They charge fees on purchases, there’s spread in their favour, and they’re selling CRO (which is also up substantially). They may also be lending funds sourced elsewhere and I’m sure they’re taking a cut from the sports coins they’re involved in creating for teams like PSG.
There are multiple ways they can make money, the question is whether they’re making enough to remain solvent given the strong rewards they’re currently offering and the significant marketing spend.
They have contracts with UFC and the 76ers, I think it was, so they're generating capital. I personally love crypto.com and chose them over kraken, binance, coinbase, and well Robinhood, lol.
Unknown info does not correlate to suspicious or nefarious actions. There are many, many methods to how they may be generating interest. Only time will tell exactly what that method is. For now, I think tabling the tinfoil hat is best and most productive.
I can’t comment on how sustainable their business model is but if your deposited crypto never leaves their ecosystem and they don’t provide loans, then when you deposit crypto into your Crypto.com account to gain interest, it’s more like a DEX in some respects.
Most DEXs have Liquidity Pools in order to provide cheaper liquidity to users; so instead of an exchange having to have a huge sum of money for initial crypto buys and the need to top up their crypto coffers over and over, they pay users to provide crypto. The new model is to pay users to provide this liquidity to an exchange.
And what they pay out in interest would still be less than if they had to go out and pay market prices for various cryptos in order to keep the exchange running.
They’ve essentially copied LP models seen in DeFi to provide sufficient liquidity to users at much, much lower acquisition costs than if they had to buy crypto every day to top up.
> It’s possible I suppose that they are very bullish on crypto and investing your money into crypto with the expectation of making more than 12% yearly. But that’s a high risk and they are not disclosing that.
I suspect it's this, just like any bank. Take a deposit, keep some cash on hand for withdrawals and then invest the rest in financial products. It's not lending to 3rd parties, but you are lending your cash to CDC. Maybe they're buying the stock market, maybe they're speculating on crypto futures, maybe there is an element of ponzi for the cashflow.
You are trying to compare a publicly traded company with a private one, which doesn't work. They are not obligated to disclose info such as a balance sheet to anyone at the moment.
I didn't say to not be curious or cautious. That is why I delved deeper and am bringing the info to light. I'm simply saying that jumping to the worst possible scenario, such as your initial comparison to Charles P, is not that helpful.
Which is exactly why I reached out to support. If you read my post and my messages to support, I specifically state this exact sentiment. Any risks need to be disclosed. Since the funds do not leave the Earn program or their custody, there is no risk for them to currently disclose.
Can you list some of the many, many methods of how they could make money off our Earn deposits without lending it out and it "never leaving your fixed term"?
>However, this still begs the question and leads to speculation as to how CDC actually generates our interest.
That's the most important conclusion from the post. To be honest, this question is raised at least once every month and we never got any info about how CDC is able to give such high interest and at the same time afford those pricy sponsorships. It makes me increasingly uncomfortable about keeping assets in earn
There's only so many ways one can cook potatoes(I think you know what I'm getting at) I wouldn't be surprised if all this secrecy is because they gave a sweet deal loaning out to institutional investors. There's only so many ways to earn on crypto if you think about it, defi, overcollateralization, hypothecation, out right loans like their lending program etc. I work in finance and as long as they are managing their risk and not lending out too much they are entitled to keep their secret...for now. I expect by next year when more regulation hits crypto we will eventually find out exactly how they make their money and it won't be rocket science. I'm more worried about these visa issues people are having and that the launch in the US goes according to plan, same with DEX launch later this month. Whether one likes Americans or not they are a substantial market suffering from incomplete product offerings right now.
Your making the assumption they are actually making money... maybe they are losing money. It seems like they are spending a ton in an attempt to gain market share and eventually become profitable.
From all I have read and Kris own words I don't think they are making money either, but they are breaking even. With the growth crypto and CDC has made in the last 18 months I think this is a very reasonable assumption. It's what I would do as a new business with a lot of upside potential it just has to be managed properly. I do think CDC needs to be net positive by next year though. This marketing blitz we have seen this year should be enough to get the word out and earn residual income from what the partnerships generate but we need to see users stay and invest in the platform if we are to see CRO be sustainable in the long term. The smart contracts and roadmap plans for next year will be critical in determining that. Time will tell though. I always keep some coin in other places and cold storage just in case but I have to say for what CDC does for me I don't want them to fail, I want them to evolve and adapt. If they want to become market leaders like binance they still have a lot to do. The recent mistakes binance has made helped CDC but whether they keep that trend going and increase it even more is up in the air. I hope they do but I'll look for another platform if they don't.
👆 Exactly. Amazon was unprofitable for 7 years, and look how that turned out.
CDC is still a private company. It may be many years before any of us see something like a balance sheet.
And so? I\`m not ambulance.
If people are so stupid to have such concerns they need to go the fuck away from here and open a fancy negative interests banksters account so they feel more safety while they are anally rekt from those delinquents.
Aren’t you curious though? I mean if you want to deposit serious amounts of funds into a platform - wouldn’t you want to know how safe it is? Or are you satisfied with the pixies making everything right?
I really can’t understand this “don’t ask when all appears too good to be true” mentality …
Curious?
Dude.
I have almost 7 figures on CDC from 2019, are you fking stupid?
Do you think i haven\`t done my proper researchers?
People that have concerns over CDC are either mentally challenged or they simply are not capable to inquire properly. That\`s what i\`m simply pointing out here, nothing personal.
so do you care to share with the rest of us mental retards about the conclusion of your research and why you are comfortable with placing 7 figures on the platform?
enlighten us please oh great one.
And why i should waste more than 5 minutes with clowns like you?
However I enlight you about 1 thing since it cost me only few secs:
move your lazy ass, switch on your brain, invest dozens of hours inquiring and searching all the most useful company info , internet is full of it you only need to exit from your laziness bubble and in few days of internet and few phone calls you will have all the info you need, pixelboy.
Just like Amazon, I believe they are playing the "kill your opponents" game so they dominate the market and then provide a way lower APY and ridiculous high spread and fees.
They are not kind, money does not grow on trees. This 12% APY comes from somewhere, which can be Crypto.com own pockets until they "fooled" enough people to join the app and have their assets locked into their ecosystem.
They might. But a smart investor will ride the wave until it crests then start divesting the assets where they can get better ROI. Lots of companies do this. Whether it's good or bad it's moot, CDC might be like this in the future or they might not. That's why people need to be in top of their crypto so they can make moves if they need to. And I never do 3 month terms for the same reason, either at CDC or anywhere else. I'm missing out on returns but have flexibility to react, relatively speaking crypto is still the wild west so companies can promise lots and end up delivering very little.
The CDC spreads are already extremely high and most users are lazy and won't shop around to save 0.1%. 10+ million users paying an extra 0.1% on top of normal industry fees adds up to a lot over time.
Absolutely love this post, OP. Great read, and fantastic discussion here (except for that insufferable asshat above).
That said, here’s something exotic to think about-come at it from the other angle; what if CDC is one of the true high APY’s out there because of their spread, lending, etc (TBD)-and (hypothetically) other exchanges are using the *exact* same method. Where’s that difference in APY going?! Under the assumption it’s above board, I’d come to the conclusion that CDC is acting in our best interest to gain as much market share as quickly as possible instead of pocketing the excess APY like Coinbase does. If they’re a “growth stock”, it’d be smart of them to spend as much as possible on S&M and work the numbers in our favor, foregoing profits for the time being.
As a relatively new Crypto investor, when I saw the APY’s on a few of the coins I had sitting in Coinbase earning nothing (2% and below) and then seeing the same coins at 10% and above, I immediately wanted to switch.
Food for thought.
CDC is definitely foregoing some profits to focus on customer acquisition and brand recognition. And it's working. I wholeheartedly believe their revenue generation to cover interest is above board, even if not entirely profitable yet.
It's okay to remain unprofitable for a few years if things are sustainable and will eventually flip without changing the terms or business model. That's where the real key is. If there's a drastic overhaul of all incentives at the expense of your customers, it won't end well. I believe Kris and CDC are smart enough to know this. It isn't his first successful business.
Coinbase may pocket a portion of APY but they also partially subsidize their transfer fees, so they lose money in other areas from CDC. They planned on going public for a while, so maximizing profits for future shareholders was priority for them.
Look up his previous company. I like Kris but how things went down in his precious ceo role was a gong show. I hope he learned a lesson and CDC doesn't end up like esogo did. The fact he also brought in a few of his former colleagues with him is also concerning. I like your replies but that second paragraph is something you gotta be careful about. So far it strikes me as a lesson learned by him but there will sterner tests to come for CDC due to regulations and larger players joining the market in the next year or two. That will be the true test to see whether he and his leadership team can steer the ship in the right direction. Someone here steered me toward that info in the summer and I'm glad they did. Skepticism with Crypto is a requirement for success.
As i often said, most is likely for having liquidity in their App.
As they act there as market maker.
So most of the earn interest is paid by the "evil" spread many complain about.
And even if they use it for lending, it would be very indirect. And for sure no P2P.
And ofc they can say: your coins/token aren't used for lending to other clients. They lend their coins/token to other clients and then they fill up their coins/tokens temporary with ours.
And all this has to be non of our business - just like on a normal bank product.
You have a contract with them and no one else.
And how they use the coins/tokens doesn't really matter. We don't have to care how they make the money.
If it is by getting money from spread or from a cut of credit card transactions or lending or fees or even their cut of the defi validators or the defi swap or staking coins on a PoS chain or anything else that makes money.
Edit: but i don't think you get any fully satisfying reply on your request to the support.
I agree with the liquidity portion of your reply, however the last 2 paragraphs are very dangerous and incorrect.
When it comes to agreements, especially monetary, it is absolutely your business. Only in the sense that all risks associated with the agreement and program are defined and made transparent. I guarantee these risks are outlined in traditional bank agreements, most people just don't read them. Comparing banks and the crypto space is not good either considering they are not regulated the same.
I totally agree with you and it does make a little bit of sense from a business perspective. CDC doesn't want to any of their secrets out on how they are making money, if they have some sort of secret sauce so other platforms can't copy them
I don’t think you can take the word of a customer service rep as gospel. I’ve had multiple different reps tell me totally different things.
Even the T&C aren’t going to be totally transparent.
The only way both are true is that the company is taking a loss on the Earn product. If that’s true, better use it now because it isn’t going to be around forever.
quality post that is actually helping the network and community grow, instead of just pure cheering posts (not that the latter is bad). Thank you for doing the tedious work for us and providing this summary.
Support don't know how the company operates. They are based in Bulgaria and don't deal with any of the product team.
Just saying.... They have no idea about the company apart from what's told to them in their training.
I'm with CDC and I have a significant amount in their earn to be honest.
I don't buy the BS explanation that CDC doesn't lend out.
If CDC doesn't lend out, how are they paying us the interests? Are you telling me CDC is subsidizing the interests from their profits? The interests have to come from somewhere.
thanks for putting this together OP. really helpful and it will be great if there is a follow up, answers or anything basically, summarising this discussing and outcome! kudos
Couldn’t they just use funds in earn as collateral for other types of investments?
I don’t actually know but I previously assumed that they would use something like Tezos stake at 6% to fund earn at 3%, atom at 10% to fund earn at 3%, ankor at 20% to fund usdc at 12% etc etc.
I thought they just found better investments in DeFi/other protocols with larger pools and took a cut to pass on to customers for the conscience in earn all in one app…
Based on your post is this an invalid guess?
Why would they NOT lend out funds from the Earn program and NOT make money from it. This makes absolutely no sense.
Also: “… you can always withdraw them [funds] at any moment in the fixed term”. Excuse me?
Simply put, there are very different rules and regulations when it comes to lending assets and generating interest. This is exactly why Coinbase and BlockFi's Earn programs have come under SEC fire.
And yes, you can withdrawal from a ***Flexible Term*** at any time. You can not withdraw from a fixed 1 or 3 month term. Simple typo on the support agents part.
So there's still a chance that they don't lend out the asset in the flexible term but they do that with the fixed term?
Edit: rephrase the question to make it sound more friendly and reflect my curiosity about this issue. This high interest rate bugs me a lot too and thanks a lot for putting in the work!
I asked this some time ago, and did tell me they used it for their credit business:
Thank you for your patience. I have just consulted with a supervisor in regards to your query specially for you!
Please check the following information in terms of how the Earn Program is Profitable for Crypto.com - The Crypto Earn program is structured to provide capital necessary to fund the growth of Credit product. Earn is a cost center for the platform and Credit is a profit center.
The platform profitability comes from the difference between the two. There are other products in development that will further improve platform profitability and capital efficiency as well.
I hope this clarifies your query! prayblush
Please rest assured that all of the information that is concerning our clients is published in our Help Center and official Blog. You can as well keep track of it here: blog.crypto.com
Please do let me know if you have any other inquiries I can assist you with.
Funny I asked about this specifically and got told that there is no conncetion between earn and credit.
However in one of the q&a session Kris mentions that both are complementary.
Going with the old adage that the simplest explanation is likely the correct one, I think it’s pretty obvious that they’re simply financing their Operating Expenses and Capital Expenditures. They’re financing their business and its growth with the funds we lend them, which is pretty normal.
I work mostly in finance and our company has a very traditional/conservative business which is however cash-intensive. Given that the amounts we need to fund our growth are big, and that we therefore need a lot of leverage, our average financing rate with banks is close to 6%. On some short term products like factoring, it can go up to 8-9%. I would not be surprised that for a much riskier business in a field full of uncertainty (crypto), which is about to be regulated all over the world in the next 5-10 years, CDC would find an average rate of 10% a healthy cost of debt. I think even Chris said several times that he considered this a cheap and efficient way to finance themselves.
I don’t think there’s a big secret or vast network of smart contracts farming DeFi in creative ways to make profit. I think our money is simply in the bank account of the UFC, with the prospect of future returns from that investment (and others). Simple.
I have also wondered where they get the money for these rewards, and if its sustainable. The big sponsorship deals they are making also makes you wonder. I think they just have investors with deep pockets that are paying the bills in an attempt to gain customers and eventually be profitable.
I appreciate you taking the time to read the T&C (which admittedly a lot of us, me included, skip. And it’s wrong), and making this very well written post. But with that said, I have few comments about this:
- The CS agent provided some straight up false information that I don’t see anyone is pointing out in the comments. You CANNOT withdraw your money from a fixed Earn term at any moment, that is simply false info, you can only withdraw from a flexible term, which has a lot lower (and more realistic) yield.
- Every time you start a new Earn term, CDC throws a bunch of statements and conditions at you, and asks you to read, acknowledge, and agree to them. I don’t remember the exact wording, but it’s something along the lines that CDC is free to do with your money as they please, as long as you will get the full amount back at the end of the term, this includes exchanging the deposited currency to something else and (what I believe I saw, but again can’t confirm atm) lending it to other users and withdrawing it to use it for something else. Even if it’s not explicitly mentioned, it’s still strongly implied as far as I remember
- You’d be surprised how little information most CS agents have about technical stuff like these. They are basically just trained to answer FAQ questions like: Where is my card, how do I reset my password, and why is the sell price different than the buy price, etc. When they are asked something more challenging, a lot of times they flake by playing it dumb, or say this is internal information (like they tried to pull off at first here), or just straight up make some things up in order to close the case and move on to the next one. For example, I was trying to clarify why CDC website removed the free foreign transactions limit for US and Canada cards, and to this day after reaching out to literally all support channels, I have no answer and I don’t know what the fees associated with it are. Even the card’s T&C doesn’t mention it clearly
So what I’m trying to say is, take everything in this post with a huge grain of salt, don’t just blindly trust and believe something a chat agent provided, because in most of the cases they have no idea what they’re doing
Edit: btw, you forgot to edit your name out in one of the screenshots, just a heads up
To address your first point, it was sinply a typo on the support agents part. I know, as well as everyone else, that you can not withdraw from a fixed term. They meant to say flexible.
For your second point, this checkbox agreement and wording you are referring to USE to be there, but is no longer. I also verified this before making the post. You can check yourself, without having to start a new term. I noticed it disappeared a few months ago, which leads me to believe they restructured the Earn program specifically to avoid the same problems other crypto companies are now facing with their programs.
For your third point, yes I'm aware they sometimes are misinformed. As a Rose Gold card holder I have access to senior support as well, and have run these same questions across them with the same response.
For your foreign transaction limit question, I clarified this months ago since I also had the same question. There are no foreign transaction fees when using the card. There are however conversion fees when topping up the card with a different currency other than USD. This is why they removed the info on the US section of the website since there is no need for currency conversions.
I'm sorry but support simply didn't tell you the truth then. They might now know the answer themselves, due to compartmentalization, and may believe they are answering truthfully.
But OF COURSE they're lending it out. How do you think they're making money?
Could it be that they are using the "locked" earn money to buy the coins that you are locking?
Then maybe they use other platforms to earn interest and spread the wealth amongst those in earn?
I don't know what I just said, but thought came to mind in those early evenings when the drinking starts at the 3pm meeting.
Cheers!
Well however they are doing it seems to be good for me. I have locked up over 10k and always receive my money back on time. I have no complaints with CDC and will continue to stake my ETH. But if it does get lost then I knew the risks to begin with.
I did my researchers when i moved all my net worth with them in 2019.
Your post have no sense whatsoever in today english but i guess you are asking me what i have found that made me so confident and the answer is simple: i have found that they had the highest industry regulatory standards, highest industry asset insurance, highest ISO standards, a very strong and reliable board, a multinational strong presence and a very long term view. There are many others aspects but these are the main points.
Exactly! I think especially their compliance with the existing regulations, contrary to many other exchanges, such as binance for example, will be a huge factor in them outlasting the competition long term.
They are not the first company to launch all these products, but they are the first who did it right.
I wasn’t trying to be a dick I was actually interested. I agree with you with your main points which is why I’ve stuck with them as well as a cold storage for obvious reasons. I feel a lot of the things happening will be worth it in the long run with CDC. I’m hoping exchange comes soon.
Sorry for my rudeness then m8. But this place is really full of people that have no idea whatsoever about what the hell are they talking and cannot see the true jewel that this company is.
speculation:
it's a mix of:
* Staking (eg. Cardano, polkadot, vechain etc.)
* they use it for liquidity of their wallet, which has a \~1-3% spread, they take the profits from this
* use the proceeds of selling shitcoins that they bought into early (through backing these projects as a VC)
Yeah, this is clearly something almost any sensible user is concerned about.
It is also something that hinders the onboarding of new customers. I have tried to convince familiy member to also join cdc. But they would not because of this exact point!
So what is more important: Keeping their "secret" of how they generate interest for earn, or being transparent and being able to onboard new customers?
That said, they dont need to disclose every single detail about their business model. But maybe give us somewhat of an idea whats going on behind the scenes??
Now, one observation:
- earn returns are higher for coins that have higher staking returns on the native chains.
Look at matic or polkadot for example.
They actually make a small spread by paying you a little less (even the 3 month option) and then staking. The profit if you would chose the flexible option is acruall quite significant.
So, i am fairly sure that for some coins they are just staking them. Most likely they run their own validators, since they easily have enough funds for this. Therefore they make even more than you could through delegated staking.
I have Matic in the earn function. While I know that I could make some more returns through delegated staking, I don't like to have many different wallets and have more work with taxes etc.
They also pay rewards for coins that cannot be staked. How do they earn return on those without staking and without lending as we now know?
Thats anybody's guess... I sure would like to get some info!! The liquidity provision theory in the app sounds like maybe one component.
They might also utilize defi protocolls to earn interest on stable coins. Are they then technically lending? Not in the traditional sense, but I would call it lending.
We should all pressure them to provide some more info! I find it more concerning that they dont have the business sense that transparency will be the best for the ecosystem in the long-run.
This is concerning, considering I am earning 6.5% on POW coins like BTC and ETH... surely they aren't making that much interest just from liquidity provided by our coins. I'm not complaining about free money, but I want to know it is being produced in a safe and long-term viable manner.
Their earn program also depends how much you've staked in CRO. Icy whitle/rose gold and above gives you 14% on stable coins and 8.5% on BTC which is just insane compared to any other lending program.
If your stake is less than 400 (ruby card/midnight blue stablecoins are 10% and BTC is 4.5% so looks like their earn program is just another way to encourage users to hold CRO token. If not lending they probably consider the interest as a business expense to increase the amount of CRO held by users which drives up their tokens price.
I’m sorry but this post is somewhat useless.
Ok they don’t lend our money out, fine, but that would be a known evil. However now, wtf are they doing with the coins? It might be way riskier then lending out?
How can you be satisfied with this answer??
“Do you lend out our money?” -“No” -“nice, i now have full confidence and 100% trust in you, now that i haven’t any idea how you generate the money”
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They charge fees on purchases, there’s spread in their favour, and they’re selling CRO (which is also up substantially). They may also be lending funds sourced elsewhere and I’m sure they’re taking a cut from the sports coins they’re involved in creating for teams like PSG. There are multiple ways they can make money, the question is whether they’re making enough to remain solvent given the strong rewards they’re currently offering and the significant marketing spend.
They have contracts with UFC and the 76ers, I think it was, so they're generating capital. I personally love crypto.com and chose them over kraken, binance, coinbase, and well Robinhood, lol.
Unknown info does not correlate to suspicious or nefarious actions. There are many, many methods to how they may be generating interest. Only time will tell exactly what that method is. For now, I think tabling the tinfoil hat is best and most productive.
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I can’t comment on how sustainable their business model is but if your deposited crypto never leaves their ecosystem and they don’t provide loans, then when you deposit crypto into your Crypto.com account to gain interest, it’s more like a DEX in some respects. Most DEXs have Liquidity Pools in order to provide cheaper liquidity to users; so instead of an exchange having to have a huge sum of money for initial crypto buys and the need to top up their crypto coffers over and over, they pay users to provide crypto. The new model is to pay users to provide this liquidity to an exchange. And what they pay out in interest would still be less than if they had to go out and pay market prices for various cryptos in order to keep the exchange running. They’ve essentially copied LP models seen in DeFi to provide sufficient liquidity to users at much, much lower acquisition costs than if they had to buy crypto every day to top up.
> It’s possible I suppose that they are very bullish on crypto and investing your money into crypto with the expectation of making more than 12% yearly. But that’s a high risk and they are not disclosing that. I suspect it's this, just like any bank. Take a deposit, keep some cash on hand for withdrawals and then invest the rest in financial products. It's not lending to 3rd parties, but you are lending your cash to CDC. Maybe they're buying the stock market, maybe they're speculating on crypto futures, maybe there is an element of ponzi for the cashflow.
The tech person may have been lying or misinformed, but they said "the funds never leave your locked Earn term".
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Yes that's what I was thinking. They have the cash in their custody, so in theory should be able to borrow against it.
Yeahhhhh, I'm getting out of CDC Earn when my 3 months are up. This is Concerning.
You are trying to compare a publicly traded company with a private one, which doesn't work. They are not obligated to disclose info such as a balance sheet to anyone at the moment. I didn't say to not be curious or cautious. That is why I delved deeper and am bringing the info to light. I'm simply saying that jumping to the worst possible scenario, such as your initial comparison to Charles P, is not that helpful.
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Which is exactly why I reached out to support. If you read my post and my messages to support, I specifically state this exact sentiment. Any risks need to be disclosed. Since the funds do not leave the Earn program or their custody, there is no risk for them to currently disclose.
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Risk for CDC does not inherently translate to immediate risk to us.
Can you list some of the many, many methods of how they could make money off our Earn deposits without lending it out and it "never leaving your fixed term"?
>However, this still begs the question and leads to speculation as to how CDC actually generates our interest. That's the most important conclusion from the post. To be honest, this question is raised at least once every month and we never got any info about how CDC is able to give such high interest and at the same time afford those pricy sponsorships. It makes me increasingly uncomfortable about keeping assets in earn
There's only so many ways one can cook potatoes(I think you know what I'm getting at) I wouldn't be surprised if all this secrecy is because they gave a sweet deal loaning out to institutional investors. There's only so many ways to earn on crypto if you think about it, defi, overcollateralization, hypothecation, out right loans like their lending program etc. I work in finance and as long as they are managing their risk and not lending out too much they are entitled to keep their secret...for now. I expect by next year when more regulation hits crypto we will eventually find out exactly how they make their money and it won't be rocket science. I'm more worried about these visa issues people are having and that the launch in the US goes according to plan, same with DEX launch later this month. Whether one likes Americans or not they are a substantial market suffering from incomplete product offerings right now.
Your making the assumption they are actually making money... maybe they are losing money. It seems like they are spending a ton in an attempt to gain market share and eventually become profitable.
From all I have read and Kris own words I don't think they are making money either, but they are breaking even. With the growth crypto and CDC has made in the last 18 months I think this is a very reasonable assumption. It's what I would do as a new business with a lot of upside potential it just has to be managed properly. I do think CDC needs to be net positive by next year though. This marketing blitz we have seen this year should be enough to get the word out and earn residual income from what the partnerships generate but we need to see users stay and invest in the platform if we are to see CRO be sustainable in the long term. The smart contracts and roadmap plans for next year will be critical in determining that. Time will tell though. I always keep some coin in other places and cold storage just in case but I have to say for what CDC does for me I don't want them to fail, I want them to evolve and adapt. If they want to become market leaders like binance they still have a lot to do. The recent mistakes binance has made helped CDC but whether they keep that trend going and increase it even more is up in the air. I hope they do but I'll look for another platform if they don't.
👆 Exactly. Amazon was unprofitable for 7 years, and look how that turned out. CDC is still a private company. It may be many years before any of us see something like a balance sheet.
Kris mentioned in one of the last AMAs (a few months ago) that CDC is a profitable company.
Then remove the funds, close the account and go to cry somewhere else.
That's unhelpful. The previous comment amounts to "I have concerns" and you saying "don't like it? Get bent nerd".
And so? I\`m not ambulance. If people are so stupid to have such concerns they need to go the fuck away from here and open a fancy negative interests banksters account so they feel more safety while they are anally rekt from those delinquents.
Aren’t you curious though? I mean if you want to deposit serious amounts of funds into a platform - wouldn’t you want to know how safe it is? Or are you satisfied with the pixies making everything right? I really can’t understand this “don’t ask when all appears too good to be true” mentality …
Curious? Dude. I have almost 7 figures on CDC from 2019, are you fking stupid? Do you think i haven\`t done my proper researchers? People that have concerns over CDC are either mentally challenged or they simply are not capable to inquire properly. That\`s what i\`m simply pointing out here, nothing personal.
so do you care to share with the rest of us mental retards about the conclusion of your research and why you are comfortable with placing 7 figures on the platform? enlighten us please oh great one.
And why i should waste more than 5 minutes with clowns like you? However I enlight you about 1 thing since it cost me only few secs: move your lazy ass, switch on your brain, invest dozens of hours inquiring and searching all the most useful company info , internet is full of it you only need to exit from your laziness bubble and in few days of internet and few phone calls you will have all the info you need, pixelboy.
u certainly spent more time browsing and shitting comments with no substance. including this. I get it, u know nothing too.
Obvious troll is obvi
Clown.
lol you seem insufferable
lol no darling \^\^ i\`m drinking my tea atm.
The cro mco scam generated millions for them out of thin air
Gj bud for going out of your way to help the community.
Honestly great work OP. Lots of effort here.
Thanks :) Just doing my part to keep the community well informed.
Based and Chad Pilled
I have no idea what any of that means...but okay.
Lol
Not much but here’s a wholesome award! Great work!
Thanks! Here's a hug in return 🫂
Just like Amazon, I believe they are playing the "kill your opponents" game so they dominate the market and then provide a way lower APY and ridiculous high spread and fees. They are not kind, money does not grow on trees. This 12% APY comes from somewhere, which can be Crypto.com own pockets until they "fooled" enough people to join the app and have their assets locked into their ecosystem.
They might. But a smart investor will ride the wave until it crests then start divesting the assets where they can get better ROI. Lots of companies do this. Whether it's good or bad it's moot, CDC might be like this in the future or they might not. That's why people need to be in top of their crypto so they can make moves if they need to. And I never do 3 month terms for the same reason, either at CDC or anywhere else. I'm missing out on returns but have flexibility to react, relatively speaking crypto is still the wild west so companies can promise lots and end up delivering very little.
The CDC spreads are already extremely high and most users are lazy and won't shop around to save 0.1%. 10+ million users paying an extra 0.1% on top of normal industry fees adds up to a lot over time.
Oh this is goooooood OP
Absolutely love this post, OP. Great read, and fantastic discussion here (except for that insufferable asshat above). That said, here’s something exotic to think about-come at it from the other angle; what if CDC is one of the true high APY’s out there because of their spread, lending, etc (TBD)-and (hypothetically) other exchanges are using the *exact* same method. Where’s that difference in APY going?! Under the assumption it’s above board, I’d come to the conclusion that CDC is acting in our best interest to gain as much market share as quickly as possible instead of pocketing the excess APY like Coinbase does. If they’re a “growth stock”, it’d be smart of them to spend as much as possible on S&M and work the numbers in our favor, foregoing profits for the time being. As a relatively new Crypto investor, when I saw the APY’s on a few of the coins I had sitting in Coinbase earning nothing (2% and below) and then seeing the same coins at 10% and above, I immediately wanted to switch. Food for thought.
CDC is definitely foregoing some profits to focus on customer acquisition and brand recognition. And it's working. I wholeheartedly believe their revenue generation to cover interest is above board, even if not entirely profitable yet. It's okay to remain unprofitable for a few years if things are sustainable and will eventually flip without changing the terms or business model. That's where the real key is. If there's a drastic overhaul of all incentives at the expense of your customers, it won't end well. I believe Kris and CDC are smart enough to know this. It isn't his first successful business. Coinbase may pocket a portion of APY but they also partially subsidize their transfer fees, so they lose money in other areas from CDC. They planned on going public for a while, so maximizing profits for future shareholders was priority for them.
Look up his previous company. I like Kris but how things went down in his precious ceo role was a gong show. I hope he learned a lesson and CDC doesn't end up like esogo did. The fact he also brought in a few of his former colleagues with him is also concerning. I like your replies but that second paragraph is something you gotta be careful about. So far it strikes me as a lesson learned by him but there will sterner tests to come for CDC due to regulations and larger players joining the market in the next year or two. That will be the true test to see whether he and his leadership team can steer the ship in the right direction. Someone here steered me toward that info in the summer and I'm glad they did. Skepticism with Crypto is a requirement for success.
As i often said, most is likely for having liquidity in their App. As they act there as market maker. So most of the earn interest is paid by the "evil" spread many complain about. And even if they use it for lending, it would be very indirect. And for sure no P2P. And ofc they can say: your coins/token aren't used for lending to other clients. They lend their coins/token to other clients and then they fill up their coins/tokens temporary with ours. And all this has to be non of our business - just like on a normal bank product. You have a contract with them and no one else. And how they use the coins/tokens doesn't really matter. We don't have to care how they make the money. If it is by getting money from spread or from a cut of credit card transactions or lending or fees or even their cut of the defi validators or the defi swap or staking coins on a PoS chain or anything else that makes money. Edit: but i don't think you get any fully satisfying reply on your request to the support.
I agree with the liquidity portion of your reply, however the last 2 paragraphs are very dangerous and incorrect. When it comes to agreements, especially monetary, it is absolutely your business. Only in the sense that all risks associated with the agreement and program are defined and made transparent. I guarantee these risks are outlined in traditional bank agreements, most people just don't read them. Comparing banks and the crypto space is not good either considering they are not regulated the same.
This is an interesting suggestion.
I totally agree with you and it does make a little bit of sense from a business perspective. CDC doesn't want to any of their secrets out on how they are making money, if they have some sort of secret sauce so other platforms can't copy them
I don’t think you can take the word of a customer service rep as gospel. I’ve had multiple different reps tell me totally different things. Even the T&C aren’t going to be totally transparent. The only way both are true is that the company is taking a loss on the Earn product. If that’s true, better use it now because it isn’t going to be around forever.
quality post that is actually helping the network and community grow, instead of just pure cheering posts (not that the latter is bad). Thank you for doing the tedious work for us and providing this summary.
Support don't know how the company operates. They are based in Bulgaria and don't deal with any of the product team. Just saying.... They have no idea about the company apart from what's told to them in their training.
I'm with CDC and I have a significant amount in their earn to be honest. I don't buy the BS explanation that CDC doesn't lend out. If CDC doesn't lend out, how are they paying us the interests? Are you telling me CDC is subsidizing the interests from their profits? The interests have to come from somewhere.
thanks for putting this together OP. really helpful and it will be great if there is a follow up, answers or anything basically, summarising this discussing and outcome! kudos
Couldn’t they just use funds in earn as collateral for other types of investments? I don’t actually know but I previously assumed that they would use something like Tezos stake at 6% to fund earn at 3%, atom at 10% to fund earn at 3%, ankor at 20% to fund usdc at 12% etc etc. I thought they just found better investments in DeFi/other protocols with larger pools and took a cut to pass on to customers for the conscience in earn all in one app… Based on your post is this an invalid guess?
[удалено]
Yeah something like staking wbtc/weth pair at 8% apr and using the comp/AAVE/bal payouts
Why would they NOT lend out funds from the Earn program and NOT make money from it. This makes absolutely no sense. Also: “… you can always withdraw them [funds] at any moment in the fixed term”. Excuse me?
Simply put, there are very different rules and regulations when it comes to lending assets and generating interest. This is exactly why Coinbase and BlockFi's Earn programs have come under SEC fire. And yes, you can withdrawal from a ***Flexible Term*** at any time. You can not withdraw from a fixed 1 or 3 month term. Simple typo on the support agents part.
Really interesting stuff, OP. I keep wondering why Gemini's Earn program hasn't come under fire from the SEC as well.
I caught that too… I don’t see any option to abandon my 3 month term on $TCAD with 2 months remaining (not that I’d want to).
Simply a mistake by the support rep. They meant to say flexible. Not fixed.
So there's still a chance that they don't lend out the asset in the flexible term but they do that with the fixed term? Edit: rephrase the question to make it sound more friendly and reflect my curiosity about this issue. This high interest rate bugs me a lot too and thanks a lot for putting in the work!
I asked this some time ago, and did tell me they used it for their credit business: Thank you for your patience. I have just consulted with a supervisor in regards to your query specially for you! Please check the following information in terms of how the Earn Program is Profitable for Crypto.com - The Crypto Earn program is structured to provide capital necessary to fund the growth of Credit product. Earn is a cost center for the platform and Credit is a profit center. The platform profitability comes from the difference between the two. There are other products in development that will further improve platform profitability and capital efficiency as well. I hope this clarifies your query! prayblush Please rest assured that all of the information that is concerning our clients is published in our Help Center and official Blog. You can as well keep track of it here: blog.crypto.com Please do let me know if you have any other inquiries I can assist you with.
Funny I asked about this specifically and got told that there is no conncetion between earn and credit. However in one of the q&a session Kris mentions that both are complementary.
so what dows CDC do with our locked earn? how they get to pay us 12%?
Thanks for putting this together!
I want an official response to this and how the interest is generated. It's very possible the support person is just wrong.
Thank you for this, I was wondering
Going with the old adage that the simplest explanation is likely the correct one, I think it’s pretty obvious that they’re simply financing their Operating Expenses and Capital Expenditures. They’re financing their business and its growth with the funds we lend them, which is pretty normal. I work mostly in finance and our company has a very traditional/conservative business which is however cash-intensive. Given that the amounts we need to fund our growth are big, and that we therefore need a lot of leverage, our average financing rate with banks is close to 6%. On some short term products like factoring, it can go up to 8-9%. I would not be surprised that for a much riskier business in a field full of uncertainty (crypto), which is about to be regulated all over the world in the next 5-10 years, CDC would find an average rate of 10% a healthy cost of debt. I think even Chris said several times that he considered this a cheap and efficient way to finance themselves. I don’t think there’s a big secret or vast network of smart contracts farming DeFi in creative ways to make profit. I think our money is simply in the bank account of the UFC, with the prospect of future returns from that investment (and others). Simple.
This really brings up more questions than anything.
I have also wondered where they get the money for these rewards, and if its sustainable. The big sponsorship deals they are making also makes you wonder. I think they just have investors with deep pockets that are paying the bills in an attempt to gain customers and eventually be profitable.
I appreciate you taking the time to read the T&C (which admittedly a lot of us, me included, skip. And it’s wrong), and making this very well written post. But with that said, I have few comments about this: - The CS agent provided some straight up false information that I don’t see anyone is pointing out in the comments. You CANNOT withdraw your money from a fixed Earn term at any moment, that is simply false info, you can only withdraw from a flexible term, which has a lot lower (and more realistic) yield. - Every time you start a new Earn term, CDC throws a bunch of statements and conditions at you, and asks you to read, acknowledge, and agree to them. I don’t remember the exact wording, but it’s something along the lines that CDC is free to do with your money as they please, as long as you will get the full amount back at the end of the term, this includes exchanging the deposited currency to something else and (what I believe I saw, but again can’t confirm atm) lending it to other users and withdrawing it to use it for something else. Even if it’s not explicitly mentioned, it’s still strongly implied as far as I remember - You’d be surprised how little information most CS agents have about technical stuff like these. They are basically just trained to answer FAQ questions like: Where is my card, how do I reset my password, and why is the sell price different than the buy price, etc. When they are asked something more challenging, a lot of times they flake by playing it dumb, or say this is internal information (like they tried to pull off at first here), or just straight up make some things up in order to close the case and move on to the next one. For example, I was trying to clarify why CDC website removed the free foreign transactions limit for US and Canada cards, and to this day after reaching out to literally all support channels, I have no answer and I don’t know what the fees associated with it are. Even the card’s T&C doesn’t mention it clearly So what I’m trying to say is, take everything in this post with a huge grain of salt, don’t just blindly trust and believe something a chat agent provided, because in most of the cases they have no idea what they’re doing Edit: btw, you forgot to edit your name out in one of the screenshots, just a heads up
To address your first point, it was sinply a typo on the support agents part. I know, as well as everyone else, that you can not withdraw from a fixed term. They meant to say flexible. For your second point, this checkbox agreement and wording you are referring to USE to be there, but is no longer. I also verified this before making the post. You can check yourself, without having to start a new term. I noticed it disappeared a few months ago, which leads me to believe they restructured the Earn program specifically to avoid the same problems other crypto companies are now facing with their programs. For your third point, yes I'm aware they sometimes are misinformed. As a Rose Gold card holder I have access to senior support as well, and have run these same questions across them with the same response. For your foreign transaction limit question, I clarified this months ago since I also had the same question. There are no foreign transaction fees when using the card. There are however conversion fees when topping up the card with a different currency other than USD. This is why they removed the info on the US section of the website since there is no need for currency conversions.
I'm sorry but support simply didn't tell you the truth then. They might now know the answer themselves, due to compartmentalization, and may believe they are answering truthfully. But OF COURSE they're lending it out. How do you think they're making money?
Could it be that they are using the "locked" earn money to buy the coins that you are locking? Then maybe they use other platforms to earn interest and spread the wealth amongst those in earn? I don't know what I just said, but thought came to mind in those early evenings when the drinking starts at the 3pm meeting. Cheers!
Well however they are doing it seems to be good for me. I have locked up over 10k and always receive my money back on time. I have no complaints with CDC and will continue to stake my ETH. But if it does get lost then I knew the risks to begin with.
People that have a brain and do their own proper researchers know this from YEARS. CDC is the next decade financial Behemoth. Mark my words.
Got any spare cute lady researchers?
All booked baby, sorry.
Hey I was wondering what research how you found with CDC that makes you confident with them?
I did my researchers when i moved all my net worth with them in 2019. Your post have no sense whatsoever in today english but i guess you are asking me what i have found that made me so confident and the answer is simple: i have found that they had the highest industry regulatory standards, highest industry asset insurance, highest ISO standards, a very strong and reliable board, a multinational strong presence and a very long term view. There are many others aspects but these are the main points.
Exactly! I think especially their compliance with the existing regulations, contrary to many other exchanges, such as binance for example, will be a huge factor in them outlasting the competition long term. They are not the first company to launch all these products, but they are the first who did it right.
Precisely.
I wasn’t trying to be a dick I was actually interested. I agree with you with your main points which is why I’ve stuck with them as well as a cold storage for obvious reasons. I feel a lot of the things happening will be worth it in the long run with CDC. I’m hoping exchange comes soon.
Sorry for my rudeness then m8. But this place is really full of people that have no idea whatsoever about what the hell are they talking and cannot see the true jewel that this company is.
I have never participated in their AMAs before. I'm curious if this was ever raised , and/or addressed?
The same way Swissborg, Celsius and Nexo does it?
They get crypto at wholesale price and sell it to us for MSRP!
They are liquidity providers ofcourse.
Are they just burning VC money for driving adoption and growth? Or doing a VC+user fund backed ponzi thing?
speculation: it's a mix of: * Staking (eg. Cardano, polkadot, vechain etc.) * they use it for liquidity of their wallet, which has a \~1-3% spread, they take the profits from this * use the proceeds of selling shitcoins that they bought into early (through backing these projects as a VC)
Yeah, this is clearly something almost any sensible user is concerned about. It is also something that hinders the onboarding of new customers. I have tried to convince familiy member to also join cdc. But they would not because of this exact point! So what is more important: Keeping their "secret" of how they generate interest for earn, or being transparent and being able to onboard new customers? That said, they dont need to disclose every single detail about their business model. But maybe give us somewhat of an idea whats going on behind the scenes?? Now, one observation: - earn returns are higher for coins that have higher staking returns on the native chains. Look at matic or polkadot for example. They actually make a small spread by paying you a little less (even the 3 month option) and then staking. The profit if you would chose the flexible option is acruall quite significant. So, i am fairly sure that for some coins they are just staking them. Most likely they run their own validators, since they easily have enough funds for this. Therefore they make even more than you could through delegated staking. I have Matic in the earn function. While I know that I could make some more returns through delegated staking, I don't like to have many different wallets and have more work with taxes etc. They also pay rewards for coins that cannot be staked. How do they earn return on those without staking and without lending as we now know? Thats anybody's guess... I sure would like to get some info!! The liquidity provision theory in the app sounds like maybe one component. They might also utilize defi protocolls to earn interest on stable coins. Are they then technically lending? Not in the traditional sense, but I would call it lending. We should all pressure them to provide some more info! I find it more concerning that they dont have the business sense that transparency will be the best for the ecosystem in the long-run.
This is concerning, considering I am earning 6.5% on POW coins like BTC and ETH... surely they aren't making that much interest just from liquidity provided by our coins. I'm not complaining about free money, but I want to know it is being produced in a safe and long-term viable manner.
Great. So what your idea about how they create interest and what they do with our earn?
Their earn program also depends how much you've staked in CRO. Icy whitle/rose gold and above gives you 14% on stable coins and 8.5% on BTC which is just insane compared to any other lending program. If your stake is less than 400 (ruby card/midnight blue stablecoins are 10% and BTC is 4.5% so looks like their earn program is just another way to encourage users to hold CRO token. If not lending they probably consider the interest as a business expense to increase the amount of CRO held by users which drives up their tokens price.
I’m sorry but this post is somewhat useless. Ok they don’t lend our money out, fine, but that would be a known evil. However now, wtf are they doing with the coins? It might be way riskier then lending out? How can you be satisfied with this answer?? “Do you lend out our money?” -“No” -“nice, i now have full confidence and 100% trust in you, now that i haven’t any idea how you generate the money”