DOLA
DOLA Stablecoin
DOLA is a synthetic stablecoin pegged to the US Dollar. It is designed to be valued as close to $1 as possible with minimal volatility. DOLA is debt-backed rather than algorithmic, meaning that DOLA is backed by retractable debt.
DOLA Basics
DOLA exists as an ERC20 token on Ethereum and Optimism which is a Layer 2 to Ethereum, which uses ETH as gas (OETH when bridged to Optimism). DOLA is also present on the BNB Chain but bridging is currently paused by Multichain.
Contract Addresses
How To Buy DOLA
DOLA can be acquired by using any of the following methods:
Borrowing from FiRM or any partnered lending protocols
How To Borrow DOLA
Borrowing DOLA can be done in two primary ways: through Inverse Finance's FiRM or via third-party variable-rate lending protocols. This guide will walk you through both methods.
To borrow DOLA in FiRM, follow our guide in the Using FiRM Section.
DOLA may also be available on third-party variable-rate lending platforms. Simply select a third-party lending protocol, such as Extra Finance, that supports DOLA borrowing. Each platform may offer different rates and terms. Before you commit, be sure you understand the terms. Variable-rate loans mean the interest rate can change over time. Ensure you understand the terms and the implications of rate changes. Also familiarize yourself with the repayment terms, including the duration and interest rates, to ensure they align with your financial goals and capabilities.
Always be aware of the risks associated with borrowing in DeFi, including liquidation risks if the value of your collateral falls.
DOLA Yield Opportunities
You can see live opportunities with current APY's on our Yield Opportunities Dashboard.
ALL yield strategies carry additional smart contract risk and you should assume that no yield opportunities mentioned on this page have been audited by Inverse Finance.
Different strategies carry different levels of risk, with some subject to potential impermanent loss or divergence loss, which can become a risk when DOLA is paired with volatile tokens, such as INV or wETH. Ensure that you do your own due diligence prior to interacting with any yield opportunity, and never invest more money than you are willing to lose.
DOLA USD Peg Management
DOLA's U.S. dollar peg is managed via the supply and demand for DOLA in the open market, primarily determined on decentralized exchanges like Curve, Balancer, and others.
If DOLA’s market price rises above $1, this means there is more demand than supply in the open market. To counter this and bring DOLA’s price down to $1, the DAO mints more DOLA into existence, causing the price to return to equilibrium.
If DOLA’s market price falls below $1, this means there is more supply than demand in the open market. To counter this and bring DOLA’s price up to $1, the DAO contracts DOLA and burns it, causing the price to return to equilibrium.
The DAO has two principal mechanisms for adjusting the supply of DOLA in the marketplace in order to ensure DOLA’s $1 peg: DOLA DEX liquidity Feds and the DOLA Fed on FiRM.
DOLA DEX Liquidity Feds
DOLA DEX Liquidity Feds, commonly referred to as DOLA Feds, supply additional DOLA to DEX liquidity pools when the price of DOLA is above $1, and contract (or burn) DOLA from liquidity pools when the price of DOLA falls below $1.
DOLA injected via DOLA Feds are backed by the LP tokens the DAO receives in exchange for the deposited DOLA.
DOLA Fed on FiRM
A dedicated DOLA Fed supplies DOLA to FiRM for purposes of lending. While multiple factors including risk are considered when expanding lending capacity on FiRM, DOLA’s U.S. dollar peg is a consideration in particular if and when DOLA’s peg is below $1, which puts the DAO in a contracting - not expansionary - position and therefore makes additional DOLA lending capacity unlikely and may even require contracting available lending capacity on FiRM.
DOLA Peg Management Operations
Inverse Finance DAO has voted to delegate peg maintenance to the Treasury Working Group and the Risk Working Group, who maintain the DOLA peg focusing on DOLA supply and demand.
DOLA Cross-Chain Bridging
PLEASE READ: Using cross-chain bridges comes with risk and Inverse Finance DAO makes no warranty or guarantee of their safety. You are strongly encourages to do your own research to ensure you understand any bridge fully before using.
The following is a brief summary of known options for bridging DOLA.
How Bridges Work
Bridges today are divided into two risk categories depending on the choice of technology and level of decentralization.
Bridges like Hop Protocol are on the centralized side of the spectrum which means that they are very fast but could carry censorship risks, along with the risk of an influential person or small group being a single point of failure.
The trade-offs are different for decentralized (native) bridges like the Optimism bridge or the Arbitrum bridge to Ethereum as you never give up self-custody of your funds and therefore don’t need liquidity on the destination chain, but you instead accept that it may take up to seven days to transfer the funds away from the destination chain (in is fast, out takes time).
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.
Native/Trusted Bridges
Some users prefer to use a bridge operated by a “trusted” third party (e.g. Coinbase operates the Base native bridge). Native bridges typically offer bridging from a limited number of chains to the target (native) chain.
Ethereum provides its security to "Layer 2" chains via native bridges which let you self-custody your funds while they are in transit and to and on the L2. Before bridging to an L2, ensure that you are familiar with the docs for the target chain and understand the risks of that protocol.
One downside of some L2 chains is that it may take up to seven days to transfer the funds away from the L2 chain back onto Ethereum or another chain. Tip: remember to also send some of the L2’s gas token to the destination chain to be able to transact.
Some native L2 Bridges:
Other native bridges:
Some L1 blockchains are independent from Ethereum's security but are nonetheless compatible with the Ethereum's execution environment and often have custodial bridges of their own.
Polygon. Polygon's bridge is non-custodial and more similar to the L2 bridges. Tip: check for liquidity before bridging.
Third Party Bridges
There are several commercial bridges that usually are fast and connect both L1's and L2's. They require there to be pre-existing liquidity on the destination chain and most of them custody your funds during the transaction. Check for liquidity before bridging. Note that Multichain is out of commission, revoke all approvals and avoid using their services until the situation is resolved. Here are a twofew custodial bridges:
Bridge Aggregators
Bridge aggregators search for the least expensive route and Inverse makes use of Socket on the combined swapping and bridging page on the Inverseour website. Bridge aggregators search for an optimal route and also aggregates DEXes across chains to allow you to swap from any token on one chain into any other token on the destination chain:
Tips on Using Cross-Chain Bridges
Look
Always check if there is enough DOLA liquidity on the other chain to transact before you bridge. Look up the analytics of the protocol that you are using, and also check both the bridge liquidity and the pool liquidity if you intend to swap on the destination chain. If the liquidity pools on the chain are low on DOLA you benefit from positive slippage if you bring DOLA to trade. If the pools have an excess of DOLA on the other hand you benefit from purchasing it.
Different bridge types have different properties and it's not a given that prices or transaction times are the same moving DOLA onto or off from any specific chain. The decentralized bridge off from Optimism or Arbitrum can take some time to exit. Anyone can challenge the validity of a transaction and a challenged transaction moving off the bridge could remain pending for up to ca 7 days before the challenge is concluded.
The private bridges offer faster bridging speeds and have more liquidity but they have a different risk profile. Take a moment to edit the allowance when you are prompted to approve the transfer and set it to match the sum you are sending. Infinite approvals carry a risk if the protocol is compromised.
Leap
Head to the bridge of your choice with DOLA at the ready.
Make sure that your wallet is pointed to the chain that you are starting from.
Select the target chain.
Approve the allowance for the sum.
Confirm the transaction to send the funds, and wait.
Here is a good blog post on farming DOLA across chains.
FAQ
Where does the DOLA that I borrow come from?
An Inverse Finance DOLA Fed contract mints DOLA to FiRM, where the DAO is the sole supplier of DOLA on FiRM. Subject to risk and other parameters, the DAO may expand or contract DOLA available to borrow in FiRM.
Is DOLA an algorithmic stablecoin?
No. DOLA is debt-backed which means that each DOLA is 100% backed by collateral assets staked in FiRM or by the Liquidity Provider token in a liquidity position created by a DOLA Fed. INV is not used to mint or redeem DOLA, though it can be used as collateral in FiRM.
What are the advantages of DOLA?
In the world of DeFi, there is no shortage of stablecoin protocols. What makes DOLA unique compared with other stablecoins is that DOLA is:
Debt-backed. DOLA is fully debt-backed and not a partially collateralized algorithmic stablecoin.
Decentralized. DOLA operates via fully decentralized, on-chain DAO governance and apart from a nominal amount of DAI (not decentralized) being used as collateral, FiRM is 100% backed by debt denominated in decentralized assets.
Supported by DOLA Liquidity Feds. DOLA Feds allow Inverse to rapidly deploy liquidity on chains other than Ethereum like Arbitrum, Optimism, or Base and to simultaneously use DOLA Feds to manage DOLA’s USD peg.
Transparent. Inverse provides an unusually high degree of transparency into its operations through the aggressive publishing data about Inverse tokens and products on our Transparency pages.
Where can I find Information About DOLA Yield Opportunities?
Take a look at the current Yield Opportunities for DOLA.
Last updated