Reddit jumps into Loot Tokens with new cryptocurrency on Ethereum
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Today, Reddit introduced about 20M new users to cryptocurrency in a matter of seconds.
That’s how many users visit Reddit’s /r/Cryptocurrency and /r/FortniteBR on any given month; and given that the number of semi-active wallets on Ethereum was only around 1.2M wallets, this is a huge deal.
What Happened?
Reddit launched two new types of loot token (a token on the Ethereum blockchain that is earnable within a community rather than purchased) in their /r/Cryptocurrency and /r/FortniteBR subreddits, and in turn signaled their plan to pivot the company’s monetization more towards crypto.
This overall initiative is referred to as “Community Points” and builds on the early experiments from /r/Ethtrader donuts.
What are the two loot tokens called?
Reddit launched “Moons” ($MOONS) for /r/Cryptocurrency and “Bricks” ($BRICKS) for /r/ForniteBR
Where can I access these loot tokens?
The tokens are available on those specific subreddits on the new Reddit theme and in the app.
Users will be able to access the tokens in their Reddit “vault” an in-app ERC20 wallet available on both iOS and Android.
How do I earn these loot tokens?
Reddit will distribute these tokens initially based on Reddit Karma to represent compensation for the value that users have contributed to the community overtime.
Reddit itself will keep a portion of the tokens in each subreddit, and award a small portion to the community moderators for managing the subreddit.
On the launch day there will be an initial distribution of 50M tokens covering previous activity in the subreddit, and then the remaining tokens will be distributed month over month diminishing with each monthly distribution until it hits its cap of 250M tokens for each individual subreddit.
Reddit has indicated that the community will also have some ability to govern the model of distribution with in each independent subreddit.
What can I do with these loot token?
By definition the Community Points Program issues a type of loot token on the Ethereum blockchain, which means you can both earn it in the community, and redeem it in the community.
In the case of Reddit, you’ll be able to use these tokens to tip other users, buy badges and awards, take part in weighted polls, or buy a special membership to each subreddit (that gives you a colored user name, specialty loyalty badges, and the ability to embed gif replies in your comments.)
For example, to get the special membership in /r/Cryptocurrency will cost 1000 $MOONS/month.
What’s the economic model of the tokens?
The economic model has three key points:
- The number of tokens issued diminishes over time, and can only be earned from human effort. All future human effort earns less tokens than all prior human effort.
- There is a hard cap of 250M tokens in a subreddit. There will never be more than 250M $MOON tokens.
- Every time $MOON tokens are used to buy badges, memberships or for any other action on Reddit, they are burned. (This means destroyed in blockchain speak!)
Given this, the more active a community is and the more value it creates for its users, the less tokens will exist over time.
This means tokens will have a lower supply, but, a greater demand.
As with any economic system, the price of an asset increases as supply lowers and demand increases.
In the future, instead of costing 500 $MOONS for a membership it may only cost 50 $MOONS, but, that’s because each individual $MOON token would be worth more.
What else can I do with these tokens?
Because Moons and Bricks are both ERC20 tokens on the Ethereum blockchain, you can do whatever you want with them.
In the Reddit app your wallet is a full Ethereum wallet that has a private key and recovery phrase. You are able to use that wallet anywhere you would normally use an Ethereum wallet by exporting it.
This means that once you claim your tokens you own them and no one else has access to them. Not even Reddit.
While these tokens started their journey with Reddit, they ultimately represent value created within a specific interest group, and could start to proliferate across other mediums.
If you are a FortniteBR fan and wanted to use the FortniteBR tokens on a message board you run, or to accept them as payment for skins you want to trade, then you can choose to do that.
If you want to list your tokens on exchanges to sell, you can do that too.
While Reddit is very likely to continue exploring new features to redeem these tokens for, the tokens are fully decentralized and can be used by anyone in anyway.
