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What is Cronos (CRO)?
Cronos (CRO) is the cryptocurrency token for a blockchain developed and operated by the cryptocurrency exchange Crypto.com. The Cronos network is designed to be a high-performance interoperable blockchain capable of supporting decentralized applications (dApps) and apps without central intermediaries, which tend to run on a variety of Ethereum-based blockchain spin-offs.
Key points
- Cronos is a blockchain with a native CRO token, designed as a nexus for decentralized finance (DeFi), non-fungible tokens (NFTs), and metaverse projects in the decentralized applications (dApps) ecosystem.
- Cronos’ interoperability can connect it to the Ethereum and Cosmos blockchains behind many dApps.
- Crypto.com offers a number of benefits for holding and using CRO, including lower trading fees, staking rewards, exclusive access to products and features, and more.
History of Cronos and CRO
Cronus is a open source blockchain and token launched in November 2021 by Crypto.com, one of the world’s largest cryptocurrency exchanges, to support a growing demand for dApps around the world decentralized finance (DeFi), non-fungible token (NFT)AND metaverse space. Since most of these dApps predominantly run on disparate derivatives of Ethereum, a blockchain was needed to connect them together and process the high volume of transactions that would result from such cross-integration.
Cronos has stepped in to address Ethereum’s dApp and scalability limitations with interoperability frameworks and consensus engines that allow multiple blockchains to connect and exchange resources and data at significant loads without the need for intermediaries. Cronos is claimed to have the capacity to process over 10,000 transactions per second (TPS), which is significantly higher than Ethereum’s TPS, which averages around 13.
In addition to being able to connect multiple dApps at the same time, Cronos allows developers to create and host dApps from different blockchains. Cronos interoperability standards enable the network to function smart contracts from various Ethereum-like blockchains with little to no modifications. Smart contracts are self-executing programs that can be used to automate various actions on a blockchain and do things other than simply transferring a cryptocurrency.
Cronos vs. other popular blockchains
One of the most significant differences between Cronos and popular blockchains like Ethereum and Bitcoin is that it uses consensus and proof-of-authority (PoA) validation rather than proof-of-work or proof-of-stake.
Validators are chosen by invitation only, with developers occasionally opening windows to accept applications. Cronos PoA uses 24 handpicked validators to verify transactions and open new blocks, giving “authority” to the consensus mechanism because the chosen validators have been vetted and are trusted.
This is in stark contrast to other chains that use anonymous validator systems. Cronos is therefore a hybrid of public and private blockchains, a decentralized private blockchain open to the public for use.
Types of apps that use Cronos
- Decentralized Finance (DeFi): A DeFi application is a software application built on a blockchain network that allows users to access traditional financial services without relying on middlemen and intermediaries. Imagine a bank that works with code instead of people, where you directly interact with the system through your own digital wallet.
- Non-fungible tokens (NFTs): An NFT platform is an online marketplace where users can buy and sell NFTs. NFTs are investable digital certificates Property coined via computer code to represent a specific piece of digital resourcewhich can be anything from graphics, music, content and collectiblesTO virtual items in the game AND real world resources like the real estate sector. Unlike fungible tokens like cryptocurrencies, which are interchangeable and indistinguishable, each NFT is one of a kind.
- Metaverse platforms and apps: The metaverse is a convergence of multiple technologies and trends that aim to create a persistent, immersive, and interconnected virtual world using games, social media, virtual reality (VR), and augmented reality (AR). Think of it as a fusion of different aspects of the Internet.
Five billion CRO, a significant portion amounting to approximately 17% of the total CRO supply, has been allocated to Crypto.com and its affiliates, including the Crypto.com team, advisors and reserves for future development . Pre-assigned tokens can concentrate power and decision-making in the hands of a few and give insiders an advantage over public participants. For example, pre-mined tokens placed on the market can negatively depress the price of the tokens and discourage subsequent investors.
Role of the CRO token in Cronos
Just like the ether (ETH) token for the Ethereum blockchain, the CRO token plays a crucial role in the Cronos blockchain ecosystem as a native utility token that drives various aspects of its functionality. CRO is used transactions, episodeAND governance, incentivizing users to maintain and participate in the network. The demand for CRO as a utility token fuels its liquidity and contributes to the stability of the Cronos ecosystem, creating a positive feedback loop.
CRO is the primary currency used to pay transaction fees on the Cronos network and facilitate seamless asset transfers between Cronos dApps without having to exchange multiple tokens. Each interaction with the Cronos blockchain requires users to spend a small amount of CRO to promote responsible use of the network and prevent spam.
CRO holders can participate in staking, where they lock their tokens to a whitelisted validator for a specified period to support the security, stability and decentralization of the network, deterring the blockchain from threats. In exchange, they earn rewards in the form of additional CRO tokens and voting rights for governance decisions on the future direction of the blockchain, including proposing upgrades, fee structures, and new integrations with other blockchains.
Cronos does not use a consensus mechanism like Bitcoin’s Proof-of-Work (PoW) model, which involves competitive cryptographic problem solving and network-level consensus to agree on the validity of transactions. Cronos’ Proof-of-Authority (PoA) consensus mechanism relies on staking validators who have already been entrusted with processing and reaching consensus on transactions and the state of its blockchain. It is also different from that of Ethereum Proof of Stake (PoS) model, who randomly chooses his staking validators.
Concerns for Cronos
Crypto.com, a cryptocurrency exchange, is the parent company of Cronos (CRO), which uses it in its blockchain operations. The company closed US institutional trading in June 2023, claiming there wasn’t enough interest from this group to justify keeping the platform open.
US retail investors can still trade on Crypto.com, but the liquidity typically provided by institutional traders in the US is not present on the platform. This can cause problems for investors who use it. For example, on April 14, 2024, the 24-hour trading volume was $35.2 million, much lower than that of many other cryptocurrencies.
Furthermore, as of April 12, 2024, there were only 8,554 active Cronos addresses, suggesting that only a limited number of people use the blockchain. Investors looking for trading opportunities or the ability to quickly enter and exit positions may want to consider other cryptocurrencies to ensure they don’t get caught in liquidity traps.
Is Cronos on Ethereum?
Cronos is based on Cosmos SDK, so it is not on Ethereum. However, it is a highly interoperable blockchain capable of communicating with Ethereum.
Does the CRO have a Blockchain?
Yes, CRO is the native token for the Cronos blockchain.
Is Cronos a Level 1 Blockchain?
In blockchain terms, “layer” refers to other chains that operate in tandem with a primary blockchain, completing tasks for that blockchain. Layer 1 is the term used to refer to primary blockchains, so Cronos is a layer 1 blockchain.
The bottom line
Cronos is a fast, interoperable blockchain, with its own native CRO token, that aims to be a user-friendly hub for DeFi, NFTs, and the metaverse within the broader dApp environment.
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