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Crypto.com community in turmoil over cut rewards

It was about time that in the world of cryptocurrencies there was a bit of controversy, right?

Crypto.com, the industry giant with over ten million users and four thousand employees, has been at the center of a storm of criticism this week after it decided to slash premiums on its popular VISA cards.

The blog post fell on Sunday evening and immediately caused an uproar.

This is what awaits you in this article

What’s happening?

Map rewards have been cut quite drastically. Lower users (Midnight Blue and Ruby Steel) get 0%, while the next highest get only 0.5% back. Even the top tier (Obsidian) has been reduced to just 2%. There will also be a monthly reward cap for lower tiers of $25-$50.

Ah, it gets worse. Staking bonuses have also been introduced. Once the 180-day limit has passed for anyone who staked before the announcement date (May 1st), all staking rewards will be discontinued except for the lowest two tiers. This is very important as the higher tiers had staking rewards well over 8% prior to Sunday.

reaction

I’ve noticed in my time on this planet that when you promise people something and then take it away, they usually get angry. Even more so when it comes to their money. Crypto.com found this out as the unexpected announcement went down like a lead balloon.

I hopped onto Reddit where the vibes were… not good. “So they want to be more profitable, let’s see if they make money from fewer customers. I mean a lot fewer customers,” wrote user KakaratoCryptoniano.

User Mac Hacker’s comment: “Only 20 days (until my 180 day ban is up) and I will liquidate my CRO interest. Good riddance”, summed up the feelings of many. In fact, markets reacted to this line of thinking when Cronos plummeted to 26 cents from 35 cents at the time of the announcement. It is currently trading at 28 cents, still almost 15% lower than when it was announced.

180 turns

The comments above were just the tip of the iceberg. CEO Kris Marzalek took to Twitter to announce a more measured adjustment to staking rewards, 8% for the higher tiers and 4% for the lower tiers.

However, cashback rates remain lowered. And while the announcement was positive, it couldn’t quell the anger in the community, many of whom had backtracked after the initial announcement. The tweets spurred the aforementioned slight surge in the token.

Why?

Crypto.com knew the reaction here would be visceral. And while their approach to unveiling the news – a sudden announcement alongside a lack of transparency to date – their hands may have been tied.

It’s a story as old as time, but this is still a fintech startup that only came to market in 2015 and has seemingly outgrown its capabilities, which is what it requires. To be clear, I think the company’s handling of this could not have been worse, but the real problems are the bloated expenses to date.

The marketing spend was staggering. The crypto.com brand is plastered over a reported $100 million deal last summer at all F1 circuits. In addition to this deal, this week’s Grand Prix will be officially referred to as the Crypto.com Miami Grand Prix, while August’s Belgian Grand Prix will be the official NFT-will be partners. They also have a deal with a team in the sport – Aston Martin. Numbers for these deals haven’t been released, but you don’t need to do much research to know they’re expensive.

It also goes beyond fast cars. You are the official sponsor of this winter’s FIFA World Cup in Qatar, the biggest sporting event in the world. They also inked a $700 million deal with the Los Angeles Lakers to rebrand the legendary Staples Center as Crypto.com Arena – the most valuable naming rights deal in history.

I could go on, but I think you get the point.

downturn

The crypto market has plummeted alongside the stock market this year. Geopolitical uncertainty, galloping inflation and the Fed’s hawkish turn all contributed to the S&P 500 having its worst start to a year since 1939, and cryptocurrencies, as expected, were even more volatile. Cronos is now 70% below his all-time high from last November – the same month that the sponsorship deal for the Staples Center was closed.

The staggering levels of marketing spend are obviously draining resources, and the company has found it impossible to sustain this as part of its business model. Therefore, it has decided to cut the rewards.

future

Digging deeper, Cronos’ fixed supply means that the bonuses can never continue at the rate at which they were paid out. The entire range of cards and the bonuses associated with them were a loss-maker in and of themselves. A strategy commonly used by startups around the world aimed at enticing people to join the app where customers can then monetize other streams.

But the speed with which those awards have ceased comes as a shock. So suddenly they were announced. There was no roadmap, no guidance for customers, and no warning for what might come later.

And even though the token is down 15%, this remains one of the largest crypto entities on the planet. As much as it may irk hardcore fans, Crypto.com has built a boisterous brand, albeit with an overly aggressive budget, as well as an extensive product range and an excellent app. Based on that they should be able to weather the current storm and if/when markets turn higher again they will be well positioned to recover.

However, it still doesn’t excuse the way they cut those rewards, which was pretty much the worst thing the company has come up with since their blatant SuperBowl advert starring Matt Damon.

Crypto.com users, I feel your pain.


Source: Crypto News Deutsch

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