Peer-to-peer decentralized lending protocol CREAM Finance announced that it is launching a protocol-to-protocol flash lending product through Iron Bank to increase capital efficiency and the extent of decentralized financing (DeFi) expand.
“Delivering log-to-log flash credit increases capital efficiency and increases liquidity for merchants looking to access more lucrative credit services for a wider variety of digital assets,” said Leo Cheng, co-founder and project leader, CREAM Finance.
Iron Bank, which has amassed a $ 425M (Total Value Locked) TVL, is the first loan protocol that allows other protocols to borrow in an unapproved manner from their pools currently used by Alpha Homora v2 and Yearn Vaults To be available.
Iron Bank’s lending platform and liquidity backbone will serve the entire Ethereum DeFi ecosystem and beyond, including the Yearn ecosystem.
With this introduction, Yearn strategists will be able to leverage flash loans at a lower cost for more assets, expanding the range of strategies they can execute.
Flash loans on CREAM cost 0.03%, which is less than Aave (0.09%) and Uniswap (0.3%), and cover the widest variety of digital assets on the market, including LP tokens.
In addition to Iron Bank, Cream v1 users are available at app.cream.finance for Ethereum, Binance Smart Chain and Fantom Flash loans.
A flash loan is an unsecured loan in which a merchant borrows, exchanges, and repays a debt in a single transaction using a smart contract.
It can be done without collateral as the loan will not be executed without all parties loaning, borrowing and repaying at the same time, reducing the risk of a trader defaulting on the loan.
A simple example of a flash loan is conducting arbitrage trades to generate a profit based on slight price differences between exchanges.
For example, Uniswap displays ETH for 2000 USD and Sushiswap trades for 2005 USD. A user can take out the following flash loan from Iron Bank within a single transaction:
- Borrow USDC 1,000,000 from Iron Bank
- Buy the ETH from Uniswap for 2000 USD / ETH
- Sell the ETH on sushi swap for $ 2005 / ETH
- Return the first USDC loan to the iron bank
The result is a profit of $ 5,000 on a single Flash loan transaction. Note: This example excludes gas charges and slippage.
While existing money markets like Cream v1 are peer-to-peer, Iron Bank will enable protocol-to-protocol lending and liquidity.
Source:
app.cream.finance
