- >CRO Price Spikes as Crypto.com Announces Biggest Token Burn Ever
CRO Price Spikes as Crypto.com Announces Biggest Token Burn Ever
In a surprise announcement, Crypto.com announced that they have burned 60% of the total supply of CRO. An additional 10% of the supply will be burned on a monthly basis as tokens are unlocked from smart contracts.
This news catapulted the price of CRO to highs not seen since last August. If that were not enough, Crypto.com announced the launch of their long awaited mainnet. Crypto.org chain will be launching on March 25th, after January’s successfully testnet dry run. According to Crypto.com’s founder Kris Marszalek, this is the largest token burn in history.
Keegan Francis | Feb 23, 2021
Crypto.com Year in Review
The last 12 months have been quite huge for Crypto.com. For starters, their user growth has been rising aggressively since the launch of their app in 2018. For perspective, in September 2019, they had just 1 million users on their platform. Now they have secured more than 5 million users worldwide.
In the last year, Crypto.com has dropped several changes to their platform without giving their users notice. One example being the MCO to CRO swap. This caused many users to turn away from the platform and become sour with the management team of Crypto.com.
While Crypto.com may have issues with communicating with their users, they have a perfect track record with handling mishaps. After the Wirecard scandal in August, they restored full functionality to their cards just days after the event. After users were outraged when Crypto.com slashed rates, management re-adjusted to better suit their users sentiments.
The biggest point of contention was the MCO/CRO swap. The main issue that users had, was that they were forced to swap a token with a supply of 30 million, for a token with a supply of 100 billion. With this 70 billion token burn, whatever contention that existed with these users is now free to evaporate.
What is a Token Burn?
A token burn is when the controlling entity of a token permanently removes a certain amount of tokens from circulation. Those tokens are forever removed from the total supply, and can never be recovered by the founding team, or anyone else. Token burning is a regular occurrence in the cryptocurrency space.
There are several reasons why a company may want to do a token burn. Since the tokens of an ecosystem (like Crypto.com’s) is the lifeblood, it is in their best interest to bring as much value to that token as possible. Because scarcity is a highly valued attribute in the world of cryptocurrency, permanently destroying tokens increases the scarcity of the token.
Both Binance (BNB), and Stellar (XLM) have used the token burn strategy. Binance uses a portion of fees generated from the exchange to buy back and burn BNB tokens. Binance does this on a monthly basis. Since the beginning of their exchange, they have burned almost 30 million tokens, or 15% of the total supply. Stellar on the other hand held the previous record for most tokens burned at once (50 billion XLM). Both projects are consistently top 20 projects and have proved the token burning model for others (such as Crypto.com).
Massive Price Recovery for CRO
Some users were in the process of totally writing off the success of CRO and Crypto.com in general.
The Crypto.com Reddit board was not a friendly place for CRO holders during the months of August to December. During this time, CRO lost 75% of its value in USD terms, and 90% of its value in BTC terms.
CRO managed to recoup some of its losses from January onwards. This is likely due to Crypto.com user growth and secondary effects from the monumental rise of Bitcoin. As of today (the day after the token burn), CRO has returned to all-time highs in USD terms. The days of seeing CRO at 15000 satoshis (.00015000 BTC) may be long behind us.
Crypto.com Mainnet Set to Fuel Ecosystem
The Crypto.com Mainnet, or “Crypto.org Chain” is set to be the center of the Crypto.com ecosystem. The CRO mainnet staking rewards are set at 20% APY. This means that if you want to earn a 20% APY on your CRO, you can lock them into the Crypto.com DeFi wallet, and help secure Crypto.Org Chain.
This attractive interest rate used to be shared by users of the exchange, and Crypto.com three-month Earn terms. Crypto.com slashed these rates in September much to the dissatisfaction of their users. In hindsight, Crypto.com’s plan starts to make sense. Everything they were doing was in preparation for a massive token burn, and handsome interest rates for the center of their ecosystem.
The Crypto.Org chain aims to be a lot like the Binance Smart Chain. That is, a faster, cheaper, more inclusive version of Ethereum. Although the Ethereum 2.0 hard fork has been announced, it is still losing ground to the other players in the game, most notably Binance. The Crypto.Org chain is said to focus on Full Decentralization, High Speed, and Low Fees. Built for payments, DeFi, and NFT’s.
What is Next for Crypto.com?
The company Crypto.com will no doubt still exist alongside the Crypto.Org chain. The roadmap for Crypto.com is starting to look a lot like the mission statement put forth by Binance. Changpeng Zhao (CZ) has stated that he would one day like to see Binance completely run (and defend) itself.
What we are likely to see is Crypto.com operating the business, merchants, and VISA Debit card side of the business. Crypto.Org Chain and the community around it will handle the DeFi side of things. That includes decentralized payments, loans, decentralized exchanges, and NFTs. One thing is for sure, the amount of momentum that Crypto.com has built up in its short four-year journey is impressive. It will be interesting to see how Crypto.com moves forward, especially with heavy competition from Binance (which has seen massive adoption numbers in 2021).