Reddit Retires Blockchain-Based Community Points

By  Noah Washington October 23, 2023

Image for Reddit Retires Blockchain-Based Community Points


  • Reddit discontinued its blockchain-based Community Points system due to high operating costs and uncertain regulations surrounding cryptocurrencies.
  • The termination caused a steep decline in the prices of subreddit tokens like MOON and BRICK, sparking backlash among Reddit users
  • The failed experiment provides lessons for social media platforms on the challenges of integrating blockchain technology.

In 2019, Reddit, the self-proclaimed "front page of the internet," initiated a blockchain-based Community Points system to reward its users for quality contributions within selected subreddits. The project was ambitious, leveraging the decentralized and transparent nature of blockchain technology, specifically the Ethereum blockchain.

However, as the program evolved to address scalability issues by migrating to Arbitrum Nova, Reddit's blockchain journey started to face substantial hurdles.

Scaling Proves Costly

Operating a blockchain-based rewards system proved to be a resource-intensive endeavor for Reddit. The aspiration to scale the Community Points system across its vast user base required not only a robust technological infrastructure but also significant financial investments.

According to Reddit's Director of Consumer Products and Communications, the escalating costs to scale the Community Points system outweighed the benefits, leading to a re-evaluation of the initiative.

The murky waters of cryptocurrency regulations added another layer of complexity to Reddit's blockchain venture. The potential legal implications surrounding tax liabilities and securities laws became a concern, with no clear regulatory framework in sight. The uncertainty surrounding the legal landscape of blockchain technology and cryptocurrencies was a significant factor in Reddit's decision to sunset the Community Points program.

This pivot also reflects a growing trend among online platforms to refine their focus toward more accessible and user-beneficial programs. Reddit, for instance, is now channeling its resources towards initiatives like subreddit karma and gifs, which are touted to be easier for the larger user base to adopt compared to the blockchain-based Community Points program​​.

This move, accompanied by official statements from Reddit's Director of Consumer and Product Communications, Tim Rathschmidt, highlights the platform's adaptive strategy in navigating the complex and evolving regulatory and technological landscapes of blockchain integration​​.

Impact on Community and Cryptocurrency Market

The announcement of the termination sent waves through the Reddit community, causing a sharp decline in the prices of subreddit tokens like MOON and BRICK. The value of these tokens plummeted by 80%, within a 24-hour window post-announcement, reflecting the market's reaction to the unexpected news.

The announcement regarding Community Points. Source: /r/CryptoCurrency subreddit

"Though we saw some future opportunities for Community Points, there was no path to scale it broadly across the platform," said Tim Rathschmidt in an official statement.

The abrupt end of the Community Points system sparked a flurry of discussions among Reddit users and the broader cryptocurrency community. Many voiced concerns about the trustworthiness of big tech companies in managing blockchain initiatives, as seen in various threads within the r/CryptoCurrency subreddit.

An unhappy user. Source: /r/CryptoCurrency subreddit

The sentiment of skepticism resonated beyond Reddit, raising questions about the viability and future of blockchain-based reward systems on social platforms.

"Just keep in mind that an hour before this moons fell by 10% in about 20 minutes. Definitely not suspect at all," said one user on Reddit.

Reddit's Shift in Community Incentive Programs

With the discontinuation of the Community Points system, attention now shifts to Reddit's other community incentive programs, such as the Moderator Rewards and Contributor Program. The contrast between the blockchain-based system and these ongoing initiatives highlights Reddit's evolving approach to community engagement and reward distribution.

Reddit's experiment provides a valuable case study for other social platforms considering blockchain integration. The challenges encountered by Reddit underscore the importance of addressing scalability, cost-efficiency and regulatory compliance in deploying blockchain solutions. The incident serves as a reminder to the tech industry and the cryptocurrency community about the hurdles that hinder the mainstream adoption of blockchain technology.

As the dust settles, the lessons from Reddit's blockchain experiment will likely echo through the corridors of other tech companies aiming to integrate blockchain technology into their platforms, serving as a cautious tale in the nascent yet tumultuous journey of blockchain's assimilation into mainstream tech.