CREAM is a decentralized lending protocol and exchange (known as Cream Swap) that resides on both the Ethereum and Binance Smart Chain (BSC).
Users can lend and borrow over 40 cryptocurrencies on CREAM.
Lenders earn interest by providing liquidity to the protocol, while borrowers can borrow by collateralizing their crypto assets to take out loans from the liquidity pools.
The protocol has a native token, CREAM, which also acts as a governance token. Governance allows the community to decide on the protocol’s direction, such as deciding on new crypto assets to be listed on CREAM, the reserve ratio, and the collateral factor.
CREAM has two core products:
- Decentralized lending protocol — known as CREAM and forked from Compound
- Decentralized exchange protocol — known as CREAM Swap and forked from Balancer
In November 2020, Yearn.Finance (YFI) merged with CREAM.
On CREAM, you can lend and borrow across 40 supported cryptocurrencies such as Sushi (SUSHI), Uniswap (UNI), and wNXM (WNXM). As a lender, you can earn interest by providing liquidity in the protocol.
Upon supplying the liquidity, you will receive crTokens that represent the respective underlying asset, and these tokens will take into account the interest accrued over time.
As a borrower, you will have to provide collateral before you can take out a loan and the amount you can take out is dependent on the collateral factor.
Cream Swap is a decentralized exchange that utilizes an automated market maker (AMM) model, where users can quickly swap from one token to another. Unfortunately, the number of assets available for swaps on CREAM Swap is limited.
CREAM was founded in July 2020 and led by Jeffrey Huang, who is also the founder of Mithril.
Analysis and Opinion
Cream is a low-risk platform compared to other DeFi platforms. Being within the Yearn Finance ecosystem provides it with credibility. The platform is a little more conservative than many of the other farming players. Cream is well known for its long-term staking product, which offers an attractive 125% APR if you stake your tokens for 4 years. Whilst the rewards or the principal can’t be removed during the lock-in period, the APR is not fixed. Cream’s minimum lock-up period is 1 year. There is over $1 billion locked on Cream’s platform, which shows there is demand for its product.
In the world of crypto, anything can happen. Regulation, hacks, new technology, new trends. An investor would be insane to lock up his crypto for more than a year, even a year is a long time in crypto. What’s to say that Cream is hit by a malicious attack? 4 years is a long time to go without any form of attack. What’s to say that there are better options than Cream that you miss out on because you have your currency locked? Whilst we believe Cream is a quality platform, we wouldn’t recommend investors lock up their crypto for more than a few months. Crypto moves too fast to be tied down.
A Note on Risk
Risk is relative. The risk assessment on this table is based on the relative risk of holding cryptocurrency as an investment. As an investment, cryptocurrency is high risk. Staking through Coinbase, for example, is lower risk compared to staking through a newly established staking platform but is still high risk compared to other investment classes.
One other important point to note is that although a platform may be rated as low-risk, investors must remember that the higher the return on offer, the higher the risk. In other words, low-risk platforms can offer high-risk investments.
No Financial Advice
This report does not constitute financial advice or a recommendation to buy in any way. Always do your own research and never invest more than you can afford to lose. Investing in cryptocurrencies is a high risk, and you could lose 100% of your investment.