Reddit releasing blockchain-based tokenization with "Community Points" - detailed breakdown
A follow up to my post yesterday. Things have escalated since, and now more people are seeing the Wallet and Points show up in the official Reddit app. It's clearly still being A/B tested, but we have a ton more information as the Wallet is now fully featured with information.
Huge credit to Reddit user MagoCrypto for parsing all the official information as text. You can read the official text from the app here.
The overview
Reddit's Community Points is an ERC-20 token residing on the public ethereum blockchain. It's a multi-purpose, fully-fledged tokenization, voting, tipping, membership and gamification token.
The Points are decentralized as you'd expect of an ERC-20 token, and we will surely see it go live on exchanges and such. Points can be used in various different ways, as per the different subreddits, with utility expected to expand over time.
Reddit Points will be displayed next to usernames on participating subreddits. Make no mistake, Reddit is going all in!
Distribution
Reddit has a pretty detailed distribution model, which you can go through in the link above. I'll just highlight the important points. Initial distribution will be 50 million Points, based on Karma earned in the subreddit. It's not clear if this is applies to all subreddits, or particular subreddits, or if each subreddit will have it's own sub-Points, so to speak. Either way, given the available information, it's likely to be global distribution, with each subreddit having their own allocation.
The first year will see 50 million Points distributed, with further years seeing narrowing inflation, reducing down to a total supply of 250 million Points.
There's some cool tokenomics with burned points (more on that later), where half of burned Points will be reintroduced each month.
Beyond the initial distribution, Points will be distrubted on a 4 weekly basis. Reddit will publish a list of karma amounts for each user in the subreddit. The community has a week to adjust the amounts, based on abuse etc, and a final list will be voted on by the community, and will lead to the smart contract distributing the Points as agreed.
Moderators get 10% share, Reddit gets 20%, and another 20% is reserved for the Reddit community. Again, unclear what that means just yet.
Memberships
One of the main utilities of Points would be to buy Memberships within subreddits. This will unlock special features like badges, emojis, GIFs, etc. Of course, this will be expanded over time for a complete gamification solution, and subreddits will have flexibility to use it whichever way they want.
The cool thing here is that Points spent to buy these memberships will be burned, effectively reducing supply. If people buy Memberships with fiat, Reddit will take their money and burn their own Points.
Voting
Voting and karma distribution on Reddit will continue to be as usual. However, poll results will have a stake-weighted voting component. Of course, there are surely unspecified algorithms at work here.
Regarding karma fraud being exacerbated by Points distribution, Reddit claims to have several mitigation strategies in place. Community members of a subreddit will be notified of possible abuse, and they can take action to ban offending amounts from Points distribution, or even ban from the subreddit outright. It remains to be seen how effective this will be, though Reddit's detection algorithms have improved by leaps and bounds.
Purists will point that this is not strictly decentralized, if people can be banned. But it is, just a mature evolution with abuse mitigations. Each subreddit will have its community members vote on the Points distribution - that's decentralized enough for me, but at the same time affords the benefit of eliminating fraud. Subreddits that are found to be unfair will naturally be uncompetitive, and members will move on to better subreddits.
Other utility
There's of course going to be direct tipping, and possible subscriptions. Transfers between users will obviously be possible through the Wallet. But the great potential here is that subreddits and communities can find utility for the Points token in their own ways. Come to think of it, I can see social networks outside of Reddit also use these Points in creative ways.
Summing it up
A lot of questions still remain, and details will surely come when Reddit officially announces Community Points. But it's pretty clear now that Reddit is taking this seriously - this is not just an experimental feature that'll be forgotten. I have plenty of concerns, particularly with the token distribution and the abuse/sybil attack mitigation. But this is exactly the right approach. It's an add-on bonus on top of the social network, which the community can derive value from whichever way they please.
I know from first hand experience (as do many others) that key sub-reddits (like key pages on wikipedia and key groups on facebook) are heavily censored and controlled - so the idea that their version of this is a 'mature' version of decentralisation is pretty wide of the mark in my opinion. We shall see where this goes though. I certainly welcome a world where blockchain and rewards become the norm for social networking.
That's certainly a fair point - though the decentralization lies in the fact that there can be multiple competing subreddits. It's certainly true that most users couldn't be bothered and will stick to the established ones, but that's more of an inefficiency of the market, rather than a fundamentally flawed concept. (It's no different from Hive/Steem's proposed SMT/Communities model)
To some extent I agree, except that Reddit is more established and the groups are huge in some cases. Much like the difficulty steem had in getting users to relocate from fb, the 'first mover advantage' is likely to stifle decentralisation on Reddit. The bottom line is that decentralisation doesn't work unless either: a) the system is totally new and it's users are empowered to a similar degree. or b) the users are alert, awake and empowered enough to know that they need to support free speech and be willing to build their own spaces if needed.
Maybe the current covid1984 situation will inspire more to do option b!
Let's be realistic, almost all people don't really care about being alert, awake or empowered. They just want a convenient, easy-to-use platform where they can share their thoughts/content and have a good time engaging with others. In fact, moderation by removing shitposts and illegal content can actually enhance their enjoyment. It's only when censorship gets so heavy-handed that it gets in the way of usability of the platform that it becomes a problem that even the mainstream will act against. There are some rotten subreddits, I'm sure, but most of the ones I'm aware of are fair with their moderation.
It's not until you share 'controversial' content you will find out just how 'sensitive' and controlled some topics are across the board.