Examining the Significance of Reddit’s New Community Points Program

  • Commentary
  • June 14, 2020


Last month, the social network platform Reddit announced its new ‘Community Points’ program, aiming to leverage cryptoeconomics for community engagement. The points are represented by ERC20 tokens and can be used to reward user contributions on particular subreddits, a type of Reddit sub-forum dedicated to specific topics. According to the announcement, users will be able to earn points by making contributions such as ‘submitting quality posts and comments’ and will be able to transfer them to other users, tip, or use them to purchase digital items, such as badges. Furthermore, communities will be able to customize the names, appearance, and usage of the points. While not explicitly stated, it appears content will be judged in a similar way to Reddit’s existing Karma system, with the added ability for communities to review and edit contribution distributions before tokens are distributed. The program, for now, is limited to the r/Cryptocurrency and r/FortNiteBR subreddits, and is running in test mode on the Ethereum Rinkeby testnet, with the trial expected to run throughout the summer. Users of r/FortNiteBR and r/CryptoCurrency can interact with the Bricks (BRICK) and Moons (MOON) tokens respectively and, if extended beyond its demo phase, the program might assign a token to each of the 2,168,008 subreddits. Reddit has implemented private-public key pairs, named ‘vaults’ to store users’ tokens from which they can freely transfer them to ERC20-compatible wallets. The token contracts were deployed on Rinkeby June 14 and 15 with r/FortNiteBR witnessing substantially more activity than r/CryptoCurrency, with 14,482 addresses and 16,411 transfers relative to just 3,077 and 3,533, despite, the former having just 21% more subscribers. While Ethereum addresses do not equate exactly to user numbers, the two metrics are likely comparable in this case, and so ultimately highlight just a small fraction of each community engaging in the program. However, when considering the total Reddit user base, that stands at 430 million monthly users, the deployment of Community Points for all subreddits on Ethereum mainnet would likely represent the largest user onboarding experience for Ethereum and possibly any blockchain network to-date.

Reporting from some outlets cited Reddit’s CEO, Alexis Ohanian’s advocacy and belief in the power of blockchain networks and cryptoassets as the principal motivation behind the program. While no doubt true to some extent, given Ohanian’s public comments and investment activity in the sector, there are causes for skepticism surrounding this explanation. As part of its announcement, Reddit stated its desire to return freedom to the internet, echoing much of the same language surrounding Web3 platforms. While laudable, the veracity of these claims is somewhat questionable both in light of Reddit’s frequent engagement in censorship, combined with its continued absolute control over the platform. Indeed, such claims of liberty would hold more weight were Reddit planning to migrate control all or parts of its platform from the current server-client model to a decentralized peer-to-peer architecture, blockchain-based or otherwise. While we do not wish to be overly critical and commend Reddit for making an initial step into the permissionless blockchain sector, Occam’s razor would suggest that the motivation behind the new program was likely a business concern, rather than primarily a philosophical position, given the increased advertising revenue that could emerge from higher user engagement rates catalyzed by the program’s cryptoeconomics.

As stated, if successful, Reddit’s program could ultimately result in the largest user onboarding for Ethereum to-date, and possibly by several orders of magnitude. Ultimately if the program was extended to all subreddits and migrated to mainnet, the current Ethereum network would be quickly overloaded with gas prices snowballing. For now, Reddit is covering the synthetic gas costs through meta transactions, abstracting the gas payments away from the user, however, it could be faced with exorbitant transaction costs on mainnet. In recognition of this potential network congestion, second layer network providers, including StarkWare and Fuel Labs have demoed their STARK-based Validium and optimistic rollup (OR) systems respectively for Reddit’s new program, demonstrating extremely large reductions in gas costs and layer one network usage. Despite many years of troubled progress, Ethereum-based second layer networks have improved significantly over the past 12 months, with several projects having recently implemented functioning implementations, including Matic and OMG Networks’ plasma designs as well as several zero-knowledge proof systems, including StarkWare’s STARK construction and Loopring’s SNARK ZK-Rollup. With the Ethereum base layer still years away from realizing a sharded architecture, alternative scaling approaches, including second layer ones, are imperative for Ethereum to successfully onboard large new user bases, such as those potentially coming from Reddit after the Community Points summer trial. For this reason, we believe that Ethereum is at a key juncture in its evolution. With an abundance of rival smart contract networks competing for adoption, whether Ethereum can successfully onboard users via its emerging second layer networks without compromising user experience and composability will greatly influence its long-term role as the preeminent smart contract network.