Reddit About to Beat Facebook, Telegram, and Most ICOs With Actually Useful Token
Also, Ethereum about to get trustless privacy solution, dYdX perpetual futures are live.
|Camila Russo||May 14|| 2||1|
Hello Defiers! Big news in Ethereum land,
Reddit is introducing an Ethereum token to more than 2 million users
Tornado.cash is steps away from becoming trustless
dYdX launches perpetual futures contracts
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Reddit Instantly Introduced Crypto to Two Million People
Reddit is introducing cryptocurrency to reward engagement in two of its communities, which together have more than 2 million members.
So-called Community Points will be distributed in Reddit’s r/CryptoCurrency and r/FortNiteBR communities, also known as subreddits, which have about 1 million members each. Tokens are earned by contributing to these communities with quality posts and comments. So far, gamers have been more enthusiastic about the feature than cryptocurrency fans, as 3.8k addresses have been created for the Fortnite subreddit token, compared with 1k for the crypto one, according to Etherscan.
Community Points are Ethereum-based ERC20 tokens, and users store them in their own Ethereum address, which Reddit calls “Vaults.” Each user has control of their private keys, which means they have full ownership of the tokens they earn, and not even Reddit can take them away. Tokens will be used to redeem items within Reddit (badges, GIFs, emojis, etc.), and can be sent and transferred to any Ethereum address, even if the wallet owner isn’t on Reddit — they’re just like any other Ethereum token.
Image source: reddit.com/r/CryptoCurrency
Reddit, which has over 400 million users, is on its way to become the first major social network to successfully introduce cryptocurrency tokens —the project is on Ethereum’s Rinkeby testnet and not actually on the mainnet yet. For context, Ethereum has a total of almost 100 million unique addresses.
Telegram scrapped its plan to distribute tokens among its 400 million users, after selling the coins for $1.7 billion in 2018. Facebook has delayed and watered down plans for Libra. Both efforts buckled under regulatory pressure.
Difference With TON or Libra
The difference here is that Reddit is giving instant use to its tokens, and isn’t selling them in exchange for money or crypto —which should ease regulators’ concern. Points are also specific to their different communities (the crypto subreddit’s tokens are called MOON, while the Fortnite ones are called BRICKS), and their value will move following activity in each group. This is different from Libra, a stablecoin, which when used by Facebook’s over 2 billion users for payments, regulators fear could threaten national currencies.
The other difference with Libra is that Reddit’s Community Points are tokens on the public Ethereum network, which US agencies have already deemed decentralized enough for ether to be considered a commodity. This compares with Facebook’s permissioned network, which regulators worried could be abused by the tech giant to collect even more data about its users.
Reddit also proved that a non-blockchain company can be more effective than most so-called Web3 apps in delivering the same message: the internet has been co-opted by large corporations which extract every bit of data and attention they can get from us in exchange for ad dollars. We’ve let them “spy, manipulate and censor” us. It’s time to create a free, interconnected, global community, where each user is in control. Its presentation is a lot clearer than pitches by most dapps, and doesn’t mention crypto once.
Image source: reddit.com/community-points/
Why is Reddit Doing This
Reddit may be hoping to increase user engagement and to position itself as the forward thinking social network. It also stands to economically benefit from this tokenized model.
Initially, 50 million Points will be distributed based on so-called “karma,” or reputation, earned in the subreddit to date. Points will then be distributed every four weeks based on how much karma each user earned in that period. And here’s how Reddit benefits: it gets 20% of the tokens distributed each cycle.
The amount distributed will continue to decrease so that the total number of Points will approach a maximum cap of 250 million. Points are also burned every time they get used to redeem for items within Reddit. A portion of burned tokens are re-distributed when the cap is reached. This cap and “burning” mechanism should help push the token value up.
Image source: reddit.com/r/CryptoCurrency
While dapps and blockchain-based projects have been experimenting with token-based business models for years, Reddit, with its millions of active users, may help prove whether the platform-specific, utility-token model works.
As for DeFi, developers will be able to incorporate Reddit’s tokens to their dapps as soon as they’re on the mainnet. Soon we’ll see Points being used as collateral for loans, added to a tokenized investment portfolio, and traded on Uniswap.
Tornado is Steps Away From becoming Fully Trustless
Tornado.cash, a privacy solution for Ethereum transactions, is about to become fully trustless.
Tornado.cash works as a transaction mixer in which users’ deposits go into a capital pool and are mixed with other users’ deposits. When users withdraw their funds, these cannot be traced to the initial address from where the deposits were made. To achieve this the product uses zk-SNARK technology, which requires a procedure —the so-called “Trusted Ceremony”— where prover and verifier keys are generated to guarantee full anonymity. Tornado.cash completed this procedure Tuesday.
Tornado’s public Trusted Ceremony had 1114 contributors, which the project says was a record and compares with less than 200 participants in other similar setup procedures.
While the team still has control of the code behind the application, it plans to modify the operator address in the next “few days” so that it’s not owned by anyone.
Ethereum’s privacy issue
Ethereum and other blockchains have a privacy issue. Transactions are associated with wallet addresses that at a simple view appear to be anonymous, but one data point connecting an individual to an address can be used to trace private information such as received payments, recurring expenses, and total owned assets. Imagine what all of this information could be used if it fell into the wrong hands? That’s especially scary taking under consideration a context in which governments around the world are increasingly starting to monitor citizens due to the COVID-19 crisis.
The Russian team of white hat hackers at Peppersec, behind Tornado.cash, are aiming to fix this by anonymizing transactions on Ethereum’s blockchain. The team’s goal is to make this solution become fully non-custodial, autonomous, free, and censorship-resistant. Also key in its success will be an intuitive interface, as clunky design has often plagued these types of projects.
Tornado.cash is not the only product that has been designed to provide full transaction privacy on Ethereum. According to the State of the mixers: summer 2019 report, there are other mixers in the works such as Miximus, Hopper, and Semaphore mixer. All of them, just as Tornado.cash does, rely on zkSNARKs proofs.
Still, the only one that has achieved significant traction is Tornado. More than $8M worth of ETH in deposits into has been made into Tornado as of today.
There have been previous cases were teams running transaction mixers have had legal liabilities. One of the most well-known cases is Larry Harmon, who created the Helix mixer. Helix was a custodial mixer who charged fees and didn’t run on Ethereum. The full decentralization of Tornado.cash that will happen in the next days could provide some protection.
Tornado.cash has positioned itself as the only transaction mixer with traction and, although it began with just plain ETH transactions and focused entirely on the Ethereum ecosystem, they quickly added ERC-20 support. At the moment it runs with ETH, DAI, USDC, and USDT but others such as WBTC could also follow, which could open the gate to expand its reach to other blockchains, too. At the end of the day, privacy concerns are not blockchain specific, but industry-specific, and products like this could prove to be useful for the industry as a whole.
dYdX Perpetual Contracts Are Live
dYdX’s perpetual bitcoin futures contract are now live and open to the public after running a private test version for the past three weeks, the decentralized exchange said in a post yesterday. Almost $5M has been traded since going into the so-called Alpha, with $3M of that coming since Sunday, dYdX said.
Perpetual contracts are the most widely traded product in crypto and dYdX is enabling users to trade them in a decentralized, non-custodial platform. Perpetual bitcoin contracts will be rolled out first, while ether and Dai contracts will come next. The contract’s price is tethered to BTC, which opens the door to other synthetic, non-Ethereum assets to be traded on the platform.
Traders have flocked to perpetual crypto contracts to access the price movement of the underlying asset, with the added benefit of being able to take on leverage to maximize their profits (if the market moves their way). Not having to worry about expiry dates makes the process easier.
Trouble among neighbors in decentralized, virtual world Cryptovoxels is much like trouble with your real-life neighbors.
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About the founder: I’m Camila Russo, a financial journalist writing a book on Ethereum with Harper Collins. (Pre-order The Infinite Machine here). I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.