Inverse Finance

Features & Applications

A decentralized stable asset with a strong USD peg

As available capital on Frontier grows, demand for and utility of DOLA as a borrowing credit also grows, therefore strengthening the DOLA vs USD peg and being less reliant on the Stablizer.
A strong USD peg makes DOLA suited to using in a variety of DeFi applications and strategies, in a similar way that Dai 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 FiRM page and DBR price.

DOLA lenders earn interest

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

Unique leverage positions

As additional synthetic assets (synths) are issued on Frontier, 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

Frontier can be used to issue DOLA to qualified 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 Frontier 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 Frontier . These assets then match user deposits in the yield aggregator's vault to increase their APY.

Under-collateralized lending

There currently is no under collateralized lending of DOLA but it would open up the ability for Frontier to act as a fractional reserve protocol with INV token as a backstop. Even though the Inverse DAO could make a future vote to supply capital in the form of tokens or synthetic assets (eg DOLA) to vetted counter-parties with low default risk, we'd like to see a stronger case for under-collateralized lending in DeFi first.

Whale Extractable Value (WEV) acquisition (yield farming)

Given a highly liquid and diverse pool of borrowable assets on Frontier 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. 1.
    Inverse DAO finds a yield opportunity generated by another protocol.
  2. 2.
    The DAO “lends itself” an amount of DOLA.
  3. 3.
    If the required deposit asset is a stable, the DAO swaps DOLA to the stable using Curve. If it’s a non-stable, it uses DOLA as collateral on Frontier to borrow the asset.
  4. 4.
    The DAO uses the asset to generate yield using the appropriate strategy.
  5. 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. Read more about how this works in this article on our collaboration with Yearn in the yvCURVE-DOLA vault.