The MCO Token Swap Explained
It will be useful for the completeness of the article to explain the sequence of events leading up to the MCO token swap, as well as the economics of the swap itself. Please keep in mind that the following interpretations of the events are the opinion of the author, and not representative of the narrative put forth by Crypto.com.
Months Leading up to the Token Swap
In the months that lead up to the token swap, there was no indication from Crypto.com that their MCO token would be discontinued. In fact, Crypto.com led investors to believe that they were simply focusing on CRO for the time being. MCO has been trading sideways, despite the numerous positive sentiments of long term MCO holders. As the price fell, many MCO investors saw this as an opportunity to increase their holdings in order to unlock the next tier of VISA debit cards.
The MCO/CRO Token Swap
The final swap was completed at a rate of 1 to 27, with an optional bonus of 20% bringing the ratio to 1 to 33. For MCO investors that bought at a price higher than about $5.50 USD, this is an outright loss. For everyone else, it is a gain. However, there is a caveat. CRO has been rising aggressively since the launch of the Crypto.com exchange earlier this year. CRO began the year at a price of $.03, and since then has more than quintupled in value.
One reddit user accurately pointed out that in order for this token swap to be maximally beneficial to Crypto.com, CRO needs to be high, and MCO needs to be low.
VISA Debit Card Readjustment
Users that have already achieved higher tiers of the VISA debit card get to maintain their current tier. For the MCO investors that were building their holdings to unlock higher tiers, they will now save to save much longer. In order to unlock the Crypto.com VISA Debit cards, you will now have to hold CRO. In terms of dollar value, the tiers are now 4x more expensive than they were before. This adjustment would make sense, if the token swap was performed at a higher ratio. What Crypto.com has done was penalize those who were saving for higher tiers by putting the cards further out of reach.
Highlighting the Positive Aspects of the Token Swap
As controversial as the token swap may be, there are some obvious positive aspects to come out of it.
- The entire Crypto.com ecosystem becomes much simpler
- The MCO/CRO swap only has to be done once
Crypto.com is being built with the ethos of accelerating the adoption of cryptocurrency worldwide. Most newcomers take their time understanding how Bitcoin works. The fact that Crypto.com has a two token system significantly complicated their job in terms of educating their users. Now that there is a single token that drives the entire Crypto.com platform, its utility is more easily understood. Furthermore CRO actually inherits, or absorbs the utility previously held by MCO.
Crypto.com has been building the tokenomics of CRO in various ways since the launch of the exchange in 2020. A strong emphasis on staking, and locking tokens is built into almost every aspect of the Crypto.com platform. Users could earn a 20% APR on their CRO deposits by locking them within the exchange. Users also earn additional cashback from spending their CRO tokens. Aside from this, users pointed out that there is little utility to the CRO token. By infusing the MCO benefits into the CRO token, the tokenomics of CRO make much more sense. It is like the missing piece of the puzzle for CRO.
Crypto.com has done a lot to build trust with their user base. However, it appears that many MCO holders are severely unsatisfied with how Crypto.com has decided to conduct the swap. In my estimation, Crypto.com knew that a portion of its user base would be significantly upset with the swap. This is a risk, and a loss that Crypto.com was prepared to take.
Looking Forward for Crypto.com
In hindsight, this move for Crypto.com should have, and was expected by many. The crux is the final swap ratio that was decided by Crypto.com. Many believe that MCO holders, (me included) are getting the short end of the stick when it comes to the swap. That being said, I believe in the fundamentals that Crypto.com has demonstrated. This event doesn’t touch Crypto.com’s strict adherence to security. Crypto.com has the most insurance out of any cryptocurrency platform in the world. Their customer service was still exemplary during the Wirecard scandal. The various VISA debit card perks are still available, albeit slightly further out of reach. The Crypto.com exchange is still in BETA, and their main blockchain is set to launch later this year.
The potential for Crypto.com to follow through on their promise of mass adoption is still very much alive. Bridges may have been burned, as the MCO swap has outraged investors. Still, I prefer to look to the future, and recognize that the entire cryptocurrency ecosystem is young. I still believe that Crypto.com has the ability to lead millions of people safely, securely, and confidently into the mass adoption of cryptocurrency.
The author of this article is invested in both CRO and MCO and is an active user of the Crypto.com ecosystem. The opinions expressed in this article as solely his own.