This image comes from the now-defunct page for Reddit’s Community Points documentation. It should serve as a sobering warning and reminder to all projects considering launching a token in Web3. As usual, excuses abound. Regulatory uncertainty. Scalability issues. The truth is that many rewards programs suffer a valueless fate because their tokenomics have not been carefully considered. Let’s now take a closer look at what lessons can be learned from this collapse, and call upon everyone building in Web3 to take heed and remember that without a carefully implemented and sustainable tokenomics structure, you, too, will get sent home because “something went wrong.”
In early August, the prices of the native currencies for two Reddit communities, MOON and BRICK, swelled about 40% and 76% respectively after cryptocurrency exchange Kraken listed them for trading. The Moonboys were overjoyed. But just over two months later, on October 17, Reddit announced in the r/CryptoCurrency subreddit that while they saw some future for Community Points, there was currently no path to scale it across the platform.
Just like that, the program was shutting down. So, what happened? Let’s start with the basics.
The Reddit Community Points system was an experimental Web3 user rewards system. It leveraged blockchain technology to give users points for their interactions and contributions to the platform. Community Points are, sorry, were, digital tokens earned by engaging in certain subreddits and could unlock special access or perks within a community. It started out on the Ethereum blockchain, and then migrated to Arbitrum Nova, a layer-2 scaling solution that launched in 2021.
Reddit Community Points were stored in “The Vault,” which was an Ethereum wallet in the Reddit mobile app. Users could access their Vault to check their Community Points balance from different subreddits, or transfer and spend tokens.
r/CryptoCurrency Moons ($MOON) launched in May 2020. Moons were the Community Points ERC-20 tokens given as user rewards for upvotes on posts and comments on the r/CryptoCurrency subreddit. More upvotes, more Moons. Simple. Moons were also earned by engaging in polls and other activities on the subreddit. Moons were distributed monthly based on user activity.
r/FortNiteBR Bricks ($BRICK) were a popular Community Points token as well. These were earned in a similar manner and also distributed to users in their Valut once a month. It’s worth noting that the subreddits r/CryptoCurrency and r/FortNiteBR are very popular, with 6.6 million and 2.6 million members, respectively.