How the money works
Where each dollar sits, in plain terms. The full account, with the reasons for each choice, is the contract build plan; the pages under Protocol describe the contracts as they are.
On this page
Two kinds of balance, kept apart on purpose
Your savings are money. Your credit is a record of what you owe. Clear keeps them in two different places and never mixes them.
ESADepositVaultClearCredit, the credit ledgerIf they were merged, part of every CLRUSD would be backed by dollars and part by somebody's promise to pay, and nobody could tell which part was which. Kept apart, every CLRUSD is backed by a dollar.
Savings
Every CLRUSD is backed one for one by USDC in the vault. You deposit USDC and the vault creates the same amount of CLRUSD for you. You hand CLRUSD back and the vault destroys it and returns the USDC. Redeeming is the only way USDC leaves the vault: there is no admin withdrawal and no sweep.
Savings pay no interest. Nothing in CLRUSD or the vault pays anything to the people who hold it.
You can save without paying the network's fee yourself. You sign; a Clear wallet called a relayer submits the transaction and pays the fee.
One limit on taking savings out. If you have pledged savings behind credit and then drawn on that credit, the CLRUSD contract can hold back the part covering what you drew until you pay it back. The lock applies only once the co-op switches it on (Parameters); the rest of your savings stays free either way.
The co-op can also pause the vault in an emergency, which stops deposits and redemptions until it is unpaused. Who can do that is in Governance.
Equity credits
Equity credits are a count Clear's server keeps for you, not money and not a token. New credits wait 30 days before they count as yours ("vesting"). They can only go toward your Clear Deed; there is no way to withdraw them or turn them into cash. The rules for earning them are in Parameters and who sets them.
Buying at a partner shop
A purchase at a partner shop is three entries on the ledger that add up to zero. Nobody lends anything at the moment you buy. Say a shop has agreed to a 3% discount and you spend $100:
No dollars move at that moment. The shop's positive balance is the record of what the co-op owes it, kept on the chain where the shop can see it.
Paying the shop
Cash is needed only when the shop turns its balance into dollars. The shop asks to be paid; its
request joins a queue, oldest first, and is due by the end of its payout window (thirty days unless
the shop's terms say otherwise). The PayoutPool pays it.
When members have not yet repaid enough to cover a payment that is due, the PayoutPool borrows the
difference from the LendingPool, where financial contributors have put money for exactly this. As
a last resort it can borrow from the reserve's excess and buffer, never its primary part. Lenders are
repaid as members repay.
A shop that also owes the co-op is paid down first: money reaching it by transfer clears its own debt before anything is left to cash out.
The card
A card swipe at a shop outside the Clear network needs real dollars, because that shop is not on the ledger. The co-op pays it from a float held with its card provider. The swipe shows straight away in your app as a hold; it is written to the ledger only once the payment clears, usually one to three days later, because the amount can still change until then (a tip, a fuel pump, a cancelled sale).
Repaying
Unless you pay a particular split plan, a repayment clears your most expensive balance first. On the chain, repayments go first to the PayoutPool, up to what it needs to pay shops, and anything beyond that goes to the reserve.
Carry: what credit costs
Credit has a cost, called carry. It builds up on what you have drawn, separately for each part of your line and each split plan. It goes to the co-op, or to the LendingPool for the share of credit its contributors paid for. Savings do not earn carry and do not pay it.
The reserve
The reserve is the money that makes it survivable when a member cannot repay. It lives in the
AssurancePool, in three parts:
The measure is the reserve-to-debt ratio (RTD): the primary reserve divided by what it stands behind. The co-op sets a target for it (Parameters). Repayments fill the primary reserve up to the target first.
Debt backed by a member's own savings does not count against the reserve, because the savings already cover it.
When someone cannot repay
- 1.Falling behind stops new split plans until the member is caught up.
- 2.Default. Once a split-plan payment has stayed unpaid for two further instalment periods, anyone can declare the member in default. Their plans close and their split-plan limit goes to zero. A credit line defaults when its period and grace period end with a balance still owed.
- 3.Collateral. Savings the member pledged can be taken, but only up to what they drew against them. Savings that were never drawn against cannot be touched.
- 4.Loss. What is left is written off as lost debt, which the reserve makes good: the buffer first, then the primary reserve.
What cannot happen
- Nobody can take USDC out of the savings vault except by redeeming CLRUSD.
- Equity credits cannot be cashed out, by you or by anyone else.
- Savings do not earn interest, and Clear does not promise any return on them.