Cronos has been a dog since the last bull market when it reached its all time high. On X and Reddit there are many disillusioned holders who are throwing in the towel. They see Bitcoin reaching new all time highs, yet CRO remains around the $0.10 range. However, I think this capitulation is premature. CRO has only been around since late 2018. Like most new coins, it had massive speculator interest at the beginning. But after the bull market, they cashed out and lost interest. Despite this, I believe that CRO has long-term potential, although not in the way that traders think. I will present my case in how CRO can be used effectively to build wealth over the long term.
Cronos began as a token on Ethereum while its own chain was in development. When completed, Cronos was a proof-of-stake blockchain built for compatibility with Cosmos. The short explanation of Cosmos is that it aims to make blockchains interoperable and able to communicate with each other. In short, it’s an internet of blockchains. At its core, this is where Cronos started. But it had some shortcomings when it came to Ethereum EVM, which were addressed by creating the Cronos EVM chain. This allowed Ethereum smart contracts to be ported into Cronos for DeFi and other services. CRO is bridged between Cronos PoS and Cronos EVM (which is just named Cronos). More recently, the Cronos development team created another variant, Cronos zkEVM, which is interoperable with zkSync blockchains, most notably zkSync Era. To understand zkSync, just refer back to Cosmos. zkSync makes different blockchains compatible so that tokens and information can transfer across blockchains, except that these blockchains are compatible with Ethereum. In a way, Cronos circled back to Ethereum. To make sense of all this to crypto nerds, Cronos PoS is Layer 0, Cronos is Layer 1, and Cronos zkEVM is Layer 2.
From another perspective, Cronos is the utility token for the Crypto.com ecosystem. Therefore, there is an explicit use for Cronos. However, for compliance reasons Crypto.com and Cronos are separate organizations. Prior to CRO, Crypto.com used MCO when the company was known as Monaco. MCO was scrapped as it initially started out in an ICO that made it too much like a security. MCO holders were migrated to CRO and Crypto.com renamed the Crypto.com Coin to Cronos, setting up a nonprofit to develop and administer the coin.
Initially, Cronos started off with a total supply of 100 Billion, but only 30 Billion were put into circulation. The remaining 70 Billion were burned. Recently, the 70 Billion that were burned has been reminted and are slowly being released into circulation. This has cause much controversy amongst CRO holders as they see it as a betrayal. While the coins are being put into circulation, they aren’t liquid. They are building up in a strategic reserve that will be tapped when CRO manages to be included into ETFs.
Cronos continues to develop improvements, most recently announcing 10X speed improvement and 10X lower gas fees. And the Cronos zkEVM chain is still in its infancy.
There is a lot to unpack here to make the case why CRO is still a good long-term project. Let’s start with the reminting of the 70 Billion previously burned coins.
While Crypto.com is a separate entity from the Cronos development organization, they still have influence over the direction of Cronos. After all, without Crypto.com, there would be limited use for Cronos. And without Cronos, Crypto.com would not have a utility token. It’s a symbiotic relationship. The decision to remint 70 Billion CRO tokens was the result of anticipating market changes that will move Real World Assets (RWA) to the blockchain. First, let’s take a little detour.
Stellar has a supply of 50 Billion Lumens. Ripplenet has a supply of 100 Billion XRP. These organizations chose such huge supplies in anticipation of massive adoption. If Stellar is successful in providing financial services to consumers, there are trillions of dollars in value that it would need to absorb without taking the price of XLM to the moon. Volatility is not a great thing for financial products. Similarly, Ripple anticipated they would onboard financial institutions, which would require a larger amount of XRP. According to rwa.xyz, Stellar has had more success in onboarding RWA than Ripple. In first place for RWA is Ethereum. In second place is zkSync Era, which is also Ethereum. The vast majority of RWA, therefore, are on Ethereum and Stellar. Cronos zkEVM hopes to tap into the RWA market.
Circling back, Crypto.com has been moving to get into the RWA market. They have been establishing relationships with Wall Street and other big movers to be able to provide financial services. Cronos zkEVM is well-positioned to tokenize RWA. Therefore, in order for Cronos zkEVM to be able to accommodate a massive amount of RWA, it needed a large supply of CRO to be able to service four blockchains (CRO on Ethereum, Cronos PoS, Cronos, and Cronos zkEVM). The same supply of CRO is servicing multiple blockchains with different uses.
The most important case for reminting the 70B CRO is that the native coin for Cronos zkEVM is zkCRO, which is used for gas fees. What makes zkCRO different from CRO is that it is built on Liquid CRO (LCRO). That is to say, CRO is staked on Cronos POS to mint LCRO, then LCRO is moved to Cronos zkEVM to produce zkCRO. Therefore, zkCRO is yield-bearing. The staking rewards are automatically rolled into the value of zkCRO. Therefore, as utility for zkCRO increases, the reduction in CRO is not 1:1. At this moment, 1 zkCRO is worth about 1.2 CRO. That ratio will continue to change as staking rewards continue to compound within zkCRO. In the long term, zkCRO will eat up the CRO supply as it expands in adoption.
Of course, there are other uses for CRO. Primarily, CRO already has a decent DeFi community with all manner of products on Cronos. And Cronos PoS continues to provide yield to holders of CRO through staking. Furthermore, Crypto.com pays rewards to customers in CRO, primarily through use of the Crypto.com debit and credit cards, which offer cashback rewards in CRO.
Without a doubt, CRO has underperformed compared to other cryptos, particularly BNB, the utility token for Binance. In their defense, Crypto.com has made it a point to be a compliant exchange, expecting that broader adoption will result in greater market penetration. My opinion is that CRO has been used largely for speculation rather than its actual utility. Too many users buy CRO with the expectation that number go up. As soon as CRO has any upward movement, they sell it. Similarly, any card rewards people get are quickly sold or traded for other cryptos. Most CRO holders, it seems, have paper hands. While the majority of CRO is held by whales, according to CoinMarketCap, 98% of wallets have less than $1000 in CRO. Yet whales hold almost 93% of all CRO. There seems to be a disconnect between the loudest voices complaining about CRO and those who actually hold it.
On the one hand, a majority of CRO holders have small positions. On the other hand, whales hold the majority of CRO and have held it for more than one year. This, of course poses a risk to speculators. When prices spike, whales can sell small portions of their holdings to suppress the price and make profit. Speculating on CRO invariably results in getting spanked by whales.
To win at CRO, you have to not play the game the CRO whales have set up. Instead, it makes more sense to play the same game whales are playing, which is to hold long term and smack down speculators. To me, the fact that CRO has behaved largely like a stablecoin means that perhaps it should be used like a stablecoin. If you set your buy range to anything below a given price, mine is $0.20, then it makes sense to constantly accumulate and stake more CRO. Between regular buys, card rewards, and compounded staking rewards, it is possible to build up a large bag of CRO over time. In this regard, it makes sense to stake CRO for the highest card tier you can afford. Your cost basis for CRO on card rewards is zero. And when you earn staking rewards, your cost basis is zero. The longer you hold CRO and accumulate rewards, the lower your average cost basis gets. In this way, you’ll be in the money long before the speculators who are acquiring at market prices.
For this reason, I have no problem staking for the card I can afford. Doing so means that I can earn larger percentages of CRO in cashback rewards. It means that I can move up the ranks to earn CRO in other ways. And it means, that I am constantly driving my cost basis towards zero.
Surely there is an opportunity cost for holding CRO, right? This is true. But you can accumulate CRO while also trading other cryptos. For example, you can do Bitcoin Standard banking by turning your paycheck to Bitcoin and using the BTC to top up your Crypto.com debit card or pay off your Crypto.com credit card. Crypto.com also offers rebates on crypto purchases, paid in CRO of course.
I’m not saying that it makes sense to invest everything into CRO. Rather, if you are going to participate in the Crypto.com ecosystem, you might as well maximize it. And to do this, it is better to not speculate with CRO for short-term gains. A long game is more appropriate in which you allow your rewards and contributions to accumulate and earn staking rewards. If you grow your CRO bags large enough, you might even be able to use the rewards as supplemental income. With this approach it makes sense to stake for the highest card tier you can afford so that you can increase your cashback rewards to further compound your staking income.
With prolonged periods of low CRO prices, it is possible to accumulate large quantities so that on the occasion of a sudden price spike it is possible to upgrade your rewards tier for faster accumulation. The way the Crypto.com ecosystem is structured, it rewards those who seriously use the platform more than those who merely dabble. Holding CRO in staking mainly pays off in yield. Therefore, the larger your CRO bags, the more income you generate passively.
When viewed with a short-term focus, CRO and Crypto.com are terrible. However, if your horizon is long term, more than 10 years, then it is a different creature, well suited for wealth accumulation with minimal effort.
This viewpoint is further enhanced by the improvements Crypto.com has made to their ecosystem and those that are in the works. The most notable improvement will be adding banking services. One pain point with using Crypto.com is the inability to use it for banking deposits and withdrawals. The current fiat wallet has restrictions that prevent it from being useful for bill payments and inbound transfers from certain banks. Banking services will expand the utility of Crypto.com and, by extension, Cronos.
Further improvements on the Crypto.com roadmap include a Crypto.com stablecoin, AI-powered trading, stock options, derivatives, and business accounts. Like Robinhood, there is the possibility that they may add tokenized stocks. Overall, Crypto.com is poised to adopt the future of finance, which means more utility for CRO. Therefore, in terms of the risk of Crypto.com going kaput, there doesn’t seem to be any indication. They have survived the crypto apocalypse and have remained profitable. In terms of the 70B reminting, the damage has been done. I suspect that the market has priced it in already.
In summary, CRO is a poor choice for short term gains. But the Cronos ecosystem holds promise for measured wealth accumulation for those who take full advantage of its benefits. Crypto.com has proven to be a reliable and steady platform that values compliance and improving its technology to expand its services to customers. While it is a risk to rely on a corporation for financial well-being, this does not take into account that its main offering is access to cryptocurrencies, which are the main driver of the future of personal finance. The present price of CRO, therefore, is a great opportunity to accumulate the token for long term growth in conjunction with normal crypto usage.
