What is C.R.E.A.M. Finance, and how does it work?

Project Reviews / 08.10.2020

If you were setting up your plate for another boring DeFi protocol named after food, C.R.E.A.M. will leave you starving. Despite its appetizing name, this platform’s denomination stands for “Crypto Rules Everything Around Me”, and there is nothing dull about it.

In fact, the developers could have easily called it “Copying Every Successful DeFi Protocol Around Me And Implementing It On My Platform.” The acronym would have been a bit more difficult to pronounce, but it would have been more accurate with the services that the platform provides.

Cream Finance is a multi-purpose protocol that has taken various strong features from other DeFi projects and made them perform together in a new and exciting ecosystem of decentralized finance applications.

Since its launch in August 2020, Cream Finance has expanded to provide lending services, crypto exchange features, and it is now developing into a decentralized autonomous organization (DAO).

With updates still emerging every week, there is no telling where C.R.E.A.M will be next year, or even how it will look like. What we know for sure is that the platform aims to become a ubiquitous financial ecosystem that should incorporate every DeFi operation a user will ever need.

If you are still unsure about what Cream Finance is and how it works, this close look under its hood should clear the air for you.

A Brief History of Cream Finance

To better understand how such an ambitious project surfaced on the crypto market we need to examine its history, which is less than three-months-old at the time of this writing.

Cream Finance is the work of Jeffrey Huang, an extremely active developer and entrepreneur in the crypto industry and not only. The Taiwanese-American tech fanatic is also the creator of other far-reaching projects, such as Mythril, a security analysis tool for EVM bytecode, and Machi 17, a Taiwanese social media company with more than 42 million users.

Huang spent most of 2020 figuring out a way to ride the DeFi wave. He developed the Cream protocol with the plan to launch it on the Binance Smart Chain in an announcement he made in mid-July. However, he changed his mind and deployed it on Ethereum on August 3rd starting with a liquidity mining pool called YOLO Alpha.

The project seemed a bit half-baked on its initial launch and continued to do so since there have been multiple updates posted on it ever since. This chaotic development does not seem to bother Huang that much, but then again, he is the self-proclaimed “semi-benevolent dictator of Cream,” so why should it?

Cream Finance seems to evolve without a preset roadmap in mind. It kind of stays on the sidelines, observing the market and cherry-picking the best and most profitable features tested and deployed by other DeFi protocols.

Huang takes his inspiration from other popular industry figures like Andre Cronje of Yearn.Finance and Robert Leshner of Compound. So far, Cream Finance has replicated elements from these two projects along with other features from Uniswap, Curve Finance, Balancer, and Blackholeswap.

On September 11th, Cream Finance released the second version of its protocol on the Binance Smart Chain (BSC). Since then, it has listed important crypto assets on the C.R.E.A.M. BSC, such as Cardano, EOS, and Band Protocol with more expected to join in the future.

What is Cream Finance?

According to its website, C.R.E.A.M Finance is “a lending platform based on Compound Finance and an exchange platform based on Balancer Labs”.

However, following its recent updates, we can safely say that Cream is more than just another lending platform.

The project is based on a fork from Compound. At the moment, it is steadily evolving into a blockchain-agnostic, decentralized peer-to-peer, community-governed DeFi protocol. Cream aims to provide the best features on the market based on smart contracts and on replicating the services that other platforms successfully offer.

Only three other developers are working on Cream Finance besides Jeffrey Huang. They vouch for their work with the expertise earned while working on the OMG Network and Ethereum. More so, they consider that the Cream code does not need an external audit since the protocol “is a fork of Compound without changes in the smart contract code.”

The mission of C.R.E.A.M. Finance is to offer DeFi services to a wider audience through cross-chain composability. The protocol aims to create more convenient links between liquidity providers and a broad range of supported crypto assets. Users can provide any of these assets and use them as collateral to borrow any other supported assets.

Some of the supported assets on C.R.E.A.M. include:

  • Stablecoins – USDT, USDC, BUSD, yCRV, yyCRV, and more.
  • Governance tokens – COMP, BAL, YFI, LEND, CRV, CREAM, MTA, SUSHI, and more.
  • Crypto assets – ETH, LINK, renBTC, EOS, Band, Cardano, and more.

At the time of this writing, C.R.E.A.M Finance had over $175 million in locked value protocols.

What is the CREAM Cryptocurrency?

CREAM is an ERC-20 token built on the Ethereum blockchain. Users receive it whenever they complete operations on C.R.E.A.M Finance, such as lending, borrowing, or providing liquidity.

CREAM token holders also receive governance power over all the protocols on the Cream Finance platform.

Similar to Yearn.Finance’s YFI token, there was no ICO hosted for the CREAM crypto. Instead, a supply of 9 million CREAM tokens was pre-mined and released on the protocol on August 7th, 2020.

On September 20th, the community voted on burning 67.5% of the tokens. As a result, the maximum supply was reduced to a little fewer than 3 million CREAM tokens, which were distributed as follows:

  • 5% has been reserved for liquidity providers.
  • 1% has been allocated to the team and advisors of Cream Finance.
  • 7% has been set aside for Compound Finance.
  • 7% will go to seed investors.

The 92.5% of the total CREAM supply is in control of the team, and it is stored in a multi-signature wallet that offers access to 12 key-holders. The people who hold the reins to this wallet include the Cream Finance developers and individuals from Pantera Capital and Compound Finance.

Since its release, CREAM has had a remarkable price evolution. It registered its all-time low (ATL) on the day of the launch, August 7th, at $9.24. From then on, it surged to as high as $288, its all-time high (ATH). Next, it managed to trade over $100 for almost an entire month before dropping below $50 at the beginning of October.

At the time of this writing, CREAM is trading for about $35 and has a 24-hour trading volume of over $2 million. Its market capitalization is $5,341,047 USD, and there is 149,928 CREAM in circulation.

CREAM is available on various crypto exchanges, including Binance and Uniswap. If you decide to make them part of your investment portfolio, you can store CREAM tokens in any crypto wallet that supports Ethereum-based ERC-20 assets. Popular options include Ledger Nano S, Trezor, and Atomic Wallet.

How does Cream Finance work?

C.R.E.A.M. Finance differs from most DeFi protocols through its ever-expanding offer of services and features, which include:

  • Lending
  • Borrowing
  • Liquidity mining
  • DEX-like services
  • Governance
  • Automated market maker (AMM) protocols

Let’s break them down and see how they work!

Cream Finance Lending

Most of the Cream services are identical copies of other original protocols in the DeFi ecosystem. For example, the lending feature is an exact copy of the Compound Finance lending protocol. The only minor difference is that Cream Finance supports more assets for both lending and borrowing operations.

Cream Finance Borrowing

Similar to borrowing money on Compound, you need to deposit cryptos in USD on the Cream Finance protocol as collateral to be able to loan a smaller amount of cryptocurrency, again in USD. You are allowed to borrow up to 60% of the USD value of the cryptocurrency you deposited.

The main benefit of borrowing cryptocurrency on Cream Finance is that there is no time limit for when you have to pay back the loan. Also, you do not need to provide any documentation beforehand.

Cream Finance Liquidity Mining

Cream Finance replicates the liquidity pools that Curve Finance offers on its protocol. You can stake cryptocurrency to earn yields of nearly 200% that you can withdraw at any time.

The Cream Finance pools reward stakers with a cut of the trading fees in the Cream Finance Swap, which is a decentralized exchange (DEX) on the protocol.

Cream Finance Swap – DEX-like Services

The developers define CREAM Finance Swap as “a fork of Balancer with a Uniswap-like frontend.” The service imitates both protocols by using the ratio of two assets in a pool to determine price instead of an order book like a centralized exchange does.

Cream Finance Governance

On September 2nd, the developers announced that Cream Finance will transition to a decentralized autonomous organization (DAO), which will give full governance power to the token holders in the community. As of October 2020, the project is still in development.

Cream Finance Automated Market Maker

Following the success of Curve Finance, the Cream Finance developers came up with their version of an AMM, called CreamY, which provides high liquidity swaps between cryptocurrency assets of the same value. You also get a cut of the trading fees on the platform every time you deposit liquidity.

The Bottom Line – What is C.R.E.A.M. Finance, and how does it work?

As you have probably noticed by now, C.R.E.A.M. is a hybrid of different DeFi protocols. Instead of focusing on a single niche of decentralized finance services, Cream Finance has decided to offer as many of them as it can.

The developers behind the Cream protocol had the inspiration not to build these DeFi services from scratch. If they would have done so, the project wouldn’t have even hit the market yet, probably. Instead, they replicated all the successful features that already exist out there. In return, they paid homage to their creators through continuous links to the original protocols, free CREAM tokens, and public acknowledgments of their contributions.

C.R.E.A.M. Finance has not surpassed any of the DeFi protocols that it is imitating. It is difficult to say if it will ever manage to, but the project is an ambitious one with limitless possibilities of expansion.

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A creative writer in the field of content writing for the past 7 years. Iulian is passionate about his work and his interest in areas such as technology, travel, sports, literature and gastronomy have aided him to the research quality in articles that reflect these themes. Recently, he discovered the Bitcoin and the blockchain technology and he’s a big fan now.