The Road to CREAM V2
Part One
2020 Look Back — We Delivered Some Milky Goodness
CREAM was built by DeFi natives with the intention to increase the rate of innovation for borrowing and lending protocols. From the moment we launched the protocol, we asked ourselves one fundamental question:
“What is missing in DeFi that we could build ourselves?”
2020 was a busy year. Here’s what we came up with:
CREAM v1 — Lend and Borrow DeFi Assets
Our first realization was that while the wave of new yield farming opportunities was expanding and new tokens were launching almost weekly, the ability to lend and borrow these newer assets was limited. This is why we initially launched CREAM — to provide supply and borrow for DeFi assets that would allow decentralized leveraged long positions and short positions and create more efficient markets for these tokens.
To date, CREAM has added over thirty assets to our protocol — far and away the largest availability of leverage in DeFi.
C.R.E.A.M. Swap — General AMM
An AMM was a natural extension toward more flexibly controlling pieces of DeFi that we needed while accruing more protocol fees to the CREAM network.
creamY — Create the Ultimate Stablecoin AMM
We then noticed that we had all kinds of stablecoins and wished there were one where we could hold for the highest yield that also was a venue to trade newly minted yield-generating LP positions. creamY was a capital efficient, dynamic AMM to provide traders with low slippage trades on assets that tend towards 1, stablecoins.
DeFi on Binance Smart Chain
Building on BSC was always in the plans, given Binance’s ability to peg every token in the world, including large caps such as XRP, LTC, BCH. We launched borrow and lend for DeFi assets on Binance Smart Chain. CREAM became the first DeFi money market to offer these services across multiple chains, helping to usher in a multichain future for DeFi.
CRETH2 — How We Supported the Transition to Ethereum 2.0
As the year began to wind down — we became an active participant in one of the most important events of 2020 for Ethereum — the launch of the Beacon Chain. We witnessed one problem holding $ETH holders back from staking their $ETH to the Beacon Chain was that although they could earn yield on these assets, their staked $ETH would effectively become illiquid, but one of the greatest strengths of DeFi is super-fluid collateral.
Not only did we help users stake 24,960 $ETH to the Beacon Chain, but we also gave these users the ability to borrow and lend against these assets with $CRETH2 — a tokenized derivative of staked $ETH that accounts for the yield generated on those assets.
First DeFi Money Market to List Algorithmic Stablecoins
As the algorithmic stable coin market heated up at the end of this year, we quickly realized how important these protocols would be to the future of permissionless access to DeFi. That’s why we voted “Yes” to add assets like Empty Set Dollar and Basis Cash as collateral.
As these are novel protocols and still in the early experimentation phase, we also used this as an opportunity to be the first protocol to add a new asset with an Asset Cap.
Engaging with Our Community to Fix Governance
We implemented a new governance framework that included a three day minimum period for new proposals to pass after enough time for community feedback, enhanced safety measures around collateral factors for new assets, and became the first DeFi lending protocol to effectively implement an Asset Cap to mitigate the risk that any one asset could cause irreparable damage to the protocol.
The Road Ahead — The Yearn Merger and CREAM V2
Becoming the Liquidity Backbone of the Yearn Ecosystem
As you may have heard, our friends at Yearn Finance have been on a mission to supercharge the composability of DeFi over the last 2 months, and CREAM is one of the most important money legos of this roll-up. We teamed up with the Yearn team via a merger at the end of November.
You can already use Yearn Finance’s lending protocol powered by CREAM v2 here.
As part of the Yearn Ecosystem, CREAM has repositioned as the core provider of leverage for Yearn v2 vault strategies. In addition, we will add Yearn vault shares as new collateral assets on the platform, and CREAM will become the launchpad for Yearn’s new StableCredit product.
Part of the process of integrating with Yearn will include more robust credit analysis to enhance and measure the health of both individual collateral assets and the overall CREAM protocol. We are currently in discussions with a few well-established teams who can run econometric analyses, and processes for us to better track the overall financial health of the CREAM platform (more on this in January). In addition, we have added insurance coverage via Cover Protocol and Nexus Mutual, while looking to increase availability with other insurance protocols in the future.
We’ve executed many steps on the path towards deeper integration with Yearn, and we are excited to share access to all of the incredible developers from their core partners. We maintain close ties with these teams and communicate on a daily basis.
If you want to learn more about the Yearn merger, you can check out this podcast with CREAM co-founder, Leo Cheng, on the Delphi Podcast or read his Tweetstorm on the DeFi Voltron here. You can also read posts from Yearn founder, Andre Cronje, like this one here.
Winding Down creamY and C.R.E.A.M. Swap
The new Yearn ecosystem includes a partnership with Sushi exchange who will focus on their exchange projects. Since we will have close ties to Sushi and will be able to integrate our lending products with them, there is no longer a need for us to maintain our own exchange products.
As a result, we have decided to wind down both creamY and C.R.E.A.M. Swap.
Two weeks back, we rescued $1.39 million liquidity locked in the creamY Swap pools. Of the $1.39 million, a significant portion was from fees generated by creamY Swap. However, as we began to unwind the funds we realized some portion was the result of an issue with the creamY oracle that returned the wrong price of cyUSD. Specifically, the oracle should have returned the actual price of cyUSD (total value / total supply), but instead returned a constant value of 1e18.
As a result, every user who previously provided liquidity to creamY Swap withdrew less than would have been returned were the oracle functioning properly. The good news is that these losses were slightly offset by the $CREAM rewards distributed to creamY Swap LPs.
We have rescued these funds (here is the transaction on Etherscan) and redistributed them to CREAM’s multisig contract. We are submitting a proposal to C.R.E.A.M. DAO that recommends we utilize these funds for the following:
- $1 million treasury assets will be utilized for ongoing protocol development. The CREAM team will submit an annual budget to our governance platform for the approval of the CREAM community.
- $390,000 will be allocated to an incentivized $CREAM/$USDC pool on Sushiswap. This pool will serve to “buy and make” $CREAM tokens. This will make CREAM the first protocol to execute on Joel Monegro’s vision to utilize buybacks for market-making rather than burning tokens.
The “buyback and burn” model is well known in crypto. However, once tokens are burned, they essentially destroy value for existing token-holders since these tokens could otherwise have been used to finance future development and growth. Tokens are capital assets that can be reused after they are bought back. One potential use case is to issue $CREAM from the treasury to incentivize future partnerships and other important community activity.
While we believe this is the best path forward for the rescued funds, we understand the importance of community governance and will submit a proposal along with this post to be voted on in the coming week.
Here is a link to the governance proposal — we invite the community to provide feedback and help us to improve this proposal.
Looking Ahead to 2021
As you can see, over the last 6 months we have been hard at work to deliver to you one of the most innovative (and we believe underrated) platforms in DeFi.
We highly value our users, token holders, and community members, so we plan to deliver even more to you all in 2021.
2021 is going to be a big year!
Our next post on the Road to CREAM V2 will highlight the new Iron Bank.
The Iron Bank will become a liquidity backstop for the DeFi ecosystem via uncollateralized loans to whitelisted DeFi protocols in the Yearn ecosystem and beyond (more partnership announcements to come)! This will expand CREAM’s focus from retail investors to protocol-to-protocol (or machine-to-machine) lending products. We expect this to drive increased fees to $CREAM token holders as the protocol gains more capital-efficient utility.
Finally, we are in the process of updating our token economics to better distribute this value to $CREAM holders over the coming year.
Stay tuned for these updates and more over the coming weeks.
Join us on Discord, follow us on Twitter, or visit us at cream.finance.
Thank you for your continued support and we look forward to delivering more milky goodness to you all in 2021.
If you have any ideas to help us build the most value lending protocol in DeFi you can join us on Discord, follow us on Twitter, or visit us at cream.finance.
C.R.E.A.M. DAO
Crypto Rules Everything Around Me, C.R.E.A.M.
