Jesse Powell, the co-founder and Chairman of the Board at crypto exchange Kraken, has argued that Reddit should have “offered a redemption path” for owners of its discontinued crypto-powered Community Points.
In a post on Reddit, Powell wrote that, “I personally don’t see the regulatory problems” cited by Reddit in its explanation for the “sunsetting,” adding that, “I get that it’s complicated and evolving and maybe Reddit doesn’t want the hassle.”
The social media platform stated that “The regulatory environment has added to scalability limitations,” for the Community Points program, cited “scalability limitations” due to the “regulatory environment” and an “outsized commitment to resources” as reasons to wind down the program.
Following the announcement, the price of Reddit’s MOON token plunged by over 80%, while BRICK, the token of Reddit’s Fortnite community, dropped by over 50%.
Powell claimed that the social media platform’s decision, “destroys the value of the holdings while offering nothing in return.” He pushed for alternative means of redeeming the tokens, suggesting that Reddit should, “ Let people buy Collectible Avatars with points at some ratio or something. Convert the points to Karma, give people a special badge based on holdings at time of burn.”
What are Community Points?
Reddit’s Community Points are ERC-20 tokens initially minted on the Ethereum network but later migrated to the layer-2 network Arbitrum Nova. The tokens could be redeemed for various perks on Reddit, like badges, emotes, GIFs, and other features.
Kraken was one of the few U.S.-based exchanges that traded in Reddit’s MOON and BRICK tokens.
Reddit announced a complete shutdown of the Community Points program by November 8. After that, community points will become invisible on the platform.
Additionally, tokens that were stored in “community tanks” or ecosystem pools will be burned by the end of the year. Around 40% of MOON’s supply was allocated toward community tanks.
Reddit’s decision to sunset Community Points has not affected its Collectible Avatars, a series of Polygon NFTs issued as free or paid drops by the social media platform. Reddit launched Avatars in July 2022 and has released more than 21 million collectible items, per a Dune dashboard.
Story edited by Stephen Graves