As some of you are aware, Crypto.com (CDC) has essentially halved earn rates for over $30 000. This really only applies to people who are heavily invested in the "Earn" section of CDC.
TL;DR: CDC halves APY on anything over $30k in the "earn" section. The approach to reducing APY was bad but overall was inevitable.
Hi All, so CDC has announced that they will halve the APY in the "Earn Program" on anything over $30 000 (no matter what tier you have staked). Before this, each tier had different caps on maximum earn limit (as far as I know) and the higher tier the higher your cap was (2m for Obsidian). Crypto.com has been unpopular in their spread, customer assistance team and slow/confusing app but one of their few glories were the high APY on stable coins and etc. With the cap now being $30k regardless of tier, it removes the incentive to stake more CRO for higher caps. You can literally have the Ruby card and still get the same amount in earn as someone who invested $500k to be Obsidian.
The approach of CDC to reduce the earn rates were terrible. People would have been more okay with reducing the rates from say 12% to 10% as it is still a competitive rate amongst the other competitors. It also would have been more appropriate if they reduced the cap for each tier, say $2k max for ruby, $10k for Jade Green/Indigo and so on. As mentioned before, keeping the same cap for all tiers removes the incentive of staking more and is super unhealthy. Whales were mostly in CDC for the "Earn Program" as they need to diversify, and this change will cause whales to go to other platforms.
Losing whales is terrible for CDC, they stake and keep CRO locked in which helps keep the price up and stable. The importance of whales is also evident in Apple where almost 70% of all App store revenue is generated by less than 10% of the users who are whales [1]. Actually, in reddit some have already mentioned changing platforms to keep their APY high, and this may cause the prices of CRO to drop. However, it is also inevitable for the APY to drop in the other platforms as well when they grow larger. It is just unsustainable, it is the same with banks, they used to have interest rates as high as 20% back when my grandparents were younger but now it is a measly 1%/2% at most. Personally, this change doesn't affect me as I don't even have close to $30k on the platform. However, the drops in price from all the whales may affect the CRO I am holding.
CDC is doing this as it is unsustainable for the company to keep such high APYs. However, they may also be doing this in preparation of new incoming users. They have released an article which mentions the higher adoption of crypto users, reaching almost 300 million at the time the article was released and a prediction of 1 billion users by the end of 2022 [2]. I am guessing that they believe they can capture a portion of these new users which can help grow the company more than keeping the whales or perhaps they just didn't think things through with their approach. In addition to this, the reduction in APY can also be attributed to the current market performance, while we don't have the exact numbers, it is apparent that less users are "borrowing" crypto which reduces the demand for lending -> lower APY.
Anyways, I've only recently upgraded my tier so I'm stuck for a while. Might buy the dip and hopefully CDC changes the cap depending on the tier or does something which actually holds incentive to stake more (other than the cash back and all that). The whales need to diversify, hence the need for high APY on the earn program so it is to be expected if quite a bit leave so I guess a dip is inevitable? Personally, I would really like the option to top up the card with CRO but we will see.
If you are planning to use the "Earn Program", the rate reduction is from the April 4th, so you should lock in now or soon.
Again, thanks for reading to the end. If some information is incorrect please comment below as I ha typed this up pretty quickly.
Some information:
1. The CRO staked for the card doesn't contribute to the $30 000 as it is not in the earn program.
2. The $30 000 is only for 1 month and 3 month lock ins, flexible doesn't count
3. Some users have mentioned that you will have to split the last deposit to make it equal to $30k if you want the maximum APY. E.g. If you have 25k invested, and want to deposit 6k, you need to split it to 5k and 1k or all of the 6k will have halved APY
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