Welcome, welcome. Hope you guys are ready to yield some frosty CREAM!
WHAT IS CREAM?
Cream is a fork of the Compound protocol, a peer-to-peer lending protocol on the Ethereum network, created by Jeffrey Huang. However, it has joined in a strategic partnership with Robert Leshner and Compound Finance, as they have become advisors and early seed investors in the project. Along with $ETH, you can borrow/supply 17 additional assets, including $COMP, $YFI, and $CRV, to name a few. This is nearly double the current assets listed on Compound (9). This is a result of Cream not being located in the US, so they are hampered by less red tape when listing a new asset. Cream also has plans for expansion on to the Binance Smart Chain (BSC) to become one of the first AMM on Binance chain. Cream, like Compound, has created its own token called $CREAM. The token is currently in the "distribution" phase, where it can be farmed (it's not easy, but it's honest work). The $CREAM token will be used for governance participation in the future.
HOW DOES CREAM WORK?
Any loan requires two basic parties, a supplier and a borrower. A supplier, in our case, chooses a token they would like to supply for lending purposes. Once the token is deposited, it goes into a liquidity pool where it may be withdrawn by a borrower, and the supplier immediately starts accruing interest in their supplied token on the next Ethereum block. This is continuously compounded every block thereafter. A borrower must first deposit an asset as collateral before borrowing. Once they have chosen and supplied an asset as collateral, they may choose which token they would like to borrow. As $CREAM is still in the distribution phase, both the supplier and borrower receive a bonus % interest paid in $CREAM for using the protocol. Borrowers can be liquidated by suppliers who call the contract function on loans that are underwater (borrow value is over 100% of collateral value). In essence, using token A to borrow token B, opens a short position of token B. As of writing, there are about 200K $CREAM circulating out of 9mil total supply. The current TVL supplied in CREAM is ~$145mil with ~$55mil being borrowed.
HOW TO FARM CREAM?
The $CREAM token can currently be farmed via 2 different methods. The first is supplying/borrowing. As a supplier, you receive interest for lending your assets in the native token you have chosen, as well as a bonus % in $cream. For borrowing, you will have to pay your interest on your borrowed asset, but along with accruing interest to pay back, you also receive a bonus % of $CREAM distribution for being an early user. The second way is being an LP (Liquidity Provider) on either Balancer or Uniswap. You must deposit $ETH and $CREAM into either pool on their respective exchange, to receive an LP token. This LP token can be staked on Cream to earn $CREAM. The APY is much higher here, however, the risk of impermanent loss make LP'ing a much riskier way to farm $CREAM. If you have not LP'ed before please DO YOUR OWN RESEARCH. You can lose money rather easily and quickly if you don't know what you're doing. Both of these methods with either stop after some time or have their APY greatly reduced as more users join CREAM and less tokens to be distributed.
The $CREAM token's main functionality will be governance within the CREAM DAO (decentralized autonomous organization). The governance dashboard has yet to launch, but if Compound is a preview, token holders will be able to vote on all matters regarding the protocol including updating interest rate models, $CREAM emissions, new token pools, and more. The reserve protocol on CREAM collects part of the interest paid by borrows. The current amount collected is ~$185K. Token holders will vote how this money is distributed/used.
Cream is well positioned to capture massive value within the crypto-lending space. Instead, of competing with the industry giant that it forked, Compound, it decided to partner with them. The two markets have little overlap in tokens, and in my opinion, probably little overlap of user-base. Compound's proven track record along with Cream's innovative strategies and UI can only help grow the two. Although, I only briefly touched on this, the implications of Cream on Binance's Smart Chain are MASSIVE. This would be the first major P2P lending protocol with a bridge for ETH and BNB, attracting users from both ecosystems.