Cream Finance
Crypto Overview
Project Overview
Cream Finance is a decentralized lending protocol built on Ethereum that enables users to lend and borrow various cryptocurrencies. The protocol is a fork of Compound Finance, launched in 2020. The CREAM token serves as the protocol's governance token, allowing holders to participate in decision-making regarding protocol parameters and development.
Intended Utility
The primary intended utility of CREAM is to serve as a governance token for the Cream Finance protocol, enabling holders to vote on protocol upgrades, risk parameters, and other key decisions. Additionally, CREAM token holders can stake their tokens to earn a portion of the protocol's fees.
Actual Utility Assessment
The protocol has faced significant challenges, including a major $130 million hack in October 2021. Current usage of the platform has declined significantly since this incident, with limited lending and borrowing activity. The governance activity through CREAM token has also been minimal, suggesting a disconnect between intended and actual utility.
Token Distribution and Founder Analysis
Initial token distribution included significant allocations to the team and early investors. While there were vesting schedules in place, the project has faced criticism for lack of transparency regarding token allocations and usage of treasury funds. The development activity has been limited since the 2021 security incident.
Revenue Model Analysis
The protocol generates revenue through lending and borrowing fees, which inherently involves interest-based transactions (riba). While some argue that these could be structured as profit-sharing arrangements, the current implementation clearly involves interest-based mechanisms that are problematic from a Shariah perspective.
Crypto Impact
To assign a comfort level investing in Cream Finance from a halal perspective we need to determine whether it has a net positive or negative impact.
Towards this end, the table below is used to tally all the positive and negative considerations our members can think of related to Cream Finance.
If you don’t see something that should be listed, positive or negative, feel free to submit your own contribution using the button “Contribute”.
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Importantly, you can review listed contributions and vote on which one you think has the greatest impact, positive or negative.
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