What is DeFi?
DeFi (Decentralized Finance) refers to a decentralized financial market that operates autonomously thanks to smart contracts, saving many intermediary costs typical of traditional markets.
DeFi allows us to stake without losing control of our tokens, although always subject to the rules of the smart contract, which will always be public and can be audited by anyone with the knowledge to do so.
All operations will be public and anyone can join the network and support it in exchange for rewards, making it more difficult for the system to be brought down by organizations or governments.
For example, if we had a computer that we can guarantee will be operational and functional 24 hours a day, we could set up a validator that offers to process the transactions of any blockchain Proof of Stake. If enough people ended up delegating their voting power to us in exchange for potential rewards, the network could choose us to validate the blocks and reward us for it.
Crypto DeFi Wallet
Crypto.com offers an additional app that focuses on DeFi markets. That means that they have created an ecosystem where anyone can offer their validator services for the cryptocurrency they wish and the selection of a validator and obtaining rewards is facilitated. Part of the ecosystem revolves around its cryptocurrency CRO.
ERC-20 CRO vs Native CRO
There are two versions of CRO token right now simultaneously:
The old one: ERC-20
This is the first one they released (it was released before the crypto.com blockchain was operational). It is launched on top of Ethereum as an ERC-20. ERC-20 tokens require Ethereum gas to transact.
The New: Native Blockchain
The most modern version, which runs directly on the official Crypto.com blockchain, has much lower transaction fees, therefore it is cheaper to operate.
When we send funds from our wallet to the DeFi wallet of Crypto.com we are given the option to convert it from ERC-20 to the new version.
Where can we invest the CRO tokens
To get the non-free Crypto.com cards, it is necessary to carry out a permanent CRO staking. This staking is necessary as long as we want to continue enjoying the benefits of the card. The red Ruby card does not generate returns on this stake, but the higher cards do:
- Ruby Steel: 0%
- Jade Green: Royal Indigo: 10% / $400 annually.
- Icy White: 12% / $4,800 annually
- Obsidian Black: 12% / $48,000 annually.
Additionally, all the surplus CRO that we have can be staked through Crypto Earn.
Crypto Earn offers interest for staking different cryptocurrencies whose interest depends on the cryptocurrency with which we stake as well as the time we want to block it and the card we have.
The most interesting interests are those that are made with stablecoins such as USDC or Tether that give a return of 12% if we block in periods of 3 months with a card superior to Ruby Steel or 10% otherwise.
The CRO token will give us between 2% and 6% depending only on whether we want to block the funds in staking for 1 month, 3 months or none. It will always be possible for us to transform those CROs that we do not have blocked into other cryptocurrencies that give us greater confidence and stake it for the returns offered.
On the Crypto.com website you can see the different interests according to the terms and the staking of the card that we have.
The Crypto.com exchange offers several ways to stake:
We can do staking in periods of 180 days in exchange for a 10% return per year paid daily.
If we activate soft-staking in our account, as long as we have available funds, they will be auto-staken without us having to do anything and with the possibility of withdrawing whenever we want. The return would be 2% per year.
Supercharger is a platform to bring liquidity to the exchange. The way it works is that CRO is deposited for periods of 45 days and we will receive other tokens as a reward.
More information on the Supercharger page.
Crypto DeFi App
The DeFi app is a separate app that connects to our crypto.com account and we can send funds from one to the other. This app offers much more interesting returns than Crypto Earn of up to 12% (January 17, 2022).
Validators are servers that process transactions on the blockchain in exchange for a block reward (inflation). Anyone can choose to be a validator on a Proof of Stake blockchain, but only the top 100 validators will receive rewards.
When it comes to staking, we are interested in choosing a validator that gives us the highest rewards and that also has an Uptime (time that is operational processing transactions) as close to 100% as possible.
Once a validator has been selected, if we want to withdraw funds we must wait for a period of 28 days of unbounding. If instead we stop trusting our validator, perhaps because returns are diminished, we can switch between validators without the 28-day waiting penalty.
Unlike the other two staking methods (Crypto Earn and Exchange), when we use the DeFi app we own the CROs and the wallet’s private key. It is also possible to stake through the Crypto DeFi app with our funds stored in a hardware wallet such as a Ledger Nano.
Additionally, there is a desktop wallet that can also be connected to a hardware wallet and allows us to easily manage our funds and rewards.
The optimization will always depend on the card we have and the confidence we have that CRO will maintain or increase its value over time. What is clear is that if we want to optimize the CRO return, we will be interested in staking on the DeFi platform, if we don’t want to for any reason, the second best option would be to do it on the Exchange and finally on Crypto Earn .
However, these returns may change, so it is important to periodically review the returns in the 3 methods explained above. In the same way, it is important to check from time to time that the DeFi validator that we have chosen continues to give the reward that we expected and change the validator if not.
If we do not trust the CRO token or we prefer other cryptocurrencies, it will always be possible to exchange our CRO for the cryptocurrency we want and analyze what staking options we have then.