Clam Island Bivalvia Update
Ahoy there Clam Island residents and visitors!
The team has been working hard to deliver on both marketing and product over the past few weeks. If you missed the action on our social media, our Community Manager Matija attended Binance Blockchain Week in Dubai, armed with ten 3D printed Clams that came with a QR code allowing the recipient to claim a free Clam NFT on our platform. Check them out below — how cool is that!
Did we forget to mention that we were the only project amongst all of the Binance Blockchain Week attendants to offer a physical redeemable NFT?
But, we are not here to talk about that today. We are here to present to you the next major update for the Clam Island ecosystem — the Clam Island Bivalvia Update!
What’s the Bivalvia Update, you might ask? Well, first of all, in case you haven’t noticed, we are naming our significant updates after various Clam-related terms, starting with Arcidae (the scientific name for Ark Clams). Bivalvia refers to a species of molluscs that have laterally compressed bodies enclosed by a shell consisting of two hinged parts. In other words — Clams! Bivalvia is not to be confused with that, er, body part that Clams sometimes get compared to. Please, keep the memes at least PG-13…
Now, on to the important bit. What does the Bivalvia Update involve?
We give a detailed explanation below. Warning — it is a deep dive of the changes being made and will be a long read. For the less patient of you, here’s the TL;DR:
- Clams will have 10 different grades with fixed (instead of fluctuating) USD-pegged GEM prices. The SHELL tokens claimable from burning a live Clam also varies depending on the Clam grade, with lower grades getting a proportionally larger amount of SHELL tokens to improve distribution of the governance token. Details of each grade of Clams are in the Airtable posted below;
- Each Clam will yield between approximately 0.6x to 300x of your GEM investment, with an average of 1.6x and 2 in 3 chance of being profitable (above 1x). The chances are slightly better with the lower grades compared to higher grades, to give smaller players an edge over whales;
- Clams purchased before the Bivalvia Update will not be affected after the update, and will have no Grade;
- The Clams available for purchase every week will be capped so that no more than 5% of the total GEM supply (or equivalent in BNB) can be used to purchase Clams in a given week;
- The Pearls available to be burned every week will be capped so that once max GEM yield from Pearl burning in a given week exceeds 2.5% of the total GEM supply, no more Pearls can be burned in that week; and
- Vested GEM can only be used for up to half of the price of purchasing a Clam.
These changes are NOT live yet and will be rolled out in the coming weeks.
And now for the deep dive and reasoning behind these changes. Are you ready? Take a breath…
This is a feature that appears on the roadmap. The core concept is to allow a person to select from various grades of Clams with different prices and corresponding $GEM / Pearl NFT yields, instead of having only one option. The benefits are clear — at a current floor price of $200 in $GEM tokens for a Clam, some people will be priced out of being able to buy one, while others who want to invest more will be forced to buy and manage a large collection of Clams. The affordability of a Clam can also fluctuate as demand for Clams fluctuate.
On that topic, we have been observing the effects of fluctuating Clam prices recently both as a result of people buying Clams and the result of $GEM price increases that outpace the TWAP oracle. Based on our observations and the community’s reaction, we have reached the following conclusions:
- volatility in the affordability and pricing of Clams is, on the whole, a bad thing and should be avoided if possible; and
- Having Pearl production price fluctuate with a peg to 1/10 of the live dollar price of a Clam, but without any correlation to the GEM price paid for the Clam that produced it, is less than ideal for the ecosystem.
Allow us to explain that second point a bit further.
The current system pegs the Pearl production price to 1/10 the live price of purchasing a Clam. Since a Clam’s live price is pegged in dollar terms, the Pearl production price is also pegged in dollar terms. And since a Pearl’s GEM yield is calculated as a multiple of its production price based on its traits, this means that the same Clam will get a lot more GEM (through Pearl production) when GEM price falls, while if GEM price rises then it will get less GEM. There are two problems with this mechanism.
Firstly, this mechanism increases inflation as GEM price falls, which is generally not good economic practice. There already is an element of this in play due to Clam and Pearl prices being pegged to dollars. This is because falling GEM prices will mean more GEM being required to buy a Clam / produce Pearls, which in turn leads to more GEM being earned over time. This element is necessary for the game to be attractive, but there is no need to add fuel to the fire by exacerbating its effects. From the ecosystem’s perspective, it is generally better for the Pearls generated by a Clam to be in loss in dollar terms due to falling GEM prices, than to try and compensate for dollar-denominated losses by letting the Pearls earn even more GEM — the latter is what will lead to hyper inflation if left unchecked.
Secondly, the current mechanism almost acts like a short hedge position on GEM. That is to say, if GEM price drops, Clam farming will be better than just holding or staking GEM because you will get lots more GEM to compensate; but if GEM price rises, you would actually get less GEM than if you just held it or staked it. As an example, if GEM price increased 3x in a month since the purchase of your Clam, assuming a Clam price of 10k GEM, you might end up having burned 10k GEM to only earn 5k GEM after farming all your Pearls. This is still a profit of 50% in dollar terms (due to 3x GEM price increase), but if you had just held on to your 10k GEM, you would have 200% profit instead. This is counterintuitive since Clam farmers should be the true believers in Clam Island and stand to earn the most if GEM price increases. By fixing pearl production price in GEM at the time of purchase, we fix this issue.
Taking these matters into account, what we arrived at is a system where a person is able to choose from one of ten grades for Clams, and the GEM cost to produce Pearls for each Clam will be fixed in GEM equivalent dollar value for that particular grade, at the time of purchasing the Clam.
This is best illustrated with an example. For the numbers nerds out there, here’s some detailed information on how Graded Clams will work:
Taking Grade E as an example, if GEM price is $0.10, it will cost 1,000 GEM to purchase the Clam. Once purchased, every Pearl from that Clam will cost 400 GEM to produce, regardless of later price fluctuations in GEM.
Please note that Clams purchased before the Bivalvia Update will not be affected and will not have any Grade.
In addition to this new pricing mechanism, we have made some adjustments to the GEM yield formula to make losses less severe and less likely. As a part of the gamification mechanism, it was always the case that you could lose, even in pure GEM terms, from farming Clams; you were just more likely to win. This “winning on average” concept is core to the Clam Island mechanism, and has the opposite effect of gambling — the more you play, the more likely you are to win. That said, unlucky losses can deter new players from continuing to play, so we want to dampen the effect of losses while retaining the chance of winning big.
The absolute worst outcome (i.e. if you have terrible luck) for each graded Clam will yield somewhere around 40% loss of GEM invested if all Pearls are farmed and burned for max yield. In contrast, the highest yield possible for each grade is around 30,000% (300x). The probability distribution is weighted such that each grade yields approximately 60% profit on average over the entirety of the Pearl farming, burning and yield streaming cycle for a Clam, which can take anywhere between approximately 40–90 days assuming active farming. The chances of a Clam you purchased being profitable overall are approximately 2/3. The average stats are actually slightly better for lower grade Clams, and you will notice that lower grade Clams also get more redeemable SHELL on a proportional basis. This is intentional to give smaller holders an edge over whales, and to allow wider SHELL governance token distribution.
We have previously said that Clam trading will be integral to our ecosystem, and this is now more so than ever. For example, if you purchase a Clam for 1,000 GEM that has an indicative ROI of -10%, it would mean that on average, you would lose 10% if you farmed all your Pearls due to the Clam having poor traits and rarity. However, with the availability of an active secondary market, you do not need to farm it yourself to recoup your investment. You could, for example, sell the Clam for 800 GEM, which is a 20% loss, in return for immediately gaining access to most of the GEM you spent so that you can try again with a new Clam. The buyer, on the other hand, gets a Clam that is now profitable on average due to having paid less GEM than usual for it, with the compromise being that it has a more modest average ROI. Such secondary market activity is what will drive large scale adoption of the platform.
In our first iteration, farming Clams was a net deflationary exercise for GEM, with the idea being that the NFT will have inherent collectible value and the GEM yield simply offsets a large proportion of the GEM paid for those that participate in Clam farming. However, starting with the Arcidae Update, we have moved away from that to a model where Clam farming produces a net gain in GEM on average, assuming that you are patient enough to play the game and wait for the 30-day streaming option when burning a Pearl. This is based on community feedback since players gravitated towards focusing on the numbers in the GEM yield, perceiving themselves to have made a loss if the GEM yield did not exceed GEM paid.
Although the Arcidae Update was well-received, it does create inflationary pressure on GEM. This was less of a problem when GEM price was higher, but as GEM price fell, the dollar-pegged Clam and Pearl pricing mechanism also meant that inflationary pressure increased significantly.
As GEM price increases, this will again become less of a problem; but in order to create a more resilient ecosystem, we will be implementing two additional caps as part of the Bivalvia Update:
- Capping the Clams available for purchase so that no more than 5% of the total GEM supply (or equivalent in BNB) can be used to purchase Clams in a given week; and
- Capping the Pearls available to be burned so that once max GEM yield from Pearl burning in a given week exceeds 2.5% of the total supply, no more Pearls can be burned in that week.
The Clam purchase cap based on total GEM supply will co-exist with the current max Clam purchase limit per week, which is on a descending schedule (2,500 in the first week of launch and reducing by 50 every week thereafter, until the number reaches 500).
In addition to the measures above, an update will also be made to how vested GEM can be used. As part of the Bivalvia Update, only half of the price of a Clam can be paid for with vested GEM. This ensures that a player cannot effectively get free Clams once they build up enough of a GEM stream from Pearls.
To Yield Farming and Beyond
We believe that one of our core strengths is the ability, and the willingness, to pivot according to feedback from the community. We have many things planned for Clam Island beyond the Bivalvia Update, but there is one in particular we are quite excited about. In the interests of not overwhelming everyone with too much new information at once (and because we like to tease), we won’t be giving any details until after we implement the Bivalvia Update. However, we can disclose that it will involve a complete reinvention of the yield farming model in Clam Island Bank in a way that (as far as we know) has never been done before, and we believe this will address the concerns raised by the community about inflationary pressure from non-native yield farms.