What is Scream?
Scream is a decentralized lending protocol on Fantom which allows users to leverage existing crypto assets to borrow, lend and earn interest. Loans on Scream are overcollateralized meaning the value of borrowed assets must always be lower than the value of deposited collateral. When a loan becomes undercollateralized, the collateral is liquidated or sold to protect the lenders. In traditional centralized finance, participants interact with each other through an intermediary such as a bank. Scream eliminates the middleman by allowing users to borrow from each other in a trustless manner using smart contracts. This drastically reduces fees to 0.02%, creating an environment where borrowing is more affordable and lending is more lucrative. This system allows Scream to be:
- Permissionless: the platform is open to all users; no gatekeeper can regulate who can use it.
- Transparent: All transactions and holdings are visible and verifiable on the blockchain.
- Non-custodial: All deposits are stored within smart contracts meaning no central entity has possession of deposited assets.
The protocol was introduced in May 2021 with the goal to become a one-stop-shop for lending and leveraging products on the Fantom network. The team worked for a year forking the code of Compound V2 and adapting the best parts of the C.R.E.A.M. protocol to circumvent “evil jar” attacks. They enlisted help from some of the best UX designers on Fantom to create a colourful user interface loaded with Screamos. The result is an easy to use protocol which is accessible to users of all skill levels. Since launch, it has exploded in size and usage with a TVL of over $800 million. This puts Scream neck and neck with Geist to be the largest lending protocol on Fantom.
Unfortunately, Scream is not available for users based in the United States.
At the top of the app, there is a summary showing the current total supply and total borrow. By selecting expand, users are able to see detailed information for each asset.
- Total Supply
- Total Borrow
- Liquidity is the amount of borrowable supply and is calculated as Total Supply – Total Borrow.
- The utilization is calculated as the Total Borrow / Total Supply and it is used in the calculation of the borrow APY. As utilization increases, so does the borrow APY; so when there is little liquidity it is expensive to borrow. This incentivizes lenders to deposit more liquidity and borrowers to repay assets during times of high utilization.
At the top of the app, there is a summary showing the current total supply and total demand. By selecting expand, users are able to see detailed information about the current total supply, total borrow, liquidity, utilization and collateral factor of each asset. Liquidity is the amount of borrowable supply and is calculated as Total Supply – Total Borrow. The utilization is calculated as the Total Borrow / Total Supply and it is used to determine the borrow APY. The borrow APY increases as the utilization increases so that when there is little liquidity, it is expensive to borrow. This incentivizes lenders to deposit more liquidity and borrowers to repay assets during times of high utilization.
As mentioned earlier, Scream loans are overcollateralized, meaning the value of collateral must always be greater than the value of borrowings. By monitoring the health factor, users can confirm that they are not at risk of being liquidated. The health factor is the ratio of borrowed assets to borrowing capacity. If the health factor falls below 1, the user\\\’s collateral will be liquidated or sold into the borrowed asset and added to the supply. The health factor can be found by selecting Your Overview.
Borrowing Capacity & Collateral Factor
Borrowing capacity is determined by the amount of collateralized deposits and the collateral factor. Collateral factors are used to limit the amount that can be borrowed in proportion to the deposited asset. The collateral factor can be found within the expanded summary table. For example, FUSDT currently has a collateral factor of 75% so for every $1,000 of deposits, a user can borrow up to $750 of assets. Large assets tend to have high collateral factors and smaller or more illiquid assets tend to have lower collateral factors. The purpose of the collateral factor is to protect borrowers in the event of mass liquidations during the capitulation of asset prices.
In the case of volatile price movements and cascading liquidations, its possible collateral could not be liquidated fast enough. This would leave the borrowers at a loss. As insurance for this situation, a small portion of fees are taken by the protocol and set aside as reserves. The reserve factor determines the amount of fees paid into this reserve. If the reserve factor is 10 then that 10% of interest paid on the borrowed asset is allocated to the SCREAM reserves.
At the time of writing, the Scream protocol is integrated with over 15 assets including WFTM, ETH, BTC and stablecoins. At the bottom of the app, users will find a table of these assets with the following information:
- Asset name.
- Supply APY and bonus Scream rewards.
- Borrow APY and bonus Scream rewards.
- Current price in USD
- Number of tokens in your wallet
- Option to enable collateral. Note: You must enable collateral in order to borrow assets. By enabling collateral, you risk having the asset liquidated.
To begin using Scream, users must first lend assets to earn fees, rewards and provide collateral. Choose the asset from the drop down menu, enter the desired amount and click ‘Supply’. Use your web 3.0 wallet to confirm the transaction. If you are supplying an asset for the first time on Scream, you will need to give Scream permission to interact with the token by clicking on the ‘Approve’ button. In the summary box below, you can see your balance in addition to the current deposit APY and reward APY. You must enable collateral in the asset overview before borrowing out assets against these assets.
To withdraw assets off of Scream, choose Withdraw at the top, select the asset you would like to withdraw, enter the amount to withdraw and then select withdraw. Ensure that you have a safe health factor before withdrawing. If your health factor falls below 1.0, loaned assets may be liquidated.
Borrowing assets is a similar process to lending. In the borrow section, choose the asset from the drop down menu, enter the desired amount and click ‘Borrow’. Use your web 3.0 wallet to confirm the transaction. In the summary box below, you can see your borrow limit in USD, your current and projected used borrow limit and the current reward APY. Be careful about using the entire borrow limit because if the borrowed asset appreciates in value, your collateral will be liquidated.
When you are finished borrowing the assets and you would like to repay, choose the Repay option at the top of the box. Select the asset you would like to repay, enter the amount to repay and then select repay. You will only be able to withdraw all of your loaned assets once the borrowed assets have been repaid.
Finally, in the center of the app is the rewards section. Users are currently given additional rewards in the form of SCREAM tokens when they supply or borrow assets. Click on Claim Your Rewards and confirm the transaction to receive your rewards.
SCREAM also allows undercollateralized ‘flash loans’ as a developer tool which they call ScLoans. Funds for ScLoans are borrowed and repaid in one transaction for a fee of 0.02%. If the borrower does not repay the capital, the transaction is reversed as if it never happened with the funds returned to the lender. This leads to minimal risks to both parties. Use cases range from arbitrage, collateral swapping opportunities and interest rate swapping.
The SCREAM token is used to incentivize lending and borrowing with half of the total supply being allocated to lending and borrowing rewards. 31% of the total supply will be allocated to Treasury funds for future development opportunities in the SCREAM ecosystem. There will be a maximum supply for 2 million tokens with an initial circulating supply of just over 100,000.
The SCREAM team have agreed to a 6 month lock-up of team allocations, which started vesting on a monthly basis for 48-months (from 31 December 2021).
StakeSteak Liquidity Farm
Scream has partnered with StakeSteak to offer an incentivised farm for those who stake their SCREAM-FTM LP tokens on StakeSteak. Users must first create an LP by depositing an equal amount of SCREAM and FTM into the SpookySwap liquidity pool. They can then deposit the LP on StakeSteak to receive a generous APR paid in SCREAM. There is a 0.5% deposit fee for LP tokens and a 10% rewards harvesting fee. These fees are sent back to xSCREAM holders. For users who would like to simplify the process and autocompound their rewards, they can deposit the LP directly on Reaper Farm.
xSCREAM is similar to xBOO and other xTokens. Users who are long term believers of protocol can deposit their SCREAM in the xSCREAM pool to accumulate additional SCREAM rewards. These rewards are currently purchased with the fees collected from the StakeSteak liquidity farm and deposited in the xSCREAM pool.
Locked xSCREAM (LSX)
To further incentivize the accumulation of SCREAM, the team has announced a new proposal to revamp the economic model of the token. Users will be offered the option to lock their xSCREAM for a certain amount of time (2 months initially). This xSCREAM will be exchanged 1:1 with a locking token named Locked xSCREAM or LXS. The team has proposed that 70% of all protocol fees be allocated to holders of LXS. LXS cannot be sold for SCREAM; nor can it be unlocked prior to the locking period’s expiration. LXS will also be used as a governance token with holders being able to create and vote on governance proposals.
The team is also looking into letting LXS be used as a collateral option. This will enable users to continue to earn protocol fees whilst using it as collateral. This creates an additional layer of capital efficiency allowing the user to generate an additional yield stream on the underlying asset. Combined with the introduction of newly incentivised isolated lending markets, LXS will become a multi-purpose utility token that will power community governance.
The first official NFT for the project is the SCREAMO collection which is made up of 6,666 total pieces made up of over 100 attributes. Within the collection are a few extremely rare 1 of 1 SCREAMOS. The project sold out with a mint price of 75 FTM. They are now tradeable on decentralised NFT marketplaces like PaintSwap with a 0% commission.
Fun fact: To celebrate the launch of SCREAMOs, the Scream team hosted a competition within their server in Minecraft. The top 25 players were whitelisted and given 10% off the mint price.
Security & Safety
The Scream team seeks to maintain high security standards and set themselves apart from competitors. The code is a fork of Compound V2 which is one of the most trusted protocols in DeFi. Scream uses three oracle systems to fetch data for live on-chain asset prices: Chainlink, Band Chain and the Scream oracle. This is to ensure high quality data, secure node operators and to further decentralize the framework behind the scenes. Additionally, the team has enlisted the help of the Byte Masons who are working with them on enhancing their smart contract security and operations.
Team & Community
The team is primarily active on discord where they have over xxxx members. They also use Twitter, Telegram and Medium for announcements.The lead developers also work on Revenant Finance and StakeSteak.
Screamsh – the face of the Scream protocol.
Entropy – Lead developer
Xam_pham — dev
Shien110 — community manager/marketing
It is proposed that LXS will be the new on-chain governance token, allowing holders to both propose, and vote on governance proposals. LXS holders will be able to put motions to a community vote. The vote is subject to an oversight committee which is appointed and managed by the community (“Committee”).
The Committee will be composed of a combination of permanent members who have access to the multisig and temporary members of the community. Committee members will be up for re-election on a quarterly basis to be determined by community vote.
Alongside the proposal to allocate 70% of platform fees to holders of LXS, it was also proposed that 30% of platform fees will fall under the management of a DAO (“DAO Reserve”). These DAO reserves would be split as follows:
- 41.66% of the DAO Reserve falling under active management of the DAO. These funds would be directed by community vote. For example financing new products, configuring incentives and token buy-backs.
- 58.34% are reserved for catastrophic contingent events (e.g. hacks, platform bugs etc.). In the event of a catastrophic event, the DAO will be responsible for deciding how these funds should be applied.
The next major steps for the project will be the roll out of the LSX governance token, the DAO reserve and the community committee. The team have also teased the roll-out of one-click leverage, isolated lending markets, whitelisted protocol lending markets, and upgrades around ScTokens and fUSD.