Cream Finance (CREAM): how the DeFi platform works

Updated 23 Sep. 2022 at 2h16

Launched in 2020, CREAM Finance, a relatively new DeFi protocol, stands out from the many offerings on the market. With one of the largest and most diverse ranges of supported crypto assets in the industry, the protocol has grown in popularity lately and now has a substantial user base. How does the Cream Finance platform work?

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The Cream Finance project: a DeFi yield farming platform

A fork of Compound Finance (COMP), CREAM Finance serves as a versatile DeFi protocol. It is essentially a peer-to-peer cryptocurrency exchange platform, with liquidity mining as the backbone.

CREAM stands for “crypto rules everything around me”. The objective of the project is to create a more accessible and inclusive financial system than traditional banks.

The CREAM protocol includes loan pools that allow you to flash loans against your USD collateral to provide liquidity, and use it as collateral while acquiring other assets.

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CREAM is an Ethereum-based peer-to-peer lending mechanism. Additional assets on CREAM, such as CRV and YFIdistinguish it from Compound Finance.

Cream Finance has a simple and intuitive interface that appeals to both beginners and advanced users. Uncommon decentralized financial systems, like Iron Bank and Polygon net, are also available.

The platform tends to become a DAO (Decentralized Autonomous Organization) in all its aspects. The Cream Finance platform can be used as an AMM (Automated Market Maker).

Loans, crypto swaps: what does CREAM offer?

Users must deposit USD cryptocurrencies on CREAM Finance protocol as collateral to borrow a smaller amount of USD cryptocurrencies. You can borrow up to 60% of the USD value of the cryptocurrency you have deposited.

The advantage of borrowing crypto-currencies on CREAM Finance is twofold: on the one hand, no document must be provided beforehand and, on the other hand, there is no time limit for the reimbursement of the ready.

CREAM Finance’s lending function is an exact replica of Compound Finance’s. The only differentiating factor is that CREAM Finance supports more assets for lending and borrowing operations.

The liquidity pools on CREAM Finance are identical to what Curve Finance offers on its protocol. Users can stake cryptocurrencies for returns of almost 200% which can be withdrawn at any time.

CREAM pools reward investors with part of the CREAM Finance Swap transaction feesa decentralized exchange (DEX) on the protocol.

Markets offered on Cream Finance
Markets offered on Cream Finance.

CREAM Finance developers describe the protocol’s Swap feature as “a fork of Balancer with a Uniswap-like front-end.”

Swap mimics both protocols, based on the ratio of two assets in a pool to determine the pricerather than using an order book like a centralized exchange does.

The developers of Cream have developed a unique version of an AMM, called CreamY, to enable highly liquid exchanges of crypto assets of equivalent value. Users get a share of the trading fees on the platform when they deposit liquidity.

Liquidity Mining is a means additional and sophisticated to take advantage of the platform. Users can choose from different pools and win stakes using their chips.

The Swap feature was introduced shortly after the launch of CREAM Finance, transforming the platform into an MSA following the upgrade.

Specificities and security of the Cream Finance platform:

The CREAM Finance app has a simple layout that clearly displays provided and borrowed assets, simplifying the process of lending and borrowing cryptoassets.

Liquidity mining is also a feature that the protocol offers its users. To borrow assets, borrowers must tap into the pools, and lenders that are long on assets can become liquidity providers and earn interest on their assets.

Unserved assets may be subject to liquidation, and users should be aware of this. Protocol users also give incentives for liquidity mining to maintain a positive flow in the market.

As users have full transparency over the protocol, it should become a democratically controlled DeFi (decentralized finance) platform.

Stacking offered on Cream Finance
Stacking offered on Cream Finance.

The developers have announced that CREAM Finance will transition to a Decentralized Autonomous Organization (DAO), giving full governance power to community token holders.

The CREAM token can be used for lend, borrow, invest and administer the network by voting on which investments to support or remove.

The security of CREAM Finance depends on the extent of its decentralization. The growing number of members seems to promise safe and secure registry and information retention.

The constant updating of the protocol and adding benefits can attract more users. This, in turn, will increase decentralization and therefore security.

Furthermore, once CREAM Finance becomes a full DAO, its security will be governed by the users themselves. Buying and holding CREAM tokens is a way to ensure the security of the protocol and monitor the finer details to track its operation.

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CREAM: the native token of Cream FINance

The token used by Cream Finance, CREAM, is an ERC20 standard token that gives its holders governance and economic powers.

Participants can engage in network governance and claim a portion of revenue from token trading on the decentralized exchange of CREAM (0.05% of the 0.25% fee).

A total of 9 million tokens were expected to be available at launch. However, the community voted to lower the maximum cap, and 6 million tokens were burned as a result.

CREAM quotation in USD according to coinmarketcap
Quotation of CREAM in USD according to coinmarketcap.

CREAM Finance provides incentives for mining liquidity for this token and gives rewards to the corresponding CREAM token holders.

Here is how CREAM tokens are distributed:

10% (900,000) will go to CREAM Finance core team and advisors, with 75% vesting over four years and six months lock-in. Seed investors will receive 10% of the shareswith a one-year break and four-year vesting.

In addition, approximately 1.8 million CREAM (20%) will be used to reward liquidity providers or for liquidity backstop. The remaining tokens – approximately 5.4 million, or 60% – will be used for governance or burned to lower the cap.

As of this writing, the price of a CREAM token is $16.11, with a trading volume of almost $2 million in the last 24 hours.

CREAM Finance has a market capitalization of around $10 milliona circulating supply of over 600,000 tokens and a total supply of nearly 3 million CREAM coins.

CREAM Finance was developed in late 2020 with a distinct range of attributes and functionality, using best practices from previous protocols and systems and addressing their limitations.

Thanks to its growing liquidity pools, CREAM Finance is now has become a protocol capable of revolutionizing the decentralized financial system.

Since its inception, CREAM Finance has maintained an impressive track record and steady growth. With certain collaborations and innovations, CREAM has the potential to expand its user base and scope of adoption.

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CREAM Finance is a core component of the DeFi ecosystem, providing new use cases and techniques to achieve higher returns from each protocol’s “product”.

Overall, CREAM Finance has made important work in unifying its services and making them available on a lending platform accessible to the greatest number.

However, the lending and yield farming practices offered by the platform remain very risky investments in terms of the volatility of crypto-asset prices but also the risks of hacking inherent in DeFi.

It is therefore very important to measure the risks incurred and verify that this corresponds well to your tolerance and investment strategy.

Interested in DeFi and yield platforms? Learn how to grow your cryptocurrencies and how to control these risks. Crypto Rider training offers you to understand the market and implement real strategies:

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Cream Finance (CREAM): how the DeFi platform works

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