Crypto.com is a centralized exchange that offers its users easy access to trading, investing, staking, wallets, and NFTs. The company launched the CRO coin in June of 2019 to be the native token of their Crypto.org chain. The company’s public blockchain protocol was built to support a wide variety of projects and also help develop the acceptance of using crypto as a form of payment. Crypto.com has placed great importance on their lucrative marketing strategy in their business plan which led to a mass movement and adoption of the CRO coin. The marketing campaign clearly worked, pumping the coin from $0.21 up to $0.90 during a 20 day period. The market cap almost hit 25 billion at the peak which was in the top 20 of all cryptocurrencies at the time despite the coin’s lack of utility. The incentives that holders can acquire through the ebit card system of Crypto.com are the only relevant utilities that CRO has to offer. This value seemed to come almost directly from the marketing efforts of Crypto.com which can be shown through the recent partnerships including Formula 1, UFC, and purchasing the naming rights to the Staples Center.
When compared to other centralized exchanges, it’s very clear that Crypto.com offers a far inferior product. Their competitors, such as Gemini, FTX, and Coinbase, offer much more to their users. Most importantly, the exchange rates on Crypto.com have margins that allow Crypto.com to make money without having direct fees correlated with each trade. At times, the exchange rates can take almost 10% off of your transactions which makes it an extremely costly exchange to use. Through centralized exchanges like Gemini, FTX, Coinbase, you are able to transfer your assets into other coins with very minimal fees and devaluation. Crypto.com simply targets uneducated cryptocurrency users which allows them to have these exchange rates that are not competitive with the other centralized exchanges. They are able to draw in these new users not only through their widespread marketing campaign but also through their eye-catching domain Crypto.com.
Now we can dive into the CRO coin itself. The utility that the coin offers has a direct correlation with the platform’s debit card system. The more CRO one has, the more benefits they can attain through the multi-tiered card system. Benefits include free memberships to Spotify, Netflix, airport lounges, and Amazon Prime with discounts towards Airbnb and Expedia. Crypto.com also incentivizes its token by offering holders a higher yield when staking on the platform. These perks might seem great to an early investor in crypto, but these utilities really don’t match up to other coins with similar valuations. Other coins seem to emphasize utilities that benefit users more such as the privacy offered through Monero, the scalability of Solana, or the interoperability of Polkadot. CRO seems to lack this cutting-edge technology that these other coins are backed by.
The Staples Center is one of the most iconic arenas in the world. The arena hosts some of the most touted sports teams including the Los Angeles Lakers, Clippers, and Kings. The arena also holds many concerts and other events which can show why the price tag for the naming rights was so steep. The recent 700 million dollar purchase gives Crypto.com the naming rights for 20 years. The main goal of this deal is to “link Crypto.com with one of the NBA’s top brands, offering crucial brand awareness as the cryptocurrency platform positions itself to capture market share in the growing digital currency space.” This is the kind of lucrative marketing that Crypto.com seeks to introduce more people into the world of cryptocurrency. There has certainly been a mass introduction to CRO which can be seen by the 4x in market cap in just under a month during the November spike. Another partnership created that was made possible through the Crypto.com marketing strategy is with Formula 1 and the UFC. The Crypto.com logo can be found on many of the fighter’s shorts and on the actual floor of the fighting cage. They are also using the UFC to launch an exclusive set of NFTs including a variety of fighter collections, fight night artwork, posters, championship belts, and more. UFC wanted to partner with Crypto.com because “ it speaks volumes about their ingenuity, foresight, and marketplace leadership” says the UFC Vice President, Tracy Bleszinski. Also, Formula 1 recently announced that Crypto.com will be the “inaugural global partner for the new Sprint series.” Formula 1 also stated that “Crypto.com will also have a trackside presence at every race for the remainder of the season.” With all of these partnerships, Crypto.com has reached enough people to become the 2nd largest centralized exchange in the Apple AppStore behind Coinbase.
It is very clear how the marketing strategy of Crypto.com is able to draw in new users. The price appreciation of the CRO coin has been correlated with their increased marketing efforts, which help make up for the lack of utility for the coin. If these users decide to dig deeper into web3, they will quickly find coins with more utility despite a lower valuation. These smaller market cap projects offer more utility to their investors yet they do not have a marketing team that is able to spend hundreds of millions of dollars on deals to promote their product. Hopefully, as we see the market develop in the coming years, investors will start to use their own due diligence and find projects that can offer them more benefits.
By Blake Germani
Sources
- https://www.cnbc.com/2021/11/17/cryptocom-buys-naming-rights-to-lakers-staples-center-in-a-700-million-deal-.html
- https://www.ufc.com/news/cryptocom-launch-exclusive-series-ufc-nfts
- https://www.formula1.com/en/latest/article.formula-1-announce-crypto-com-as-inaugural-global-partner-of-the-f1-sprint.ozYI9zd0622tZyvroYhcM.html#:~:text=Formula%201%20has%20today%20announced,1%20Pirelli%20British%20Grand%20Prix.
March 17 2022
Disclaimer: This report is for educational purposes and should not be construed as investment advice. Additionally, the author may hold any of the assets mentioned.