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I never knew about this and, as others said, they may have been doing this for a while, but I'd say OP still has a point when they said:
This is the sort of thing they work on instead of their shit app. They've had years to improve that app. Longer than NFTs.
They want everyone to use their shitty app so yours forced to see the avatars of other posters, thus subliminally making you want an avatar to "fit in"
When I used infinity all you saw was the username of who made a post or comment, and the content they posted itself. You don't need avatars for reddit, its an anonymous website(for now)
And also ads. They also really want people to see unavoidable ads
They didn't even give app developers the option of showing Reddit's ads.
Well yeah, like I said, they (read: spez and tencent) are pursuing quarterly rapid growth over viable long term solutions. But instead they are burning their business
And copying and idolizing another guy who doesn't know what he's doing at the former birdsite.
At least Zuck knows when to shut up.
In the few months before the end I kept seeing people inexplicably complimenting other people's avatars. I wasn't sure what that was about until this, and now I wonder if they had people intentionally doing so to make others jealous or something.