The world of decentralized finance offers plenty of profitable opportunities for everyone willing to put some effort into it. Besides, the higher the risk, the bigger the reward, so investors are becoming more and more audacious to onboard new platforms that offer leveraged returns and yields. This is the case with Cream Finance, which is an open and inclusive financial system built on smart contracts. Seemingly one of the hottest novelties in the DeFi space, the project managed to incorporate several protocols into their conceptual approach, without losing track of reality like other fast-paced bullish projects (such as SushiSwap).
In this article, we took a more detailed look at this project and what type of potential it has to impact the scene both in the short and in the long-term.
What Is Cream Finance?
Cream Finance, also called C.R.E.A.M Finance, is an open-source blockchain agnostic platform. Its structure is based on a fork of Compound Finance, also incorporating other lending protocols such as Uniswap, Balancer, etc.
Self-described as a lending platform based on Compound and an exchange platform based on Balancer Labs, the platform is more of a multi-purpose DeFi project where investors can come and expose themselves to different strategies.
Built first on Ethereum and launched in August 2020, the platform launched a second version of its protocol on the Binance Smart Chain on September 11th.
The platform has an interesting approach, bridging liquidity across several underserved crypto assets by providing cash flow with algorithmic money markets. Investors can opt for supplying any supported asset, using these assets as collateral to borrow other assets in the platform.
New services are added almost on weekly basis into the platform. As most of these services are “forked” from other protocols, they work pretty much identically within the network as well.
Currently, several categories can be used within an eclectic strategy for maximizing profit on a decentralized ecosystem. These possibilities include lending and borrowing, liquidity mining, governance, or even AMMs (Automated Market Makers) such as DEXs and other similar services.
One of the main focuses of the project is its list of tokens. Their vision is to support tokens that bring relevance and help the DeFi ecosystem to mature in size and profitability, such as stablecoins, governance tokens, and other strategic choices.
Their list includes major staples such as ETH and LINK, also allowing users to use several stablecoins such as USDT, USDC, BUSD, yCRV, yyCRV, and others. As the presence of the yTokens denounces, the Yearn Protocol is also another novelty incorporated by Cream to leverage potential gains.
Governance tokens include COMP, BAL, YFI, LEND, CRV, CREAM, MTA, and SUSHI. The SUSHI token, which was surrounded by controversy not long ago, is now part of the rebuilding of the SushiSwap project. Coincidentally, both projects are results of a “fork” in a major DeFi lending protocol (in this case, Compound and Uniswap).
Nevertheless, this list is not (and could not) be exhaustive, as the project is still incorporating new tokens to add up more profitable alternatives for investors.
Native Token and Governance
The CREAM token, an ERC-20 token built on Ethereum, is the governance token used in the network. Regarded by some investors as a “fair distributed” version of Compound’s COMP token, it is given to those who interact within the platform by lending/borrowing assets or providing liquidity to any supported protocols.
The project is going through a slow transition to go full DAO-mode on since it was released, although this approach was officially announced by the team only on September 2nd. As their DAO structure is still under development, we can only wait and check their Medium posts to see spoilers of it.
CREAM token holders will have governance- although it is unclear how voting will work at this current stage.
Smart Contract Security
The platform borrows uses source code from several other DeFi protocols such as Compound, Balancer, Curve, Uniswap, and Backholeswap. Their purpose is to push the boundaries of DeFi further by both creating and integrating existing protocols in a positive symbiotic approach.
This code structure, however, has not been audited at all- which is a red flag for more suspicious investors. Jeffrey Huang, the main head behind the project, stated that none of this code needs to be audited by anyone except the entities which created it.
Although it is unlikely that Compound will audit Cream’s Compound code, it is also flaky to state that it is impossible, given the current stage of innovation the DeFi scene is going through.
Despite being only a few months old in the industry, Cream Finance has been remarkably transparent since its launch regarding all changes made to the protocol.
So far, the platform has reached around US$ 200 million worth of cryptocurrencies in Total Locked Value at its peak, and at the time of writing, this value is around US$ 157 million.
Who Is Behind the Idea?
The project was first announced on July 16th this year by founder Jeffrey Huang. Huang is known amid the industry as a seasoned professional, being responsible for various successful projects such as Mithril and Machi.
Mithril is an Ethereum-based social media platform, while Machi is a Taiwanese social media company with over 42 million users across its apps and websites.
Huang is not alone at the core team of Cream Finance, being aided by three developers with solid backgrounds in computer science.
Given the current boom of yield farming and all the frenzy surrounding multi-strategy portfolios for ridiculously leveraged returns, the platform is worth giving it a try.
With a more cautious approach than other “fork” platforms such as SushiSwap, Cream Finance shows that the top protocols in the Defi industry are not immune to competition. The decentralized nature of the game makes it possible for such projects to thrive and make a lot of money.
The platform is not perfect, as it is plain to see with the code audit issue. However, Cream has done a noteworthy work on integrating several functions of different protocols to deliver a unique user-friendly and profitable idea.