DOLA
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.
Basics
Yield Opportunities
Peg Management
Bridging
FAQ
DOLA exists as an ERC20 token on Ethereum and Optimism which is a Layer 2 to Ethereum, both use ETH (OETH when bridged to Optimism). DOLA can also be bridged to the BNB Chain and Fantom with Multichain.
DOLA can be acquired by using any of the following methods:
ALL yield strategies carry additional smart contract risk. Many yield opportunities mentioned on this page have not been audited by Inverse Finance. Different strategies carry different levels of risk, with some subject to potential impermanent loss or divergence loss 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, and never invest more money than you are willing to lose.
DOLA's peg management is a result of supply and demand in the open market, primarily determined on decentralized exchanges such as Curve, Balancer, Velodrome and others. As DOLA is debt-backed and not collateralized by locked-up tokens like Maker’s DAI, it’s best to look at the DOLA liquidity pools and add assets and liabilities from Frontier and other lending markets when calculating total supply. Inverse Finance DAO have voted to delegate peg maintenance to the Treasury Working Group and the Risk Working Group who maintains the DOLA peg using the following methods:
- If DOLA’s market price goes above $1, there is more demand than there is supply in the open market. To counteract this, Inverse Finance will mint more DOLA into existence on the ‘Supply’ side of partnering lending markets to become available for borrowing. An increase in lending supply causes the variable interest rate for borrowing DOLA on that lending market to decrease. As DOLA becomes cheaper to borrow, more DOLA gets borrowed and the circulating supply in the market increases.
- If DOLA’s peg falls below $1, then the opposite is done, meaning DOLA on the supply side of lending markets is retracted and ‘burned’. A decrease in lending supply causes the borrowing interest rate to increase, which leads people to buy back DOLA to pay off their loans. As DOLA becomes cheaper to borrow, more DOLA gets borrowed and the circulating supply in the market increases. This additional buy-pressure in the market returns the value of DOLA back to $1.
- These increases and decreases in supply continue until the market reaches equilibrium (where the supply of DOLA equals the demand for DOLA), which Inverse Finance aims to achieve at $1.
DOLA Liquidity Supply
- As DOLA liquidity pools become underweighted in DOLA terms, Feds can supply DOLA to the pool which provides Inverse Finance both with the revenue generated from the deposit and the ability to make significant DOLA supply contractions instantly.
- DOLA burned from liquidity pools will directly impact the balance of assets in the pools and therefore have an immediate effect on the DOLA peg.
- Inverse Finance, through the DOLA Fed, maintains the flexibility to adjust borrowing rates across one or even all partner lending markets in order to optimize supply and demand for DOLA and to maintain its USD peg.
- The Stabilizer can also be used to arbitrage away price differentials if the peg of DOLA varies from its $1.00 USD peg, guaranteeing an exchange rate of 1 DAI = 0.996 DOLA, or 1 DOLA = 0.996 DAI (provided there is DAI liquidity in the Stabilizer.
DOLA is an Ethereum chain ERC20 token. DOLA can be bridged to Ethereum "layer 2" chains like Arbitrum and Optimism, and other blockchains like Polygon, BNB chain and Avalanche which are compatible with Ethereum (EVM).
Different bridges have different advantages and risks. Ethereum provide its security to layer 2 chains vie "Native" bridges which let you self-custody your funds while on L2 and in transit. This means that you don’t need pre-existing 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 (onto L2's is fast, out takes time). Remember to also send some of the gas token to the destination chain to be able to transact. There are bridge aggregators which search for the cheapest route as well.
There blockchains that are independent from Ethereum's security (layer 1's) which are compatible with the EVM and they often have bridges of their own.
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. Here are a few:
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:
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.
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 moving from.
Select the chain to move to.
Approve the allowance for the sum.
Confirm the transaction to send the funds and wait.
Inverse Finance Fed contracts mint DOLA directly to the supply side of lending markets or to other fed-enabled liquidity pools (e.g. DOLAFraxBP on Curve) in response to market DOLA demand. If DOLA demand decreases, they retract and burn DOLA from the supply. This includes FiRM, Frontier and any lending market officially partnered with Inverse Finance. Check out our Transparency page to find an up-to-date list of our partners.
Users can also exchange DAI for DOLA or DOLA for DAI for a 0.1% fee using The Stabilizer. When swapping DAI for DOLA in the stabilizer, DOLA is minted and sent to the user’s wallet. The DAI will remain in The Stabilizer until another user initiates a swap of DOLA for DAI. The Stabilizer will then take the 0.1% fee and burn the rest of the DOLA.
No. DOLA is debt-backed which means that you don't burn or redeem another token to create it, each DOLA is instead backed by collateral assets locked in as debt lending markets or by the other token(s) in a liquidity position created by a Fed. INV is not used to mint or redeem DOLA. INV is however one of the collateral assets typically used as collateral for DOLA loans in Frontier.
In the world of DeFi, there is no shortage of stablecoins currently available on the market. What makes DOLA unique and advantageous compared with other stablecoins is the ability for Inverse Finance to mint it onto the lending side of partnered protocols and into liquidity pools.
This is a massive advantage to a lending market that is looking to grow rapidly, as borrowable stablecoin liquidity can be instantly supplied by Inverse Finance at low interest rates for borrowers. We call this a win-win-win situation:
- 1.The partnered lending protocol wins as they can expand their protocol’s TVL rapidly while taking a cut of the profits from DOLA borrowers
- 2.Borrowers win as they have access to the most capital-efficient, decentralized stablecoin on the market at low interest rates
- 3.Inverse Finance wins as the treasury earns interest from DOLA borrowers
Also, this allows for Inverse Finance to seamlessly expand DOLA’s use on chains other than Ethereum. This is done by partnering with well-established lending protocols on the other blockchain and through bridges like Multichain. Inverse Finance has demonstrated the success of this advantage already by partnering with Velodrome and Beefy on Optimism which is a gas efficient second layer on top of Ethereum.
The Inverse DAO selects and controls which lending markets get ‘whitelisted’ to have DOLA minted onto their ‘supply’ side. First, potential lending market's pros and cons are discussed in the Inverse Finance Discord. The next stage is for a proposal to go to the Inverse Finance Forum; at this stage, vetting of the protocol is carried out along with the collateral options in the lending pool. The Inverse Finance DAO takes a low-risk approach when deciding whether to ‘whitelist’ a lending market for DOLA minting. The final stage is to take it to an official on-chain governance vote in the Inverse DAO, where INV and xINV token holders can vote ‘for’ or ‘against’. If the proposal passes, then the lending protocol will become an official partner, and Inverse Finance will have the ability to mint DOLA onto the ‘supply’ side of the pool.
Last modified 5d ago