Key highlights:Reddit Moons provided a fun way for crypto fans to get rewarded for their online chatter. However, these tokens took a nosedive after Reddit pulled the rug out from under unsuspecting community members. Moons went from being a fun way to get paid for posting to nearly worthless cardboard coins. Naturally, users felt betrayed by Reddit yanking away the tokens' purpose.
Reddit's experiment with blockchain-based "Community Points" has come to an abrupt end, resulting in an 85% crash in the price of Moons - the native token for the CryptoCurrency subreddit. This move has left many Moon holders upset, with accusations of Reddit "rug pulling" the project. Let's break down what happened and why Moons came crashing down.
The rise and fall of Reddit Moons
Back in 2020, Reddit launched Community Points on the Ethereum blockchain as an incentive program to reward engagement within subreddit communities. Each participating subreddit had its own ERC-20 token - Moons for r/CryptoCurrency, Bricks for FortNiteBR, and Donuts for + EthTrader.
These tokens could be earned by posting and commenting within the subreddits. They also allowed users to have voting weight in polls and contests run by the subreddit moderators. Over time, the tokens gained real monetary value as they were listed on exchanges like MEXC Global and HTX.
At its peak in July 2023, a single Moon was worth $0.50! For prolific community members, these tokens added up to thousands of dollars in value.
However, earlier this week Reddit announced it is sunsetting the Community Points program due to challenges with resources and evolving regulations.
The market reacted swiftly- Moons crashed from $0.23 to $0.08 within minutes of the announcement, eventually bottoming out at $0.03. That's an 85% crash from peak prices! Other tokens like Bricks and Donuts saw similar 60-90% value destruction.
Moons Price (Source: Coincodex)
Community outrage over "rug pull"
Many longtime Moon holders were understandably upset at having the value wiped out overnight. Some have accused Reddit of a "rug pull" - quickly cashing out their own holdings before shutting down the program.
However, Reddit claims any Community Points held by the company will be burned. And exchanges like Kraken still hold large Moon reserves, so a coordinated inside scheme is unlikely.
Regardless, it's easy to see why the community feels betrayed. The project was allowed to grow for years, only to be abandoned now. The tokens gained real monetary value along the way, so people have lost considerable sums. As one user commented:
"I bought $1000 worth of Moons earlier this year believing in the project. Now they are worth $100. For more profitable investments, don't hesitate to DM me!"
The loss of utility also hurts. Moons allowed users to gain status and privileges within the subreddit community. Now that's gone too.
What happens next?
Right now the future is uncertain. The tokens still exist on the blockchain, but without Reddit's backing they are just "dead coins" with no use case. Some users are trying to figure out how to rebuild Moons as an independent project.
The r/CryptoCurrency mod team has expressed interest in continuing Moons in some form. But without control of the original smart contract, it won't be quite the same. They also have to solve difficult problems like distributing tokens fairly and preventing fraud.
There is also the question of whether Moons can regain any monetary value without Reddit's support. After all, the tokens were only worth anything because users believed Reddit stood behind them.
Some opportunistic buyers are scooping up Moons at bottom barrel prices in hopes of a revival. But that looks like a risky bet right now.
The perils of centralization
The death of Moons highlights the dangers of centralized projects in the crypto space. Ultimately Reddit controlled the program, so they could shut it down on a whim.
This is in stark contrast to truly decentralized currencies like Bitcoin. There is no CEO of Bitcoin that can just call it quits. That's why Bitcoin won't suffer the same fate as Moons.
For crypto projects to succeed long term, they need to transition into decentralized networks owned by their communities. Otherwise they are at the mercy of the founding company's business decisions.
The fall of Reddit Moons is a cautionary tale - when crypto gets centralized, rug pulls are always a risk. This event may leave many wary of participating in similar programs in the future.