Author: Jaleel, Jucy, BlockBeats

Editor: Zhang Wen, BlockBeats

On October 18th, according to TechCrunch, Reddit has decided to terminate its blockchain-based community points service that has been in operation for nearly three years. Tim Rathschmidt, Reddit's Consumer and Product Communications Director, stated that "although we see some future opportunities for community points, the resources required are too high to continue. In addition, the regulatory environment has also increased the difficulties in this area."

Reddit will cancel community points on November 8th. These points are essentially interchangeable Ethereum tokens stored in Reddit's Vault, which operates as a cryptocurrency wallet.

After the announcement, the native token Moons (MOON) of the Reddit r/CryptoCurrency community fell by 85%, the Bricks (BRICK) token of the r/Fortnite sub-forum fell by 67%, and the Donut (DONUT) token representing the community points of the r/ethtrader sub-forum fell by 66%.

Reddit Crypto Community's Black Swan Event

In the r/CryptoCurrency community, the announcement of the suspension of the community points test version and special membership qualifications is highlighted in bold with [SERIOUS]. The post states that due to regulatory environment and resource constraints, the community points token will be cancelled no later than November 8th.

Such a sudden announcement caused the MOON token to drop 82% within three minutes. Many users promptly sold off their tokens, while users in other time zones were not so lucky. "After waking up, Australian and Asian users found that the price of the token was already in chaos, and those holding the token will welcome the new day in this way," the community said.

There are over 3,000 comments gathered under the post, and most of the community members express dissatisfaction. There is indeed an explanation for the new plan in the announcement, namely the "New Contributor Program", where eligible users can earn cash based on the Karma and gold they earn through qualified contributions. However, the community members are not buying it.

What followed was speculation about the rug, "the price plummeted a few hours before it reached my inbox, so there must have been something shady going on," "it would be annoying if Reddit sold off before the news was released. They do hold a large amount of tokens." The community saw very suspicious transaction records on the chain, pointing out that some addresses completed large sell-offs before the "Token Points Cancellation" notice, achieving "escape."

The community further accuses Token of centralization and even wants to report the matter to the US Internal Revenue Service for investigation: "Reddit is operated by POS and they don't care about their community at all."

In this black swan event in the Reddit crypto community, one of the platforms that suffered heavy losses was the crypto exchange Kraken. Therefore, in the "[SERIOUS] Points Topic" post, Kraken co-founder Jesse Powell replied: "I personally don't think it's a regulatory issue, but I know regulatory issues are complex and constantly evolving, maybe Reddit doesn't want to deal with it."

According to Jesse Powell, Reddit should at least provide a compensation method and redemption path. People should be able to purchase collectible avatars with points in some proportion or other ratio. It should not only destroy the value of the held shares, but also not provide any return.

From Ethereum to Arbitrum Nova

Three years ago on Reddit, a novel blockchain-based points system based on Ethereum received a lot of discussion. Initially revealed in a video posted by a community manager from the decentralized domain project Unstoppable Domains, the video showed that Reddit was configuring an Ethereum wallet for each user and using ERC20 tokens.

Reddit has officially announced this news, which has caused a huge response in the cryptocurrency industry. According to some descriptions from Reddit, these so-called "community points" actually represent the ownership of Reddit subreddits. The token system was initially launched on r/Cryptocurrency and r/FortNiteBR, with tokens named MOONS and BRICKS respectively. At that time, the total number of users in these two communities reached 2.4 million, which can be said to be a very important starting point.

Reddit's mechanism is quite straightforward: it distributes tokens based on users' monthly contributions to subreddits. After four weeks, Reddit will announce each user's contributions during this period and give the community a week to provide feedback or suggest modifications. The tokens will be directly deposited into the users' wallets once the final list is determined. These community points have multiple uses, from unlocking special features to displaying a user's "reputation" online.

However, when things seem perfect, problems begin to emerge. The use of Ethereum transaction fees is clearly a huge problem. Ethereum's transaction fees are high and bandwidth is limited, making it a big challenge for Reddit to expand its community points.

"For example, it is not feasible to put all Reddit users on the Ethereum main network, and the cost is prohibitively expensive." The community points page further explains the reason. Therefore, they studied, adapted, and migrated to Arbitrum Nova.

Arbitrrum Nova is a solution provided by Arbitrrum specifically for promoting gaming and social applications, and can be said to be the top choice for Reddit.

Points tokens that were closed at the peak moment

After migrating to Arbitrum Nova, and with the influence of Reddit, the number of subscribers to r/Bitcoin and r/Ethereum has reached a new record. During the week of June 4th to June 11th, r/Bitcoin subReddit gained over 364,000 new subscribers, while the r/Ethereum community gained 461,000 new subscribers. Currently, r/Bitcoin has over 5 million subscribers, and r/Ethereum has over 2 million subscribers.

What's even more shocking is that after Reddit's community tokens Moons and Bricks were listed on Kraken, their prices skyrocketed.

Kraken, a cryptocurrency trading platform, announced the listing of Reddit community tokens Bricks (BRICK) and Moons (MOON), and opened deposits and withdrawals on the Arbitrum Nova network. Within 24 hours, the Reddit r/CryptoCurrency community token MOON and the r/Fortnite subReddit community token BRICK increased by 42.1% and 83.4%, respectively.

Despite the impressive growth, the fatal flaw in the development of community tokens is the difficulty in achieving cross-platform applications, apart from regulatory issues and limited resources. In addition, the token scoring mechanism has also worsened the community discussion atmosphere to some extent, with meaningless discussions about tokens flooding various sections.

In the past three months, the price of Reddit's community points token has been falling all the way. The peak moment six months ago is difficult to reproduce, and this outcome may be inevitable.

This passionate wife and crypto OG how to influence Reddit?

Reddit co-founder Alexis Ohanian is a passionate advocate for his wife and is very affectionate with the well-known tennis superstar "Serena Williams". Behind this Reddit pioneer, there is also a little-known identity: a senior player in the cryptocurrency and NFT fields.

Alexis Ohanian couple, image source network

Translation:

Alexis Ohanian couple, image source network

In 2014, Ohanian purchased 50,000 ETH for only $15,000 when the price of ETH was only 30 cents. This Armenian descendant said that his ancestors lost all their property in World War I, and cryptocurrency showed him the potential of non-deprivation property, so he participated in the ICO of Ethereum. However, he still feels that he bought too little when he looks back on this transaction.

Subsequently, Ohanian established venture capital firm 776 in 2020 using the profits from his early investments in ETH and Coinbase. To date, the company has invested in 29 cryptocurrency-related startups and has over $750 million in assets under management.

This is undoubtedly a regrettable decision, but it also reflects the challenges and tensions that still exist between regulation and the world of encryption in reality. Not only token and NFT holders, but many people also hope that Reddit can regain the intimacy and enthusiasm with encryption.

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