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DeFi Iron Bank: Cream Iron Bank

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What are the features of Cream's Iron Vault? Which protocols will it fund towards DeFi's "Iron Throne"?

Original title: "Cream's Iron Vault"

Original source: Blue Fox Notes

Cream started as a fork of Compound , which is also a lending agreement. However, with the development of DeFi and the integration of Cream into the AC ecosystem, it began to show a different evolution path. One of these is its Iron Bank.

The Iron Bank is derived from "Game of Thrones", it is a bank from the free city of Braavos (Braavos), it has been funding Players sit on the Iron Throne and are one of the most important behind-the-scenes forces in Game of Thrones. It has a famous saying that "the iron treasury cannot be defaulted". What are the features of Cream's Iron Vault? Which protocols will it fund towards DeFi's "Iron Throne"?

(Iron Bank comes from the free city-state Braavos , "Game of Thrones")

Iron Bank: a protocol-to-protocol lending platform

Cream's Iron Bank It is a lending platform, but it is different from ordinary lending platforms. It is a lending platform between agreements, and it can provide liquidity support for the DeFi ecosystem.

Cream V1 is a fork of Compound, which is currently the mainstream DeFi lending model, providing loans between users. Cream made a metaphor, saying that the peer-to-peer lending market in traditional finance is about 70 billion U.S. dollars, while U.S. corporate debt will grow to more than 10 trillion U.S. dollars in 2020, and lending between companies can be compared to lending between DeFi protocols. This metaphor is not necessarily appropriate, and there is no comparison between protocol applications and enterprises. However, DeFi agreements and lending between agreements may also develop into a larger market. This is currently an untapped field.

Borrowing between protocols will promote the improvement of capital efficiency between DeFi, allowing funds between different protocols to flow quickly, thus opening up a new era of DeFi field.

Iron Bank’s zero-collateral loan

All current DeFi lending agreements, from Maker, Both Compound and Aave are over-collateralized, and Cream’s Iron Bank is trying to adopt a credit system to achieve unsecured lending. If it can be implemented smoothly, this will unlock the liquidity of capital in the DeFi field.

Iron Bank will set up a whitelist, if a protocol is included in the whitelist, you can get a certain amount of credit, through which you can directly borrow money from CREAM V2 . According to CREAM, it is similar to its borrowers who are allowed to borrow a certain amount of loans after they have sufficient collateral. The main difference here is that they can obtain the required loans without sacrificing their liquidity.

(Iron Bank running, Cream)

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Iron Bank is currently closed to all protocols, and each whitelisted protocol will have a credit limit. These protocols can borrow wETH, DAI, and y3CRV from Iron Bank, and USDT, USDC, sUSD, mUSD, DUSD, LINK, YFI, SNX, WBTC, and CREAM V2 will focus on mainstream DeFi assets. However, CREAM itself will continue to introduce more mortgage assets.

Who will Iron Bank "support"

In "Game of Thrones", Iron Bank The treasury needs to support the right person to sit on the Iron Throne, but who will CREAM's Iron Bank "support"? As one of the important LEGOs in the AC ecology, it first serves its more familiar internal ecological projects.

* YFI

After the launch of Yearn V2, strategists can ” to borrow assets. Iron Bank will support Yearn's yVault in developing leveraged liquidity mining strategies and cross-asset strategies. Users deposit DAI through CREAM and lend the equivalent amount of ETH, and then enter SushiSwap's liquidity pool by using Alpha Homora's leveraged mining products. Through leverage, users can obtain up to 80 times (ETH) or 90 times (stable currency) leverage to mine SUSHI, CRV, ALPHA, etc., which is very high leverage. Yearn is also launching an abstraction to leverage its strategy through Iron Bank. As for the specific details, it is still unclear.

* Alpha

In cooperation with CREAM, Alpha Homora is trying to launch the first Low-collateralized inter-protocol lending product. That is, the Alpha Homora V2 contract can borrow money from CREAM V2's Iron Bank in accordance with the low-collateralization (non-full collateralization) model.

Alpha Hormora V2 borrows liquidity from Iron Bank and then provides it to its users. Since low-collateralized products will stimulate more borrowing demand, which will stimulate higher borrowing volume, users of CREAM will benefit from this, because they can obtain higher yields. And users of Alpha Homora will also benefit, they can increase their income through leveraged mining.

Iron Bank for DeFi

From CREAM’s description of Iron Bank, it tries to Provide greater liquidity to the entire DeFi protocol. First of all, CREAM will provide capital leverage for Yearn V2 by cooperating with the AC ecological project. CREAM also has plans to release Yearn's "stable credit" product.

In addition, Iron Bank's new lending model will also bring about the need for risk monitoring. CREAM plans to cooperate with the economic analysis team to track the financial situation of the CREAM platform, and will also cooperate with insurance companies such as COVER and Nexus Mutual to increase insurance coverage.

Iron Bank for Cream token holders

Lending in the over-collateralization model Among them, the loan market demand of CREAM is subject to various restrictions such as mortgage assets, and if it is a low-mortgage or even unsecured credit model, this will release the loan demand, thereby promoting the rise of the market size.

Iron Bank has the opportunity to release the demand for lending. If it can do this, it means that more people will borrow through the CREAM market, and the CREAM agreement Reserve pools can capture fees. Borrowers on the Iron Bank whitelist can participate in more DeFi activities through the liquidity of CREAM and earn higher returns. At the same time, it will also bring benefits to CREAM holders. If CREAM's Iron Bank model can work well and can be compared to the role of "Iron Bank" in "Game of Thrones", then it will be a matter of time before CREAM tokens capture value.

Of course, if this mode does not work, then the capture fee will not increase accordingly. In the next few months, we can see the actual effect.

There is no high return without high risk

Although we see that through the agreement The cooperation between them releases the flow potential of more funds and can obtain higher returns. But there has never been a high return that is not accompanied by high risk. Participants must fully understand this and do a good job in risk control.

Can Iron Bank become the liquidity backing of DeFi

Traditional banks provide economic activities A lot of financial support. And can DeFi banks take on a corresponding role in the encryption field? The CREAM protocol has shifted its focus from individual user lending to inter-agreement lending. It tries to improve capital efficiency and provide better liquidity through an unsecured model, becoming an important support for DeFi liquidity, thereby releasing the potential of the DeFi protocol. Whether it can be successful is still unknown, but the exploration of this model will bring more possibilities to DeFi.