Layer 2 and FTX Are Being Utilized By Reddit In Order To Create A Community Token

A Social Media Giant Is Going to Launch ERC20 Tokens Based on Arbitrum.

Alongside the launch of Reddit's Community Points program on Tuesday was the introduction of Arbitrum Nova, a Layer 2 blockchain with the objective of enhancing the gaming and social media experiences on Ethereum.

Popular social media platform Reddit, which has 400 million monthly users and hundreds of thousands of subject-specific communities known as "subreddits," will enable its communities to issue Ethereum-based tokens known as Community Points. These tokens will be used to reward users for participating in the platform's various activities.

The social media giant claims that a subreddit can encourage engagement and create polls that give dedicated, long-term users added weight by setting rules that determine how its Community Points are allocated. In addition, the subreddit can set rules that determine how its Community Points are allocated.

According to Offchain Labs, the startup producing Arbitrum, Reddit chose Arbitrum Nova as its partner after it triumphed in a competition titled "The Great Reddit Scaling Bake-Off" over a number of other Ethereum L2s.

"Nova is the ideal chain for projects with cost-sensitive and high transaction volume expectations," Offchain Labs said in a news release. "These projects include games that frequently mint new items and currency, or social projects with different levers for on-chain interactions," Offchain Labs continued. "Nova is also the ideal chain for projects with low transaction fees and high transaction volumes."

Layer 2 blockchains, such as Arbitrum and Optimism, are designed to overcome the deficiencies of Ethereum, such as its prohibitively high transaction costs and its congested network.

Reddit has formed a partnership not just with Nova, but also with the cryptocurrency exchange FTX. Users who do not have enough Ether in their wallets to cover the transaction fees that must be paid in order to transfer Community Points will be sent to FTX Pay in order to add more Ether to their balances.

According to FTX, the cryptocurrency subreddit and the Fortnite videogame subreddit will be the first places where users may purchase Community Points after they become accessible.