The world’s sixth-largest exchange has shot itself in the foot by announcing substantial reductions in rewards for its Visa cardholders, causing CRO price to tank.
Crypto exchange Crypto.com announced severe reductions to CRO staking rewards for most tiers of its VISA prepaid card which has forced the token price to fall around 30% in less than a week.
Its May 1 blog post explains that card rewards will be reduced by an average of 69.5%, and 100% on its lowest tier Midnight Blue card “to ensure long-term sustainability.” On its highest tier Obsidian card which requires at least $400,000 in CRO to be staked, rewards will drop from 8% to 5%. Changes to the rewards schedule will begin on June 1.
However, cardholders who had an active six-month stake before May 1 will not see their rewards schedule change until their current term expires.
In addition to rewards rates, there will also be a cap set on three tiers of cards. The Ruby Steel tier will have a $25 per month limit while the Royal Indigo and Jade Green cards will have a $50 monthly limit on rewards.
Current stakers are irritated by the exchange’s sudden move to change the rewards. High-profile staker Devchart told his 170,000 Twitter followers on May 2 that the exchange’s decision was “the dumbest move of the day.”
And for the dumbest move of the day, https://t.co/2VyM3mIsbK $CRO decided to reduce their staking rewards, add some stupid monthly cap reward that removes staking incentives.
Thankfully I just care about the crypto to debit for my expenses but yeah that was a moronic move. pic.twitter.com/qhhpatlpsi
— Devchart (@devchart) May 1, 2022
In response to the backlash from the community, Crypto.com CEO Kris Marszalek tweeted on May 3, that planned changes would be adjusted to reflect “a more balanced approach.”
He said that rather than issue individual changes per tier, Private Members who use the Obsidian, Icy White, and Frosted Rose Gold cards would receive an 8% annual yield. Royal Indigo and Jade Green holders would have a 4% annual yield. This adjustment has not yet been confirmed on the exchange’s blog.
Instead of eliminating card staking earn rates completely, we will offer a more balanced approach: 8% APY for Private Members (Obsidian, Icy White, and Frosted Rose Gold) 4% APY for Royal Indigo and Jade Green card holders
— Kris | Crypto.com (@kris) May 3, 2022
When Cointelegraph asked the exchange about how much more sustainability it expects to gain from rewards reduction, a Crypto.com spokesperson responded via email:
“Crypto.com is committed to offering the best possible products and services that meet the needs of our customers around the world. Our recent changes were made to bring our substantially scaled programs closer to long-term sustainability, and we continue to provide attractive rewards and opportunities to our customers.”
The news has had a clearly negative impact on the price of CRO, the native token for Crypto.com’s CRONOS blockchain network. CRO price began tumbling on May 1 from $0.36 at the start of the day to $0.28 as of the time of writing according to Cointelegraph data. It has lost a whopping 30% over the past seven days according to CoinGecko.