What Can We Learn from the Viral Reddit NFTs Overseas?

Written by: Eric Choi

Translated by: TechFlow

Reddit is a popular online platform that allows users to discuss, vote on, and share content (similar to internet forums). It has over 1.5 billion registered users, 430 million monthly active users, and 52 million daily active users.

I use Reddit as a search engine. For example, before buying a car, I search for "Honda CR-V" on Reddit and read comments from relevant subreddits.

Why Did Reddit Issue Collectible Avatars as NFTs?

Reddit launched collectible avatars (NFTs) to provide artists within its community with a way to monetize their work.

Reddit retains only 5% of sales revenue to support its creator program; the remaining 95% goes directly to the artists.

Reddit partnered with around 30 artists to release a second generation of 40,000 collectible avatars.

Launched on October 21, 2022, they sold out within 24 hours—a significant improvement compared to the first generation released in July 2022, which took several weeks to sell out.

Owners can use these NFTs as profile pictures on Reddit and other platforms or resell them on secondary markets like OpenSea. According to RedditFloor, the most expensive NFT is currently valued at approximately $14,000.

How Did Reddit Attract Non-Web3 Users to Buy Its NFTs?

• Reddit used the term "digital collectibles" instead of NFTs to reduce psychological resistance among non-Web3 users. In fact, this isn’t Reddit’s first foray into NFTs. During the summer of 2021, Reddit released four limited-edition CryptoSnoos NFTs—digital artworks based on Reddit’s mascot, Snoo.

• Non-Web3 users can easily create wallets using familiar password setups. There's no need for seed phrases or understanding public addresses (0x...).

• All 40,000 collectible NFTs are available for purchase at fixed prices using fiat currency. Non-Web3 users don't have to worry about buying ETH or MATIC on cryptocurrency exchanges.

Why Did Reddit Choose Polygon?

The main goal is tokeep transaction costs low and energy consumption minimal. The Polygon blockchain is known for its flexibility, scalability, and low gas fees, while maintaining the security benefits of Ethereum.

The Polygon organization is also leading mass adoption of Web3. It has already collaborated with top brands such as Coca-Cola, Starbucks, DraftKings, and Meta to onboard users into Web3.

How Has It Performed So Far?

Since launch, approximately 3 million wallets have been created on Reddit, the market cap of Reddit NFTs is around $100 million, and daily trading volume stands at $230,000.

This is quite remarkable, considering that OpenSea has created only 2.3 million wallets so far.

Has Reddit Achieved Mass Adoption of NFTs Yet?

Not yet, for two reasons:

1. The number of participants is still small

Unique Reddit NFT holders number fewer than 100,000—less than 0.1% of its daily user base (52 million).

Even if all 3 million Reddit crypto wallets purchased Reddit avatar NFTs, it would still represent less than 6% of daily users.

2. Reddit Has Not Yet Found a Sustainable Business Model

If we generously assume all 40,000 NFTs were sold at $99.99 each, Reddit earned roughly $200,000 from NFT sales. Given that Reddit’s revenue last year was $350 million, NFT sales account for just 0.006% of total revenue.

Nevertheless, Reddit has undoubtedly taken a successful first step toward mass Web3 adoption and set an example for other Web2 companies.

Key Takeaways from Reddit’s NFT Success:

1. Serve your community before making money. Reddit empowers artists to showcase their work and keeps 95% of NFT sale proceeds.

2. Reduce friction in wallet creation. Reddit lets users create a crypto wallet simply by setting a password—no seed phrases or public addresses required.

3. Allow credit card purchases of NFTs. No Web2 user wants to go through the hassle of buying ETH or MATIC on an exchange just to purchase an NFT.

4. Choose a blockchain with low gas fees. Nobody wants to pay $50 in gas fees to buy a $30 NFT avatar.

5. Start small and iterate continuously. Despite having 52 million daily active users, Reddit released fewer than 100,000 NFTs. The team will gather feedback from holders and users to improve the purchasing process for future versions.

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