Table of Contents
- 1 Summary
- 2 Overview
- 3 Tokenomics and Mechanism Design
- 4 Macro View
- 5 Further Reading and Sources
- 6 Cryptofunds, market makers, and trading desks can interact with these DeFi protocols with MetaMask Institutional
- 7 Found this research useful? Connect with the ConsenSys Cryptoeconomic Research team at [email protected]
Cronos is an Ethereum compatible Layer 1 (L1) blockchain built on Cosmos SDK and is supported by the cryptocurrency exchange company, Crypto.com. It utilizes Ethermint, a scalable, high throughput proof-of-stake (PoS) blockchain that’s compatible and interoperable with Ethereum and Tendermint core, a Byzantine Fault Tolerance middleware “consensus engine”. Similar to its competitors, its mission is to improve blockchain technology particularly in terms of scalability, interoperability and usability. It has the backing of 4,000 employees and 50M users in 90 countries from its supporting company, Crypto.com. The company facilitates a vast ecosystem of crypto-related products and services including crypto exchange, DeFi services (e.g. stake , swap, earn, non-custodial wallet), tax services, NFT marketplace, crypto payment solutions and crypto credit card.
The Cronos team is relatively small compared to its competitors despite the backing of Crypto.com. The company was founded in 2017 and launched its Monaco (MCO) token through an initial coin offering (ICO) before rebranding itself as Crypto.com. Although the company has a sizable user base of 50M, there are not enough dapps on the Cronos blockchain today. Therefore, they started the Cronos ecosystem grants program to support early stage startups by bootstrapping product development and providing tech support.
The Cronos blockchain, which launched on October 19, 2021, utilizes Ethermint, a scalable, high throughput PoS blockchain that’s compatible and interoperable with Ethereum and Tendermint core, a Byzantine Fault Tolerance middleware “consensus engine”. Cronos also supports the Inter-Blockchain Communication (IBC) protocol, allowing token transfers between Cronos and other chains on Cosmos SDK and the IBC ecosystem. By enabling IBC channel to Cosmos Hub, it has facilitated cross chain ATOM token transfer to Cronos ecosystem to bring DeFi yield generating opportunities to the broader Cosmos community. Users are predominately retail crypto traders and gamers and are evenly distributed across America, EMEA and APAC.
Crypto.com has been audited by Quantstamp and Certik but not since it has rebranded. A bug bounty program is being offered through immunefi.
Tokenomics and Mechanism Design
CRO is Crypto.com’s native token and its holders receive perks when using their products and services. Some of these include paying discounted trading fees on their exchange, reduced costs for merchants, and earning CRO cashback rewards for Crypto.com cardholders (details below). In addition to CRO being the native token, it is also the base settlement currency of Cronos.
The total supply of CRO is capped at 100B coins. 70B CRO were burnt during the relaunch and rebranding phase and as of today 76B has been burned (up to 80B will be burned as it gets unlocked monthly which should increase the circulating supply of CRO).
Token distribution shown below:
30% – Secondary distribution and launch incentives, released in batches over five years.
20% – Capital reserve account (vested until November 7, 2022).
20% – Network Long-Term Incentives (locked until November 7, 2022).
20% – Ecosystem grants.
10% – Community and marketing efforts.
Cronos is ranked eighth among all chains by total value locked (TVL) across 60 protocols. It has dropped more than 60% since its high, to around $1.3B, where more than 90% of TVL are dominated by four projects (VVS, TONIC, MMF, MMO). Therefore, Cronos will need to bring more founders and developers on to its platform to successfully deliver its value proposition to the broader crypto ecosystem. The total number of holders as of today is 830k unique addresses (up 215% this year) but the number of total daily active chain addresses has slowed since April which has been further exacerbated by the current macro environment.
More than 70B CRO were burnt during the relaunch and rebranding phase and as of today 76B has been burned based on etherscan making it more scarce and possibly more valuable. However, there may be counteractive sell pressure in the foreseeable future as a portion of distributed tokens get vested this year. Recently, Crypto.com has also revised its staking rewards which has negatively impacted the token price for CRO. It has reduced the rewards on the usage of its Visa credit card and ceased staking rewards as well. Reducing such rewards reduces the value proposition of CRO tokens and may reduce further this year when long-term network incentives get unlocked.
Rebranding Crypto.com coin to Cronos and swapping MCO token to CRO token may have been due to regulatory reasons as MCO was used for its initial coin offering (ICO). Therefore, the company could potentially face charges for conducting an unregistered securities offering (eg. ICO issuers such as Coinspark were charged with securities fraud well after ICO were completed). It will be interesting to see if the strategy will work from potential SEC action.
Understanding the significance of founders and developers, Cronos has been focusing on building support for its ecosystem through its newly announced accelerator program, developer series blog posts, release of developer tools (e.g. Moralis suite) and Hackathons. As a result it will be worth monitoring to see if Cronos can successfully attract strong development growth in the coming months.
Further Reading and Sources
Cryptofunds, market makers, and trading desks can interact with these DeFi protocols with MetaMask Institutional
MetaMask Institutional offers unrivalled access to the DeFi ecosystem without compromising on institution-required security, operational efficiency, or compliance. We enable funds to trade, stake, borrow, lend, invest, and interact with over 17,000 DeFi protocols and applications.
Found this research useful? Connect with the ConsenSys Cryptoeconomic Research team at [email protected]
ConsenSys Software Inc. is not a registered or licensed advisor or broker. This report is for general informational purposes only. It does not constitute or contain any individual investment advice and is made without any regard to the recipient’s objectives, financial situation, or means. It is not an offer to buy or sell, or a solicitation of any offer to buy, any token or other investment, nor is it intended to be used for marketing purposes to anyone in any jurisdiction. ConsenSys does not intend for any person or entity to rely on any facts, opinions, or ideas, and any financial or economic commentary expressed in this report may not be relied upon. ConsenSys makes no representations as to the accuracy, completeness, or timeliness of the information or opinions in this report and, along with its employees, does not assume any responsibility for any loss to any person or entity that may result from any act or omission based upon this report. This report is subject to correction, completion, and amendment without notice; however, ConsenSys has no obligation to do so
Read more: Cronos blockchain – Krypto-NFTs