- Crypto.com announced a series of reductions in rewards for the use of its Visa Card as a measure to ensure the long-term sustainability of the project.
- The reductions produced discomfort within their community, which showed their annoyance on social networks.
- Crypto.com CEO Kris Marszalek said on Twitter that the announced changes would be adjusted to reflect “a more balanced approach.”
On May 1 Crypto.com, one of the most relevant crypto exchanges today, made a blog post where they reported clipping rewards for using your Visa Card. The announced reduction was on average 69.5% to 100%; this last reduction for its lowest level card, called “Midnight Blue”.
According to the statement, the measure would have been taken in search of “guaranteeing the long-term sustainability” of the project. However, it generated annoyance and criticism from its community that was reflected in a significant reduction in the market price for the CRO token.
A decision without evaluation?
In general, any company should be cautious when it comes to changing aspects of the product they offer. In fact, an important concept has to do with the elasticity of consumer demand; that is, on how consumers react to changes in the product that the company offers.
For example, if a cookie company wants to reduce the grams of sugar used in the preparation, either for cost reduction or health reasons, it will probably have to evaluate how said change will impact the final product, and how consumers might react to it. this change. Essentially, a comprehensive understanding of who the consumer is is required to attempt to predict their behavior.
In the case of Crypto.com, the differentiating aspect of their Visa cards is that, with them, users could stake their CRO and, in exchange, receive rewards that were attractive to them. For example, the top-tier card, called Obsidian, is obtained by staking $400K USD in CRO for 180 days, and she offered 8% cashback on card spend.
Also, the fact that the rewards were directly dependent on the amount of CRO locked is critical. Why? Because this created incentives within the community to lock more and more CRO and thus get more rewards; that is, incentives to demand more of the token from the crypto exchange, which, due to economic laws, is known to influence the price of the token upwards.
So the question Crypto.com must have asked themselves is: How will my Visa Card consumers react when we tell them that their CRO staking will no longer generate the same levels of rewards? Will they withdraw all their money?
measurement details
According to the press release, as of June 1, 2022, Crypto.com would be cutting a lot of the benefits they offer. For example, a Jade Green / Royal Indigo cardholder (with an active CRO stake) currently enjoys 3% cash back when he spends on the card. However, this will be halved from next month to 1.5%, which means a reduction in half.
In addition to lowering the return percentage, Crypto.com announced that Jade Green/Royal Indigo and Ruby Steel cardholders would have a monthly cap on rewards of US$50 and US$25, respectively.
While the Obsidian card would see its reward rate go from 8% to 5%.
“Introducing these changes to the card program is a difficult decision. We are committed to continuing to explore and forge new partnerships to unlock greater value and benefits for our cardholders, such as our partnership with Dosh.”explained the statement.
The anger of the community is felt
One of the advantages of social networks is that they allow consumers to express their annoyances loud and clear to the different companies in the world and, in fact, this was precisely what the Crypto.com community did.
One of the most voted comments on a post on Reddit emphasizes the fact that the changes have been very sudden. The user was of the opinion, and many seemed to agree, that the measure would not have been so bad if it had been gradual and given users time to think things over.
“The problem here is how abruptly they did it, they could have made an announcement that they will be gradually lowering the staking rewards so people have time to ponder whether or not to stick with it“explained a user on Reddit.
“vI will continue to use the card for the remainder of my participation period and then I will stop participating and say goodbye to the card“, he claimed another user.
Likewise, Devchart told its 170,000 Twitter followers that Crypto.com’s decision was one of the “dumbest moves of the day.”
In general, most of the people who discussed it on social media seemed to agree that Crypto.com would lose many users after the decision. Particularly as they removed the incentives to stake your token.
In this waymany users were planning to wait until their CRO token lockup time is over to withdraw their money and look for other solutions to optimize returns.
As expected, the discontent of the community was noted in the price of the CRO. From Sunday to this moment, the price of the token has decreased by approximately 17%.
We take it back, but not completely
Seeing the reaction of the community and the price drop of the CRO token, Crypto.com CEO Kris Marszalek said on Twitter that the announced changes would be adjusted to reflect “a more balanced approach.”
“Instead of completely eliminating card staking earning fees, we will offer a more balanced approach: 8% APY for private members (Obsidian, Icy White and Frosted Rose Gold) 4% APY for Royal Indigo and Jade Green cardholdersMarszalek said.
Despite having made some adjustments to be more balanced, the rewards will be even lower than those currently offered and, consequently, some users continue to express their disagreement.
Even so, the CEO of Crypto.com assures that this adjustment was essential to guarantee the “long-term sustainability” of this product given the scale of the crypto exchange.
However, it is important to note that the adjustments announced by Marszalek on Twitter have not been confirmed on the Crypto.com blog.
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