The crypto exchange has inked an agreement with Reddit, in the latest example of FTX embarking on a big bear market purchasing frenzy.
FTX Pay, a crypto-to-fiat exchange platform, has partnered with Reddit and Arbitrum to enable users to pay gas fees on Reddit’s “Community Points” tokens with fiat. Community Points, which were released in 2020, are blockchain-based Reddit tokens that will enable users to distribute prizes and interact with the social site.
Reddit is a great forum for retail crypto investors; crypto was the most-viewed topic on the platform in 2021. The company announced Tuesday that Arbitrum, a roll-up solution, won a contest to develop an Ethereum rollup for Community Points in July 2021, and the rollup is now live on Ethereum’s mainnet.
Subreddits can use Community Points to reward active members or make governance decisions. Community Points transactions, like all layer-2 rollups, are sorted on Ethereum, and Reddit partnered with the forward-thinking FTX to allow users to pay Ethereum transaction costs in fiat. “Users need Eth for gas fees to transact with their community points.”
On-chain and FTX Pay allow them to do that, Amy Wu, CEO of FTX Ventures, explained in an email. For the time being, Community Points are only available in the r/cryptocurrency and r/fortnite subreddits, albeit Reddit has a waitlist. Reddit airdrops point to active users in the same way that users earn “Karma” for upvoted posts.
Top r/cryptocurrency contributors earned 3,774 “Moons” tokens last month, which is around $340 at current secondary market pricing.
According to a Reddit representative, Community Points are exclusively intended for community governance and “reputation points” on Reddit, and selling the tokens is against the site’s terms of service. Off-chain Labs’ CEO, Steven Goldfeder, said that he hopes to see new use cases arise around Reddit’s crypto tokens.
“We have the entire rollup and security mechanism built out, but we also allow for others to develop in this ecosystem,” Goldfeder said. “It’s not just Reddit launching Community Points. Others can tap into that. For example, a game developer can go ahead and say, ‘I’m launching a game and the currency in my game is these Reddit Community Points.”
Following Instagram’s expansion of its NFT integration last week, Reddit’s crypto integration is the latest example of a Web2 firm investing in Web3 technologies.
“Reddit has a massive community,” Goldfeder stated. “How do you get a billion users on the blockchain?” It’s by tapping into these existing communities and bringing them to the blockchain.”
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