In the most recent instance of FTX's big bear market buying frenzy, the cryptocurrency exchange has reached an agreement with Reddit.
FTX Pay is merging with Reddit and Arbitrum to enable users to pay gas fees on Reddit's "Community Points" tokens with fiat currency.
Community Points, which will be released in 2020, are blockchain-based Reddit assets that enable users to share prizes and participate with the social site. Community Points enable subreddits to reward active users and make governance decisions.
Reddit is an excellent site for retail crypto investors, as crypto was the most popular topic on the platform in 2021.
The rollup solution Arbitrum won a contest in July last year to design an Ethereum rollup for Community Points. It is currently launching on Ethereum's mainnet, the group announced Tuesday.
Community Points transactions, like all layer-2 rollups, are settled on Ethereum, and Reddit enlisted the expansion-minded FTX to enable users to pay Ethereum's transaction costs using cash.
Amy Wu, the head of FTX Ventures, stated in an email, "Users need Eth for gas costs to transact with their Community Points on-chain, and FTX Pay enables them to do so."
For now, Community Points are currently only available in the r/cryptocurrency and r/fortnite subreddits, although a waitlist exists. Similar to how users earn "Karma" for upvoted posts, Reddit distributes points to active users.
Top r/cryptocurrency contributors earned 3,774 "Moons" tokens last month, equivalent to around $340 at current secondary market rates.
A representative for Reddit stated that Community Points are exclusively intended for community governance and "reputation points" on Reddit, and that it is against the site's rules of service to sell the tokens.
Offchain Labs CEO Steven Goldfeder and developer of Arbitrum, said he anticipates the emergence of new use cases for Reddit's crypto tokens.
Not only is Reddit introducing Community Points. Others can utilize this as well. For instance, a game creator can announce, "I'm launching a game, and the in-game currency is these Reddit Community Points," Goldfeder explained.
The crypto merger of Reddit is the most recent example of a Web2 corporation adopting Web3 technology, following Instagram's NFT integration extension last week.
Goldfeder stated that Reddit has a vast community. "How do you acquire a billion blockchain users? By leveraging these existing groups and incorporating them into the blockchain."