OtterClam is a protocol that lets users more easily to enter the world of DeFi. We are a DAO-governed protocol that uses votes to decide the investment strategies of the treasury. The revenue of the treasury will be used to buy back CLAM and continually increase the treasury. Each CLAM, which is backed by a basket of assets, can be used to govern the protocol.
As one of the oldest currencies used by humans, we would like to present CLAM as the first store of value that fully integrates DeFi reserve currency tokenomics with a permissionless, open-source NFT platform on the Polygon network.
Is CLAM a stable coin?
No, CLAM is not a stable coin. Rather, CLAM aspires to become an ETF-like share, backed by other decentralized assets.
CLAM is backed, not pegged.
Each CLAM is backed by underlying assets. Because the treasury backs every CLAM with underlying assets, the protocol buys back CLAM when it trades below the backing. This has the effect of pushing the CLAM price back up to the backing value. CLAM could always trade above backing value because there is no upper limit imposed by the protocol.
How does it work?
At a high level, OtterClam consists of its protocol-managed treasury, protocol-owned liquidity (POL), bond mechanism, and staking rewards that are designed to control supply expansion.
Bond sales generate profit for the protocol, and the treasury uses the profit to mint CLAM and distribute them to stakers. With liquidity bonds, the protocol is able to accumulate its own liquidity. Check out the entry below on the importance of POL.
What is the deal with (🦦,🦦) and (
(🦦,🦦) is the idea that, if everyone love otters, it would generate the greatest gain for everyone (from a game theory standpoint). Currently, there are three actions a user can take:
Staking and bonding are considered beneficial to the protocol, while selling is considered detrimental. Staking and selling will also cause a price move, while bonding does not (we consider buying CLAM from the market as a prerequisite of staking, thus causing a price move). If both actions are beneficial, the actor who moves price also gets half of the benefit (
). If both actions are contradictory, the bad actor who moves price gets half of the benefit (
), while the good actor who moves price gets half of the downside (💀). If both actions are detrimental, which implies both actors are selling, they both get half of the downside (💀).
Thus, given two actors, all scenarios of what they could do and the effect on the protocol are shown here:
If we both stake (🦦, 🦦), it is the best thing for both of us and the protocol. The otters will harvest more CLAM tokens for us.
If one of us stakes and the other one bonds, it is also great because staking takes CLAM off the market and puts it into the protocol, while bonding provides liquidity and MAI for the treasury.
When one of us sells, it diminishes the effort of the other one who stakes or bonds.
When we both sell, it creates the worst outcome for both of us and the protocol (💀,💀).
What is the point of buying CLAM if it is trading at a very high premium?
When you buy and stake CLAM, you capture a percentage of the supply (market cap) that will remain close to a constant. This is because your staked CLAM balance also increases along with the circulating supply. The implication is that if you buy CLAM when the market cap is low, you would be capturing a larger percentage of the market cap.
What is a harvest?
Harvest is a mechanism by which your staked CLAM balance increases automatically. When new CLAM are minted by the protocol, a large portion of it goes to the stakers. Because stakers only see staked CLAM balance instead of CLAM, the protocol utilizes the harvesting mechanism to increase the staked CLAM balance so that 1 staked CLAM is always redeemable for 1 CLAM.
What is reward yield?
Reward yield is the percentage by which your staked CLAM balance increases during the next epoch. It is also known as harvest rate. You can find this number on the OtterClam staking page.
What is APY?
APY stands for annual percentage yield. It measures the real rate of return on your principal by taking into account the effect of compounding interest. In the case of OtterClam, your staked CLAM represents your principal, and the compound interest is added periodically on every epoch (8 hours) thanks to the harvesting mechanism.
One interesting fact about APY is that your balance will grow not linearly but exponentially over time! Assuming a daily compound interest of 2%, if you start with a balance of 1 CLAM on day 1, after a year, your balance will grow to about 1377. That is a lot!
The power of compounding
How is the APY calculated?
The APY is calculated from the reward yield (a.k.a harvest rate) using the following equation:
It raises to the power of 1095 because a harvest happens 3 times daily. Consider there are 365 days in a year, this would give a harvesting frequency of 365 * 3 = 1095.
Reward yield is determined by the following equation:
The number of CLAMs distributed to the staking contract is calculated from CLAM total supply using the following equation:
Note that the reward rate is subject to change by the protocol.
What will be CLAM's intrinsic value in the future?
There is no clear answer for this, but the intrinsic value can be determined by treasury performance. For example, if the treasury could guarantee to back every CLAM with 100 MAI, the intrinsic value will be 100 MAI. It can also be decided by the DAO. For example, if the DAO decides to raise the price floor of CLAM, its intrinsic value will rise accordingly.
How does the protocol manage to maintain the high staking APY?
Let’s say the protocol targets an APY of 100,000%. This would translate to a harvest rate of about 0.6328%, or a daily growth of about 2%. Please refer to the equation above to learn how APY is calculated from the harvest rate.
If there are 100,000 CLAM staked right now, the protocol would need to mint an additional 2000 CLAM to achieve this daily growth. This is achievable if the protocol can bring in at least 2000 MAI daily from bond sales. If the protocol fails to achieve this, the APY of 100,000% cannot be guaranteed.
Do I have to unstake and stake CLAM on every epoch to get my harvest rewards?
No. Once you have staked CLAM with OtterClam, your staked CLAM balance will auto-compound on every epoch. That increase in balance represents your harvest rewards.
How do I track my harvest rewards?
You can track your harvest rewards by calculating the increase in your staked CLAM balance.
Record down the Current Index value on the staking page when you first stake your CLAM. Let's call this the Start Index.
After staking for some time, if you want to determine by how much your balance has increased, check the Current Index value again. Let's call this the End Index.
By dividing the End Index by Start Index, you would get the ratio by which your staked CLAM balance has increased.
In this example, the CLAM balance has grown by 1.5 times.