2021-03-20 17:33:14

Everything You Need to Know About Moon – Reddit’s Ethereum-Based Cryptocurrency

Rahul Nambiampurath Hacker Noon profile picture

@nambiampurathRahul Nambiampurath

I help B2B SaaS and fintech companies drive leads with compelling content.

In 2020, discussion website Reddit took the idea of democratizing user-generated content mainstream with the introduction of Community Points. Put simply, these points allow users to be monetarily rewarded for their contributions to the platform and community. On a more technical level, these points translate to digital tokens on a blockchain.

Each participating subreddit on Reddit will eventually receive its own form or stylization of Community Points. To begin with though, the platform’s developers decided that the cryptocurrency community would be the first to get its hands on this new feature. This led to the birth of the MOON token.

Designed to incentivize participation, MOON is a digital currency built specifically to service the r/CryptoCurrency subreddit.

Reddit Karma vs. Community Points

Reddit has long maintained a community reputation system in the form of ‘karma’ points, which essentially represent a user’s earned ‘upvotes’. The introduction of MOON means that users can now also attach a monetary value to their contributions.

Reddit’s vision for MOON tokens and the Community Points program is to encourage high-quality posts, discussions, and engagement. By giving value to a user’s community reputation, Reddit hopes to offer interactive features such as user tipping, prize-based contests, and weighted voting.

Several use cases for MOON tokens have already popped up in the short time since the project’s inception. In September 2020, Reddit admins unveiled enabled MOON tokens to be converted into Reddit Coins. Reddit Coins allow users to award posts and comments, and were formerly only obtainable in exchange for fiat currencies.

Announced in May 2020, the first batch of MOON tokens were distributed to all existing members of r/CryptoCurrency later that month. A total of 50 million tokens were initially disbursed to the subreddit’s existing user base. Claiming these tokens was a manual process though, which means that many users likely missed out on the opportunity to receive their free reward.

Nevertheless, new MOON tokens are now distributed on a monthly basis. The extent of these rewards are based solely on the user’s contributions to the community over the preceding four-week period. Any contribution to the cryptocurrency subreddit is automatically eligible to earn MOON tokens.

New contributions to the subreddit (in the form of posts and comments) start out with 1 upvote, which doesn’t net the user any reward. However, subsequent upvotes from the community translates to token rewards for the contributor at the end of the month.

MOON’s Token Economics Explained

As mentioned previously, a fixed number of tokens are awarded to active users of the subreddit every month. Only a maximum of 5 million MOONs will be distributed each month. Furthermore, this limit will shrink by 2.5% each cycle. Ultimately, only a total of 250 million tokens will be minted and distributed — with a sizable portion of that amount already in circulation.

In this sense, MOON follows a deflationary model similar to Bitcoin and other cryptocurrencies. Tokens with limited supply fare better at preserving their purchasing power, and can even result in the appreciation of their prices. This has already happened with MOON, in fact.

In its mere ten months of existence, the MOON token went from being virtually worthless to having a market cap of a few million dollars. As of March 2021, each token trades for approximately $0.06.

It’s worth noting that Reddit has not disclosed how many tokens each upvote translates to or if the reward ratio is fixed month-to-month. This means that the same number of upvotes can result in varying amounts of MOON tokens awarded from one cycle to another.

Intuitive or Convoluted?

MOON token balances can only be accessed through Reddit’s official mobile applications — on either Android or iOS. Once logged in, users simply have to create a vault and claim their MOON rewards at the end of each month. Reddit offers a more thorough guide on its website here.

Reddit’s Vault is a user-friendly term to describe a cryptocurrency wallet. Like any other wallet, it abstracts the more technical aspects of cryptocurrency ownership. Under the hood though, each user is assigned a randomized private key and corresponding public key or receiving address. As long as the private key is safely backed up, users can restore their MOON balances on any supported Ethereum wallet.

Using MOON tokens on Reddit is relatively straightforward. The vault section offers the aforementioned option to exchange MOON tokens for Reddit Coins. Navigating to the cryptocurrency subreddit, meanwhile, brings up the option to become a ‘special member’ in exchange for 1000 MOON tokens per month. The subscription offers unique perks, including the ability to comment with GIFs, use animated emoji, and show off a colorful username.

Trading accumulated MOON tokens for other digital tokens and currencies, however, can be a bit tricky. This is because the MOON contract lives on a test network. Since testnet coins have no value, users need to trade their MOON tokens for xMoon and exchange that in turn for DAI.

In the future, the MOON contract will officially live on the Ethereum mainnet — making this conversion process a literal thing of the past. For now, however, the most convenient way to spend MOON tokens is on Reddit itself.

MOON: A Shining Ray of Light for Ethereum

Similar to most cryptocurrencies on the market today, MOON has been built on top of the Ethereum network. This means that a user’s MOON token ownership can be easily verified on the Ethereum blockchain. With thousands of daily active users and transactions, this underlying network is extremely secure and trustworthy — second perhaps only to Bitcoin.

All functions of the MOON token, including balance management, transfers, and distribution, are handled by smart contracts. In other words, the entire system has been programmed to run in perpetuity and is free from human input. This eliminates the possibility of nefarious activity or malice — both of which could be risks for a community-driven token.

Reddit’s MOON token showcases yet another promising use case for Ethereum — and cryptocurrency technology in general. While platforms such as Steem pioneered the idea of community-backed rewards, Reddit’s mainstream appeal may finally result in mass adoption. Once the Community Points program reaches other subreddits, millions of Reddit users will finally be able to witness the merits of cryptocurrencies first-hand.

Rahul Nambiampurath Hacker Noon profile picture

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I help B2B SaaS and fintech companies drive leads with compelling content.

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