In an unexpected move, Reddit, the renowned social media platform, announced discontinuing its Community Points program, built on the Ethereum blockchain. The decision reportedly made due to the program’s failure to gain traction and a challenging regulatory environment, surprises many users.
Effective next month, Reddit will officially terminate the trial version of its Community Points program, a decision linked to what the company described as “scalability limitations” and an unclear legal landscape. While a representative from Reddit refrained from immediate comment, a member of the Community team, known as u/cozy__sheets on Reddit, disclosed, “Though we saw some future opportunities for Community Points, there was no viable method to expand its reach across the entire platform.”
Speculations have arisen among users, hinting at potential tax implications or the classification of the points as securities as potential causes for Reddit’s regulatory concerns, although these speculations remain unconfirmed.
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Understanding Reddit’s Community Points System
Approximately three years ago, Reddit introduced Community Points, a rewards system based on Ethereum intended to foster engagement within specialized subreddits. Within communities like r/CryptoCurrency, users were rewarded with tokens known as “Moons” for active participation, including posting and commenting. Similarly, participation in the r/EthTrader and r/FortniteBR communities allowed users to earn tokens such as “Donuts” and “Bricks.”
These tokens served various purposes, including acquiring awards for specific subreddits and their trade on decentralized markets such as Uniswap and Sushiswap. However, as per the recent announcement, the visibility of Points and the ability to earn them within communities will cease in users’ Reddit Vaults from the following month onwards.
The moderators of the r/CryptoCurrency subreddit expressed their surprise at the news, emphasizing, “We are deeply disappointed in Reddit’s decision today and wish to clarify that we were only informed of this resolution one hour ago.” Reddit administrators sought to reassure users that their accumulated “Moons” would not be retracted, highlighting that the “transfer functionality in the smart contract is not being shut off” and affirming Reddit’s decision to relinquish ownership of the associated agreement.
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Reddit native Token Plunges
In the wake of Reddit’s announcement, the value of the associated tokens has taken a significant plunge. Users who had invested in these tokens, such as “Moons,” “Donuts,” and “Bricks,” are now witnessing a sharp decline in their token holdings.
The development triggered a sell-off in these digital assets, rapidly devaluing the tokens used for rewards and transactions within Reddit’s specialized subreddits. The token is currently 78% below its previous 7-day price.
The token’s plunge underscores the profound impact of platform decisions on the value of associated digital assets. Reddit’s decision has disappointed users and raised questions about the future of digital tokens for incentivizing online communities.
