CLAWS

In-depth : https://forum.sushiswapclassic.org/t/collaboration-proposal-badger-uma-sushi/2156

Summary :

Badger DAO and UMA protocol are collaborating to enable users that have their WBTC/ETH Sushi LP or Badger (Currently about $325M worth) positions staked in the Badger Sett Vaults, to mint synthetic stablecoins (we call them sCLAWS and bCLAWS). We like to partner with Sushiswap for this new product initiative with the purpose of giving Sushi LP’s the ability to borrow against their positions while earning interest. The intention is for this to be the first test of this with subsequent similar launches to follow.

We are going to create an exclusive liquidity pool on Sushi for each CLAW paired with USDC. There will be subsequent incentivized vaults on Badger for users to deposit those SLP tokens with active strategies.

Badger and UMA are splitting LP incentives for this initiative and we are proposing Sushiswap join us as an equal partner. Weekly incentive of SUSHI for each of these pools would be higher than the current Onsen program permits. Through Badger vaults, any Sushi that is earned by the LP’s will automatically be staked for xSushi and distributed back to the users in that token.

We believe through this collaboration together we could create the largest LP pools available on Sushiswap while bringing a unique product offering that drives new value for DeFi participants. We anticipate 100m’s in additional liquidity and trading volume along with the subsequent fees.

Our intention is to move forward with this initiative quickly as the underlying technological requirements are almost complete.

What are the appropriate incentives for these vaults/liquidity pools?

Each vault would have a cap on the maximum amount of capital allowed and life cycle of each vault (8 weeks). For the sCLAWS/USDC SLP that would be $250M and for the bCLAWS/USDC SLP that would be $75M. By doing this we can create a floor for the minimum amount of APY users would receive.

Important to note: Having caps on the vaults doesn’t mean there wouldn’t be more than that minted in synthetic stablecoins. I foresee users minting for the purpose of converting to USDC in the highly liquid Sushiswap pool. Further increasing trading volume and fees for Sushiswap.

Based on our experience, to incentivize these vaults to reach capacity we feel 25% APY on sCLAWS/USDC SLP and 50% APY bCLAWS/USDC SLP would potentially accomplish this.

Another driving force for this is the fact that the SUSHI pools will be primarily 2 stablecoins on each side which would mitigate Impermanent loss implications and further attract LPs.

Badger, UMA, SUSHI would split these rewards evenly 3 ways. To achieve the above APY targets we would need;

$1,201,923 weekly rewards for the wbtc/eth SLP collateralized vault (sCLAWS/USDC) $480,769 weekly rewards for the Badger collateralized vault (bCLAWS/USDC) With a 3 way split among collaborators that would mean;

48,858 SUSHI (@$8.20/SUSHI) rewards per week for the wbtc/eth SLP collateralized vault (sCLAWS/USDC)

19,543 SUSHI (@$8.20/SUSHI) rewards per week for the bBadger collateralized vault (bCLAWS/USDC)

These weekly rewards would be up to a maximum of 8 weeks.

Sushiswap Benefits

• Large inflow (potentially 100’s of millions) in new liquidity from USDC/CLAWS.
• Attracting new LPs for the WBTC/ETH pool that are looking to borrow against it for CLAWS.
• Potentially large trading volume on the USDC/CLAWS Sushiswap pools. Competitive advantage due to the exclusive nature of the collaboration and uniqueness of using lp positions as collateral.

By Spadaboom