Skip ahead to the TLDR sections to get straight to the tokenomics.

Avenue into defi

Do you use Crypto.com? (I'll refer to it as CDC from here) - CRO has become somewhat of a company token - but it is also used to power transactions on the Cronos Blockchain. If you are brave enough to venture outside of the app and into the world of decentralized finance (defi) - arguably to really use crypto beyond trading - here is a TLDR on how to get started.

Despite its lavish marketing campaigns, CDC has proven itself to be a sensible and trustworthy exchange in these bearish times. Centralized exchanges have been collapsing left right and center. It uses a custodial wallet system - i.e. CDC holds the keys to your wallet. Non-custodial wallets offer a greater level of control to the user and access to defi protocols.

You can begin the process with the CDC defi wallet. The CDC defi wallet can be integrated into metamask - which is arguably better designed for interacting with crypto dapps. The CDC defi wallet has proven to be slow in times of need. I would skip the middle man and just set up an independent metamask wallet. Once the mandatory 24-hour waiting period for a new wallet is over, withdrawals can take a few seconds!

(Do not store the keywords on a smartphone or computer! Never connect your wallet to popup wallet invitations!)

Finally, before getting into defi - remember to always go to the correct website. Use coingecko, coinmarketcap or defillama links as a gateway to safe entry. You won't have to spend minutes at a time proofreading URLs - but no one was ever hurt by being too safe - trust but check. 

Liquid Staking?

You stake your coins, in this case, CRO (but there are liquid staking versions of ETH, MATIC, etc.), for a small but attractive yield.

In return, you are given a liquid staking token, in this case, bCRO (bonded CRO).

• The staked coins are sent to validators.
• Validators lock their coins to be randomly selected to validate the next block on the blockchain.
• (This is the essence of a proof-of-stake blockchain.)
• Minting blocks rewards validators with the native coins, in this case, CRO.
• You receive a portion of this CRO relative to your stake.
• The gains are only realized when you unstake your bCRO.

In summary:

bCRO = CRO + staking rewards

Price of bCRO = (Total CRO staked + Total CRO staking rewards) / bCRO in circulation

bCRO in circulation = Total bCRO minted - Total bCRO burnt

CRO and bCRO maintain a certain ratio, so if you need to opt out without unstaking for some reason, you can always swap your bCRO for CRO on an exchange (instead of unstaking). The analogy would be a government bond - you buy bonds from the government and they promise to buy them back from you with some kind of interest after a certain amount of time. In comparison, liquid staking tokens should continue to generate yield as long as their validators continue to validate - there is no fixed time limit on the buyback.

Benefits

The innovative part of defi is that your liquid staking tokens can be used elsewhere to earn more yield! The staking token acts as a receipt, which you can use to interact with other protocols. In this case, the Cronos ecosystem is your garden.

For example, they can be supplied on money markets (lending and borrowing platforms) to earn additional yield. Or you can use yield aggregators such as Beefy to auto compound your tokens.

In summary - liquid staking provides instant liquidity and hence improves capital efficiency without compromising network security.

Risks

Defi birthed a new type of human - a degen - degen yield farmers would combine these strategies, accepting greater risk for maximum yield. Degen yield farming is an expert-level strategy. If you are a novice - do not get sucked in by these high yields. You may lose all of your money.

Always ask where the yield is coming from, and how it is paid.

Traditional staking involves trusting the validators. Normally you choose a single validator to stake your coins with. Validators who misbehave have their rewards slashed - referred to as slashing - also reducing the returns of those staked with them. Liquid staking, however, reduces this risk by spreading the locked CRO across a number of top-tier validators - those with a good reputation. The fungibility of bCRO means that the risk is spread equally across all tokens and hence token holders - and is proportional to the size of your stake. Don't you just love fungibility.

bCRO Tokenomics (TLDR)

CRO:

• Market cap < 3.5 billion
• Circulating supply > 25.26 billion
• Total supply > 30.26 billion
• CRO staked on Argo > 43 million (> $6 million)

Argo is the platform hosting bCRO liquid staking.

They currently (as of 22nd July 2022) offer 10 - 12% APY to those who stake their CRO for bCRO.

Yields come from a fixed portion of validator staking rewards as explained above.

Unstaking takes 28 days. As mentioned above, you can immediately swap bCRO for CRO on one of their dex partners (e.g. MMF, MM Stableswap, VVS). In this case, you will lose your staking rewards on the coins withdrawn and experience trading slippage, but you will be able to get back your initial investment (i.e. your input CRO).

Nuff said.

Rewards comparison

The Crypto.com Defi Wallet offers 12% APR on CRO. You can also get 1% CRO cashback with the Ruby CDC VISA card.

Why stay on CDC?

Despite some insider Shenanigans involving withdrawals, CDC has been relatively drama-free during this bear market. They have handled their finances carefully and not exposed user funds to unnecessary leverage. Consequently, the yields are not so sexy but they are robust.

Better yet, each account is supposed to have $750 million of insurance to replace funds lost in the case of theft or accidents (likely those that can be attributed to platform errors, hacks, etc.)

Defi opportunities (TLDR)

You can access these protocols through defillama.

Mimas - supply bCRO for 28%, borrow for 49% APY

MMF (Mad Meerkat Finance) - and MM stableswap - 18% APY on the CRO-bCRO liquidity pair (LP)

VVS finance - 17% APY on CRO-bCRO LP

Single finance - you can access the VVS farm with leverage - for 33.31% APY

(Values will change/decrease with time).

Keep in mind that in yield farming protocols, the yields will always look sexy, but the majority of the yield will be paid in the native farm token, i.e. Mimas and rMimas (a timelocked version that takes a year to unlock to Mimas), MMF, VVS and Single. Make sure to check the breakdown on the rewards before you ape in.

rMimas may seem like a long-term investment - it definitely is - but this locked rewards mechanism prevents people from dumping the token periodically. It currently cannot be traded. Mimas finance recently partnered with Defira, a new defi/anime based game with similar gameplay to Defi Kingdoms. Arguably its UI was always geared up for this partnership. The Mimas token will be an integral part of the gameplay, so be sure to stack up if this project sounds interesting to you. Cliches abound - not financial advice.

Just remember - don't buy farm tokens, farm them! Unless the risk-reward ratio has been carefully calculated.

Degen strategies for the uninitiated (more not financial advice)

Stake CRO for bCRO on Argo.

Money markets (Mimas) - supply bCRO for a variable APY.

• Borrow bCRO (stay below 80% LTV to be safe) - use this to form an LP which you can enter on MMF/VVS/Single finance
• OR Supply the borrowed bCRO - and borrow more. This is known as looping.

You can also stake half of your CRO on Argo and then directly supply your CRO and bCRO to one of the LPs.

The point is to stack yields. You should also note how to unwind these strategies. Remember to keep some CRO aside for gas fees.

Argo governance rewards (TLDR)

Argo:

• Max supply = 1 billion
• Price today (22nd July 2022) = $0.014
• xARGO pledged < 52 million

Requirements - Stake ARGO (which you can buy on VVS finance) - you will be given xARGO. Stake xARGO. There is a 28-day unlocking timer. This means that if you want to convert your xARGO back to ARGO, it will take 28 days. Keep this in mind. xARGO cannot be traded.

xARGO can be unlocked early, with a 50% penalty fee.

50% of all protocol revenue goes to xARGO stakers:

• LP fees
• Unstaking fees
• xARGO early unlock fees (25%)
• Validator rewards commissions (10%)

This is organic yield. Sometimes early unlocking is necessary. The upside here is that the rewards are partially paid in CRO! I feel that this is a cleaner way to make returns, protected from the shenanigans and wild price fluctuations of farm tokens.

As of 23/7/2022 - the total yield is 58% APY.

Much easier than messing with degen strategies.

Currently, early xARGO staked generates additional xARGO rewards. This will not last for more than a few months.

Argo plans to release an ARGO vault and veARGO in the future, further reward options for governance token holders.

To conclude

Defi is all about incentives. Those who get in early with conviction get the best yields. Those who know when to realize gains (i.e. take profits) are tho ones who get to keep their money in the long run.

Come up with a strategy to take profits before you get started. Calculate your expected gains and see if it's really worth entering the position.

Just ask yourself, WWMDD - what would Matt Damon do? Actually, I don't want to know...

Resources

Argo docs linked below