Cream Finance Logs $1.3M Bad Debt After SWAG Crash
Key Takeaways
Cream Finance has written $1.3 million in bad debt due to a crash in the price of SWAG tokens.
The tokens were used as collateral in one of Cream Finance’s liquidity pools.
Cream Finance will pay users from its reserves.
Share this article
Swag Finance’s SWAG token has plummeted this week, leaving Cream Finance with $1.3 million in bad debt.
Cream Finance Writes Bad Debt
Cream Finance has created $1.3 million in bad debt due to a token price crash.
Swag Finance’s SWAG token dropped from $0.0644 to lows of $0.0036 earlier this week, possibly due to an internal hack. Crypto Briefing identified significant transaction volumes amounting to 22 million SWAG in the lead-up to the crash.
Cream Finance is a DeFi platform for borrowing and lending digital assets. Users on Ethereum, Binance Smart Chain, and Fantom can deposit collateral to borrow other types of crypto assets. One of its liquidity pools allows users to deposit SWAG tokens as collateral to borrow other coins.
Cream Finance held debts of $1.3 million in USDC and USDT, but when SWAG crashed suddenly, the debt turned illiquid. The total liquidity in the pool dropped from $18.1 million to $10,000 in minutes, leaving little funds to repay liquidity providers. Will Sheehan posted a report on the incident on Twitter Thursday, noting that “long tail lending requires constant maintenance.”
The Cream Finance team responded to the issue by confirming that it suspended lending and borrowing against SWAG in November 2020. Some long-term long loans taken before the suspension were liquidated in the recent drop.
Cream Finance also confirmed that it would pay SWAG lenders from protocol reserves.
C.R.E.A.M. added markets for highly risky assets early on. On the same day as the Yearn merger in November, SWAG was delisted; supply/borrow for SWAG was stopped.
We anticipated that bad debt may result from this. Any bad debt will be covered by reserves.
— Cream Finance 🍦 (@CreamdotFinance) June 11, 2021
Cream Finance currently grants loans with collateral in over 75 tokens. In comparison, MarkerDAO has enabled lending pools for about 30 tokens.
Share this article
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
DeFi Project Spotlight: Small-Cap Lending Platform Cream Finance
Cream Finance takes some of the more popular ideas from DeFi’s lending and borrowing space one step further. The project lists nearly 70 different assets, LP tokens, and various derivative…
Cream Finance Launches Cross-Protocol Flash Loans
Cross-protocol flash loans are coming to Cream Finance. Protocol-to-Protocol Flash Loans on Cream Finance The lending protocol will allow other protocols to borrow from its pools through its Iron Bank…
What is Polygon (MATIC): Ethereum’s Internet of Blockchains
In terms of both decentralized app (DApp) development and adoption, no blockchain has been more successful than Ethereum (ETH). But despite its relative success, the Ethereum network still contains several…
Alpha Finance Exploited in $37.5 Million Attack
An attacker targeted DeFi protocol Alpha Finance for a sum of $37.5 million earlier this morning. The exploit was found in the protocol’s Alpha Homora V2 product—not Cream Finance, as…
