This time, we had the pleasure of hosting Ken Timsit, the managing director of Cronos Labs, on our Staking Mondays episode and discussed how Cronos is playing a unique role in onboarding users into Web3.
We explored:
- The relationship between Cronos, Crypto.com, and Crypto.org Chain
- Cronos Development Goals
- The Influence of Crypto.com over Cronos
- Competition with other EVM Chains
- Next Milestones for Cronos
- Why developers should build on Cronos
- And more!
Want to get all the insights without listening to the full 45minutes episode? Read on. We summarised the entire episode for you in a 5-10 minute read. Starting off by summarising Ken’s “alpha drops” below.
Key Takeaways
- Crypto.com has more than 50 million users. Only ~ 1 million of these users are interacting with dApps. One of Cronos’s main goals is to grow the number of users that are interacting with dApps by making it easier for them to migrate to self-custody solutions and start using Defi and NFTs.
- Cronos is uniquely positioned for users that come from a mainstream crypto exchange, users that want to move in and out of a chain as quickly as possible with a UI that they are used to.
- Cronos has a similar structure to BNB. Both the Binance Smart Chain (BEP20) and Cronos are compatible with the Ethereum network, while Crypto.org and the Binance Chain are not. Cronos network and Crypto.org both use $CRO as the native token, where you will need them to process transactions on either blockchain. This is similar to how you will need to use BNB on both the Binance Smart Chain and Binance Chain.
- Cronos is getting ready for the gaming and social Web3 boom, something that can catapult the chain into the limelight.
What is Cronos?
Cronos is the first Ethereum-compatible blockchain network built on Cosmos SDK technology. It is an open-source and permission-less layer-1 network that aims to massively scale the DeFi, GameFi, and overall Web3 user community. Cronos does this by providing builders with the ability to instantly port dApps and crypto assets from other chains with low transaction fees, high throughput, and fast finality.
Cronos Chain is supported by Crypto.com, which is one of the largest Custodial crypto providers in the world. How does the Cronos chain fit into the strategy of Crypto.com?
Cronos is an open source project and decentralised network, it does not exist as a legal entity in of itself and is the first EVM module that was built on top of Cosmos. Crypto.com is a regulated entity in multiple jurisdictions which aims to create an ecosystem that makes cryptocurrencies accessible for everyone. The third party in this is Crypto.org , it is a chain that has been built on the Cosmos SDK that acts as a standalone network to allow for fast transactions with low fees.
But how does this three-way relationship work?
Crypto.org chain
Crypto.org chain is an older application specific chain that has been built on Cosmos. This chain is mainly used by Crypto.com for staking, payments and the transfer of NFTs. It is not an ecosystem, but it is very efficient when running the plumbing under the suite of Crypto.com products.
Cronos chain
Cronos has been built on Cosmos and is designed to be EVM compatible. It has an ecosystem of more than 300 dApps and has an active community supporting its growth and development. Cronos is a Layer 1 network while Crypto.Org is an application specific chain, since both chains are built on the Cosmos network, this allows for better a level of interoperability between them. But why would they need to interact?
Crypto.com
Crypto.com is the centralised exchange that offers the suit of products to over 50 million users. The ‘plumbing’ of all these activities happens on the Crypto.org chain while Defi andNFT activities happen on the Cronos chain.
The relationship functions in a similar way to Binance Chain (BEP2) and Binance Smart Chain (BEP20). Both the Binance Smart Chain (BEP20) and Cronos are compatible with the Ethereum network, while Crypto.org and the Binance Chain are not. Cronos network and Crypto.org both use $CRO as the native token, where you will need them to process transactions on either blockchain. This is similar to how you will need to use BNB on both the Binance Smart Chain and Binance Chain.
The journey of a crypto user
A new crypto user will typically start on Crypto.com and buy themselves some Bitcoin or Ethereum. The next step for them is to progress to dApps and NFTs, their access point into this is the Cronos chain. Through integrations with the Crypto.com Defi wallet, they start interacting with dApps on the Cronos chain while using a familiar UI that they see on Crypto.com. This is a great way to onboard new users and expose them to Defi. It makes it easier for a company like Crypto.com to provide visibility and exposure to the dApps when they are involved in the technical direction of Cronos chain.
What are the main goals for Cronos development and go to market cronos ecosystem?
Cronos exists to drive the next generation of users into Web3. Crypto has around ~350m users today and out of that, Crypto.com has more than 50 million users. Only ~ 1 million of these users are interacting with dApps. One of Cronos’s main goals is to grow the number of users that are interacting with dApps by making it easier for them to migrate to self-custody solutions and start using Defi and NFTs. This goal is being accomplished through:
- The partnership with Crypto.com to provide them with a thriving ecosystem of dApps that can act as a channel for migration for their users
- Having a chain that is fast, cheap and eco friendly
- A highly secure chain that is here to stay with ample runway
How involved is Crypto.com in the development of Cronos?
At a protocol level, Crypto.com is a very important contributor to the open source project. The team at Cronos are open to their assessment of protocol developments and guidance on security enhancements that can be put in place. Example: A trustless bridge between Cronos and Ethereum. In terms of what is happening on top of the Cronos chain itself, the team cannot control that, builders will build and they will do what they want there. Neither Cronos nor Crypto.com has control over which applications will succeed in the ecosystem.
Where does Cronos fit on the blockchain Trilemma?
Cronos has a similar standing to BNB and Polygon. It is sufficiently decentralised but will never claim that it is as decentralised or secure as Ethereum. Cronos positions itself as a blockchain focused on having cheap and fast transactions to support the activities of new crypto users moving into Defi and NFTs. The tradeoffs made are a bit more nuanced and complex and come down to:
- Cronos is EVM compatible and does not hide the fact that users are able to transfer their holdings from and to other EVM chains with very little change in scenery. Given that Cronos is not isolated from Ethereum, users on Cronos also inherit some security from Ethereum because they can always transfer their holdings there. In a sense, users are gaining from the cheap and fast transactions while still having the option to move to Ethereum whenever they want to.
- Communities – Why not just have one chain to rule them all? The reason is that each chain is its own digital community. In the same way that there are different languages in the world and it’s not necessarily the most efficient way to communicate (having hundreds of languages), it’s important to note that a local government is easier to reach and to get your idea or voice heard than a global one. It is easier to be meaningful when you participate in local communities. Similarly, if you go to a smaller chain you are more likely to be heard. So Cronos has its own community and key opinion leaders in the community and likes to differentiate itself by that.
How do you see the competition amongst other EVM Chains?
A key ‘competitor’ that people think of is Evmos, the Cronos team has been working with Evmos for years. Both teams help one another when it comes to network upgrades, members from each team get opinions and feedback from one another on the best way forward. Cronos is uniquely positioned for users that come from a mainstream crypto exchange, users that want to move in and out of a chain as quickly as possible with a UI that they are used to. Evmos is more for early adopters and people that are at the bleeding edge of blockchain innovation.
How does the Cronos Proof of Authority consensus mechanism work and how will it look in a few years?
Under the hood of the Cronos blockchain, the consensus engine used is Tendermint, but the team has made several changes to this to suit their needs which has changed the nature of this consensus. The key change is that even though it is a POS mechanism, not everyone can be a validator. To become one you need the other validators in the network to accept you. Once you become a validator, the token you use to put up stake is not a stake in $CRO, but rather a separate token that is purely used for governance and slashing purposes.
The intent of this was so that the team could leverage the tendermint process which is very robust while also providing Cronos with ways to evolve and change the governance over time. Given that Cronos is targeting mainstream users, scalability is the main focus for now instead of decentralising the consensus further. There are currently 27 validators which place the network at a level of centralisation between the BNB chain and Polygon. Tendermint allows Cronos to evolve their decentralisation over time, but right now it is about scalability and stability for mainstream adoption.
What are some good yield opportunities on Cronos chain?
The three traditional ways you would earn yield in crypto is the same on Cronos:
- Liquidity providers in a DEX
- Lending your crypto to someone who uses it for short-term trading activities
- Staking
Some of the leading Defi protocols on the network are:
- Ferro: A stableswap venue that doesn’t cost a fortune
- Tectonic: Tectonic is a cross-chain money market for earning passive yield and accessing instant backed loans
How can I stake my CRO on the Cronos chain?
$CRO cannot be delegated or staked with a validator directly on the Cronos chain but it can be invested in liquid staking protocols such as Argo on Cronos. The CRO on Argo gets bridged over to Crypto.org chain where it is staked in a network of Crypto.org validators and then the yields generated are sent back to Cronos.
What makes a good validator on the Cronos network?
Cronos is prioritising the stability and scalability of the network. Consequently, the team is often deploying testnets to try out various upgrades and optimisations in the network. Validators are expected to participate in the testnet and give valuable feedback. In addition, validators are expected to be technically savvy and able to run validator nodes on other networks so that they have comparison points. Professional validators are sought after and Cronos generally favours high performing validator companies at this point.
Why should developers build on Cronos chain?
The addressable market in crypto is ~ 350 million people at the moment, Crypto.com has more than 50 million of these users. Developers want to have access to the 50 million addressable users, which is one of the key value propositions for Cronos. Not all 50 million are ready to use self custody solutions, currently there are only about 1 million which leaves a lot of room to grow into. The #CroFam community is growing consistently – this represents everyone who directly or indirectly is part of this family. This combines Crypto.org, Crypto.com and Cronos users.
The second part of the Cronos proposition is that the user base is very attractive. On one hand they are familiar with crypto, but on the other hand they are not hard core full time users. So they are a good testing ground to appeal to the next generation of Web3 users. This is particularly true for gaming developers, they know that as the market grows it is not sustainable to build your game for crypto natives who only care about token price pumps. Devs want users who are at the core gamers and people that use your app for entertainment, the Cronos user base is eager for those things and eager to try them. So it is a great testing ground for Developers to get their feet wet. They can then move to other chains and further grow.
The third element is Cronos Labs – an entity that is helping developers in their journey to developing on Cronos chain. Cronos labs provide marketing visibility, grants, accelerator program, and technical assistance to be as developer friendly as possible.
What will be the next big milestone for Cronos, what is the ecosystem excited about, what is the catalyst for Cronos?
- A reinvention of Defi
The traditional Dex or AMM model has somehow reached its limits because it is too reliant on protocol rewards to attract liquidity. Most Dex’s are attracting liquidity by providing high token emission yields. We are going to see a migration of these protocols towards order book based capital markets, more like traditional markets.
- Web3 Gaming
Axie was the tip of the iceberg, Cronos is looking at companies that will accelerate adoption in crypto gaming and learning from past successes and failures.
- Social
Social Web3 has not yet taken off but it looks like it is set to be the next big narrative in crypto. It is unclear what it will look like at the moment, but Cronis ID is meant to explore avenues of innovation in this area. There are many use cases here that are yet to be explored.
What is your latest big learning in crypto? When did you change your mind on something big?
“The collapse of Terra was a big moment for me, there were very smart people explaining how Terra is the next big thing in blockchain and how Terra is going to be a top three asset. The sudden collapse was a big shock and eye opener because so many people around me were convinced that it is here to stay. It was a reminder for me that we need to be very cautious and remember that we are in a position to influence how and where people are going to invest their money. Terra is a reminder of the responsibility we carry and a reminder of why you should stay humble in this space. Never discount the advice of others.”
What will bring the broad adoption that you mentioned?
Education and word of mouth are the biggest factors that contribute to healthy adoption. Crypto is a game of cycles and at the end of each cycle there are people that remain and become core contributors of the ecosystem. It takes time and there is no shortcut, people need to be educated to make sure they understand the value proposition of crypto.
Conclusion
Cronos is a EVM-compatible chain running in parallel with the Crypto.org Chain. It aims to scale the Crypto.org Chain DeFi ecosystem by providing developers with the ability to rapidly port DApps from Ethereum and EVM-Compatible chains. Developers also gain access to the large user base of the Crypto.com ecosystem and funding from Cronos Ecosystem Grants. Cronos is uniquely positioned for the next wave of Web3 adoption and is building innovative new dApps to onboard current Crypto.com users into the world of Defi and NFTs. Don’t sleep on Cronos during this bear market, keep a watchful eye on the progress they are making by checking out their asset page.