Revisions to Crypto.com’s card and staking rewards sent CRO token prices tumbling by up to 11% as the community expressed displeasure with the changes that will take effect on June 1.
In a blog post published on Sunday, Crypto.com stated that it would reduce rewards for using its Visa-enabled cards based on the tiers available. Lower tiers, such as Midnight Blue and Ruby Steel, would receive 0%, Royal Indigo and Jade Green would receive 0.5 percent, Icy White and Frosted Rose Gold would receive 1%, and Obsidian, the highest tier, would receive only 2%.
Monthly rewards on the lower tiers would be capped at $25 to $50, with no rewards cap on the higher tiers, according to the company.
Staking rewards on Crypto.com’s cards would also end after the 180-day period for anyone who staked on May 1 or before, with the exception of cards in the lowest two tiers. These represent a significant decrease from current rates ranging from 1% on lower-tier cards to more than 8% on the highest tier, depending on funds staked.
Prepaid cards from Crypto.com are a popular product in the crypto community, allowing users to load supported cryptocurrencies or stablecoins and spend fiat at Visa merchants.
Meanwhile, other card benefits, such as cashback on subscription services and complimentary airport lounge access, would be maintained. Furthermore, interest rates on Crypto.com’s Earn product, which allows users to earn up to 14 percent on their cryptocurrency holdings, remain unchanged.
The community responds
Cardholders expressed their displeasure with the changes in social media posts on Reddit and Twitter. The majority of the comments were critical of the decision.
“I’m going to use the card for the rest of my staking period, then unstake and say goodbye to the card,” one Reddit user stated.
“It’s not the end, but they’ve lost a lot of customers,” another said.
Some Twitter users claimed that the yield rates offered by decentralized finance (DeFi) applications were far more profitable as a use of idle capital.
CRO, Crypto.com’s native token, has dropped 11% in the last 24 hours, with the majority of the losses occurring in the hours following the rewards decision. CRO traded above $0.36 on Sunday before falling as low as $0.29 during Asian trading hours on Monday before recovering slightly at the time of publication.
According to some analysts, the lack of adequate rewards contributed to a lower fundamental value for CRO tokens, which resulted in the price drop.
“Staking CRO tokens enabled rewards for users and incentivized debit card use,” Edson Ayllon, product manager at dHEDGE, explained in a Telegram message. “Reducing cashback rewards decreased CRO’s intrinsic value proposition.” This is similar to how DeFi protocols attract assets through liquidity mining. It’s frequently intended to bootstrap liquidity, and we’ve seen in DeFi that when the incentives dry up, the token price often suffers.”