With global markets plummeting, NFT trading volumes and crypto wallet activity are down across the board. Despite this, Reddit just onboarded more people into web3 over the past 3 months than OpenSea has in the past five years.
They subtly handed their users custodial wallets and airdropped them free NFTs. Since launch, their NFT collections are also up an average of 300%.
What’s their secret? Read on to find out.
In case you haven’t heard, Reddit is the “social news aggregation, content rating, and discussion website,” and it’s huge.
Every fifth person you meet has a Reddit account.
The platform has:
NFTs have certainly been a topic of discussion on Reddit for a while now, and Reddit users’ disdain for digital assets is no secret. The apathy towards NFTs follows the well-known path of a social media hate storm echoed in particular subreddits. However, despite this, the platform has managed to influence three million of its users, and the majority of new sign-ups, to open a Polygon wallet and hold an NFT.
To be fair, Reddit’s not entirely new to crypto. The platform has accepted cryptocurrency payments since 2013. They tokenized points on layer 2 blockchain, Arbitrum, for select subreddits in 2020. They even launched a four-piece 1/1 NFT collection in June 2021. The collection was named “CryptoSnoos”, based on their iconic ‘Snoo’ logo. The NFTs sold for 70–175 ETH.
However, Reddit’s most recent crypto endeavor is what has caught everyone’s attention. They solved the million-dollar question of how to onboard the masses to crypto. The simplicity is genius. Here’s what they did.
First, Reddit created a custodial Polygon-based wallet. They ditched the “wallet” terminology, instead calling this wallet a “Vault.”
Second, Reddit started to offer their top users free NFTs. Cleverly, they didn’t call them NFTs. They referred to them as “collectible avatars.” The avatars could be used to customize Redditors’ profile pictures (PFPs). This was an enticing status symbol for engaged Reddit users who innately understand the value of community points, karma, and reputation.
Third, to collect their avatar, Reddit required users to set up a Polygon-based wallet account. Except Redditors weren’t aware they were opening a Polygon wallet. They opened a “Vault” account. They weren’t taken to a third-party website to do this. They didn’t have to write down a seed phrase or go through onerous KYC procedures. They didn’t need to hold MATIC for gas fees (Reddit covered gas fees). Ultimately, there were no web3 hurdles. The wallet setup took two clicks and the seed phrase was simply embedded into their Reddit accounts. At this stage, very few Redditors were actually interacting with their NFTs or using them to customize their PFPs. The blockchain protocols, wallets, and infrastructure were disguised through user-friendly language and web2 UX.
Finally, Reddit had already been partnering with artists to release NFT PFP collections at a low cost, purchasable with USD. Reddit released Reddit Collectible Avatars Season One in July. The NFTs, disguised as collectible avatars, were sold for between $10-$100, and the proceeds automatically went to artists. Owners of multiple avatars could pull traits from the different avatars to customize their Reddit profile pictures. The NFTs were semi-fungible, with each of the 29 PFPs containing 87 of the same NFTs. The updated profiles would display a hexagon profile picture with their relevant avatar. The process was seamless and akin to an all-too-familiar e-commerce transaction.
Reddit Collectible Avatars Season One launched in July and was very slow to sell out. However, airdropping free avatars in August lit the match for the collectible avatars’ explosion.
From August to October, the number of collectible avatar holders rose from 12,940 to 2.87M. The vast majority of the 3 million existing Reddit Vault wallets were created to collect avatars. In fact, more people have opened Reddit Vaults to collect avatars than have ever traded on OpenSea, the most popular NFT platform.
Reddit Collectible Avatars Season Two launched in October and sold out within 24 hours.
Sales volume skyrocketed, increasing from less than $10/day at the beginning of August to a peak of $209,000 in October. This represents a 2,089,900% increase and a cumulative sales volume of over $10m.
Of the 2.869M wallets that hold avatars, just 25,009 hold more than one. That statistic represents idle wallet holders. That means that there are 2.84M wallet holders that have NFTs, but haven’t been fully engaged in trading. Maybe they are just holding, or maybe they mindlessly accepted a free avatar. However, the potential to engage these users is endless, and they have the capabilities to interact in the web3 ecosystem. It’s important to note that a continued and sustained engagement with those 2.84M wallets is necessary to claim an overwhelming web3 success. The foundations have been set.
Web3 has a notoriously bad user experience, and it’s no secret that focusing relentlessly on user experience is a priority. However, Reddit took it a step further.
First, Reddit removed crypto jargon to put emphasis on the use case: PFPs (profile pictures).
Rightfully so. To onboard people to web3, blockchain choices, cryptographic wallets and token standards like NFTs’ ERC721 complicate the use case. In web2, no one cares whether you use .pdf, HEIC, .jpeg, or .png. They simply care that they can digitally view, share and store their photo. NFTs, cryptographic wallets, and the blockchain are all means to different, but related, ends. However, Reddit users often only care about their stored ownership of their avatars.
To that end, it is important to be solution-oriented. What do NFTs, wallets, and the Polygon blockchain enable? (1) unique digital assets (collectible avatars), (2) a way to access these unique digital assets (Vaults), and (3) a place to store, trade and verify the authenticity of these assets.
If Reddit publicly referred to avatars as NFTs, the results would have likely been less impressive. The Trojan horse style approach and dressing up NFTs in a disguise, simply using the technology as a means to an end, is where the space should go. This acts as good validation for the use case of NFTs.
Second, Reddit made the onboarding process hassle-free.
To get Redditors to open crypto wallet accounts, they offered them free Snoo-themed avatars which could be used to customize their PFPs. Reddit dangled an NFT in front of active users to onboard them into their web3 ecosystem, however they ensured that users themselves didn’t have to jump through any web3 hoops.
The process to set up a Vault and accept the avatar took a couple of seconds and the same number of clicks. The process was seamless. Reddit covered the gas fees which meant that no one needed to figure out how to purchase MATIC with fiat and then how to send that MATIC to their Vault wallet. Reddit did all the legwork for Redditors.
Compare this with Twitter’s attempt to get people to use NFTs for PFPs. Twitter users needed to go to OpenSea, have a MetaMask or other wallet integrated with the platform, own crypto, own NFTs, have ETH for gas, and finally return to Twitter. The comparison easily shows how Reddit’s relentless focus on user experience is a recipe for success. If Twitter took a similar approach, how might it have fared?
Third, Reddit already has a productized community that aligns itself well with Web3 principles.
Brands with the same should take note. In Reddit’s case, product and community are largely the same thing. Community is the product.
Status symbols are present in most communities. Within Reddit, status is measured by your interactions within the platform and endorsements from other users in the form of karma points. NFTs introduce another way to represent status within Reddit. Avatars are scarce, which is a common feature of NFT collections. Airdropping avatars to top users initially anointed them in a symbol of a user’s engagement as they were able to flex them on their profile. Then as collections grew, keen users wanted to also own this status symbol. Heightened demand for scarce resources only increased the collectibles’ monetary and status value. The community structure of Reddit aligns well with the NFT use case.
Avatars enable redditors to interact with Reddit in a non-detrimental way while supporting artists. The NFTs enhance Reddit users’ experience on the platform, but they’re not integral to Reddit’s product. In this way, Reddit’s move has been low-risk. Using Reddit’s Snoo logo, tying utility to the avatars, periodically dropping new collections, and enabling a way to easily show them off within the platform should create a recurring loop of interactivity which will increase the adoption of NFTs within Reddit’s 430-million strong community. If it doesn’t, that’s fine. Reddit will not lose any users. Avatars are not essential for Reddit’s community to enjoy Reddit’s product. The Avatar NFT strategy was well positioned to not deter from existing community features, but simply amplify them.
Reddit’s move was brilliant because of its simplicity. It represents the first proven web3 experiment that worked without technical confusion and learning. Onboarding the masses to web3 is the golden chalice. Reddit seems to have found a way to prove that it’s possible at scale. The nature of the product at Reddit makes this an innate use case, however, easy-to-use purchasing, and wallet integration remove any friction points.
Reddit laid the foundations to provide additional utility to avatar holders. We’re already seeing this with holders of certain collections receiving airdrops. Using Polygon has enabled Reddit’s avatars to be used within the wider Ethereum ecosystem. The journey from here is an opportunity to shine the light on the brilliance of blockchain composability and asset liquidity.
While only 25,009 individuals hold more than one avatar, which could be taken as a measure of interaction with the collections, by getting 2.8 million people to open Polygon wallets, Reddit has opened the Trojan gates. Avatar holders can more easily explore the wider web3 ecosystem. Thousands have done this already, millions more can. We look forward to welcoming them when they arrive.
References: https://en.wikipedia.org/wiki/Reddit; https://thrivemyway.com/reddit-statistics/#:~:text=Subreddit%20Statistics,124%2C000%20new%20subscribers%20each%20month; https://page1.substack.com/p/the-reddit-nfts-thesis; https://nft.reddit.com/; https://cointelegraph.com/news/reddit-nft-trading-volume-hits-all-time-high-as-wallet-holders-near-3-million; https://www.redditfloor.com/
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