How Reddit Became One of the World’s Largest NFT Marketplaces in Just Four Months

Brian Nguyen describes himself as a “whale,” a cryptocurrency term used to describe collectors of high-value non-fungible tokens (NFTs). “I’m interested in buying the expensive, higher-tier ones,” said Nguyen, a Los Angeles-based venture capital adviser.

But lately, the 28-year-old hasn’t focused on popular, pre-made NFT collections like Bored Ape Yacht Club or CryptoPunks. He bought Reddit Collectible Avatars, a new NFT initiative from the social community platform.

Despite only being four months old, Reddit’s NFT marketplace, called Vaults, has already grown to a $10.5 million marketplace. And with 2.3 million Reddit Avatar owners, the platform’s number of active users has surpassed those of OpenSea, which bills itself as the largest NFT marketplace. Reddit’s collectible avatars, variations of the website’s iconic mascot, Snoo, are designed by artists active in the platform’s comic book and digital art sub-communities. With a price range of $10 to $100, they are generally accessible and can be purchased by credit card. But the avatars quickly sold out, fetching high prices on the secondary market.

Nguyen estimates he’s spent over $100,000 on Reddit avatars so far, mostly through purchases on OpenSea. He’s particularly interested in a collection of Reddit avatars called Midas Touch, and has already purchased five of the golden avatars for $15,000 each.

NFTs give users social power within their communities

Reddit avatars are used as profile pictures for Reddit users, giving the images a glowing effect when commenting in forums. “People don’t know who you are when you post on Reddit, but an expensive NFT gives you more credentials,” Nguyen said. Besides viewing them as a long-term investment, he calls avatars a “social flex,” akin to driving an expensive Ferrari or Lamborghini. And in terms of instant recognition, Nguyen said an avatar profile picture is the equivalent of being granted a verified blue tick on Twitter.

With Twitter’s verification system being changed under new CEO Elon Musk, the social media platform could take inspiration from Reddit Avatars and adopt something similar in the future, according to professor Andrea Baronchelli. at City University London studying crypto and NFT space. “It’s a new tool, very flexible. It’s perfect for community engagement,” he said.

Reddit NFTs are simply known as collectible avatars. Courtesy of Reddit.

Reddit chose to store its NFTs on a blockchain called Polygon because of its low cost and sustainability commitments, according to a press release. “The system is simple and effective,” Baronchelli said. “And the fact that there are low fees is very appealing.” Using credit cards as payment further simplifies the process, Baronchelli said, because it ties the abstract concept of blockchain to something used daily in reality. “Simplicity is the crucial thing,” he said.

According to Merav Ozair, blockchain expert and professor of financial technology at Rutgers Business School, an important part of Reddit’s surprising success in NFT is the platform’s community. The majority of NFT and blockchain users discuss their activity on platforms like Reddit, in addition to Telegram and Discord. “That’s where you’ll find them,” Ozair said. “Reddit is creating something for the community itself.”

Although Reddit isn’t as widely used as social media sites like Twitter or Instagram, Ozair said the Avatar concept could eventually move to those platforms, especially since they’ve already shown interest. In January, Twitter announced that NFTs could be used as profile pictures for members of the Twitter Blue subscription service, while Instagram in August began testing “Digital Collectibles” and allowing a handful of creators to share NFTs on the platform. “Now, after Reddit, maybe they have a business model on how to do that,” Ozair said.

Despite the popularity of its NFTs, Reddit refuses to use crypto terminology

Another factor in Reddit’s success has been the push towards avatars by various companies, as a way to incorporate NFTs. “It’s a theme I see everywhere. Creating an avatar is what everyone is talking about right now: JPMorgan, Microsoft, big fashion designers,” Ozair said. In February, JPMorgan became the first bank to enter the metaverse, creating a lounge in the world based on the Decentraland blockchain where people can attend as digital avatars. In October, Microsoft announced “Mesh avatars” for Microsoft Teams, where meeting attendees are replaced with digital versions of themselves. And in 2021, Gucci teamed up with social media app Zepeto to create 3D avatars that can be dressed in Gucci outfits.

NFT avatars are particularly useful when it comes to social media, as they can be used as a form of authentication, according to Ozair. “Because it’s one of a kind, if I own it, I’m the only one who owns it and no one else can claim it’s them. It has great power.

Red and White Reddit Logo
Reddit’s mascot “Snoo”, which his avatars are based on. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

One notable aspect of Reddit’s new initiative is the absence of the term “NFT” or any other cryptocurrency jargon. “They’ve taken a good path when it comes to branding,” said Arun Sundararajan, an NYU professor specializing in digital technologies. “There’s kind of a mixed association in people’s minds about NFTs right now.” In recent months, crypto and NFTs have been associated with scams and severe financial downturns.

Getting away from that kind of terminology also made the process less scary for consumers, Sundararajan said. “Reddit holds the user’s hand, which makes it feel like a more natural goal than anything in the blockchain world.” After the advent of the internet, user-generated websites like WordPress and social media platforms emerged after realizing that the majority of the population needed an easier form of entry, Sundararajan said. “Its success was partly because people didn’t want to deal with uncertain technological details.”

While NFTs have been surprisingly difficult for users to access, Reddit has simplified the process by using understandable terminology, integrating its new marketplace into a familiar platform, and not upsetting or intimidating consumers with the technology. real behind his avatars, Sundararajan said. “I think a lot of Web3 companies haven’t learned that yet.”

How Reddit Became One of the World's Largest NFT Marketplaces in Just Four Months

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