CREAM Finance is a decentralized lending protocol that specializes in markets for DeFi tokens. The protocol is blockchain-agnostic and has been deployed on several chains, including ​​Ethereum, Binance Smart Chain and Fantom. One of CREAM’s most unique features is its Iron Bank, a zero-collateral protocol-to-protocol lending platform.

The CREAM Finance protocol is part of the Yearn ecosystem, filling the lending-market role in a wider group of DeFi protocols and services. CREAM is currently the primary provider of leverage for “vault” strategies in Yearn v2, which maximizes yield on user deposits.

CREAM Background

CREAM Finance was founded by Jeffrey Huang, a Taiwanese entrepreneur who also founded Ethereum-based social media platform, Mithril. The CREAM name is acronym for “Crypto Rules Everything Around Me”.

The platform was created by forking the Compound Finance protocol, which was tweaked to focus on support for governance and liquidity tokens from other DeFi protocols. This provided lending markets for a wide range of tokens that were not previously supported by any other major lending protocols.

The original version of the CREAM Finance protocol was well-recognized by its quirky and colorful user-interface.

CREAM also previously offered its own automated market maker (AMM) exchanges – CREAM Swap and creamY Swap – however these were wound down in early 2021 following the establishment of a partnership with Yearn. This was due to the Yearn ecosystem already incorporating AMMs via SushiSwap. On the other hand, the partnership resulted in the birth of the Iron Bank, which is described in more detail below.

Lending markets

Lending markets remain as CREAM’s primary retail-facing product,  facilitating the lending and borrowing of various assets. Most of the tokens supported by CREAM are governance tokens and liquidity provider (LP) tokens for other major DeFi protocols, across multiple blockchains. Some wrapped assets and stablecoins are also supported.

Iron Bank

CREAM’s partnership with Yearn led to the creation of the “Iron Bank” – an innovation enabling zero-collateral, protocol-to-protocol lending via a credit system. The Iron Bank enables whitelisted protocols to set a credit limit and borrow funds directly from CREAM v2, without wasting their own liquidity. This also enables more unencumbered use of assets deposited into the protocol, while maximizing returns for lenders.

To begin, the Iron Bank partnered with Yearn Vaults and Alpha Finance Lab’s Alpha Homora V2, providing both protocols with considerable leverage for their yield-farming strategies.

Flash Loans

CREAM also provides flash loans, in a similar fashion to those provided by Aave. Flash loans enable advanced users (usually developers) to access liquidity without collateral, provided that the borrowed funds and associated fee are returned within a single transaction block. At the time of writing, this fee is 0.03%.

CREAM Token

The CREAM token is the official governance token of the CREAM Finance platform. The token is used to decide the future direction of the protocol, including the addition of new assets and parameters such as collateral factors.

CREAM holders are able to submit proposals to the rest of the community, who can then vote on the matter using their tokens.

How to Lend with CREAM

CREAM users can use the protocol to earn interest on deposits, as well as borrow against them.

To use CREAM finance, visit https://app.cream.finance/ and connect to the dApp using a web 3.0 wallet like Metamask.

Once connected, click on the asset that you wish to deposit into the protocol (to lend).

In the pop-up window, enter the quantity of the asset that you wish to deposit, then click “supply” and confirm the transaction within your wallet.

Once the transaction confirms, you will automatically begin earning interest on your deposit!

Why CREAM?

CREAM Finance provides lending and borrowing markets for a much wider range of assets than other lending protocols. This enables users to earn interest on (or borrow) tokens that aren’t supported elsewhere, reducing their opportunity costs of holding DeFi-related assets in the long-run.

When it comes to yield-farming protocols, a partnership with CREAM also makes sense to obtain leverage from the Iron Bank. The ability to access extra leverage without collateral is mutually beneficial to all parties involved.

Conclusion

CREAM is an extremely useful retail lending market for DeFi-related tokens, but its most important innovation may actually be protocol-to-protocol lending via its Iron Bank. By providing zero-collateral lending to well-established protocols such as Yearn and Alpha Finance, these projects are able to access extra leverage while also returning more interest to CREAM lenders.

Both of these features give CREAM a very important role in the Yearn ecosystem, which is likely to remain the case for some time.