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Clay, typically bentonite, acts as a binder in the green sand mixture, giving it the ability to retain its shape when molded. Bentonite is favored because of its swelling properties when combined with water, which enhances the binding effect and allows for better mold strength during the casting process. Water in the mixture also plays a crucial role by activating the clay, creating the plasticity needed for the molding process. Proper moisture content is essential; too much water can lead to defects in castings while too little can make the sand too dry to form adequate molds.