Bear markets are difficult.
Floor prices fall, holders get antsy, and innovation seems to slow to a crawl. But in these challenging market conditions, some companies have thrived, building on their brand and creating value for their communities.
One of those companies may be a surprise to some. In 2021, it was home to some of the loudest critics of non-fungible tokens and Web3 technology. Today, it has earned praise from leaders in the next iteration of the internet and mainstream publications for its NFT initiative.
And the market value it has created now is approaching $50 million.
Enter Reddit and its over 10 million NFT holders. This is their Web3 story.
Reddit Collectible Avatars: A Multi-Year Project
The origin for the Reddit collectible avatars started in 2020, the year of the coronavirus pandemic. With lockdowns shuttering cities worldwide, people were spending more time online than ever. Amid this, the company launched the beginnings of what would become a multimillion-dollar revenue stream: the Reddit avatar builder.
Using this tool, Redditors could create their own version of the company’s mascot: Snoo, an alien-looking creature. Outfitting it with clothes and accessories, the users could add a touch of personality to their posts while still expressing loyalty to the brand and their sub-communities. The launch was a success, and it no doubt got the executives thinking.
After NFTs soared in popularity throughout 2021, Reddit began exploring the technology. But there were problems. Non-fungible tokens were complicated, the tech complex, and the UX unwieldly. The company needed a simple way to onboard its users, an accessible price point, and a means to avoid the negative connotations associated with the term.
Reddit Collectible Avatars were born.
The company chose the Polygon blockchain to launch the collectibles, which mitigated the argument that its NFTs were bad for the environment. The price point was low: $10 for some. It created its own wallet called Vault for a seamless onboarding experience. And perhaps most importantly: It steadfastly avoided the term NFT.
These were digital collectibles. Same tech, different packaging.
What happened next would shock almost everyone in the space.
Reddit Collectible Avatars Spark Trading Frenzy
There is a phrase in Web3 circles based on the hit movie The Matrix: the Red Pill. In crypto circles, it represents when someone is introduced to some aspect of crypto and starts down the rabbit hole of the tech, culture, and potential riches.
Reddit debuted its Generation 1 NFT collection in July of 2022. It sold out slowly, almost like a stealth launch, with few people knowing about it. But soon word spread and demand grew. By the time Generation 2 entered the market, the hype had grown sky-high.
Then a frenzy ensued.
Bear markets are dull. The time between news can be long, and excitement is hard to find. But for a period of weeks in late 2022, the whole space was buzzing about the latest novelty: Reddit Generation 2 Collectible Avatars. What started as a cheap entry point to NFTs became a cash cow, with some avatars selling for tens of thousands of dollars.
- Flippers were scooping and selling.
- Floor prices were rising fast.
- Clout was forming around the high-priced avatars.
- One Gen 2 collection flipped CryptoPunks in trading volume.
And Redditors were becoming interested in the space at large.
In a stroke, Reddit had onboarded 3 million new people into the world of non-fungible tokens. At the time, that was more than the total number of active wallets on OpenSea, the leading NFT marketplace.
Reddit Collectible Avatars: Digital Assets Meets Social Experience
Today, there are nearly 14 million Reddit collectible avatars. 72% of holders own just one. Dune Analytics shows a series of steady rises and tails off after Reddit released each Generation of NFTs. But a zoom out shows the truth: Reddit’s digital collectibles have caught fire.
So, why have Reddit NFTs been so successful?
The magic lies at the intersection of digital assets and social experience. Like with other non-fungible tokens, holders can buy and sell Reddit collectible avatars on secondary markets. This means, simply, that people can make money off them. It pervades the new paradigm in Web3, that NFTs offer a novel way to own digital content.
Then there is the social experience. Reddit imbued their collectibles with certain features. For instance, they come with animations that add some pop to Reddit posts. Some are tailored to specific subreddit communities, appealing to digital inhabitants of those spaces. And they all come with brand attached, as all Reddit NFTs are based on the Snoo mascot.
Finally, there’s the larger community aspect. To create the collectibles, Reddit partnered with independent artists all over the world, some of whom are active on Reddit itself. The revenue from the primary mint goes to the artists, while secondary royalties are split between the creators and the company. Wins all around.
Gen 3 and Rabbids
For Gen 3 of its Collectible Avatars, Reddit broke convention. Instead of partnering solely with independent artists, it brought in a big name: Ubisoft, the creators of Assassin’s Creed and Just Dance. Now, Reddit avatar collectors can browse a new addition to the collectibles: Rabbids, based on the gaming company’s multimedia franchise by the same name.
Who knew a plunger was just what your Avatar needed? 🪠 In partnership with Ubisoft, we’re bringing @RabbidsOfficial to Reddit! Get your Rabbids #RedditCollectibles now.https://t.co/e81Zn0Yr6S pic.twitter.com/1lKFUU0rrJ— Reddit (@Reddit) May 25, 2023
The new avatars have sparked another wave of trading activity. Currently, enthusiasts have minted nearly 3 million Generation 3 Reddit Collectible Avatars, with the most expensive selling for $7,000. 10 collections have more than 3,000 NFTs minted, and the unique ownership percentage is still much higher than 50%.
As Sandeep Nailwal, the co-founder of Polygon, said in an Ask-Me-Anything session, Reddit is perhaps the only Big Tech company that has cracked the NFT code, with its collectibles driving community engagement.
This certainly is a bright spot during this difficult bear market and Reddit has accomplished a feat many companies would be envious of: Onboard millions of users into Web3, support artists, and form partnerships, all at the same time.