Reddit launched its collectable avatars in July 2022, and by the end of October, it’s the talk of the town in the NFT space. Growing over 100x in value.
A web2 social behemoth making a big splash in the Web3 world. Just how big an impact Reddit has had on NFTs, how exactly did it manage to crack it in an NFT market that’s firmly in the girls of bears, and what are the learnings that a Web2 icon brand can offer the Web 3 kids on the block? Is it what will define the future or just an aberration? We try to dig a little deeper.
What are they?
Reddit Collectible avatars are NFT-based digital collectibles that are unique Profile Pics that a Reddit user can collect. Having an avatar helps you stand out in Reddit comments and makes you more recognizable to other users.
Reddit launched an avatar builder enabling various curated Artists from Reddit to create and launch their avatars on Reddit as digital collectibles.
Earlier users could unlock some specific premium styles for their avatars by Purchasing Reddit premium; now, they can purchase and own a unique avatar as a Digital collectible on the blockchain!
Reddit currently has almost 3 million wallets, compared to Opensea’s 2.5 million. While Opensea took four years to get here, Reddit got here in 4 months!
Even in a bear market, Reddit avatars could peak NFT volume across the Polygon chain with a wild secondary volume of $8.6 million.
Why does it matter?
Reddit Avatars are an incredible milestone because they mark the success of a Web2 brand successfully entering the NFT space and using it positively to engage its existing audience!
Another outstanding achievement that paves the path for NFTs is that avatars or profile pictures naturally integrate digital collectibles into their current system!
It’s a fantastic accomplishment that Reddit has been able to get NFTs into the hands of 86k users while onboarding new members to this space!
Within four months, Reddit enabled its members to set up 3 million wallets, most of which were created in this previous month! This is quicker than the rest of the market, and the number itself is valuable given that most are first-time Crypto/NFT consumers.
Avatars have a powerful pull factor! What began as Cool Profile Pictures created by your favorite Reddit user for merely $10 developed into its own financial market, briefly crossing the secondary volume of the ETH blockchain itself!
Reddit Avatars have a market cap of more than $122 million and a 24-hour volume of $752K in the last 24 hours alone!
One of the reasons this launch worked so well was that everything was in-app and integrated organically unlike the past NFT launches by many other platforms.
Reddit has created its own Vault (Crypto Wallet) in-app that users can use to store these Avatars!
The biggest criticism of Reddit’s endeavor is its control over the whole process of buying, selling, and interacting with avatars. First, users don’t own anything if they leave the collectible in their vault. Reddit can choose to revoke access to the vault. They can also cancel the service anytime, resulting in loss of access.
Reddit Avatar NFTs also do not offer users commercial rights. So, even though a user might own the rarest avatars on the platform, they can’t venture into merchandising or monetizing it. This defeats the purpose of these avatars being on the blockchain, as they can only exist within the walled garden of Reddit.
Recently, the NFT space has already been debating creator royalties. On Reddit, a 5% Royalty is imposed on the buyer instead of the seller. Any trades that don’t pay these royalties can potentially lose account and vault access.
Web3 started with the idea of ‘democratization over control’ while Reddit’s terms look contradictory.
Looking Into The Orb Ball
Micro-blogging/Social networking sites came into being a long time before the Facebooks & Twitters of the world held ground in their current state.
It started as a means to check what famous people were up to and then slowly transcended into witnessing the online life of folks in varying degrees of our vicinities. Over time, users realized, what is a place for them to know/hear/witness, can very well be the stage to “share”.
It’s the canvas to paint their thoughts and ideas and indulges in critique, laughter, and bonding with people who aren’t just friends but, at times, become the audience to their craft.
The thing to learn from this is that it all looks like a part of the process, but only in hindsight. The fascinating factor is that a tool reaches peak efficiency when it becomes invisible. Had the means of creation and the idea of a social reputation model been shoved onto people’s throats, we wouldn’t have seen this surge of home-grown creators (and when we say ‘home-grown’, it’s sometimes in our own homes).
Similarly, while a huge chunk of the market isn’t yet sold on the idea of digital collectibles, Reddit has done a tremendous job at marrying these two worlds.
What’s next? Taking things a notch further. Recently, in partnership with Polygon, Starbucks announced its non-fungible token-based loyalty program - Odyssey, which will provide the patrons of the coffee chain with a marketplace to indulge in limited edition digital merchandise and secure ownership of such rare arts on the Blockchain.
To put this in perspective, Reddit has 430 million active monthly users, while ~2.2bn coffee cups are consumed in a week in the US alone. Now, if one does the math, this unimaginable scale is waiting to be tapped.
Membership leading to limited edition merchandise is a no-brainer for anyone who visits the store regularly.
Onboarding hundreds of thousands of such folks seamlessly without pushing all the jargon and slowly letting them realize the power of the underlying technology is what will lead to mainstream adoption.
We’ll very soon see many legacy brands taking such steps to onboard their existing customers onto Web3, and this is when we’ll see the seeds of actual mass adoption enabled by nurtured relationships and omnipresent distribution.
For more, Follow: Asset Money