What is Creditum?
Creditum is a new protocol from Revenant Finance which aims to create a native Fantom stablecoin by pegging cUSD to the US Dollar. The protocol maintains the peg through the over-collateralization of assets and the incentivization of arbitrage. Creditum was born from the ashes of StakeSteak and is led by the same team.
There are two tokens associated with the Creditum protocol: CREDIT and cUSD. CREDIT is the governance token and cUSD is a stablecoin.
Revenant (RVNT) is the name of an intermediary token awarded to Steak holders after the protocol was exploited in October 2021. The StakeSteak team airdropped the token to users in order to compensate them with allocations in their future projects. Users can only exchange their Revenant for Creditum as of writing. The next project will be the last opportunity to redeem Revenant for other tokens. Users must claim their Revenant before June 1, 2022.
The goal of Creditum is to ensure cUSD is pegged to the US Dollar. Having a native stablecoin is a huge boon to users of the network. A native stablecoin allows for more complex strategies as aggressive users can increase their capital efficiency by borrowing against their existing Fantom assets.
Peg is maintained by requiring users to lock assets in order to mint cUSD. This means each cUSD is backed by assets locked in the protocol. Each cUSD is over-collateralized, meaning a user must lock more than $1 worth of assets to mint $1 worth of cUSD. This helps ensure that price volatility on the underlying assets does not impact the value of cUSD. The protocol also uses a stabilizer function to facilitate arbitrage which allows users to quickly and easily mint or redeem cUSD for USDC if it drifts from peg.
CREDIT is the governance token of the Creditum protocol. Users are rewarded CREDIT for staking in farms on the Creditum website. Users can also earn a share of the protocol revenue from cUSD minting and liquidation by staking their CREDIT for xCREDIT.
The total supply of CREDIT, 50 million tokens, was minted on launch. Most of the tokens were allocated to the treasury which will be emitting the tokens as rewards. These tokens were allocated as follows:
- 8,584,575 CREDIT to RVNT holders = ~17.2%
- As RVNT holders do not have to redeem their RVNT for Credit, this figure is approximate
- 8,500,000 CREDIT for Team Vesting = 17%
- Vesting starts February 1st and will last 2 years
- 4,000,000 to treasury for later usage (dao decisions) = 8%
- 28,915,425 to Treasury for Emissions = ~57.8%
- 20K CREDITS will be emitted every day for the next four years.
- Of which, 1k is paid to AGEUR, one of the partnered farms.
The xCREDIT token functions exactly like other xTokens with the xCREDIT pool receiving 10% of user fees. See this graphic for more details:
“Ultimately, the xToken model rewards users that hold the tokens for longer, which in turn, is beneficial for the project and the team behind it as well. Although it does not typically reward the user in amounts similar to that of an LP farm, it is generally safer, as users limit their price exposure to different tokens and are not subject to impermanent loss (as is the case with farming in the CREDIT-FTM Spooky Pool).” – Creditum Docs
Lending and cUSD
Creditum uses a lending system to mint and burn cUSD to keep it on peg. The terms ‘borrow’, ‘loan’ and ‘minting’ in this section all refer to the creation of cUSD by a user. It may seem a bit confusing at first but the borrowing process is fairly straightforward. We will go through each step one at a time.
Depositing Collateral and Borrowing
The amount a user can mint depends on the type and total value of collateral provided. A user must always provide more collateral than the cUSD they want to mint.
On Creditum, each type of collateral has different characteristics that determine how the cUSD loan will work. All collateral types have these variables: a deposit limit, liquidation penalty, liquidation threshold and LTV/Max Debt Ratio.
If the deposit limit is reached, no more of that asset can be deposited as collateral. Because this limit is shared with all users of the platform the treasury can not be over-allocated to any one particular asset.
The liquidation threshold is the amount the value of your loan has to exceed the value of your collateral for your position to be liquidated. The liquidation penalty is the fee the protocol takes for liquidating your position. We will cover liquidations more in depth further on.
LTV/Max Debt Ratio
On Creditum, the LTV or Loan to Value ratio (sometimes referred to as max debt ratio) describes how much cUSD a user can mint for their posted collateral. For example, the LTV of USDC is 95% so if you deposit 100 USDC you can mint a max of 95 cUSD. On the other hand, the LTV for FTM is 50% so if you deposit 100 FTM (assumed value $1) you can only mint a max of 50 cUSD! This ensures that cUSD is always overcollateralized and the protocol remains solvent.
LTV varies between assets with similar values because it is calculated by gauging the volatility, liquidity and safety of the asset collateralized. The idea is that the more likely an asset’s price is to shift, the more a user needs to deposit to guarantee their position is covered.
Users will be able to borrow an amount dictated by the LTV of their deposits. Once a user borrows any cUSD they are provided a Health Factor and liquidation price to help them understand the liquidation risk of their position.
There is a variable mint fee taken upfront from the value of the loan. For example, if the mint fee is .5% and Scully mints 1000 cUSD, he will receive 950 cUSD. The 50 cUSD fee is taken from the loaned amount directly.
The Health Factor of a position shows how likely a position is to be liquidated. If the Health Factor ever drops below one, the position is likely to be liquidated. The Health Factor is calculated so:
Health Factor = $collateral x liquidation threshold / $borrowed
Outside extreme circumstances, your Health Factor can only decrease in two ways: Borrowing and devaluation of the collateral. In extreme situations, it could also be affected by the depegging of cUSD. Because of the arbitrage opportunity this would present, it is unlikely this would happen. If the collateralized asset hits the liquidation price, the position is subject to liquidation. Users must be mindful of their Health Factor because as a user approaches the maximum amount of cUSD they can mint the greater the risk of liquidation.
The Health Factor also determines how much of a user’s collateral can be withdrawn at a time.
Repay and Withdraw
In order to withdraw their collateral, users must return all cUSD to the position and make sure their Health Factor will be greater than one after withdrawal. Users will be charged a ‘stability fee’, called interest on the site, on withdrawal. The interest is charged based on how long the position was open.
For example, a user borrowing 100 cUSD for 6 months with a stability fee of 5% will pay 2.5 cUSD on withdrawal. This is calculated like so: 100 * (6 / 12) * 0.05 = 2.5 cUSD
Principal x (time in months position was opened / 12) x interest rate = interest owed
The Stabilizer allows users to quickly and easily capitalize on arbitrage opportunities on cUSD and USDC. If cUSD is trading above $1 users can deposit USDC to mint cUSD in a 1:1 ratio. If cUSD is below $1 users can deposit cUSD to mint USDC in a 1:1 ratio. This is another mechanism for keeping cUSD pegged to the dollar.
When a position’s Health Factor drops below one there is an amount of time during which it can be liquidated. This is known as the Depreciation Duration and varies from asset to asset. Anyone can call the liquidation function on any user and be rewarded their collateral as a result. The protocol takes a small fee, the liquidation penalty, on all liquidations claimed.
The Creditum team plans to launch a new exchange called Singularity Swap. It will use cUSD as its main pairing and routing token. Some users may be interested in beginning accumulation now. Currently, the only use for cUSD is creating LPs on Curve or SpookySwap and farming on the Creditum website.
After the Stake Steak opsec failure, the team has stressed their commitment to security and revamped their operations as a result. The Byte Masons were brought in post-exploit to help the team analyze vulnerabilities in their processes and restructure as necessary.
Contracts have been audited by Peckshield.
Team and Community
The team is primarily active on Discord where they have over 3K members. They also use Twitter and Medium for announcements. The lead developers for Revenant also work on the successful lending protocol Scream.
The team and their roles:
Xam_pham – Scream Dev
Entropy – Lead Scream Dev
Shien110- Community Mod/Marketing
Xannie – Designer
cript_walkin – Mod / bots
njredot – mod
JustJeff – analytics