CLAWS Explained: Scratching the Surface of Sett-Vault Assets

Badger Finance

Introduction

What is CLAWS?

Yield dollars are collateralized assets — meaning they are minted when a user puts up collateral at some LTV (Loan-to-Value) ratio. In the case of CLAWS, there are actually two collateral types that can be used to mint tokens — bBadger and wBTC/ETH SLP tokens. These collateral types will create bCLAWS and sCLAWS, respectively. You read that right — there are multiple types of CLAWS in the pipeline!

But that’s not all! For each type of CLAWS, there will be a subset of tokens with a variety of expiration dates. While this has not been fully set in stone, initial discussions are expiration dates in 60 day increments.

There will be two ways to get CLAWS tokens. Unlike the airdrop of DIGG tokens, the CLAWS token supply will be entirely created by users wishing to take advantage of additional yield opportunities through creating CDP positions. Alternatively, users could purchase CLAWS on the open market — but beware of price premiums. Remember that all variations of CLAWS tokens have an expiration date, at which they will be worth only $1. Investors must take this into account when purchasing at a price over the expiration peg.

What You Can Do With CLAWS

The result is a “yield-ception” of sorts. In the first “layer” of the Sett, we have many forms of income already. In the case of bBadger — you are earning both BADGER and DIGG rewards, which are auto compounded. In the case of the SLP — you are earning bBADGER, bDIGG, xSUSHI and trading fees. Now, these tokens are used to collateralize CLAWS, which then in turn earns additional bBADGER, bDIGG, UMA, xSUSHI, and more trading fees. In total, CLAWS Sett vaults have nearly 10 sources of income — making it a diversified basket of passive incomes unto itself!

But that’s not all! Users who do not wish to participate in CLAWS Setts can still utilize CLAWS to unlock some of their value stored in their Badger or SLP Vaults — all while retaining their base yield. For example, they could mint CLAWS using their LP tokens and sell CLAWS for USDC in the highly liquid Sushiswap pool. This gives users the flexibility they need to pursue trades or other yield opportunities as they see fit — so long as they pay back the CLAWS to unlock their collateral before expiration!

Conclusion

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*Badger tokens are a means by which users may utilize and govern the protocol. Badger DAO does not recommend purchasing Badger for speculative investment purposes. Badger tokens may lose value or have no value and may have no market. Note that if applicable law does not allow all or any part of the above limitation of liability to apply to you, the limitations will apply to you only to the maximum extent permitted by applicable law.*

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