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Rewards on the blockchain, decentralised organisations and immortality – Part 1

A screen-recording posted on the CryptoCurrency subreddit shows what appears to be Reedit implementing a blockchain-based points system that is closely related to its existing ‘karma’ rewards system (which is centralised).

While there are clearly some details that need to be thought out – for instance there is a blank section titled ‘tipping and transfers’, there is enough in the video to sketch an outline of how the system works:

Earning points

  • Points are earned in the same way karma is. While karma is universal, points are only available in subreddits that support them. It’s unclear if points = karma or are earned differently (the screengrab only mentions ‘through contributions’). Banned users to not earn points. 
  • Curiously, according to the section ‘how is this different from karma’, points ‘represent ownership in a community’
  • Reddit periodically asks members of a points-enabled subreddit to vote on the accuracy of points earned per member and then asks members to claim those points. Reddit will then deposit points into members’ wallets. It’s unclear how members will be able to independently verify accuracy of earned points – probably by an audit of the smart contract that describes how points are awarded. 
  • Points that are not claimed ‘expire’, by which I take to mean they are never distributed.
  • The document in the screengrab also states that “[moderators] get a 10% share for their administrative contributions to the community, Reddit gets 20% of points, and another 20% will be reserved for the broader Reddit community”. This sounds like a 50% tax. Does this mean each member eventually only gets half of the points they have earned? Additionally, how will the points reserved for community be used? Who decides this? How does Reddit plan to encode transparency?

Buying points

  • Points are ‘standard ERC-20 tokens’, live in a wallet, and – even though the ‘transfers’ section is empty, may be ‘traded freely’. It’s unclear if this means only between Reddit account holders or in general. While Reddit generates the wallet’s public address and private key, there is no mention of not being allowed to manage them via another ERC-20 compatible wallet

Using/redeeming points

  • Points can be used for voting, to buy ‘special memberships’ via which users can – based on examples – display statuses and post GIFs/graphics. These are the two explicit examples in the screengab; it also states that they may ‘be used for any number of purposes within the community’
  • It’s notable each of these use cases is fleshed out erasonably well:
  • For instance, voting can either be one-vote-per-member or weighted votes. The weight is the minimum of the current balance and the number of points the member has ever earned. Since points are tradeable and can be bought, making a distinction between current balance and the number of points earned, not accumulated, is to mitigate the buying of influence.
  • The points with which memberships are bought don’t add to Reddit’s store; they’re burned, reducing the total points in circulation and increasing every other member’s % holding proportionately. I understand the intent, but it’s unclear to me how this is relevant as long as Reddit itself is not allowed to use the size of its holdings to influence, say, voting outcomes.

Points supply

  • 50 million points will be initially distributed, “based on karma in the subreddit to date”
  • According to the document, there will be a total supply of 250 million points – because of the way the earlier point is worded, does this mean 250 million points per subreddit? Otherwise the document could have said “based on karma across all subreddits”
  • Anyway. The first year’s supply is another 50 million, and then successively smaller amounts until the supply approaches 250 million
  • Burned points will also be re-introduced, with “half of the burned points” reintroduced each month. This adds to each month’s supply. These should count towards the lifetime supply, since these points were also minted/distributed once.

Even if none of this pans out – Reddit released a no-statement statement – it’s interesting to think the rewards system design through, imagine what it would look like if everything about Reddit – not just the rewards system – were to be decentralised, and finally, how is a system that lives entirely on the blockchain fundamentally different? That’s part 2 and onwards.