In a statement that is likely to raise eyebrows and invite close scrutiny on Oct 21, leading influencer and cryptocurrency analyst Alex Saunders has raised serious doubts on the long term viability of Crypto.com and the CRO token. He warned that the token lacked any real purpose and that the project’s business model is unsustainable.
A while back I warned about the coming failure of @cryptocom. Neither token had any utility, they'd need to slow real withdrawals & their unsustainable model relies on promoting $CRO to have value. They claim 5M users? With 50k addresses & 500 DAU? I fear collapse is near. 🚨⚠️📉 pic.twitter.com/KmbZVMEmf7
— Alex Saunders 🇦🇺👨🔬 (@AlexSaundersAU) October 20, 2020
He further stated that the project’s value is coming from the promotion and sale of the token, rather than any organic development of the business. The Crypto.com team has claimed a total of 5M addresses, but the total daily active addresses and resultant users count puts the officially cited figure into question. It can be clearly seen that both of the metrics show an entirely different picture.
Crypto.com (formerly MCO token) requires users to stake their CRO tokens in order to acquire their crypto-debit cards in liquidity pools for the platform’s native liquidity pool and as fixed-term deposits for yields. It ensures that the majority of the supply is locked on the platform. Therefore, while the CRO token is traded on most major exchanges, its liquidity and trading volume remain low.
CRO Price Has Gone Down 35% In A Month
To make matters more complicated, the token price isn’t helping things. CRO tokens have a total supply of 100 billion, out of which, only 20 billion is in circulation. The tokens are slowly released into circulation as rewards for staking or the team is unlocked. Obviously, this creates inflationary pressure, ensuring that the price goes down in the long run unless demand rises up proportionately.
We heard the community feedback and updated #CRO staking rates:
2%➡️4% 1 Month
4%➡️6% 3 Month
6%➡️10% 6 Month
✅Longer notice will be given for important changes in the future.
✅We'll host an #AMA w/ @Kris_HK 21 Oct @ 3pm HKT
More: https://t.co/wzQL7YNeLN pic.twitter.com/Keqa0aPSWG
— Crypto.com (@cryptocom) October 15, 2020
Despite the Crypto.com Coin maintaining the 15th largest cryptocurrency position by market cap at $2.1 billion, it has a relatively low trading volume of merely $ 40-60 million daily, with the bulk of trading occurring on its own exchange. Furthermore, the price has gone down 35% since last month following the team’s announcement on the reduction of staking rewards by 70% on Oct 15.
LOL as if we couldn't see that coming.
Big lock up periods for stakers with huge APYs advertised.
Yet the can somehow afford to do half price crypto sales and pay a raft of crypto influencers along the way.$CRO 🧐 Likely insolvent within 12 months. https://t.co/AeGjYEwyT9
— DeFi Ted (Bakes) (@DeFi_Ted) October 15, 2020
For obvious reasons, users aren’t happy with the development. Some noted that it seems to be the company’s business model to attract people first and then lower down the rewards after significant milestones. However, analysts believe that regularly toning down rewards is crucial for long term sustainability.
As this happened at least 2x within a short period already, it makes me think this has been your strategy all along – changing to ridiculously unfair rates then a day later increasing it to an "acceptable" level to appear you're "listening." Doesn't really inspire confidence.
— Felip 💙🧙♂️🔴 (@AmadoFelip) October 15, 2020
Crypto.com Is Not All Gloomy
But, even with the recent tokenomics and price troubles, there’s no doubt that the Crypto.com debit card actually works. They are also said to be in contact with Visa and Mastercard, to renegotiate deals and enhance functionality for their payment processing services.
The team recently introduced the PayID service (similar to Ethereum name service), which allows users to bypass the complex wallet addresses. However, the team’s responses to these allegations need to be seen.