Cream Finance has announced their plans to launch a Cream v2 nicknamed “The Iron Bank”. This new upgrade will enable trusted protocols like Alpha Finance and Yearn to borrow from Cream Finance without collateral.
Initially, Yearn and Alpha Finance will be the only protocols that are authorized to borrow from The Iron Bank. The thinking behind this is that the yield strategies employed by both of these protocols that would be doing the borrowing are generally more trustworthy than any single individual borrower or smaller DeFi protocols.
This seems to be the latest joint effort by DeFi protocols that have aligned themselves with the Yearn ecosystem, the Cream team believes that The Iron Bank will enable greater capital efficiency in DeFi than ever before.
There are only 3 listed assets that can be borrowed at the time of this writing including wETH, DAI, and y3Crv. Other assets like USDT, USDC, sUSD, mUSD, DUSD, LINK, YFI, SNX, and WBTC will soon be added as well. You can check out the available assets here.
In the current model, once a protocol has been whitelisted they can begin borrowing from Cream Finance directly without collateral. At this time, The Iron Bank is not open to on-boarding new protocols for zero collateral borrowing. Until other protocols can also easily borrow from Cream Finance, this seems to be a large differentiator for both Alpha Finance and Yearn as they will have greater access to capital than their peers. The Cream team has stated that they will focus on building out their financial health monitoring tools and revamping the CREAM token model before on-boarding additional borrowers.
For Yearn, this new borrowing ability will be it’s v2 vault users to obtain up to 90x leverage on stablecoins and 80x leverage on ETH. Alpha Homora’s users will also gain access to much deeper liquidity for their leveraged yield farming activities due to The Iron Bank.
Users who deposit assets into Cream Finance will also benefit from higher lending rates. Any fees generated by this new zero collateral lending product will accrue to CREAM token holders.
Keep up with Cream Finance by following their Twitter.