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Reddit Rolls Out Community Points on Arbitrum’s New Ethereum Scaler With FTX Support

Arbitrum’s new gaming and social dapp-centric Nova chain is live, and Reddit could bring millions of users to it via rewards. FTX is also on board.

5 min read
Reddit has over 50 million daily active users. Image: Shutterstock

In brief

  • Arbitrum Nova, a new Ethereum scaling solution built for games and social apps, has launched to the public.
  • Social giant Reddit will use Nova to scale its crypto-powered Community Points rewards program.

Arbitrum One is a popular layer-2 Ethereum scaling solution that enables faster, cheaper transactions than Ethereum’s own mainnet. But seeing a need for even cheaper transactions for certain applications, Arbitrum creator Offchain Labs has unveiled a second Arbitrum blockchain called Nova—and social community giant Reddit is onboard, along with crypto exchange FTX.

Offchain Labs opened Arbitrum Nova to the public on Tuesday. Reddit will use the new platform to scale its blockchain-based Community Points rewards program for users, and FTX will enable Redditors to purchase ETH to pay for their on-chain Community Points transactions on Nova.

Reddit first launched Ethereum-based Community Points in late 2019, and in August 2020, announced a “Scaling Bake-Off” competition to find an ideal scaling solution to bring the initiative from just two of its subreddit communities to potentially millions of them.

In July 2021, Reddit announced that it had selected Arbitrum as its scaling partner. This week, Reddit’s Tim Rathschmidt, director of consumer and product communications, told Decrypt that Arbitrum Nova is ideal for its particular use case because the tech is “optimized for ultra low-cost transactions with strong security guarantees.”

Rathschmidt wouldn’t share any firm details about Reddit’s roadmap for scaling the Community Points system to reach more of its 52 million daily active users (as of December 2020). However, he spoke to Reddit’s view of Web3 technology on the whole, which includes NFT avatars built on Polygon, a competing Ethereum scaling solution.

“In many ways, the evolution of the internet is seeing a return to its open-source, community-led, decentralized roots,” said Rathschmidt. “Reddit has prioritized and fostered these attributes since the beginning. Unlike other social platforms that need to entirely rehaul or risk being disrupted by new entrants, Reddit has been building for this all along.”

“We believe the technology should be in service of something much more foundational and fundamental to human interaction and connection,” he continued. “Like everything we do at Reddit, our involvement will be open, self-sustaining, focused on empowerment, and have community at the heart.”

Arbitrum expands

Steven Goldfeder, co-founder and CEO of Offchain Labs, told Decrypt that the new Arbitrum Nova chain is an ideal fit for gaming and social applications. Arbitrum One is better suited for higher-value transactions like decentralized finance (DeFi) and NFT assets, he explained.

Arbitrum One is an Ethereum layer-2 scaling solution that uses optimistic rollups to bundle batches of transactions from its own blockchain and commit those to the Ethereum mainnet. Meanwhile, Arbitrum Nova embraces a different approach, relying on a series of validators to avoid committing everything to Ethereum, thus cutting down on fees.

It’s a model that Offchain Labs calls AnyTrust, and it relies on a Data Availability Committee made up of prominent partners. Reddit is one of those partners, along with FTX, Ethereum-centric software firm ConsenSys, and blockchain API firm QuickNode. 

According to Goldfeder, the model “tries not to put the data on Ethereum,” and relies on the committee members to maintain the network. But Ethereum’s mainnet remains in play as a backstop: if members don’t process transactions or they don’t act as they intended to, then transactions are ultimately still rolled up and written to Ethereum.

“Is it as secure as our rollup? No, but it's much more secure than a sidechain,” Goldfeder explained. “For those projects that are priced out in rollup mode, it's a really good solution.”

The goal with the AnyTrust technology and Arbitrum Nova is to maintain various benefits of blockchain technology, albeit tuned in a way that keeps transaction costs small and services applications that don’t necessarily need to constantly interact with the Ethereum mainnet.

That’s why it’s deemed an ideal fit for social applications like Reddit’s Community Points, but also crypto-fueled video games. Goldfeder said that Offchain has been speaking with major video game publishers, and that they’re looking for a platform that enables experiences that are “game first, blockchain second.” In other words, it has to be a quality game.

Blockchain technology provides potential benefits for gaming, including the ability for players to benefit from a game’s success, sell off purchased NFT assets when they’re done playing, and potentially use NFTs and tokens across multiple games. Nova’s approach can minimize the hassle for players interacting with the technology, Goldfeder suggested.

Launching Reddit’s Community Points on the permissionless Arbitrum Nova chain unlocks another interesting possibility. Once deployed, Goldfeder said, other developers can potentially create their own decentralized applications (dapps) that use Reddit's crypto Community Points, yielding an ecosystem and added utility around the crypto rewards program.

With many millions of engaged users, Reddit’s crypto rewards push could significantly grow the Web3 user pool. Goldfeder suggested that transitioning existing Web2 communities into the space will do more for crypto adoption than creating a killer Web3 app from scratch.

“Reddit is a pioneer, and I think that this is the way we get to a billion users—by existing large communities bringing their users over to the blockchain,” he said.

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