Disclaimer

Is There Risk When Using Inverse Finance?

DeFi and smart-contracts are not 100% safe no matter how many audits or white-hat hacker attempts that are made to break it, there is an ever-present risk that previously undiscovered vulnerabilities surface without warning.

You may lose 100% of your funds in case of an unidentified exploit of hack. There are no refunds and users participate in FiRM, Frontier, Inverse Finance and associated products at their own risk. FiRM, Frontier, and any other protocol deployed by Inverse, however thoroughly tested and audited, will always carry risk inherent in smart-contracts due to Ethereum’s simultaneous execution environment. Inverse Finance is a decentralized, open-source protocol, and is not affiliated with any central authority or organization. Inverse Finance’s products are provided "as is" and without any warranties or guarantees of any kind. Inverse Finance does not endorse or recommend any particular use or implementation of its products, and is not responsible for any losses or damages that may result from their usage. Users of FiRM are to follow any local laws applicable when using FiRM and users are solely responsible for their own actions, and Inverse Finance will not be liable for any damages or losses that may result from the use of FiRM. Users are encouraged to purchase cover from firms like Nexus Mutual offering protection against smart contract and other risk. By using FiRM, users acknowledge and agree to these terms and conditions.

Potential risks

This is a list of some, but not an exhaustive list of risks associated with using FiRM, INV, sINV, DOLA, sDOLA, DBR, and other Inverse Finance products:

1. Smart contract failure risk: Despite our security efforts, our contracts may be exploited and drained.

2. Arbitrage risk: If you buy DOLA and pay more than $1.00 or sell it for less than $1.00 OR supply liquidity at the incorrect price, your trade is likely to be arbitraged and which may result in you holding less DOLA than you expected.

3. Liquidation risk: If you do not add sufficient collateral to your FiRM position and the prices of your borrowed assets depreciate beyond your loan to value ratio, your position may be liquidated.

4. Dollar peg risk: The DOLA stablecoin USD peg may fail due to abnormal market conditions.

5. Bridge risk: If you move your DOLA across chains via a bridge, your DOLA may fail to transfer or the assets locked in a bridge may be subject to an exploit, which may dramatically affect the value of the bridged asset. Also, some bridges require a multi-day delay before bringing your assets back to Ethereum mainnet, which may cause unspecified losses.

Make sure that you are familiar with the underlying infrastructure that you are using: Ethereum provide the strongest security guarantees for tokens issued on Ethereum. Bridging tokens to other base layer chains change the token's risk profile drastically as you need to trust a custodian bridge. Even Ethereum layer 2 rollups like Arbitrum and OP Mainnet have some weaker or different security assumptions than Ethereum, but you can manually withdraw your funds from the rollup back to Ethereum.

Optional Nexus Mutual Cover

To help protect against potential losses, users can purchase one or more of three Nexus Mutual cover products, each tailored to different aspects of Inverse Finance’s ecosystem:

1. Inverse Finance FiRM Cover – Provides coverage against exploits or failures specifically impacting FiRM, including smart-contract hacks and governance attacks.

2. Inverse Finance sDOLA Cover – Protects user funds involved in sDOLA, safeguarding against contract vulnerabilities and malicious liquidations.

3. DOLA Depeg Cover – Offers coverage if DOLA loses its peg by a specified percentage for a defined duration, compensating for losses incurred by a prolonged depeg event.

All of these covers are discretionary, with final decisions on payouts determined by Nexus Mutual members. Users should review Nexus Mutual’s documentation and terms for details on eligibility, exclusions, claim processes, and limitations. Inverse Finance does not endorse or guarantee coverage from Nexus Mutual and will not be liable for disputes or decisions arising from any claim or policy.