In a surprising move, the big social media platform Reddit recently announced plans to discontinue its blockchain-powered Community Points program launched in 2020. The initiative allowed users on select subreddits to earn crypto tokens as rewards but faced challenges scaling across Reddit’s massive user base.
The Community Points system utilized crypto wallets and blockchain technology. Participants in enabled subreddits could earn Points by engaging with their communities. These could then be used to purchase special memberships and perks like custom emojis.
Stored in users’ Reddit Vault wallets, the Points took the form of unique crypto tokens pegged to each subreddit. The blockchain infrastructure ensured transparency and immutability when tracking Points transactions.
But despite promising a novel way to incentivize participation, Community Points suffered from barriers to broader adoption. Transaction costs on the Ethereum blockchain proved prohibitive for users. Reddit eventually migrated Points to a Layer 2 network, yet scalability issues persisted.
After assessing the challenges and resources required to expand the program, Reddit determined winding down Community Points altogether was the appropriate path forward. Director of Communications Tim Rathschmidt admitted the blockchain model simply didn’t demonstrate the potential to scale up sufficiently.
Rathschmidt also noted the added burden of navigating an increasingly complex regulatory environment surrounding cryptocurrencies. With users struggling to understand crypto wallets and tokens, Reddit felt Community Points no longer made sense as a mainstream incentive system.
Instead, the company is now focused on developing alternative programs that are more accessible and aligned with the platform’s goals of fostering community engagement. For example, Reddit’s new Contributor Program allows users to directly convert karma and awards into cash payouts.
Within Reddit’s member communities, reaction to phasing out Points has been mixed. Some users are disappointed to lose a unique embodiment of their contributions in the form of crypto tokens. But others look forward to incentives that are simpler and easier to use across Reddit.
In the end, Community Points highlighted drawbacks in trying to shoehorn blockchain mechanisms like crypto tokens into models not well-suited for them. The friction and complexity overshadowed the program’s aims of rewarding community participation.
As online platforms explore web3 integrations, Reddit’s experience exemplifies the importance of matching use cases to technology. For decentralized systems to drive real value, they must provide straightforward benefits for mainstream users, not just novelties for crypto enthusiasts.
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