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CREAM’s trading volume surged by 378.65% in 24 hours and drove the price near $75. Almost all the holders of the crypto are whales but Cream Finance’s TVL has been underwhelming. CREAM, the native token of Cream Finance, a DeFi protocol, has taken the crypto market unaware as its price rallied by 65.25% in the last seven days. This surge came at a time when the prices of most cryptocurrencies were either shrinking or consolidating.At press time, CREAM’s price was $72.25 with a market cap of $133.40 million. However, Cream Finance’s reach in the market seems limited considering that the crypto is not a part of the top 100.
For those unfamiliar, AMBCrypto explains what the project entails in this article.
What is Cream Finance? Cream Finance is a part of the yearn.finance [YFI] ecosystem. However, Cream does not just work as a lending protocol for individuals. Instead, it also allows institutions and other protocols to access liquidity on its network.
Cream Finance is a permissionless and open-source network and works for users on the Binance Smart Chain, Ethereum, Polygon, and Fantom blockchains.
Not many know this but CREAM came to life after a hard fork of Compound Finance [COMP] in 2020. In crypto, a hard fork is a change to the protocol of a blockchain’s network.
When this happens, previous blocks become invalid as well as transactions. Furthermore, users and nodes upgrade to the latest version to remain compatible with the upgrade.
Sometimes, a hard fork comes with a new token. Sometimes, it does not. For Cream Finance the 2020 split brought about the development of the CREAM cryptocurrency.
With CREAM, users can stake, lend, and borrow assets on the network. However, the token is not the only asset that can be used on the network. Cryptos like COMP, ETH, YFI, some stablecoins, and a few other tokens can interact with Cream Finance.
“This group” is driving the price higher As per the recent price increase, AMBCrypto noticed that Cream Finance did not announce any major developments. However, using IntoTheBlock’s data, we observed that there was an increase in the activity of whales.
Whales own a greater dollar amount of a cryptocurrency. Most times, the tokens held by this cohort represent 1% of the total circulating supply.
According to press time data, about 94.74% of CREAM holders are whales. Out of this group, 19.42% of them engaged in 1,362 transactions in the last 24 hours.
Source: IntoTheBlock This number is considered high whale activity and is enough to move prices significantly. As such, it seemed the reason Cream Finance has outperformed other projects was because of high whale activity.
Confirmation of this increase appeared in the trading volume. As of this writing, CREAM’s volume has increased by 378.65% in the last 24 hours.
On the 19th of May, the volume surpassed $100 million according to Santiment’s data. With this volume, CREAM’s price was closed in on $75.
Moments later, the price decreased indicating that some holders of the token were booking profits. Though the volume had slightly fallen from this point, it might not be enough to force a double-digit correction.
Source: Santiment If the volume continues to rise while the price increases, CREAM could drive another 15% increase that could take the price to $83.95.
However, a decline in volume could mean waning strength for the token. In this case, the price could fall to $53.59 which was another area of interest.
Is CREAM dependable? Despite the mind-blowing price increase, the Total Value Locked (TVL) indicated a bearish signal. TVL is an indicator of a protocol’s health.
If the metric increases, it means that market participants are depositing assets into the ecosystem. When the TVL falls, it indicates a surge in withdrawals.
In this instance, it could mean that participants no longer trust the system to provide good yield. According to AMBCrypto’s analysis using DeFiLlama, Cream Finance’s TVL was more than $ 2 billion in 2021.
Source: DeFiLlama But after a Flash Loan attack in 2021, the metric has become a shadow of its former self. For context, a Flash Loan attack happens when capitalizes on a flaw in a protocol and takes out uncollateralized loans from a lending protocol.
Realistic or not, here’s CREAM’s market cap in ETH terms
The attackers, in question, use this to manipulate the market while stealing assets owned by depositors. This ugly side of DeFi was what Cream Finance experienced such that its TVL was a little over $15 million at press time.
While the TVL might not necessarily influence the crypto price, it serves as a sign that users are wary of interacting with the protocol.