Reddit Community Points Were a Bad Idea: r/cryptocurrency (xMOON)
A while ago I wrote an article about how I had been 'farming' Reddit Community Points (RCP) on r/cryptocurrency called Moons, called xMOON on Google. But now I want to look at where they are headed.
xMOONS are currently ERC-20 tokens, interoperable with all types of Ethereum-based cryptocurrencies, and managed by a suite of smart contracts that handle balances, transfers, distribution/claiming, and purchasing Special Memberships.
Essentially, higher participation in the subreddit by posting and commenting led to larger monthly airdrops of xMOON in my wallet (called a Vault). Each month I would swap them all for Bitcoin - until recently - when the airdrop ratio dropped significantly for me, so I stopped participating.
CREATION AND DISTRIBUTION
"Initially, 50 million Moons will be distributed based on karma earned in the subreddit to date. The amount distributed each following month will start at 5 million and decrease by 2.5% every cycle, so that the total number of Moons distributed over time will approach a maximum cap of 250 million." - Moons_wiki (Mw); "where all information about r/CryptoCurrency Moons can be found in one spot." - Mw
"As blockchain tokens, Moons are independent of Reddit. Once you’ve earned them, neither Reddit nor moderators can take your Moons away or decide what you do with them. They’re all yours." -Mw
"Community Points are currently on the Rinkeby testnet (through summer 2020). We plan to migrate Community Points to the Ethereum mainnet, and Points balances will be carried over. If you send Moons to outside non-Reddit wallets or contracts, you are sending them to testnet addresses. These tokens will not show up in outside software (e.g. wallet apps, Etherscan) unless you switch to Rinkeby and use the testnet Moons contract address (0xDF82c9014F127243CE1305DFE54151647d74B27A)." -Mw
"Reddit Points will be distributed based on how much Karma a person has. And, similar to most ICOs, some of the Points will go to the builders. Reddit takes a 20% cut of new Points, and Reddit moderators get a 10% share." -From Decrypt (10-4-2020)
Okay to sum it up, Moons are community points distributed/airdropped with simple blockchain tech. They are to be used to vote in weighted polls and 'buy' Reddit membership with. They use the word 'testnet': a testnet is an instance of a blockchain powered by the same or a newer version of the underlying software, to be used for testing and experimentation without risk to real funds or the main chain.
WORTH REAL MONEY AND TRADEABLE
"Q: What is the Price of Moons? A: Take a look at Coingecko Page for more information https://www.coingecko.com/en/coins/moon" - Mw
https://twitter.com/moonsreddit
THE VALUE COMES FROM THIRD PARTY SITES WHERE PEOPLE HAVE BROKEN REDDIT TERMS OF SERVICE AND COMMUNITY GUIDLINES TO TRADE XMOON:
Reddit Community Points Terms of Service: "Community Points have no monetary value (i.e., are not a cash account or equivalent), cannot be sold to other users, and cannot be exchanged for cash or for any other goods and services outside of Reddit’s virtual goods or services. Reddit does not guarantee that Community Points, or any virtual goods or services that Community Points provide access to or use of (e.g., Special Memberships, animated emojis, and GIFs), will continually be offered or will be available for any particular length of time. Reddit may modify Community Points, and how many you receive, at its sole discretion, and such modifications may remove or add functionality. In accumulating Community Points, you may not and should not rely upon their continued availability."
"Anyone instructing you to move Moons out of the Reddit app or off of Rinkeby, for any purposes, are directly encouraging you to engage in problematic, risky behavior. Keep in mind that there are many people in this community who are new to blockchain and are less versed in these distinctions that many of us take for granted. We need to collectively work together to ensure that this early phase of the Moons experiment goes well for everyone." - Mw
Reddit MOON — How to Buy Using Celesti Trade (beginner’s guide) (Medium article)
Reddit.com/r/cryptocurrency/How_to_Sell_(or_Buy)_Moons (Reddit post)
https://ccmoons.com/exchanges (Website made by r/cryptocurrency moderator)
What is Reddit’s MOON cryptocurrency and how to convert it (moonstats article)
Who said you can't spend crypto? Redditor sells free Moon tokens to pay rent (cointelegraph article)
"Decrypt’s Tim Copeland managed to turn his MOONs into real value by converting them to xMOONs on the xDAI chain, swapping them for xDAI, and then converting those xDAI to regular DAI on Ethereum. The process is somewhat convoluted, expensive and potentially risky, meaning most MOON-holding Redditors haven’t bothered to attempt it. Copeland did, however, manage to end up with $2,000 in DAI, showing that spending all day on Reddit can pay off after all."
So essentially community points are not to be traded - but they are still worth $. Reddit Moons Wiki even displays the coingecko link showing $USD value.
Blockscout shows "Moons - 0x138fAFa28a05A38f4d2658b12b0971221A7d5728 - ERC-20 - Total Supply 93,590,806.567 - 165,097 Addresses - 905,216 Transfers - 18 Decimals"
MAINNET
One major source of Hopium within the r/cryptocurrency community (the subreddit and their telegram) is talk of XMOON MAINET COMING. Mainnet is a term used to describe a fully developed and deployed blockchain protocol where transactions are being broadcasted, verified, and recorded on a solid distributed ledger technology. From the Moon_wiki;
Due to scalability issues, Moons originally launched on Rinkeby testnet with the plan to eventually migrate over to the Ethereum Mainnet. Reddit partnered with the Ethereum Foundation in February 2021 to develop an open-sourced scaling solution for Moons. Eventually they will be migrated from Rinkeby and point balances will carry over.
In July 2021 Reddit announced that Moons would be migrated to a new Layer-2 rollup using Arbitrum technology. This network will be tested on top of Rinkeby before migrating to the Ethereum Mainnet (date TBA).
Arbitrum is a non-custodial scaling solution that is compatible with Ethereum, offering ETH/ERC-20/ERC-721 interoperability, censorship resistance, and EVM smart contracts. As these smart contracts are identical to those on L1 Ethereum, developers can port existing solidity apps or write new ones using familiar toolchains such as Truffle or Buidler.
With the upgrade to the new Layer-2 network, Moon transfers are faster and claims are processed automatically."
It's just a new chain to make distribution faster. There is not real added value in this. Distribution was already fast enough. They are community points -they don't need to be fast as lighting. The quickness of their airdropping, tipping, and transferring is fine in app really, I never felt they were slow. Plus they are not meant for trading off site anyway, right?
"As ERC-20 tokens Moons can be used off of Reddit in websites or apps that support them. Developers can start building on top of Moons through standard blockchain tools and protocols to add more utility and value." - Mw
"Reddit is actively working on developing a scaling solution that can increase the bandwidth and capacity of blockchain applications like Community Points, without sacrificing the unique properties and guarantees that a decentralized blockchain provides." - Mw
"What is gas, and who's paying for it? Transactions on the Ethereum network cost "gas," which are micro amounts of Ethereum's native cryptocurrency (Ether). Since most Redditors do not have Ether already, Reddit will cover their cost of gas for now, through meta-transactions and the Gas Station Network on the Rinkeby testnet. We plan to adopt better scaling and gas solutions in the future that will greatly reduce the amount of gas needed." - Mw
"We do not currently charge fees for creating a Vault account or for Vault transactions, but we reserve the right to do so in the future." - Reddit Community Points Terms of Service
"In 2020, we issued a call to the crypto community to present their best scaling options for Community Points. In 2021, we launched a layer-2 scaling network using Arbitrum optimistic rollups technology" - Mw
I see what Reddit is doing. Arbitrum's optimistic rollups are settled on a proprietary sidechain, a blockchain connected to a main chain; in this case, Ethereum - collecting batches of transactions, settles them on sidechain, and then feeding the transaction data back to Ethereum. FTX recently (Feb 2022) added support for the Ethereum Layer 2 solution Arbitrum, letting users make direct deposits to Ethereum's Layer 2 without having to bridge assets from mainnet. Coinbase also wants to do this too.
MOON price rallied in response to the Arbitrum news.
From a Reddit commenter: "Like all other moon announcements, reddit will probably release this [mainnet] information out of nowhere and when people least expect it. It could happen tomorrow, next month, or next year. But when it happens you will want to have your bags ready, because that rocket is going straight to Uranus 🚀"
“Today’s launch is a big step forward, but our work is far from done,” Reddit’s developers wrote. “Our goal is to cross the chasm to mainstream adoption by bringing millions of users to blockchain.”
REALITY
Mainnet launch comes with anticipation and interest that MOONs will be tradeable on exchanges, which will dramatically effect MOON price. At the moment, given the difficult of trading moons, volume and liquidity are very low, causing a single large trade to move the markets in giant waves – somewhat explaining the pump above $0.40 in August 2021. It has since crashed and has been falling ever since.
Following the migration to mainnet, larger and easier trading volumes and morphed supply and demand will decide the future value of MOON. But although interested investors will be able to more easily purchase MOON, and exchange listings could drive awareness and confidence in the token across others in the cryptocurrency space - many Redditors who have farmed and been airdropped tens of thousands of MOONs (who have up to now been unable to sell easily) could immediately dump their tokens and crash the price even more.
People outside the r/cc farming community would have no incentive to buy in even if it where to launch on a mainnet and get listed on multiple centralized exchanges. It's true that many CEX and DEX listings pumps price, but its often short lasting, and too much fuel from hype alone can cause major volatility and crashes in price. Luckily this would not change the nature of the subreddit governance, a degen millionaire could not buy a boatload of xMOON, create a reddit account, import his wallet, and dominate the 'credibility' status nature by having a fortune next to his username when he posts and comments, as only 'earned' (airdropped) xMOON can be used for governance polls.
Plus, xMOON is centralized. They use blockchain tech which is decentralized in nature, but the project/community of xMOON is not. Even if the tokens themselves are on a blockchain and you can access them outside of the Reddit app if you connect your wallet; many users wont do this; defi is hard. In September 2020, articles called Reddit's Moon Moons & Dumps as Subreddit With 1m Members Goes 'Yield Farming' talked about farming, saying "Stats from the Rinkby contract show that the top 100 holders together own almost 69% of all Moons. This is particularly true for the top three holders, owning 18.5%, 18%, and 8%, respectively." Whale games much? These numbers have since changed (might look more into that, where did they all go?)
Reddit is an American social news aggregation, content rating, and discussion website, with revenue over US$100 million (Q2 2021) - funded by 30 investors, having raised a total of $1.3B in funding over 10 rounds, with their latest funding was raised on Aug 12, 2021 from a Series F -- Fidelity Management and Research Company and Quiet Capital are the most recent investors ---Reddit itself has invested in Imgur in 2014 valued at $40M. --- generating more than $100 million in total ad revenue in 2019 - that was expected to rise over 70% for 2020. It's not going to risk being blamed for bad financial shtuff - It has rules;
"Discontinuation of Services: We reserve the right to modify, suspend, or discontinue the Services (in whole or in part) at any time, with or without notice to you. Any future release, update, or other addition to functionality of the Services will be subject to these Terms, which may be updated from time to time. You agree that we will not be liable to you or to any third party for any modification, suspension, or discontinuation of the Services or any part thereof." - Reddit Community Points Terms of Service
"Suspension or Termination of Services: As stated in Reddit's User Agreement and its Content Policy, you must follow and comply with the rules of the platform and the rules of the individual subreddits you participate in. Failure to do so may result in a temporary or permanent ban from Reddit or certain subreddits or the removal of your posts and comments, including those subreddits where you might have Community Points and/or Special Membership(s). In such instances, you might lose the benefits of your Community Points and/or your Special Membership(s). There are no refunds." - Reddit Community Points Terms of Service
"Community Points have no monetary value (i.e., are not a cash account or equivalent), do not constitute currency, cannot be sold to other users, and cannot be exchanged for cash or for any other goods and services outside of the Services without Reddit’s approval. Reddit does not guarantee that Community Points will continually be offered or will be available for any particular length of time. Reddit may modify Community Points, at its sole discretion, and those modifications may remove or add functionality. In accumulating Community Points, you may not and should not rely upon their continued availability." - Reddit Terms of Use
xMOON SUFFERS FROM BEING ON BLOCKCHAIN
None of the use-cases of Moons realistically needs to be on the blockchain to function. Subreddit moderators turn towards their communities to vote on issues all the time, you doesn't have to have a crypto governance token to do that.
xMOON adds nothing to the voting process that couldn't be achieved by opening the floor to the community as a whole. Why should different voices in how ppl enjoy the platform (only viewing) be less heard than someone who takes enjoyment from posting or commenting? Its unfair compared to just opening up a general poll on the subreddit and gauging the popularity of a measure from there.
There is also nothing actually binding moderators' votes to the outcomes of the poll - So there was a vote to ban memes. Great. Now if the mod team decided that they weren't going to enforce that rule, do the xMOON holders have any recourse? Do xMOON holders have grounds to appeal to the Reddit Admin team? Do xMOON holders have the ability to impeach or otherwise hold noncompliant mod teams accountable to their votes? Because if they don't have any tools to enforce the outcome of their votes, and if their votes are at best "weighted suggestions" that the mod team can follow at their whim... then there is even less of a real ownership interest.
"This project is our first attempt at utilizing decentralized technology to empower individuals to have a sense of accountability and more ownership in the communities that they create and contribute to. Community Points are currently in beta on the Rinkeby network and are being tested in r/CryptoCurrency and r/FortNiteBR" - Mw.
No matter how many "Moons" someone has, they can't actually own a part of the r/cc subreddit, because r/cc exists completely at Reddit's pleasure. If Reddit goes underwater and shuts down its servers, any "ownership" of xMOON means absolutely nothing. If the Reddit decides to remove all financial subreddits including r/cc, ownership of those moons means absolutely nothing. If holders of xMOON don't have ultimate control and final say over the moderation team, then they don't have an ownership interest. I'm not saying that they don't have anything, but whatever it is that they have isn't any form of ownership.
So at the end of the day we have the following situation. Reddit releases a poorly designed, superfluous, community blockchain voting concept - r/cc as one of the premier crypto subs gets in on reddit's crypto project with xMOON - the project sucks and violates core tenants of how crypto should work such as freely transferable assets, a true decentralized nature, and real digital ownership - third parties break Reddit ToS and start to sell buy and trade xMOON leading to real USD$ value and price volatility - r/cc attempts to hotwire the system to allow more ownership to users - Because crypto sucks as a governance tool, xMOON immediately gets abused by farmers who work their ass off to farm moons (me) - Because r/cc still needs to appear to be complying with Reddit's policies regarding their ill conceived crypto project only "earned" Moons can be used for governance, not purchased Moons, cuz if not votes would internally fail and the system would break further - Realizing their mistake, r/cc implements policies to limit the transferability of the token - end result is a glorified community poll feature taking up space on the blockchain that doesn't confer any real ownership with constant efforts to restore some aspects of ownership (like being freely transferable) and ever changing airdrop rules - which actually caused the community to become worse than before.
You can't say something is "transferable" if its transfer violates the Reddit Terms of Service and they lose their governance power upon transfer. It is no different from Squid requiring "marbles" tokens to cash out. You can freely buy and sell Squid, but its effectively worthless. You can buy and sell moons, but they lose their only value (governance) on trade. To be freely transferable you have to be able to sell the governance authority represented by the moon.
credit u/akaean
REDDIT IS EXPANDING
Two other subreddits also offer token rewards: r/FortNiteBR has Bricks and r/ethtrader has Donuts. They follow comparable rules but differ in various ways.
Reddit has released a waitlist for subreddits that wish to have their own Community Points - and provide more information about said Community Points on its website.
Reddit is even letting users tip real money — but only to one guy in one subreddit: Three percent of the tip goes to the payment processor Stripe, while Reddit pockets about 18.5 percent of each tip, and about 78.5 percent goes to the user. Facebook and YouTube have experimented with tipping before, and Venmo and PayPal are successful at keeping their transaction fees low. Reddit wants a piece of that pie, being a money transferring platform with crypto and fiat, maybe it will make the company more profit, but I think the legal certainty is questionable at the moment. Crypto is largely unregulated, just look to the abandoned project Diem (formerly Libra), a permissioned blockchain-based stablecoin payment system proposed by Facebook (Meta).
BEST CASE SINERIO, ITS A PUMP AND DUMP
Essentially Reddit is printing worthless sheets of iron metal, we are melting that metal into coins, and gambling on the iron coin market. When third parties started to sell/trade the tokens last year, there was a price spike from $0.07 to $0.35 as shown above, and it is now trading at $0.045, a drop of -87%, becuase people (like me who had thousands of xMOONs) cashed out ASAP. If price explodes on mainnet due to CEX listing, other Redditors who have essentially been airdropped 'free money' and haven't sold yet (as they were WAITING for mainnet) will likely sell. ITS CRYPTO DAMMIT - IT'LL HAVE HIGH $USD VALUE - SO DUH PEOPLE ARE GOING TO SELL. The governance ecosystem will be further changed due to this, having the most senior participants in r/cc (whales) no longer have large weight in governance after selling big time. CEX and DEX listings will further divorce any xMOON moved away from r/cc governance.
A dramatic example is when someone tried to buy 90,000 moons - on Coingecko you could see this caused the market price to get bumped to $1.56. This means the slippage on the exchange they were using must have bumped the price well over $2.
The current total liquidity in Honeyswap and RCPswap for Moons is "Honeyswap: 80,301 - xMOON 4,269 - WXDAI" "Rcpswap: 2215 - BUSD 45272 - MOONS"
Reddit user u/jwinterm, a moderator of r/cc, said in April 2022, "I may or may not be like 20% of rcpswap liquidity..."
If it hits market cap like other altcoin projects, of 20-200 billion say, we are talking $10-100 per xMOON. That's the straight Hopium talked about on the r/cc community channels like https://reddit.com/r/CryptoCurrencyMoons/. I don't see this happening, for as mentioned above many many times, Reddit Community Points were a bad idea almost from the start. They are extremely flawed as a governance tool and as a cryptocurrency. Being "paid to shitpost" has never been a good thing. If there is some hyperphantastic mania like GME and Dogecoin towards "Reddit.com Community Points" in the future then yeah, Moons will moon, but I don't see that happening. If it does I will eat my hat.
Thank you all for reading.