One of the most prominent cryptocurrency exchange, through heavy advertising spending and sponsorships, Crypto.com, announced May 1st 2022 that they will drastically slash their CRO Visa Card rewards.
The sudden announcement shocked the crypto.com community and the exchange faced harsh backlash from its users as many shared their frustrations online. A major cut was the elimination of the 10% staking rewards for holding CRO, a requirement for enjoying the most benefits from the Visa card. The online community's outpouring of anger forced the company to walk back on the elimination and offer a more "balanced approach". Here is a summary of the changes annnounced effective June 1st, 2022:
Crypto.com Reward Changes
1. Major Cut to CRO Cashback Card Rewards
Users who staked before 1 May 2022 13:00 UTC will continue to receive their current rate until their 180-day stake expires. Thereafter, the revised rates will apply:
Opinion: This is a major blow to the company as the cash-back rewards was one of the main reasons I raved about the exchange. There are other alternatives out there offering better cash-back without locking in funds! For my Canadian friends, check out Shakepay Visa with 2% cash-back in Bitcoin!.
May 5th, 2022 - Crypto.com announced they are "listening to the community" and walking back on the cut for Ruby Steel from 0.5% to 1% and Jade Green/Royal Indigo from 1.5% to 2% which is more reasonable and what it should have been.
2. Monthly CRO Card Rewards Cap
Crypto.com introduced a cap on the amount of cash back you can earn on your spending per month, excluding the cash back from Spotify/Netflix rebates.
Opinion: This cap is not a major dealbreaker in my opinion unless you spend over US$3,333 ($3,333 x 1.5% = $50cap)per month with the New Jade/Royal or $5,000 ($5,000 x 0.5% = $25cap) with the Ruby Steel.
3. Reduction of Card CRO staking rewards
Initially eliminating this benefit, crypto.com went back to revise the stake rewards due to all the backlash it received from the online community and rightly so!
Opinion:This cut deeply hurt their loyal customer base, especially those who have staked for the higher tiered cards.
My Opinion on the Changes
I had high hopes for Cronos to do well this year as I enjoyed using their rewards cards and benefits, the launch of the Cronos chain, and the Crypto.com NFT marketplace. The Cronos ecosystem mirrored that of Binance's token and I believed that they could have rivaled BNB's success.
With the changes to the rewards structure, Crypto.com has lost a lot of customers. Users who have finished their stake, sold their holding as evident by the 25% drop in price after the announcement. What also damaged Crypto.com's reputation is revising the changes not once, but twice in a matter of days. Having to walk back on the changes and claiming to listen to the community demonstrates the incompetence of the management team at Crypto.com. Removing staking rewards for holding a sum of CRO and cutting rewards to offer less than the competition should have never been considered!
More Downside Ahead
In the short-term, CRO may continue to drop in price. Users who joined and staked CRO after the big advertisement push in Nov/Dec of last year will have the 180-day stake be completed by June when the changes take effect. Customers who have lost faith in the exchange can now sell their unlocked CRO, putting downward selling pressure on the coin for the next few months.
Can Cronos CRO Recover?
The question of whether CRO can recover in price is hard to predict and is dependent on whether they can attract new customers into their Cronos ecosystem. With the main incentive to purchase and hold CRO drastically reduced, the cut in the coins's utility means a reduction in buying pressure making it difficult for CRO to recover. After walking back on the reward cuts twice, the rewards are more in-line with the competition improving the hopes of retaining the old and attracting new customers.
Intentional Blunder?
In a business sense, the cut in rewards was a positive step for the company as their reward structure was unsustainable. The way they handled the announcement could have played out better but makes me question if it was intentional:
- Announcement to eliminate staking rewards was to anger long-time investors who got in early. (e.g. those who got in early at 0.07 staking $500k in the highest tier is over 7million CRO - earning 12% stake is giving over 850k CRO a year away!)
- Now they reduce the rewards instead of eliminating them to attract new customers (e.g. purchasing $500k at 0.40 is 1.25million earning the reduced 8% is just 100k CRO a year!)
So was the move intentional or just bad management decision at Crypto.com? Personally I chose to reduce my exposure to CRO as my reason for purchasing it in the first place has changed. Can crypto.com come back from this mishap? Only time will tell.
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