How the No. 1 Reddit NFT in the daily list exploded

Original author: Eric Choi

Original compilation: Shenchao TechFlow

Reddit is a popular online site that allows users to discuss , vote and share content (similar to Tieba). 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, when searching for a car before buying one, I use Reddit to check out "Honda CRV" and read the reviews on the relevant subreddit.

Why does Reddit issue collection avatars in the form of NFT?

Reddit released collectible avatars (NFTs) to give artists within its community a way to monetize their work. Reddit only keeps 5% of sales proceeds to support the Creator Program, the rest goes to the artist.

Reddit and About 30 artists collaborated to release the second generation of 40,000 collectible avatars. Released on October 21, 2022, they sold out within 24 hours, a vast improvement over the first generation, released in July 2022, which took weeks to sell out.

People who have purchased an NFT can use it as a personal photo on Reddit and other platforms, or on OpenSea to be sold on the secondary market. According to RedditFloor, the most expensive NFT is now about $14,000.

How did Reddit get non-Web3 users to buy its NFTs?

1. Reddit used the term "digital collectibles" instead of NFTs to reduce non-Web3 users psychological exclusion. In fact, this is not the first time Reddit has dabbled in NFTs. In summer 2021, Reddit released a limited series of 4 CryptoSnoos NFTs, digital artwork based on Reddit mascot Snoo.

2. Non-Web3 users can easily create their wallets with familiar password settings. No mnemonic or knowledge of public addresses (0x...) is required.

3. The 40,000 collection NFTs can only be purchased at a fixed price with fiat currency. Non-Web3 users don't have to worry about how to buy ETH or MATIC on cryptocurrency exchanges.

Why did Reddit choose Polygon?

The main purpose of this is to keep transaction costs low and save energy. The Polygon blockchain is known for its flexibility, scalability, and low gas costs, while maintaining the advantages of the Ethereum blockchain. The Polygon organization is also leading the mass adoption of Web3. It has partnered with top brands like Coca-Cola, Starbucks, Draftkings, Meta, etc. to bring users into Web3.

How is it doing so far?

Since launch, about 3 million wallets have been created on Reddit, Reddit NFT market cap is about $100 million, with a daily transaction volume of 230,000 Dollar. This is quite surprising since OpenSea has only created 2.3 million wallets so far.

So, have Reddit NFTs been adopted at scale?

Not yet, for two reasons:

1. The number of people is still very small

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There are fewer than 100,000 unique Reddit NFT holders, less than 0.1% of its daily user count (52 million). Even with all 3 million Reddit cryptocurrency wallets buying Reddit avatar NFTs, it still represents less than 6% of daily users.

2. Reddit has not found a sustainable business model

If we are generous Assuming all 40,000 NFTs were sold for $99.99, Reddit made about $200,000 from the NFT sale. Reddit had $350 million in revenue last year, so NFT sales accounted for only 0.006% of its revenue. Still, Reddit has certainly taken a successful first step towards mass adoption of Web3 and set an example for other Web2 companies.

The following are the main revelations of the Reddit NFT explosion:

1. Serve your community before making money. Reddit empowers artists to showcase their work and earn 95% of the revenue from NFT sales.

2. Reduce friction when creating a cryptocurrency wallet. Reddit lets users create a cryptocurrency wallet simply by setting a password. There is no seed phrase and no public address.

3. Let users buy NFT with a credit card. No Web2 user is willing to buy ETH or MATIC on a cryptocurrency exchange because they want to buy NFT.

4. Choose a blockchain with low Gas fees. Nobody wants to pay $50 for a $30 NFT avatar.

5. Start small and iterate. Reddit has 52 million daily active users, but it has released less than 100,000 NFTs. The team will gather feedback from holders and other users and make improvements to the next version of the NFT purchase process.

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