designed to encourage positive engagement and high-quality contributions by Redditors in select subreddits.
They were initially created as ERC-20 tokens on the Ethereum network but later transitioned to the Arbitrum Nova scaling network.
Users could exchange these points for special features, such as memberships that unlocked unique badges and animated emojis, and once used, the points were permanently removed.
Two prominent tokens, $MOON and $BRICK, played a pivotal role in this initiative.
These tokens are associated with two of Reddit's most popular subreddits, r/Cryptocurrency (6.9M members) and r/FortniteBR (3.0M members), respectively.
Their purpose was to reward users for their valuable contributions to these subreddits, creating an incentive for quality content and meaningful interactions.
However, due to the recent announcement, holders of the two tokens, $MOON and $BRICK, have been selling off their holdings, resulting in a significant nosedive in their prices.
MOON has plummeted by a staggering 87% in a single day, now trading at a mere $0.035 (at time of writing)
While BRICK has experienced a 50% decline over the past 24 hours, currently valued at $0.053 (at time of writing)
The decision to discontinue these tokens has been met with curiosity, considering Reddit's prior venture into Collectible Avatar NFTs.
Reddit's Director of Consumer and Product Communications, Tim Rathschmidt, explained that resource constraints were a significant factor in the decision. He stated, "Though we saw some future opportunities for Community Points, the resourcing needed was unfortunately too high to justify."
Additionally, regulatory concerns, particularly in the United States, have added to the complexity of the initiative.
Recent allegations of insider trading within Reddit's Community Points system have raised concerns.
In a now-deleted thread on Reddit, a user known as Gr8WallofChinatown claimed that some subreddit moderators were privy to the discontinuation plan before it was publicly announced.
According to the user, these moderators allegedly sold their tokens in advance, capitalizing on the information and exiting the market before the token's price plummeted further.
The accusations of front-running, where insiders take advantage of their position to benefit from non-public information, have generated significant discussion and debate within the Reddit community.
This question highlights a critical issue that emerges from Reddit's decision to retire its "Community Points" reward tokens.
The sudden depreciation in the value of tokens like $MOON and $BRICK has raised concerns, especially for users who may have invested time and effort in accumulating these tokens.
Reddit introduced these tokens as an incentive for active participation and quality contributions, allowing users to "own" a part of their respective communities. The promise of rewards and the sense of community ownership were driving factors for many users.
However, the decision to end these tokens without offering an alternative or a transition plan raises questions about fairness. Token holders who believed in the utility and potential of these tokens may now feel let down, as the value of their holdings dwindles.
It makes us consider whether Reddit, as a platform that thrives on its user community, should have taken steps to mitigate the impact on its users.
Moreover, the allegations of insider trading add an additional layer of complexity to this situation. If moderators did indeed have early knowledge of the discontinuation plan and took actions to sell off their tokens, it not only erodes trust but also calls into question the platform's commitment to transparency and fairness.
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