Reddit and Web3: NFTs by Another Name
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When it comes to NFT trading, the primary marketplace is OpenSea, which has consistently maintained its dominant position. Improved functionality has been added along the way, such as support for NFTs on blockchains beyond Ethereum, including, most recently, Avalanche.
However, a recently circulating statistic has taken the NFT space by surprise. According to reports, the number of active NFT wallets on the social media forum, Reddit is now higher than the number of active wallets on OpenSea, numbering 3 million on the social media giant, compared to around 2.5 million on the specialized NFT platform.
What Is Reddit’s Connection with NFTs?
In July of this year, Reddit announced that it would be foraying into NFTs through what it called ‘Blockchain-Backed Collectible Avatars’ to be sold through its own dedicated storefront, and kept in a Reddit wallet called Vault.
What this actually meant was the creation of PFP-style NFTs on the Polygon blockchain, with royalties for the artists involved in their making. Also, the right to utilize the NFT artwork is transferred to purchasers of the NFTs.
In other words, this is very similar to the kinds of NFT drops that have blown up in popularity throughout 2021 and 2022. What was different about Reddit’s collection, though, was that it chose not to use the term NFT and that its items were priced in USD, rather than in cryptocurrency.
This appears to be a strategic choice since NFT is a loaded term that doesn’t always elicit a positive response. Pricing in fiat also acts to differentiate Reddit’s collection from the wider worlds of crypto and NFTs.
Remarkably, four Reddit NFT collections are now, at the time of writing, occupying the top ten spots on OpenSea’s twenty-four hour sales volume rankings, including the number one position.
What Are the Implications for NFTs?
It’s possible that more mainstream NFT adoption comes with a gradual detachment from the current NFT scene, which can be regarded as a sub-sector of the broader crypto environment.
This means that potential users who are not focused on either NFT trading or crypto speculation might still come to NFTs, but through a utility in existing, web2 platforms such as Reddit, and also through adoption in the gaming sector and other non-crypto areas of development.
These kinds of adoption are likely to blend in with existing applications and will be less explicitly focused on price gains and profit, more centered on adding to the user experience and may steer away from terms such as NFT altogether.
Such a dynamic runs counter to the way that crypto has attracted newcomers up to now. One of the main drivers of crypto interest is its profit potential and capacity to deliver outsized returns. If these gains then lead to meaningful adoption, then we can conclude that the model is effective. After all, a combination of profitability and utility sounds optimal.
However, in the worlds of, for example, social media and gaming, an overt focus on trading and profit may be regarded as detrimental to the user experience. As such, crypto and NFTs in these contexts need to be integrated carefully, with profits, at least on the surface, taking a back seat.
A more cynical take is that profit motives are no less present, but are simply less upfront, and we might just be witnessing a subtle rebranding of NFT technology so that it becomes palatable among users who have, at times, been hostile towards all aspects of crypto.
Is the NFT Space Prepared?
The NFT ecosystem can sometimes tend towards insularity and is complex to navigate. Information is scattered around Twitter and unintuitive Discord servers, and hype and manufactured exclusivity play outsized roles in driving trade.
Accordingly, there is an over-emphasis on gathering off-limits insights and early access to launches, while at the same time, it’s often unclear exactly what some projects are intending to create.
Reddit has had the opportunity to look over the existing landscape, and then chart an alternative course, as is the case for web3 gaming projects, and other newcomers to the space.
Labyrinthine information networks focused mainly on trading for profit have limited mainstream appeal. By contrast, focused collections that tap into existing social media and gaming communities, while placing a less overt emphasis on financial motivations, might find a wider audience.
Alternatively, it’s possible that a nascent Reddit NFT community simply winds up taking the same path as the existing NFT space, but with a different surface aesthetic. However, even in that case, there is cause for optimism, as more participants onboarded equates to an expanding market.
The frenetic early NFT boom of 2021 might come to be seen as a preliminary stepping stone on the way to mainstream integration of NFTs. In that case, Reddit’s role in the NFT story may be to provide a boost in user numbers, or it could be part of a substantial shift that takes NFTs in new directions.
Either way, if we are looking for signs of increased NFT and web3 adoption, and an overall lift for the market, then developments at Reddit can be taken as positive news.
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