Crypto.com Sparks Chaos, Pushes Vote to Re-Mint 70 Billion CRO

Tags: cronos

Key Takeaways:

• Crypto.com re-minted 70 billion CRO tokens that were previously burned.
• The controversial vote was pushed through by a last-minute surge of votes from Crypto.com-owned validators.
• The move has sparked an outcry of disappointment and charges of broken trust among the CRO community.

The entire crypto community is currently reeling from Crypto.com’s controversial decision to re-mint 70 billion CRO. That action, which is essentially an undoing of a token burn that was executed in 2021 with the goal of creating a permanent impact on the token’s supply, has drawn significant criticism and claims of trust being broken, and fueled the ongoing conversation about centralization vs decentralization in the crypto space.

A Controversial Proposal: Undoing the Burn

At the heart of the controversy is Crypto.com’s plan to reverse a major token burn that took place in 2021. Initially, this burn effectively took 70 billion CRO out of circulation and was seen as a step in a good direction, as it should help stabilize the value of the token and reward long-hold types. That decision to bring those tokens back to life has, to many, felt like a betrayal of that initial promise.

According to the justification for their re-minting, the new tokens will be utilized as a strategic reserve for the Cronos blockchain and allocated for investments in Cronos projects — and even potentially a CRO-backed Exchange Traded Fund (ETF). However, the methods to realize these goals have caused considerable division in the community.

The Vote: A Last-Minute Power Grab Draws Scrutiny

The voting process itself has come under scrutiny. Enactment of the proposal, which ranged from March 2nd to March 16th, struggled to gain traction for a large part of its time frame. Support dipped precariously above opposition, but the critical quorum of 33.4% required for the proposal to pass remained just out of reach.

Then, in the final hours, everything changed. An unprecedented volume of 3.35 billion CRO tokens flooding into the “yes” pool caused the proposal to cross the line and was followed by a tidal wave of anger and disbelief among the community. A total of 61.18% voted for, 17.61% voted against, 20.11% abstained, and 0.11% vetoed. The turnout for the vote is 70.18%, far beyond the required minimum.

“They Pushed Their Votes”: Community Erupts in Disappointment

The late flood of votes has been largely blamed on validators owned by Crypto.com. These validators, including Starship, Falcon Heavy, Electron, Antares, and Minotaur IV, collectively control a large majority (70-80%) of the total voting power within the Cronos network. This power center enabled Crypto.com to qualify as a validator in order to bypass smaller validators’ baskets with respect to token holders.

Final voting tally. Source: Mintscan

“A lot of disappointment,” one prominent CRO holder wrote on Telegram, encapsulating the mood. They added that Crypto.com had “pushed their votes almost at the last minute,” raising a red flag for other projects hoping to game governance results. In its decision-making, Crypto.com prioritized its own strategic objectives over the concerns of its user base, and in doing so reduced trust and diluted the very fabric of decentralized governance that should underpin the crypto ecosystem.

The Aftermath: A Token Burn with Symbolic Value and Lingering Questions

Immediately after the vote, Crypto.com attempted to ease the backlash by swiftly announcing plans to burn 50M CRO tokens. But this was widely viewed as a cynical gesture, because of the enormity of the re-minting campaign. As one of the naysayers of the CRO validator, who went on to sarcastically comment on Telegram, burning 50 million tokens after re-minting 70 billion is nothing more than a symbolic gesture.

The incident, however, goes deeper than just its immediate financial consequences, as it leaves behind questions regarding the long-term sustainability of governance models in blockchain-based projects. Such overwhelming control by a single entity over the voting process undermines decentralization and allows the wealthiest groups to dictate the network’s future development.

Sonic co-founder Andre Cronje (AC) later shared extensive critical commentary on the situation. When asked by CryptoSlate the “practical meaning” of a vote having ‘impacted’ Cronos’s market cap, he added that it only takes one vote: “One vote and the Cronos’s market cap increases; cronos’ market cap is voted and her market cap will rise.” He went on to say that market cap is a meme. Decentralization doesn’t matter until it does, and immutability doesn’t matter until it does.

Andre Conje, Sonic Co-Founder

The Crypto.com CRO re-minting saga is a powerful reminder of the uphill battle the crypto world has to thread the needle between innovation and governance by the community. The project defended its actions, but its failure to take proactive communication only added to the fire. Transparency, decentralized voting, and active community engagement will be crucial in restoring trust and ensuring the long-term sustainability of the Cronos ecosystem.