Features & Applications

Anchor and DOLA features and potential applications

A decentralized stable asset with a strong USD peg

As available capital on Anchor grows, demand for and utility of DOLA as borrowing credit also grows, therefore strengthening the DOLA vs USD peg and relying less on the Stablizer (Dai peg).

A strong USD peg makes DOLA suited to using in a variety of DeFi applications and strategies. in a similar way that Das has become a dependable building block in DeFi applications.

DOLA minters earn interest

Unlike Maker, DOLA borrowers also earn interest on their collateral while borrowing DOLA, making DOLA a native yield bearing asset. This reduces the opportunity cost of holding DOLA.

For the current rates lending rates, see the Anchor Banking page.

DOLA lenders earn interest

DOLA is a natively yield generating asset. Users can buy DOLA and supply it to Anchor to earn interest from DOLA minters.

Unique leverage positions

As additional synthetic assets (synths) are issued on Anchor, different synths can be used to collateralize one another, allowing traders to enter an unlimited number of unique leveraged positions which would otherwise require custom derivatives.

Protocol to protocol lending

Anchor can be used to issue DOLA to audited protocols with a low risk of default. This is similar to the Iron Bank, where protocol-to-protocol credit limits are replaced with a DOLA balance.

One application of protocol to protocol lending is lending to yield aggregators looking to borrow assets from Anchor to leverage their vaults yield. In this case, Inverse DAO can issue a 0-collateral DOLA loan to the protocol's strategy contract. The issued DOLAs would only be used as collateral to borrow other assets from Anchor. These assets then match user deposits in the yield aggregator's vault to increase their APY.

Under-collateralized lending

This opens up the ability for Anchor to act as a fractional reserve protocol with INV token as a backstop. The Inverse DAO could vote to supply capital in the form of tokens or synthetic assets (eg DOLA) to vetted counter-parties with low default risk.

Whale Extractable Value (WEV) acquisition (yield farming)

Given a highly liquid and diverse pool of borrowable assets on Anchor and sufficient DOLA liquidity on automated market makers (AMMs), Inverse DAO can capture yield opportunities of its listed assets from other DeFi protocols by following these steps:

  1. Inverse DAO finds a yield opportunity generated by another protocol.

  2. The DAO โ€œlends itselfโ€ an amount of DOLA.

  3. If the required deposit asset is a stable, the DAO swaps DOLA to the stable using Curve. If itโ€™s a non-stable, it uses DOLA as collateral on Anchor to borrow the asset.

  4. The DAO uses the asset to generate yield using the appropriate strategy.

  5. At a later time, the DAO reverses the steps above and burns the minted DOLA amount and keeps the generated yield.

The generated profit from these WEV crusades would be kept in the DAO treasury. Alternatively, it can be used to leverage Inverse vaults yield. However, when DOLA is used as collateral in Anchor in step #3, the profit would trickle down to Anchor suppliers who are paid borrowing interest by the DAO, which maximizes utilization of depositors funds, further increasing capital efficiency.