Guide to Crypto.org Chain
January 26, 2022
Crypto.org Chain powers a growing suite of user-friendly financial products.
An introduction to Crypto.org Chain
Crypto.org Chain is a Tendermint-based protocol in the Cosmos ecosystem launched by Crypto.com, one of the largest consumer facing crypto-financial organizations in the industry. The protocol’s goal is to power a growing suite of financial products. By designing user-friendly interfaces for these products, the complexity of blockchain is abstracted away so that the general public can access cryptoassets as well as use smart-contract based products.
Crypto.com has been growing and evolving since the release of the first ever crypto-backed Visa card in 2018. Their Crypto.com Visa debit card was launched first in Asia, then in the U.S. in 2019, and across Europe in 2020 as well as Canada. Crypto.com was also the first cryptocurrency company in the world to achieve a series of international payment card and information security quality assurance standards (PCI, ISO/IEC). The company’s other digital asset products include a fiat-to-crypto exchange, payment solutions, and ports to DeFi.
Crypto.org Chain’s first goal is to support Crypto.org Pay, the company’s mobile payment solution. Initially the protocol will only support CRO transfers.
What is CRO?
CRO is the native asset of Crypto.org Chain; CRO will be staked by validators to help secure the network, paid as rewards for participating in consensus on the chain, and used for CRO transactions.
Currently, CRO is built on the ERC-20 format. When the native token CRO is launched on Crypto.org Chain, it will exist in parallel with the previous token. There is no set target ration between the two assets. Although details have not been released, the hope is the native CRO will be used for the same purposes as the Ethereum-based coin.
The Ethereum-based CRO is currently used for three main functions:
CRO holders can stake CRO within the crypto.com platform. Staking CRO within the app also grants access to the crypto.com Visa card and increases one’s rewards in other areas of the crypto.com ecosystem.
Users of the crypto.com payment solution can earn CRO rebates for paying in CRO with merchants who accept the token, and merchants who accept CRO do not pay transaction fees for those sales. CRO rebates are also available for making peer-to-peer CRO transfers.
CRO is used to settle transaction fees within the crypto.com ecosystem and can be used within the crypto.com exchange to trade currencies for retail purposes, with a rebate when trading fees are paid in CRO.
The Crypto.com team will encourage users to migrate to the new, native CRO token on Crypto.org Chain following mainnet launch. The CRO migration tool, along with Crypto.org Chain staking, will be available via the Crypto.com DeFi wallet.
How to participate on Crypto.org Chain
Crypto.org Chain uses a proof of stake consensus method as it is Tendermint-based. Participants in Crypto.org Chain can run a node and participate in the network as validators, or can delegate their CRO to an active validator, earning a portion of rewards in exchange for helping to secure the network.
There are two types of nodes in Crypto.org Chain – validator nodes and full nodes. Validator nodes are responsible for validating transactions and committing new blocks to the blockchain, while full nodes retrieve data from the blockchain and provide it to the validator node client. Participating as a validator requires operators to run a cluster which has both types of nodes plus their supporting infrastructure.
The active set of validators is made up of the top 100 validator nodes by total stake, including self-bonded stake and delegation (together known as “voting power”). There is no minimum self-bond to join the network as a validator.
Validators charge delegators a percentage commission of rewards earned in exchange for performing the work of validation; the distribution of rewards to delegators is executed on-chain, as with most Tendermint based protocols. Rewards are not automatically re-staked. There is no minimum delegation or warm up period; though there is a 28 day unbonding period during which delegators do not earn rewards. Delegators can change their choice of validator without having to unbond.
There are four key considerations to optimize one’s participation in Crypto.org Chain:
Amount of self-bonded CRO:
A higher amount of self-bonded CRO on a node shows other network participants that a validator is more liable for its own actions, an attractive attribute for delegators.
Amount of delegated CRO:
Inclusion in the active set is based on the total CRO staked to a validator, so nodes want to attract delegators in order to increase its overall voting power. Higher voting power not only increases the probability a validator will be awarded block slots, but it also signals the community trusts the validator.
Commission rate :
Validators charge delegators a commission on rewards in exchange for conducting the work of validation. Increasing or decreasing this commission can optimize for the gross amount of delegations and validator revenue.
A validator’s track record is an important factor in a delegator’s decision to stake tokens to a particular node. This track record includes a validator’s uptime history, whether or not it has been subject to any slashing incidents, the age of the validator, and the validator’s governance participation history.
Rewards on Crypto.org Chain
There are two types of rewards on Crypto.org Chain:
Block rewards are earned for conducting the work of validating transactions and committing new blocks to the blockchain.
Transaction fee bonuses are paid if a validator includes more than 66% of precommits from other validators in the blocks they produce. The bonus is intended to incentivize better networking between validators as well as to reduce empty block proposals.
All rewards earned by a validator are subject to the protocol’s community tax fee. The tax fees are sent to a community pool, which can then be spent on community spend proposals approved using Crypto.org Chain’s on-chain governance apparatus.
Both validators and delegators have to manually collect rewards by submitting a withdrawal transaction on-chain.
The Crypto.org Chain testnet explorer Source
Risks of participation on Crypto.org Chain
Crypto.org Chain includes slashing as a deterrent to prevent poor validator performance or malignant behavior. A validator’s self-bonded stake along with the funds staked by delegators are subject to slashing; the amount of CRO at risk of slashing is based on the total voting power of the validator.
All validators may survey the network for “misbehavior” by other validator nodes and submit evidence of slashable offenses to the protocol.
There are two main slashing conditions in effect on Crypto.org Chain:
Double signing: when a validator signs two different blocks within the same consensus round, or when a validator signs a message that does not agree with the state of the chain. The penalty for double signing is the loss of a percentage of the total funds bonded on the validator, currently set at 0.05%. The validator will also be permanently removed from participating in the network, referred to within Crypto.org Chain as being “tombstoned.”
Downtime: when a validator is non-responsive or cannot be reached for a predetermined period of time, currently set at 1000 out of 2000 consecutive blocks. The penalty for downtime is currently 0.0001% of the total funds bonded on the validator. The validator will also be removed from participating in the network for a period of time, currently set at one hour. The validator must then execute an un-jail transaction to rejoin the active set and resume participation in the network.
Governance on Crypto.org Chain
CRO holders can participate in Crypto.org Chain’s on-chain governance, with staked CRO serving as the voting mechanism. Using the Crypto.org Chain commands within the CLI, participants can submit a proposal along with an initial deposit, deposit tokens to fund an active proposal, and vote for an active proposal. Delegators inherit the vote of the validator they are delegated to unless they submit their own vote, which overrides their validator’s vote.
Governance within Crypto.org Chain takes place in three phases:
Phase 0 — Submit period: Users can submit a governance proposal with an initial CRO deposit, which helps to reduce spam in submissions. Once the deposit is made, the proposal becomes active and enters Phase 1.
Phase 1 – Deposit period: CRO holders can deposit CRO to show support for an active proposal. If the proposal reaches the deposit minimum it moves on to Phase 3. If not, it becomes inactive and all of the deposits are refunded.
Phase 2 – Voting period: Once a governance proposal makes it to the voting period, staked CRO can be used to vote either yes, no, no with veto, or abstain.
Once the voting period has ended there are four outcomes which would lead to rejecting the proposal:
No one votes, or everyone votes abstain
Votes did not reach the quorum, meaning that less than 40% of staked CRO participated in the vote
More than the veto threshold of voters vote “no with veto”
More than the threshold of voters vote “no”
Otherwise, the proposal will be accepted and it will be implemented as part of the network’s software.
Why run Crypto.org Chain nodes with Coinbase Cloud?
Bison Trails provides the expertise needed for early adopters to participate in this growing network. Having supported Crypto.com through the Crossfire testnet development and implementation, we are excited to support the mainnet launch of Crypto.org Chain with Participate Clusters, Query & Transact Clusters, and seed nodes.
Participate: A Participate Cluster with Coinbase Cloud for Crypto.org Chain includes a validator node along with its accompanying full nodes and supporting infrastructure. During cluster creation, you can choose your preferred cloud provider and region; every cluster is supported by a resilient multi-cloud recovery system to ensure maximum uptime.
Delegate: Those who do not have enough CRO to run their own node can stake to Coinbase Cloud's to community validator, using the staking feature of the Crypto.com DeFi Wallet.
Query & Transact: Coinbase Cloud will also offer Query & Transact read/write infrastructure on the Crypto.org Chain to enable companies and developers to build Web 3.0 applications.
“Bison Trails [now Coinbase Cloud] has been an invaluable partner to us through the launch of the Crypto.org Chain, supporting us from testnet to mainnet with deep technical insight and reliable infrastructure. This is a pivotal moment in our company that brings us closer to our vision of making crypto assets and transactions accessible to everyone. We look forward to continuing to work together.” — Kris Marszalek, CEO of Crypto.com
Coinbase Cloud operated the Seed Node Program for Crypto.org Chain’s initial stages, operating the “chatty” nodes that provide nodes coming online with a list of peers to connect to in order to help ensure stability in the network’s first year of mainnet operation.
This program was proposed by Coinbase Cloud to ensure a smooth experience for the existing community of node operators as well as for new stakeholders onboarding post-mainnet launch, while supporting the chain’s decentralization and security.
Coinbase Cloud has deep technical knowledge of the Crypto.org Chain, having been active participants on the Crossfire testnet and supporting mainnet launch. We provide secure, reliable validator node infrastructure to Crypto.org Chain to help optimize validation and governance participation.
"Crypto.com has been growing and evolving since the launch of the first-ever crypto-backed Visa card in 2018. Having supported the Crypto.org Chain through the Crossfire testnet, we are excited to support mainnet launch. By providing expertise and easy-to-use infrastructure, we aim to make it easier for anyone to participate in the network." — Joe Lallouz, Coinbase Cloud
Bison Trails also supports a number of protocols besides Crypto.org Chain that are built on the Tendermint consensus engine.
Optimize participation: Our Protocol Operations team monitors the changing state of Crypto.org Chain’s validators and protocol updates, regularly offering information to help inform validators of the decisions to optimize their participation.
Performance: Sign transaction blocks with low latency and high throughput with robust infrastructure.
Ease of use: Participate as a validator in Crypto.org Chain without requiring deep engineering, protocol, dev-ops, or security knowledge.