Introducing Pearl Chests and Pearl Notes

Gather around the stream, Otters!

Otters have already been enjoying their PEARLs, but now it’s time to give them a boost! In this article, we will discuss:

  • Our new staking pools: Otter Pond and Otter Lake
  • PEARL Chests and how to use them
  • PEARL Notes and what you can do with these NFTs

So sit down on your favorite rock and get ready to learn about the new staking system.

Otter Bites (TL;DR)

Otters will now be able to stake in two different rewards pools. The first pool will get 20% of CLAM emissions, and the second one will get 80%. The 20% Pool is named Otter Pond and the 80% Pool is named Otter Lake.

Quick Facts About Otter Lake

  • Access to Otter Lake requires Otters to wrap their CLAMs into PEARL, and then lock the PEARL in a vault for a minimum of 2 weeks. We call these Pearl Chests.
  • Rewards from Otter Lake are claimable at the end of each epoch (the 8-hour rebasing period). Whereas Otter Pond emissions are paid in CLAM, Otter Lake emissions are in PEARL. Remember, PEARL’s value is CLAM’s value * index, so the emission token doesn’t change the amount of reward.
  • Once claimed, you can relock the PEARL in Otter Lake for higher rewards.
  • Locked PEARLs are locked in a non-custodial vault (PEARL Chest) registered as an NFT that you will be able to transfer, sell, or buy as any other NFT on OpenSea or on the OtterClam NFT marketplace.

Quick Facts About Otter Pond

There is no difference between our current staking system and Otter Pond: it retains the same functionality.

  • Otter Pond will receive 20% of rebase emissions.
  • The reward token will be in CLAM.
  • There is no locking mechanism, which means you can stake and unstake your tokens as often as you want.

Why do we need a new staking system?

The Otter Kingdom economy has been facing two main problems:

  1. The first problem is Bond Flipping. This happens when an Otter unstakes their CLAMs, sells them, and then bonds with the tokens obtained from the sale. For example, Narloke is earning 12% on his 5-day ROI by staking. He sees a FRAX (4,4) Bond that guarantees 18% 5-day ROI. So, Narloke unstakes his CLAMs, sells for FRAX and then buys the FRAX (4,4) Bond. Now, Narloke is earning 6% percent more than just staking. This is detrimental to the OtterClam ecosystem because it negatively affects the price of CLAMs and indirectly lowers the runway.
  2. The second problem is Rebase Sniping. Some Killer Whales are profiting from the rebase system to collect CLAMs while not staking for the entire duration of each epoch. This is also affecting other similar projects and is rewarding behavior that doesn’t align with our community’s (3,3) values.

In response to these issues, our team devised an awesome new system which honors all investment strategies, while prioritizing long-term staking and (3,3) attitudes.

Introducing Otter Pond and Otter Lake

The current staking pool will be separated into two pools. Otter Pond will receive 20% of the rebase emissions, while Otter Lake receives 80%. Below is an overview of each pool (this is copied from the TL;DR section…we will continue to elaborate on each component throughout the article.)

Quick Facts About Otter Lake

  • Access to Otter Lake requires Otters to wrap their sCLAMs into PEARL, and then lock the PEARL in a PEARL Chest for a minimum of 2 weeks.
  • Rewards from Otter Lake are claimable at the end of each epoch (the 8-hour rebasing period). Whereas Otter Pond emissions are paid in CLAM, Otter Lake emissions are in PEARL. Remember, PEARL’s value is CLAM’s value * index, so the emission token doesn’t change the amount of reward.
  • Once claimed, you can relock the PEARL in Otter Lake for higher rewards.
  • Locked PEARLs are locked in a non-custodial vault (PEARL Chest) registered as an NFT that you will be able to transfer, sell or buy as any other NFT on OpenSea or on the OtterClam NFT marketplace.

Quick Facts About Otter Pond

There is no difference between our current staking system and Otter Pond: it retains the same functionality.

  • Otter Pond will receive 20% of rebase emissions.
  • The reward token will be in sCLAM.
  • There is no locking mechanism, which means you can stake and unstake your tokens as often as you want.

Introducing PEARL Chests

PEARL Chests are personal vaults for long-term staking. To stake in Otter Lake, you must lock your PEARLs into a Chest.

When you deposit your PEARLs into a Chest, you will be able to select the lock period from 2 weeks to 6 months.

Each Chest will also receive a reward boost, depending on the lock-up period you select: the longer the lock-up, the bigger the boost!

Note: Indeed, the current treasury runway is shorter in duration than the maximum lock-up period option, however, with a vote by the DAO, a reduction of emissions can be made to increase the runway over time.

An Example (all numbers are made up and only for illustration):

  • SIM has 10 PEARLs locked for 2 weeks with a boost of (x 1)
  • OtterKing has 10 PEARLs locked for 6 months with a boost of (x 2)

Note: Boosts are a multiplier for the emissions you receive each epoch.

At the end of an epoch, if we assume that 10,000 PEARLs need to be distributed, SIM qualifies for the reward with his 10 PEARLs and gets 0.1% of the reward allocated to PEARL Chests. OtterKing also qualifies, but because he locked his PEARL longer, he gets 0.2% of the reward allocated to the PEARL Chests.

Reward Allocation: Current vs New System

Current System

Before sharing about the new allocation system, here is a quick reminder of how our current pool works and the benefits of PEARL!

Our current staking pool uses and rewards sCLAMs. Otters are able to deposit CLAMs in the pool and receive sCLAMs as rewards after each rebase. However, one issue is that each rebase allocates new assets, which in some countries is considered a taxable event.

PEARLs mitigate the issue of taxable events by wrapping sCLAMs. PEARL will never see its quantity grow after each rebase, however its intrinsic value grows over time. When you unwrap your PEARL, you will receive PEARL Amount x CLAM Index Number. So, as the index number grows (which is a reflection of APY and rebases), your PEARL grows in value! Therefore, PEARL has great versatility: lock it in a chest, use it as collateral, or just leave it alone!

New System

As stated in the Quick Facts on both Otter Pond and Otter Lake, the emissions are spread between two pools.

Otter Pond will function like our current staking system. Otters can stake their CLAM or wrap/unwrap to PEARL without lock-ups. Otter Pond will receive 20% of the emissions. The rewards are CLAMs.

Otter Lake requires Otters to lock their PEARLs in Chests. The rewards from Otter Lake are PEARLs. Otters are rewarded PEARLs based on their percentage of Total Locked PEARLs in Otter Lake. This is how the current system works too. If only one person staked, they would receive 100% of the emission; if your PEARLs compose 1% of total PEARLs locked, you receive 1% of the total emission.

Additionally, you get boosted rewards paid in PEARLs. Remember that the total amount you will receive is the number of PEARLs you locked multiplied by the boost granted by the lock-up duration.

All rewards from Otter Lake must be claimed in Otter Pond. These PEARL rewards are not locked and you can claim them after each epoch. With your new PEARLS, you can either unwrap and stake as sCLAM in Otter Pond, unwrap and sell your CLAMs, or add them back to Otter Lake.

At the end of your Chest’s lock-up period, your PEARLs are removed and can be claimed in Otter Pond.

Example

Here is an example of what happens at the end of 1 epoch for three different Otters:

  • Pingu1 has 10 sCLAM in Otter Pond
  • SIM has 1 PEARL locked in Otter Lake for 2 weeks with a boost of (x 1)
  • OtterKing has 1 PEARL locked in Otter Lake for 6 months with a boost of (x 2)

Let’s assume that the current index is 1 PEARL = 10 sCLAM, and that there are 15 CLAMS to be allocated in total.

  • Otter Pond’s staking reward is 20% of the total amount of distributable CLAMs, which is 3 CLAMs. (20% of 15 CLAMs is 3 CLAMs)
  • Otter Lake receives 80% of the emission, which is 12 CLAMs. (80% of 15 CLAMs is 12 CLAMs)
  • Let’s also assume that there are only our 3 Otters qualified for the rewards. Remember, allocation of rewards is dependent on emission total and how many Otters are receiving those emissions. This is how the current system works too. If only one person staked, they would receive 100% of the emission.

Pingu1 has staked 10 sCLAM in Otter Pond, while SIM and OtterKing have locked 1 PEARL each in Otter Lake. They each receive 1 CLAM from Otter Pond as normal staking rewards, but SIM and OtterKing get Chest rewards in addition to the normal staking rewards.

SIM has the equivalent of 1 PEARL, while OtterKing has the equivalent of 2 PEARLs because he locked them longer. Hence, SIM will receive 0.4 PEARL (the equivalent of 4 sCLAMs) and OtterKing will get 0.8 PEARL (the equivalent of 8 sCLAMs).

As a recap, even if the 3 Otters have the same starting value of 10 CLAMs,

  • Pingu1 received 1 CLAM
  • SIM received the equivalent of 5 CLAMs
  • OtterKing received the equivalent of 9 CLAMs

What are PEARL Notes?

Once you lock your PEARLs into a Chest to get higher rewards, you will receive a PEARL Note, a visual reminder that you own a PEARL Chest. A PEARL Note is an NFT that is minted as you lock your PEARL, which looks like this:

Note: This NFT is very important. It’s the receipt for your PEARL Chest, and is required if you want to claim PEARL rewards from the associated PEARL Chest. However, because it’s an NFT, it means you can also transfer it to another Otter, or sell it on NFT marketplaces like OpenSea. The Otter who receives/buys a PEARL Note will be able to claim the rewards from the Chest, as well as receive the PEARL once the lock expires.

Managing your PEARL Notes

You will receive a PEARL Note as soon as you lock your PEARLs into a Chest. This will qualify you for PEARL rewards. If you want to lock your PEARL rewards back into Otter Lake, you have several choices:

  • Add more PEARLs to one of your PEARL Chests. PEARL Chests are defined by their lock duration, so you will not be able to change the lock of the Chest to which you’re adding PEARLs, but its expiration date will be reset and will be updated to your PEARL Note.
  • Create a new PEARL Chest with the duration you want and get a new PEARL Note associated with it. Depending on the duration of the new Chest and its associated boost, you will earn additional rewards on each rebase.

Keep in mind that PEARLs that are not claimed are still getting rebase rewards simply because they are PEARLs (wrapped sCLAMs). You can play the (3,3) game even if you’re not locking your PEARLs. However, you will receive less rewards if you don’t.

Other cool ideas for PEARL Notes include gifting them to friends and family, proposing giveaways to your community, or creating amazing prizes for contests you host.

PEARL Notes Bonus

If your PEARL Chest is big enough, the PEARL Note may be used on Bonds to get additional discounts, the same way you would use your Otter PAW NFTs. As an example, if you lock 50 PEARLs for 3 months, you may use your PEARL Note as a Stone-hand NFT. The current system is still being developed, but the idea would be as follows:

  • Locked 50 PEARL for 1 month — Furry-hand Note
  • Locked 50 PEARL for 3 months — Stone-hand Note
  • Locked 50 PEARL for 6 months — Diamond-hand Note

An example of using the new staking system

Otters, thank you for your input and hard work to improve our staking system! I am sure many of you are wondering which investment strategies are now best to use. While we are learning along with you, here is an example that may help!

Step #1 “The Purchase”: Narloke buys 50 CLAM

Step #2 “The Decision”: Narloke wants to put his CLAM into PEARL Chests.

  • Narloke wraps his CLAMs into PEARLs. Narloke received 10 PEARL.
  • Narloke wants half his PEARLs in a 6-month Chest, where he will receive the maximum bonus rewards. He wants the other half in a 1-month Chest, where he might earn some bonus but have access to those PEARLs sooner.
  • Narloke locks PEARLs in Chests and receives the NFT Notes.

Step #3 “Receiving and Using the Rewards”: Narloke is getting rewards every epoch. These rewards are claimable in the Otter Pond. Because these rewards are in PEARL, they don’t need to be “staked” to receive the benefit of the rebases.

  • Narloke wants to sell some of his PEARL and add some back into his Chests.
  • Narloke waits after a few rebases (epochs), so he now has 2 PEARL. That’s the great thing about PEARL being the rewards…they earn rebases even if you aren’t actively managing your tokens.
  • Narloke unwraps one PEARL and sells a portion of the CLAM for some monthly income.
  • Narloke takes the other PEARL and adds it back to the 1-month Chest. Because Narloke added more PEARL to the 1-month Chest, the lock period of 1 month resets. Narloke will not add any PEARL to the 6-month Chest because he does not want that lock period to reset.
  • The NFT Note for the 1-month Chest is automatically updated to reflect the new number of PEARL.

Helpful Tips and Tricks

  • Rewards can be claimed after each epoch in Otter Pond. These rewards are in PEARL, so even if you don’t claim them, they are still reflecting the increased value of the rebases.
  • Determine your strategy and use the system to benefit yourself and other Otters! If you want to mainly (3,3), lock your PEARL in long-term Chests. Remember, you can have as many Chests as you want (e.g. 2-week, 1-month, and 6-month Chests).
  • If you desire to Bond Flip or Snipe Rebases, that is still possible! Given the constant buying and selling those strategies require, you will likely only be playing in the 20% Pool.

Still have questions? Stop by our Discord. We are always happy to see new faces, and we’d love for you to join our community.

See you downstream Otters!

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