Reddit Community Points

» see reddit.com as it lived, on the wayback machine

~ the eulogy ~

Reddit launched Community Points on 13 May 2020, as a beta on an Ethereum test network, in two subreddits chosen because they could not have been less alike. Users earned ERC-20 tokens based on how their posts and comments were received, and the tokens were specific to the community that issued them. Moons went to the cryptocurrency subreddit and Bricks to the Fortnite battle royale subreddit, with a token called Donuts over in the Ethereum trading subreddit folded into the same program later on.

The early numbers were funnier than anything Reddit could have planned. Within days of the launch the Fortnite subreddit had created 8,666 wallets to hold its Bricks, while the cryptocurrency subreddit had managed 2,073 for its Moons. A community of teenagers who had never thought about Ethereum onboarded four times faster than a community that discussed it daily. Points could be spent on cosmetic badges and special memberships, and they carried weight in subreddit governance polls, which was the actual pitch: a community currency that gave the people who built a place some say in running it. By 2022 the whole thing had moved off Ethereum mainnet to Arbitrum Nova, because the gas fees on a token nobody paid for had become indefensible.

On 17 October 2023 Reddit told the subreddits it was winding Community Points down, effective 8 November. Tim Rathschmidt, a Reddit communications director, said the resourcing needed had become too high to justify and that the regulatory environment had added to the effort, and pointed out that Reddit had since shipped several products doing what Community Points had tried to do. The market read it the only way it could: Moons fell about 85 percent that day, Bricks about 67. I had no position in any of this, which is easy to say when the whole program lived inside three subreddits I did not post in, and the honest measure of my distance is that I learned the wallet numbers from a 2020 exchange report rather than from having a wallet.

~ the dossier ~

~ the token economy ~

The part that made Community Points more than an arcade ticket is that the tokens were real on a public chain, which meant they had a price whether Reddit liked it or not. Moons listed on exchanges and traded against actual money, so karma in one subreddit became a quantity with a quote attached, and people began optimizing their posting for it. Reddit had built a loyalty program and then put it somewhere it could be arbitraged.

~ the mod who sold first ~

When the wind-down was announced, several moderators of the cryptocurrency subreddit sold. One of them started trading in under sixty seconds from the announcement post going up and liquidated more than 350,000 Moons inside four minutes. Across the group, more than 100,000 tokens were dumped by people who had read the notice before the community did, and the moderators who sold were removed from the mod team afterward.

It is a small scandal and a complete one. The tokens were designed to reward the people who look after a community, those people were handed the news first by virtue of looking after it, and a few of them treated the gap between their knowledge and everyone else's as the asset. Nothing in the design prevented it, and the tokens were liquid on a public exchange at the time, so the sales cleared in minutes.

~ what broke first ~

Reddit's two stated reasons were both true and neither was the whole thing. The scaling problem was genuine, which is why the project had already fled to a cheaper chain in 2022, and the regulatory climate for anything token-shaped in the United States had become actively hostile by late 2023, with enforcement actions running against far larger token issuers than a message board.

The timing says the rest. 2023 was the year Reddit started charging for its API, lost Apollo and most other third-party clients, weathered a moderator blackout, and arranged itself for the IPO it filed for a few months later. A blockchain reward scheme with an uncertain securities status is not what a company wants on its books going into an S-1. Community Points had been an experiment from a Reddit that could afford experiments, and it was closed by a Reddit that was counting them.

The tokens themselves did not technically die, which is the strange consequence of having issued them on a public chain. The contracts are still there, the balances are still there, and a trading subreddit can keep operating its own token economy with no help from Reddit at all. What stopped was the part only Reddit could provide, which was the thing that connected a number in a wallet to anything you could do on the site.

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