$CLAW: Basic Guide

General Discussion
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I see a lot of confusion floating around about CLAW. This post will act as TLDR where people can get some clarity. All info here has been pieced together across different media platforms and with some help from the BadgerDAO team.

What is $CLAW?

It is a yield dollar that you mint after using one of our Setts as collateral and is in collaboration with UMA. The current cap on how much can be minted is $1b. Unlike DAI, Claw will have an expiration that will be a fixed term, from release…not from the time that you mint as a user. From what I can tell, the term may be 8 weeks, but nothing official there at the moment. We can look at transitioning to a perpetual contract in the future.

To keep CLAW pegged to USD, we will have a new Sett(s) paired with USDC. This will enable the minting of CLAW to be put to use and earn APY. While CLAW will have interest charged on minting, the theory is we will be earning much more on the Sett via Badger, Digg, UMA, and potentially Sushi rewards.

Alternatively, you can mint CLAW and use it in the existing DeFi stack. Buy the underlying asset, speculate on assets, etc.

We will have 2 versions…sCLAW will be collateralized with our wBTC/ETH Sushi Sett and bCLAW, which will be collateralized with our bBADGER Sett. In the future we can add more Setts as collateral.

Still some unknowns like LTV rate for collateral and whether we will get this integrated on Sushi or not, as we’ve proposed a special request through their ONSEN program. And of course, I can’t answer ‘Wen CLAW’ :wink:

It appears that many people seem to think that CLAW will be some sort of airdrop. I have absolutely no reason to believe that and as a community, I think we should try to correct that assumption when we see it voiced.

I will keep this post updated as new developments come in. Hope this helps.

Link to BadgerDAO write up;CLAWS Explained: Scratching the Surface of Sett-Vault Assets | by Badger DAO 🦡 | Feb, 2021 | Medium

Link to UMA basics of minting on their protocol;Borrowing and Lending the “Yield Dollar” on UMA | by Clayton Roche | UMA Project | Medium

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What, you mean we won’t be getting something for free again? I am aghast.

Can’t wait to see this in action, will really unlock the value held in the setts creating a virtuous cycle.

Go badger.

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I’m trying to grasp the expiration of Claw concept
Not sure if I understood i mean I’m sure I didn’t lol

When will it expire ? You mean we will have 8 weeks to repay it ?

Cheers

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We don’t know exactly what the expiry will be in terms of time, but yes, basically you will need to pay it back to unlock your collateral. When the expiry is up, a new round of minting can open. Or not, if something is deemed to be unsustainable. Think of it as an ongoing trial.

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I hope that my question doesn’t sound critical or anything. I’m just trying to get a better understanding of the “what,” and the “why” and the “how,” etc. of CLAW. I skimmed through the documentation on github, but it’s still not clear to me. Why was it decided that CLAW will have an expiry?

Also, who or what is holding the collateral? Is it the Badger DAO? If someone fails to redeem in a timely manner, what happens with their collateral? Would any consideration be provided for grace periods in expiry if gas rates have gone through the roof?

Was there at some point discussion on charging a user points(or some other rate) for borrowing CLAW (as opposed, or in addition, to an expiry)? If so, I’d be curious to hear why that was decided against. Or is it perhaps an add-on option under consideration for the future?

Maybe I just have the wrong mindset or something, but I’m having a difficult time seeing the utility in a short-term, overcollateralized loan that expires in 8 weeks. I mean, I get that a subset of people would want to take their positions and have the ability to lever up. The whole expiration thing feels unusual to me, though, and I’m falling short of wrapping my mind around why that route was chosen. If someone could please help explain the bigger picture, I would certainly appreciate it.

Thanks!

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My thought is that it will be a smart contract on UMA’s end, not sure though.

I wrote this guide when we had very little info available and even with the teams recent announcement, I’m struggling to answer your questions when it comes to the fine print details.

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Thanks for the effort of writing up this guide, but (and I don’t mean to be critical), I still don’t understand the base mechanism of how I get $claws, what I can / should do with it, what are the risks, and what that expiry thing means for me.

Surely I can’t be the only beginner here, still in the dark about all that ?

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I suggest you check out our Discord, as we’ve set up a channel for CLAW. Some of the people from UMA are popping on there and answering questions, have also provided a video. You can check pinned messages.

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