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ChainLinkGod.eth

I'm growing increasing concerned regarding the state of the

@CreamdotFinance

money market By taking a long tail approach of supporting numerous low quality tokens with nearly non-existent liquidity as collateral, insolvency risk increases exponentially

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40% of all $CREAM collateral is a single centralized exchange token. 25% of the entire $FTT float is in $CREAM too. This is straight up reckless from a risk perspective, and the people who are going to get hurt the most are $CREAM holders. twitter.com/meeseeking/sta…

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ChainLinkGod.eth

Over 40% of Cream's collateral is $78M of $FTT (25% of float) What happens during a liquidation? Well considering $FTT only has a daily volume of $2M and a whole $6 of liquidity on Uniswap... A downward price death spiral is created and that $78M will never be fully covered

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uniswap isn't where the FTT liquidity is so don't think it's the right think to compare to here

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ChainLinkGod.eth

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I think that misses the forest for the trees here, no token with $2M in total daily liquidity can handle $78M being liquidated at once without a major downward price collapse (furthering the insolvency) This isn't necessarily a $FTT issue, but an issue for Cream and its users

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yeah hear you on that, just think the uniswap datapoint was wrong also FTT does have a lot more support than it looks like but that's not obvious from anything easy to tell

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like not saying your point is crazy here--it's not! just that you're overplaying your hand a little bit, like playing as if your point is 2x stronger than it is

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ChainLinkGod.eth

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I really don't think I am, 25% of the entire $FTT is on Cream, that's 39x the daily volume and 40% of all collateral on Crean No matter how you paint this, it's incredibly risky for users, depositors are already having issues withdrawing their funds due to a lack of liquidity

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guess we're going to have to agree to disagree then, not saying you're totally wrong here just that there's nuances to it, but if you're not willing to give any ground here then :shrug:

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Mike CCIP Made-It

@MikeShillMadeIt

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You haven't really made a counterargument tbf

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@MikeShillMadeIt

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so: 1) uniswap was a bad datapoint 2) otc market is really deep for FTT 3) I personally am happy to buy a bunch 4) coins with buy/burns etc. tend to have away deeper liquidity 5) there's a flip side to this: the more you cut down on lending, the less usage the protocol gets

5:42 AM · Oct 9, 2020Twitter Web App

Decentral Station

Replying to

Hear both sides, Only question I have is, Hypothetically if $FTT had 50% drop in price, how cream will handle this?

@machibigbrother

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@MikeShillMadeIt

so I think a big thing to think about here is -- if FTT drops 50%, what happened to the rest of crypto? If everything drops 50% then it's fine b/c both lending and borrowing sides dropped the same. Historically FTT has a low-ish beta, so an overall market move wouldn't do it.

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@ExaltedTrading

Replying to

Sam, are you aware of Huang's past history with scams such as Fortuna? I won't pretend to know all the details, but you being willing to associate and downplay potential risks on their end may also have some costs down the line that are “not obvious from anything easy to tell”.

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@MikeShillMadeIt

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I also think this is missing the prob bigger point. FTT is a relatively stable, low-beta coin; in large market moves everything is down which doesn't affect cream. The larger worry for borrow/lending: what if all of DeFi goes up/down a ton? Things are correlated.

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@MikeShillMadeIt

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We've seen 5x swings in DeFi overall; going in either direction is possible. If that happens, then all DeFi coins move mostly together, and any wBTC/ETH/USDC/etc. vs DeFi basket blows out 5x. That's true of all DeFi borrow/lending, and is the larger risk.

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