Social media platform Reddit announced that it was looking into tokenisation of its Karma points.
Reddit to turn Karma Points into Community Points
Reddit is somewhat of an outlier when it comes to social media networks. Instead of betting on fancy gimmicks and pushing new content onto users with dopamine-maximising algorithms, the network still very much looks like the forums of an internet era that’s long forgotten. Still, its 500 million users appreciate the text-heavy and free-flowing nature of Reddit, racking up Karma points for posting content that others can upvote in the process.
These Karma Points may soon carry real value, as the US-based social media giant is considering to tokenise them in an effort to improve user interaction by introducing cryptocurrency initiatives. Reddit engineer Rahul pointed to such an initiative being underway in a series of tweets. That would fit nicely with the layer-two rollup scaling solution to the Ethereum network that Reddit developed in July 2021. The Arbitrum-based technology would turn Karma Points into Community Points and allow users to profit from posting valuable content on the network.
Will Reddit onboard 500m new cryptocurrency users?
Ethereum maximalists have long been looking for scaling solutions, as the ecosystem plans to overtake Bitcoin in usage rates but struggles dearly with congestion and exorbitant gas fees on its mainnet. The partnership between Reddit and Arbitrum may just be the spark that the so-far little-used layer-two solutions needed to really get going. If Reddit were to pull tokenisation off, it would automatically onboard 500 million new users to web3 and cryptocurrencies. This would most likely prompt a massive influx of money into layer-twos, relieving the Ethereum blockchain of some of the congestion it has been experiencing and incentivizing other DApps to build on scaling solutions as well.
Reddit’s tokenisation gameplan
Rahul announced that Community Points for two subreddits with around 80,000 users were already on the Rinkeby testnet on Reddit’s own Arbitrum network, which is distinct from the Arbitrum One layer two. The users from r/cryptocurrency and r/FortNiteBR have been moved to this testnet, which will be scaled for gasless transactions in the future. Also, Reddit communities are to fork other blockchains through community consensus and broaden the scope for monetisation strategies beyond scaling on Arbitrum alone.
The network has long been a hub of crypto initiatives and enthusiasts. For instance, Reddit has been the home of Dogecoin fundraisers and caters to other crypto projects as well. Many a meme coin hype was born on Reddit, and, most famously, the r/wallstreetbets, while not being strictly crypto-related, shows the proficiency of Reddit’s users in galvanising grassroots support for projects.
Thus, it’s not surprising that Reddit is finally looking to enter the crypto game as well. That also shows in the company’s job postings, with Reddit looking for a senior backend engineer with crypto proficiency that will take responsibility for “millions of users to create, buy, sell and use NFT-backed digital goods.” With Twitter and TikTok already allowing NFT exposure to their users, Reddit may just want to board the crypto train before it’s too late.
