In the past week, we’ve seen two major catalysts within the Ethereum ecosystem coming from mainstream companies like Visa and Reddit.
Reddit Launches Community Points
First, Reddit launched the initial trials for “community points” – ERC20 tokens used to incentivize and reward contributions within certain subreddits. The Reddit trials are launching with two prominent communities combining for millions of active users – /r/cryptocurrency and /r/FortniteBR.
BREAKING: Reddit introduced about 20M new users to cryptocurrency or their own token in a matter of seconds.
Thousands of popular websites, likely thousands of tokens.
— CZ Binance 🔶🔶🔶 (@cz_binance) May 14, 2020
While the launch of Community Points on /r/cryptocurrency is rather intuitive, the more notable release of these points is to the Fortnite Reddit community.
For the most part, the launch of the Fortnite community points – BRICKS – targets the Gen Z crowd. These are kids and young adults who’ve grown up playing video games features web2 digital assets like virtual currencies (in this case Fortnite’s VBucks) and other in-game assets like skins and cosmetics.
The key takeaway with these trials is that Reddit is potentially introducing millions of new users to the DeFi and Ethereum ecosystem – starting with those who may already be familiar with digital economies. Ideally, the launch of BRICKS and MOONS will introduce the potential of Ethereum and the new paradigm it can provide with digital economies ubiquitous in today’s video games via the ERC20 and ERC721 standard.
With the DeFi ecosystem only comprising for less than 150,000 users (which is a generous estimate), if only a sliver of Fortnite’s 1.3M subreddit users realizes the potential for Ethereum, it could drastically increase the existing user base.
The trials will start with the tokens living on the Ethereum testnet, hopefully with plans to launch on mainnet following rigorous testing.
Visa Files Patent for Ethereum-based Stablecoin
The other notable piece of news this week comes from the payment giant – Visa – who’s looking to file a patent for a “digital fiat currency”.
— The Block (@TheBlock__) May 14, 2020
The framework employs a “central entity” who retains the right to “maintain control over the monetary system”. Throughout the patent application, Ethereum is mentioned multiple times (as well as Hyperledger Fabric) as a potentially key piece of technology for Visa’s digital currency patent.
It’s important to note that the patent doesn’t explicitly state that it will leverage the public Ethereum blockchain for its “digital fiat currency”. As stated in the patent:
“In some embodiments, Ethereum may be used to implement various aspects described herein”
Equally important, just because Visa filed the patent doesn’t necessarily mean we’ll see a Visa stablecoin in the future as not all patents necessarily lead to new products. However, it does make it readily apparent that Visa and others are exploring fiat-backed stablecoins as a future alternative for sovereign currencies.
The Key Takeaways
There’s an increasingly bullish case beginning to emerge for DeFi and Ethereum at large. The news of both Reddit and Visa exploring potential implementations for the technology may be one of the driving catalysts for the next market cycle.
That said, it’s important to understand that these are likely multi-year long roadmaps for both companies. Reddit launching community points to the thousands of subreddits and Visa releasing a “digital currency” will not happen in the next week and it may not even happen this year.
But, there’s no doubt that major companies across the world are genuinely exploring and understanding the potential for our nascent industry.
With EY building NightFall, ErisX launching CFTC-regulated Futures, Reddit exploring Community Points, Visa seeking to file a stablecoin patent, there’s a common theme among all of them.