Why I Believe Reddit’s Collectible Avatars Will Be A Milestone in Web3

Reddit has chosen to stay away from the words “NFT” or “Non-Fungible Token” for their Collectible Avatars project. In fact, aside from saying that these will be “transferrable via blockchain” there is little to indicate that these have much to do with crypto. But it is this decision to use the “defi-mullet” of Web2 in the front, Web3 in the back is what I believe will make Reddit’s Collectible Avatars a milestone in the development of Web3.

Admittedly, before Reddit’s Collectible Avatars, I had not purchased any NFTs. There were two key problems. First, I wasn’t about to spend a few hundred dollars “on a JPEG”…and certainly didn’t have the stomach or checkbook for the “blue-chip” editions. Also, despite being relatively tech savvy with all the infrastructure set up (various hardware / non-custodial wallets, and accounts on the major KYC-ed exchanges) there is still meaningful friction that goes into buying an NFT. But Reddit’s team broke through. And their design choices may be a roadmap for what the future of NFT products looks like.

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What Reddit Has Done Right to Make Collectible Avatars Easily Accessible

· Seamless Fiat onramp/offramp. These have been enabled for a while by the likes of Moonpay, Ramp.network, and Wyre. It looks like Reddit is using Stripe’s recently-launched crypto product, and boy is it smooth. Sure, there were no stored payment credentials, and I had to enter my card info a few times, but it was still fewer steps than funding a Metamask account—and without any explicit fees or spreads being charged. Truly seamless. And if you wanted to buy on Apple Pay, that worked too—and I can assume the same for the Android experience.

· Integrated wallet – There was no lengthy setup needed to write down your 12-word seed phrase to get started. And certainly none of the “IF YOU LOSE THE 12 MAGIC WORDS OR MISSPELL SOMETHING OR GET THE ORDER WRONG OR YOUR ENEMY GETS THEIR HANDS ON THEM, YOU WILL NEVER SEE YOUR PRECIOUS EVER AGIAN” barriers in to get started. I clicked to claim my airdrop, and my Vault was immediately set up…with a cool / friendly graphic too.

· Bundled gas fees – This was a huge breakthrough. No worrying about whether you want to pay higher or lower gas fees for network priority; no having to send MATIC to your wallet first to make sure you had enough to cover gas; no need to even know that this concept exists. This was all included in the price (and an excellent use of an L2 to keep costs low).

· Immediate Utility – Sure, it’s just a profile picture (PFP). But it’s a casual flex with a blue hexagon around your avatar, and your profile immediately looks different when people visit. Plus the ability to mix and match pieces of each Snoo makes it very cool and all the more collectible for personal enjoyment purposes. And we all already use Reddit—nobody needed to adopt new behaviors.

· Aesthetic Appeal – It’s hard to argue with the fact that some of these actually look very cool compared to the base Snoos. So it is a real aesthetic upgrade if you’re coming from a standard look.

· Excellent Example of Generative Art – The combinatorics of generative collections is definitely one of the coolest things to come out of the NFT trend and it was put on excellent display by Reddit for a lot of people who might not even be familiar with the technical vocabulary. I only wish I could buy a Meme Gang NFT or two now!

· Low dollar entry cost – While 80 ETH for an ape (~$120k greenbacks) is way too much for most of us, $9.99 to $99.99 is actually within reach for a casual buy like something on Shien or a few Hearthstone packs as an in-app purchase.

· Large existing community – Numbers on Google are a bit all over the place from 400mm+ to 800mm+ monthly active users (MAUs) for Reddit, but it is certainly one of the largest social communities online. And at least 5mm of those people are interested in crypto here. The biggest impact will come from these large existing networks and platforms.

· Airdrops as a hook – While some people complain, it’s hard to turn away something cool for free. And all of a sudden, thousands more are set up with a Web3 wallet…and they don’t even know.

TLDR: Reddit makes buying NFTs so easy that most people won’t even know they’re doing it. And that’s a beautiful thing.

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Where do we go from here? The following are some ideas that I hope to see from Reddit based on an outside-in view—not their actual roadmap.

· Integrated secondary market. For seamless ownership transfer, I believe Reddit should build its own marketplace. While we can use Opensea now, if connecting a Metamask and OpenSea requires an FAQ and the potential for what could be effectively “catastrophic” or “total loss” user error, it’s probably too complicated for 99% of users. Building an integrated marketplace to trade avatars—potentially for a native Reddit Token (e.g., Moons)—would be a much smoother experience, and likely worthwhile given a large enough userbase. Opensea has ~1.5mm users (Apr 2022 est from Dune Analytics)—Reddit can easily top that with a modest attach rate on its existing user base. Even if volumes are lower, it is not unforeseeable that eventually a Reddit NFT marketplace becomes one of the largest on the web.

· Reddit-managed private keys as default. This will be controversial, but I believe that most internet users have no interest in managing their own keys. The beauty of web3 is it gives you the OPTION to do so, but I think that services like Web3Auth or Magic.xyz whcih abstract away seed phrases and securely manage private keys while letting you log in with a regular password or OAuth credentials is a major bridge between early adopters and the early majority. I think I had a weird process while setting up my Vault on the subway and flipping casually between apps not knowing I was making a wallet (and there was a 60-minute period where I was afraid I sent my PFPs into a lost Vault because I never got a seed phrase)—but making sure people don’t have to worry about their keys at all (unless they really want to) will be a usability benefit.

· New NFT Drop / Product roadmap visibility – I would love to know when future sets are dropping and hope it can be a regular occurrence for more artists on Reddit similar to how Nifty Gateway curates and supports them in getting set up to launch. Let’s also hope that there is a smooth lottery / Dutch auction system in place when that happens so there aren’t issues like in the Otherdeed sale.

· Improved pre-purchase transparency. Greater visibility into the graphic elements included in each to determine avatar interoperability before buying (e.g., right hand / left hand, hat, face, hair, etc) would be helpful. I don’t even need a try on feature—I just want to know if my space UFO is compatible with my mini robot before buying.

· Improved iOS / Web experience – As alluded to, I couldn’t figure out how to get my Vault seed phrase b/c I quickly set it up while waiting for the subway one evening. And was afraid I lost it forever…turns out, you just can’t see it on iOS / desktop (for now)—but somehow, it was visible on my Android device. Clearly, the Reddit team is still building but I’m glad they launched!

· Cross-platform interoperability - As Web2 networks (as Twitter has done) open up to Web3, it’ll be great to make it easy to connect the Reddit Vault to other websites. I hope the partnerships team can get some cool integrations for seamless syncing for PFP use on other platforms like Discord or Snapchat.

· $4.99 and lower priced tiers – Simpler add-on PFP elements at lower price points would be awesome even if they’re open editions and might open the door to more people becoming comfortable with purchasing and later selling their NFTs.

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Why does any of this matter? NFTs are likely to be one of the lasting technologies to come out of the most recent crypto development cycle. Potentially irrational price action aside, I absolutely believe this is true. And Reddit’s team has opened these up to a lot of new users / participants, including myself. At the end of the day, it boils down to two things—NFTs are:

· Good for owners – The ability to own your digital content and transfer it opens up new possibilities. Buying a PFP for $10 and being able to transfer or sell it in the future (potentially for $15…or maybe for $1) is a lot more appealing than buying a PFP for $10 without any potential recovery value in the future. Perhaps it goes to zero like fast fashion, but perhaps there is some secondary resale value like you might see on StockX or The Real Real. And maybe one day, you can use it on other platforms.

· Good for creators – The ability to monetize subsequent secondary art sales was not possible before smart contracts. Also, prior to this, if you weren’t on DeviantArt or the digital media portions of Etsy, most of us probably weren’t buying art from small artists. Further, interoperability will increase the market and functionality of their work.

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What is the best way to buy a Reddit Collectible Avatar? If you want to buy a Reddit Collectible Avatar, do it on the website rather than on iPhone via Apple Pay because (1) it’ll save you on taxes especially if you live in a high-tax state, and (2) the artist gets more money because Stripe charges ~3% vs Apple Pay’s ~30% toll (note that you’ll pay the same either way pre-tax).

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Are you here to pump the prices of the collection? For transparency, I only own 5 of these, and not the rarest ones: “deadass from ny” by u/bodegacatceo ($25), “Dr. Nickelmittens” by u/Conall-in-Space ($25), Bow Wow Bandits by u/puzzled__panther ($10), and a Rainbow Foustling by u/tfoust10 ($25), and was airdropped a Singularity. I’m happy with them all and bought based on what I thought looked cool and what was still available. But I don’t think this will be a get-rich-quick…or even a get-rich-slow scheme.

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Price Predictions? While not investment advice, I think the time-tested frameworks will still hold here.

· The first editions of anything, as with CryptoPunks and CryptoKitties…or Base Set Charizards…are the most likely to hold their value over time versus future releases.

· In the near term, until the airdrop ends (Gizmodo has mentioned a 10mm supply target), secondary prices for all of the free avatars should continue to decline w increased supply—likely stabilizing at a floor of ~$10, or the eventual lowest-tier paid avatar price. However, given their generative nature, it’s likely that some (especially Meme Gang) with rarer elements will retain value.

· Prices for paid avatars will likely follow (1) hype cycles (e.g., if everyone suddenly wants the firey-hair look of a Boroborygmius) and (2) individual artist careers—rooting for you all!

· All that said, it’s unlikely that we come to a time again where people are making 1000x speculative profits on what are effectively JPEGs.

· And the big open unknown is what future supply of reddit NFTs looks like. Increased supply of avatars in the future will put a ceiling on price appreciation for all but the most interesting avatar elements (looking at you, NYC pizza rat!)

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In closing, a job well done to the Reddit team who put this project together with a truly smooth experience. A round of applause for the artists who contributed to making this a success. And thanks to the community here where I have been a long-time lurker.

Let me know with your thoughts!