Retrospective on Reddit’s Collectibles as Gen 4 Drops
On Wednesday, Reddit will drop its gen 4 Collectible Avatars. Available in the Collectible Avatars Shop, these customizable and blockchain-based profile pictures (PFPs) mark the evolution of the front page of the internet.
As the rumor mill on Reddit’s pre-IPO valuation ramps up, how do these tokenized assets fit into Reddit’s long-term outlook?
NFTs, Engagement, and Reddit Traffic
Last week, Mirela Spasova, lead engineer for Reddit’s Collectible Avatars initiative, outlined Reddit’s Web3 footprint. At the Ethereum Community Conference (EthCC) in Paris, Spasova clarified why they rolled out special assets instead of users just having profile pictures (PFPs).
In July 2022, Reddit launched a collectible avatar marketplace on Ethereum’s scaling network Polygon to avoid costly gas fees and lower the barrier to entry. The concept is simple. Redditors gain a tradable asset with a supply cap by tokenizing users’ profile pictures (PFPs) into non-fungible tokens (NFTs).
And when something gains inherent and portable value, it sparks the motivational engine. Axie Infinity first demonstrated this proof-of-concept in the blockchain gaming sphere, as in-game tokenized/tradable creatures triggered a 6,500% revenue growth in less than two years.
Likewise, Reddit’s rollout of NFTs has been a significant success.
Join our Telegram group and never miss a breaking digital asset story.
Reddit Avatars Growth on the Back of Artists
Spasova noted that over eight million users were added to their Reddit Vault wallet. Not only does the non-custodial, Ethereum-compatible wallet offer actual ownership, but it also can freely resell tokenized PFPs on popular marketplaces like OpenSea.
Reddit’s Collectible Avatars have been so successful that they outpaced OpenSea’s active NFT wallets by October 2022. So far, there have been three Collectible Avatars rollouts:
- Creator Collection (August 2022)
- Series Collection (October 2022)
- Future Realities Collection (April 2023)
They have been designed by independent artists hailing from their subreddits. 17 million Polygon-hosted Collectible Avatars have been launched across 14 million unique holders.
In secondary sales, Reddit’s Collectible Avatars accounted for $32.6 million, cumulatively across 306,253 total sales. The highest-priced Collectible Avatar sold for $49.6k as a part of The Senses collection.
In the grand scheme of tokenization adoption, where does that lead to?
Stagnating Engagement and Lower NFT Sales Highs
In 2020, Reddit had 52 million daily active users (DAU), a 44% uptick from the previous year. Nearly half of the Redditors are from the United States, followed by the UK and Canada, clearly centered in the Anglosphere.
In 2022, Reddit reported 57 million DAUs. This is important to notice because the two-year period diminished social activity in the physical world post-lockdowns. In turn, one would expect a significantly higher user activity than pre-2020 growth.
This stagnation is evident from the estimated 55.79 million DAU for 2023. Combined with Reddit’s Anglo-centered demographics, this suggests an engagement ceiling is approaching.
At present, there are 11.4 million single Collectible Avatars holders. However, despite the growth in Reddit Vault wallets, Collectible Avatars sales have been on a steep downward trajectory, interrupted by new rollouts.
In turn, tomorrow’s Gen4 Collectible Avatars deployment is likely to be met with less excitement than the previous three, tapping into limited engagement supply with more tokenized avatars reaching lower price floors.
If every Redditor gets a tokenized PFP representing them, will that standardization increase engagement or flatten it? Let us know in the comments below.