In response to Reddit’s recent announcement of discontinuing its blockchain-based reward service, Community Points, co-founder of Kraken, Jesse Powell, expressed his concerns about the move, emphasizing that Reddit should not undermine the value of community tokens without offering something in return. The decision, disclosed yesterday, sent shockwaves through the related tokens.
Reddit’s official statement on its platform explained the decision to sunset the Community Points beta, including Special Memberships, by November 8. Consequently, users will no longer see Points in their Reddit Vault, and any further Points accrual within communities will cease. Reddit acknowledged the potential for Community Points but cited an inability to scale it across the entire platform as the primary reason for discontinuation.
Regulatory challenges were also cited as a contributing factor. Reddit acknowledged the limitations posed by the evolving regulatory environment, despite the strong support from moderators and communities that had championed Community Points.
Notably, Kraken had listed two Reddit community reward tokens, MOON and BRICK, in August, causing a significant surge in their prices. However, following yesterday’s news, MOON plummeted approximately 90%, dropping from $0.24 to $0.024, according to data from CoinGecko. Other Reddit reward tokens experienced similar declines.
In response to Reddit’s regulatory concerns, Jesse Powell of Kraken stated, “I personally don’t see the regulatory problems, but I understand that it’s a complex and evolving issue, and Reddit may wish to avoid the hassle.” He suggested that Reddit should consider offering users a redemption path, allowing them to exchange their Community Points for Collectible Avatars or convert them into Karma. Powell emphasized that Reddit should provide some form of compensation rather than devaluing users’ holdings without offering anything in return.
Community Points, introduced in 2020, aimed to reward Reddit users for their engagement on the platform, such as receiving upvotes on comments or posts. These Ethereum-compatible ERC-20 tokens were stored in Reddit’s crypto wallet, known as the Reddit Vault, and could be spent on various perks like emojis and badges. In August 2022, the service migrated from Ethereum to Layer 2 Arbitrum Nova to address scalability issues and reduce transaction costs.
Reddit defended its decision, stating that moving away from Community Points would allow the company to invest in products that provide value to a broader audience of Redditors. They noted that they had already launched,