Why Reddit Is Stopping Crypto Rewards Community Points

Reddit's popular blockchain-based rewards initiative, Community Points, is about to be discontinued. Tim Rathschmidt, director of consumer and brand communications for Reddit, highlighted the challenges in the program in developing regulatory frameworks.

The decision highlights the complexity businesses face when integrating cryptocurrency incentives into their platforms.

Launched in 2020, Community Points reward active participation in select subtexts. Essentially Ethereum tokens, these points lived in Reddit's Vault, acting as a crypto wallet. Once assigned, they were irreversible as neither Reddit nor the moderators could retrieve them.

Users can spend these tokens on special features such as memberships, which give them emojis and special badges. Following their spending, the tokens are irrevocably “burned”.

Serving as a “name” logo, community dots appeared next to usernames in active subtexts honoring the platform's top contributors. With their presence on the blockchain, Redditors can show their “name” online globally.

Read More: How to Sell Reddit r/CryptoCurrency Moons in 2023

However, manipulation poses significant obstacles. Initially tied to Ethereum, high transaction fees and limited bandwidth limited the growth of Community Points.

Reddit's solution, which will transition to Arbitrum Nova in 2022, aims to take advantage of Ethereum's scalability while maintaining the fundamental benefits of Ethereum. However, this proved ineffective on the social media as well.

“While we saw some future opportunities for Community Points, the resources required were unfortunately too high to justify. The regulatory environment has since increased for that effort. Although moderators and communities that support community points are amazing partners – in evolution, the product is no longer structured by size,” Ratschmidt said.

During his tenure, Reddit tried several incentives. Notable among them is the donation program, a system that converts Reddit Gold and Karma into real currency. This program allows Redditors to start monthly withdrawals with 10 gold earned in a month or users with more than 5,000 karma.

Interestingly, Reddit's reward scheme isn't the only one being discontinued this year. The previous practice, which allowed users to buy gold to honor others, was discontinued after public outcry. The contributor program pops up behind it.

“We are still working on ways to improve community management and empower communities and contributions. Part of the reason we've passed this product is that we've launched or are actively investing in a number of products that are easy to accept and understand to achieve what the Community Points program is trying to do,” Ratschmidt added.

Read more: 6 Best Ways to Earn Crypto Rewards in 2023

Ratschmidt also explained that the goal is not to replace Community Points with a contributor program. The focus is on scalable, useful programs.

“Many benefits of Community Points have been integrated into the platform,” Rathschmidt concluded.

Following the news, Reddit's tokens MOON and BRICK experienced a significant drop in their value. MOON, associated with r/Cryptocurrency, is down 84% today, standing at $0.035. Meanwhile, BRICK from r/FortniteBR has seen a 59% drop in the past day, now trading at $0.041.