"【Old Cat Tests 3C】Principle Explained in Detail! MCO Surges by 40%, How Does CRO's Arbitrage Restrict Coin Prices?"

Crypto.com has announced the upcoming launch of its mainnet to maximize the functionality of the blockchain. In order to simplify operations, the company will be merging the MCO and CRO tokens. They have introduced the MCO Swap Program to facilitate this integration. The current MCO token is mainly used for applying for the MCO Visa card, as well as for card top-ups and enjoying VIP benefits and better interest rates through MCO staking. These functions will be replaced by CRO, which will serve as the single token. The MCO/CRO exchange program has been introduced in response to these changes.

Reasons for the Surge in MCO Coin Price - Early Exchange Reward of 20%

Crypto.com uses the following formula to calculate the exchange quantity based on the Volume Weighted Average Price (VWAP):

1 MCO = (MCO 30-day weighted average ÷ CRO 30-day weighted average) x 1 CRO

The 30-day trading volume is calculated from July 2nd to August 2nd.

Exchange before 07:59 on September 3rd (Taiwan time), Crypto.com will provide an Early Swap Bonus in CRO:

1 MCO can be exchanged for 33.1726 CRO, which is 20% more than the original exchange rate

However, it is worth noting that the additional 20% bonus received needs to be locked for 180 days before it can be withdrawn, while the rest of the converted amount is unaffected and does not require locking.

The 20% early exchange bonus will be sent to the Crypto.com exchange. Please register with the exchange to receive the bonus. If you have not registered with the exchange, do not worry, the early exchange bonus will be stored in the system until you register with the exchange.

Additionally, those who are already locked or participating in Crypto Earn and have a lockup can also participate in the exchange to receive the early bonus, and the lockup period will not be reset after the exchange, so you can rest assured.

Arbitrage Opportunities Arise, CRO Faces Arbitrage Pressure

Following the news, the MCO price on Binance once reached $6, but then returned to rational levels and is currently hovering around $5.5. Why does it remain around $5.5? What does this have to do with the price of CRO? We can actually deduce this from the early exchange bonus.

Through a simple calculation, we find that using the current price to calculate, one MCO is worth $5.5 but can only be exchanged for an equivalent of $4.46 in CRO. At first glance, this may seem unreasonable as the MCO price is too high. But what if we factor in the early exchange bonus?

Calculating based on the early exchange bonus, some arbitrage opportunities begin to appear

Why Does Arbitrage That Seems Unprofitable Exist?

The entire operation process is as follows: leveraging the feature of being able to directly convert and withdraw CRO after the exchange, sell it on other exchanges directly, and as the price of CRO rises, the arbitrage opportunities will increase, or as the price of MCO decreases, larger profit margins will be generated.

Overall, as long as the MCO price on Binance drops slightly, there will be buying interest, whereas on Kucoin, there will always be selling pressure on CRO. On the night of August 3rd, it was quite interesting to see people constantly moving back and forth.

Should You Join the Arbitrage Ranks?

Here are a few points to consider:

1. If you can accurately buy MCO at a price below 3 or even lower, then there will be better profit margins
2. CRO continues to face selling pressure, and if it drops directly, there will be no arbitrage opportunities
3. The profits from arbitrage cannot be used immediately and must be locked for 180 days on the Crypto.com exchange

Overall, waiting for MCO to drop will present good arbitrage opportunities, but you must accept the fact that the profits will be locked for 180 days.

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[This article is authorized and reproduced from Old Cat Tests 3C, written by Josh Lu Zijian]