Stick A Fork In It
VeradiVerdict - Issue #102
C.R.E.A.M. (Crypto Rules Everything Around Me) Finance is a blockchain agnostic, decentralized lending platform developed from a fork of Compound Finance. C.R.E.A.M. targets offering liquidity across underserved assets (particularly those not on Ethereum) by providing algorithmic money markets for these assets; the full list of assets can be found here. The protocol has been launched on Ethereum and will soon be available on Binance Smart Chain (BSC).
Cream is a fork of the Compound Finance DeFi protocol. The crux of the protocol is the lending service, where users can lend or borrow assets like BAL, COMP, ETH, USDC, USDT, YFI, and more. Since Cream is compatible with BSC and Binance, users can also engage with assets like XRP, LTC, and BCH which aren’t available on ETH.
Cream offers a secondary product, called Cream Swap, which is a fork of Balancer. On Swap, users can deposit assets into liquidity pools in exchange for Cream Pool Tokens (CRPTs). Users can then stake CRPTs for various rewards, including the Cream governance token CREAM. Cream Swap also enables users to switch collateral positions without leaving them, which removes the need for middlemen like Uniswap and offers lower fees to consumers.
The protocol’s governance plans to be completely decentralized; the governance token is called CREAM. Cream plans to distribute 9 million CREAM over the lifetime of the protocol, of which 1.8 million will be distributed as an incentive for liquidity providers on the protocol. Users can earn CREAM by providing liquidity and staking CRPTs. Cream is revisiting their token distribution plan every 7 days to respond to market changes. This current week, Cream is distributing 1000 CREAMS –– 500 for supply and 500 for borrowing.
Since its launch in August, Cream has accrued 294.6 million USD in its protocol, making it the 10th largest protocol on DeFi pulse. Adding in Swap and their BSC product, they have roughly 500 million USD in total value locked. A little over 350,000 CREAM tokens have been distributed, and it’s currently trading at $148, giving it a market cap of roughly 47 million USD.
Cream offers a promising model for how DeFi innovators can leverage the successes of past projects, like Balancer and Compound, and enhance their capabilities with newer technologies, governance frameworks, and cryptoeconomics. The insane growth of the protocol in a little over a month demonstrates continued interest in DeFi and liquidity mining, but also the inherent demand for and value in expanding DeFi beyond purely Ethereum.
C.R.E.A.M.’s useful money legos include the addition of “seed” tokens that’s used in yieldfarming to generate tokens. These tokens are generally other DeFi ecosystem tokens so that new projects can bring in more DeFi natives by allowing them to stake tokens they already have for additional yield. These tokens include: COMP, LINK, SUSHI, YFI USDC etc. Also, CREAM has added trading pairs that allow users to easily transfer between high(est?) yielding stablecoin LP token (yyCRV) and the high yield, yearn version of ETH, the yETH.
What the fork is going on in DeFi?
Decentralized finance, or DeFi, has been exploding recently, especially due to enhanced lending protocols, liquidity mining, insane rewards, and more. Several DeFi protocols have accrued hundreds of millions of locked volume over just months, indicating that the space has exponential growth potential and could actually challenge traditional financial paradigms.
Given the explosion of interest in the space, lots of developers are spinning up new DeFi protocols with governance tokens and are offering liquidity incentives to the community. As these projects grow, developers have learned about significant shortcomings, including slow transaction speeds, high fees (Ethereum gas), and more. More crypto enthusiasts are beginning to explore the idea of “forking” an older protocol and making a tangible improvement to it before deploying it to the public. One recent famous example is Swerve Finance, a fully decentralized fork of Curve Finance. Another protocol, Cream, is a fork of Compound that targets DeFi beyond the constraints of the Ethereum blockchain.
What is C.R.E.A.M. Finance?
C.R.E.A.M. is an acronym, short for “Crypto Rules Everything Around Me.” Cream is a decentralized finance protocol that aims to bring core DeFi functionalities to as many users and assets as possible.
How exactly do they do that? Cream differentiates itself from most other DeFi protocols because it considers itself blockchain-agnostic and scopes itself beyond Ethereum. Cream is built in solidity and deployed on both Ethereum as well as the Binance Smart Chain (BSC). The BSC is an EVM-compatible blockchain designed for enhanced capabilities, including lower transaction fees, easier interoperability, and more. Several assets, including BTC, ETH, BCH, XRP, and more, are already pegged on BSC, and the chain has accrued 14% Ethereum’s transaction volume. By building smart contracts on top of BSC, Cream distances itself from the Ethereum-enforced constraints that other DeFi protocols have dealt with, while maintaining interoperability with ETH, EVM, and DeFi protocols on Ethereum.
What exactly can users do on Cream?
Cream was developed from a fork of Compound Finance and is an algorithmic money market protocol. The platform handles lending, borrowing, earning interest, asset tokenization, and more. Cream’s functionalities can be grouped in two main products:
First, the lending platform. Cream’s core product is an interface for users to lend and borrow assets at algorithmically set interest rates –– this list of assets includes BAL, COMP, ETH, USDC, USDT, YFI, and more. APYs are currently higher than centralized lending platforms on multiple assets, e.g.- 12.88% for ETH, 11.68% for USDC, and 49.87% for BAL. This is fairly central to any DeFi platform and is a useful primitive for any long/short strategies as well as other exciting functionalities, like yield mining. Cream is also available on BSC, where transactions incur significantly less fees than gas fees on Ethereum, meaning Cream can offer unparalleled cost savings and competitive rates to lenders and borrowers alike. Additionally, BSC offer tokens such as BNB, XRP, LTC, BCH and more, opening up DeFi to a market of $20-billion+ that were largely unable to participate ini DeFi previous to this.
Second, Cream Swap. Cream Swap is a fork of Balancer that offers liquidity pools and automated market makers for liquidity mining. Most yield farming methods rely on platforms like Uniswap, which can incur steep gas and trading fees. Cream Swap allows users to switch collateral positions without leaving it, which charges users less fees. For context, Uniswap charges 0.3% trading fees, while Cream charges 0.25%, of which 0.2% will be returned to liquidity providers and 0.05% goes back into the protocol. With Swap, Cream offers several liquidity pools, where users can easily trade in and out of high yield tokens, e.g.- USDC for yyCRV(yUSD), or between high yield assets representing USD stablecoins (crYYCRV) and ETH (crYETH). In exchange for providing liquidity into these pools, Cream gives users the native Cream Pool Token (CRPT). Users can stake CRPT for various rewards, including Cream’s governance token CREAM.
Cream has also become a powerful complement to the Yearn Finance ecosystem. The Yearn tokens (YFI, yCRV, yyCRV, yETH) are all supported by Cream’s protocol, allowing it to build off of the explosion of liquidity in Yearn recently.
How is Cream governed?
Cream Finance is on the path toward decentralized governance; the governance token is called CREAM. The total supply of CREAM tokens will be 9 million, of which 900,000 is distributed to the Cream team, 900,000 is distributed to seed investors, 1.8 million are distributed to liquidity providers, and 5.4 million are allocated later for further governance purposes. All the tokens circulating so far have been liquidity rewards.
Of the 900,000 CREAMs being distributed to the team, Cream will be giving 225,000 (25% of the team distribution) to the Compound Labs team. Compound has also joined Cream as a security and technical advisor –– the two will work in concert with each other moving forward, and offer a bright vision for how forked DeFi protocols can interact and create more value for everyone.
Users who want to earn CREAM can simply use the service to supply and borrow tokens. More advanced ways to earn tokens include depositing assets in a Cream liquidity pool and stake the returned CRPT on their reward page. Cream adjusts their reward schedules according to market conditions every 7 days (sometimes sooner). Their latest updates are shared on their Twitter and Medium channels.
How has the platform grown?
Cream has 296.4 million USD locked in its protocol as of writing, making it the 10th largest protocol on DeFi pulse in terms of total value locked. Adding in Swap ($150M) and their recently-launched BSC platform ($38M) CREAM is almost at $500-million TVL. The platform launched in August of this year and has grown remarkably since. To date, a little over 350,000 CREAM tokens have been distributed as liquidity incentives. The CREAM token is currently trading at $148.35 and has a market cap of $47 million.
Cream Finance provides a promising model for how iterating from previous successes in DeFi can open up novel use cases and enhanced functionality. Cream leveraged the demonstrated value prop of protocols like Compound and Balancer, but took them a step further and expanded them beyond the Ethereum blockchain. By making use of BSC’s enhanced capabilities, Cream can offer similar functionality with faster speeds, comparatively low transaction and trading fees across previously untapped assets and communities.
The growth of Cream to nearly 500 million USD locked in the protocol in just over a month also demonstrates continued interest in DeFi and liquidity mining. Cream offers incredible insight into what non-Ethereum DeFi can look like and how multimillion dollar protocols can grow out of forks of larger-scale, established projects. As users take advantage of Cream’s lower fees, faster speeds, and enhanced functionalities, we’re likely to see more blockchain-agnostic protocols and movement away from Ethereum as the standard for DeFi infrastructure.
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Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. The firm invests in equity, pre-auction ICOs, and cryptocurrencies on the secondary markets. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.