- Cream Finance has written $1.3 million in unhealthy debt resulting from a crash within the value of SWAG tokens.
- The tokens had been used as collateral in one among Cream Finance’s liquidity swimming pools.
- Cream Finance pays customers from its reserves.
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Swag Finance’s SWAG token has plummeted this week, leaving Cream Finance with $1.3 million in unhealthy debt.
Cream Finance Writes Unhealthy Debt
Cream Finance has created $1.3 million in unhealthy debt resulting from a token value crash.
Swag Finance’s SWAG token dropped from $0.0644 to lows of $0.0036 earlier this week, presumably resulting from an inner hack. Crypto Briefing recognized vital transaction volumes amounting to 22 million SWAG within the lead-up to the crash.
Cream Finance is a DeFi platform for borrowing and lending digital belongings. Customers on Ethereum, Binance Good Chain, and Fantom can deposit collateral to borrow different kinds of crypto asset. Considered one of its liquidity swimming pools permits customers to deposit SWAG tokens as collateral to borrow different cash.
Cream Finance held a debt of $1.3 million in USDC and USDT, however when SWAG crashed, the debt turned illiquid. The overall liquidity within the pool dropped from $18.1 million to $10,000, that means there are not sufficient funds to repay liquidity suppliers. Will Sheehan posted a report on the incident on Twitter Thursday, noting that “lengthy tail lending requires fixed upkeep.”
The Cream Finance crew responded to the problem by confirming that it suspended lending and borrowing in opposition to SWAG in November 2020. Some long-term lengthy loans taken earlier than the suspension had been liquidated within the current drop.
Cream Finance additionally confirmed that it will pay SWAG lenders from its reserves.
C.R.E.A.M. added markets for extremely dangerous belongings early on. On the identical day because the Yearn merger in November, SWAG was delisted; provide/borrow for SWAG was stopped.
We anticipated that unhealthy debt might end result from this. Any unhealthy debt might be coated by reserves.
— Cream Finance 🍦 (@CreamdotFinance) June 11, 2021
Cream Finance at the moment grants loans with collateral in over 75 tokens. As compared, MarkerDAO has enabled lending swimming pools for about 30 tokens.
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