Otter Pond vs. Otter Lake
Understanding the ins and outs of each staking pool
Gather round the stream, Otters!
The Otter Kingdom wants to cater to the different lifestyles of the Otters. As such, it now has two pools for you to raise your beloved CLAMs: Otter Pond and Otter Lake. Still unsure which one to choose? Well, then this article is for you. By the end of this, you’ll hopefully understand:
- How Otter Pond works
- How Otter Lake works
- Where to park your CLAMs and PEARLs
Grab a fish snack and a shrimp smoothie, and get ready to learn about the differences between the two pools.
Otter Bites (TL;DR)
What is Otter Pond?
Otter Pond is the pool that distributes regular staking rewards. It allocates 20% of the total CLAM emissions. To illustrate, if a rebase is generating 2,000 CLAMs in total, sCLAM or PEARL owners will share 400 CLAMs. Rewards are distributed in CLAMs.
An Otter can stake CLAMS as sCLAM tokens (staked CLAM), and the sCLAM can be unstaked anytime. No fees, no lock. Nothing prevents you from depositing or withdrawing from Otter Pond.
Otter Pond rewards are also distributed to
- bonds that can be purchased on OtterClam, denominated in staked CLAMs; meaning that you will receive staking rewards after each rebase. These rewards are added to the vesting sCLAM tokens. You will not be able to withdraw them before the end of the vesting period.
- PEARLs, which are wrapped sCLAM tokens. As such, PEARL holders get staking rewards as the index grows after each rebase. As a result, one PEARL will contain more and more CLAMs over time.
What is Otter Lake?
Since best results are achieved with precious care, Otters will need to spend a little more time with the PEARLs. Otter Lake is a new staking pool in which only the finest PEARLs are cultivated to distribute to the Pearl Chest owners.
The main difference between Otter Lake and Otter Pond is that you need to lock your PEARLs for a given amount of time. During the entire locked period, you will not be able to unlock/withdraw your investment. So, if you lock your PEARLs for 2 weeks, you will be able to access them only after the 2 week period. The longer you lock, the more PEARLs you will receive (see our previous article).
By staking in Otter Lake, you will receive PEARL rewards. Eighty percent of the total emission is now converted to PEARL tokens and distributed to locked PEARLs owners. Therefore, if the total emission on a given rebase is 2,000 CLAMs, the equivalent of 1,600 CLAMs will be distributed to locked PEARL owners in the form of new PEARL tokens.
In addition to new PEARL tokens, Chest holders will see the amount of CLAM tokens wrapped in their PEARLs grow as the index is adjusted after each rebase. Indeed, all PEARLs in the Otter Kingdom benefit from this adjustment, even locked ones. This reward is coming from Otter Pond. When you lock your PEARLs in a Chest, you don’t choose between 2 rewards, you get them both.
The new PEARL tokens are claimable anytime, they are not locked like the PEARLs that produce them. If you don’t claim them right away, they will still gather the regular staking rewards like any other PEARL outside Otter Lake.
When you lock your PEARLs, you will get an NFT representing your Chest (indicating the number of locked PEARLs, and the unlock date) that you will be able to keep as a proof-of-ownership or sell/trade on NFT platforms like OpenSea. This will be detailed on another page/article.
With your PEARL rewards, you can
- keep them as is, they will get staking rewards from Otter Pond
- unwrap and keep the underlying sCLAM tokens
- unwrap and withdraw the underlying CLAMs to sell them, also known as “capturing the benefits”
- add them to your current PEARL Chests, which will reset the locked period
- use them to create a new PEARL Chest
- use them as collateral to borrow other assets (coming soon)
How Otter Lake and PEARL Chests benefit everyone
- When PEARLs are locked, they aren’t accessible. This implies a lot less selling pressure on the CLAM token, and while it doesn’t guarantee price appreciation, it makes it easier for CLAM to increase in value.
- If the PEARLs that are locked can’t be sold on the market, and if the price of CLAM goes up, it means that the value of the treasury will also go up. This directly increases the runway (the period during which the protocol can issue new rewards), which is always a good thing for the protocol — for all Otters as well.
- We want to make sure that Otters who lock their PEARLs in Otter Lake can also participate in the growth of the protocol with the rewards they will collect at the end of each epoch, either by locking more tokens or purchasing more bonds.
Now that we’ve covered the basic mechanics of Otter Pond and Otter Lake, let’s take a look at some of the things you should consider before deciding whether to play in the pond, or lounge at the lake.
Before playing in Otter Pond, remember:
- You have full control over your investment. You can withdraw your sCLAMs and unwrap your PEARLs anytime you want.
- Likewise, you can get your rewards from staking as soon as the rebase rewards are distributed.
- If you choose not to get your rewards in the meantime, leaving them staked in the pond would enable you to auto-compound your sCLAMs.
- For Otters selling their CLAMs to purchase new bonds (a.k.a. bond flippers), you will still be able to do that. Just remember, the ROI you will get over the 5-days vesting period may be lower than the potential reward you can get by locking your PEARLs in Otter Lake.
- Otter Pond gives a lot of operational autonomy, but, conversely, offers less rewards than Otter Lake (see below) : you will collect only 20% of the rewards emitted by the Protocol. Otter than that (pun intended), your otter life will remain the same.
Before lounging at Otter Lake, remember:
- You need to lock PEARLs for a given period of time.
- Locked PEARLs cannot be manipulated while they are locked in a Chest for the entire locking period.
- You get bonus rewards from Otter Lake- you also get regular staking rewards simply because you are holding PEARLs.
- By staking with a Pearl Chest in Otter Lake, you will also receive a Pearl Note NFT. This is your key in unlocking your PEARLs after the time-lock and in being eligible for rewards. Instead, if you don’t want to wait, just like other NFTs, you may sell this, gift it to a loved one, or airdrop it to others if you are feeling generous.
- You are exposed to the risk of locking your asset. There is no guarantee that the PEARLs you lock will still have the same value at the end of the locked period. This risk is the main reason behind the very high reward allocation from Otter Lake.
- As a mitigation system, you may trade your PEARL Note as an exit solution.
- PEARLs you get from Otter Lake do not auto-compound in quantity. This is because PEARLs are already technically auto-compounding as the index increases (i.e. PEARL Price = CLAM Price x Index). Nevertheless, you may still manually compound the number of your PEARLs by adding them to your Pearl Chest or opening another one.
Putting it all together
So, now that you know how both pools work, and you’ve thought carefully about what these features mean for your risk management strategy, here is a high-level view of the investment opportunities OtterClam offers, so you can decide how your adventure in the Otter Kingdom unfolds.
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!