Crypto.com, a conglomerate primarily engaged in payments and exchanging crypto assets, announced its foray into decentralized financing with a platform called DeFi Swap.
According to the whitepaper released on Friday, DeFi Swap is an offshoot of the popular decentralized Uniswap swap.
Aside from minor aesthetic changes, the differences appear to be in the choice of tokens, additional geographic restrictions and, in particular, an incentive for income farming based on CRO, the token of the Crypto.com chain.
Users who use the CRO token in the exchange are entitled to a reward for additional tokens given out daily. Higher stake amounts entitle the holder to higher earnings, based on a multiplier that increases after each year of stake.
The minimum amount for the boost is 1,000 CRO and is worth about $ 160 at press time.
Accrued Token Rewards are subject to a 30- or 90-day lock-up period depending on whether the stake is higher or lower than 100,000 CRO (16,000 USD).
The system is not dissimilar to some of the more commonly used crop farming systems today, but with one major limitation in practicability. This could help avoid some of the excesses of previous systems, where funds would quickly switch from one coin to the next within a matter of weeks. The Crypto.com calculator assumes that annualized returns could be greater than 1,000% if around 500,000 CRO ($ 80,000) are staked for two years. Interest rates are likely to change, however, and it remains to be seen whether they can stay that high throughout the period.
Kris Marszalek, CEO of Crypto.com, told Cointelegraph that the company is “building an entire ecosystem and DeFi products are an important part of our roadmap.” He teased that a DeFi wallet is also being developed.
The company would follow Binance’s lead of a centralized vendor bringing DeFi-inspired products to market. In contrast to Binance, which is pushing for its own blockchain, Crypto.com’s strategy seems to have been oriented towards Ethereum so far. The DeFi Swap product shares some similarities with SushiSwap, another Uniswap fork that has been used to attract users through an incentive system.
However, there are certain aspects of the exchange that make it less decentralized than its competitors. In particular, the platform is limited to intellectual property in countries such as the United States, the People’s Republic of China, and a large number of other states that are often listed on sanctions lists.
In answering the reason, Marszalek said, “Compliance, privacy and security are the foundation of everything we do and they determine important product development decisions.”
It is worth noting, however, that DeFi Swap can be accessed as a Uniswap fork by invoking the contracts by alternative means that cannot be stopped by anyone.
An additional restriction is the selection of assets, which appear to be at the discretion of Crypto.com, while Uniswap is notorious for its completely permissionless creation of token pools.
DeFi has grown to the point that centralized platforms are trying to incorporate it into their own product lines. But like the portmanteau of “CeDeFi” which was taken over by Binance CEO Changpeng Zhao and means “Centralized Decentralized Finance”, these efforts seem to be an oxymoron.