Hello Friends 👋🏽,
A warm welcome to the 47 new subscribers who joined us last week! If you haven’t subscribed, join 839 crypto-curious members by subscribing here:
The One Big Idea newsletter is powered by Rug Radio, the world’s largest decentralized media company, changing how creators build, distribute, and own their content. A platform built for creators by creators. To learn more about this creator's first community, visit Rug Radio at https://www.rug.fm/.
So first off…let’s address that last paragraph. I’m thrilled to partner with Rug Radio to bring my newsletter and podcast to the next level. Farokh and his team have continually demonstrated a commitment to elevating independent voices in web3. With their support, I will be able to boost both the quality and reach of my content. We have a lot coming, so stay tuned.
Second, we have a collaboration coming down the pipes later this week. Make sure you are subscribed to the newsletter and podcast to hear more when it drops on Wednesday.
Lastly, my sincere apologies for the abundance of emails last week. Publishing my draft was a gaffe; I felt it was important to notify you all to ensure you knew it was not a finished product. You should hear from me twice per week. Once on Mondays for the newsletter and once on Wednesdays for the podcast. This schedule may fluctuate a bit as we get into a rhythm but, I want to set expectations for you all.
Let’s get into this week’s One Big Idea: Expressing Identity.
Reddit Avatars, “digital collectibles” (NFTs, cough cough), took the Web3 world by storm last week. With over 3 million wallets owning a customizable on-chain Snoo (Reddit’s mascot), the collection is bigger than all wallets purchased NFTs on OpenSea…combined.
Some are calling this the trojan horse moment for NFTs. For the technology to assimilate into Reddit’s community, one whose anger towards NFTs is well documented, is a win for any who hope for mainstream adoption. Yet, most of Crypto Twitter is missing the point entirely. While degens rush to bridge their ETH to Polygon for a chance as snagging a rare, many in the Reddit community are amused at our lack of understanding of what’s truly going on here.
The truth is the broader web3 community is working under the wrong mental framework. This isn’t about rarity and flipping. It’s about identity.
Reddit won by copying the Fortnite playbook.
What Are Reddit Avatars
Before we dive into what that playbook is, let’s do a quick refresher on Reddit Avatars. Believe it or not, the Reddit community has been customizing their avatars for years. These Snoos served as a user’s profile picture for use across Reddit. User’s had free and premium options as part of their Reddit subscription.
In July, the Reddit team made some pretty significant updates. With the introduction of “Collectible Avatars,” Reddit enabled independent artists to create limited edition runs of avatars. These avatars were fully customizable and available for purchase via credit card (versus being a part of a subscription), with proceeds flowing back to creators. These avatars also unlocked special benefits on the platform and would be visually unique due to their hex shape (versus circle for regular avatars).
And here’s the kicker…for the first time, users were given commercial rights to their avatars. Backed by blockchain tech (Polygon), users were free to take their purchased avatar off Reddit and use it (or sell it) elsewhere. A purchase of an avatar prompts a user to create a Vault, a crypto wallet to store their collectibles.
The first generation of limited edition Collectible Avatars launched in July and took several weeks to sell out. Knowledge of these new NFT collections was relegated mainly to Reddit forums. Then, two weeks ago, Gen 2 dropped and sold out within days. By Sunday, Crypto Twitter was salivating at an opportunity to generational wealth, pushing these collectibles to the top of the NFT charts.
I believe most of these degens will learn a hard lesson and become exit liquidity for some unsuspecting but loyal Reddit community members.
These avatars were never about financialization. They were about identity.
Copying the Fortnite Playbook
With 400 million registered users, Fortnite is an absolute juggernaut. At the same time, a highly entertaining Battle Royale game, the real secret sauce of Fortnite is rooted in its approach to skins. Fortnite enables users to mix and match their favorite IP. Have you always wondered if Darth Vader could beat Goku in a fight like this ill-tempered person?
Easy buddy. Still, wonder no more.
Awesome right? Here’s the problem. This is your character.
Yeah…pretty mid. The above is a base character. Free for all users. Vader and Goku are premium skins. So how do you get access to them? Playing a lot (Boo!) or paying a small amount (Yay!). With revenue of $5.4 billion last year, many people chose the second option.
Okay, I just threw a lot at you, so let’s summarize the Fortnite playbook.
Identity > Financial Gain: People want skins because they are fun! The utility is enhancing the experience. While there is space for financial gain (more on that in a bit), it’s imperative players’ core incentive is grounded in the skin’s usefulness as a tool for expression.
A Place to Convene: A skin only you can see is like a poster you keep in your closet. People want to see and be seen. In fact, with the introduction of Party Royale, Fortnite has transformed from a game to a social platform. Now players jump on to hang out with their friends and use their skins as status symbols.
Premium Upsell: Fortnite is free-to-play. Anyone can use a base tier avatar and start chopping wood. These free users are essential to maintaining a healthy ecosystem (no one likes an empty party). The magic of Fortnite comes in delivering premium skins for purchase. Players are happy to fork over their money to play out their fantasies of striking someone down as Darth Vader.
Minimal Purchase Fricton: If you have an online console, you already have a credit card on file. Fortnite doesn’t make you jump through hoops to take your money.
Sustainable Business Model: With a near-endless amount of licensable IP and original ideas, Fortnite can release new premium skins forever.
The Reddit Playbook - Like Fortnite, But Better!
Now let’s copy pasta this playbook for Reddit.
Identity > Financial Gain: Reddit users have used avatars for years to express themselves. Financialization was only introduced after community members saw real value in using avatars as identity.
A Place to Convene: Reddit’s social platform serves as the hub for expression. By displaying the avatars next to the username on each post, Reddit has incentivized users to make their profile unique.
Premium Upsell: Reddit-free avatars serve as a base layer of identity for everyone to participate. But with collectible avatars, Reddit adds price and scarcity to drive value for holders.
Minimal Purchase Friction: Reddit enables users to buy avatars with a credit card. No Coinbase or MetaMask is required. Regular users are purchasing avatars, not just degens.
Sustainable Business Model: Reddit has released two generations of Collective Avatars, with more in the works. Unlike most NFT projects, Reddit has established an expectation of releasing more skin types over time.
Now. Let’s look at how blockchain enables Reddit to improve on the Fortnite playbook.
Ownership: Unlike Fortnite skins, users own their Reddit collectibles. Not only are they free to take their avatars off Reddit and display them for personal use, but they can sell them! See, I told you there was a place for financial gain.
Interoperability: Building Reddit Collective Avatars on-chain means the potential for users to be able to use their Snoos across Polygon. This means we could see these avatars as playable characters in games or for exploring the metaverse in the future.
Freedom to Exit: On-chain value accrues to holders and can be freely exited at any time. Compare this to Fortnite, where your super rare skin’s value is always locked within the game.
This Week’s One Big Idea - Express Identity
I believe Reddit’s play for social engagement that builds on existing behavior and creates a place for a new form of social interaction serves as a model for how mass adoption will happen for Web 3.
The Reddit playbook for NFTs has established an excellent pathway for users to embrace a new world of digital collectibles without much friction.
Thank you for reading this week’s One Big Idea. Be sure to claim your free OG Status NFT on Polygon at onebigidea.xyz before the claim window closes later this year!
If you enjoyed this week’s edition consider subscribing to The One Big Idea podcast on Youtube!