But what will happen when the lunar-themed crypto transitions to the Ethereum mainnet? Will it live up to its name and moon in price or will a dramatic crash see Redditors left holding worthless tokens?
What Are Reddit MOONs?
Back in May 2020, a new rewards system called Reddit Community Points (RCP) was announced on the social media site. RCPs can be earned for contributions to Reddit, similar to Reddit karma – with the difference being that RCPs exist on the blockchain as ERC-20 tokens and so can have a real-world monetary value.
Each subreddit can have its own stylized RCP and the first two to be launched were the MOON token for r/cryptocurrency and the BRICK token for r/FortNiteBR.
Reddit distributed the first 50 million MOONs to users based on karma earned in the cryptocurrency subreddit, with 5 million MOONs distributed the following month and issuance decreasing by 2.5% each month thereafter.
Karma points earned for posting, commenting, and otherwise contributing to the subreddit, provided the initial basis for MOON distribution, but the final decision lies with the r/cryptocurrency community.
Do MOONs Have Value?
At launch, the value of MOONs was mainly as an internal reward system. Users can tip each other with the token and MOONs earned can be used for benefits such as displaying reputation within the subreddit, adding weight to votes in polls, buying special memberships, and unlocking exclusive features like badges and rewards.
As crypto assets, MOONs can also hold monetary value, but extracting this value is currently very difficult as the testnet MOONs can’t be traded on exchanges. Decrypt’s Tim Copeland managed to turn his MOONs into real value by converting them to xMOONs on the xDAI chain, swapping them for xDAI, and then converting those xDAI to regular DAI on Ethereum.
The process is somewhat convoluted, expensive and potentially risky, meaning most MOON-holding Redditors haven’t bothered to attempt it. Copeland did, however, manage to end up with $2,000 in DAI, showing that spending all day on Reddit can pay off after all.
Since being listed on CoinGecko in October 2020, MOONs went from a price of about $0.07 per coin to surge to over $0.40 in August 2021.
From Rinkeby to the Ethereum mainnet
Towards the end of July this year, Reddit MOON devs announced that the tokens would be moved to a new scaling network, bringing the eventual migration to the Ethereum mainnet one step closer.
The mainnet launch is awaited with anticipation and interest by Redditors and external crypto enthusiasts alike. The major change will be that MOONs will be tradeable on exchanges, and what effect this will have on MOON price is up for debate.
Given how difficult it currently is to cash out MOONs, the trading volume and liquidity have been very low, meaning a single large trade has the power to move the market – which may somewhat explain the sudden pump to above $0.40 in August. Following the migration, larger trading volumes and market-wide supply and demand will decide the real value of MOON.
On the one hand, interested investors will be able to easily purchase MOON, while exchange listings could drive awareness and confidence in the token among the wider investor community. However, on the other side of the argument, the many Redditors who have amassed MOONs and thus far been unable to sell them could immediately dump their tokens on the market the first opportunity they get.
The question is how these two reactions will balance out. As one Redditor pointed out, “It’s possible that there will be more people wanting to cash out their freebies, which is what most people hope to do eventually. Than people looking to buy moons, especially if people keep getting them for free every month.”
The Future of MOONs
The sheer volume of Redditors with MOONs and the possibly more cautious nature of potential new investors could well mean a price crash when MOONs migrate to the Ethereum mainnet. However, the popularity of Reddit and the enthusiasm shown so far for MOONs likely mean the token isn’t going away any time soon.
What’s more, the scarcity of MOONs and their decreasing supply from token burns may provide a decent long-term value proposition, despite the possibility of negative volatility in the short term following mainnet launch.
