CRO: The Secret Weapon Fueling Crypto . com’s Success!

Crypto.com, also known by its ticker CRO, is the cryptocurrency behind Crypto com.
For those who don’t know, Crypto com is a one-stop shop for all things crypto, founded in 2016 by Kris Marszalek, Rafael Melo, Bobby Bao, and Garry Or.

While on Crypto com, you can partake in various forms of crypto trading, borrowing, lending, staking, payments, and NFT trading, among other activities.

However, what Crypto com is most famous for is likely its Visa debit card, which allows you to spend your cryptocurrency like regular cash.
In addition, it also rewards cash back benefits and access to subscription services like Spotify and Amazon Prime for its users.
Behind Crypto.com is the CRO token, but what is it, and how does it work?

Cronos began life as an ERC-20 token on the Ethereum blockchain back in 2018. However, CRO token has since gone on to become the native cryptocurrency for two different blockchains, which I’ll come back to shortly.

Initially, 100 billion CRO tokens were created with no pre-sell, public sale, or initial coin offering. However, I’ll dive into the tokenomics a little later as well. As first, I need to explain how it works.

Cronos was built using the Cosmos SDK, a topic I’ve covered before, so I’ll leave a link here for you to check out.
To summarise, the Cosmos Software Development Kit, or SDK, is a pre-built engine that developers can build on that accepts input from any programming language.
This allows developers to spend more time creating better products as time and resources do not need to be spent on engine creation or transcribing the code from one computer language to another.

Projects built with the Cosmos SDK are interoperable with each other if they have the Inter-Blockchain Protocol, or IBC, enabled.
The benefit here is they can interact and move assets between each other quickly and cheaply, but they also do not get congested by each other’s traffic as they host their own independent blockchains.
But now we know how it works. What makes Cronos unique?

While Crypto.com may be most well known for their crypto Visa card, which depending on how much you’ve deposited to the blockchain rewards you with an array of benefits such as increased cash back and access to paid services like Amazon Prime and Spotify, Crypto com is perhaps most notable for being smart contract compatible, unlike most Cosmos-based blockchains.

How does a smart contract work?

A smart contract is a type of self-executing code pioneered by Ethereum that executes once predetermined criteria has been met.

For example, if you’re buying an NFT on a public marketplace, most likely the code running in the background will be a more complex variation of this simple formula: When Person A places X amount of money into Person B’s wallet, transfer the NFT from Person B to Person A.

The benefit is that smart contracts are automated and do not require human intervention to finalize. Meaning transactions process quicker, and the markets can remain open 24/7.

However, Cronos isn’t naturally smart contract compatible. To achieve this, they must run two separate chains within the Cronos ecosystem.

Difference between Cronos and Crypto . org chain

There is the Crypto.org chain and the Cronos chain, which both operate differently. For example, the Crypto.org chain was built using the Cosmos SDK and uses the Tendermint variant of the Proof-of-Stake consensus mechanism.

This is the exchange chain of Crypto com, and is the face of the user experience. Here, CRO is used for staking, paying transaction fees, and governance.

Governance doesn’t come cheap on the exchange chain, as 20’000 CRO tokens is required to be used as a deposit if you wish to propose a governance vote.

This vote must have a majority of participating voting power vote back ‘yes’ during the required voting period, with less than 33.4% of participating voting power returning a ‘no-with-veto’ vote.
If either criteria is not met, the 20000 CRO tokens deposit is burned.

Then we have the Cronos chain, a side-chain running parallel to the exchange chain.
The Cronos side-chain was also built using the Cosmos SDK. However, unlike the exchange chain that uses a Proof-of-Stake variant, the Cronos chain runs a Proof-of-Authority model.

Under the Proof-of-Stake model the exchange chain uses there are 100 validators chosen based on how much they have deposited to the ecosystem. The logic being those with the most to lose are less likely to misbehave when given responsibility.

However, under Proof-of-Authority the validators have been selected by Crypto.com itself to verify their transactions. Currently, there are only 25 chosen validators. That is done to secure much faster transaction speeds, but comes at the cost of decentralization.

The reason for this change is because of what the Cronos side-chain is doing, which is running the smart contracts of the Crypto.com experience.

Thanks to Ethermint, a high-throughput blockchain built using the Cosmos SDK and is interoperable with Ethereum, Crypto.com users can access all the benefits of smart contracts without using the Ethereum network itself.

In this case, high-throughput refers to the number of transactions it can process at once, and with Ethermint that equates to roughly 10x more transactions per second than the original Ethereum blockchain.

Specfically, Ethermint allows for an Ethereum Virtual Machine, or EVM, to run as a Cosmos application-specific blockchain that is interoperable with the exchange chain due to the IBC Protocol being enabled by both.

This EVM is essentially a vanilla version of Ethereum that can be utilised to access smart contract functionality, giving developers all the tools of the Ethereum blockchain while still retaining the benefits of using the Tendermint Proof-of-Stake consensus mechanism.
But what about the tokenomics?

Here, things get a little interesting. Initially there were 100 billion CRO tokens, which started as an ERC-20 token on the Ethereum blockchain.

However in March 2021, Crypto.com got its own blockchains, the Crypto.org chain and Cronos chain we mentioned previously.

As this occurred, Crypto.com burned 70 billion CRO tokens from their 76 billion remaining total supply – with the other 24 billion having been bought up by early investors.

This did a few things. First, it gave those lucky enough to have bought in early quite a boost to their return on investment, but it also decentralized the CRO token.

That is because, of Crypto . com’s remaining 6 billion, 5 billion was locked away to act as rewards for network validators, and the final 1 billion was set aside for the network development.

In Conclusion, Crypto.com is a one-stop shop for most things crypto.

Its purpose is to provide a range of crypto related services, and does so with the benefit of a Visa crypto card that rewards cash back on purchases.

Additionally, it is known for being a Cosmos-based blockchain that is smart contract compatible.
Thus giving it the benefits of Ethereum while retaining the benefits of the Tendermint consensus
mechanism.