While there have been many negative reactions about the Crypto.com card cash-back rewards, recent turn in events might support the cause. Towards the middle of 2022, Crypto.com announced a massive cut-back in their famous card rewards program.
The previous earn-back rate on top-tier cards was reduced by more than half. Also, stake rewards on the Crypto.com app and DeFi were greatly reduced. The major reason the platform gave for this massive reduction was to ensure the long-term sustainability of the project.
However, after considering the Celsius platform situation, many Crypto.com users will indeed reconsider about how they felt about the initial cutback in rewards.
The Celsius situation
Celsius is a crypto platform that offers majorly DeFi. So, you can categorize it as one of the modern era disciples of the emerging financial structure. The stake rewards on the Celsius network were very high and the founder made different ways to explain how they will cope with the high interest. However, the higher the return on investment, the higher the risk.
Celsius was founded to excel banks at their own game by providing financial services on conditions that traditional financial institutions no longer provide. There are no fines or bank-style fees.
Celsius keeps a portion of the profit margins from interest payments while still giving users 80 percent of the money. The business also extends credit to institutions like hedge funds. Loans are asset-backed, and every borrower is required to provide over 100% of the amount they borrow in the destination currency, ensuring that payments will be made.
Where did it all go wrong?
Even though the token lost over 50% of its value at the beginning of the week, data from FTX show that on Tuesday, the price of CEL rose by 756% to an intraday high of $2.57 from 30 cents. However, an hour after the price increase, it declined and was trading at roughly 54 cents. With that pricing, CEL’s market value was around $125 million, per CoinMarketCap data.
How Crypto.com avoided this situation
Following the Celsius situation, it is obvious that it is difficult to maintain giving high yield on stakes in a plummeting market. This must have been one factor considered by Crypto.com when they made the hard decision of reducing rewards on stakes and its debit card. To ensure the longevity of any project, a tough decision that might affect customers must be made. However, the sole thing to keep in mind is to find ways in which customers will never lose their money.
While Crypto.com cards and earning rewards will be beneficial on the initial reward structure, the platform has maintained its integrity and has been a safe place for funds. Also, in the traditional financial structure, many institutions have offered cards with little to no rewards. Considering this, Crypto.com has ensured that its users still keep earning on their stakes and purchase without compromising the safety of the funds.
If you are left with a choice to go with the current Celsius situation or reduce the return on stakes, you will go with the latter.