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HODLer's Den By Aromatic (Free Version)
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Disclaimer: Nothing in this report constitutes investment advice—I am just reporting on my accounts and its progress on each platform. You should not use this report to make financial decisions. I recommend you seek professional advice from someone who is authorized to provide investment advice.
Hey everyone and welcome to the HODLer’s Den!
Here you will find information on my crypto investment portfolio straight from a HODLer’s perspective. This section will focus on HODLing cryptos and interest-earning platforms.
Crypto.com
Things worked out nicely as this report on Crypto.com (CDC) was supposed to be release last week, but C1S and I decided on BlockFi instead.
A lot has happened since the last CDC report, 5 weeks ago. I know a large majority of CDC users are conflicted about the events that have recently transpired: the MCO (Monaco) Swap for CRO (Crypto.com) and changes to the entire CDC ecosystem.
MCO Swap
The old CDC system utilized two tokens, MCO and CRO, each with its own functions. The MCO swap, as the name implies, converts existing MCO into CRO. Moving forward, CDC will only utilize CRO which, according to the team, will have the combine functionalities of MCO and CRO.
To do the MCO swap, you must use the Crypto.com app—make sure you have updated to the most current version. Once you open the app, there should be an icon to initiate the MCO swap. You literally cannot miss it since it pops up on almost every screen inside the app and becomes annoying after a while until you eventually give in like I did.
Since the swap occurs within the CDC app, you will need to move all of your MCO onto the app before you initiate the swap. I wanted to document the steps for the conversion but it skipped my mind. It does not matter if your MCO is staked or locked in an earn period—the app will allow you to convert all MCO that it detects within the app. It seems like you can do the swap multiple times as long as you have remaining MCO. Below is the current swap rate for MCO to CRO.
CDC users must initiate the swap before 2 Nov 2020 at 23:59 UTC. You must take action, otherwise you risk losing all of your MCO: this process is not automated. They currently offer a 20% bonus for early swappers if you complete the conversion process before 2 Sep 2020 23:59 UTC. Below is the 20% bonus swap rate for MCO to CRO.
The swap process requires that you are a registered CDC user with a verified KYC (Know Your Customer). If you do not have an account with CDC, your best bet would be to sell your MCO on an exchange.
Discussion
The MCO Swap came out of the blue so it took me some time to process and gather my thoughts. When it comes down to it, I like to use a pros-and-cons list to make my decision.
PROs
Simplification of the CDC platform with 1 utility token: CRO
Regulatory compliance
Bonus CRO for early adopters/swappers
CONs
MCO and CRO price manipulation
Non-transparency with initial investors and CDC community
Changes in CDC card staking requirements
Following the MCO Swap, the CEO of CDC, Kris Marszalek, did an AMA (Ask Me Anything) on Tuesday August 4th, 2020. I recommend a watch if you have time, but it helped address some concerns I had after learning about the MCO Swap on Monday.
I will be honest, I did not bother researching CRO when they announced it and just invested in it because of the 18% APR (Annual Percentage Rate) when locked up in a 3-month period with CDC. I knew MCO was the main token used to stake for debit cards and to unlock better earn rates. Aside from that, I really did not know the use case for CRO. I believe the MCO swap will make CDC easier to use as users will only need to learn about one token, CRO. With cryptos being fairly new, keeping the CDC platform simple will help with adoption hence it is a pro in my opinion.
In the AMA, Kris said the main reason for the swap is for CDC to become compliant with the regulatory environment. CDC has already applied for a number of licenses and more are in progress.
Part of this is managing regulatory compliance risk. And it so happens that in our industry, ICO tokens are on one end of the spectrum in terms of regulatory compliance risk, and you could argue that Bitcoin is on the opposite side. So in order to manage these risks, practically, we can't rewrite history. We did an ICO in 2017. But we can't have an ICO token perform core functions on our platform as we grow, as we get licensed, as we get regulated in all key jurisdictions around the world.
-Kris Marszalek, CDC CEO
Since ICOs (Initial Coin Offering) are not regulated, many investors have lost their investments in scam coins during the 2017 ICO fiasco. Hence, tokens like MCO which were offered in CDC’s ICO is a huge regulatory compliance risk and it makes sense to move over to CRO.
I was an early adopter of MCO and bought in around 2.5 USD so I benefited from both HODLing MCO in crypto earn and the price appreciation. By swapping my MCO early, I got 20% extra CRO for free so it was a no-brainer in my situation.
Even though I enjoy the 20% extra CRO, the formula used to calculate the rate was advantageous for CDC and not its users.
Looking at the price charts for the previous 3 months, MCO was on the decline from almost 6 USD down to 4 USD in the month of July. During this time CRO grew from 0.06 USD to a high of 0.16 USD. If the swap had occurred 2-3 months earlier, the conversion rate would have benefited CDC users because 1 MCO should theoretically yield 100 CRO. Kris mentioned this during the AMA, stating that this conversion rate would “mean essentially that the cost of the swap will increase from $22 million to almost $200 million. And that's just not feasible.”
Many have speculated this to be price manipulation—and it could be true—but I think CDC just chose an opportune time so that the conversion formula worked out in their favor. Either way, it was unfair to users of CDC so I consider it a con in my book. I believe they should have adjusted the formula so that it takes into account more than just 30 days—perhaps changing it to accommodate the last 200 days to get a better average price for both MCO and CRO.
As I mentioned, the swap was announced out of the blue which shocked the CDC community. They should have been more transparent with their intentions. There was a clip on Reddit with Kris saying, “At no point in time will there be a swap from MCO to CRO.” The video clip has now been removed but I saw and heard it with my own eyes. Transparency is important for CeFi (Centralized Finance) platforms such as CDC, and the unexpected MCO Swap has made them lose come credibility in opinion.
With the MCO Swap came changes to the CDC debit card staking requirements as seen below.
The new requirements for CDC debit cards increased by a factor of roughly 4, which is insane and I was extremely upset with the changes. It felt like a quick and easy way to pump the price of CRO after the swap while at the same time making many of the card tiers inaccessible for new users due to high costs. I was relieved to find out that users would be “grandfathered” into their current card tiers unless they unstake their MCO/CRO.
During the AMA, Kris did announce adjustments to the CDC debit card requirements which are now favorable for users.
The updated CRO staking requirements mean that it will now cost 20% to 30% less than the original MCO requirements based on the current prices of MCO and CRO at 5 USD and 0.16 USD, respectively. Originally, the change in card tier was considered a con, but it is now a pro in my book.
Ultimately, the pros outweigh the cons in my situation, so I will continue to give my business to CDC.
Interest Earned
During the span of 5 weeks, my CDC earn account grew an extra 4168 USD. The crypto market is currently in a bullish state so do not forget to take that into consideration when looking at my earnings. Bitcoin is sitting at 11.7k USD and Ethereum is at 391 USD—both of which make a huge chunk of my portfolio.
You can track my earnings progress on the four major interest-earning platforms that I use by checking out this Google spreadsheet. As you can see, my total earnings from CDC grew a whopping 44% over the course of just 5 weeks. I could easily use my interest earnings to top off my CDC card to pay most off my monthly bills, but since I am a HODLer at heart, I will continue to compound all of my earnings.
Conclusion & Prospect
With the recent changes to CDC post MCO Swap announcement and the AMA with Kris, I still have high hopes in the platform. I have already outlined the pros and cons earlier in this report, but I will go into additional details here.
MCO has a circulating supply of roughly 31.5 million, while CRO has 100 billion—meaning the supply increased by more than 3000 folds post MCO swap. In my previous CDC progress report, I stated that I was bullish on MCO because of its limited circulating supply. Now that supply has expanded, it is hard to speculate on CRO’s price.
I am glad CDC listened to the community in regards to the debit card requirements. With the new, lower CRO requirements, I was able to upgrade my Jade Green card to the Icy White card. The MCO early swap bonus definitely helped me reach the required 100,000 CRO tokens. The card is currently in the “Issued” status and I am super excited to get it. Before the changes, I did not think I would ever get the opportunity to upgrade to the next card tier.
With my new Icy White card, I might actually start using it for most of my purchases to maximize the 4% cash back in CRO. The Jade Green has 3% which is good, but at 4% the Icy White nets me double the amount that my Citi Double Cash can produce. Just a reminder that by using a CDC debit card, you are basically DCA (Dollar Cost Average) into CRO. As the price of CRO increases, the cash back amount increases as well, so even 1% or 4% may result in ridiculous gains in a bull market.
From a HODLer’s perspective, I was super hyped to see the 2% extra earnings in Crypto Earn now that I unlocked the Icy White card.
As you can see, with each asset invested in Crypto Earn, I will get an additional 2% interest paid out in CRO—basically 2% extra across the board for all assets in earn except for CRO itself which will remain at 18%. With my upgrade, I am considering moving some assets from Bitrue back into CDC.
My MCO Swap process did not go as smoothly as I wanted—the app was stuck in the swap process and I did not get the 20% bonus CRO for doing it early. However, that was all remedied within a day by contacting support through the CDC app. In addition, I had CRO locked up for 3 months in Crypto Earn which they helped me to unlock so that I can stake for the Icy White card. Overall, the customer support and customer service from CDC are still top notch. I contacted support the day after the MCO Swap announcement and I can only imagine the amount of incoming traffic congesting customer support, yet they responded promptly and resolved my issues.
The MCO Swap was definitely unfavorable for most CDC users. The timing and the formula used in the conversion suggested price manipulation and non-transparency from CDC. However, the AMA with Kris, CDC’s CEO, helped answered some of my concerns regarding the MCO Swap. In all honesty, I was ready to stop using CDC when I read the email but I always tell myself not to act rash—I like to take a day or two to analyze the situation and make a pros-and-cons list. If the swap is truly for regulatory compliance then I am all for it because it is beneficial in the long run. Like I mentioned earlier, I wish they modified the conversion formula to be fairer to users. At least they made the CDC debit card tiers more accessible by lowering the requirements.
For now, I will continue to use CDC—I am super hyped to receive my Icy White card. The interest I earn will now increase since I will be getting an additional 2% paid out in CRO. Overall, I am satisfied with CDC and I think moving forward they will continue to deliver great products and become more transparent in what they do. Final reminder to do your early MCO Swap for the 20% bonus CRO—it may help you reach your next card tier requirements like it did for me.
Each week I will report on a different interest-earning platform that I use—mainly, Celsius Network, Bitrue, Crypto.com, and BlockFi.
If you do not have an account with Crypto.com and would like to support my work, please use this referral link to sign up and we both get 50 USD paid in CRO! Much is appreciated!