Reddit non-fungible tokens (NFT) have dominated conversation in cryptocurrency markets this week after they generated $2.5 million in daily trade volume and prompted 3 million people to sign up for NFT wallets on the social media platform, Coinbase (COIN) said in a report Wednesday.
NFTs are digital assets on a blockchain that represent ownership of virtual or physical items and can be sold or traded.
“Facebook, Instagram and Twitter all have NFT integrations, but those initiatives focus on ‘showing off’ NFTs purchased from marketplaces and adding your favorite as a profile picture,” however, Reddit’s NFT marketplace makes it a direct participant, the report said.
Reddit’s strategy also focuses more on its community as it gives extra features to NFT owners and supports creators, the note said. It is airdropping – or giving away – NFTs to the more active users on the platform.
The role of the Polygon blockchain is also key, Coinbase said. As a layer 2 blockchain, it is compatible with Ethereum, while allowing users to transact more quickly and for lower network fees, thereby “addressing two major barriers to crypto adoption.”
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Even as NFT sales volumes have plummeted this year, dropping 97% from the January peak, Reddit’s success shows the potential for these tokens, the note said. The company is likely to capitalize during the current slowdown, and has already started teasing its Halloween avatar collection, the note added.