https://fortune.com/crypto/2022/11/03/how-reddit-defied-crypto-winter-and-created-a-10-million-market-for-customizable-avatars-just-dont-call-them-nfts/
Reddit has upended NFT logic by offering versions of its avatar illustrated by different independent artists.
At 2:59 p.m. ET on Oct. 20, when Reddit announced its second generation of collectible avatars, Ethan was ready, phone in hand.
He wanted to try to buy them on his desktop computer, since the iOS App Store takes a 30% cut. A 38-year-old graphic designer living in northern Virginia who asked to be identified by his first name to avoid doxxing, Ethan didn’t like the idea of the proceeds going to Apple instead of to independent artists. Unfortunately, the Stripe credit card integration on desktop wasn’t working for him, so here he was with his iPhone and PayPal account, ready to snag some NFTs of Reddit’s custom Snoo mascot designed by internet creators like Rojom and Foustling.
As Ethan scrolled and clicked through his favorite collections, his bank called, asking if the purchases were fraudulent. He tried to reassure them as quickly as possible so he could get back to the marketplace. He ended up buying around $300 worth, an amount he figured he could recoup through secondary sales, and that his wife wouldn’t yell at him about—a 38-year-old man paying real money for art of online mascots? Really?
The frenzy around the drop, which Reddit named the Spooky Season Collectible Avatars, recalls a rosier era of crypto, circa January 2022, when NFTs were all the rage and people were splashing out millions of dollars, often outbidding one another, to buy pixelated JPEGs of bespectacled primates.
The Reddit drop defies all logic of Crypto Winter, in which overall NFT trading volumes have collapsed by as much as 99%. By allowing artists to create designs of its signature avatar, mint them on the Ethereum-tied Polygon blockchain, and sell them to users who want them as profile pictures, Reddit has onboarded millions of new wallets into the crypto ecosystem and driven millions of dollars in sales, all while avoiding that dreaded label: non-fungible token.
Ethan encapsulates how the social media platform managed to pull off the unlikely success story. Just a few months ago, he would’ve had the same befuddled reaction as his wife at spending hundreds for illustrated avatars. He’s far from an NFT fanboy. As an artist, he was intrigued by the initial hype, creating an OpenSea account back when NFTs first blew up. Still, he never got too involved.
“I felt the barrier was too high, and it was just such a crap shoot,” he said.
Reddit clearly agreed. The platform has been toying with the idea of allowing users to customize its iconic football-shaped alien logo, Snoo, as their avatar for years—Reddit cofounder Alexis Ohanian told Fortune that he first shipped a prototype avatar builder over 10 years ago. Reddit introduced a basic builder tool eight years ago and an updated version two years ago. While the most recent one was integrated with Reddit’s in-platform currency and premium offerings, it was not tied to blockchain technology, which would allow users to trade and sell them on secondary markets, except for a brief trial of four NFTs in June 2021.
Alexis Ohanian, co-founder of Reddit, was an early supporter of the customizable avatar feature.
That changed this July, when Reddit announced the launch of “blockchain-backed collectible avatars,” which it described as limited-edition renditions of its Snoo mascot designed by independent artists that users could buy, mixing and matching different elements to create profile pictures. In the nearly 800-word post, Reddit did not use the term “NFT” once.
“NFTs are widely hated,” one Reddit user told *Fortune. “*Just the name itself has a negative reputation.”
It was a shrewd move to make the technology seem more accessible. “In the future, we see blockchain as one way to bring more empowerment and independence to communities on Reddit,” a spokesperson said. “We are exploring tools to help them be even more self-sustaining and self-governed.”
The announcement post detailed the benefits of blockchain in simple terms. Purchasers would have the rights to use the art on and off Reddit, and the avatars would be stored on the Ethereum-compatible Polygon, meaning purchasers would have “ownership and portability.” In other words, they could sell them on secondary markets like OpenSea.
Reddit also took steps to avoid some of the jargon and difficulty of NFTs. All purchases could be made with fiat currency, and users wouldn’t have to set up crypto wallets. Instead, they would use blockchain-powered wallets built into the Reddit platform—branded “vaults”—that already were integrated into other aspects of the platform, like community points.
Ethan has been a Reddit user for over 11 years, but like most people, he didn’t notice the July announcement. To spur more traction, Reddit began to airdrop the avatars for free to power users in August, which Ethan saw, but he still kept his distance. What caught his attention was the rapid growth of the r/avatartrading subreddit, an unofficial community where users gathered to share tips and make offers for their preferred artwork.