The Team from Polygon zkEVM & Is CRO Staking Right for You?
In This Issue
- The team from Polygon’s zkEVM talks about the first zero-knowledge scaling solution that’s fully equivalent to EVM.
- David has a report for you on CRO staking.
Premium members also get the following:
- My latest portfolio updates
- Rekt Capital has the latest technical analysis for you on the market.
- Rebecca has all of the latest news for you.
- Upcoming NFT drops
- Defi Dad has a tutorial for you on how to earn trading fees, bribes, and VELO rewards in Velodrome stable pools.
- Jesse has a ton of hot new airdrops for you.
- Hot new token sales.
- Rebecca breaks down this week’s trending coins.
- Jesse has a deep dive for you on the Synthetix Network.
And much more!
Polygon zkEVM Inverview
For anyone not familiar, what is Polygon’s zkEVM?
Polygon zkEVM is the first zero-knowledge scaling solution that’s fully equivalent to EVM: All existing smart contracts developer tools and wallets work seamlessly. The zkEVM harnesses the power of ZK proofs to reduce transaction cost and massively increase throughput, all while inheriting the security of Ethereum L1.
How do zk-rollups work?
Zk roll-ups aggregate a large batch of transactions and proves all of them to the Ethereum network with a single ZK validity proof.
How scalable will zkEVM be?
We’re still doing testing, so no specifics yet, but it will be more scalable than layer 1 Ethereum. Users will see increased scalability using this solution.
What kind of fee reduction can users expect?
Compared to Ethereum Layer 1 users can expect a significant reduction in gas fees. Our layer 2 scaling solution batches transactions together and then effectively spreads the cost of a single layer 1 transaction across multiple layer 2 transactions.
Can you talk about Ethereum Virtual Machine compatibility and why this is so important?
Our ultimate goal is not compatibility. Our ultimate goal is equivalence. Solutions that are compatible enable most of the existing apps to work, but sometimes with code changes. Additionally, compatibility may lead to the breaking of developer tooling. We strive for EVM Equivalence because it means that applications, tools, and infrastructure built on Ethereum can immediately port over to zkEVM with zero changes needed. Everything will work 100% on day one. This is important, because:
- Development teams don’t have to make changes to their code, which could add a security vulnerability.
- Since no code changes are needed neither are additional audits, which saves teams money.
- The experience for a developer is much better. Since he/she is not rewriting the application value time is saved.
- Our solution ultimately benefits from the security and decentralization of Ethereum, since we’re still finalizing everything on Ethereum.
- Allows zkEVM to benefit from the already vibrant and active Ethereum community.
- Allows for significant and quick Dapp adoption, since all apps built on Ethereum today are 100% compatible
Can this layer two work with other chains?
Aspirationally, the goal in the future is to build one of many chains that allow for users’ assets to move from layer 2 (L2) to layer 2. With that being said, users will not be able to utilize this functionality at launch, but L2 to L2 movement is something we have road mapped for the future.
What is your plan to gain market share from the likes of Arbitrum and Optimism?
When evaluating ZK rollups versus Optimistic Rollups like Arbitrum and Optimism if a user chooses the ZK rollup it’s most likely because they’re prioritizing finality and capital efficiency.
When can we expect the testnet and mainnet?
Testnet late 2022, Mainnet Early 2023
CRO Staking by Erik
Staking any cryptocurrency should be viewed as a long-term investment. Staking reward payouts are not near as important as the fundamentals of the investment asset. Anyone caught holding a bag of UST earning that incredible 20% knows what I’m talking about.
So, in order to answer the question of whether it’s worth it to stake CRO, one should understand the company and blockchain along with the token and staking reward details. The following will do precisely that!
What is Crypto.com
Crypto.com is a Singapore-based company offering an encompassing menu of blockchain-focused trading, payment, and financial services to a global client base. Known for its sleek advertising campaigns (Fortune Favors the Brave with Matt Damon and the Los Angeles Crypto.com Sports Arena), the company ranks among other tier-one blockchain trading providers such as Coinbase, Binance, and FTX.
Crypto.com was founded in 2016. The company offers approximately 250 cryptocurrencies and several financial products including a crypto-backed Visa debit card to roughly 50 million users across 90 countries.
What is Cronos
Cronos is a decentralized, proof-of-stake blockchain developed and maintained by Crypto.com. The Cronos blockchain is Crypto.com’s foray into the blockchain payments industry. This blockchain, backed by a private brokerage company, is somewhat analogous to Binance’s BNB blockchain.
Cronos is an EVM-compatible blockchain built on Cosmos. Crypto.com markets Cronos as an “easy-to-port platform” for Ethereum and EVM compatible dApp projects that want to plug into it. Cronos uses the Tendermint proof of stake consensus mechanism and is integrated into the Inter Blockchain Communications Protocol.
At a high level, Crypto.com’s mission is to use Cronos and its native token CRO to allow users to seamlessly pay for real-world goods with cryptocurrency. Please see here and here for deeper dives into Cronos.
What is CRO
CRO is the Cronos blockchain’s utility token. CRO is mainly used as a medium of exchange and as an intermediary settlement fee currency for all Cronos blockchain transactions. Any participant that transacts on Cronos pays fees in CRO. The cryptocurrency is also used for staking and staking rewards for delegators and validators.
CRO currently has a market cap of $3.6B, ranking it at #25 of all cryptocurrencies. Due to its tokenomics, CRO might also be considered as a store of value coin. It has a max and circulating supply of 30.2 and 25.2 billion tokens, respectively. Thus, approximately 83% of CRO’s total supply has already been created.
|Quick & Dirty CRO Statistics|
|Market Cap / Rank||$3.6 Billion / #25|
|Fully Diluted Market Cap||$4.4 Billion|
|Circulating Supply||$25.2 Billion|
|Max Supply||$30.2 Billion|
|Circulating to Max Supply Ratio||83%|
For staking, CRO uses a delegate proof of stake system. Investors delegate their CRO to validators, the latter of whom secure the network. Block rewards are paid in CRO, which are distributed to delegators after validators have been paid their commission.
Currently, delegators (that’s you!) are receiving a staking reward of 12.18% (adjusted for CRO inflation) on their CRO. Not terrible! Here are some other important details:
- No minimum stake requirement;
- 28-day unstaking lock-up period. Users can unstake at any time, but unstaking triggers a 28-day lock-up where users cannot trade or sell that CRO; and,
- Slashing enabled! Select your validators carefully! Ideally, it’s recommended to choose validators with 99% uptime and over 8% voting power. The status of CRO validators can be seen here.
|Quick & Dirty CRO Staking Statistics|
|Delegator Reward Adjusted for Inflation||12.18%|
|Average Validator Commission Fee||.11%|
|Staking Market Cap Rank||#16|
|Staking Market Cap||$566 Million|
|Staking to Circulation Supply Ratio||15.48%|
CRO Staking: Is it Worth It?
Not financial advice, but I think CRO staking is probably worth it if the investor:
- Purchases CRO at a relative market bottom
- Considers purchasing no earlier than November 1, 2022, and
- Is willing to hold and stake for at least two to three years.
1. Buy and Stake the Bottom, Not the Top
Investors looking to purchase and stake CRO should try to purchase the asset at a relative market bottom. 12.18% APR is excellent, but if the CRO was purchased at a market top (e.g. November 2021 for $.9 per token), then they’re in for a world of pain. Under such a scenario, and with the current market price at $.14, and assuming this price remains steady long-term, investors would need to wait approximately 7 years for the staking to break them even. Ouch!
Are we at a market bottom now? I don’t know, and neither does anyone else. But if I had to make a bet, I would bet yes. The CRO price is currently back in a bottom market channel that began in June of 2020. If BTC dumps to 10K, then CRO might fall another 50% to 75%. But I think a 10K BTC purchase will be the buying opportunity of a lifetime and very short-lived. Thus, once BTC bounces back to $20K, CRO will quickly regain traction too.
2. But Why Consider Waiting for November 2022 to Purchase?
Because of the possible price implications from Crypto.com’s recent rewards cut to their Visa Debit Card program.
Crypto.com has a popular Visa Debit card product that lets users fund their card with fiat or crypto and then spend it anywhere Visa is accepted. This card has an additional rewards program that pays users cash back on purchases relative to the amount of dollar-denominated CRO that users have staked to the network.
See the image below. Before June of 2022, users were able to receive these cash back percentages according to the amount of CRO staked to the network.
But as of June 2022, Crypto.com implemented a revised reward schedule and required the same amount of staked CRO. See below.
Importantly, those with active 6-month stakes before May 1, 2022, are grandfathered in at the previous reward rates until their 180-day stakes expire.
Some users were vocally upset with the revised rewards announcement. So one concern is that some grandfathered investors will sell off their CRO after their 180-day lock-up period expires. This could create a negative feedback loop because other investors might decide to sell too, instead of topping off their staked amount to maintain their rewards category (remember, Visa rewards members must maintain a certain dollar-denominated CRO balance to keep their applicable rewards category).
The last grandfathered investors will complete their 180-day lockup by November 2022. Unless BTC moons before then, it might make sense to wait until near the end of the year to scoop up CRO.
3. Plan to Hold for Two to Three Years
This doesn’t need much explanation, but none of this makes any sense unless investors’ time horizons are at least two to three years. A longer time-period gives a certain buffer for price dips along with a bigger window for price pumps.
I think it’s likely worth it to stake CRO.
Crypto.com appears to be in the top tier of global centralized exchanges. Their financial products, marketing, and global reach lend them credibility. The Cronos blockchain appears relatively stable and functional, CRO’s tokenomics are favorable, and the staking reward percentage is high. Investors will want to purchase CRO at a reasonable market bottom and plan to hold for a few years. CRO might experience sell pressure as the 180-day lock-up periods end for grandfathered Visa rewards members. Thus, an ideal time for purchasing CRO might be near the end of 2022.
Thank you so much for your support, and I truly hope that today’s issue will give you insights needed to help you master your wealth.
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Lark and the Wealth Mastery Team
TCL Publishing ltd (director Lark Davis, owner of Wealth Mastery) is not providing you individually tailored investment advice. Nor is TCL Publishing registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. TCL Publishing is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.