The case for a crypto company like Coinbase acquiring Reddit and the future of Community Points

Recently, I've been contemplating the enormous potential of Reddit's tokenized community points project, and the missed opportunity of Reddit canceling the project. What I dwell on the most is that Reddit developers had already set the stage for a site-wide implementation. They had a functional Ethereum-L2-integrated Vault and comprehensive documentation ready to go. The only piece missing was the executive decision to go live.

As for the potential, consider that Reddit has around 140,000 active communities. If even a quarter of these communities were to introduce their community points, that's a staggering 35,000 independent tokens. To provide some context, Reddit's two official Community Points during their trial phase had market caps of $10 million and $28 million, respectively.

Even if the average market cap of an RCP ended up being $2 million, that would mean that the 35,000 unique Reddit Community Points would have an aggregate market cap of $70 billion. The magnitude of the opportunity for both Reddit, and crypto in general, was enormous.

Now, let's delve into the opportunity in front of a company like Coinbase:

1. Web3 Integration: By pivoting Reddit to a Web3 site, Coinbase would be in possession of the largest crypto site, and largest collection of crypto users, in the world. On the Reddit side, this transition would not only allow users to have more control over their data but would also enable new ways to monetize and drive engagement on the site.

2. Decentralized Finance With the launch of tens of thousands tokens, each with a real community of stakeholders behind it, Coinbase could add millions of users to DeFi. Think of trading, lending and borrowing based on community engagement. Reddit itself could become one of the largest crypto websites in the world, and an incredibly valuable user-acquisition channel for a crypto exchange like Coinbase.

3. New Revenue Streams: Beyond advertising, Reddit would be able to explore token-based monetization. This might include anything from token staking for premium features to selling avatars for community points. A Reddit with tokenized community points would undoubtedly have more revenue channels open to it than one without. What this means is that Coinbase acquiring Reddit would immediately lead to the value of Reddit as a web property increasing.

4. Compensating Users: Tokens can be used to directly reward content creators and curators. There is a very good possibility this would lead to Reddit's monthly traffic massively increasing, which would make it a more valuable web property for Coinbase.

And the bigger picture here is that with the community points project launched, crypto as a whole would see a massive boost in adoption, and any company, like Coinbase, with a significant stake in the crypto economy, would stand to benefit from that.