Crypto.com has significantly slashed its card rewards, driving the value of the CRO token down considerably as the community had a less than welcoming reaction to developments. The changes are set to go into effect from the 1st of June.
Significant Revisions To Staking Rewards
Crypto.com has revised its card and staking rewards, sending the token value tumbling by nearly 11%, coupled with significant backlash from the community, with changes set to go into effect from the 1st of June. Crypto.com announced the news in a blog post published on Sunday.
The post stated that rewards on the usage of its Visa-enabled cards based on the tiers offered. According to the new revision, lower tiers, including Midnight Blue and Ruby Steel, will get 0%. Royal Indigo and Jade Green would get 0.5%, while Icy White and Frosted Rose Gold would get 1%. The highest tier, Obsidian, would now get only 2%. According to the company, monthly rewards on lower tiers would also see a cap from $25 to $50, while higher tiers would not feature a rewards cap.
Additionally, staking rewards on Crypto.com’s cards would cease once the 180-day period is completed for those who staked on the 1st of May or prior. This would not apply to cards of the two lowest tiers.
A Steep Drop In Rewards
The new rates represent a steep drop compared to Crypto.com’s current rates, which are 1% on the lower-tiered cards and go over 8% on the highest-tiered card, depending on the funds staked. The platform’s prepaid cards are hugely popular within the crypto community, enabling users to use supported stablecoins or cryptocurrencies and spend fiat through Visa merchants.
However, Crypto.com has not modified other benefits on the cards, including cash backs on subscription services and complimentary airport lounge access, which are set to continue. Interest rates on Crypto.com’s Earn product has also not been changed. Earn allows users to earn interest of up to 14% on their crypto holdings.
Community Not On Board
Crypto.com’s card users were not too thrilled about the developments and expressed significant dismay in social media posts on Reddit and Twitter, with highly critical comments. One user stated,
“I’m going to continue to use the card for the remainder of my staking period and then unstake and say goodbye to the card.”
While another added,
“Not the end, but they just lost a lot of customers.”
Others stated that yield rates offered on decentralized finance (DeFi) applications were lucrative as use of idle capital.
CRO Token Tanks
Following the news, CRO, Crypto.com’s native token fell 11% in 24 hours, with most of the losses coming after the news of the modification in rewards was announced. CRO was trading at $0.36 on Sunday and fell to $0.29 during trading hours in Asia before staging a slight recovery. Analysts concluded that the lack of rewards after the announcement contributed to a lower value for the CRO tokens, resulting in a significant loss of value.
Product manager at dHEDGE, Edson Ayllon, stated,
“Staking CRO tokens enabled rewards for users and incentivized the use of their debit card. Reducing cashback rewards reduced the intrinsic value proposition of CRO. This is similar to how DeFi protocols use liquidity mining to attract assets. It’s often intended to bootstrap liquidity, and we see in DeFi that when the incentives dry up, often the token price takes a hit.”
So far, there has been no comment from Crypto.com.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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