Thread by @hasufl

Whitelisted protocols can now borrow from Cream without posting collateral. I have a few thoughts/questions on it

1) pool to protocol loans are a natural first step for uncollateralized loans when the borrowing protocol is itself non-custodial

https://twitter.com/CreamdotFinance/status/1349656712584654849

2) Lots of people were speculating what it means for two protocols (such as Yearn X Cream) to "merge"/partner with each other. This is an unexpected advantage as Yearn vaults will be able to borrow for free.

3) Being whitelisted is a big advantage so maybe to qualify and align incentives future candidates will have to hold CREAM tokens in their treasury.

4) Cream's interest rate is dynamic and changes as a result of borrow utilization. I think above 80% borrowed the interest rate for borrowers doubles every 8 hours to ensure there's always liquidity for lenders to withdraw

My question would be how this surge pricing interacts with zero collat loans. The interest they owe can rise, but if they only settle once a week, then either some borrowers can't withdraw in the short term or some of the non-whitelisted lenders get extremely rekt

5) In general I'm very curious how often the interest is settled, what happens if a protocol exceeds their credit limit, etc.

6) You'd think that this leads to strictly more borrow/lending volume but I'm not sure yet. The nice thing with overcollateralized loans is that they always add more liquidity to the lending book than they remove as borrowers.

With uncollateralized loans, this will no longer be true as parties can only remove liquidity from the protocol. On the flip side, zero collat requirement means the borrower can afford to pay higher interest rates, which in turn will attract more single sided lenders as well.