Last week Reddit's r/CryptoCurrency community token, MOON, soared from $0.09 to $0.58 in just four days, with daily transaction volumes reaching millions of dollars at their peak. But what caused this mini bull-run on MOON?
MOON tokens are ERC-20 standard tokens on the Arbitrum Nova blockchain, launched by Reddit admins in 2020 as a part of the experimental Community Points project.
Each subreddit’s community points are customized for and by their community, including their name and tokenomics (quantity and issue rules). They can be stored in Vault (a mobile wallet created by Reddit), but can generally be moved and managed like any other blockchain token. Their advantage over internal points is that once earned the coins can't be taken away by admins or moderators.
MOON is used to reward Redditors for their contributions in the r/CryptoCurrency subreddit. The tokens are distributed every 28 days based on the individual user's share of the subreddit's total karma (the users' scores representing how much they have contributed to the Reddit community).
Some sources suggest that the surge in the price of MOON was down to a recent change in Reddit's internal rewards policy.
Last week, a Reddit product team member published a post about the future of the platform's reward system. It mentioned that Reddit is going to discontinue its Coins and Awards (non-blockchain digital tokens used on the platform for rewarding other users) by September 2023.
Then came a post in the r/CryptoCurrency subreddit about changes in the platform's terms of use that, it was presumed, allowed the external trading of tokenized community points such as MOON.
Indeed, Reddit's new Terms of Use, which was last revised on June 21, makes a clear distinction between Virtual Goods (Coins and Awards) and Verified Virtual Goods (Avatar and Community Points) and says that the latter “can be transferred to another Vault or any digital wallet operated by a third party that supports Ethereum-compatible blockchains,”
CoinGecko's co-founder, Bobby Ong tweeted that it was already possible to trade CPs via Arbitrum Nova DEX even before the update of the terms. He also added that the matter could be “something to monitor in the coming months.”
The MOON post also received a comment from Kraken suggesting that the token may get listed on the exchange, which could also be one of the reasons for the price surge.
Another major crypto exchange Crypto.com was also quick to jump on the trend and listed the coin on July 18. Such as move may see the exchange attract many new users, as the r/Cryptocurrency subreddit is home to over 6.5 million Redditors. The token has been listed on Gate.io, RCP, Sushiswap and MEXC since 2022.
Reddit is one of the main social platforms for fans of digital assets with many active crypto-related groups (subreddits) and strong community spirit. The possibility of creating crypto tokens with real-world value on the platform may encourage even greater engagement, and is something we will continue to Observe.
