Reddit lays out the blueprint to engage the audience and drive NFT adoption

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The non-fungible token (NFT) industry has been in turmoil over the last few quarters. Many leading marketplaces, including OpenSea, have experienced a decline in sales volume, amid the fading interest and popularity of digital assets globally. Furthermore, the popularity of NFT projects including the Bored Ape Yacht Club has also experienced a decline in trading volume and value in 2022. Consequently, a bet into the NFT market seemed riskier than fruitful, at least from the short-term perspective. However, Reddit, an online message board community, has turned out to be a significant force for NFT adoption.

The social media platform, which has grown significantly over the years with more than 50 million daily users and 8 billion page views per month, has again boosted the popularity of NFTs.

• In July 2022, Reddit announced its foray into the NFT segment by launching an NFT marketplace that allows users to buy NFT profile pictures at a fixed price. Notably, the limited edition, blockchain-powered profile pictures were created in partnership with 30 independent artists. Nearly 40,000 avatars were released by the firm at the time, which the users could purchase through the Reddit mobile app for prices ranging from US$9.99 to US$99.99. Notably, the users who purchased these NFTs received the licensing rights for the limited-edition avatars along with Reddit platform-specific benefits.

Many of the social media giants have recently forayed into the NFT segment. Facebook, Twitter, and Instagram have all announced NFT integrations on their platform. However, these initiatives are focused on showing NFTs purchased by users from other marketplaces. Because Reddit has launched an NFT marketplace, it makes the social media platform a direct participant in the segment. Furthermore, the strategy from Reddit also focuses more on offering platform-specific benefits to NFT owners, unlike Facebook and Twitter.

While the NFT industry has been struggling to drive growth amid several challenges faced by the industry, including fading consumer interest, rising interest rates, and a decline in cryptocurrencies, the NFT project from Reddit is again driving the popularity of the digital asset class. For instance, 

• In October 2022, Reddit announced that more than three million users on the platform have used Vault blockchain wallet, a digital wallet developed by Reddit, to create over three million crypto wallets. Of these, 2.5 million were created specifically to purchase the NFT avatars released by Reddit in July 2022. Notably, the three million active wallets hosted by Reddit are much higher compared to OpenSea, one of the largest NFT marketplaces globally. This itself shows that the Reddit NFT project has been a great success.

Notably, the growing popularity of digital collectibles has also driven their prices in the secondary market. On OpenSea, some of the avatars have floor prices of more than US$2,000, with a few having a price above US$20,000.

Since its launch in July 2022, over 2.9 million NFT collectibles have been minted using the Polygon blockchain. Notably, the approach from Reddit has driven the success of its NFT project. For instance,

• Because of the declining valuation of cryptocurrencies and popular NFT projects, a lot of resistance was seen toward NFTs over the last few quarters. Consequently, Reddit never used the word NFT to introduce its digital avatar collection to the world. Furthermore, the process to claim these digital avatars was smooth and simple. Users could buy them through fiat and without setting up any crypto wallet.
• Reddit also avoided the term wallet, as it has been seen to potentially off-put the users. Rather than using the term wallet, the firm uses the vault term to entice users into its digital initiative. Notably, the strategy of preferring non-crypto native terms has a major role in driving the popularity of the NFT project among the millions of users on the social media platform.

Given the success of Reddit in the NFT space, the strategy and approach adopted by the firm can serve as the blueprint for many of the Web2 firms that are looking to move into the Web3 segment to further engage their audience. The popularity of the Reddit NFT project further reiterates the growth potential of the sector by opening the doors for mainstream adoption of NFTs.

Furthermore, with the popularity of Reddit’s NFT project, the competition among social media platforms is expected to further intensify from the short to medium-term perspective. Notably, firms are launching new tools and features to attract users and drive the market position in the NFT segment. For instance,

• In November 2022, Instagram, the social media platform owned by Meta Platforms, announced that the platform will provide users with a toolkit, thereby allowing them to create, showcase, and sell NFTs through the platform directly. Notably, Instagram partnered with Polygon to allow the users to mint NFTs on its platform.

The buy and sell process will work like traditional in-app purchases and at the moment Instagram is not taking cut from the revenue. While initially launched for a small group of creators in the United States, Instagram is expected to further launch the toolkit for users around the world from the short to medium-term perspective. While it remains to be seen whether Instagram achieve the same popularity as that of Reddit through its NFT foray, the foray from major social media giants into the NFT space is projected to keep driving the growth of the market over the next three to four years.

To know more and gain a deeper understanding of the NFT market in the United States, click here.