Cronos POS V5 Upgrade Proposal: Equitable Distribution of 70 Billion $CRO to Existing Holders

[Theohox]

Aligned with the ambitious vision and mission outlined in the Cronos and Crypto.com 2025 Roadmap, Cronos Chains and $CRO are committed to fostering the growth of reliable, robust decentralized networks to accelerate the adoption of Trad-Fi and AI-powered solutions. To achieve these objectives and ensure fairness to the community that has supported the ecosystem, we propose the following updates to the network parameters and token allocations as part of the Cronos POS V5 upgrade.

1/ New Token Allocation: Equitable Distribution to Existing $CRO Holders

Advancing key roadmap goals—such as connecting $CRO to institutional liquidity pools through a $CRO Exchange Traded Fund (ETF), securing a top 10 protocol position, and achieving U.S. ETF approval—requires not only strategic funding but also unwavering trust from the $CRO community. The original proposal to allocate 70 billion $CRO to a Cronos Strategic Reserve escrow wallet, while well-intentioned, risks diluting the value held by existing stakeholders without their consent. This dilution is tantamount to theft, undermining the moral foundation of a decentralized ecosystem.

In traditional finance, a stock split equitably distributes new shares to existing shareholders to maintain their proportional ownership and reward their loyalty. Similarly, we propose that the 70 billion $CRO—bringing the total supply back to the original 100 billion—be distributed pro-rata to existing $CRO holders as of a designated snapshot block height. This approach:

• Upholds Fairness: Ensures that current holders, who have staked, traded, and supported $CRO, are not penalized by dilution but instead benefit from the ecosystem’s growth.
• Supports Roadmap Goals: Empowers holders to contribute to Trad-Fi crossover projects, AI development, and ecosystem growth through their own initiatives, staking, or participation in governance.
• Aligns with Decentralization: Reinforces trust in Cronos as a community-driven network, fostering long-term adoption and loyalty.

Proposed Distribution Mechanism:

• A snapshot of all $CRO holders (wallets with non-zero balances, including staked and unstaked tokens) will be taken at the V5 upgrade block height.
• The 70 billion $CRO will be distributed proportionally based on each holder’s share of the circulating supply at the snapshot.
• Distributed tokens will be subject to a 5-year lockup period with linear monthly vesting (approximately 1/60th unlocked per month) to balance immediate rewards with long-term ecosystem stability.

This equitable allocation supports initiatives such as:

• Driving attractiveness of the crypto ecosystem in the U.S. by empowering holders to participate in Trad-Fi crossover projects.
• Seeding the $CRO ETF through community-driven liquidity rather than centralized reserves.
• Funding AI development and ecosystem growth as holders reinvest their allocations into grants, Dapps, and developer tools.

2/ Network Parameters Updates

To complement the equitable distribution and maintain competitive staking rewards despite the increased total supply, we recommend adjusting the following network parameters in the ‘mint’ module:

• Update inflation_max from 3.7% to 1%
• Update inflation_min from 1.2% to 0.85%

These adjustments ensure staking rewards remain sustainable, targeting an 8% staking APR under the new 100 billion $CRO total supply, incentivizing continued participation from delegators and validators.

Technical Details

A/ Distribution of 70 Billion $CRO to Existing Holders

• Snapshot: Taken at the V5 upgrade block height to determine eligible $CRO holders.
• Allocation: 70 billion $CRO distributed pro-rata to all wallet addresses holding $CRO (including staked tokens) based on their proportion of the pre-upgrade circulating supply.
• Vesting: Tokens will be allocated to individual vesting accounts using the Cosmos SDK’s PeriodicVestingAccount mechanism:
  • Start Time: V5 upgrade block timestamp.
  • End Time: 5 years post-upgrade.
  • Vesting Periods: 60 equal monthly periods (approximately 2,628,000 seconds each), with each period unlocking 1/60th of a holder’s allocated amount.
  • Example for a holder receiving 1 billion $CRO:

    '@type': /cosmos.vesting.v1beta1.PeriodicVestingAccount
    base_vesting_account:
      base_account:
        address: ## Holder’s wallet address ##
      original_vesting:
      - amount: "1000000000000000000"
        denom: basecro
    start_time: ## Upgrade height timestamp ##
    vesting_periods:
    - amount:
      - amount: "16666666666666666"
        denom: basecro
      length: "2628000"
    - [Repeated for 60 periods, adjusting final period for precision] -

B/ Network Parameters Updates

• Adjust the ‘mint’ module parameters to maintain competitive staking rewards:

  "changes": [
    {
      "subspace": "mint",
      "key": "InflationMax",
      "value": "\"0.010000000000000000\""
    },
    {
      "subspace": "mint",
      "key": "InflationMin",
      "value": "\"0.008500000000000000\""
    }
  ]

• With a total supply of 100 billion $CRO and a maximum inflation of 1%, staking rewards will sustain an approximately 8% APR at a 10% bonded ratio (10 billion $CRO staked).

Testing

Proposed changes will be tested on the Croeseid testnet (testnet-croeseid-4) to verify snapshot accuracy, distribution mechanics, vesting functionality, and staking reward stability.

Conclusion

This proposal ensures that the 70 billion $CRO allocation benefits existing holders rather than a centralized reserve, honoring the moral obligation to reward the community akin to a stock split. By distributing tokens equitably, we empower $CRO holders to drive adoption—supporting the $CRO ETF, Trad-Fi integration, and AI innovation—while maintaining network security through sustainable staking rewards. This approach aligns with the Cronos 2025 Roadmap’s vision of fostering a robust, decentralized ecosystem.

Next Steps

An on-chain governance proposal will be submitted for community voting, with the following options:

• Yes: Approve the equitable distribution of 70 billion $CRO to existing holders and network parameter updates.
• No: Reject the proposal, maintaining the status quo.
• Abstain: Defer judgment to other holder