- CREAM’s trading volume increased by 378.65% in 24 hours, pushing the price close to $75.
- Almost all cryptocurrency holders are whales, but Cream Finance’s TVL has been underwhelming.
CREAM, the native token of Cream Finance, a DeFi protocol, has surprised the crypto market as its price has increased by 65.25% in the last seven days. This increase came at a time when the prices of most cryptocurrencies were either shrinking or consolidating.
At press time, CREAM was priced at $72.25 with a market cap of $133.40 million. However, Cream Finance’s reach in the market seems to be limited considering that the cryptocurrency is not in the top 100.
For those who don’t know: AMBCrypto explains what the project entails in this article.
What is Cream Finance?
Cream Finance is part of yearn.finance [YFI] Ecosystem. However, Cream doesn’t 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, open-source network and works for users of the Binance Smart Chain, Ethereum, Polygon and Fantom blockchains.
Not many people know this, but CREAM was launched after a hard fork of Compound Finance [COMP] in 2020. In the crypto world, a hard fork is a change to the protocol of a blockchain network.
In this case, both previous blocks and transactions become invalid. In addition, users and nodes update to the latest version to remain compatible with the upgrade.
Sometimes a hard fork comes with a new token. Sometimes that’s not the case. For Cream Finance, the 2020 split brought with it the development of the CREAM cryptocurrency.
CREAM allows users to 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 some other tokens can interact with Cream Finance.
“This group” is driving up the price
Due to the recent price increase, AMBCrypto noted that Cream Finance has not announced any major developments. However, using data from IntoTheBlock, we observed that whale activity was increasing.
Whales own a larger dollar amount of a cryptocurrency. In most cases, the tokens held by this cohort represent 1% of the total circulating supply.
According to data as of press time, approximately 94.74% of CREAM holders are whales. Of this group, 19.42% completed 1,362 transactions in the last 24 hours.
Source: IntoTheBlock
This number is considered high whale activity and is enough to move prices significantly. So the reason Cream Finance outperformed other projects seemed to be due to high whale activity.
Confirmation of this increase was reflected in the trading volume. At the time of this writing, CREAM’s volume is up 378.65% over the last 24 hours.
According to Santiment, volume exceeded $100 million on May 19. With this volume, CREAM’s price was close to $75.
Moments later, the price dropped, suggesting that some holders of the token were booking profits. Although volume declined slightly from this point, this may not have been enough to force a double-digit correction.
Source: Santiment
If volume continues to increase as the price rises, CREAM could fuel another 15% increase that could take the price to $83.95.
However, a drop in volume could mean that the token’s strength is weakening. In this case, the price could fall to $53.59, which would be another area of interest.
Is CREAM reliable?
Despite the stunning price rise, the Total Value Locked (TVL) indicated a bearish signal. TVL is an indicator of the health of a protocol.
When the metric increases, it means that market participants are contributing assets to the ecosystem. If the TVL decreases, it indicates an increase in withdrawals.
In this case, it could mean that participants no longer trust that the system will deliver a good return. 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 is a shadow of its former self. For comparison, a flash loan attack occurs when a flaw in a protocol is exploited and uncollateralized loans are removed from a credit protocol.
Realistic or not, here is CREAM’s market cap in ETH calculations
The attackers in question are using this to manipulate the market while stealing assets from depositors. Cream Finance experienced this ugly side of DeFi, such that its TVL was just over $15 million at press time.
While TVL may not necessarily affect the crypto price, it serves as a sign that users are cautious when interacting with the protocol.