The Shift from Blockchain-based Rewards to Cash Incentives on Reddit

In a bold move that has surprised many in the crypto world, Reddit is phasing out its blockchain-based Community Points program, moving towards rewards programs that are easier to scale. Despite the initial excitement around this program, the resource intensity and regulatory requirements have made it impractical to continue.

“The shift from blockchain-based rewards to real cash incentives marks a significant turn in Reddit’s approach to incentivizing user engagement.”

Understanding the Community Points Program

Launched in 2020, the Community Points program was hailed as an innovative way to reward users who positively contributed to select subreddits. These points, which were essentially interchangeable Ethereum tokens, were stored in Reddit’s Vault, a type of cryptocurrency wallet. Once awarded, these points could be used for special features, like unique badges and animated emojis, and were displayed next to usernames as a reputation marker.

The Challenges of Scaling the Community Points Program

However, scaling the Community Points program proved to be an immense challenge. The pilot program initially used the Ethereum network, hampered by high transaction fees and limited bandwidth. To address these issues, Reddit moved the Community Points to Arbitrum Nova in 2022, a platform built on Ethereum that promised ultra-low-cost transactions, high energy efficiency, and strong security guarantees. Yet, this move did not resolve the scalability issues.

The Shift to the Contributor Program

In response to these challenges, Reddit has rolled out other community incentives, such as the Contributor Program, which allows eligible users to convert their Reddit gold and karma into cash. Under this program, Redditors who earn at least ten gold within 30 days are eligible for a monthly withdrawal, and users who have over 5,000 karma can make $1 per gold.

The Future of Community Engagement on Reddit

As Reddit phases out the Community Points program, it is clear that the platform is focusing on scalable and user-friendly reward systems. While the blockchain-based program offered unique advantages, the transition to actual cash rewards through the Contributor Program provides a more accessible and practical approach to incentivizing user engagement.

Despite this shift from blockchain, Reddit remains committed to improving community governance and empowering communities and contributions. The platform is working on products that accomplish what the Community Points program aims at while being more accessible to adopt and understand.