# Getting Started Inverse Finance is a decentralized autonomous organization (DAO) that develops and manages DOLA, a debt-backed stablecoin, and FiRM, a fixed-rate lending market protocol. Originally founded by Nour Haridy in late 2020, the protocol is now fully governed by the Inverse Finance DAO—a collective of crypto enthusiasts and DeFi users. Our suite of products gives you predictable borrowing costs, yield opportunities, and governance participation in a transparent, community-owned protocol. This documentation will help you understand and use Inverse Finance whether you're borrowing DOLA for the first time, seeking yield opportunities, or participating in protocol governance. Choose your path below based on what you want to accomplish. {% hint style="info" %} **New to DeFi?** Start with our [Core Concepts](/inverse-finance/inverse-finance/getting-started/core-concepts) page to understand fundamental terms like collateral, liquidation, and stablecoins before diving into specific products. {% endhint %} *** ### Core Products [**FiRM - Fixed Rate Market**](/inverse-finance/inverse-finance/products/firm) Our flagship lending protocol offers fixed-rate borrowing for any duration. Unlike other protocols with short-term fixed rates, FiRM loans can be extended indefinitely with predictable costs through the DBR system. [**DOLA - Decentralized Stablecoin**](/inverse-finance/inverse-finance/products/tokens/dola) A debt-backed stablecoin pegged to the US dollar. DOLA is generated through borrowing on FiRM and maintains its peg through market mechanisms and protocol-controlled liquidity. [**DBR - DOLA Borrowing Rights**](/inverse-finance/inverse-finance/products/tokens/dbr) A tokenized interest rate mechanism. Holding DBR gives you the right to borrow DOLA at zero interest—a DeFi primitive enabling rate locking, hedging, and speculation. [**INV - Governance Token**](/inverse-finance/inverse-finance/products/tokens/inv) The protocol's governance token. Staking INV provides voting rights, anti-dilution rewards, DBR streaming rewards, and the ability to borrow against staked positions. [**sINV - Staked INV**](/inverse-finance/inverse-finance/products/tokens/inv/sinv) A yield-bearing wrapper around staked INV that auto-compounds rewards without requiring FiRM interaction, enabling cross-chain deployment and use as collateral. [**sDOLA - Staked DOLA**](/inverse-finance/inverse-finance/products/tokens/dola/sdola) A yield-bearing version of DOLA that auto-compounds DBR rewards into more DOLA. Holders earn protocol revenue while maintaining DOLA exposure. [**jrDOLA - Junior Tranche**](/inverse-finance/inverse-finance/products/tokens/dola/jrdola) A first-loss insurance mechanism where depositors earn enhanced yield for accepting bad debt risk, protecting DOLA's backing and enabling protocol scaling. *** ### Choose Your Path

🌱 New to Inverse Finance

Start here if you're new to DeFi or Inverse Finance

Learn core concepts, understand how our products work, and take your first steps with confidence.

Get Started →

💰 Borrow DOLA on FiRM

Access fixed-rate loans with predictable costs

Deposit collateral and borrow DOLA at truly fixed rates for any duration. Know your exact borrowing costs upfront.

Explore FiRM →

🧩 Explore our Product Suite

Understand how our products work together

See how FiRM, DOLA, DBR, and our yield products interconnect to create a comprehensive DeFi ecosystem with unique mechanics.

View All Products →

🪙 Earn Yield

Multiple strategies from conservative to aggressive

Compare all yield options: sDOLA for safety, sINV for governance participation, jrDOLA for enhanced returns.

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👤 Meet the Team

Discover the community building Inverse Finance

Learn about our DAO structure, core contributors, working groups, and how a decentralized community governs and develops the protocol.

About the DAO→

⚖️ Participate in Governance

Shape the protocol's future

INV holders control all protocol decisions. Vote on risk parameters, treasury allocation, and strategic direction.

Learn About Governance →

*** ### Essential Resources **Official Links:** * 🌐 **App:** [inverse.finance](https://app.inverse.finance) * 💬 **Discord:** [Join our community](https://discord.gg/JnHcJX8n) * 🐦 **Twitter:** Follow [@InverseFinance](https://x.com/InverseFinance) * 📝 **Forum:** [Governance discussions](https://forum.inverse.finance/) * 💻 **GitHub:** [View our code](https://github.com/inversefinance) * 🐛 **Bug Bounty:** [Report vulnerabilities](https://immunefi.com/bug-bounty/inversefinance/information/) **Key Pages:** * Risk Disclosure - [Understand protocol risks](/inverse-finance/inverse-finance/about/disclaimer) * Audits & Security - [Review security assessments](/inverse-finance/inverse-finance/technical/audits) * Smart Contracts - [Official contract addresses](/inverse-finance/inverse-finance/technical/smart-contracts) * Transparency Dashboard - [Real-time protocol data](/inverse-finance/inverse-finance/about/transparency) {% hint style="danger" %} **Security Reminder:** Team members will never DM you first. Always verify you're on official Inverse Finance sites. Never share your seed phrase or private keys with anyone. {% endhint %} *** # Core Concepts Understanding a few fundamental concepts will help you navigate Inverse Finance and DeFi more effectively. This page explains the essential terms and mechanisms you'll encounter throughout our documentation and when using our products. {% hint style="info" %} **Already familiar with DeFi?** Jump to [Guide for Beginners](/inverse-finance/inverse-finance/getting-started/guide-for-beginners) to learn more about how to get started with our unique suite of products. {% endhint %} *** ### DeFi Fundamentals
Stablecoins **What they are:** Cryptocurrencies designed to maintain a stable value relative to an external reference, typically the US dollar. While most crypto prices fluctuate dramatically, stablecoins aim to stay at $1. **How DOLA works:** DOLA is a **debt-backed stablecoin**—it's created when users borrow against crypto collateral on FiRM. Each DOLA in circulation is backed by more than $1 worth of collateral held in the protocol, plus additional safety buffers. **Why it matters:** Stablecoins let you hold dollar-denominated value on-chain, earn yield without price exposure, and move value across blockchains without using traditional banking. {% hint style="info" %} **Key difference:** Unlike algorithmic stablecoins, DOLA is over-collateralized with crypto assets and uses market-driven mechanisms to maintain its peg. {% endhint %}
Collateral **What it is:** Assets you deposit to secure a loan. Think of it like putting down a security deposit when renting an apartment—if you don't fulfill your obligations, the landlord keeps the deposit. **In DeFi lending:** You deposit crypto (like ETH or wstETH) into a protocol, which locks it up while you borrow a different asset (like DOLA). If the value of your collateral drops too much relative to your loan, the protocol can sell your collateral to repay the debt. **Common collateral types on FiRM:** * **WETH** - Wrapped Ethereum * **wstETH** - Wrapped staked ETH (Lido) * **CVX** - Convex governance token * **INV** - Inverse Finance governance token * **sUSDe -** Ethena's yield bearing USDe stablecoin * **DOLA-wstUSR LP** - A liquidity pool token composed of DOLA and wrapped-staked-USR from Resolv Labs {% hint style="warning" %} **Important:** Different collateral types have different risk profiles and borrowing capacities. Always understand the specific risks of the collateral you're using. {% endhint %}
Collateral Factor **What it is:** The maximum percentage of your collateral's value that you can borrow, expressed as a percentage or ratio. **Example:** * You deposit $10,000 worth of ETH * ETH has an 82% collateral factor on FiRM * You can borrow up to $8,200 DOLA * Your loan-to-value (LTV) ratio is 82% **Why it's not 100%:** The buffer protects the protocol from rapid price drops. If ETH crashes 10%, your $10,000 collateral becomes $9,000, but you still owe $8,200—the protocol still has cushion before bad debt occurs. **Real-world analogy:** Like how banks only lend 80% of a home's value for a mortgage, DeFi protocols only allow borrowing a portion of collateral value to maintain safety margins. | Collateral Factor | What You Can Borrow | Risk Level | | ----------------- | ------------------- | ------------ | | 65% | $6,500 per $10,000 | Conservative | | 75% | $7,500 per $10,000 | Moderate | | 82% | $8,200 per $10,000 | Aggressive | | 85%+ | $8,500+ per $10,000 | High Risk | {% hint style="info" %} **Best Practice:** Even if your market allows 82% collateral factor, consider borrowing only 70-75% to protect against volatility and liquidation risk. {% endhint %}
Liquidation **What it is:** The forced sale of your collateral to repay your loan when the collateral's value falls too low relative to your debt. **When it happens:** Each market has a **liquidation threshold** slightly above the collateral factor. If your collateral value drops and your LTV ratio crosses this threshold, liquidators can repay your debt and claim your collateral plus a bonus. **Example liquidation scenario:** 1. You deposit $10,000 ETH, borrow $8,000 DOLA (80% LTV) 2. ETH price drops 15%, your collateral now worth $8,500 3. Your LTV is now 94% ($8,000 / $8,500) 4. This exceeds the liquidation threshold 5. Liquidators repay your $8,000 debt 6. They receive $8,400 worth of your ETH (liquidation penalty) 7. You lose your collateral but debt is cleared **How to avoid liquidation:** * Maintain conservative LTV ratios (stay well below maximum) * Monitor your positions regularly * Set price alerts for your collateral * Keep extra collateral ready to add if needed * Repay debt or add collateral before liquidation threshold {% hint style="danger" %} **Critical:** Liquidation is permanent and happens automatically. You cannot stop it once triggered. Always maintain a safety buffer and monitor positions during volatile markets. {% endhint %}
Yield & APY **Yield:** Returns earned on deposited or staked crypto, similar to interest on a savings account but typically much higher. **APY (Annual Percentage Yield):** The annualized rate of return including compound interest. If you earn 10% APY and reinvest earnings, you'll have 110% of your starting amount after one year. **APR (Annual Percentage Rate):** The simple annualized rate without compounding. A 10% APR means you earn 10% over one year if you don't reinvest. **Why APY > APR:** APY accounts for earning returns on your returns (compounding). The more frequently rewards compound, the bigger the difference between APR and APY. **Example:** * 10% APR with no compounding = 10% total return * 10% APR compounded daily = \~10.52% APY * 10% APR compounded per block = \~10.54% APY **Where yield comes from in Inverse Finance:** * **sDOLA:** DBR revenue from FiRM borrowers * **sINV:** DBR revenue + anti-dilution INV rewards * **jrDOLA:** DBR insurance premium + sDOLA base yield * **INV staking:** Anti-dilution rewards + DBR streaming {% hint style="warning" %} **Remember:** Past yields don't predict future performance. APY fluctuates based on protocol revenue, participation, and market conditions. {% endhint %}
Gas Fees **What they are:** Transaction fees paid to blockchain validators to process your transactions. On Ethereum, gas fees are paid in ETH. **Why they exist:** Validators (computers running the network) need compensation for processing transactions and securing the blockchain. More complex transactions require more computational work and therefore cost more gas. **Gas fee factors:** * **Network congestion:** Higher demand = higher fees * **Transaction complexity:** Simple transfers cheaper than complex smart contract interactions * **Transaction speed:** Pay more to prioritize your transaction **How to reduce gas costs:** * Transact during low-traffic periods (weekends, late nights UTC) * Batch operations when possible * Use gas price trackers to time transactions * Consider L2 chains where DOLA is available (Optimism, Base, Arbitrum) {% hint style="info" %} **Gas Tip:** You always need some ETH in your wallet to pay gas fees, even when depositing or withdrawing. Keep at least $50-100 worth of ETH available for transaction costs. {% endhint %}
Wallets **What they are:** Applications that store your private keys and let you interact with DeFi protocols. Your wallet is your identity in DeFi—whoever controls the private keys controls the assets. **Types of wallets:** **Hot Wallets (Software):** MetaMask, Coinbase Wallet, Rainbow, Frame * Convenient for frequent transactions * Higher risk if your computer is compromised * Good for: Active DeFi use, moderate amounts **Cold Wallets (Hardware):** Ledger, Trezor, GridPlus Lattice * Maximum security, offline storage * Less convenient, requires physical device * Good for: Large amounts, long-term holdings **Smart Contract Wallets:** Safe (formerly Gnosis Safe), Argent * Programmable wallets with advanced features * Can require multiple signatures (multisig) * Good for: DAOs, shared accounts, advanced users {% hint style="danger" %} **CRITICAL SECURITY RULES:** * Never share your seed phrase or private keys with anyone * Inverse Finance team will never DM you first * Always verify you're on official sites (check URL carefully) * Bookmark official sites and use bookmarks, not search engines * Be extremely skeptical of "support" offering to help via DM * If something seems too good to be true, it is {% endhint %}
*** ### Inverse Finance-Specific Concepts
Governance & DAOs **DAO (Decentralized Autonomous Organization):** An organization controlled by token holders through on-chain voting rather than traditional corporate management. **How Inverse Finance governance works:** 1. Someone creates a proposal (on forum or directly on-chain) 2. Proposal goes through discussion and refinement (temperature check) 3. Formal on-chain vote with INV tokens 4. If passed, proposal executes automatically via smart contracts **What governance controls:** * Parameter setting for FiRM markets * Budget approvals for DAO working groups (treasury, risk, product, growth) * Protocol upgrades and new features * INV tokenomics * Emergency actions **Voting power:** 1 INV = 1 vote. The more INV you hold (or have delegated to you), the more influence you have over protocol decisions. **Why it matters:** Unlike centralized companies, INV holders collectively own and control Inverse Finance. There's no CEO who can make unilateral decisions. {% hint style="success" %} **Get involved:** Even if you don't have large INV holdings, participating in forum discussions and voting helps shape the protocol's future. Active governance is what makes DeFi truly decentralized. {% endhint %}
FiRM **What it is:** Inverse Finance's lending protocol that enables fixed-rate borrowing for any duration. **How it differs from other lending protocols:** **Traditional DeFi Lending (Aave, Compound):** * Variable interest rates that change constantly * Rates spike during high demand * Unpredictable borrowing costs * Can't plan long-term **FiRM:** * Fixed costs for any duration * Buy DBR upfront, know exact borrowing cost * Extend loans indefinitely * Full predictability **Key features:** * Personal Collateral Escrows (isolated positions) * Pessimistic Price Oracles (conservative pricing) * Governance tokens keep voting rights when used as collateral * No duration limits on loans {% hint style="info" %} **When to use FiRM:** Any time you need predictable borrowing costs, want to maintain governance rights while borrowing, or plan to hold a loan for extended periods. {% endhint %}
DBR (DOLA Borrowing Rights) **What it is:** An ERC-20 token that represents your right to borrow DOLA on FiRM. One DBR lets you borrow one DOLA for one year at zero interest. **How it works:** * You buy DBR tokens (on DEXs or through auctions) * Each DBR represents 1 DOLA borrowed for 1 year * DBR balance decreases as time passes while you have a loan * When DBR hits zero, forced replenishment occurs (expensive) **Examples:** **One-year loan:** * Borrow 1,000 DOLA for 1 year * Need 1,000 DBR * DBR costs $0.02 each = $20 total borrowing cost * Effective APR: 2% **Six-month loan:** * Borrow 1,000 DOLA for 6 months * Need 500 DBR (borrow half the time) * DBR costs $0.02 each = $10 total borrowing cost * Effective APR: 2% (annualized) **Three-year loan:** * Borrow 1,000 DOLA for 3 years * Need 3,000 DBR * DBR costs $0.02 each = $60 total borrowing cost * Effective APR: 2% **Why DBR is powerful:** * **Rate locking:** Buy DBR when cheap, use later when rates are higher * **Predictability:** Know exact costs upfront * **Flexibility:** Borrow for any duration, extend anytime * **Tradeable:** DBR can be bought, sold, or transferred * **Speculation:** DBR price fluctuates based on demand for DOLA loans {% hint style="info" %} **DBR Strategy:** Always buy more DBR than you minimally need. If your DBR hits zero, forced replenishment costs can be 5-10x normal DBR prices. Maintain at least a 30-day buffer. {% endhint %}
Personal Collateral Escrow (PCE) **What it is:** Your own isolated smart contract that holds your collateral on FiRM. Each user gets their own PCE for each collateral type they use. **Why it matters:** Problems in one market can't affect your positions in other markets. This is a major safety improvement over pooled collateral systems. **Example of protection:** * You have two positions: one with WETH, one with CVX * CVX market experiences issues (oracle failure, governance attack, etc.) * Your CVX position might be at risk * Your WETH position is completely unaffected * Problems are contained to individual markets **Compare to traditional lending:** * **Aave/Compound:** All your collateral in one pool, cross-collateralization * **FiRM:** Each position isolated, no cross-contamination {% hint style="success" %} **Benefit:** PCE gives you peace of mind that experimental or risky collateral types won't endanger your safer positions. {% endhint %}
Pessimistic Price Oracle (PPO) **What it is:** A conservative price feed system that uses the lower of two oracle prices to value your collateral. **How it works:** * FiRM queries two different price oracles * Takes the pessimistic (lower) price for collateral valuation * Uses optimistic (higher) price for debt valuation * Creates a safety buffer against oracle manipulation **Example:** * Chainlink oracle says ETH = $3,000 * Fallback oracle says ETH = $2,950 * FiRM values your ETH collateral at $2,950 (lower) * If you're repaying debt, uses $3,000 (higher) **Why it's important:** * Protects against oracle failures or manipulation * Reduces bad debt risk * Gives users confidence in system stability * Creates implicit safety margin **Trade-off:** You get slightly lower borrowing capacity than if using a single oracle, but the safety benefit outweighs this minor inconvenience. {% hint style="info" %} **What this means for you:** Your actual borrowing capacity might be 1-2% lower than theoretical maximum, but you're protected from oracle exploits that have devastated other protocols. {% endhint %}
ERC-4626 Vaults **What they are:** A standardized way to create yield-bearing tokens that wrap underlying assets. Think of them as "receipt tokens" that represent your share of a growing pool. **How they work:** 1. You deposit DOLA into an ERC-4626 vault 2. Receive sDOLA tokens representing your share 3. The vault earns yield (DBR rewards) 4. Yield auto-compounds into the vault 5. Each sDOLA becomes worth more DOLA over time 6. Redeem sDOLA anytime for underlying DOLA + accrued yield **Inverse Finance ERC-4626 vaults:** * **sDOLA:** Wraps DOLA, earns DBR yield * **sINV:** Wraps staked INV, earns anti-dilution + DBR rewards * **jrDOLA:** Wraps DOLA with first-loss risk, earns enhanced yield **Benefits of the standard:** * Composability: Works with other DeFi protocols expecting ERC-4626 * Predictability: Standard interface everyone understands * Safety: Well-audited, battle-tested standard {% hint style="info" %} **Think of it like:** A money market fund. You deposit dollars, get shares, the fund invests and earns returns, your shares become worth more dollars over time, redeem anytime. {% endhint %}
Tranches (Senior vs Junior) **What they are:** Different layers of capital with different risk/reward profiles, like different floors in a building that flood from bottom up. **Senior Tranche (sDOLA):** * Lower risk, lower yield * Gets paid first * Protected by junior tranche buffer * Can withdraw anytime * Capital is safe unless junior tranche is completely wiped out **Junior Tranche (jrDOLA):** * Higher risk, higher yield * Accepts first losses * Gets paid after senior tranche * Withdrawal delays to prevent bank runs * Capital can be partially or fully lost during bad debt events **Example scenario:** * Total deposits: $10M ($8M senior sDOLA, $2M junior jrDOLA) * Bad debt event: $1M shortfall * Junior tranche absorbs the loss (now worth $1M) * Senior tranche unaffected (still worth $8M) * Junior holders lost 50%, senior holders lost 0% **Why tranches exist:** * Let users choose their risk tolerance * Enable protocol scaling with less systemic risk * Create market-driven insurance mechanisms * Attract different types of capital {% hint style="warning" %} **Choose based on your risk tolerance:** If you can't afford to lose principal, use sDOLA. If you want higher yields and can accept capital loss risk, consider jrDOLA. {% endhint %}
Slashing **What it is:** The permanent reduction of your deposited capital to cover protocol losses. Only applies to jrDOLA (junior tranche). **When it happens:** * A borrower's collateral value drops below their debt * Liquidation occurs but proceeds are insufficient * Bad debt remains after liquidation * jrDOLA vault assets are used to repay the shortfall * All jrDOLA holders share the loss proportionally **Example:** * You deposit 10,000 DOLA to jrDOLA * Protocol experiences $500K bad debt * Total jrDOLA vault has $5M * Slashing event: 10% loss ($500K / $5M) * Your 10,000 DOLA is now worth 9,000 DOLA * Loss is permanent **How to think about it:** * jrDOLA is insurance you're selling to the protocol * You earn premiums (enhanced yield) * Sometimes you have to pay claims (slashing) * If claims exceed premiums, you lose money * If premiums exceed claims, you profit {% hint style="warning" %} **Not for everyone:** Only deposit to jrDOLA if you fully understand and accept the possibility of permanent capital loss up to 100%. {% endhint %}
*** ### Risk Concepts
Smart Contract Risk **What it is:** The risk that bugs or vulnerabilities in smart contract code could be exploited, resulting in loss of funds. **Why it exists:** * Smart contracts are immutable (can't be easily changed after deployment) * Complex code can have unexpected edge cases * Even audited code can have undiscovered vulnerabilities * Composability means risks compound across protocols **How Inverse Finance mitigates this:** * Multiple audits from reputable firms (Sherlock, ChainSecurity, yAudit, Nomoi) * Public audit contests with competitive bug bounty * Gradual rollouts of new features * Time-locks on upgrades * Bug bounty program for responsible disclosure **What you can do:** * Only deposit amounts you can afford to lose * Check that protocols are audited before using * Consider purchasing cover (insurance) from Nexus Mutual * Diversify across multiple protocols * Avoid new, unaudited protocols {% hint style="warning" %} **Reality check:** All DeFi carries smart contract risk. No amount of auditing can guarantee 100% safety. Even the most reputable protocols have been exploited. Never invest more than you can afford to lose entirely. {% endhint %}
Oracle Risk **What it is:** The risk that price feeds used by the protocol are manipulated, fail, or provide inaccurate data, leading to incorrect liquidations or bad debt. **Why oracles matter:** * Protocols need external price data to value collateral * If oracle says your ETH is worth $1,000 when it's actually $3,000, you might get wrongly liquidated * If oracle says it's worth $5,000 when it's actually $3,000, the protocol takes on bad debt **Types of oracle attacks:** * Flash loan manipulation of spot prices * Exchange exploits or failures affecting price feeds * Oracle provider going offline * Malicious oracle operators **How FiRM protects against oracle risk:** * Pessimistic Price Oracle (uses lower of two prices) * Multiple oracle providers (Chainlink + fallback) * Time-weighted averages prevent flash loan attacks * Governance can update oracles if problems detected
Liquidation Cascade Risk **What it is:** When falling collateral prices trigger liquidations, which creates selling pressure, which lowers prices further, which triggers more liquidations—a death spiral. **How it happens:** 1. Market downturn begins, collateral prices drop 2. Some positions hit liquidation threshold 3. Liquidators sell collateral to repay debt 4. Increased selling pressure lowers prices further 5. More positions become liquidatable 6. Cycle repeats, accelerating downward **Historical examples:** * Black Thursday 2020 (MakerDAO) * Terra/Luna collapse 2022 * FTX contagion 2022 **How to avoid being caught in cascades:** * Maintain very conservative collateral ratios * Monitor positions during volatile markets * Set price alerts well above liquidation threshold * Have capital ready to add collateral quickly * Consider deleveraging during uncertainty {% hint style="danger" %} **Cascade Warning:** The most dangerous liquidations happen during cascades because gas fees spike (making it expensive to save your position) and DEX liquidity dries up (making it hard to buy more collateral or repay debt quickly). {% endhint %}
*** ### Comparing Inverse Finance to Other Protocols | Feature | Inverse Finance (FiRM) | Aave | Compound | MakerDAO | | ------------------------ | -------------------------- | ------------------------ | ------------------------ | ------------------------ | | **Interest Type** | Fixed rate (via DBR) | Variable | Variable | Variable (stability fee) | | **Loan Duration** | Any duration, indefinite | No duration (continuous) | No duration (continuous) | No duration (continuous) | | **Collateral Isolation** | Yes (PCE) | Partial (isolation mode) | No | Yes (vaults) | | **Governance Rights** | Retained when staking | Lost | Lost | Lost | | **Price Oracles** | Pessimistic (conservative) | Chainlink | Chainlink + custom | Multiple sources | | **Interest Rate Model** | Market-driven DBR price | Algorithmic curve | Algorithmic curve | Governance-set | | **Stablecoin** | DOLA (debt-backed) | No native stablecoin | No native stablecoin | DAI (debt-backed) | | **Rate Predictability** | Perfect (fixed) | Changes per block | Changes per block | Changes via governance | *** ### Next Steps Now that you understand the fundamentals, here's where to go next: **Ready to try Inverse Finance?** * [Get Started with FiRM](/inverse-finance/inverse-finance/products/firm) - Borrow DOLA against crypto collateral * [Stake in sDOLA](/inverse-finance/inverse-finance/products/tokens/dola/sdola) - Earn yield on DOLA holdings * [Buy and Stake INV](/inverse-finance/inverse-finance/products/tokens/inv) - Earn protocol revenue share **Want to learn more?** * [DOLA Stablecoin](/inverse-finance/inverse-finance/products/tokens/dola) - Deep dive into our stablecoin * [DBR Token](/inverse-finance/inverse-finance/products/tokens/dbr) - Understanding borrowing rights * [Governance](broken://pages/LfJHNLfha7udHaQ5cjHX) - How to participate in protocol decisions **Need help?** * [Glossary](/inverse-finance/inverse-finance/getting-started/glossary) - Quick reference for all terms * [FAQ](/inverse-finance/inverse-finance/getting-started/guide-for-beginners) - Common questions answered * [Discord](https://discord.gg/3pTPChAU) - Ask the community {% hint style="warning" %} **Remember:** DeFi is powerful but carries risks. Always start small, experiment with amounts you can afford to lose, and gradually increase exposure as you gain confidence and understanding. Never invest money you need for living expenses. {% endhint %} *** # Guide for Beginners Get started with Inverse Finance in minutes. This guide walks you through common first actions step-by-step, from setting up your wallet to earning your first yield or borrowing your first DOLA. {% hint style="info" %} **Choose your starting point below** based on what you want to accomplish. Each path includes everything you need to get started, including prerequisites and next steps. {% endhint %} *** ### Before You Begin: Essential Setup **You'll need three things to use Inverse Finance:** #### 1. A Web3 Wallet A wallet lets you interact with DeFi protocols and stores your crypto assets. **Recommended wallets:** * **MetaMask** - Most popular, easy to use, browser extension + mobile app * **Coinbase Wallet** - Good for Coinbase users, user-friendly * **Rainbow** - Beautiful interface, mobile-focused * **Rabby** - Advanced features, multi-chain support **Don't have a wallet yet?** 1. Visit [metamask.io](https://metamask.io) (or your preferred wallet) 2. Download the browser extension or mobile app 3. Create a new wallet and **securely store your seed phrase** 4. Never share your seed phrase with anyone {% hint style="danger" %} **Critical Security:** Your seed phrase is the master key to your funds. Write it down on paper, store it securely offline, and never type it into any website or share it with anyone claiming to be "support." {% endhint %} #### 2. ETH for Gas Fees All transactions on Ethereum cost gas fees paid in ETH. **How much ETH you need:** $10-20 worth is sufficient for multiple transactions **How to get ETH:** * Buy directly in your wallet (MetaMask has built-in purchase) * Buy on a centralized exchange (Coinbase, Kraken, Binance) and withdraw to your wallet * Use an on-ramp service (MoonPay, Ramp, Transak) {% hint style="info" %} **Important:** Always keep some ETH in your wallet. Even if you're depositing DOLA or other tokens, you need ETH to pay gas fees for the transactions. {% endhint %} #### 3. Choose Your Network Inverse Finance's suite of products are predominantly available only on Ethereum Mainnet. DOLA is made available on select L2s like Optimism, Base, and Arbitrums. For more, visit the [yield opportunities](/inverse-finance/inverse-finance/yield-opportunities) section. | Network | Best For | Gas Costs | | -------------------- | -------------------------------- | ----------------------- | | **Ethereum Mainnet** | Full features, highest liquidity | $2-10 per transaction | | **Optimism** | Lower fees, fast transactions | $0.50-2 per transaction | | **Base** | Lowest fees, growing ecosystem | $0.10-1 per transaction | | **Arbitrum** | Low fees, established DeFi | $0.50-2 per transaction | **For this guide, we'll use Ethereum Mainnet** (most features available). Once you're comfortable, you can bridge assets to L2s for lower costs. {% hint style="success" %} **Tip:** Start on Ethereum Mainnet to access all features. Once you understand the basics, explore L2s to save on gas fees for regular usage. {% endhint %} *** ### Choose Your Path Select the action you want to take first. Each path is complete and standalone—you can come back and try other paths anytime. {% tabs %} {% tab title="Earn Yield with sDOLA" %} #### Earn Yield with sDOLA * **Best for:** Conservative users who want passive yield on stablecoins * **Time required:** 1-5 minutes * **Difficulty:** 🟢 Beginner * **What you'll need:** DOLA or money to buy DOLA *** **Step 1: Get DOLA** You need DOLA to stake in sDOLA. Here's how to get it: **Option A: Buy DOLA on your DEX or DEX Aggregator of choice** 1. Go to [swap.defillama.com](https://swap.defillama.com/) 2. Click "Connect Wallet" in the top right 3. Select your wallet (MetaMask, Coinbase Wallet, etc.) 4. Approve the connection in your wallet 5. Navigate to the "Swap" section 6. Select DOLA as the output token 7. Enter the amount of ETH or USDC you want to swap 8. Select a route to perform the swap 9. Review the exchange rate and slippage (keep under 0.5%) 10. Click "Swap" and confirm in your wallet
**Option B: Borrow DOLA on FiRM** If you have crypto collateral and want to borrow instead of buying, see the [Borrow DOLA on FiRM](#borrow-dola-on-firm) tab. {% hint style="info" %} **How much DOLA to get?** Start with a small amount for your first test ($100-500). Once you're comfortable, you can add more. {% endhint %} *** **Step 2: Navigate to sDOLA Staking** 1. Navigate to [inverse.finance](https://inverse.finance/) (connect wallet) 2. Click on "sDOLA" in the navigation menu under Product 3. You'll see the sDOLA staking interface
The interface shows: * **Current APY** - Your expected annual yield * **Your DOLA balance** - How much you can stake * **Your sDOLA balance** - How much you currently have staked * **Exchange rate** - Current DOLA per sDOLA ratio *** **Step 3: Stake Your DOLA** 1. In the "Stake" section, enter the amount of DOLA you want to deposit 2. Click "Approve DOLA" (first-time only) * This gives the sDOLA contract permission to use your DOLA * Confirm the approval transaction in your wallet * Wait for confirmation (usually 15-30 seconds) 3. Click "Stake" after approval completes 4. Review the transaction details: * Amount of DOLA you're staking * Amount of sDOLA you'll receive * Estimated gas fee 5. Confirm the transaction in your wallet 6. Wait for confirmation (15-30 seconds) {% hint style="success" %} **Success!** You're now earning yield. Your sDOLA balance will grow automatically as DBR rewards compound into more DOLA. No claiming needed! {% endhint %} *** **Step 4: Monitor Your Position** 1. Visit [inverse.finance/sDOLA](https://www.inverse.finance/sDOLA) 2. Connect your wallet 3. View your sDOLA position showing: * Current sDOLA balance * Underlying DOLA value (increasing over time) * Total earned yield * Current APY You can check back anytime to see your earnings grow.
*** **What's Happening Behind the Scenes?** Your DOLA is deposited in the sDOLA vault, which: 1. Earns DBR rewards from FiRM borrowing revenue 2. Automatically swaps DBR for more DOLA via auction 3. Compounds the DOLA back into the pool 4. Increases the DOLA value of each sDOLA token **You don't need to do anything.** Just hold sDOLA and it automatically becomes worth more DOLA over time. *** **When You Want to Withdraw** 1. Return to [inverse.finance/sDOLA](https://inverse.finance/sDOLA) 2. Click the "Unstake" tab 3. Enter the amount of sDOLA you want to withdraw 4. Click "Unstake" and confirm the transaction 5. You'll receive your original DOLA plus all accrued yield **No withdrawal delays, no penalties.** You can withdraw anytime. {% endtab %} {% tab title="Stake INV for Governance + Yield" %} #### Stake INV for Governance + Yield * **Best for:** Users who want governance participation and protocol revenue share * **Time required:** 1-5 minutes * **Difficulty:** 🟡 Intermediate * **What you'll need:** ETH to buy INV, or existing INV tokens *** **Step 1: Buy INV Tokens** **Where to buy:** * **Curve Finance** (deepest liquidity): INV/WETH pool * **DEX Aggregators** (best price finder): Input INV address `0x41d5d79431a913c4ae7d69a668ecdfe5ff9dfb68` * Try: CowSwap, 1inch, LlamaSwap, Matcha **How to buy (using a DEX aggregator):** 1. Go to [swap.cow.fi](https://swap.cow.fi) or your preferred aggregator 2. Connect your wallet 3. Paste INV contract address: `0x41d5d79431a913c4ae7d69a668ecdfe5ff9dfb68` 4. Enter the amount of ETH you want to spend 5. Review the exchange rate and price impact 6. Set slippage to 1% (increase if transaction fails) 7. Click "Swap" and confirm in your wallet
{% hint style="warning" %} **Verify the contract address!** Always double-check you're buying the correct token. Scam tokens with similar names may exist. The official INV address is `0x41d5d79431a913c4ae7d69a668ecdfe5ff9dfb68.` {% endhint %} **How much INV to buy?** * Start with a modest amount ($500-1,000 worth) * Remember: 1 INV = 1 vote in governance * Consider your voting intentions and yield goals *** **Step 2: Navigate to INV Staking on FiRM** 1. Go to [app.inverse.finance/firm](https://app.inverse.finance/firm) 2. Connect your wallet (if not already connected) 3. Find the "INV" market in the list of available markets 4. Click on the INV row to open the market page *** **Step 3: Stake Your INV** 1. On the INV market page, you'll see the staking interface 2. Click the "Deposit" tab 3. Enter the amount of INV you want to stake 4. Review the information shown: * Current xINV APY (anti-dilution rewards) * DBR streaming APY (real yield rewards) * Combined total APY 5. Click "Approve INV" (first-time only) * Confirm the approval transaction in your wallet * Wait for confirmation 6. Click "Deposit" after approval completes 7. Confirm the staking transaction in your wallet
**What happens:** * Your INV is deposited and you receive xINV receipt tokens * You start earning xINV anti-dilution rewards (auto-compounds) * You start earning DBR streaming rewards (claim manually) * You retain full voting rights on your staked INV {% hint style="success" %} **Congratulations!** You're now earning protocol revenue and can participate in governance. Your staked INV also maintains its voting power for DAO decisions. {% endhint %} *** **Step 4: Claim Your DBR Rewards** Unlike xINV rewards (which auto-compound), DBR rewards need to be claimed manually. 1. Return to the INV market page on FiRM 2. You'll see "Claimable DBR" showing your earned rewards 3. Click "Claim DBR" 4. Confirm the transaction in your wallet 5. DBR tokens will appear in your wallet **What to do with claimed DBR:** * **Hold it** if you plan to borrow DOLA later (rate locking) * **Sell it** on Curve or via the DBR auction for immediate value * **Use it** to borrow DOLA on FiRM at zero interest {% hint style="info" %} **Claiming strategy:** Gas fees cost $10-20, so wait until you have meaningful DBR accumulated before claiming (e.g., $50+ worth). Claim monthly or quarterly rather than daily. {% endhint %} *** **Step 5: Vote in Governance** Your staked INV gives you voting power. Here's how to use it: 1. Join the Inverse Finance Discord 2. Follow discussions in the #governance-general channel 3. Read proposals on the Forum 4. When votes go live vote directly on-chain for binding proposals 5. Connect your wallet and cast your vote 6. Your voting power = your INV + xINV balance {% hint style="success" %} **Your voice matters:** Even small INV holdings contribute to governance. Participating in votes helps shape protocol direction and risk management decisions. {% endhint %} *** **When You Want to Unstake** 1. Return to [inverse.finance/firm](https://inverse.finance/firm) 2. Navigate to the INV market 3. Click "Withdraw" tab 4. Enter the amount of xINV to withdraw (or click "Max") 5. Click "Withdraw" and confirm the transaction 6. Your INV will be returned to your wallet **No lock periods or penalties.** You can unstake anytime. {% hint style="info" %} **Before unstaking:** Make sure you've claimed all pending DBR rewards. Once you unstake, you stop earning DBR, so claim first to maximize your yields. {% endhint %} {% endtab %} {% tab title="Borrow DOLA on FiRM" %} #### Borrow DOLA on FiRM * **Best for:** Users who want leverage or liquidity without selling crypto * **Time required:** 2-5 minutes * **Difficulty:** 🟡 Intermediate to 🔴 Advanced * **What you'll need:** Crypto collateral (ETH, wstETH, etc.), DBR tokens, understanding of liquidation risk {% hint style="warning" %} **Higher complexity:** Borrowing involves more steps and risk than staking. Make sure you understand collateral factors, liquidation risk, and DBR mechanics before proceeding. Read our Core Concepts if anything is unclear. {% endhint %} *** **Step 1: Choose Your Collateral** FiRM accepts [multiple collateral types](/inverse-finance/inverse-finance/products/firm/firm-collateral-guide). Each has different characteristics: | Collateral | Collateral Factor | Liquidation Factor | Daily Limit | Best For | | ------------------ | ----------------- | ------------------ | ----------- | ------------------------------ | | **WETH** | 85% | 75% | 2M | General borrowing | | **wstETH** | 85% | 75% | 2M | ETH staking yields + borrowing | | **CVX** | 65% | 100% | 500k | Convex governance participants | | **INV** | 30% | 50% | 25k | INV holders wanting leverage | | **sUSDe** | 90% | 70% | 1M | Pure DOLA short | | **wstUSR-DOLA LP** | 90% | 100% | 5M | Resolv Points Farming | *** **Step 2: Get Collateral (If You Don't Have It)** 1. Use CowSwap, 1inch, LlamaSwap or any other DEX aggregator 2. Under "You Buy", search for your desired collateral from the dropdown menu 3. Under "You Sell", select ETH or any other asset that you wish to sell for your chosen collateral 4. Set slippage to 0.3%-1% (increase if transaction fails) 5. Click "Swap" and confirm in your wallet {% hint style="info" %} **How much collateral?** Plan to deposit at least $1,000 worth for your first borrow. Smaller amounts work, but gas fees become a larger percentage of your position. {% endhint %} *** **Step 3: Get DBR (Borrowing Rights)** You need DBR to borrow DOLA. Remember: 1 DBR = right to borrow 1 DOLA for 1 year. **Calculate how much DBR you need:** * Planning to borrow 1,000 DOLA for 6 months? Need 500 DBR * Planning to borrow 5,000 DOLA for 1 year? Need 5,000 DBR * Planning to borrow 2,000 DOLA for 90 days? Need \~493 DBR **Where to buy DBR:** **Option A: Use Helper Function built into FiRM Market page** 1. Go to your desired market and toggle the Auto-buy DBR button 2. Select duration to cover and select one between Days, Months, and Years 3. Check slippage before confirming
**Option B: DBR XY=K Auction (often better prices)** 1. Visit [inverse.finance/xykauction](https://inverse.finance/xykauction) 2. Enter the amount of DBR you want 3. Review the DOLA cost 4. Confirm the purchase 5. DBR is minted directly to you **Option C: DEX Aggregator** 1. Use CowSwap, 1inch, LlamaSwap or similar 2. Input DBR address: 0xad038eb671c44b853887a7e32528fab35dc5d710 3. Swap DOLA, ETH, or stables for DBR {% hint style="info" %} **Pro tip:** Buy 20-30% more DBR than you minimally need. This buffer protects you from forced replenishment if you hold the loan longer than expected. DBR that reaches zero triggers expensive forced purchases. {% endhint %} *** **Step 4: Deposit Collateral and Borrow DOLA on FiRM** 1. Go to [inverse.finance/firm](https://inverse.finance/firm) 2. Find your collateral type in the markets list 3. Click on that market to open it 4. Click the "Deposit & Borrow" tab 5. Enter the amount of collateral to deposit and how much DOLA to borrow 6. The interface shows: * Borrow Limit * Liquidation Price * DBR depletion date 7. Click "Approve \[Token]" (first-time only) 8. Confirm approval in your wallet 9. Click "Deposit & Borrow" after approval completes 10. Confirm the deposit & borrow transaction
**What's happening:** * Your collateral goes into a Personal Collateral Escrow (PCE) * This is YOUR isolated smart contract—problems in other markets can't affect it {% hint style="warning" %} **Safety Check:** Even if FiRM allows you to borrow up to 82% of collateral value, **stay below 75%**. This buffer protects you from liquidation during normal market volatility. A 10-15% price drop in your collateral can trigger liquidation if you're too leveraged. {% endhint %} *** **Step 6: Monitor Your Position** **Immediately after borrowing:** 1. Visit [inverse.finance/dashboard](https://inverse.finance/dashboard) 2. View your FiRM position showing: * Current debt amount * Collateral value * Collateral ratio * Remaining DBR balance * Days until DBR depletes * Liquidation price {% hint style="warning" %} **Position management is critical:** Unlike staking (set and forget), borrowing requires active monitoring. You must: * Watch your collateral ratio * Ensure DBR doesn't run out * Be ready to add collateral or repay debt if market drops * Check positions more frequently during high volatility {% endhint %} *** 3. Watch two critical metrics: * Collateral Ratio (liquidation risk) - your collateral ratio = (Debt / Collateral Value) × 100 * DBR Balance (replenishment risk) If your collateral value drops or DOLA debt increases, your ratio rises. Stay in the safe zone. **How to improve your ratio:** * **Add more collateral** (deposit more of the same token) * **Repay some debt** (reduces numerator) * **Both** for maximum safety margin Your DBR balance decreases every second while you have debt. **Check your "Days until depletion" metric regularly** **If DBR is running low:** * Buy more DBR immediately (prices may rise if you wait) * Plan to repay your loan before DBR hits zero * Never let DBR reach zero—forced replenishment is expensive (5-10x normal prices) *** **When You Want to Repay** **Partial repayment:** 1. Go to your FiRM market 2. Click "Repay" tab 3. Enter amount to repay 4. Confirm transaction 5. Your debt decreases, collateral ratio improves **Full repayment:** 1. Click "Repay" tab 2. Click "Max" to repay all debt 3. Confirm transaction 4. Your debt is cleared 5. You can now withdraw all collateral **After repaying:** * Unused DBR stays in your wallet (keep for future borrows or sell) * Withdraw your collateral if you want * Or leave it deposited for future borrowing *** **What to Do With Borrowed DOLA** Now that you have DOLA, here are common strategies: **Earn yield:** Deposit borrowed DOLA into sDOLA or jrDOLA to earn while borrowing (yield farming / "carry trade") **Liquidity provision:** Provide DOLA to DEX pools for trading fees + incentives **Use in other DeFi:** DOLA is available on many protocols for lending or farming **Real-world use:** Spend DOLA for real needs without selling your crypto collateral **Leverage:** Borrow DOLA, buy more of your collateral, re-deposit, borrow more (advanced, risky) {% hint style="warning" %} **Risk management:** Whatever you do with borrowed DOLA, remember you still need to monitor and maintain your collateral ratio. Don't forget about your open borrow position while chasing yields elsewhere. {% endhint %} {% endtab %} {% tab title="Provide Liquidity" %} #### Provide Liquidity * **Best for:** Experienced DeFi users comfortable with impermanent loss * **Time required:** 5-10 minutes * **Difficulty:** 🔴 Advanced * **What you'll need:** DOLA + pairing token (USDC, ETH, etc.), understanding of IL risk {% hint style="warning" %} **Advanced users only:** Liquidity provision involves impermanent loss risk, smart contract risk, and requires active management. Only proceed if you understand these risks. See Core Concepts for background. {% endhint %} *** **Understanding Liquidity Provision** When you provide liquidity, you: 1. Deposit two tokens into a liquidity pool (e.g., DOLA + USDC) 2. Receive LP tokens representing your share of the pool 3. Earn trading fees when people swap using the pool 4. Potentially earn additional rewards (incentive programs) 5. Face impermanent loss if token prices diverge *** **Step 1: Choose Your Pool** **For beginners to liquidity provision:** Start with **DOLA/stablecoin Pool on Curve such as DOLA/sUSDe, DOLA/wstUSR, or DOLA-sUSDS** * Both are stablecoins, minimal impermanent loss * High liquidity, established pool * Straightforward to understand *** **Step 2: Get Both Tokens** To minimize slippage, you need values of both tokens in the pair according to the pool's current balance. **Example for DOLA/sUSDe:** * If providing $1,000 of liquidity * You may need $700 DOLA + $300 sUSDe * The pool will accept a small imbalance but works best with equal values **How to get the tokens:** * Buy DOLA (see Tab 1 above) * Buy sUSDe on any DEX or transfer from an exchange * Check you have enough of both before proceeding *** **Step 3: Navigate to the Pool** 1. Go to [curve.fi](https://curve.fi) 2. Search for "DOLA" in the pools list 3. Select the DOLA/sUSDe pool 4. Click "Deposit"
*** **Step 4: Add Liquidity** 1. Enter the amount of DOLA you want to deposit 2. Enter the amount of sUSDe (or use "Balanced" option) 3. Review: * Current pool balance * Your expected LP tokens * Pool fees and slippage 4. Click "Approve DOLA" (first time) 5. Click "Approve sUSDe" (first time) 6. After approvals, click "Deposit" 7. Confirm the transaction **You now have LP tokens** representing your share of the pool. *** **Step 5: Stake LP Tokens (Optional, for Rewards)** Many pools offer additional rewards if you stake your LP tokens. 1. Look for "Stake" or "Gauge" option on the pool page 2. Click "Stake LP tokens" 3. Approve the LP token 4. Confirm the staking transaction **You now earn:** * Trading fees (automatically compound into LP value) * Incentive rewards (CRV, INV, or other tokens) {% endtab %} {% endtabs %} *** ### After Completing Your First Action **Congratulations!** You've successfully: * ✅ Set up your wallet and got connected * ✅ Completed your first transaction on Inverse Finance * ✅ Earned your first yield or borrowed your first DOLA *** ### What's Next? #### Keep Learning **Deepen your knowledge:** * Read [Core Concepts](/inverse-finance/inverse-finance/getting-started/core-concepts) to understand DeFi fundamentals * Study the specific products you're using: * [sDOLA](/inverse-finance/inverse-finance/products/tokens/dola/sdola) documentation * [INV staking](/inverse-finance/inverse-finance/products/tokens/inv/inv-staking-guide) guide * [FiRM borrowing](/inverse-finance/inverse-finance/products/firm) * Explore [Yield Opportunities](/inverse-finance/inverse-finance/yield-opportunities) for more strategies #### Expand Your Portfolio **Try other products:** * If you started with sDOLA, try staking INV for governance participation * If you staked INV, explore borrowing on FiRM with your collateral * If you borrowed, consider providing liquidity for additional yields * Check out jrDOLA if you're comfortable with higher risk/reward *** ### Important Reminders {% hint style="warning" %} **Security First:** Inverse Finance team will never DM you first. Never share your seed phrase. Always verify URLs before connecting your wallet. {% endhint %} {% hint style="warning" %} **Understand the Risks:** All DeFi carries smart contract risk, market risk, and various other risks. Only deposit funds you can afford to lose. Read our Risk Disclosure before using any products. {% endhint %} {% hint style="warning" %} **Start Small:** Your first transaction is about learning, not maximizing returns. Use small amounts, understand the mechanics, then scale up gradually as you gain confidence. {% endhint %} *** # Glossary * **Accelerated Leverage Engine (ALE) -** The Accelerated Leverage Engine allows advanced FiRM users to instantly multiply borrowing power up to 10x by looping borrowed DOLA into additional collateral at fixed rates, offering greater predictability than variable-rate leverage tools. * **Bridge -** A mechanism for transferring assets like DOLA or DBR across blockchain networks (e.g., from Ethereum to Base), enabling multichain utility. * **Collateral -** Assets such as wstETH or sUSDe that are deposited on FiRM to secure fixed-rate DOLA loans. * **Collateral Factor -** The percentage of a collateral asset’s value that can be borrowed against, set by governance to manage risk and volatility. * **Cover -** Decentralized insurance-like protection for sDOLA and FiRM assets, underwritten by Nexus Mutual and governed by OpenCover DAO for claims approval. * **Daily Borrow Limits -** Daily borrow limits cap the amount of DOLA that can be borrowed per market each day on FiRM, managing protocol risk and enabling support for higher-risk collateral assets over time. * **DBR (DOLA Borrowing Right) -** A tokenized interest mechanism used to pay fixed-rate loan costs on FiRM. One DBR allows users to borrow 1 DOLA per year. * **DBR Streaming -** DBR tokens are continuously streamed to users who stake INV on FiRM, offering real yield with rates governed by the Fed Chair multisig. * **DBR XY=K Auction -** A permissionless, automated Dutch auction where users buy DBR with DOLA at a dynamically adjusting price, helping repay protocol bad debt and deepen DBR liquidity for borrowers. * **Delegate -** An address or individual authorized to vote on governance proposals on behalf of INV holders. * **DOLA -** A decentralized, overcollateralized, debt-backed USD-pegged stablecoin minted via fixed-rate borrowing on FiRM. * **DOLA Fed -** DOLA Feds are governance-controlled smart contracts that expand or contract DOLA supply in lending markets (like FiRM) or DEX liquidity pools to help manage DOLA's peg. By adjusting supply based on demand and earning LP rewards for the DAO, Feds enable precise, scalable peg stabilization while minimizing inflation and maximizing capital efficiency. * **DOLA Savings Account (DSA) -** The DSA smart contract allows users to stake their DOLA stablecoin and earn DBR. While the main use of the DOLA Savings Account (DSA) is sDOLA, users and third party integrators who believe DBR is currently underpriced may utilize the DSA. * **FiRM (Fixed-Rate Lending Market) -** Inverse Finance’s flagship lending protocol where users can borrow DOLA at fixed rates using approved collateral. * **Fixed-Rate Loan -** A loan on FiRM with a stable borrowing cost over time, paid using DBR instead of variable rate interest. * **Frontier -** Inverse Finance’s deprecated variable-rate lending market, previously known as Anchor. * **Governor Mills -** The on-chain governance contract responsible for executing DAO proposals on Inverse Finance. * **Governance Proposal -** An on-chain or forum-submitted proposal to modify protocol parameters, funding decisions, or governance structure. * **INV Staking Rewards -** Protocol incentives distributed to users who stake INV, often supplemented by DBR emissions. * **Inverse Finance -** A decentralized protocol offering fixed-rate borrowing, DOLA stablecoin issuance, and DAO-controlled monetary tools. * **Isolated Market -** A FiRM structure where each collateral asset is siloed, preventing risk from spreading between markets. * **Liquidation -** The process of selling off a borrower’s collateral if it becomes undercollateralized or fails to maintain a positive DBR balance. * **Looping (Leveraged Borrowing) -** A technique where users borrow DOLA, swap it for more collateral, and redeposit it to increase leverage—enabled more efficiently through ALE. * **LP Tokens (Liquidity Provider Tokens) -** Tokens received for providing liquidity on AMMs, which can be used as yield-bearing collateral on FiRM. * **Personal Collateral Escrows (PCE’s) -** FiRM uses Personal Collateral Escrows to isolate each user’s collateral by token and wallet, improving security versus pooled collateral models and reducing systemic risk. * **Pessimistic Price Oracle (PPO) -** FiRM’s security-enhancing oracle system that uses the lower of Chainlink’s current price or the 48-hour low (adjusted for collateral factor) to prevent borrowing against inflated collateral. * **PT Tokens (Principal Tokens) -** Tokens representing the principal of a yield-bearing asset from protocols like Pendle, redeemable at maturity and usable as collateral on FiRM. * **Replenishment -** A high-cost mechanism where a third party tops up a user’s DBR balance to prevent liquidation if it turns negative. * **sDOLA (Yield-Bearing DOLA) -** A synthetic, auto-compounding stablecoin that earns DBR yield from FiRM and converts it into more DOLA over time. * **sINV (Yield-Bearing INV) -** An ERC-4626 wrapper around staked INV where DBR rewards are auto-swapped for INV and reinvested, leading to a growing exchange rate. * **Stablecoin -** A digital asset, such as DOLA, designed to maintain a stable value pegged to the U.S. dollar, typically overcollateralized and used in DeFi. * **Variable-Rate Loan -** A loan where borrowing costs fluctuate based on market liquidity and supply-demand dynamics. * **Yield-Bearing Collateral -** Collateral that generates passive income while being used to secure a fixed-rate DOLA loan on FiRM. *** # Products # FiRM FiRM is Inverse Finance's flagship lending protocol that lets you borrow DOLA stablecoin at fixed interest rates using a variety of crypto collateral. Unlike traditional DeFi lending where rates fluctuate unpredictably, FiRM gives you certainty about borrowing costs through the DBR system, where you purchase and hold borrowing rights that stream over time. Whether you are borrowing DOLA for the first time or looking to optimize an existing position, this guide will walk you through everything you need to know about using FiRM safely and effectively. {% embed url="" %} *** ### Navigate FiRM Documentation

🌱 Getting Started

New to FiRM? Start here

Step-by-step walkthrough of borrowing your first DOLA, from depositing collateral to managing your position.

Get Started →

🔐 Collateral Options

Compare all collateral types

Detailed guide to choosing the right collateral for your needs, with risk profiles and borrowing capacity for each asset.

Explore Collateral →

⚡ Advanced Features

Maximize your efficiency

Learn about Accelerated Leverage Engine, DBR optimization strategies, and how to use advanced FiRM capabilities.

Advanced Guide →

🛡️ Security & Safety

How FiRM protects you

Understand Personal Collateral Escrows, Pessimistic Price Oracles, and the multiple security layers that safeguard your position.

Security Details →

⚠️ Liquidations & Replenishments

Protect your position

Learn how liquidations work, what triggers forced DBR replenishment, and strategies to avoid both scenarios.

Avoid Liquidation →

❓ Frequently Asked Questions

Quick answers

Common questions about borrowing, collateral, DBR, and troubleshooting issues with expandable answers.

View FAQs →

*** # Getting Started with FiRM This guide walks you through borrowing your first DOLA on FiRM. The entire process takes 5-10 minutes and involves four main steps: deposit collateral, buy DBR, borrow DOLA, and monitor your position. {% hint style="info" %} **First time?** Read [Core Concepts](/inverse-finance/inverse-finance/getting-started/core-concepts) if terms like "collateral factor" or "liquidation" are unfamiliar. {% endhint %} *** ### What You'll Need Before starting, make sure you have: * **Supported collateral** - WETH, wstETH, or another accepted asset * **ETH for gas** - $10-20 worth for transaction fees * **10 minutes** - For your first borrow (faster after) {% hint style="warning" %} **Risk Warning:** Borrowing involves liquidation risk if collateral value drops. Start with conservative amounts and maintain safe loan-to-value ratios below 70%. {% endhint %} *** ### How FiRM Works FiRM's fixed-rate borrowing works in four steps: 1. **Deposit collateral** → Choose Your Collateral Select from 20+ approved collateral types including stable and volatile assets, staking derivatives, governance tokens, yield-bearing assets, principal tokens, and liquidity pool tokens. Each has different collateral factors and risk profiles. Your collateral goes into an isolated smart contract (PCE) specific to you and your token type. This isolation prevents issues in one market from affecting your other positions. 2. **Buy DBR tokens** → Buy DBR tokens equivalent to your intended borrow amount × duration. DBR can be purchased on Curve, through the XY=K auction, or from DEX aggregators. (1 DBR = borrow 1 DOLA for 1 year) 3. **Borrow DOLA** → With collateral deposited and sufficient DBR in your wallet, borrow DOLA up to your collateral factor limit. DOLA appears in your wallet immediately. 4. **DBR streams over time** → Your DBR balance decreases continuously while you have an outstanding loan. Monitor your DBR balance to avoid forced replenishment. Manage Your Position Add collateral to increase borrowing capacity, repay debt to reduce risk, purchase more DBR to extend your loan, or close your position entirely anytime. Unlike traditional fixed-rate loans, FiRM loans never expire. You can hold positions indefinitely as long as you maintain sufficient DBR and collateral. *** {% stepper %} {% step %} ### Method 1: One-Transaction Borrow This method deposits collateral, purchases DBR, and borrows DOLA all at once. #### Step-by-Step Process 1. **Navigate to FiRM** * Go to [app.inverse.finance/firm](https://app.inverse.finance/firm) * Connect your wallet * Select your desired collateral market from the list 2. **Open the Borrow Interface** * Click the **"Deposit & Borrow"** tab * You'll see the integrated borrowing interface
3. **Configure Your Position** The interface shows multiple input fields that work together: Deposit collateral, Borrow DOLA, Duration to cover (check "Auto-buy DBR" to include purchase in transaction). 4. **Review the Transaction** Before confirming, check the Summary tab to ensure values make sense.
5. **Execute** * Click **"Approve \[Collateral Token]"** (first time only) * Wait for approval transaction * Click **"Borrow"** (or "Deposit & Borrow" if depositing new collateral) * Review the transaction summary in your wallet and confirm the transaction **What just happened in one transaction:** * ✅ Your collateral was deposited into your Personal Collateral Escrow * ✅ DBR was purchased and added to your wallet * ✅ DOLA was borrowed and sent to your wallet * ✅ Your position is now active and DBR begins decaying {% hint style="success" %} **Success!** Your borrowed DOLA is in your wallet. View your position at [inverse.finance/dashboard](https://inverse.finance/dashboard). {% endhint %} {% endstep %} {% step %} ### Method 2: Pre-Purchase DBR If you believe DBR prices will rise, or want to lock in today's rates for future borrowing, buy DBR separately first. #### Where to Buy DBR **Option A: XY=K Auction** 1. Go to [inverse.finance/xykauction](https://inverse.finance/xykauction) 2. Enter DBR amount 3. Review DOLA cost 4. Click "Buy DBR" and confirm **Option B: Curve Finance** 1. Go to [curve.fi](https://curve.fi) and find triDBR pool 2. Swap DOLA/USDC → DBR **Option C: DEX Aggregator** * Use CowSwap, 1inch, or LlamaSwap * DBR address: `0xad038eb671c44b853887a7e32528fab35dc5d710` **After buying DBR:** When you're ready to borrow, follow Method 1 but **uncheck "Buy DBR"** - the interface will use your existing DBR balance instead. {% endstep %} {% step %} ### Method 3: Deposit Collateral First You might deposit collateral without borrowing if you: * Are still deciding how much to borrow * Plan to borrow later when DBR prices are better * Want to separate the two actions for accounting/tax reasons #### Deposit-Only Process 1. Navigate to your market on FiRM 2. Click the **"Deposit"** tab (not "Borrow") 3. Enter collateral amount 4. Click "Approve" then "Deposit" Your collateral is now deposited. You can borrow later by: 1. Returning to the same market 2. Clicking **"Borrow"** tab 3. Following Method 1, but leaving "Collateral to deposit" blank 4. The interface uses your already-deposited collateral {% endstep %} {% endstepper %} *** ### Flexible Position Management Once you have an active position, FiRM offers multiple ways to adjust it:
Borrow More DOLA (No New Collateral Needed) If you have unused borrowing capacity: 1. Go to your market on FiRM 2. Click **"Borrow"** tab 3. Enter additional DOLA amount to borrow and confirm transaction **Requirements:** * Must have sufficient DBR in wallet (or buy more during transaction) * Existing collateral must provide the borrowing capacity {% hint style="info" %} **Common use case:** You deposited $10,000 collateral and borrowed $5,000 DOLA conservatively. Later, you want to borrow another $2,000 against the same collateral without depositing more. {% endhint %}
Add Collateral (Improve Your Ratio) To increase your borrowing capacity or safety margin: 1. Go to your market on FiRM 2. Click **"Deposit"** tab 3. Enter additional collateral amount and confirm transaction Your collateral ratio improves immediately, giving you: * More buffer against liquidation * Ability to borrow more DOLA if desired * Peace of mind during volatile markets
Buy More DBR (Extend Your Loan) Your DBR decreases continuously while borrowing. To extend your loan: **Option A: During any FiRM transaction** * Check "Buy DBR" in the interface * Adjust the amount/duration * It's included in your next deposit/borrow/repay transaction **Option B: Standalone DBR purchase** * Buy DBR on Curve, auction, or aggregators * No need to interact with FiRM * Your loan automatically extends as long as you have DBR {% hint style="info" %} **Pro tip:** Check your DBR balance monthly. Buy more when you're down to 30 days remaining to avoid forced replenishment. {% endhint %}
Repay Debt **Partial repayment:** 1. Go to your market 2. Click **"Repay"** tab 3. Enter amount to repay and confirm transaction **Full repayment:** 1. Click **"Repay"** tab 2. Click "Max" button and confirm transaction 3. Your debt is cleared and you can withdraw all collateral **After repaying:** * Unused DBR stays in your wallet (keep for future borrows or sell) * Withdraw collateral if desired, or leave it for future borrowing
*** ### Quick Safety Checklist Set up these safeguards immediately after borrowing: * [ ] Bookmark the [dashboard](https://inverse.finance/dashboard) * [ ] Set price alerts for your collateral (use CoinGecko/TradingView) * [ ] Make note of your liquidation price * [ ] Set calendar reminder to check position periodically * [ ] Note when you need to buy more DBR *** ### What to Do With Your DOLA Popular uses for borrowed DOLA: * **Earn yield:** Stake in sDOLA or jrDOLA or deposit in DOLA DEX liquidity pools * **Cross-chain:** Bridge to Optimism, Base, or Arbitrum for lower-fee operations * **Spend or hold:** Use for any purpose while keeping your crypto collateral exposure {% hint style="info" %} **Positive carry strategy:** If DOLA yield > your DBR cost, you earn the spread while maintaining stable DOLA exposure. {% endhint %} *** ### Next Steps **Learn more about FiRM:** * [FiRM Collateral Guide](/inverse-finance/inverse-finance/products/firm/firm-collateral-guide) - Compare all collateral options with risk profiles * [Advanced FiRM Features](/inverse-finance/inverse-finance/products/firm/advanced-firm-features) - Accelerated Leverage Engine and optimization strategies * [FiRM Security & Safety](/inverse-finance/inverse-finance/products/firm/firm-security-and-safety) - How PCE, PPO, and other mechanisms protect you * [FiRM Liquidations & Replenishments](/inverse-finance/inverse-finance/products/firm/firm-liquidations-and-replenishments) - Understanding and avoiding liquidation and replenishment * [FiRM FAQs](/inverse-finance/inverse-finance/products/firm/firm-faqs) - Common questions and troubleshooting **Optimize your strategy:** * Learn DBR mechanics for rate locking and hedging * Explore multi-collateral positions for diversification * Join Discord to discuss strategies with other borrowers *** # FiRM Collateral Guide FiRM accepts 20+ collateral types across stablecoins, ETH derivatives, governance tokens, and yield-bearing assets. This guide helps you choose the right collateral for your borrowing needs based on risk tolerance, capital efficiency, and your specific goals.
{% hint style="info" %} **New to borrowing?** Start with [Getting Started with FiRM](/inverse-finance/inverse-finance/products/firm/getting-started-with-firm) for a step-by-step walkthrough before diving into collateral selection. {% endhint %} *** ### Collateral Categories #### Stablecoins and Stablecoin LPs **Assets:** sUSDe, sUSDS-DOLA, scrvUSD-sDOLA, sUSDe-DOLA, USR-DOLA, wstUSR-DOLA These are USD-pegged assets or liquidity pool tokens composed of stablecoins. They offer high capital efficiency with collateral factors typically between 90-92%. **Advantages:** Minimal liquidation risk due to stable value, highest borrowing capacity per dollar deposited, predictable positions even during market volatility. **Risks:** Smart contract risk from underlying protocols (Ethena, Sky, Resolv, Curve), depeg risk if stablecoin loses its peg, yields and position profitability are dependant on reward token price action. **Best for:** Borrowers seeking positive carry trades who want to maximize capital efficiency with calculated liquidation risk. *** #### Stablecoin Yield Vaults **Assets:** yv-sUSDe-DOLA, yv-wstUSR-DOLA, yv-sUSDS-DOLA, yv-scrvUSD-sDOLA, yv-USR-DOLA These are built atop of Yearn Finance's autocompounding [yVaults v2](https://docs.yearn.fi/getting-started/products/yvaults/v2) that deposit stablecoins or stablecoin LPs into yield strategies. You earn vault yields while using the vault tokens as collateral. They offer the high capital efficiency with collateral factors typically between 90-92%. **Advantages:** Earn yield on collateral while borrowing (potential positive carry), high capital efficiency similar to base stablecoins, vault strategies reduce volatile reward token risk. **Risks:** Additional smart contract risk from Yearn vaults, slightly more complex than holding base stablecoins. **Best for:** Borrowers comfortable with Yearn's vault strategies seeking positive carry trades who want to maximize capital efficiency with calculated liquidation risk. *** #### Wrapped Ethereum and Bitcoin **Assets:** wETH, wBTC, cbBTC Wrapped Ethereum and tokenized Bitcoin on Ethereum, allowing HODLers to maintain exposure while enabling borrowing. **Advantages:** Maintains full ETH or BTC price exposure while accessing liquidity, high liquidity for easy entry and exit, well-established with deep oracle support. **Risks:** Price volatility can trigger liquidation, requires active position management during market drops. **Best for:** ETH and/or BTC holders who want liquidity without selling, those bullish long-term, borrowers comfortable managing volatile collateral. *** #### Governance Tokens **Assets:** CVX, INV Governance tokens like those from Convex Finance and Inverse Finance that retain voting rights when staked as collateral on FiRM. **Advantages:** Retain full governance voting power while borrowing, earn staking rewards on collateral, participate in protocol governance without giving up liquidity. **Risks:** Higher price volatility than blue chip volatile assets or stablecoins, liquidity can be thinner. **Best for:** Active governance participants who need liquidity, protocols and DAOs wanting to borrow against treasury holdings while maintaining voting power, users who want to leverage governance positions. **Why this matters:** Most lending protocols require you to forfeit voting rights when depositing governance tokens. FiRM's Personal Collateral Escrow system allows you to stake and vote with your tokens while simultaneously borrowing against them. *** #### Liquid Staking Derivative Tokens **Assets:** wstETH, cvxCRV, st-yCRV These tokens represent staked positions in underlying assets that continue earning staking or protocol rewards while serving as collateral. **Advantages:** Your collateral actively earns yields while you borrow against it, creating potential for positive carry strategies. These tokens maintain exposure to their underlying assets while adding a yield layer, making them capital-efficient collateral choices. Staking rewards may accrue automatically depending on the collateral without requiring manual claims. **Risks:** Price volatility of underlying assets can trigger liquidation. Separate ecosystem health considerations and market dynamics require additional monitoring. Additional smart contract risk from staking protocols (Lido, Convex, Yearn) beyond FiRM itself. **Best for:** Users who want to maintain staking positions while accessing liquidity, those seeking additional yield on collateral and are confident in the long-term value of staked assets. *** #### Principle Tokens **Assets:** None presently available Principle tokens represent the principal component of yield-bearing assets that have been split into separate principal and yield tokens through protocols like Pendle. When you hold a PT, you're entitled to redeem the underlying asset at maturity while forgoing the yield during the holding period. **Advantages:** Locked-in yield for a defined maturity date provides yield certainty as both sides of the equation (collateral yield, borrowing costs) are fixed. **Risks:** Time-dependent value that increases predictably toward maturity but may fluctuate unpredictably beforehand. Liquidity can decrease as maturity approaches, requires understanding of PT mechanics and maturity dates. **Best for:** Sophisticated users who understand fixed-income mechanics, borrowers comfortable with time-bound collateral that appreciates toward par, users who seek guaranteed yields while minimizing risk assumptions. *** ### Next Steps **Ready to borrow?** Follow the [Getting Started with FiRM](/inverse-finance/inverse-finance/products/firm/getting-started-with-firm) guide with your chosen collateral. **Want to optimize?** Read [Advanced FiRM Features](/inverse-finance/inverse-finance/products/firm/advanced-firm-features) for leverage strategies and position optimization. **Concerned about safety?** Study [FiRM Security & Safety](/inverse-finance/inverse-finance/products/firm/firm-security-and-safety) to understand how PCE and PPO protect your position. **Worried about liquidation?** Learn prevention strategies in [FiRM Liquidations & Replenishments.](/inverse-finance/inverse-finance/products/firm/firm-liquidations-and-replenishments) *** # Advanced FiRM Features Once you're comfortable with basic FiRM borrowing, these advanced features let you optimize positions, automate leverage, and implement sophisticated strategies. This guide covers the Accelerated Leverage Engine, DBR optimization techniques, and position management strategies for experienced users. *** ### Accelerated Leverage Engine (ALE) The ALE automates the process of leverage looping— flash-minting DOLA, swapping it for more collateral (via 1inch, Odos, etc), depositing that collateral, and then borrowing DOLA to burn the previously flash-minted DOLA; repeating until you reach your target leverage ratio. There is no fee charged for the service. #### How ALE Works Traditional leverage looping requires multiple manual transactions: borrow DOLA → swap to collateral → deposit → borrow more → repeat. Each step costs gas and takes time. ALE executes this entire sequence in a single transaction. **Example without ALE:** You deposit 10 ETH worth $30,000 and want 3x leverage. You must manually execute 8-10 transactions over 15-20 minutes, paying gas for each step. **Example with ALE:** You deposit 10 ETH and specify 3x target leverage. ALE executes one transaction that loops your position automatically, resulting in \~30 ETH exposure from your 10 ETH deposit. #### Using ALE 1. Navigate to your FiRM market 2. Toggle the Leverage / Looping option 3. Specify your target leverage multiple (2x, 3x, 4x, etc.) 4. Review the preview showing: * Final collateral amount * Total debt * Liquidation Price * DBR depletion date 5. Confirm the transaction 6. ALE executes the entire loop atomically
{% hint style="warning" %} **Leverage amplification:** Leveraged positions amplify both gains and losses. A 10% collateral price drop with 3x leverage means a 30% loss to your effective position value. Higher leverage dramatically increases liquidation risk. Only use high leverage if you can actively monitor and manage the position. {% endhint %} *** ### DBR Optimization Strategies DBR pricing fluctuates based on demand for DOLA borrowing. DBR prices rise when demand for DOLA loans increases and fall when demand decreases. Strategic DBR purchasing can significantly reduce your effective borrowing costs. #### Rate Locking Strategy You can lock in low rates by purchasing DBR during low-demand periods and using it later when rates are higher. When buying significant amounts of DBR, market orders can cause substantial price impact in liquidity pools. Limit orders through venues such as [cow.fi](cow.fihttps://cow.fi) let you accumulate DBR gradually at your target price without moving the market. This is particularly relevant when purchasing DBR for multi-month or multi-year loans. #### DBR Yield Farming Alternative If you stake INV on FiRM, you earn DBR streaming rewards that can cover borrowing costs entirely or significantly reduce them. Calculate your DBR earnings from INV staking versus purchasing DBR outright. If you earn 1,000 DBR annually from staking but only need 500 DBR for your DOLA loan, you can sell the excess 500 DBR for additional income. This effectively makes your borrowing cost negative. #### Monitoring DBR Market Conditions Inverse Finance provides real-time DBR market data at [inverse.finance/transparency/dbr](https://www.inverse.finance/transparency/dbr). This dashboard shows current market conditions, historical trends, and key metrics for making informed DBR purchase decisions.
Supply metrics reveal the total DBR in circulation, the rate at which DBR is being issued through staking rewards and auctions, and how much DBR is being burned by active borrowers. The burn rate is particularly important—when more DBR is being burned than issued, supply contracts and prices typically rise. {% hint style="info" %} **Set a routine:** Check the DBR transparency page monthly when you review your FiRM positions. This takes 2-3 minutes and helps you make better timing decisions for DBR purchases worth hundreds or thousands of dollars in borrowing costs. {% endhint %} *** ### DOLA Peg Arbitrage Strategy FiRM values DOLA at exactly $1.00 regardless of its market price. This creates arbitrage opportunities when DOLA trades off-peg, allowing sophisticated users to profit from peg deviations. #### How the Peg Assumption Works When you borrow or repay on FiRM, the protocol treats 1 DOLA = $1.00 for all calculations. Your debt is denominated in DOLA units, not dollar values. This is different from oracles that update based on market prices. **Why this matters:** If DOLA trades at $0.99 on the open market but FiRM assumes $1.00, you can buy it cheaply on the market and repay your FiRM debt for 1% savings. a +1% arbitrage on a 10x leveraged position can result in significant gains. #### Borrow When Peg Is Strong, Repay When Peg is Weak When DOLA trades closer to peg, borrowing from FiRM gives you tokens worth more than when DOLA trades further away from it's $1.00 soft-peg. When DOLA trades below peg, repaying debt becomes cheaper as you can buy DOLA on the market for less than the dollar value of debt you're extinguishing. {% hint style="info" %} **Timing matters:** Execute this strategy during periods of strong DOLA demand such as new yield opportunities launching, major liquidity incentives attracting capital, or cross-chain deployments creating temporary supply constraints. {% endhint %} {% hint style="warning" %} **Peg may not recover:** DOLA could remain off-peg longer than anticipated or move further from your target price. If the arbitrage takes weeks or months to close, DBR costs eat into profits. {% endhint %} *** ### Yield Optimization with Borrowed DOLA Borrowing costs money (DBR), so optimizing what you do with borrowed DOLA is critical to achieving positive net returns. #### Positive Carry Strategies Positive carry occurs when yields on borrowed DOLA exceed your DBR costs, resulting in net profit from the borrow itself without considering collateral performance. Borrowed DOLA can either be used to leverage up your collateral directly on FiRM (using ALE), be staked in sDOLA or jrDOLA or be deployed in liquidity pools for trading fees and incentive rewards. DOLA is also available on multiple chains with varying yield opportunities. For a complete overview of yield opportunities across the Inverse Finance ecosystem, see [Yield Opportunities](/inverse-finance/inverse-finance/yield-opportunities). To evaluate if a strategy is working, track your all-in returns monthly. Start with what you're earning on borrowed DOLA (sDOLA yield, LP fees, whatever strategy you chose). Subtract your DBR costs (total DBR spent ÷ amount borrowed ÷ time held). Add any yields your collateral earned while deposited (wstETH staking, INV rewards, vault yields). Include collateral price changes if you've closed or adjusted the position. {% hint style="warning" %} **Chasing yields without considering risk.** A 20% APY on a risky protocol might sound better than sDOLA's 6%, but if the protocol gets exploited or tokens crash, you lose the borrowed DOLA and still owe your FiRM debt. Match yield opportunities to your risk tolerance and only use borrowed funds for strategies you deeply understand. {% endhint %} *** ### Common Mistakes to Avoid **Overleveraging in calm markets:** Low volatility makes high leverage feel safe. Markets can shift rapidly—maintain conservative ratios even when recent history suggests you could push higher. **Neglecting compounding costs:** Gas fees, swap fees, bridge fees, and slippage costs compound across multiple transactions in advanced strategies. Calculate all-in costs before executing complex strategies. A 0.5% slippage on a swap might seem small but compounds across 5-6 transactions in a strategy. **Chasing yields blindly:** Highest advertised APY doesn't account for risks, sustainability, or hidden costs. Evaluate smart contract risk, impermanent loss, lock periods, and likelihood of rewards continuing before deploying capital. **Assuming peg stability:** DOLA peg arbitrage requires DOLA to return to $1.00 eventually. Don't assume this happens quickly or at all. Fundamental issues could cause prolonged depegs. Always have exit plans if the peg doesn't normalize. **Underestimating gas costs:** Complex strategies on Ethereum mainnet can cost $100-500+ in total gas fees. Ensure position size justifies costs. A $5,000 position paying $300 in gas fees needs to earn 6% just to break even on setup costs. *** ### Next Steps **Master the basics first:** If anything in this guide felt unclear, revisit [Getting Started with FiRM](/inverse-finance/inverse-finance/products/firm/getting-started-with-firm) and practice basic borrowing before attempting advanced features. **Understand your collateral:** Read [FiRM Collateral Guide](/inverse-finance/inverse-finance/products/firm/firm-collateral-guide) to deeply understand the assets you're leveraging. **Know the risks:** Study [FiRM Liquidations & Replenishments](/inverse-finance/inverse-finance/products/firm/firm-liquidations-and-replenishments) before using leverage or complex strategies. **Get help:** Join discussions in [Discord](https://discord.gg/jFYSXQqe) where experienced users share strategies and risk management techniques. *** # FiRM Security & Safety FiRM implements defense-in-depth security through six distinct protective mechanisms: Personal Collateral Escrows isolate positions, Pessimistic Price Oracles use conservative valuations, Borrow Limits prevent manipulation, Contract Whitelisting blocks exploits, Staleness Thresholds guard against oracle failures, and continuous Risk Working Group oversight manages evolving threats. {% hint style="warning" %} **Defense in depth:** No single security mechanism is perfect. FiRM's strength comes from layering multiple independent protections so attackers must overcome several obstacles simultaneously. {% endhint %} *** ### Risk Working Group Oversight FiRM's security architecture is continuously evaluated and enhanced by the Risk Working Group (RWG), a team of risk management specialists who analyze protocol vulnerabilities, propose parameter adjustments, and develop frameworks for safe collateral onboarding. The RWG publishes detailed security assessments, collateral risk analyses, and parameter recommendations in the [Risk Working Group Digest](https://docs.inverse.finance/risk-working-group-digest/). This transparency allows the community to understand the reasoning behind security decisions and participate in governance discussions about risk management. {% hint style="info" %} **Stay informed:** Read the [RWG Digest](https://docs.inverse.finance/risk-working-group-digest/) to understand ongoing risk assessments and proposed security enhancements. {% endhint %} *** ### Personal Collateral Escrows (PCE) Every FiRM position is isolated in its own Personal Collateral Escrow—a dedicated smart contract that holds only your collateral for one specific token type. This architecture provides critical security and functionality advantages over traditional pooled lending systems. #### How PCE Works When you deposit collateral on FiRM, the protocol deploys a new smart contract escrow specifically for you and that token. Your WETH goes into a separate escrow from your INV position. Your escrow is completely separate from other users' escrows. No sharing, no pooling, no cross-contamination. **Contained exploit risk:** If an attacker finds a vulnerability in a specific collateral type's escrow implementation, only positions in that collateral type are at risk. Your other positions using different collateral remain completely safe. Compare this to pooled systems where exploiting one asset's oracle could drain the entire protocol. A compromised WETH market cannot affect your CVX market, your INV market, or any other position you hold. #### Functional Benefits Beyond Security **Governance rights preservation:** PCE enables staking governance tokens as collateral while retaining voting rights. Your CVX in your personal escrow can vote on Curve proposals. Your INV continues earning staking rewards and governance participation. Traditional lending requires you to forfeit these rights when depositing. **No rehypothecation:** Your collateral in your PCE is never lent to others, never used for protocol operations, never deployed in strategies without your explicit consent. It sits in your escrow until you withdraw it after repaying debt. **Simplified position tracking:** Each escrow holds one token type for one user. No complex accounting across pooled positions. No wondering if protocol-wide issues affect your specific collateral. Just check your personal escrows to understand exact positions. *** ### Pessimistic Price Oracles (PPO) FiRM's Pessimistic Price Oracles evaluate collateral using the lower of two values: the current Chainlink price and a 48-hour trailing low price, adjusted by the collateral factor. This conservative approach protects against flash loan manipulation and temporary price spikes while providing stability for long-term borrowers. PPO uses a two-step process to determine your collateral's borrowing value: {% stepper %} {% step %} **Compare two prices** * Current Chainlink oracle price (real-time market price) * 48-hour low price (lowest price in past 2 days) * Take the lower of these two values {% endstep %} {% step %} **Apply collateral factor** * Divide the selected price by the collateral factor * Result is your borrowable value per unit of collateral {% endstep %} {% step %} **Example:** Assume you deposit wETH with an 80% collateral factor: * Current Chainlink price: $1,500 * 48-hour low: $1,000 * PPO selects: $1,000 (lower value) * Borrowable value: $1,000 ÷ 0.80 = $1,250 per wETH Even though wETH currently trades at $1,500, FiRM values it at $1,250 for borrowing purposes. This $250 buffer ($1,500 - $1,250) provides protection against rapid downward price movements. {% endstep %} {% endstepper %} #### Protection Against Manipulation **Flash loan resistance:** Attackers cannot pump an asset's price for a single block or transaction to extract more borrowing capacity. PPO ignores momentary spikes because the 48-hour low anchors valuations to sustained price levels. Even if someone manipulates wETH to $2,000 for one block, PPO still uses the 48-hour low of $1,000. **Pump-and-dump immunity:** Coordinated pumps that briefly inflate prices cannot be exploited for over-borrowing. By the time an asset's price pumps sustainably enough to raise the 48-hour low, the manipulation window has passed and costs become prohibitive. **Oracle failure safety:** If Chainlink experiences issues and reports incorrect prices temporarily, the 48-hour low provides a fallback anchor preventing extreme over-valuations. The conservative approach means FiRM errs toward undervaluing collateral rather than overvaluing it. {% hint style="info" %} **Conservative by design:** PPO intentionally gives you less borrowing capacity than current market prices suggest. This protects both you and the protocol from rapid downside moves and manipulation. {% endhint %} *** ### Borrow Limits FiRM implements two types of borrow limits that work together to prevent manipulation, ensure efficient liquidations, and provide fair access across all timezones. #### Minimum Debt Amount Each market enforces a minimum debt threshold per user. You cannot borrow less than this minimum amount in any single position. **Why minimums exist:** Tiny borrow positions create inefficiency in liquidation systems. If someone borrows $10 of DOLA, liquidating that position costs more in gas fees than the debt itself. Attackers could create thousands of small positions to clog liquidation queues, preventing healthy positions from being efficiently managed during market stress. **Griefing prevention:** Minimum debt requirements curtail malicious strategies where attackers open many small positions to disrupt protocol operations. Each position must represent meaningful economic value that justifies the computational overhead of managing it. **Efficient capital allocation:** Higher minimums encourage borrowers to consolidate into fewer, larger positions rather than fragmenting across many small ones. This improves protocol efficiency and reduces governance overhead in managing parameters. #### Rolling 24-Hour Borrow Limit Instead of resetting daily limits at a fixed time (e.g., midnight UTC), FiRM employs a continuously replenishing cap over a 24-hour rolling window. This prevents exploitation while ensuring fair access regardless of timezone. **How rolling limits work:** Each market has a maximum amount that can be borrowed in any 24-hour period. As time passes, the oldest borrows "expire" from the window and capacity replenishes. If someone borrows 1M DOLA at 3:00 PM today, that capacity becomes available again at 3:00 PM tomorrow. **Preventing reset exploitation:** Fixed-time resets create arbitrage opportunities where sophisticated users borrow maximum amounts right before reset, then immediately borrow again after reset, effectively doubling access. Someone could borrow 1M DOLA at 11:59 PM, then another 1M at 12:01 AM, bypassing daily limits. Rolling windows eliminate this loophole. **Fair global access:** Users in different timezones have equal access to borrow capacity. Asian users aren't disadvantaged because reset happens during their night hours. European users don't get first access every morning. Capacity replenishes continuously based on when previous borrows occurred. *** ### Contract Address Whitelist To mitigate flash loan exploits and atomic manipulation attempts, FiRM allows only whitelisted contracts to borrow DOLA at the Borrow Controller level. Any address can deposit collateral, but borrowing is restricted to EOAs (Externally Owned Accounts and pre-approved smart contracts. FiRM's implementation includes protection against EIP-7702 delegated contract calls introduced in Ethereum's Pectra upgrade. This ensures that even with new Ethereum features allowing EOAs to temporarily act like contracts, FiRM's security model remains intact. #### Protection Mechanisms **Flash loan blocking:** Flash loans typically execute within single transactions where contracts borrow assets, manipulate markets, repay loans, and extract profits atomically. By restricting borrowing to whitelisted addresses, FiRM prevents attackers from using flash-borrowed collateral to manipulate FiRM's markets within the same transaction. **Reentrancy prevention:** The whitelist works alongside checks like `tx.origin == msg.sender` (ensuring the caller is the ultimate transaction originator) and `msg.sender.code.length == 0` (verifying the caller isn't a contract) to block unauthorized reentrancy attacks where contracts call back into FiRM during execution to manipulate state. #### Legitimate Contract Integration **Approval process:** Protocols wanting to integrate FiRM borrowing into their smart contracts can propose whitelist additions through governance. All whitelisted contracts are publicly visible on-chain and documented in governance proposals, allowing users to understand which contracts have borrowing privileges and why. **Examples of whitelisted contracts:** Yield aggregators that automate FiRM borrowing as part of larger strategies, protocol-owned liquidity managers that borrow DOLA for specific purposes, or advanced position management tools that help users optimize their borrows. {% hint style="info" %} **Security tradeoff:** Whitelisting reduces FiRM's permissionlessness (contracts can't integrate freely) but significantly hardens defenses against the most common DeFi exploit vectors. This tradeoff prioritizes user fund safety over maximal composability. {% endhint %} *** ### Staleness Threshold FiRM safeguards against oracle disruptions and stale price data by enforcing a staleness threshold: if price feeds fail to update within a governance-defined timeframe, new borrows are temporarily blocked until fresh prices become available. If Chainlink or other oracle providers experience outages, their last reported price might become increasingly inaccurate as real market prices diverge. An attacker could exploit stale prices to borrow against overvalued collateral. Staleness thresholds prevent this by halting borrows when data is questionable. Every collateral market on FiRM has a maximum allowed age for price data, typically set between 1-24 hours depending on the asset's oracle characteristics. Before allowing a borrow transaction, FiRM checks when the oracle last updated. **If price is fresh (updated recently):** Borrowing proceeds normally. **If price is stale (hasn't updated within threshold):** New borrows are rejected with an error. Existing positions remain unaffected—you can still add collateral or repay debt, just not increase debt. Borrowing automatically resumes once oracles update. No governance action needed; the system self-heals when data becomes available again. {% hint style="info" %} **Rare but important:** Most users will never encounter staleness blocks because oracle providers maintain high uptime. But during major infrastructure failures or attacks, this mechanism provides critical protection. {% endhint %} *** ### Using FiRM Safely While FiRM implements multiple security layers, you should still follow best practices to protect your positions: **Start conservatively:** Use well-below maximum collateral factors for your first positions. Borrow at 60-70% even when markets allow 82%. This gives you room to learn while maintaining safety margins. **Diversify collateral types:** Don't concentrate all borrowing in one market. Spread across multiple collateral types to benefit from PCE isolation. **Monitor oracle health:** Stay informed about Chainlink and oracle provider status. Major outages might temporarily restrict borrowing through staleness thresholds. **Understand your collateral:** Research underlying protocols for yield-bearing assets. sUSDe security depends on Ethena, Yearn vaults depend on vault strategies. Know the dependency chain. **Keep emergency capital:** Maintain extra collateral or DOLA available to quickly respond to market movements or position deterioration. **Follow governance:** Security parameters can change via governance votes. Stay informed about proposals affecting borrow limits, staleness thresholds, or whitelist additions. *** ### Learn More **Understand other FiRM safety features:** * [FiRM Liquidations & Replenishments](/inverse-finance/inverse-finance/products/firm/firm-liquidations-and-replenishments) - How liquidation works and how to avoid it * [FiRM Collateral Guide](/inverse-finance/inverse-finance/products/firm/firm-collateral-guide) - Risk profiles of different collateral types * [Advanced FiRM Features](/inverse-finance/inverse-finance/products/firm/advanced-firm-features) - Optimization strategies with safety in mind **Deep dive into risk management:** * [Risk Working Group Digest](https://docs.inverse.finance/risk-working-group-digest/) - Detailed risk assessments and parameter recommendations * [Audits](/inverse-finance/inverse-finance/technical/audits) - Full security audit reports * [Bug Bounty](/inverse-finance/inverse-finance/technical/bug-bounty) - Report vulnerabilities responsibly **Get help:** * [FiRM FAQs](/inverse-finance/inverse-finance/products/firm/firm-faqs) - Common security questions answered * [Discord](https://discord.gg/jFYSXQqe) - Report concerns or ask questions *** # FiRM Liquidations & Replenishments Liquidations and forced replenishments are the two main risks when borrowing on FiRM. Both result from inadequate position management but trigger under different conditions. Liquidation occurs when your collateral value drops too low relative to your debt. Your collateral is sold to repay the loan, and you lose your deposited assets. Forced Replenishment occurs when your DBR balance hits zero while you still have debt. DBR is automatically purchased at premium prices and added to your debt. Both are preventable through active position management. Neither happens suddenly without warning if you monitor your position regularly. {% hint style="info" %} **Prevention is key:** Understanding these mechanisms helps you maintain healthy positions. Most liquidations and replenishments are completely avoidable with proper monitoring. {% endhint %} *** ### Liquidations If the value of a borrower's debt exceeds the value of their maximum permitted credit limit (determined by the **Collateral Factor** % parameter setting for the market), a portion or the entirety of their debt (determined by the **Liquidation Factor** % parameter setting for the market, which sets the upper limit) can be repaid by a liquidator. In return, the liquidator can seize the lenders collateral with a bonus (determined by the **Liquidation Incentive** % parameter setting for the market). When your position becomes eligible for liquidation, anyone can act as a liquidator by repaying your debt in exchange for your collateral at a discount. **The liquidation process:** {% stepper %} {% step %} **Position becomes liquidatable** Your collateral hits your positions' liquidation price. The position is now visible to liquidation bots monitoring the protocol. {% endstep %} {% step %} **Liquidator repays your debt** A liquidator (usually an automated bot) repays some or all of your DOLA debt to the protocol. {% endstep %} {% step %} **Liquidator receives your collateral** In exchange, they receive your collateral and a bonus incentive, compensating the liquidator for taking the position. {% endstep %} {% step %} **Your position is closed or reduced** If fully liquidated, your position closes and you receive nothing. If partially liquidated, your remaining collateral stays deposited with reduced debt. {% endstep %} {% step %} **Example** * Bob intends to borrow from FiRM's wETH market, which is configured to have the following parameters: Collateral Factor: 80%, Liquidation Factor: 100%, Liquidation Incentive: 5%. * Bob's collateral (1 wETH) is worth $4000 at the time of deposit, and with this the maximum he can borrow is 0.8 ETH worth of DOLA (0.8 \*$4000 = $3200). * Bob borrows 0.65 WETH worth of DOLA ($2,600), which puts his collateral ratio (Debt / Collateral Factor) at 81.25%, generally viewed as a ratio at high risk for liquidation. * Sometime after Bob's deposit and borrow, the USD price of WETH drops dramatically by 25% in one block to $3,000. This decreases the maximum amount of DOLA that Bob can borrow (his credit limit) from $3,200 to $2,400. * The amount of Bob’s loan ($2,600) is now at $200 more (108%) than his credit limit ($2,400) and the loan is now considered insolvent. Bob can no longer withdraw his collateral from FiRM or borrow more until he has either repaid part of his debt or deposited more collateral to increase his credit limit. * In a liquidation scenario, however, and before Bob can take direct action, an external liquidator notices that Bob’s loan is insolvent. The liquidator repays Bob’s entire (100%) outstanding debt of $2600 to FiRM. At the same time, the liquidator seizes $2600 worth of Bob’s WETH plus an additional 5% of his WETH as a liquidation “bonus”, or $160 in WETH. * Bob now has no outstanding DOLA debt on FIRM and after liquidation costs, has $120 in WETH remaining on FiRM. {% endstep %} {% endstepper %} **Who are liquidators?** Mostly automated bots run by sophisticated operators who monitor all FiRM positions continuously. They profit from the liquidation penalty while providing a crucial service keeping the protocol solvent. When your position becomes liquidatable, expect liquidation within a few blocks depending on profitability and gas prices. *** ### Replenishment Forced replenishment occurs when your DBR balance reaches zero while you still have outstanding debt. Unlike liquidation, replenishment addresses insufficient borrowing rights. DBR decreases continuously at a rate proportional to your debt. With 5,000 DOLA borrowed, you consume approximately 13.7 DBR per day (5,000 / 365). If you purchased exactly enough DBR for your intended duration but hold the loan longer, or if you forget to top up, your balance eventually hits zero. The **DBR replenishment rate**, expressed in APR, is charged to borrowers when their DBR balance falls to 0 whilst holding an open loan position on FiRM, triggering a replenishment event. When this occurs, anyone can call `forceReplenish` on the borrower's position—the full replenishment cost is added to the borrower's DOLA debt, while the **replenishment incentive** determines how that cost is split between the caller and the DAO Treasury. If borrowers fall into the replenishment zone, the replenishment rate encourages them to add more DBR to their balance to avoid additional costs. Borrowers with a continuous DBR deficit will eventually accumulate enough debt in the protocol to be liquidated, unless they terminate their loan or continue to add collateral. The replenishment rate must be higher than the DBR price to act as an effective incentive for borrowers to maintain adequate DBR balances, as it represents a de facto cost ceiling on borrowing in FiRM. **The replenishment process:** {% stepper %} {% step %} **Your DBR hits zero** You still have outstanding debt but no remaining borrowing rights. Your wallet with the open position has a 0 DBR balance. {% endstep %} {% step %} **Replenisher acts** Anyone (usually bots) can call the `forceReplenish` function on your position, specifying how much DBR to add. {% endstep %} {% step %} **DBR is purchased at the replenishment rate** DBR is acquired and charged to your position at the replenishment rate of 54.75% APR (0.15% per day). This rate is higher than the market cost of DBR, creating an incentive for borrowers to maintain adequate DBR balances rather than relying on forced replenishment. {% endstep %} {% step %} **Cost added to your debt** The replenishment cost is added to your DOLA debt. Your debt increases without you receiving any DOLA. A portion of this cost (10%) goes to the replenisher as a reward, with the remainder going to the DAO Treasury. {% endstep %} {% step %} **Example** * You have 5,000 DOLA debt and 0 DBR remaining * You need 1,000 DBR to cover your position * The replenishment rate of 54.75% APR is applied to the value of the DBR deficit * The replenishment cost is added to your DOLA debt * If you remain in DBR deficit, replenishments can repeat, compounding your debt over time {% endstep %} {% endstepper %} **Who replenishes positions?** Similar to liquidators, automated bots monitor for zero-DBR positions and execute replenishments to earn the premium spread. They're providing a service (preventing your position from becoming invalid) but at punitive pricing meant to incentivize self-management. *** ### Related Resources **Learn more about FiRM:** * [Getting Started with FiRM](/inverse-finance/inverse-finance/products/firm/getting-started-with-firm) - Borrow your first DOLA * [FiRM Collateral Guide](/inverse-finance/inverse-finance/products/firm/firm-collateral-guide) - Choose the right collateral * [Advanced FiRM Features](/inverse-finance/inverse-finance/products/firm/advanced-firm-features) - Optimization strategies * [FiRM Security & Safety](/inverse-finance/inverse-finance/products/firm/firm-security-and-safety) - How FiRM protects positions * [FiRM FAQs](/inverse-finance/inverse-finance/products/firm/firm-faqs) - Common questions answered **Monitor positions:** * [Dashboard](https://inverse.finance/dashboard) - Your position overview * [Liquidations Transparency](https://inverse.finance/transparency/dbr#Liquidations) - Recent liquidation activity * [Replenishments Transparency](https://inverse.finance/transparency/dbr#Replenishments) - Forced replenishment data * [All Positions](https://inverse.finance/transparency/dbr#Positions) - Protocol-wide position data **Get help:** * [Discord](https://discord.gg/jFYSXQqe) - Ask questions and get support * [Governance Forum](https://forum.inverse.finance/) - Technical discussions *** # FiRM FAQs Answers to common questions about borrowing DOLA on FiRM. Questions are organized by topic—click any question to expand the answer. Can't find what you're looking for? Ask in Discord #support. *** ### Getting Started #### What do I need to borrow on FiRM? You need three things: supported collateral (like wETH, wstETH, stablecoins, or governance tokens), ETH in your wallet for gas fees (budget $50-100 for multiple transactions), and DBR tokens to enable your borrowing position. DBR (DOLA Borrowing Rights) represents your prepaid interest. You buy DBR upfront equivalent to your borrow amount times your intended duration. For example, borrowing 5,000 DOLA for 6 months requires 2,500 DBR. The FiRM interface guides you through acquiring DBR if you don't have it. See our Getting Started with FiRM guide for a complete walkthrough. #### How much can I borrow? Your maximum borrow amount depends on your collateral type and deposit amount. Each asset has a collateral factor—for example, wstETH has an 82% collateral factor, meaning you can borrow up to $82 for every $100 of wstETH deposited. The formula is: **Maximum Borrow = Collateral Value × Collateral Factor** Example: Deposit $10,000 worth of wstETH with 82% collateral factor → Can borrow up to $8,200 DOLA. However, borrowing at maximum capacity is risky. We recommend staying below 70% of your maximum to protect against price volatility. Check the FiRM Collateral Guide for collateral factors on all supported assets. #### What does "fixed-rate" mean on FiRM? Unlike protocols where interest rates change constantly based on supply and demand, FiRM offers true fixed-rate borrowing through the DBR mechanism. When you purchase DBR tokens, you're prepaying your borrowing costs at today's prices. If DBR costs $0.02 each and you buy 1,000 DBR, you've locked in $20 of borrowing costs for borrowing 1,000 DOLA for one year—that's an effective 2% APR that won't change regardless of what happens to rates on other protocols. This certainty allows for accurate budgeting and planning, similar to traditional fixed-rate mortgages but with the flexibility to extend, reduce, or close your position anytime. #### Is there a minimum or maximum borrow amount? Each market has a minimum debt threshold to prevent trivial positions that could clog liquidation mechanisms. Minimums typically range from $100 to $1,000 depending on the collateral type. There's no universal maximum borrow amount—your limit is determined by your collateral value times the collateral factor. However, each market has a total debt ceiling set by governance that caps total borrows across all users. If a market is at its ceiling, you won't be able to borrow until debt is repaid or governance increases the ceiling. Practically, gas fees make very small borrows inefficient. We recommend minimum borrows of $1,000-2,000 to ensure gas costs remain a small percentage of your position. #### How long can I hold a FiRM loan? Indefinitely. Unlike traditional fixed-rate loans with maturity dates, FiRM loans never expire. You can hold your position for days, months, years, or forever as long as you maintain sufficient DBR in your wallet and adequate collateral. This is possible because DBR streams continuously. When your DBR balance gets low, simply buy more to extend your loan—no refinancing, no new terms, no disruption to your position. #### Do I need to repay my loan by a certain date? No. There are no maturity dates, deadlines, or forced repayment schedules. Repay whenever you want—tomorrow, next month, or years from now. The only requirement is maintaining a positive DBR balance. If your DBR hits zero, forced replenishment occurs (expensive), but even this doesn't require repayment—it just adds DBR purchasing costs to your debt. *** ### Collateral Questions #### Which collateral should I use? This depends on your goals, risk tolerance, and existing holdings: **For maximum capital efficiency**: Use stablecoins like sUSDe or sUSDS (85-90% collateral factors). You can borrow nearly your entire deposit value with minimal liquidation risk. **For earning while borrowing**: Choose wstETH (earns staking yields), Yearn vaults (earn strategy yields), or INV (earns anti-dilution + DBR rewards). **For maintaining governance rights**: Only CVX, CRV, and INV retain voting power when deposited as FiRM collateral thanks to Personal Collateral Escrows. **For simplicity and liquidity**: Start with wETH or wstETH—well-understood assets with deep liquidity and straightforward risk profiles. See our FiRM Collateral Guide for detailed comparisons of all 20+ supported assets. #### Can I use multiple types of collateral at once? Yes. Each collateral type creates a separate isolated position in its own Personal Collateral Escrow (PCE). You can have simultaneous borrows against wstETH, INV, and sUSDe with complete independence between positions. This isolation is a key security feature—if one market experiences problems, your other positions remain completely unaffected. Many sophisticated users diversify across multiple collateral types to reduce single-asset concentration risk. #### What happens to my collateral's yields and rewards? Your collateral continues earning yields while deposited: * wstETH continues earning Lido staking rewards (\~3-4% APY) * Yearn vault tokens continue earning vault strategy yields * INV continues earning xINV anti-dilution rewards and DBR streaming rewards * CVX and CRV continue earning their respective staking rewards This is unique to FiRM's Personal Collateral Escrow design. In most lending protocols, deposited assets stop earning their native rewards. #### Can I withdraw my collateral while I have debt? You can withdraw excess collateral that's not required to maintain your current debt. The FiRM interface shows your "available to withdraw" amount, which is any collateral beyond what's needed to maintain the minimum collateral ratio. Example: You deposited $10,000 worth of wETH and borrowed $6,000 DOLA with an 82% collateral factor. Your minimum required collateral is $7,317 ($6,000 ÷ 0.82). You could withdraw up to $2,683 worth of wETH while maintaining your borrow position safely. To withdraw all collateral, you must first repay your entire debt. #### What if my collateral isn't supported? FiRM currently supports 20+ collateral types, but if your preferred asset isn't available, you have several options: Submit a governance proposal to add your desired collateral. New markets require thorough risk analysis and community approval, but governance regularly evaluates new collateral additions based on liquidity, oracle availability, and community demand. Alternatively, swap your assets for supported collateral. For example, if you hold ETH derivatives not yet supported, you could swap to wstETH which is supported. Check our Markets page for the current list of supported collateral and upcoming additions. #### Can I change my collateral type after depositing? Not directly. To switch collateral types, you must: repay your debt fully, withdraw your original collateral, acquire the new collateral type, deposit it into the new market, and re-borrow DOLA. This process involves multiple transactions with gas costs for each, so carefully consider your collateral choice upfront. However, the isolation between markets means you can always open a second position with different collateral without disturbing your first position. *** ### DOLA Borrowing Rights Questions #### What exactly is DBR? DBR (DOLA Borrowing Rights) is an ERC-20 token that represents your right to borrow DOLA on FiRM. Think of it as prepaid interest or a borrowing license. One DBR token gives you the right to borrow one DOLA for one year at zero additional interest. If you want to borrow 5,000 DOLA for six months, you need 2,500 DBR (half the amount since it's half the time). While you have an active loan, your DBR balance decreases continuously at a rate proportional to your debt. When you repay, the DBR consumption stops and remaining DBR stays in your wallet for future use. #### How much DBR do I need? Use this formula: **DBR needed = Borrow Amount × (Duration in days ÷ 365)** Examples: * Borrow 10,000 DOLA for 1 year = 10,000 DBR * Borrow 10,000 DOLA for 6 months = 5,000 DBR * Borrow 10,000 DOLA for 90 days = 2,466 DBR * Borrow 5,000 DOLA for 2 years = 10,000 DBR Always buy 20-30% more than your calculated minimum as a safety buffer. If you underestimate your hold period or forget to top up, this buffer prevents forced replenishment. #### Where do I buy DBR? DBR is available through three main channels: **XY=K Auction** (inverse.finance/xykauction): Often has the best prices, especially during low-demand periods. This is a Dutch auction where price decreases continuously until someone buys. You can purchase any amount of DBR using DOLA. **Curve Finance** (triDBR pool): Good for larger purchases with predictable slippage. Trade DOLA, USDC, or other stablecoins for DBR. Check current liquidity and exchange rates before executing. **DEX Aggregators** (CowSwap, 1inch, LlamaSwap): Compare prices across multiple venues and execute at the best rate. Paste DBR contract address: `[INSERT DBR ADDRESS]` to find the token. #### What happens if I run out of DBR? If your DBR balance reaches zero while you still have outstanding debt, forced replenishment occurs. Anyone can purchase DBR on your behalf and add it to your wallet, with the cost added directly to your DOLA debt. Forced replenishment prices are set at a significant premium (typically 5-10x normal market rates) to incentivize you to manage your DBR balance responsibly rather than relying on replenishment. Example: Normal DBR costs $0.02, but forced replenishment might charge $0.10-0.20 per DBR. For a 5,000 DOLA position requiring DBR top-up, you'd pay $500-1,000 instead of $100 at market rates. **This is completely avoidable**—simply monitor your "days until DBR depletion" and buy more DBR before you run out. #### Can I sell my unused DBR? Yes. DBR is a freely tradeable ERC-20 token. If you repay your loan early or overbought DBR, you can sell excess on Curve, through the XY=K auction, or on DEX aggregators. Many users strategically buy DBR when prices are low (during low borrowing demand) and either use it for future borrows or sell when prices rise (during high demand). This creates a secondary market for rate speculation. #### Does DBR price fluctuate? Yes. DBR trades on open markets and its price reflects supply and demand for DOLA borrowing. When borrowing demand is high, DBR prices rise. When demand is low, prices fall. This creates the effective APR for borrowing: if you pay $0.02 per DBR to borrow for one year, your effective APR is 2%. If DBR costs $0.05, your effective APR is 5%. Track DBR prices to time your purchases. Buying during low-demand periods locks in lower borrowing costs even if rates rise later—this is the fixed-rate advantage. #### Can I earn DBR instead of buying it? Yes, by staking INV on FiRM. INV stakers receive DBR streaming rewards in addition to anti-dilution xINV rewards. The DBR you earn can cover borrowing costs or be sold for income. Current DBR emission rates to INV stakers vary based on governance decisions and protocol revenue. Check the INV Staking page for current APYs. This creates an interesting strategy: stake INV to earn DBR, use that DBR to borrow DOLA against your staked INV, creating leveraged exposure funded by your own DBR earnings. *** ### Liquidation & Replenishment Questions #### When does liquidation happen? Liquidation occurs when your collateral value falls below the minimum required to support your debt. Each market has a liquidation threshold slightly above the collateral factor. For example, with an 82% collateral factor, liquidation typically triggers around 85% loan-to-value ratio. This 3% buffer protects the protocol from accumulating bad debt if prices continue falling. **Calculation example:** * You borrowed $8,000 DOLA against $10,000 wETH (80% LTV) * wETH drops 15% to $8,500 * Your LTV is now 94% ($8,000 / $8,500) * This exceeds the 85% liquidation threshold * Liquidation is triggered The exact liquidation threshold varies by collateral type. Check your market's specific parameters in the FiRM interface or our FiRM Liquidations guide. #### How much do I lose in liquidation? During liquidation, liquidators can repay up to a certain percentage of your debt (typically 50%) in exchange for your collateral at a discounted price. The liquidation penalty is usually 5-10% depending on the market. **Example liquidation:** * You have $8,000 debt backed by $8,500 collateral * Liquidator repays $4,000 of your debt (50%) * They receive $4,200 worth of your collateral ($4,000 + 5% bonus) * You're left with: $4,000 debt and $4,300 collateral * Your position is now healthier (lower LTV) but you lost value The liquidation penalty compensates liquidators for gas costs and incentivizes quick liquidations before positions become severely undercollateralized. #### Can I prevent liquidation? Yes, through proactive position management: **Monitor your collateral ratio**: Check your position weekly at minimum, daily during volatile markets. The dashboard shows your current LTV and liquidation threshold clearly. **Maintain conservative leverage**: Never borrow at maximum capacity. Stay below 70% LTV even if your market allows 82%. This 12-point buffer protects against normal market volatility. **Set price alerts**: Use CoinGecko, TradingView, or similar to alert you when your collateral price drops 10%, 15%, and 20% from deposit price. This gives you time to react. **Keep capital ready**: Have extra collateral or DOLA available to quickly add to your position during drawdowns. Being able to inject capital in minutes can prevent liquidation. **Add collateral or repay debt**: When your LTV enters the warning zone (70%+), immediately add more collateral or repay some debt to restore your safety margin. See our FiRM Liquidations & Replenishments guide for comprehensive prevention strategies. #### What's the difference between liquidation and replenishment? **Liquidation** occurs when collateral value becomes insufficient for your debt. Your collateral is sold to repay the loan. This is triggered by price movements of your collateral asset. **Replenishment** occurs when your DBR balance reaches zero. DBR is purchased on your behalf at premium prices and the cost is added to your debt. This is triggered by time passing, not price movements. Both are preventable: liquidation through maintaining safe collateral ratios, replenishment through monitoring DBR balance and topping up before depletion. #### Can liquidation be reversed or stopped? No. Liquidation executes automatically via smart contracts when thresholds are crossed. There's no appeals process, no manual review, no way to stop it once triggered. This is why prevention is critical. Once you see your collateral ratio entering dangerous territory (above 75%), you must act immediately—add collateral, repay debt, or accept liquidation risk. During extreme volatility, gas prices spike and network congestion increases, making it harder and more expensive to save your position. This is why maintaining substantial safety margins (staying below 70% LTV) is essential. #### What happens to my DBR if I get liquidated? Your DBR stays in your wallet. Liquidation only affects your collateral and debt—it doesn't touch your DBR tokens. If you had excess DBR (more than needed for your remaining debt), you can sell it or use it for future borrows. If you had insufficient DBR when liquidated, the forced replenishment cost will have been added to your debt before liquidation occurred. *** ### Position Management Questions #### How do I add more collateral to my position? Navigate to your market on FiRM, click the "Deposit" tab, enter the additional amount you want to deposit, and confirm the transaction. Your collateral immediately increases and your LTV ratio improves. You don't need to close or modify your existing borrow—additional collateral simply makes your position safer and increases your maximum borrow capacity if you want to borrow more later. #### How do I repay my debt? Go to your market, click the "Repay" tab, enter the amount of DOLA you want to repay (or click "Max" for full repayment), and confirm the transaction. Your debt decreases immediately and your LTV ratio improves. After full repayment, you can withdraw all your collateral. Partial repayments allow you to reduce risk while maintaining access to borrowed DOLA. You need DOLA in your wallet to repay. If you used your borrowed DOLA elsewhere, you'll need to retrieve it or purchase DOLA to repay. #### Can I borrow more without closing my position? Yes, if you have available borrowing capacity. Your maximum borrow is determined by your collateral value times the collateral factor. If you're currently below this maximum, you can borrow additional DOLA anytime. **Example:** * Deposited: $10,000 wstETH (82% collateral factor) * Currently borrowed: $6,000 DOLA * Maximum capacity: $8,200 DOLA * Available to borrow: $2,200 additional DOLA Simply go to the Borrow tab and borrow more. Just ensure you have sufficient DBR to cover the additional borrowed amount times your hold duration. #### How do I close my position completely? Full position closure requires two steps: **Step 1: Repay all debt** * Navigate to your market * Click "Repay" tab * Click "Max" to repay your entire balance * Confirm the transaction **Step 2: Withdraw all collateral** * After debt is zero, click "Withdraw" tab * Click "Max" to withdraw all collateral * Confirm the transaction Your Personal Collateral Escrow remains (it's permanent), but it's empty and you have no active position. You can reuse it anytime by depositing collateral and borrowing again. #### What should I do with my borrowed DOLA? How you use borrowed DOLA depends on your strategy: **Earn yield**: Stake in sDOLA for auto-compounding yields or jrDOLA for enhanced yields with risk. If yields exceed your DBR costs, you're earning positive carry. **Provide liquidity**: Add to Curve, Velodrome, or Balancer pools to earn trading fees and incentives while maintaining DOLA exposure. **Leverage**: Buy more of your collateral asset with borrowed DOLA, deposit it, borrow more, repeat. This creates leveraged exposure (high risk, requires active management). **Real-world use**: Spend DOLA for actual expenses without selling your crypto collateral. This is common for businesses, DAOs, or individuals who need cash flow while maintaining their crypto positions. **Hold as stable value**: Keep DOLA as a stablecoin hedge against volatility in your other holdings. The beauty of FiRM is you have complete flexibility—use borrowed DOLA however you want while maintaining your collateral exposure. *** ### Technical & Advanced Questions #### What is a Personal Collateral Escrow (PCE)? PCE is an isolated smart contract that holds your collateral for a specific market. Each user gets their own PCE for each collateral type they use—your wstETH PCE is separate from your INV PCE, which is separate from other users' PCEs. This isolation is a critical security feature. If one market experiences oracle failures, exploits, or other issues, damage is contained to that market's PCEs. Your positions in other markets remain completely safe. PCEs also enable unique features like retaining governance voting rights. When you deposit INV, CVX, or CRV into your PCE, you can stake those tokens and vote with them while simultaneously borrowing against them—impossible in pooled collateral systems. #### What is the Pessimistic Price Oracle (PPO)? PPO is FiRM's conservative price valuation system. Instead of using a single price feed, PPO takes the lower of two values: the current Chainlink price and a 48-hour low price adjusted by the collateral factor. **Example:** * wETH current price: $3,000 (Chainlink) * wETH 48-hour low: $2,800 * Collateral factor: 82% * PPO calculation: min($3,000, $2,800 / 0.82) = min($3,000, $3,415) * PPO uses: $3,000 (the lower value) This conservative approach protects against flash loan attacks, oracle manipulation, and temporary price spikes. It especially benefits long-term borrowers by preventing false liquidations from brief oracle anomalies. The tradeoff is you get slightly lower borrowing capacity than if FiRM used optimistic pricing, but the safety benefit far outweighs this minor inconvenience. #### How does the rolling 24-hour borrow limit work? Instead of resetting borrow limits at a fixed time (midnight UTC), FiRM uses a continuously replenishing cap. Your available borrow capacity recovers incrementally every second over a 24-hour period. **How it works:** * Market has 1M DOLA daily limit * User borrows 500K DOLA at 3pm Monday * Their personal limit depletes by 500K * Starting at 3pm Tuesday (24 hours later), capacity begins returning * By 3pm Tuesday, they have 500K capacity available again This prevents users from exploiting timezone-based resets where someone could borrow maximum amounts just before midnight, then again just after midnight, effectively double-borrowing. It also ensures fairer access—users in different timezones get equal opportunity rather than advantages going to those who can time the reset. #### Can smart contracts borrow on FiRM? Only whitelisted contracts can borrow DOLA. This restriction prevents flash loan attacks and other exploits where malicious contracts could manipulate markets within a single transaction. Any address can deposit collateral, but the Borrow Controller checks if `msg.sender` is whitelisted before allowing DOLA borrows. This creates a security perimeter around the most sensitive operation (minting DOLA) while keeping deposits permissionless. Legitimate protocols wanting to integrate FiRM borrowing can request whitelist approval through governance proposals with security audits. #### What are the contract addresses? **Core FiRM Contracts:** * Borrow Controller: `[INSERT ADDRESS]` * DBR Token: `[INSERT ADDRESS]` * DOLA Token: `[INSERT ADDRESS]` **Market-Specific Contracts:** Each collateral market has its own set of contracts including the market contract and Personal Collateral Escrow implementation. See our Smart Contracts page for the complete list of all market contracts and their addresses. Always verify contract addresses through multiple official sources (docs, Discord, app.inverse.finance) before interacting. #### Has FiRM been audited? Yes, FiRM has undergone multiple comprehensive security audits. Review the [Audits](/inverse-finance/inverse-finance/technical/audits) page for more. *** ### Troubleshooting #### Transaction keeps failing - what's wrong? Common causes and solutions: **Insufficient gas**: Increase your gas limit in MetaMask/wallet settings. FiRM transactions can be complex and may need higher limits than the estimated amount. **Not enough ETH**: Ensure you have enough ETH to cover gas fees. Even if you have the tokens you're depositing, you need ETH for transaction costs. **Approval needed**: For first-time interactions with a market, you must "approve" the token before depositing. Complete the approval transaction, wait for confirmation, then retry your deposit/borrow. **Insufficient DBR**: If borrowing, verify you have enough DBR in your wallet for your intended borrow amount and duration. The error message should specify if this is the issue. **Slippage (for swaps)**: If you're swapping to get collateral or DBR, increase slippage tolerance to 1-2% to account for price movement during transaction processing. **Network congestion**: During high gas price periods, transactions may fail if you're using low gas settings. Increase gas price or wait for network congestion to decrease. #### I don't see DBR in my wallet after buying DBR is there—your wallet just doesn't display it yet because it's not automatically recognized. **To add DBR to MetaMask:** 1. Open MetaMask 2. Scroll to bottom of token list 3. Click "Import tokens" 4. Paste DBR contract address: `[INSERT DBR ADDRESS]` 5. Token symbol: DBR 6. Decimals: 18 7. Click "Add Custom Token" 8. Confirm DBR will now appear in your token list with your correct balance. #### My position isn't showing on the dashboard Several possible reasons: **Blockchain confirmation delay**: Transactions need time to confirm and propagate. Wait 1-2 minutes then refresh the page. **Cache issue**: Clear your browser cache or try opening in an incognito/private window. **Wrong network**: Verify your wallet is connected to Ethereum Mainnet (or whatever network you borrowed on). If connected to wrong network, positions won't display. **Transaction didn't complete**: Check Etherscan using your wallet address to verify your transactions actually completed. You may need to retry a failed transaction. **Dashboard loading error**: Sometimes the dashboard has temporary loading issues. Disconnect and reconnect your wallet, or try accessing from a different device. If the problem persists, verify on Etherscan that your transactions confirmed, then ask in Discord #support-and-bugs with your wallet address and transaction hashes. #### Can't withdraw collateral even though debt is repaid Check these issues: **Debt not fully repaid**: Even 0.01 DOLA of remaining debt prevents full collateral withdrawal. Click "Repay Max" to ensure complete repayment including any accrued amounts. **DBR still streaming**: If you have any debt, DBR is still being consumed. Verify your debt is actually zero before attempting withdrawal. **Transaction failed**: The repayment transaction may have failed. Check Etherscan to verify it completed successfully. **Wrong market**: Ensure you're viewing the correct collateral market. If you have multiple positions, you might be looking at the wrong one. Once debt is confirmed at exactly zero, you should be able to withdraw all collateral immediately. #### Collateral ratio showing as unhealthy but I'm sure it's safe Verify using these steps: **Check actual numbers**: Look at your debt amount and collateral value directly, don't just trust the ratio display. Calculate manually: (Debt / Collateral Value) × 100 = Your actual LTV%. **Price volatility**: If your collateral is volatile (ETH, BTC, governance tokens), prices may have moved since you last checked. Refresh the page to get current prices. **PPO pricing**: Remember FiRM uses Pessimistic Price Oracle, which may value your collateral lower than spot prices you see elsewhere. This is intentional and conservative. **Different collateral factor than expected**: Verify your market's actual collateral factor. If governance recently changed it, your safe borrowing amount may have decreased. If you're still confused, share your specific numbers in Discord #support and the community can help verify if there's a display bug or if you genuinely need to add collateral. *** ### Still Have Questions? **Can't find your answer here?** We have several support channels: [**Discord**](https://discord.gg/jFYSXQqe): Fastest way to get help from the community and team. Join Discord [**Governance Forum**](https://forum.inverse.finance/): For detailed technical questions or discussions. Visit Forum **Documentation**: Explore our other FiRM guides for deeper dives on specific topics: * [Getting Started with FiRM](/inverse-finance/inverse-finance/products/firm/getting-started-with-firm) * [FiRM Collateral Guide](/inverse-finance/inverse-finance/products/firm/firm-collateral-guide) * [Advanced FiRM Features](/inverse-finance/inverse-finance/products/firm/advanced-firm-features) * [FiRM Security & Safety](/inverse-finance/inverse-finance/products/firm/firm-security-and-safety) * [FiRM Liquidations & Replenishments](/inverse-finance/inverse-finance/products/firm/firm-liquidations-and-replenishments) **Twitter**: Follow [@InverseFinance](https://x.com/InverseFinance) for updates and announcements. *** # Tokens # INV INV is the governance and value accrual token of Inverse Finance. Holding INV gives you voting power over protocol decisions, and staking INV lets you earn protocol revenue and allows for using your tokens as collateral for borrowing. This makes INV holders the owners and decision-makers of the protocol. **Contract Address:** `0x41D5D79431A913C4aE7d69a668ecdfE5fF9DFB68` (Ethereum) | Property | Details | | ------------------------ | --------------------------------------------------- | | **Token Type** | ERC-20 token | | **Primary Use** | Governance voting, revenue sharing, FiRM collateral | | **Staking Rewards** | DBR streaming (Real Yield) | | **Voting Power** | 1 INV = 1 vote (retained when staked) | | **Auto-Compound Option** | sINV (ERC-4626 vault) | | **Available On** | Ethereum Mainnet | | **CEX Listings** | Coinbase, MEXC Global, Gate.io, CoinEx | | **DEX Liquidity** | Curve, Balancer, Uniswap V2, Sushiswap | *** ### Choose Your Path

💰 How to Buy INV

Get started with INV tokensLearn where to buy INV on centralized and decentralized exchanges, how to verify the correct contract address, and recommended purchase strategies.
How to Buy INV →

🪙 INV Staking Guide

Earn protocol revenue + governance powerStep-by-step guide to staking INV on FiRM, claiming your anti-dilution and DBR rewards, and using sINV for auto-compounding.
INV Staking Guide →

🔒 Stake INV → sINV

Earn yield on your INV without locking it on FiRM. sINV auto-compounds protocol revenue and lets you exit anytime.
sINV →

📊 INV Tokenomics

Supply, emissions, and economicsDeep dive into INV's supply model, how emissions work, buyback mechanisms, and how the protocol manages token economics.
INV Tokenomics →

⚖️ INV Governance

Vote on protocol decisionsUnderstand how INV voting works, where to participate in governance discussions, and how to create and vote on proposals.
INV Governance →
*** # How to Buy INV INV is available on both decentralized and centralized exchanges. For on-chain purchases, the deepest liquidity can be found on Curve Finance and Balancer. *** ### Decentralized Exchanges If you prefer to buy on-chain, you can trade directly against the following liquidity pools: | Pool | Platform | | ---------------------------------------------------------------------------------------------------------------------- | ------------- | | [INV/WETH](https://www.curve.finance/dex/ethereum/pools/factory-twocrypto-101/deposit/) | Curve Finance | | [INV/DOLA/DBR](https://www.curve.finance/dex/ethereum/pools/factory-tricrypto-18/deposit/) | Curve Finance | | [INV/DOLA](https://app.balancer.fi/#/ethereum/pool/0x441b8a1980f2f2e43a9397099d15cc2fe6d3625000020000000000000000035f) | Balancer | Alternatively, any DEX aggregator will route your trade automatically across available liquidity. Simply paste the INV contract address into [Cowswap](https://swap.cow.fi/#/1/swap/WETH), [1inch](https://app.1inch.io/#/1/simple/swap/ETH), [LlamaSwap](https://swap.defillama.com/?chain=ethereum\&from=0x0000000000000000000000000000000000000000), or [Matcha](https://matcha.xyz/tokens/ethereum/eth) and compare quotes before executing. {% hint style="info" %} **Tip:** Check that slippage is within an acceptable range before confirming your transaction. For larger purchases, a DEX aggregator will typically find the best available route. {% endhint %} *** ### Centralized Exchanges INV is also listed on the following centralized exchanges: | Exchange | Link | | ----------- | ---------------------------------- | | Coinbase | [Trade](https://www.coinbase.com/) | | MEXC Global | [Trade](https://www.mexc.com/) | | Gate.io | [Trade](https://www.gate.io/) | | CoinEx | [Trade](https://www.coinex.com/) | *** **What's next?** Once you have INV, you can stake it via sINV to earn auto-compounding yield, or deposit it on FiRM to access governance rewards and borrow DOLA. # INV Tokenomics INV does not have a hard-capped supply. In the past the DAO managed the circulating supply through periodic governance-approved expansions used to fund liquidity incentives, operational expenses, and anti-dilution rewards for stakers. This flexible supply policy allowed Inverse Finance to remain competitive and properly resourced while protecting stakers from dilution. *** ### Supply Policy **No Maximum Supply** At the project's founding, the original social consensus targeted a maximum of 100,000 INV in circulation. However, following the [INV+ proposal](https://www.inverse.finance/governance/proposals/mills/6), the DAO shifted to an uncapped supply model, enabling governance to expand the supply as needed through on-chain votes. This ensures the DAO maintains sufficient INV for liquidity programs and operating expenses while continuing to reward stakers with anti-dilution incentives. **Latest Supply Expansion** The most recent supply expansion occurred in July 2025 through the [DOLA Bad Debt Elimination Proposal](https://www.inverse.finance/governance/proposals/mills/305), which minted 104,000 INV. These tokens were allocated to a group of strategic investors (Temple, DCF God, Chud.eth, Greenfund, Octoshi, and SS from Ethena) in exchange for immediately repaying $2.6M of DOLA bad debt. The INV was issued at a rate of 25 DOLA per INV and subject to a six-month vesting period, during which the tokens were staked in sINV. *** ### Historical Programs **Liquidity Mining Incentives** The DAO directs INV incentives to select DEX liquidity pools to ensure deep, sustainable liquidity for INV, DOLA, and DBR. These allocations are monitored and adjusted by the Policy Committee based on market conditions and strategic priorities. **xINV Anti-Dilution Program (2022 – 2024)** The original anti-dilution rewards system was enacted operated through the xINV token on FiRM. INV stakers deposited their tokens into FiRM's INV market and received xINV receipts representing their staked position. These stakers earned continuous INV emissions designed to protect them from dilution caused by supply expansions used for DAO operations and liquidity programs. The xINV program was phased out in early 2024 once DAO revenues became sufficient to operate at net-zero inflation. With the protocol generating enough income to cover operational expenses without requiring new INV issuance, the DAO no longer needed to compensate stakers for supply expansions that were no longer occurring. The anti-dilution mechanism was later replaced by the sINV model, which offers auto-compounding protocol revenue without requiring deposits on FiRM. **Bond Protocol / Olympus Pro (2022 – 2023)** From 2022 to 2023, Inverse Finance maintained a working relationship with Bond Protocol, utilizing their Olympus Pro bonding program. This allowed users to purchase INV tokens at a discount in exchange for supplying liquidity pool tokens or DOLA to the DAO treasury. The program helped the DAO accumulate protocol-owned liquidity while distributing INV at favorable rates. The amount of INV allocated to bonds was continuously monitored and optimized by the Policy Committee during the program's operation. The bonding program ceased operations in 2023 as market conditions shifted and the DAO prioritized other liquidity strategies. *** ### INV Buybacks The DAO now operates an active INV buyback program funded by DBR issuance through the Virtual Auction infrastructure. This program was approved in [Proposal #345](https://www.inverse.finance/governance/proposals/mills/345) in response to favorable market conditions for accumulating INV at attractive prices. **How It Works** The Treasury Working Group manages a DBR-to-INV auction that continuously sells newly minted DBR for INV on the open market. The purchased INV is stored in the DAO Treasury and can be redeployed by governance for future initiatives, including grants, liquidity programs, or strategic partnerships. **Key Parameters** The auction operates with a rate-limited DBR issuance cap of up to 50M DBR per year, though the actual rate is dynamically adjusted based on INV's USD price and overall market conditions. The TWG multisig has flexibility to scale the buyback activity up or down as appropriate. {% hint style="warning" %} **Buybacks are price-sensitive:** The program is designed to accumulate INV during periods of relative weakness, not to support the price. The DAO views buybacks as a capital allocation decision, not a market intervention tool. {% endhint %} **Transparency** For the most up-to-date information on INV supply, emissions schedules, and treasury holdings, visit the Inverse Finance [Transparency Pages](https://www.inverse.finance/transparency/daohttps://www.inverse.finance/transparency/dao). *** # INV Staking Guide Staking INV on FiRM is how you put your INV to work. Stakers earn two forms of continuous rewards, retain full DAO voting rights, and unlock the ability to borrow DOLA against their position — all within a single market. *** ### Benefits of Staking INV
* **Anti-Dilution Rewards:** INV stakers receive continuous INV rewards with every Ethereum block, designed to protect long-term holders from the effects of periodic INV supply expansions used to fund DAO liquidity and operations. The reward rate is monitored and adjusted by the Policy Committee to ensure stakers remain the primary beneficiaries of any new supply — meaning stakers grow their proportional ownership of INV over time rather than being diluted by it. The DAO has consistently upheld this commitment since early 2022. Because the APY tracks supply expansions, it will fluctuate over time. At present, INV dilution protection rewards are set to 0 since the DAO is currently operating at net 0 INV inflation. * **DBR Real Yield Streaming:** Separate from anti-dilution rewards, stakers earn DBR streamed continuously on a per-INV basis. Since these DBR rewards come on top of the inflation-adjusted INV rewards, they function as genuine real yield. Earned DBR can be held for future DOLA borrowing, swapped for other assets, or used immediately to service an existing DOLA loan on FiRM. The DBR APY varies based on DOLA borrowing activity across FiRM — keep an eye on the Policy channel in Discord for updates. * **DOLA Borrowing:** Staked INV can serve as collateral to borrow DOLA at fixed rates on FiRM. This makes INV staking the entry point for DOLA loans, not just a passive yield position. * **DAO Governance:** Staking does not forfeit your governance rights. INV stakers retain full voting power in the DAO's on-chain governance system. *** ### How to Stake INV #### Starting from a Non-Custodial Wallet If you already hold INV in a non-custodial wallet like MetaMask or Coinbase Wallet, ensure you have some ETH available to cover gas fees. Then navigate to the INV market on FiRM, connect your wallet, and use the **Stake** tab to deposit your INV.
Upon depositing, you will receive **xINV** tokens as receipts representing your staked position. These can always be redeemed for your underlying INV when you unstake. From this point, staking rewards begin accruing immediately and your position is eligible as collateral for DOLA borrowing. {% hint style="info" %} The interest-free borrowing calculator in the staking interface shows your projected DBR rewards and burns over 12 months, helping you plan whether your rewards will cover any borrowing you intend to do. {% endhint %} *** #### Starting from a Centralized Exchange (e.g. Coinbase) If your INV is held on a centralized exchange, you'll first need to transfer it to a non-custodial wallet before staking. The process below uses Coinbase as an example, but the steps are similar across most exchanges. If you're new to non-custodial wallets, Coinbase has a helpful setup guide [here](https://www.coinbase.com/learn/tips-and-tutorials/how-to-set-up-a-crypto-wallet). **Step 1 — Initiate a transfer from Coinbase** From the **My Assets** screen, click the **Transfer** button in the top-right corner.
**Step 2 — Send INV to your wallet address** Select **Send**, choose INV as the asset, enter the amount, and input the Ethereum address of your non-custodial wallet as the recipient. Double-check the address before confirming.
{% hint style="warning" %} Always verify your destination wallet address carefully. Transactions on Ethereum are irreversible. {% endhint %} Once the transfer arrives in your non-custodial wallet, make sure the wallet is set to **Ethereum Mainnet**, then follow the non-custodial staking steps above. *** # sINV sINV is designed as a tokenized [ERC-4626](https://ethereum.org/en/developers/docs/standards/tokens/erc-4626/) wrapper around the INV market on FiRM. An XY=K Dutch auction swaps DBR streaming rewards for INV and, along with INV staking rewards, deposits the INV into FiRM and the vault smart contract, leading to the INV:sINV exchange rate to continuously grow. sINV brings the INV governance token to users who do not trade on Ethereum mainnet or who do not use FiRM. sINV also gives users a way to hold INV without the need to manually claim rewards, while creating opportunities to make sINV available in liquidity pools or as loan collateral on third party lending markets. Depositing INV for sINV further incentivizes the long-term holding of INV, creates continuous market buy pressure on INV, and results in reduced liquidity costs per circulating INV and improved overall unit economics of the protocol. Please note that the INV deposited into sINV do not retain their on-chain governance voting rights. **Contract Address:** `0x08d23468A467d2bb86FaE0e32F247A26C7E2e994` (Ethereum) *** ### Minting sINV To stake INV for sINV, simply follow the steps presented below or open the [sINV homepage](https://inverse.finance/sINV). {% stepper %} {% step %} First, select the "sINV" tab on the upper navigation bar:
{% endstep %} {% step %} Select "sINV" in the pulldown menu and connect your wallet. Next, indicate the desired amount of INV to stake as sINV
{% endstep %} {% step %} Finally, approve the desired amount of INV in your wallet (gas required) and stake your INV to receive sINV in your wallet. You can keep track of your sINV deposits and earnings (along with INV, DBR, and FIRM borrowing positions) on the [dashboard page](https://www.inverse.finance/dashboard).
{% endstep %} {% endstepper %} Important points about minting sINV: * The sINV token represents pro rata deposits within the ERC-4626 vault and is always withdrawable for INV governance tokens at the pro rata rate. * There is no maximum number of sINV that may be minted by a user depositing INV. * INV staked to mint sINV is never rehypothecated or loaned to third parties. *** ### sINV ​​Yield Accrual sINV yield is derived from two sources: * **xINV Staking Rewards:** xINV staking rewards function as a remedy to dilution experienced by INV holders when the DAO mints INV in order to fund liquidity and other DAO operations. Until the release of sINV, xINV staking rewards were available exclusively to INV stakers on FiRM. For both sINV users and INV stakers on FiRM, xINV staking rewards are added automatically to a user’s staking position on a continual basis with each Ethereum block. At present, INV dilution protection rewards are set to 0 since the DAO is currently operating at net 0 INV inflation. * **DBR Streaming Rewards:** DBR streaming rewards function as a revenue sharing mechanism for holders INV stakers. DBR’s are a primary revenue generator for the DAO and are issued to INV stakers who in turn sell them in marketplaces or auctions, primarily to borrowers who need them for DOLA loans on FiRM. Until the release of sINV, DBR streaming rewards were available exclusively to INV stakers on FiRM and required users to manually claim their DBR streaming rewards. With sINV, DBR streaming rewards are automatically swapped for INV via a dedicated XY=K Dutch auction and deposited weekly into the sINV vault with no manual claiming required by the user. The token flows involved in autocompounding sINV can be illustrated as follows:
To convert DBR yield into more INV for the user, the DBR yield must be first swapped for INV. sINV implements the DAO’s XY=K Auction contract, meaning this will create additional depth to DBR’s market and run in a fully automated manner via Miner Extractable Value (MEV). The XY=K Auction operates as a virtual, x\*y = k constant function market maker auction. The purpose is to provide a market-driven, continuous, Dutch auction for DBR, paid in INV. DBR reserves increase over time, pushing down the price of INV in the auction, until the price is low enough for an arbitrageur to extract profits. Upon a successful trade, the buyer will deposit INV in return for freshly minted DBR. Essentially the contracts function very similarly to a Uniswap V2 pool, except one side of the pair is virtual (INV), and the other (DBR) has a continuous stream of new tokens being added to the reserves. *** ### sINV Yield Distribution Yield generated from sINV's DBR-INV swaps is allocated to sINV holders on a pro-rata basis over a 7-day period. This distribution cycle is structured on a weekly basis, with weeks starting and finishing at roughly Thursday 00:00 UTC each time. The yield for any given week is derived from auction activities in the preceding week. This mechanism implies that as the supply of sINV increases, the current yield lags the projected yield, appearing lower. This is because the revenue earned in the previous week was from a comparatively smaller sINV supply than the present distribution base. Conversely, if sINV supply diminishes due to withdrawals, remaining holders experience a temporarily enhanced yield until the current and projected yields align. Importantly, sINV does not have a predefined minimum or maximum APY. *** ### Withdrawing sINV Users may unwrap their sINV at any time through a conventional un-staking transaction. There is no maturity date, no waiting period to withdraw INV, and users may re-stake into sINV at any time. *** ### sINV Cross-Chain Bridging sINV cross-chain support is planned for Q4 2024. *** # DOLA DOLA is Inverse Finance's native decentralized stablecoin, pegged 1:1 to the US dollar. Unlike stablecoins backed by bank deposits or maintained through algorithmic supply mechanics, DOLA is created exclusively through overcollateralized borrowing on FiRM and direct reserve swaps through the Peg Stability Module. Every DOLA in circulation is backed by collateral — either locked by a borrower in a FiRM market or offset by reserve assets held in the PSM. | | | | ---------------------- | ------------------------------------------ | | **Type** | Decentralized stablecoin | | **Peg** | 1:1 USD | | **Primary issuance** | FiRM overcollateralized borrowing | | **Secondary issuance** | Peg Stability Module (USDS ↔ DOLA) | | **Chains** | Ethereum mainnet + L2s | | **Mainnet Contract** | 0x865377367054516e17014ccded1e7d814edc9ce4 | *** ### How DOLA Is Created DOLA comes into existence through two mechanisms. The primary channel is borrowing on FiRM: the FiRM Fed pre-mints DOLA into each market in anticipation of borrowing demand, up to governance-approved limits. When a user deposits eligible collateral and draws a loan, they borrow from that pre-minted pool. Two governance parameters control how much DOLA can enter circulation through each market — a supply ceiling that caps total exposure, and a 24-hour rolling daily borrow limit that controls the flow rate. Borrowed DOLA is backed by the collateral held in the borrower's Personal Collateral Escrow until the loan is repaid and the DOLA is burned. FiRM's overcollateralization requirements and liquidation mechanics ensure outstanding loans remain backed as market conditions shift. The secondary channel is the Peg Stability Module (PSM). The PSM accepts USDS at a 1:1 exchange rate and mints an equivalent amount of DOLA, providing a direct on-ramp from one of DeFi's most liquid stablecoins. Buying DOLA through the PSM (minting) is free; selling DOLA back (redeeming) carries a 20 basis point fee. USDS reserves held in the PSM are not idle — they are deposited into sUSDS, Sky's yield-bearing USDS vault, generating revenue for the DAO treasury while sitting in reserve. The PSM is sized as a backstop and liquidation-support mechanism rather than a primary supply source, reflecting its role in peg defense during stress events. {% hint style="info" %} **A note on DOLA's backing:** DOLA's supply is highly concentrated in FiRM's overcollateralized lending — this concentration is intentional. FiRM's fixed-rate model with conservative collateral factors and robust liquidation infrastructure provides the strongest backing for DOLA. The protocol has deliberately moved away from AMM-based supply toward lending-backed DOLA, which offers clearer backing and better capital efficiency. {% endhint %} *** ### Feds: How DOLA Reaches the Market DOLA supply is managed by Feds — specialized smart contracts authorized by governance to mint new DOLA (expansion) or burn it (contraction). The Fed Chair multisig executes supply adjustments within governance-approved ceilings, allowing the protocol to respond to market conditions quickly while remaining accountable through full on-chain transparency. The DAO currently operates three active Feds: the FiRM Fed, which provides the vast majority of all circulating DOLA through FiRM's lending markets; the PSM Fed, which powers the Peg Stability Module; and the Frontier Fed, a legacy contract from the deprecated Frontier protocol that is gradually winding down as its bad debt is repaid. {% hint style="info" %} **See also:** [DOLA Feds](/inverse-finance/inverse-finance/products/dola-feds) for a full breakdown of how each Fed operates, the history of AMM Feds, and how to monitor Fed activity in real time. {% endhint %} *** ### Choose Your Path | Goal | Start here | | ------------------------------------- | ------------------------------------------------------------------------------------------------------ | | Get DOLA | [Getting DOLA](/inverse-finance/inverse-finance/products/tokens/dola/getting-dola) | | Earn yield on DOLA | [sDOLA](/inverse-finance/inverse-finance/products/tokens/dola/sdola) | | Protect the protocol and earn DBR | [jrDOLA](/inverse-finance/inverse-finance/products/tokens/dola/jrdola) | | Use DOLA on another chain | [DOLA Cross-Chain Guide](/inverse-finance/inverse-finance/products/tokens/dola/dola-cross-chain-guide) | | Borrow DOLA against your assets | [Getting Started with FiRM](/inverse-finance/inverse-finance/products/firm/getting-started-with-firm) | | Understand how DOLA maintains its peg | [DOLA Peg Mechanism](/inverse-finance/inverse-finance/products/tokens/dola/dola-peg-mechanism) | # Getting DOLA DOLA can be acquired in several ways, each suited to a different starting point. Borrowing through FiRM is the primary route if you hold eligible collateral — it creates new DOLA without requiring you to sell your assets. Alternatively, DOLA is available on decentralized exchanges, directly through the Peg Stability Module for users moving from USDS, and on multiple chains if you're already operating on an L2. *** ### Borrowing DOLA on FiRM The most capital-efficient way to get DOLA is to borrow it on FiRM. This doesn't require selling anything you already hold — instead, you deposit supported collateral into a FiRM market and draw DOLA against it at a fixed rate. Your collateral stays in your Personal Collateral Escrow, isolated from other borrowers, and your borrow rate is determined by the current price of DBR — FiRM's borrowing rights token — rather than a floating utilization curve. FiRM currently supports over 20 collateral markets spanning blue-chip assets (wETH, wBTC, cbBTC, wstETH), yield-bearing stablecoins (sUSDe, sFRAX, sUSDS), Pendle Principal Tokens, and selected governance tokens. Each market has its own collateral factor, daily borrow limit, and supply ceiling set by governance. To borrow DOLA on FiRM: 1. Navigate to [app.inverse.finance/firm](https://app.inverse.finance/firm) and connect your wallet on Ethereum mainnet. 2. Select the collateral market for the asset you want to deposit and approve the deposit transaction. 3. Check your DBR balance. DBR streams down at a rate of approximately 1 token per DOLA per year — a 1,000 DOLA loan requires roughly 1,000 DBR per year to sustain. If you don't have enough DBR, purchase it directly in the FiRM interface before drawing your loan. 4. Set your borrow amount within the collateral factor limit and confirm. DOLA is transferred to your wallet from the market's available supply. {% hint style="info" %} **No maturity date.** FiRM loans can be held indefinitely — there is no rollover, no term expiry, and no variable rate adjustment. Your cost of borrowing is locked at the time you buy your DBR. As long as your collateral stays above the liquidation threshold and your DBR balance remains positive, your position stays open. {% endhint %} {% hint style="warning" %} **DBR depletion risk.** If your DBR balance reaches zero, liquidation bots can call a forced replenishment on your position — minting DBR on your behalf and charging the cost plus a 10% fee back to your debt. Monitor your projected depletion date in the FiRM app and top up your DBR balance before it runs out. {% endhint %} {% hint style="info" %} **See also:** [Getting Started with FiRM](/inverse-finance/inverse-finance/products/firm/getting-started-with-firm) for a full walkthrough of the borrowing process, including how to manage collateral, choose DBR amounts, and use the Accelerated Leverage Engine. DBR for a complete explanation of how borrowing rights work. {% endhint %} *** ### Buying DOLA on a DEX If you don't have collateral to borrow against, DOLA is available to purchase directly on decentralized exchanges. The primary venue is Curve Finance, where DOLA pools provide deep stablecoin-to-stablecoin liquidity with low slippage. DOLA is also available on Uniswap and through DEX aggregators like 1inch, Paraswap, and Odos, which route across multiple liquidity sources to find the best rate. For most users converting a moderate amount from USDC, USDT, or another stablecoin, Curve offers the most competitive execution. Aggregators are worth checking for larger conversions where pool depth matters. {% hint style="warning" %} **Verify before swapping.** Always confirm you are buying the correct DOLA token. Official token addresses are listed on the Smart Contracts page and on [app.inverse.finance](https://app.inverse.finance). Do not add token addresses shared in Discord, Telegram, or social media without cross-referencing them against official documentation. {% endhint %} *** ### Using the Peg Stability Module The Peg Stability Module (PSM) allows direct conversion of USDS to DOLA at a 1:1 exchange rate with no buy fee. This is the most frictionless on-ramp for holders who already hold USDS and want to move into DOLA — there is no slippage, no pool imbalance risk, and no intermediary routing. The PSM has a supply cap of 10,000,000 DOLA. Under most conditions this is more than sufficient for retail conversions, but very large transactions may encounter the cap if utilization is high. The PSM is accessible through the Inverse Finance app. Redeeming DOLA back to USDS through the PSM carries a 20 basis point fee. This asymmetry — free to enter, small fee to exit — is intentional: it helps sustain buy-side demand for DOLA while discouraging arbitrage strategies that would otherwise drain the PSM's reserves. *** ### Getting DOLA on Other Chains DOLA and sDOLA are available on Ethereum, Arbitrum, Base, Optimism, and Polygon. If you're already operating on one of these networks, DOLA may be accessible through local liquidity pools without bridging. If you want to move DOLA or sDOLA from Ethereum to an L2 — or between L2s — the Chainlink CCIP integration for sDOLA allows transfers without unstaking or interrupting your yield accrual. *** ### Next Steps * **Put your DOLA to work** → [sDOLA](/inverse-finance/inverse-finance/products/tokens/dola/sdola) * **Explore available collateral markets** → [FiRM Collateral Guide](/inverse-finance/inverse-finance/products/firm/firm-collateral-guide) * **Learn how DBR affects your borrow cost** → [DBR](/inverse-finance/inverse-finance/products/tokens/dbr) * **Move DOLA across chains** → [DOLA Cross-Chain Guide](/inverse-finance/inverse-finance/products/tokens/dola/dola-cross-chain-guide) * **Understand how DOLA maintains its peg** → [DOLA Peg Mechanism](/inverse-finance/inverse-finance/products/tokens/dola/dola-peg-mechanism) # DOLA Peg Mechanism DOLA is a debt-backed stablecoin that maintains its $1 soft-peg primarily through market-driven borrowing and repayment dynamics on FiRM. Unlike algorithmic stablecoins that rely on contract-enforced minting and burning by protocol operators, DOLA's supply naturally expands when users borrow against their collateral and contracts when they repay their loans. The protocol manages DOLA supply through specialized smart contracts called [Feds](/inverse-finance/inverse-finance/products/dola-feds) — with the FiRM Fed handling overcollateralized lending, the PSM Fed enabling direct stablecoin swaps, the legacy AMM Feds, and Frontier Fed representing deprecated lending positions. The DAO delegates peg monitoring and parameter adjustments to the Treasury Working Group (TWG) and Risk Working Group (RWG), who ensure lending capacity aligns with sustainable peg maintenance and adjust Fed operations based on market conditions.
**When DOLA Trades Above $1 (Shortage of Supply)** When DOLA consistently trades above $1, two mechanisms work to restore the peg: organic borrowing incentives through FiRM and direct arbitrage through the PSM. On FiRM, users can borrow DOLA at $1 par value and immediately sell it on the open market for more than $1, pocketing the difference (minus DBR costs and gas fees). Simultaneously, the PSM provides immediate arbitrage opportunities. When DOLA trades above $1, arbitrageurs can deposit USDS into the PSM at a 1:1 rate to mint DOLA, then sell that DOLA on the open market at the premium price. This creates instant DOLA supply to meet excess demand. **When DOLA Trades Below $1 (Excess Supply)** When DOLA trades below $1, market forces again provide natural stabilization, with FiRM debt repayment contributing to peg recovery. Borrowers on FiRM can buy DOLA from the market at below-par prices (say $0.98) and use it to repay their $1 par value debt, effectively reducing their obligations at a discount. DBR can play a role in incentivizing debt repayment as well. When DBR trades at low prices, borrowing DOLA becomes cheap, encouraging users to take out loans and increasing DOLA supply. This additional DOLA flowing into markets creates downward pressure on the peg. Conversely, when DBR trades at high prices, users who secured their loans at lower rates are incentivized to repay their loans (as they can profit from selling their remnant DBR balance) by buying DOLA from the market and burning it. As borrowers repay loans, they remove DOLA from circulation (it's burned when repaying debt), creating buying pressure that helps restore the peg. **Debt-Level Targeting and Dynamic Capacity** The TWG and RWG don't target specific DOLA supply levels but rather manage sustainable debt capacity based on the protocol's ability to lend without decimating the peg. This capacity is dynamic and depends heavily on DOLA demand drivers (or "DOLA sinks") such as [sDOLA](/inverse-finance/inverse-finance/products/tokens/dola/sdola), [jrDOLA](/inverse-finance/inverse-finance/products/tokens/dola/jrdola), and liquidity depth across DEXs — deeper liquidity can absorb larger borrowing without significant price impact. When DOLA peg is stable, the working groups may increase lending capacity through higher daily borrow limits, injecting more liquidity via the FiRM Fed into select markets, and/or approving new collateral types. When liquidity is thin or the peg shows stress, capacity may be constrained to prevent excessive DOLA issuance that the market can't absorb. The PSM's reserves and capacity are similarly monitored to ensure it can serve its dual role of peg defense and liquidation support without creating new vulnerabilities. *** ### Current DOLA Backing Breakdown DOLA's backing is highly concentrated in FiRM's overcollateralized lending, with minimal exposure to other sources. This concentration in FiRM is a feature, not a bug. FiRM's fixed-rate lending model with conservative collateral factors and robust liquidation mechanisms provides the strongest backing for DOLA. The protocol has deliberately shifted away from relying on DEX Liquidity Feds (which were more prominent in the pre-FiRM era) in favor of lending-backed DOLA, which has clearer backing and better capital efficiency. *** ### Bad Debt and Unsecured DOLA A small portion of DOLA's backing is currently unsecured due to bad debt accrued during the [April 2022 Frontier exploit](/inverse-finance/inverse-finance/legacy-products/frontier-anchor). This bad debt represents a small and shrinking fraction of DOLA's total backing. The DAO has committed substantial resources to repaying bad debt using protocol revenues from FiRM, and strategic investor swaps (detailed in the INV Tokenomics section). Progress is tracked transparently on the [Bad Debts page](https://www.inverse.finance/transparency/bad-debts). As FiRM generates consistent revenue and the repayment plan continues, the influence of bad debt on DOLA's backing diminishes month by month. *** ### Historical Context: Pre-FiRM Era DOLA's peg mechanism has evolved significantly since the protocol's founding. DOLAs supply evolved from coming primarily from the Frontier Fed (2021-2022), to AMM Feds (2022-2023), to now the FiRM Fed (2024-present).
In the AMM Feds era, DOLA was more akin to an algorithmic stablecoin; maintaining its $1 peg through supply management in the various Fed deployments that managed DOLA liquidity in DEX pools on protocols like Curve and Balancer. These AMM Feds would add DOLA to liquidity pools when price rose above $1 and remove DOLA when price fell below $1, using the trading dynamics within the pools to maintain the peg. This model worked but had limitations: DOLA was backed by LP positions rather than direct overcollateralized borrowing, capital efficiency was lower, and peg maintenance required more active management. The launch of FiRM in late 2022 fundamentally changed DOLA's backing model. By offering fixed-rate DOLA borrowing against high-quality collateral, FiRM created sustainable demand for DOLA that didn't rely on liquidity mining incentives or complex DEX strategies. Over time, the FiRM Fed grew to dominate DOLA supply while AMM Feds contracted. This evolution represents a maturation of DOLA's peg mechanism — the current model is more capital efficient, easier to understand, and provides stronger backing than the historical AMM-dominated approach. *** ### Monitoring the Peg Users can monitor DOLA's peg health and Fed operations in real-time through several resources: **Price Tracking** Current DOLA price across major DEXs is displayed on the [Liquidity page](https://www.inverse.finance/transparency/liquidity). If DOLA consistently trades away from $1, expect Fed operations to adjust supply in response. **Fed Activity** The [Feds Policy page](https://www.inverse.finance/transparency/feds) shows every Fed expansion and contraction transaction, allowing you to see exactly when and how the TWG is managing supply. Look for expansion transactions when DOLA is above $1 and contraction transactions when below $1. **Supply Evolution** The [DOLA & Feds page](https://www.inverse.finance/transparency/dola) displays historical DOLA supply, showing how total circulation has changed over time in response to demand fluctuations and peg management operations. **Backing Verification** The "DOLA sources overview" chart on the DOLA & Feds page breaks down exactly what backs every DOLA in circulation. If you ever have concerns about DOLA's backing, this chart provides complete transparency into the composition. *** # sDOLA sDOLA is a yield-bearing stablecoin that earns auto-compounding returns from FiRM's lending revenue. When you deposit DOLA, you receive sDOLA tokens that continuously appreciate as protocol revenue accrues — no staking required, no claiming necessary, no manual compounding. Your sDOLA grows in value automatically, and you can convert back to DOLA anytime with no lock-up period. Unlike yield-bearing stablecoins that derive returns from centralized sources or rehypothecate user deposits, sDOLA generates yield entirely from decentralized fixed-rate lending on FiRM. This makes it one of DeFi's few truly decentralized yield-bearing stablecoins backed exclusively by on-chain revenue. *** ### How sDOLA Works sDOLA is structured as an ERC-4626 wrapper around the DOLA Savings Account (DSA) smart contract. When borrowers on FiRM spend DBR to service their loans, that DBR is recognized as protocol revenue and redistributed three ways: to INV stakers as DBR streaming rewards, to the DSA contract powering sDOLA, and to the DBR auction for liquidity depth. The DBR allocated to the DSA is automatically converted to DOLA through the DAO's XY=K Auction contract — a virtual constant-function market maker that operates as a continuous Dutch auction. As DBR reserves increase in the auction, the price of DBR in DOLA terms decreases until an arbitrageur finds it profitable to buy DBR with DOLA. This trade deposits DOLA into the DSA, which is then distributed to sDOLA holders proportionally. The beauty of this system is full automation. MEV bots monitor the auction continuously and execute trades when profitable, converting DBR yield into DOLA without requiring any DAO intervention or user action. The DOLA acquired through these swaps accrues to all sDOLA holders on a pro-rata basis, causing the DOLA:sDOLA exchange rate to grow continuously. *** ### DOLA Savings Account (DSA) The DSA is the underlying smart contract powering sDOLA. While most users interact with sDOLA through the ERC-4626 wrapper, the DSA can also be used directly by advanced users or integrators who want to stake DOLA for DBR rather than auto-compounding into more DOLA. This is useful when you believe DBR is significantly underpriced relative to its fair value, as you can accumulate DBR directly rather than having it auto-sold through the auction. Third-party protocols may also integrate with the DSA to build custom yield strategies that utilize raw DBR rewards. For most users, sDOLA provides a superior experience due to automatic compounding and simpler tax treatment (appreciation rather than regular reward claims), but the DSA remains available for those who prefer direct DBR exposure. *** ### Minting sDOLA To mint sDOLA, you deposit DOLA into the DSA contract, which wraps it into the ERC-4626 vault and issues sDOLA tokens representing your share. The process is straightforward and requires just a few clicks. **Step 1 — Navigate to the sDOLA interface** Visit [inverse.finance/sDOLA](https://inverse.finance/sDOLA) and connect your wallet. Select "sDOLA" from the navigation menu. **Step 2 — Enter deposit amount** Specify how much DOLA you want to stake. There's no minimum or maximum — deposit whatever amount suits your strategy.
**Step 3 — Approve and confirm** Approve the DOLA amount in your wallet (requires gas), then confirm the minting transaction (also requires gas). Once confirmed, you'll receive sDOLA at the current exchange rate. Your sDOLA position will appear in the dashboard at [inverse.finance/dashboard](https://www.inverse.finance/dashboard), where you can track your holdings, accumulated yield, and current exchange rate alongside your other Inverse Finance positions. {% hint style="info" %} **Important:** DOLA staked as sDOLA is never rehypothecated or loaned to third parties. Your DOLA remains in the sDOLA smart contract until you choose to withdraw, maintaining full custody throughout. {% endhint %} *** ### Auto-Compounding Mechanism sDOLA's defining feature is automatic yield compounding with zero user intervention. As DBR revenue accrues to the DSA, it's continuously swapped for DOLA through the auction mechanism and distributed to all sDOLA holders over the following week. This increases the amount of DOLA backing each sDOLA token, causing the exchange rate to rise steadily. You never need to claim rewards, manually compound, or execute any transactions to benefit from yield. Simply hold sDOLA and watch its value grow relative to DOLA. The compounding happens on-chain, automatically, driven by arbitrageurs seeking profit from the auction rather than requiring any centralized operator or manual intervention. *** ### Yield Distribution Schedule Yield generated from the DBR-DOLA auction is distributed to sDOLA holders on a weekly cycle. Each week runs roughly from Thursday 00:00 UTC to the following Thursday, with the yield for any given week derived from auction activity in the previous week. This creates an interesting dynamic: when sDOLA supply increases rapidly due to new deposits, the current yield temporarily appears lower than projected yield because the revenue earned last week is now being distributed across a larger holder base. Conversely, when sDOLA supply decreases due to withdrawals, remaining holders experience temporarily enhanced yield until current and projected yields converge. This is a feature, not a bug — it ensures fair distribution based on actual time-weighted holdings while preventing gaming through last-minute deposits right before yield distribution. sDOLA has no predefined minimum or maximum APY; yield fluctuates based on FiRM borrowing demand and the resulting DBR revenue. *** ### Withdrawing to DOLA Unwrapping sDOLA back to DOLA is instant and permissionless. There's no maturity date, no waiting period, and no penalty for early withdrawal. Simply initiate an unwrap transaction and receive DOLA at the current exchange rate.
Navigate to the sDOLA interface, select the amount to unwrap, and confirm the transaction. Your DOLA will be returned immediately. You can re-stake into sDOLA anytime if you want to resume earning yield. *** ### Cross-Chain Availability sDOLA is available on multiple chains through Chainlink CCIP (Cross-Chain Interoperability Protocol), allowing you to hold and earn yield on lower-fee networks while maintaining the same exchange rate and yield accrual as Ethereum mainnet.
The exchange rate updates cross-chain automatically through CCIP's governance proxy infrastructure, ensuring your sDOLA appreciates at the same rate regardless of which chain you hold it on. This means you can bridge sDOLA to Base, benefit from lower transaction fees for other DeFi activities, and still earn the full yield generated on Ethereum mainnet. **Bridging sDOLA:** Use CCIP-compatible bridges to move sDOLA between chains: * Interport Finance * Other CCIP front-ends The bridged sDOLA is fully fungible across chains and maintains the same appreciation rate everywhere. *** ### What Makes sDOLA Unique **Decentralized Yield** sDOLA generates yield entirely from decentralized sources — specifically, fixed-rate borrowing revenue on FiRM. Unlike yield-bearing stablecoins that derive returns from centralized assets like US Treasury bills or depend on trusted custodians, sDOLA's yield comes from on-chain lending activity backed by decentralized collateral. DOLA itself is backed by debt positions on FiRM, not by centralized reserves, making the entire yield stack decentralized end-to-end. **Fixed-Rate Revenue Premium** FiRM's fixed-rate lending model generates higher revenue than variable-rate protocols because borrowers pay a premium for rate certainty. This premium flows to sDOLA holders as yield. Variable-rate protocols typically offer lower returns due to lower opportunity cost of capital — borrowers only pay what's necessary to attract lender supply. In contrast, FiRM borrowers pre-pay for the option to lock rates, even if those rates later become unfavorable, creating revenue surplus that accrues to sDOLA. **No Rehypothecation** Your DOLA staked as sDOLA never leaves the contract and is never loaned to third parties. This contrasts sharply with many yield-bearing stablecoins that lend your deposits to generate returns, introducing counterparty risk and potential insolvency scenarios. sDOLA's yield comes from protocol revenue sharing, not from putting your principal at risk through lending. **Non-Dilutive Revenue** sDOLA distributes actual protocol revenue, not inflationary governance token emissions. Many "yield-bearing" stablecoins achieve high APYs by issuing governance tokens, which dilutes existing token holders and creates unsustainable yield that collapses when emissions end. sDOLA's yield is entirely real — it comes from DBR burned by FiRM borrowers, which is captured protocol revenue, making yields sustainable over the long term. *** ### Frequently Asked Questions **What is sDOLA?** sDOLA is a yield-bearing stablecoin structured as an ERC-4626 wrapper around the DOLA Savings Account (DSA) contract. It continuously streams DBR rewards to staked DOLA and auto-compounds them into more DOLA, causing the DOLA:sDOLA exchange rate to grow over time. **Where does sDOLA's yield come from?** sDOLA's yield comes from DBR revenue generated by borrowers on FiRM. When borrowers spend DBR to service their DOLA loans, that DBR is recognized as protocol revenue and partially allocated to sDOLA holders. The DBR is automatically swapped for DOLA through an on-chain auction and distributed to all sDOLA holders proportionally. **Is there a minimum holding period?** No. You can unwrap sDOLA back to DOLA anytime with no waiting period, lock-up, or penalty. **What are the risks?** sDOLA carries smart contract risk (despite audits, bugs could exist), DOLA peg risk (sDOLA's value depends on DOLA maintaining its $1 peg), and yield fluctuation risk (APY varies based on FiRM borrowing demand). Consider purchasing cover through OpenCover if you want additional protection. **How does sDOLA compare to other yield-bearing stablecoins?** Most yield-bearing stablecoins derive returns from centralized sources (US Treasuries, corporate bonds) or through rehypothecation (lending your deposits). sDOLA generates yield from decentralized fixed-rate lending revenue without rehypothecating user deposits, making it one of DeFi's few truly decentralized yield options. See [stableyields.info](https://www.stableyields.info/) for yield comparisons across protocols. **Can I use sDOLA as collateral on FiRM?** Not currently, though this may change through future governance proposals. For now, sDOLA is optimized as a yield-bearing asset rather than as borrowing collateral. **How is sDOLA taxed?** Tax treatment varies by jurisdiction. Consult a tax professional familiar with cryptocurrency taxation in your region. In many jurisdictions, sDOLA's appreciation may be treated more favorably than regular reward claims since you're not receiving periodic payouts. *** ### Resources * **Stake DOLA:** [inverse.finance/sDOLA](https://inverse.finance/sDOLA) * **Dashboard:** [inverse.finance/dashboard](https://www.inverse.finance/dashboard) * **Yield Comparison:** [stableyields.info](https://www.stableyields.info/) * **Cover:** [OpenCover](https://app.nexusmutual.io/cover/product/208) * **Audit Reports:** [Security Documentation](/inverse-finance/inverse-finance/technical/audits) # jrDOLA jrDOLA (Junior DOLA) is a yield-bearing token that provides first-loss layer coverage for Inverse Finance's FiRM lending markets. Users who stake DOLA as jrDOLA earn enhanced yield from DBR rewards in exchange for accepting bad debt risk before it impacts the protocol's core reserves. This creates a market-driven insurance mechanism that protects DOLA's backing while enabling protocol growth with reduced systemic risk. By depositing DOLA for jrDOLA, users become voluntary risk absorbers who earn premium yields for protecting DOLA holders and the broader protocol. The junior tranche absorbs losses from liquidation shortfalls and bad debt events, ensuring DOLA remains fully backed even during adverse market conditions. {% hint style="danger" %} **Risk Disclosure:** jrDOLA accepts first-loss risk. During bad debt events, your deposited capital may be partially or fully slashed to repay protocol debts before senior DOLA holders are affected. Only deposit funds you can afford to lose. This is a higher-risk, higher-reward product designed for users who understand and accept these tradeoffs. {% endhint %} *** ### jrDOLA Basics jrDOLA is structured as an ERC-4626 vault that wraps DOLA deposits with an sDOLA base layer. This architecture ensures jrDOLA holders earn at minimum the same rate as sDOLA holders, plus additional DBR rewards for accepting slashing risk. The token continuously auto-compounds DBR rewards into more DOLA through an XY=K Dutch auction mechanism, leading to a steadily increasing DOLA:jrDOLA exchange rate. **How it works:** 1. User deposits DOLA into the jrDOLA vault 2. DOLA is automatically staked as sDOLA (earning base yield) 3. Additional DBR rewards stream to the vault 4. DBR is auto-converted to DOLA via auction 5. Both sDOLA yield and DBR rewards compound into jrDOLA 6. jrDOLA exchange rate continuously grows relative to DOLA **Key characteristics:** * **First-loss position:** Absorbs bad debt before impacting senior creditors * **Enhanced yield:** sDOLA base yield + DBR insurance premium * **ERC-4626 compliant:** Standard vault interface for composability * **Coverage:** Protects select FiRM lending markets and other Inverse Finance products via governance approval * **Withdrawal delays:** Time-locked withdrawals protect against bank runs * **No governance rights:** Unlike staked INV, jrDOLA does not grant voting power {% hint style="info" %} **Why jrDOLA exists:** As FiRM scales, bad debt risk grows proportionally. The current model absorbs all losses directly into protocol reserves, limiting growth potential. jrDOLA creates a dedicated capital buffer that allows the protocol to scale lending capacity while maintaining robust DOLA backing. {% endhint %} *** ### Minting jrDOLA The underlying asset for jrDOLA is DOLA, Inverse Finance's decentralized stablecoin. DOLA can be borrowed on FiRM or purchased on AMMs. To mint jrDOLA, navigate to and follow these steps:
1. **Connect Your Wallet** * Click "Connect Wallet" and select your wallet provider * Ensure you have DOLA (or sDOLA) and ETH (for gas) in your wallet 2. **Select jrDOLA Tab** * Navigate to the jrDOLA section in the interface * Review current APY and vault statistics 3. **Enter Deposit Amount** * Specify how much DOLA (or sDOLA) you want to stake as jrDOLA * The interface shows how much jrDOLA you will receive 4. **Approve and Deposit** * Approve the spending limit (requires gas) * Confirm the deposit transaction (requires gas) * jrDOLA tokens will appear in your wallet **Important points about minting jrDOLA:** * **Capital at risk:** Your DOLA deposit may be slashed during bad debt events * **Pro rata deposits:** jrDOLA represents your proportional share of the vault * **Always withdrawable:** You can always redeem jrDOLA for DOLA (subject to withdrawal delays) * **No maximum:** There is no limit on how much jrDOLA can be minted * **Never rehypothecated:** DOLA staked as jrDOLA is never loaned to third parties * **Starts earning immediately:** Yield accrual begins as soon as you deposit You can monitor your jrDOLA position and earnings on the [jrDOLA dashboard](https://www.inverse.finance/jrDOLA) *** ### jrDOLA Yield Accrual jrDOLA yield comes from two distinct sources that compound together: #### 1. sDOLA Base Yield All DOLA deposited into jrDOLA is automatically staked as sDOLA, providing a baseline yield floor. This ensures jrDOLA can never earn less than sDOLA holders, making the insurance premium pure additive yield. The sDOLA component earns yield from FiRM borrowing revenues distributed to the DOLA Savings Account. #### 2. DBR Insurance Premium Additional DBR tokens are streamed to the jrDOLA vault as compensation for accepting first-loss risk. This "insurance premium" is the incremental yield that jrDOLA earns above sDOLA for protecting the protocol. The DBR reward rate is managed by an operator within governance approval limits and scales with protocol risk exposure. **Yield distribution mechanism:** FiRM generates revenue → DBR is burned by borrowers → Protocol allocates DBR to: * INV stakers (governance participation) * sDOLA holders (senior tranche) * **jrDOLA holders (junior tranche insurance premium)** * Treasury operations The relative allocation to jrDOLA determines the insurance premium rate. Higher allocations mean higher yields but also indicate governance's assessment of risk levels requiring more insurance coverage. {% hint style="info" %} **Why the premium exists:** Markets pay premiums for risk transfer. jrDOLA holders voluntarily accept tail risk that would otherwise constrain protocol growth, enabling FiRM to scale lending capacity while maintaining conservative risk management. The premium compensates depositors for providing this critical infrastructure. {% endhint %} *** ### jrDOLA Auto-Compounding A key feature of jrDOLA is automatic compounding of both sDOLA yield and DBR rewards into additional DOLA. Your DOLA balance within jrDOLA continuously grows without any manual action required. **Auto-compounding process:** ``` DBR rewards stream to jrDOLA vault ↓ XY=K Dutch auction converts DBR → DOLA ↓ DOLA added to sDOLA base position ↓ jrDOLA exchange rate increases ↓ Each jrDOLA worth more DOLA ``` The XY=K auction operates as a virtual constant-function market maker that continuously sells DBR for DOLA. DBR reserves increase over time, pushing the price down until arbitrageurs find it profitable to buy DBR with DOLA. This creates a permissionless, automated mechanism for converting rewards into compounded principal. **Key mechanics:** * **Virtual liquidity:** One side of the pair (DOLA) is virtual, the other (DBR) has continuous inflows * **Dutch auction:** Price decreases over time until trade execution * **MEV-driven:** Arbitrage bots monitor and execute trades automatically * **No manual claims:** jrDOLA never requires claiming rewards * **Gas-free for users:** MEV searchers pay gas to execute profitable trades After DBR is swapped for DOLA, the additional DOLA is automatically deposited into the underlying sDOLA position, increasing the jrDOLA vault's total assets and thereby increasing the exchange rate for all jrDOLA holders on a pro-rata basis. *** ### jrDOLA Yield Distribution Yield generated from DBR auctions is allocated to jrDOLA holders on a pro-rata basis over a 7-day distribution period. This weekly cycle is structured with periods starting and finishing at roughly Thursday 00:00 UTC. The yield distributed in any given week derives from auction activity during the preceding week. **Supply dynamics and yield lag:** This distribution mechanism creates interesting dynamics based on supply changes: **When jrDOLA supply increases:** * Current yield appears lower than projected yield * Previous week's revenue was earned on a smaller supply base * Revenue gets distributed across more shares * Yield normalizes over 1-2 weeks as revenue catches up **When jrDOLA supply decreases (withdrawals):** * Remaining holders experience temporarily enhanced yield * Same revenue distributed to fewer shares * Yields appear higher than projected yield * Effect normalizes as new revenue matches current supply {% hint style="info" %} **No fixed APY:** jrDOLA does not have a predefined minimum or maximum APY. Yields fluctuate based on DBR reward allocation, protocol revenue, vault size, and slashing events. Historical yields are not predictive of future performance. {% endhint %} *** ### Slashing Mechanism The core function of jrDOLA is absorbing bad debt through a process called "slashing." If and when FiRM lending positions become undercollateralized and liquidation proceeds are insufficient to cover outstanding debt, the shortfall is repaid using jrDOLA vault assets. #### How Slashing Works **Triggering conditions:** 1. A borrower's collateral value falls below their debt 2. Liquidators partially or fully liquidate the position 3. Liquidation proceeds + liquidation incentive < outstanding debt 4. Bad debt shortfall is identified **Slashing execution:** 1. The FiRMSlashingModule contract identifies the shortfall 2. Governance or authorized guardian triggers a slash 3. DOLA is withdrawn from jrDOLA vault to repay the debt 4. All jrDOLA holders experience proportional asset reduction 5. Exchange rate decreases: each jrDOLA now worth less DOLA **Example:** * jrDOLA vault holds 1M DOLA * You hold 1,000 jrDOLA (0.1% of supply) * Your position is worth 1,000 DOLA * Bad debt event requires 100K DOLA repayment (10% slash) * Your 1,000 jrDOLA now worth 900 DOLA (10% loss) * All holders share the loss proportionally {% hint style="danger" %} **Capital Loss Risk:** Slashing is a permanent loss of capital. Unlike temporary price fluctuations, slashed capital cannot be recovered. In extreme scenarios, large-scale bad debt events could slash 50%+ of vault value or even result in total loss. Only deposit capital you can afford to lose entirely. {% endhint %} #### Slashing Parameters To balance protection against abuse while maintaining effectiveness, the slashing system includes several configurable parameters: **maxCollateralValue:** Maximum collateral value eligible for slashing coverage * Purpose: Prevents single massive positions from draining the vault * Example: If set to $5M, positions with $10M collateral would not be covered **minDebt:** Minimum debt threshold to trigger slashing * Purpose: Gas efficiency - avoids slashing for tiny positions * Example: If set to $10K, positions with $500 debt wouldn't trigger slashing **activationDelay:** Time before newly added markets become slashable * Purpose: Allows observation period before risking capital * Example: 7-14 day delay gives time to assess market behavior **guardian:** Multi-sig with emergency powers to remove markets * Purpose: Rapid response if a market exhibits concerning behavior * Example: Can disable slashing for a market before delay expires These parameters are set by governance and can be updated through proposals as risk conditions evolve. *** ### Withdrawal System jrDOLA implements a time-delayed withdrawal mechanism designed to prevent bank runs while maintaining reasonable liquidity for depositors.
#### Two-Step Withdrawal Process **Step 1: Initiate Withdrawal (Enter Cooldown)** * Navigate to * Click "Withdraw" and specify amount * Transaction enters your jrDOLA into a withdrawal queue * Cooldown period begins (variable based on queue size) **Step 2: Complete Withdrawal (Claim DOLA)** * Wait for cooldown period to complete * Return to interface once cooldown expires * Click "Claim" to receive your DOLA * Must claim within exit window or withdrawal cancels
#### Dynamic Delay Model Withdrawal delays use linear interpolation based on what percentage of total supply is currently in the withdrawal queue: **When queue is small (< maxDelayThreshold):** * Delays are minimal (approaching minDelay) * Example: 1-3 days if only 5% of supply withdrawing **When queue is large (> maxDelayThreshold):** * Delays extend to maximum (maxDelay) * Example: 30 days if 50%+ of supply withdrawing This dynamic model prevents coordinated mass exits while keeping individual withdrawals reasonably quick during normal conditions. It protects remaining depositors from being last out while preventing users from reacting instantly to bad news. {% hint style="warning" %} **Withdrawal Timing:** During your cooldown period, your funds remain slashable. If a bad debt event occurs while you are in queue, you will experience the loss before being able to withdraw. However, you also continue earning yield during this period since your capital is still at risk. {% endhint %} #### Withdrawal Fees A small withdrawal fee (measured in basis points) is charged when completing withdrawals. This fee is distributed to remaining jrDOLA holders, compensating them for increased risk concentration as vault size decreases. **Fee purpose:** * Compensates remaining holders for higher per-capita risk * Discourages frequent entry/exit behavior * Kept minimal to maintain reasonable liquidity * Paid to stakers, not protocol (zero-sum within vault) **Example:** * 0.1% withdrawal fee (10 bps) * You withdraw 10,000 DOLA * Fee: 10 DOLA goes to remaining jrDOLA holders * You receive: 9,990 DOLA #### Exit Window After your cooldown period completes, you have a limited exit window to claim your DOLA. If you do not claim within this window, your withdrawal request cancels and your jrDOLA returns to the active vault. **Why exit windows exist:** * Prevents indefinite withdrawal queue buildup * Ensures capital eventually returns to active duty * Allows vault mechanics to normalize after withdrawal waves **What happens if you miss the window:** * Your jrDOLA automatically restakes * You can initiate a new withdrawal at any time * No penalty beyond needing to wait through cooldown again *** ### Security Considerations #### Comprehensive Audit Process jrDOLA underwent an extensive dual-audit process through Sherlock to ensure security of funds and correctness of slashing mechanics: [**Phase 1 - Private Audit**](http://inverse.finance/audits/junior-sherlock-audit.pdf)**:** * Conducted by specialized security researchers Hash and Obsidian * Focus areas: ERC-4626 vault accounting, slashing logic, withdrawal queue edge cases * All identified issues remediated before public phase [**Phase 2 - Public Audit Contest**](http://inverse.finance/audits/junior-sherlock-contest.pdf)**:** * Open competition among Sherlock's security research community * Incentivized vulnerability discovery through competitive format * Final report documented all findings, fully addressed before launch **Sherlock Shield Coverage:** * $300,000 exploit insurance for first month post-deployment * Provides additional financial protection during critical early period * Covers smart contract vulnerabilities missed during audits #### Architecture Security Features **Modular slashing system:** * Only approved modules can slash vault assets * Governance can add or remove modules * Emergency guardian can disable concerning markets * Reduces attack surface through separation of concerns **Time-delayed market activation:** * New FiRM markets have 7-14 day delay before becoming slashable * Allows observation of market behavior before risking capital * Guardian can cancel activation if issues detected **Reentrancy protection:** * Uses OpenZeppelin's ReentrancyGuard * Transient storage patterns for gas efficiency * Prevents cross-function reentrancy attacks **Oracle security:** * Inherits FiRM's Pessimistic Price Oracle (PPO) system * Conservative pricing reduces likelihood of bad debt * Chainlink integration for price feeds *** ### jrDOLA vs sDOLA Comparison Understanding the differences between junior and senior tranches helps inform allocation decisions: | Feature | jrDOLA (Junior) | sDOLA (Senior) | | ---------------------- | ---------------------------- | -------------------------- | | **Risk Level** | High - first loss | Low - senior position | | **Yield Source** | sDOLA base + DBR premium | DBR revenue only | | **Expected Yield** | Higher (premium for risk) | Moderate | | **Capital Protection** | Can be slashed | Protected by jrDOLA buffer | | **Withdrawal** | Time-delayed with fees | Instant withdrawal | | **Best For** | Risk-tolerant yield seekers | Conservative DOLA holders | | **Composability** | Limited due to slashing risk | High - safer as collateral | *** ### Contract Addresses **Mainnet (Ethereum):** * **jrDOLA Token:** `0x633821b8e003344e5223509277f2084ea809a452` * **Withdrawal Escrow:** `0x3912365Cc44309c99743597F9d18c6CB946Ab5f0` * **FiRM Slashing Module:** `0x3b1E443aB423c9A7B1B2EA7b3cB7c0be012a4FbF` * **Linear Delay Model:** `0x9c0e166052d69d6f46422525e1f75d4a8f295423` * **Helper:** `0xe0db3f30c96e272c5ef7dfe3d30272bd2ae3d3cf` **Related Contracts:** * **DOLA:** `0x865377367054516e17014CcdED1e7d814EDC9ce4` * **sDOLA:** `0xb45ad160634c528Cc3D2926d9807104FA3157305` *** ### Frequently Asked Questions **What is jrDOLA?** jrDOLA is a yield-bearing stablecoin token structured as an ERC-4626 vault that provides first-loss insurance for Inverse Finance's FiRM lending markets. Depositors earn enhanced yield from DBR rewards in exchange for accepting bad debt risk that would otherwise impact protocol reserves. **How is jrDOLA different from sDOLA?** jrDOLA is the junior (first-loss) tranche while sDOLA is the senior (protected) tranche. jrDOLA earns higher yield by accepting slashing risk, while sDOLA earns moderate yield with capital protection from the jrDOLA buffer. jrDOLA builds on sDOLA as a base layer, guaranteeing jrDOLA yields are always higher than sDOLA yields. **Can I lose money with jrDOLA?** Yes. jrDOLA explicitly accepts capital loss risk. During bad debt events, your deposited DOLA can be partially or fully slashed to repay protocol debts. In extreme scenarios, you could lose your entire deposit. Only deposit funds you can afford to lose completely. **How much can I lose in a slashing event?** There is no cap on potential losses. A single large slashing event could take 10-50% of vault value, and multiple events could compound losses. While the protocol implements safeguards (collateral limits, minimum debt thresholds), severe market conditions could result in total loss. This is an explicit tradeoff for earning enhanced yields. **Why would I use jrDOLA instead of sDOLA?** jrDOLA is for users seeking higher yields who can tolerate capital risk. If you believe bad debt events will be rare relative to the yield premium earned, jrDOLA offers better risk-adjusted returns. It's a bet on protocol health and risk management quality. Conservative users should prefer sDOLA. **What happens if I don't withdraw during my exit window?** Your jrDOLA automatically returns to the active vault and begins earning yield again. You can initiate a new withdrawal at any time. There is no penalty beyond needing to wait through another cooldown period. This prevents indefinite withdrawal queue buildup. **Can jrDOLA be used as collateral on FiRM or other protocols?** While technically possible as an ERC-4626 token, jrDOLA is not recommended as collateral due to slashing risk. A bad debt event could suddenly reduce your collateral value, potentially triggering liquidation of your borrowing position. Most lending protocols will not accept jrDOLA as collateral for this reason. **How is the DBR reward rate determined for jrDOLA?** The DBR reward allocation to jrDOLA is set by governance through on-chain proposals. The Policy Committee multisig can adjust rates within bounds set by governance. Rates are optimized based on protocol risk exposure, vault TVL targets, competitive yield environment, and available DBR budget. **Does jrDOLA have governance rights?** No. Unlike staked INV on FiRM, jrDOLA does not grant voting power in DAO governance. This is purely a yield-earning product without governance participation. If you want voting rights, stake INV directly on FiRM instead. **What are the withdrawal delays and why do they exist?** Withdrawal delays range from a minimum (1-3 days) to maximum (30 days) based on what percentage of total vault supply is currently withdrawing. Delays prevent bank runs where all depositors simultaneously exit, leaving the protocol vulnerable. They give the system time to handle withdrawal demand while protecting remaining depositors. **Can governance change the slashing rules or withdrawal delays?** Yes. All jrDOLA parameters are governable, including slashing module configuration, withdrawal delay ranges, fee structures, and DBR reward rates. Governance can add or remove slashable markets, adjust risk parameters, and even migrate to new contract versions. This flexibility allows the system to evolve as conditions change. **Is there insurance or cover available for jrDOLA?** Users can purchase cover from services like Nexus Mutual through OpenCover to protect against smart contract risks. However, this does not protect against slashing events (which are a designed feature, not a bug). Cover protects against hacks or exploits, not economic losses from intentional slashing. **What is the expected APY for jrDOLA?** jrDOLA has no fixed or expected APY. Yields depend on sDOLA base rate, DBR reward allocation, vault TVL, protocol revenue, and slashing events. Historical yields are not predictive. Users should evaluate risk/reward based on current parameters rather than backward-looking returns. **How do I monitor my jrDOLA position?** Visit the dashboard at to view your jrDOLA balance, current exchange rate, accrued yield, withdrawal status, and historical slashing events. The interface provides real-time visibility into your position health and vault statistics. **What happens during a slashing event?** When bad debt occurs, the FiRMSlashingModule calculates the required repayment amount and withdraws DOLA from the jrDOLA vault. This reduces the vault's total assets while supply remains constant, decreasing the exchange rate. All holders experience proportional losses based on their share of the vault. The event is reflected immediately in your jrDOLA's DOLA value. **Can I withdraw during a slashing event?** Yes, but you will absorb the loss before exiting. Slashing occurs atomically, affecting all holders simultaneously. If you are in the withdrawal queue when slashing happens, your position value decreases before you can claim. You cannot front-run slashing events because they are executed in single transactions. **Why doesn't jrDOLA cover the PSM (Peg Stability Module)?** Phase 1 of jrDOLA focuses exclusively on FiRM lending markets to minimize complexity and risk surface area. PSM coverage (protecting against depeg scenarios) is architected to be possible in future versions but requires additional development and risk analysis. The modular design allows governance to add PSM coverage through proposals when appropriate. **How does jrDOLA help the Inverse Finance protocol?** jrDOLA enables protocol scaling by absorbing tail risk that would otherwise constrain growth. It converts implicit bad debt risk into explicit, market-priced insurance funded by willing participants. This allows FiRM to expand lending capacity, support riskier collateral types, and maintain aggressive collateral factors while keeping DOLA fully backed. The protocol can grow faster with jrDOLA than without it. # DOLA Cross-Chain Guide DOLA operates across multiple networks, bringing Inverse Finance's stablecoin and yield infrastructure to wherever users prefer to transact. Today, the primary mechanism for accessing DOLA cross-chain is sDOLA via Chainlink CCIP — Inverse Finance's integration that lets holders move their yield-bearing DOLA position across networks without unstaking. Raw DOLA is also present on various L2s through organic and incentivized liquidity, though active Fed management of DOLA supply is currently concentrated on Ethereum mainnet. *** ### How DOLA Reaches Other Chains DOLA's cross-chain presence has evolved significantly since the protocol's early days. Historically, AMM Feds — governance-authorized minting contracts — deployed DOLA directly into liquidity pools on Curve, Balancer, and other venues across multiple chains, managing supply and contraction in response to peg conditions. Most of those AMM Feds have since been deprecated. Today, DOLA's primary supply is managed by the FiRM Fed on Ethereum mainnet, with L2 liquidity maintained through organic and incentivized LP provision rather than active Fed management. What this means practically: DOLA exists as a token on Arbitrum, Base, Optimism, and other networks, and can be traded in DEX pools on those chains. But the active minting and burning infrastructure — the Feds — currently operates on Ethereum. The cleanest way to bring a fresh DOLA position cross-chain is via sDOLA and Chainlink CCIP, which preserves yield continuity and uses a well-audited transfer protocol rather than relying on third-party bridges. {% hint style="info" %} **For the full history of how the Fed architecture has evolved** — from Frontier Fed to AMM Feds to the current FiRM-dominated model — see [DOLA Feds](/inverse-finance/inverse-finance/products/dola-feds). {% endhint %} *** ### sDOLA Cross-Chain via Chainlink CCIP For users who want to move their sDOLA position between networks, Inverse Finance has integrated Chainlink's Cross-Chain Interoperability Protocol (CCIP). sDOLA is available on Ethereum, Arbitrum, Optimism, Base, and Polygon via CCIP, and transfers can be initiated directly from the Inverse Finance app. The key distinction from standard bridges is that sDOLA yield accrual is not interrupted by a CCIP transfer. The user's position continues compounding during the bridging process, and auto-compounding resumes immediately upon arrival at the destination chain. There is no need to unstake on the origin chain, bridge DOLA, and restake on the destination — the transfer handles the entire sDOLA position in a single transaction. {% hint style="warning" %} **CCIP transfers are not instant.** Cross-chain transactions route through Chainlink's decentralized oracle network for validation. Most transfers complete within a few minutes, but timing can vary with network conditions. Do not assume funds are lost if they don't appear immediately — check the Chainlink CCIP Explorer for transaction status. {% endhint %} {% hint style="info" %} **Why Chainlink CCIP?** CCIP was selected for its decentralized validator architecture, independent risk management network, and multi-round security design — all of which set a higher security floor than simpler lock-and-mint bridges. The protocol evaluated multiple bridging solutions and chose CCIP specifically for its resilience against the class of exploits that have affected other cross-chain protocols. {% endhint %} #### How to Bridge sDOLA 1. Navigate to [app.inverse.finance](https://app.inverse.finance) and connect your wallet on the source chain. 2. Select the CCIP bridge interface and choose your destination chain from the supported list. 3. Enter the amount of sDOLA you want to transfer and review the estimated completion time and any applicable gas costs. 4. Approve and confirm the transaction. Your sDOLA is locked on the source chain, and an equivalent balance is minted on the destination chain once the CCIP relay completes. 5. Monitor the transfer at the [Chainlink CCIP Explorer](https://ccip.chain.link) if you want real-time status updates. *** ### Moving DOLA (Not sDOLA) Cross-Chain If you hold plain DOLA — not sDOLA — and need to move it between networks, the standard approach is to use a DEX aggregator with cross-chain routing (such as Li.Fi or Jumper) or a native chain bridge for Arbitrum, Base, or Optimism. These routes work for DOLA the same way they work for other ERC-20 tokens, though they involve the security assumptions of those specific bridges rather than Chainlink CCIP. For most users, the more practical approach is to stake DOLA into sDOLA before bridging, take advantage of CCIP's security and yield continuity, and unstake on the destination chain if needed. The sDOLA vault has no lockup period, so converting and reconverting is frictionless. *** ### Bridge Security Considerations Multi-chain deployments introduce risks that do not exist in single-chain protocols. The most important safeguards to keep in mind: Chainlink CCIP uses a separate Risk Management Network that monitors cross-chain transactions independently of the primary system, providing a defense-in-depth architecture for sDOLA transfers. The native DOLA on each chain is issued by governance-approved Fed contracts — not by bridge signatories with unilateral mint authority. And the Inverse Finance app links exclusively to audited, governance-approved contract addresses. Standard operational hygiene still applies: verify contract addresses against the Smart Contracts page before interacting with any bridge, confirm you're on the official Inverse Finance domain, and review any significant CCIP transfer against Chainlink's explorer before assuming completion. *** ### Next Steps * **Stake DOLA for yield on any supported chain** → [sDOLA](/inverse-finance/inverse-finance/products/tokens/dola/sdola) * **Borrow DOLA against your assets on FiRM** → [Getting Started with FiRM](/inverse-finance/inverse-finance/products/firm/getting-started-with-firm) * **Understand how DOLA is backed** → [DOLA](/inverse-finance/inverse-finance/products/tokens/dola) * **Get DOLA for the first time** → [Getting DOLA](/inverse-finance/inverse-finance/products/tokens/dola/getting-dola) # DBR DOLA Borrowing Right Token DBR is the token at the core of FiRM's architecture — and the reason FiRM can offer fixed-rate, indefinite-duration borrowing without relying on variable utilization curves or maturity dates. Rather than charging interest through a floating rate that adjusts with pool utilization, FiRM requires borrowers to hold DOLA Borrowing Rights: an ERC-20 token that depletes continuously at a rate proportional to outstanding debt. The price you pay for DBR on the open market is your effective annual borrowing rate, determined before you open a position and locked in the moment you buy. {% hint style="info" %} **The core mechanic in one line:** 1 DBR entitles you to borrow 1 DOLA for 1 year. To sustain a loan of 1,000 DOLA for twelve months, you need 1,000 DBR. If DBR trades at $0.05, your effective annual rate is 5%. {% endhint %} {% embed url="" %} *** ### How DBR Streaming Works When a borrower opens a FiRM position, they must hold sufficient DBR to cover their outstanding debt. DBR doesn't disappear at the moment of borrowing — it depletes gradually over time at a fixed rate tied to the size of the loan. Specifically, each 1 DOLA of outstanding debt consumes approximately 1 DBR per year, accruing per block. A borrower carrying 1,000 DOLA in debt will see their DBR balance decline by roughly 2.74 tokens per day. The duration is also flexible. You don't have to buy DBR for a full year — you can borrow 2 DOLA for 6 months, 4 DOLA for 3 months, or any other combination. What matters is that your DBR balance covers your debt over however long you plan to hold the position. This streaming mechanic produces several properties that distinguish FiRM from conventional lending protocols. The cost of borrowing is fully transparent before a position is opened — the rate is simply the market price of DBR at the time of purchase, with no hidden fees or retroactive adjustments. Rate changes don't affect existing borrowers: if DBR becomes more expensive after you've already bought your supply, your effective rate doesn't change until your current holdings run out and you need to top up. And there is no maturity date or rollover requirement — a position can remain open indefinitely as long as collateral stays above the liquidation threshold and the DBR balance remains positive. {% hint style="warning" %} **Time is the cost.** DBR depletion is constant and unavoidable as long as a loan is outstanding. Unlike a fixed-term loan, there's no moment when "the interest is paid" — the cost of borrowing is continuous. Users who underestimate their holding period and buy too little DBR will face forced replenishment. {% endhint %} *** ### Replenishment and Liquidations If a borrower's DBR balance reaches zero, FiRM's replenishment mechanism activates. External bots monitor all active positions and can call `forceReplenish` on any underfunded borrower. When triggered, additional DBR is added to the borrower's position and the cost — priced at a substantial premium to market DBR pricing — is added to their outstanding debt balance. This premium exists to incentivize responsible loan management and to avoid relying on oracle infrastructure for the replenishment price. Replenishment can repeat if the borrower continues to neglect their DBR balance, with each cycle adding more debt. If the accumulated debt eventually reaches the maximum allowed by the borrower's collateral factor, the position becomes eligible for liquidation. At that point, third-party liquidators can repay the loan and claim the collateral, earning a liquidation fee for doing so. {% hint style="info" %} **Best practice:** Maintain a DBR buffer that extends your projected depletion date by at least 30 days beyond your expected loan duration. The FiRM app displays your current depletion timeline in real time based on your outstanding debt, making it straightforward to know when to top up. {% endhint %} {% hint style="info" %} **See also:** [FiRM Liquidations & Replenishments](/inverse-finance/inverse-finance/products/firm/firm-liquidations-and-replenishments) for a detailed explanation of how the liquidation process works and how to avoid it. {% endhint %} *** ### Getting DBR DBR is available through several channels, and the right one depends on your context. **Through the FiRM app** — When opening or managing a position, the FiRM interface includes an inline DBR purchase flow. This is the most convenient path for active borrowers, as it allows you to buy exactly the amount you need for your planned holding period without leaving the app. **On Curve Finance** — The primary source of on-chain DBR liquidity is the triDBR LP on Curve. DBR can be purchased by swapping DOLA directly, or through DEX aggregators (Cow Protocol, 1inch, LlamaSwap, Matcha) that route through the pool. This is the preferred option for users who want to pre-purchase DBR separately from opening a position, or who are buying larger amounts where pool depth matters. **Via the DBR xy=k Auction** — The protocol operates a continuous virtual xy=k auction that sells newly issued DBR for DOLA. The auction price decreases every second until a purchase is made, at which point it resets upward — MEV bots typically arbitrage between the auction and the triDBR pool on Curve whenever a spread opens. A frontend for the auction is available at [inverse.finance/xykauction](https://inverse.finance/xykauction). DOLA proceeds from the auction currently flow via the `sendToSaleHandler()` function toward repaying outstanding bad debt from the 2022 Frontier exploit, with governance able to redirect the proceeds in the future (for example, to the DAO treasury). *** ### DBR Supply and Issuance DBR is not a fixed-supply token. The protocol issues new DBR through two governance-controlled channels. **Streaming to INV stakers** distributes DBR continuously to INV holders who stake their INV on FiRM, streamed with each new Ethereum block and claimable at any time. This aligns long-term INV holders with the health of FiRM and provides a baseline level of DBR supply independent of auction conditions. **The xy=k auction** continuously sells DBR for DOLA at market-clearing prices. The Fed Chair multisig sets the `DbrRatePerYear` within a maximum annual ceiling approved by governance. The DAO uses the issuance rate as an active tool for targeting DOLA lending growth: if FiRM currently has 5,000,000 DOLA borrowed but the target is 8,000,000 DOLA, the DBR issuance rate can be raised toward 8,000,000 DBR per year to bring down the borrowing cost and stimulate demand. Contracting the rate reverses the process. This makes DBR issuance one of the most consequential policy levers the DAO controls: too little supply and debt growth stalls as borrowing becomes prohibitively expensive; too much and the cost of borrowing falls to a level that weakens sDOLA yield. The goal is a DBR market that clears at a rate that sustains both healthy borrowing demand and meaningful auction revenue. *** ### Practical Examples DBR's flexibility is best illustrated through concrete scenarios. **Short-term loan:** A borrower deposits wETH and borrows 800 DOLA for three days. They need approximately 6.6 DBR (800 × 3/365). At current market prices, the DBR cost is a fraction of the loan amount — and the rate was known precisely before the position was opened. **One-year loan:** The same borrower plans to hold 800 DOLA for a full year. They acquire 800 DBR, locking in their effective annual rate at the current DBR market price for the entire duration, regardless of what happens to DBR pricing after they buy. **Pre-purchasing DBR:** A borrower anticipates needing a large loan in the future and notices that DBR is trading at an unusually low price. They purchase DBR now and hold it — effectively locking in a future borrowing rate before the loan is even opened. This is only possible with DBR's design; variable rate protocols offer no equivalent mechanism. *** ### DBR Use Cases DBR's fixed-rate, duration-flexible design unlocks a broader range of use cases than is practical with variable-rate lending. Yield farmers who loop strategies against FiRM can borrow at a known cost for as long as they need, eliminating the risk of an interest rate spike that could trigger a liquidation cascade. If farming yields rise, the farmer holding DBR benefits — DBR prices typically rise alongside demand, meaning a portion of the improved farming environment is captured in the value of their remaining DBR balance. Borrowers financing real-world needs — home down payments, tuition, business capital — can fix their borrowing cost for months or years with no rollover risk. DBR also supports an idea analogous to assumable mortgages: a borrower could theoretically transfer a below-market-rate DBR position to another party along with an underlying asset. Rate locking is a natural use case for anyone who expects DBR to become more expensive over time. Purchasing DBR in advance of a loan locks in the current rate the moment of purchase, providing a hedge against future rate increases without requiring any active management. DAOs can use FiRM to borrow against idle treasury assets at a fixed, predictable cost — funding operational expenses like payroll or liquidity mining without selling governance tokens or accepting variable rate risk. *** ### DBR and sDOLA The auction revenue from continuous DBR sales flows directly to sDOLA holders. When you stake DOLA into the sDOLA vault, you receive a proportional share of the DBR auction proceeds, auto-compounded into your staked balance. This creates a direct economic relationship between FiRM borrowing demand and sDOLA yield: when borrowers compete more aggressively for DBR, auction prices rise and sDOLA returns increase. When demand is slower, yields moderate in line with actual protocol revenue. This revenue structure is what makes sDOLA yield genuinely sustainable. It is not funded by token emissions, farming incentives, or dilutive issuance — it is the direct output of fees paid by borrowers for the fixed-rate borrowing FiRM provides. *** ### DBR and jrDOLA jrDOLA, the protocol's first-loss insurance layer, also distributes DBR rewards to its depositors. Governance allocates a DBR budget — managed by the TWG operator multisig within limits set by governance — to incentivize deposits into the jrDOLA vault. The more DBR allocated to jrDOLA, the more attractive the yield for depositors willing to accept bad debt risk. This creates a market-driven mechanism for capitalizing the insurance buffer: when jrDOLA returns are competitive, the buffer grows, and the protocol can expand FiRM lending with greater safety for DOLA holders. *** ### Next Steps * **Borrow DOLA using DBR on FiRM** → [Getting Started with FiRM](/inverse-finance/inverse-finance/products/firm/getting-started-with-firm) * **Earn yield from DBR auction revenue** → [sDOLA](/inverse-finance/inverse-finance/products/tokens/dola/sdola) * **Provide insurance coverage and earn DBR** → [jrDOLA](/inverse-finance/inverse-finance/products/tokens/dola/jrdola) * **Understand FiRM's full security architecture** → [FiRM Security & Safety](/inverse-finance/inverse-finance/products/firm/firm-security-and-safety) * **See all supported collateral markets** → [FiRM Collateral Guide](/inverse-finance/inverse-finance/products/firm/firm-collateral-guide) # DOLA Feds DOLA Supply Management Fed contracts are specialized smart contracts that manage DOLA supply across different protocols and liquidity venues. Each Fed has the authority to mint new DOLA (expansion) or burn existing DOLA (contraction), allowing the protocol to adjust circulating supply in response to market demand. The name "Fed" draws inspiration from central banks like the U.S. Federal Reserve, but with a critical difference — Inverse Finance Feds operate transparently on-chain under DAO governance control, with every expansion and contraction visible in real-time. Feds serve two primary functions: providing DOLA supply where it's needed (lending markets, liquidity pools, stability modules) and maintaining DOLA's $1 peg through supply adjustments. Rather than requiring the DAO to manually mint and distribute DOLA across various venues, Feds automate this process within governance-approved parameters, allowing the Fed Chair to respond quickly to market conditions while maintaining accountability through on-chain transparency. *** ### How Feds Work All Fed contracts share core functionality regardless of their specific deployment venue. Each Fed can expand DOLA supply by minting new DOLA and supplying it directly to its connected protocol (a lending market, liquidity pool, or stability module). When contraction is needed, the Fed withdraws DOLA from the protocol and burns it, permanently removing it from circulation. These operations are controlled by the Fed Chair multisig, which can execute expansions and contractions within parameters set by governance, but cannot exceed globally approved limits or violate risk constraints established by the Risk Working Group. This creates a balance between operational flexibility (the Fed Chair can respond to market conditions in hours, not days) and decentralized control (the DAO sets the boundaries within which Feds operate). Every Fed operation is recorded on-chain and visible through the transparency portal. When the FiRM Fed expands by 1M DOLA to increase lending capacity, that transaction appears in the [Feds Policy page](https://www.inverse.finance/transparency/feds) with the exact timestamp, amount, and resulting total supply. When the PSM Fed contracts by withdrawing DOLA, the transaction is similarly logged. This transparency ensures the community can audit Fed behavior and verify that operations align with stated peg management goals. *** ### Active Fed Contracts The DAO currently operates three Fed contracts, each serving a distinct role in the DOLA ecosystem. #### FiRM Fed (Isolated-Lending) The FiRM Fed is DOLA's primary supply source, providing nearly all circulating DOLA through overcollateralized lending on FiRM's fixed-rate markets. When users deposit approved collateral types (wstETH, wBTC, sUSDe, INV, etc.) and borrow DOLA, that DOLA is minted by the FiRM Fed and backed by the borrower's collateral position. The Fed maintains both a global DOLA limit (the maximum total DOLA that can be borrowed across all FiRM markets) and per-market limits. These limits are set by governance based on risk assessments and recommendations driven by the RWG. For example, if a particular market shows signs of stress or the collateral becomes more volatile, the RWG may recommend reducing that market's daily borrow limit or market ceiling. #### Frontier Fed (Cross-Lending) The Frontier Fed represents a legacy Fed tied to the now-deprecated Frontier variable-rate lending protocol. Frontier was Inverse Finance's original lending product, launched in 2021, but was sunsetted in favor of FiRM's superior fixed-rate model and enhanced security features following the April 2022 exploit. While no new DOLA can be borrowed through Frontier, existing unbacked borrows remain outstanding. The Frontier Fed will gradually shrink over time as proceeds from other products owned by the Inverse Finance DAO repay this bad debt. #### PSM Fed (Peg Stability Module) The PSM Fed operates the Peg Stability Module, which enables direct 1:1 swaps between DOLA and approved stablecoins (currently USDS via integration with ERC4626 vaults). The PSM serves dual purposes: peg defense during stress periods and immediate liquidity provision for FiRM liquidators. The PSM's small size relative to total DOLA supply reflects its role as a backstop mechanism rather than a primary supply source. It exists to provide peg defense during stress events and ensure liquidators have access to DOLA when needed, not to supply the majority of DOLA in normal market conditions. The PSM represents the evolution of Inverse Finance's original DOLA Stabilizer (launched February 2021), which facilitated 1:1 DOLA-DAI swaps. The Stabilizer was deprecated in October 2023 as AMM Feds and FiRM made it redundant, but the need for immediate DOLA liquidity during liquidations persisted. The PSM addresses the Stabilizer's limitations while adding flexibility, yield generation on reserves, and extensibility for future peg defense mechanisms. *** ### Historical Context: AMM Feds Before FiRM became DOLA's dominant supply source, the protocol relied heavily on AMM Feds (Automated Market Maker Feds) that managed DOLA supply in decentralized exchange liquidity pools. These Feds would mint DOLA and deposit it into Curve, Balancer, Velodrome, Aerodrome pools alongside counterparty assets (USDC, FRAX, etc.), receiving LP tokens representing the Fed's share of the pool. When demand for DOLA increased (users swapping into DOLA or depositing counterparty assets), the AMM Fed would expand by minting additional DOLA to rebalance the pool. When demand decreased (users swapping out of DOLA), the Fed would contract by withdrawing and burning excess DOLA. The Fed's DOLA was effectively backed by the counterparty assets in the pool — if the Fed supplied 1M DOLA to a DOLA-USDC pool, it received LP tokens representing both the DOLA and an equivalent amount of USDC. This model worked but had limitations compared to the current FiRM-dominated approach. Capital efficiency was lower, peg management required more active intervention, and the backing structure was more complex. Most importantly, AMM Feds created DOLA supply without creating corresponding DOLA demand — the DOLA was just liquidity, not productive borrowing. Most AMM Feds have been deprecated, with DOLA liquidity now maintained through organic and/or incentivized liquidity provision rather than through Fed-managed positions. *** ### Monitoring Fed Operations Fed activity is fully transparent and can be monitored in real-time through the transparency portal. The [Feds Policy page](https://www.inverse.finance/transparency/feds) shows every expansion and contraction transaction across all Fed contracts, including: * Transaction hash (linking to Etherscan for full details) * Event type (Expansion or Contraction) * Amount of DOLA minted or burned * New Fed supply after the transaction * New total supply across all Feds * Timestamp
*** ### Resources * **Fed Operations:** [Transparency - Feds Policy](https://www.inverse.finance/transparency/feds) * **DOLA Supply Breakdown:** [Transparency - DOLA & Feds](https://www.inverse.finance/transparency/dola) # Peg Stability Module DOLA Peg Stability Module (PSM) The DOLA Peg Stability Module (PSM) provides direct 1:1 swaps between DOLA and USDS, serving as both a peg defense mechanism and critical liquidity infrastructure for FiRM liquidations. When DOLA deviates from $1, the PSM creates immediate arbitrage opportunities that restore balance while ensuring liquidators always have access to DOLA when needed. The PSM is the successor to the original DOLA Stabilizer (launched February 2021), which facilitated simple DOLA-DAI swaps. The Stabilizer was deprecated in October 2023 after AMM Feds and FiRM made it redundant. However, the need for immediate DOLA liquidity persisted — particularly for liquidators during volatile markets. The PSM addresses the Stabilizer's limitations through ERC4626 vault integration for yield on reserves, configurable fees, modular architecture, and controller hooks for future enhancements. *** ### How the PSM Works **USDS → DOLA (No Fee, 1:1 Ratio)** Users can swap USDS for DOLA at 1:1 with no fees when DOLA trades above $1. If DOLA is at $1.02 on Curve, arbitrageurs deposit USDS to mint DOLA, sell it at the premium, and profit from the difference. This arbitrage continues until DOLA returns to $1.
**DOLA → USDS (20 bps Fee, 1:0.998 Ratio)** Users can swap DOLA for USDS at 1:0.998 (0.2% fee) when DOLA trades below $1. If DOLA is at $0.98, arbitrageurs buy cheap DOLA from the market, swap it through the PSM for near-par USDS, and profit from the spread. The 20 bps fee prevents the PSM from being used during normal volatility — it only activates when DOLA is meaningfully undervalued.
*** ### Key Features * **ERC4626 Vault Integration:** PSM reserves are deposited into sUSDS (Sky's yield-bearing USDS) rather than sitting idle. Yield accrues to the DAO treasury, creating revenue from otherwise unproductive capital. * **Governance-Controlled Migration:** Governance can migrate reserves to new yield vaults if better opportunities emerge or risks develop in the current vault. * **Configurable Fees:** Swap fees are adjustable through governance proposals. Fee profits route to the DAO treasury or other strategic priorities. * **Controller Hooks:** Enable future features like depeg circuit breakers, dynamic fee adjustments, or enhanced liquidation integration without contract redeployment. * **Security Safeguards:** Minimum supply checks prevent inflation attacks. Modular architecture limits blast radius of potential vulnerabilities. *** ### Deployed Contracts | Contract | Address | Purpose | | -------------- | ------------------------------------------------------------------------------------------ | ------------------------------------- | | **PSM** | [`0x4dfd...9398`](https://etherscan.io/address/0x4dfd662622d766304cb539e66f893c4defa19398) | Core swap logic and vault integration | | **PSM Fed** | [`0x4005...d28`](https://etherscan.io/address/0x400510611BcBf9171F0E548F1C3dcA7159e60d28) | DOLA minting/burning authority | | **Controller** | [`0xe347...5ff2`](https://etherscan.io/address/0xe3475728673eabaec90a37aa3ae2ced9f0db5ff2) | Governance hooks and parameters | *** ### Resources * **PSM Activity:** [Transparency - DOLA & Feds](https://www.inverse.finance/transparency/dola) * **Transaction History:** [Transparency - Feds Policy](https://www.inverse.finance/transparency/feds) # Yield Opportunities Inverse Finance offers multiple ways to earn yield on your crypto assets, from simple auto-compounding strategies to advanced liquidity provision and leverage tactics. Current APYs and live opportunities are available on the [Yield Opportunities Dashboard](https://www.inverse.finance/tokens/yield-opportunities), which pulls data from DefiLlama and updates continuously. {% hint style="warning" %} **Risk Disclaimer:** All yield strategies carry smart contract risk. The opportunities mentioned on this page have not been audited by Inverse Finance unless explicitly stated otherwise. Different strategies carry different risk levels, with some subject to impermanent loss or divergence loss when DOLA is paired with volatile tokens like INV or wETH. Never invest more than you can afford to lose. Always conduct your own due diligence before participating in any yield opportunity. {% endhint %} *** ### sDOLA: Auto-Compounding Stablecoin Yield **Current APY:** [Check live rates](https://www.inverse.finance/tokens/yield-opportunities) sDOLA is the simplest way to earn yield — deposit DOLA and receive sDOLA tokens that automatically appreciate as FiRM's lending revenue accrues. No staking required, no manual claiming, no active management. Your sDOLA grows continuously and you can convert back to DOLA anytime with no lock-up period. sDOLA's yield comes from DBR revenue generated by FiRM borrowers, making it genuine protocol revenue share rather than inflationary farming rewards. The APY fluctuates based on borrowing activity — higher borrowing means more DBR burned and higher yields for sDOLA holders. **How to earn:** Navigate to [inverse.finance/sDOLA](https://inverse.finance/sDOLA), deposit DOLA to receive sDOLA, and watch it appreciate automatically. Available on Ethereum, Base, Optimism, Arbitrum, and Berachain. *** ### jrDOLA: Enhanced Yield Through Junior Tranche jrDOLA is the junior tranche of a structured yield product that offers enhanced returns by absorbing first-loss risk. When you deposit into jrDOLA, you earn higher yields than sDOLA in exchange for providing downside protection to senior tranche holders. If the underlying strategy experiences losses, jrDOLA absorbs them first before senior positions are affected. This makes jrDOLA suitable for users who understand tranched risk structures and are willing to accept additional risk for potentially higher returns. The enhanced yield compensates for the first-loss position in the capital stack. **How to earn:** Available through the [jrDOLA interface](https://www.inverse.finance/jrDOLA). Deposit DOLA or sDOLA to receive jrDOLA tokens representing your junior tranche position. Monitor your position regularly as first-loss exposure requires active risk management. *** ### sINV: Staking INV for Protocol Revenue **Current APY:** [Check live rates](https://www.inverse.finance/tokens/yield-opportunities) Stake INV for sINV to earn auto-compounding protocol revenue without locking tokens on FiRM. You receive DBR streaming rewards plus anti-dilution protection against INV supply expansions. The combined APY varies based on protocol revenue and emissions policy. Unlike FiRM staking, sINV doesn't allow borrowing against your position but also doesn't expose you to liquidation risk. You retain full voting rights while staked — sINV works for governance just like INV. **How to earn:** Visit the sINV interface, deposit INV to receive sINV, and your position appreciates automatically. Available cross-chain on Base, Optimism, and Arbitrum. *** ### Providing Liquidity to DOLA Pools **Current APYs:** [View all pools](https://www.inverse.finance/tokens/yield-opportunities) Provide liquidity to DOLA pools on Curve, Aerodrome, and other DEXs to earn trading fees plus potential protocol incentives. Liquidity provision offers higher yield potential than staking but carries impermanent loss risk, especially in volatile pairs. **Stablecoin Pools (Lower Risk):** * DOLA-sUSDe on Curve * DOLA-sUSDS on Curve * DOLA-scrvUSD on Curve * sDOLA-scrvUSD on Curve * DOLA-USR on Curve * DOLA-wstUSR on Curve * DOLA pairs on Aerodrome (Base) Stablecoin pools minimize impermanent loss since both assets maintain similar values, making them suitable for risk-averse liquidity providers seeking yield without significant principal risk. **Volatile Pools (Higher Risk, Higher Potential):** * INV-WETH on various DEXs * INV-DOLA-DBR on Curve Volatile pairs expose you to impermanent loss as asset prices diverge, but often offer higher base trading fees due to increased volatility. Only provide liquidity to volatile pools if you understand and accept the impermanent loss risk. **How to participate:** Check the [Liquidity page](https://www.inverse.finance/transparency/liquidity) for current pools, APYs, and TVL. Deposit equal value of both tokens to receive LP tokens, stake LP tokens if additional rewards are available, and monitor for impermanent loss regularly. *** ### Advanced: Leveraged Yield with FiRM **Estimated APY:** Varies significantly based on collateral, leverage, and DBR costs Experienced users can amplify returns by depositing yield-bearing collateral on FiRM, borrowing DOLA, swapping for more collateral, and repeating. This multiplies exposure to the collateral's native yield but introduces liquidation risk and requires managing DBR costs. This strategy works best when the collateral's yield exceeds DBR costs, you maintain conservative collateralization ratios, and you can actively monitor positions during volatility. Start with low leverage (1.5x-2x) if experimenting with this approach. {% hint style="warning" %} **Advanced Strategy Warning:** Leverage amplifies both gains and losses. Liquidations can result in permanent capital loss. Not recommended for beginners. {% endhint %} *** ### Comparing Yields Across DeFi **Inverse Finance Dashboard:** [inverse.finance/tokens/yield-opportunities](https://www.inverse.finance/tokens/yield-opportunities)\ Live APYs for sDOLA, sINV, liquidity pools, and FiRM borrowing costs updated continuously from DefiLlama. **StableYields.info:** [stableyields.info](https://www.stableyields.info/)\ Compare stablecoin yields across major DeFi protocols including sDAI, sUSDe, Aave, Compound, and dozens of others. Filter by risk level and understand whether yields come from protocol revenue, inflationary rewards, or trading fees. When evaluating yields, consider the source (protocol revenue is more sustainable than farming emissions), risk level (higher yields typically mean higher risk), liquidity (can you exit quickly?), track record (how long has the protocol operated?), and transparency (can you verify yields and backing on-chain?). *** ### Risk Considerations **Smart Contract Risk:** Every DeFi protocol depends on smart contracts that could contain bugs or vulnerabilities. Never deposit more than you can afford to lose. **Liquidation Risk:** If you borrow DOLA on FiRM, your collateral can be liquidated if its value drops too close to your debt value. Maintain conservative buffers and set up alerts. **Impermanent Loss:** Liquidity providers can suffer impermanent loss if the price ratio between paired assets changes significantly. This risk is minimal in stablecoin pairs but substantial in volatile pairs like INV-WETH. **Yield Fluctuation:** APYs are not guaranteed and change based on protocol usage and market conditions. Current yields may not persist indefinitely. **Peg Risk:** Stablecoin yields depend on the stablecoin maintaining its peg. DOLA has strong peg mechanisms, but no stablecoin is entirely risk-free. *** {% hint style="info" %} **Yield Optimization:** Don't chase the highest APY without understanding risk. Sustainable, protocol-revenue-based yields like sDOLA often provide better risk-adjusted returns than high-APY farming that relies on inflationary rewards. {% endhint %} # Governance # Governance Overview INV is the governance token of Inverse Finance. Every INV held in your wallet equals one vote in the DAO's on-chain governance system. INV holders control all protocol parameters, treasury allocations, risk decisions, and strategic direction — making them the true owners of the protocol. *** ### What INV Governance Controls The Inverse Finance DAO governs every aspect of the protocol through binding on-chain votes. This includes setting collateral factors and liquidation parameters across FiRM markets, approving new collateral types after risk assessment, managing DBR issuance rates and auction parameters, allocating treasury funds for liquidity programs and operational expenses, adjusting INV emission schedules and buyback rates, appointing and removing working group members and multisig signers, and executing protocol upgrades or contract deployments. No individual or team can make unilateral changes to the protocol. All decisions flow through the governance process, ensuring INV holders retain ultimate control. *** ### Governance Parameters **Minimum Voting Power to Submit Proposals:** 1,900 INV **Minimum Quorum for Passage:** 15,500 INV Proposals that meet quorum and receive majority support are automatically executed on-chain after the voting period ends. This on-chain execution model ensures governance decisions are binding and trustless — no multisig can block or override a passed proposal (except the Policy Committee's governance guardian role, detailed below). *** ### Working Groups and Multisigs To manage daily operations efficiently, Inverse Finance operates through working groups assigned specific roles via governance proposals. Each working group operates through a multisig wallet with designated signers and quorum requirements. This structure balances decentralization with operational speed, allowing the DAO to respond quickly to market conditions and protocol needs while maintaining transparency and accountability. The Risk Working Group (RWG) assumes a head-of-multisigs role, ensuring safety and best practices are followed across all working groups. This governance model is designed to give INV holders direct control over strategic direction while maximizing operational output in a fast-moving DeFi landscape. #### Working Group Overview | Working Group | Quorum | Primary Roles | | ---------------------- | ------ | ------------------------------------------------------------------------------------------------------------------------------ | | **Fed Chair** | 2 of 7 | Manages and implements Fed policies on Mainnet, Base, Optimism, and Arbitrum | | **TWG (Treasury)** | 3 of 5 | Optimizes the Inverse treasury and manages liquidity operations across Mainnet, Base, Fantom, Optimism, BNB Chain, and Polygon | | **Policy Committee** | 5 of 9 | Governance guardian role (can cancel proposals), manages reward rate policies, operates as BondsManager | | **GWG (Growth)** | 2 of 3 | Manages investments and costs related to growth initiatives | | **PWG (Product)** | 3 of 5 | Processes product-related expenses, acts as gas clerk on Arbitrum | | **AWG (Analytics)** | 2 of 3 | Improves protocol and DAO analytics | | **RWG (Risk)** | 1 of 3 | Creates risk monitoring toolsets, pause guardian role (can pause markets) | | **Bug Bounty Program** | 3 of 5 | Handles rewards for bug bounties | *** ### Governance Resources * [**Governance Portal**](https://www.inverse.finance/governance) * [**Delegates Directory**](https://inverse.finance/governance/delegates) * [**Forum**](https://forum.inverse.finance) * [**Discord**](https://discord.gg/BPgKmST4) *** {% hint style="info" %} **Your vote matters.** Inverse Finance is governed entirely by INV holders. Every proposal, every parameter change, and every treasury allocation is decided by the community. Participate to help shape the protocol's future. {% endhint %} # How to Vote Voting in Inverse Finance happens entirely on-chain through [Governor Mills](https://www.inverse.finance/governance), the DAO's proposal execution environment. Every INV token equals one vote, and proposals that reach quorum are automatically executed without requiring any trusted intermediary. This guide walks you through the voting process, delegation options, and how to participate in governance discussions. *** ### Before You Vote To vote on any proposal, you must first delegate your voting power — either to yourself or to another address. Delegation is required even if you plan to vote directly, as it activates your voting power on-chain. The good news: delegation is free and only requires a wallet signature, not a gas-paying transaction. **Why delegate to yourself?** If you want to vote directly on proposals, delegate to your own address to activate your voting power. **Why delegate to someone else?** Voting on-chain requires paying Ethereum gas fees for each vote, which can be expensive during network congestion. Delegating to a trusted community member allows them to vote on your behalf at no gas cost to you. You can revoke or change your delegation at any time. *** ### How to Delegate Your Voting Power From either the Governance Portal or Delegates Directory, find the *Your Current Voting Power* box.
Here you will see your eligible xINV, voting power, and who you are delegating to. To change your delegation select *Change INV Delegate.*
Here you will be given the option to select from a list of delegates, or to self-delegate. Were you to choose a delegate, select their address here, then sign the message, and share the generated signature with them. **The signature message looks like this:** `{`\ `"sig": "0xad4268d4e493edadsa64186fba40a2cc60de936f5c22daebd45cec2646bc443a...",`\ `"nonce": "0",`\ `"expiry": 10000000000,`\ `"chainId": 1,`\ `"signer": "0xE0e8C1D73569806047234279a8e4C20276Fc2ds24"`\ `}` Your delegate will register the signature on-chain, activating your voting power under their control. Your INV tokens remain in your wallet at all times — delegation only assigns voting rights, not custody. {% hint style="info" %} **Delegation is free.** You only sign a cryptographic proof with your wallet — no gas fees required. Your delegate pays the gas to register your delegation on-chain. {% endhint %} *** ### Finding the Right Delegate Active delegates can be found in the **#delegates-pitch** channel on Discord and maintain profiles on the [Delegates Directory](https://www.inverse.finance/governance/delegates). Review their voting history, read their policy positions, and engage with them in their dedicated Discord channels to ensure their views align with yours. Once a delegate accumulates 1,900 delegated votes, they gain the power to submit proposals on-chain. This threshold may be adjusted by governance in the future to account for INV supply changes. *** ### Changing Your Delegation Delegation is not permanent. You can redirect your votes to a different delegate or reclaim them to vote directly at any time. Simply follow the delegation process again with your new choice — the most recent delegation signature overrides all previous ones. {% hint style="warning" %} **Important:** While delegated, you cannot vote on proposals yourself unless you override as described above. Check your delegate's voting record regularly to ensure they continue to represent your interests. {% endhint %} *** ### How to Vote Directly If you've delegated to yourself or want to override your delegate for a specific proposal, follow these steps: 1\. Navigate to the [Governance Portal](https://inverse.finance/governance) connect your wallet. 2\. Review Active Proposals to see proposals currently open for voting. Each proposal displays: * Title and summary * Link to the forum discussion * On-chain actions that will execute if passed * Current vote totals and time remaining 3\. Read the Full Proposal. Understanding what will execute on-chain is critical — these are binding code changes, parameter updates, or fund transfers. 4\. Cast Your Vote. Select For or Against and confirm the transaction in your wallet. You'll pay Ethereum gas fees to submit your vote on-chain. 5\. Track Voting Progress. Your vote is recorded immediately and the proposal's vote totals update in real-time. Once the voting period ends (\~3 days), proposals that meet the 15,500 INV quorum and receive majority support enter the mandatory queueing period after which they are automatically executed. {% hint style="info" %} **Voting power is calculated at the snapshot block.** Your voting power is determined by your INV balance when the proposal was created, not when you cast your vote. Acquiring more INV after a proposal goes live will not increase your voting power for that specific proposal. {% endhint %} *** ### The Proposal Discussion Process Before any proposal is submitted on-chain, the Inverse Finance community follows a social agreement to publish and discuss it for at least 24 hours. This happens in two places: **The Inverse Finance Forum** All major proposals begin as forum posts where community members provide feedback, raise concerns, and refine the proposal scope. Visit forum.inverse.finance to read ongoing discussions and contribute your perspective. **Discord** Real-time governance discussions happen in the **#governance** channel on Discord. Join the conversation to ask questions, debate proposals, and hear from working group members and delegates. This 24-hour minimum ensures proposals are thoroughly vetted before moving to binding on-chain votes. Use this time to engage with the community and voice your support or concerns. *** ### Becoming a Delegate Any INV holder can become a delegate simply by stating their intentions in the Discord. Every active delegate as a dedicated channel on the Inverse Finance Discord server. Active delegates typically: * Share governance updates and voting rationales * Participate actively in forum discussions * Maintain transparent voting records * Engage with their delegators in dedicated Discord channel Delegates gain voting power by accepting delegation from other xINV holders. This is registered once you submit their delegation signature on the Governance Portal.
Once you accumulate 1,900 delegated votes, you gain the power to submit proposals on-chain, making you a key contributor to the DAO's decision-making process. *** ### Governance Resources * [**Governance Portal**](https://www.inverse.finance/governance) * [**Delegates Directory**](https://www.inverse.finance/governance/delegates) * [**Forum**](https://forum.inverse.finance/) * [**Discord**](https://discord.gg/BPgKmST4) *** {% hint style="info" %} **Gas fees too high?** Delegation lets you participate in governance without paying gas for every vote. Find a delegate whose views align with yours and let them vote on your behalf — it's free and you can change delegates anytime. {% endhint %} # Creating Proposals Any INV holder can initiate discussion around a governance proposal, but successful proposals require more than just meeting the 1,900 INV threshold. They require community buy-in, clear articulation, and thoughtful execution planning. This guide walks you through the process of creating, socializing, and launching a proposal that has the best chance of passing. *** ### Getting Involved in the DAO Before creating your first proposal, spend time understanding how the Inverse Finance community operates and what priorities matter most to existing contributors. Discord is where the community interacts daily through text and voice channels. Join discussions in #governance-general to socialize ideas, ask questions to understand the protocol better, and participate in the public working group channels to contribute to specific areas. Discord is the best place to gauge community sentiment before formalizing a proposal. **The Forum** is where proposals are formally discussed before going on-chain. Every major proposal should have a forum thread where community members can provide detailed feedback, raise concerns, and suggest improvements. Forum discussions are archived and searchable, making them the official record of proposal development. [Twitter](https://twitter.com/InverseFinance), [Newsletter](https://www.inverse.finance/newsletter), and [Blog](https://www.inverse.finance/blog/en-US) keep you informed about protocol updates, partnership announcements, and DAO priorities. Follow @InverseFinance on Twitter, subscribe to the weekly newsletter, and read the blog to understand the context and trajectory of the protocol. {% hint style="info" %} **Start by contributing, not proposing.** The most successful proposals come from active community members who understand the protocol's needs and have built trust through participation. Spend time in Discord, comment on existing proposals, and help others before launching your own initiative. {% endhint %} *** ### Attributes of Successful Proposals Strong proposals share common characteristics that make them clear, actionable, and trustworthy.
ClarityWrite in plain language that both technical and non-technical community members can understand. Clearly define the specific on-chain actions being proposed and any responsibilities assigned to DAO members or third parties. Avoid jargon where possible, and explain technical concepts when necessary.
CompletenessAll referenced information must be accessible through the proposal. Include links to relevant forum discussions, prior proposals, external documentation, or data sources. Do not make the proposal dependent on future circumstances that haven't been defined yet. Disclose any conflicts of interest for all parties involved.
AccountabilityWord responsibilities in a way that makes success or failure easy to define. If your proposal creates a new role or working group, specify deliverables, reporting requirements, and success metrics. Avoid vague commitments like "improve governance" without concrete actions.
Time LimitsFor experimental initiatives like new working groups or pilot programs, include moderate time limits (e.g., 3-6 months) with the expectation that successful programs will be renewed through subsequent proposals. This allows the DAO to evaluate results before committing long-term resources.
Reporting RequirementsIf your proposal involves ongoing work or spending, specify reporting requirements. Reports should have a clear owner responsible for publishing them, a defined frequency (monthly, quarterly), and a standard format. This ensures transparency and allows the DAO to track progress.
BudgetingAll expenses required to execute the proposal must be accounted for upfront. Long-term contributors with consistent workloads are paid in DOLA through the Payroll contract. One-time or project-based expenses should specify the exact amount needed from the Treasury. If the proposal passes, a spending allowance will be created for the appropriate wallet.
AgencyAny required multisig wallets, contract deployments, or technical prerequisites must be created before the proposal's execution. Identify willing multisig signers, verify their availability, and confirm they understand their responsibilities. Gas fees for setup actions will be reimbursed by the Treasury Working Group if the proposal passes.
*** ### The Proposal Lifecycle Proposals follow a structured path from ideation to execution: {% stepper %} {% step %} **Forum Discussion** Ideas are first discussed on the Inverse Finance Forum, where community members provide feedback, raise concerns, and refine the proposal scope. This informal discussion phase helps gauge sentiment before moving forward. {% endstep %} {% step %} **On-Chain Proposal** Once refined, a proposal is submitted on-chain by an address holding at least 1,900 INV. The proposal includes a detailed description, forum link, and specific on-chain actions (contract calls, parameter changes, fund transfers). {% endstep %} {% step %} **Voting Period** The voting period lasts 60 hours. INV holders cast votes weighted by their balance at the proposal's snapshot block. {% endstep %} {% step %} **Queueing Period** Once the voting period ends and If the proposal reaches the 15,500 INV quorum and receives majority support, the proposal will enter a mandatory 40 hour queueing period. The Policy Committee holds a governance guardian role allowing it to cancel proposals before execution if critical issues are identified, but this power is reserved for emergency situations only. {% endstep %} {% step %} **Execution** After the queueing period, the proposal becomes executable. Anyone can trigger execution by calling the execute function and paying the gas fee (typically done by a DAO member). The proposal must be executed within 14 days or it will expire and become unactionable. Once executed, all on-chain actions specified in the proposal occur automatically and irreversibly. {% endstep %} {% endstepper %} *** ### Proposal Execution Requirements **Quorum:** 15,500 INV minimum (combined For + Against votes) **Passage:** More For votes than Against votes **Queueing:** Automatic 40-hour delay after voting ends **Execution Window:** 14 days from the end of the queueing period {% hint style="info" %} **Execution is not automatic.** While proposals queue automatically if they pass, someone must manually trigger execution within the 14-day window. This is typically handled by DAO members, but anyone can execute a passed proposal. {% endhint %} *** ### Governance Resources * [**Governance Portal**](https://www.inverse.finance/governance) * [**Delegates Directory**](https://www.inverse.finance/governance/delegates) * [**Forum**](https://forum.inverse.finance/) * [**Discord**](https://discord.gg/BPgKmST4) *** {% hint style="info" %} **Good proposals take time.** Budget at least 1-2 weeks from initial Discord discussion to on-chain launch. Rushing the process increases the likelihood of rejection or, worse, passing a flawed proposal that harms the protocol. {% endhint %} # Technical # Smart Contracts Inverse Finance smart contract cheat sheet Inverse Finance operates entirely through smart contracts deployed on Ethereum and other chains. Every protocol function — from governance votes to DOLA minting to FiRM borrowing — is executed by audited, immutable code that anyone can verify on-chain. This page provides an overview of the contract architecture, links to key contracts, and resources for developers and security researchers. *** ### Contract Architecture Overview Inverse Finance's contracts are organized into several interconnected systems, each serving a specific protocol function. Understanding this architecture helps you navigate the codebase and verify how different components interact. **Governance Contracts** manage the DAO's decision-making system, including proposal submission, voting, execution, and multisig controls. Key contracts include Governor Mills (the main governance executor), the Policy Committee's governance guardian, and various working group multisigs. **FiRM Contracts** power the fixed-rate lending protocol with market-specific contracts for each collateral type, shared infrastructure like the BorrowController and Oracle, escrow contracts that custody deposited collateral, and price feed contracts that provide oracle data for liquidation calculations. **Fed Contracts** manage DOLA supply across multiple chains and liquidity venues, minting and burning DOLA based on market demand while maintaining peg stability through automated and multisig-controlled operations. **Token Contracts** include core assets like INV, DOLA, DBR, sDOLA, and sINV, along with cross-chain bridge infrastructure using Chainlink CCIP for moving tokens between Ethereum, Base, Optimism, Arbitrum, and Berachain. **Helper Contracts** provide convenience functions for users and integrators, including flash loan helpers, liquidity provision tools, auto-compounding wrappers, and batch transaction utilities. *** ### Key Contract Addresses **Core Protocol Tokens** | Token | Address | Chain | | ----- | -------------------------------------------- | -------- | | INV | `0x41d5d79431a913c4ae7d69a668ecdfe5ff9dfb68` | Ethereum | | DOLA | `0x865377367054516e17014ccded1e7d814edc9ce4` | Ethereum | | DBR | `0xad038eb671c44b853887a7e32528fab35dc5d710` | Ethereum | | sDOLA | `0xb45ad160634c528cc3d2926d9807104fa3157305` | Ethereum | | sINV | `0x08d23468A467d2bb86FaE0e32F247A26C7E2e994` | Ethereum | **Governance** | Contract | Address | Chain | | ------------------- | -------------------------------------------- | -------- | | Governor Mills | `0xbeccb6bb0aa4ab551966a7e4b97cec74bb359bf6` | Ethereum | | Treasury | `0x926df14a23be491164dcf93f4c468a50ef659d5b` | Ethereum | | Governance Guardian | `0x941c2699eC7E55a50Bde030d8E1e70649839259D` | Ethereum | **FiRM Core Infrastructure** | Contract | Address | Chain | | ------------------- | -------------------------------------------- | -------- | | BorrowController v4 | `0x01ECA33e20a4c379Bd8A5361f896A7dd2bAE4ce8` | Ethereum | | Oracle | `0xabe146cf570fd27ddd985895ce9b138a7110cce8` | Ethereum | | FiRM Fed | `0x2b34548b865ad66a2b046cb82e59ee43f75b90fd` | Ethereum | | DBR Distributor | `0xdcd2D918511Ba39F2872EB731BB88681AE184244` | Ethereum | *** ### Active FiRM Markets FiRM operates multiple lending markets, each with its own collateral-specific contracts. Below are the currently active markets as of February 2026: **Major Collateral Markets** * **WETH Market** — `0x63df5e23db45a2066508318f172ba45b9cd37035` * **wstETH Market** — `0x3FD3daBB9F9480621C8A111603D3Ba70F17550BC` * **wBTC Market** — `0x48BA574Edf0bc4E2E40B529863aaA6a67c264E7C` * **cbBTC Market** — `0x2A256306D8ba899E33B01e495982656884Ac77FF` **Stablecoin & Yield Markets** * **sUSDe Market** — `0x79eF6d28C41e47A588E2F2ffB4140Eb6d952AEc4` * **Convex DOLA-sUSDe Market** — `0xb427fc22561f3963b04202f9bb5bcebd76c14a99` * **Yearn DOLA-sUSDe Market** — `0x4e264618dc015219cd83dbc53b31251d73c2db1a` * **Convex DOLA-sUSDS Market** — `0xD68d3a44d46dd50BFeBa8Cca544717B76e7C4b29` * **Yearn DOLA-sUSDS Market** — `0x4A33baFA8a31E4ec9649f65646022cAD1957808b` * **Convex DOLA-wstUSR Market** — `0xe4D47Ef77AC2C3FA4019Cd169Ac1Dd9E27cb12E4` * **Yearn DOLA-wstUSR Market** — `0x28684485369f7478f42aAA62660123AB5D573537` * **Convex sDOLA-scrvUSD Market** — `0x63D27fC9d463Ed727676367D3F818999962737E8` * **Yearn sDOLA-scrvUSD Market** — `0xb8bc1E9c0a2d445bc39d2A745F47619E954dD565` **Governance & DeFi Tokens** * **INV Market** — `0xb516247596Ca36bf32876199FBdCaD6B3322330B` * **CRV Market** — `0x63fAd99705a255fE2D500e498dbb3A9aE5AA1Ee8` * **cvxCRV Market** — `0x3474ad0e3a9775c9F68B415A7a9880B0CAB9397a` * **Staked CVX Market** — `0xdc2265cBD15beD67b5F2c0B82e23FcE4a07ddF6b` * **st-yCRV Market** — `0x27b6c301Fd441f3345d61B7a4245E1F823c3F9c4` *** ### Cross-Chain Deployments Inverse Finance operates on multiple chains through Chainlink CCIP bridges and chain-specific Fed contracts. **sDOLA Deployments** | Chain | sDOLA Address | Governance Proxy | | --------- | -------------------------------------------- | -------------------------------------------- | | Base | `0xCa78ee4544ec5a33Af86F1E786EfC7d3652bf005` | `0x1C064265E053D23d120c518fDBB542e6537f82d1` | | Optimism | `0xfc63C9c8Ba44AE89C01265453Ed4F427C80cBd4E` | `0xaF956837AF704D825c1FCbE2651D5c3c37AD5289` | | Arbitrum | `0x7a1e123e41458aabaB8068BFed6010D8f9480898` | `0x607bCd974bB69C78eCdbf0B68748B791bBa24d94` | | Berachain | `0x02eaa69646183c069FC2B64F15923F27B9CF3b03` | `0x1992AF61FBf8ee38741bcc57d636CAA22A1a7702` | **sINV Deployments** | Chain | sINV Address | Governance Proxy | | -------- | -------------------------------------------- | -------------------------------------------- | | Base | `0x8Bbd036d018657E454F679E7C4726F7a8ECE2773` | `0x5D5392505ee69f9FE7a6a1c1AF14f17Db3B3e364` | | Optimism | `0x1992AF61FBf8ee38741bcc57d636CAA22A1a7702` | `0xCbB162B761B83578b2a0226cbAf4C1adE0d60B2e` | | Arbitrum | `0x4C7b266B4bf0A8758fa85E69292eE55c212236cF` | `0x1230bd56bf23Bf7adF95b9F861711301E3CCd6b3` | *** ### Contract Governance & Upgrades Inverse Finance contracts follow different upgradeability patterns depending on their function and risk profile. **Immutable Contracts** Core token contracts (INV, DOLA, DBR) are immutable and cannot be upgraded. Their code is fixed at deployment, ensuring no single party can change token mechanics. **Governance-Controlled Contracts** Most protocol contracts are controlled by Governor Mills, the DAO's on-chain governance system. Parameters like collateral factors, liquidation incentives, and borrow caps can be adjusted through governance votes, but core contract logic remains fixed unless a new contract is deployed and approved by governance. **Multisig-Controlled Contracts** Certain operational contracts are controlled by working group multisigs for day-to-day management. These include Fed contracts that manage DOLA supply, oracle configurations that require rapid updates, and helper contracts that provide convenience functions. All multisig actions are transparent on-chain and can be monitored in real-time. **Emergency Controls** Key multisigs holdd limited emergency powers including the ability to cancel proposals and pause active markets (but not unpause). These defensive measures help protect the protocol during exploits or oracle failures but cannot be used to change core economics or access user funds. *** ### Historical Context Inverse Finance has evolved significantly since its 2020 launch, with contracts reflecting different product iterations and market conditions. **Deprecated Products** Some contracts in the registry represent discontinued products including Frontier (deprecated variable-rate lending), Fuse pools (Rari Capital integration, deprecated 2022), DCA vaults (discontinued), and various Fed contracts for sunset liquidity venues. These contracts remain in the registry for historical transparency and audit trail purposes. **Contract Migrations** The protocol has undergone several major contract migrations to improve functionality and security including BorrowController v1 → v4 (improved debt management), DBR Auction v1 → v2 (enhanced liquidity), and various price feed upgrades (improved oracle resilience). Understanding this evolution helps contextualize why multiple contract versions exist and how the protocol has responded to changing DeFi landscape and security best practices. *** ### Resources * [**Audits**](/inverse-finance/inverse-finance/technical/audits)**:** Security & Audit Reports * [**Bug Bounty**](/inverse-finance/inverse-finance/technical/bug-bounty)**:** Immunefi Program * [**GitHub**](https://github.com/inversefinance)**:** Open Source Repository *** {% hint style="success" %} **Building on Inverse?** Join the Discord server to get support, share your integration, and connect with the core team. {% endhint %} # Audits Inverse Finance has undergone multiple audits as part of our smart-contract review process. Our on-going efforts in identifying security-related bugs are made public in the spirit of transparency. These are briefly summarized below. Further information or risk prevention can be found in the [RWG Gitbook](https://inverse-dao.gitbook.io/inverse-finance-risk/).
Sherlock - Monolith (Contest) Monolith's third comprehensive security audit was in the form a public contest, hosted by Sherlock in December 2025. The complete audit report will be made available once all remediation efforts are finalized.
Sherlock - Junior Tranche (Contest) Following the private audit, jrDOLA underwent a public audit contest in November 2025, opening the codebase to Sherlock's broader security researcher community. This dual-audit approach combined the focused expertise of specialized auditors with the distributed scrutiny of competitive security research. The public contest format incentivized thorough review of all protocol components, with researchers competing to identify edge cases and potential vulnerabilities missed during the private phase.
Sherlock - Junior Tranche (jrDOLA) The jrDOLA Global Junior Tranche underwent a comprehensive private audit with Sherlock in October 2025, engaging specialized security researchers Hash and Osidian. The audit focused on critical protocol mechanisms including ERC-4626 vault mechanics, slashing logic, and withdrawal queue edge cases. This initial security review identified and addressed potential vulnerabilities before broader public scrutiny, ensuring the core architecture met production security standards. All findings were remediated prior to the subsequent public audit contest.
ChainSecurity - Monolith Monolith's second comprehensive security audit was conducted by ChainSecurity in October 2025. The complete audit report will be made available once all remediation efforts are finalized.
yAudit - Monolith Monolith, Inverse's innovative single-collateral lending protocol featuring a novel debt-free borrowing mode, underwent its first security audit by Electisec in May 2025. Two experienced auditors conducted a five-day comprehensive review of the core protocol contracts including Vault.sol, Lender.sol, InterestModel.sol, Factory.sol, and Coin.sol. The audit identified one critical finding related to interest accrual initialization, one medium-severity issue concerning collateral handling, and several lower-impact findings—all of which were promptly addressed by the development team. The audit report can be found here.
yAudit - sDOLA + DOLA Savings Account sDOLA and the DOLA Savings Account (DSA) were audited in January 2024 by yAudit, a budding collective of auditors recruited from [yAcademy](https://yacademy.dev/about/) (Yearn Finance’s auditing program). The scope of the review consisted of DolaSavings.sol, sDola.sol, and sDolaHelper.sol contraacts. The [audit](https://inverse.finance/audits/sDOLA-yAudit.pdf), spanning three days, uncovered a range of findings from high to low impact, alongside gas-saving and informational insights. Critical vulnerabilities, such as the susceptibility of the sDola vault to inflation attacks and the potential manipulation of sDola in lending-borrowing markets, were promptly addressed. Lower-impact issues, focusing on aspects like checks and function optimizations, were also noted for improvement
Nomoi - FiRM FiRM's second security audit was conducted in April 2023. The experts at Nomoi, a boutique Web3 hacker collective with roots in Open Zeppelin and Consensys, spent over a week reviewing our FiRM repository, with the objective of providing an independent assessment of our smart contracts’ security, code quality, and overall functionality. Since the Code4rena contest, 4 additional markets had been added to FiRM, some requiring non-standard oracle implementations. This engagement was made possible by our friends at Convex Finance, who graciously offered to connect us with Nomoi in preparation for the forthcoming launch of the cvxCRV market on FiRM. The report can be found [here](https://www.inverse.finance/audits/firm-nomoi.pdf).
Code4Rena - FiRM (Contest) Inverse hosted a 5-day open bug bounty contest, which ran between October 25-30, 2022, on the Code4rena platform to conduct a comprehensive audit of our new fixed-rate lending protocol, FiRM. The contest saw $50,000 in rewards up for grabs and 198 white-hat researchers taking part, the highest recorded participation ever at the time. The final report can be found [here.](https://code4rena.com/reports/2022-10-inverse) Several qualified security projects and firms had been vetted by our RWG, and the vibrant community at Code4rena stood out to the team as both highly skilled and genuine. We see immense value in this form of auditing and look forward to a future partnership between Inverse and Code4rena.
DeFiMoon - FiRM The RWG onboarded boutique auditing firm [DefiMoon](https://www.inverse.finance/blog/posts/en-US/new-security-layer-a-welcome-to-the-defi-moon-team) during Q3 and Q4 2022 as security partners, with the intent of having their team complement internal QA and testing and bolster our security infrastructure. After a period of research and introductions into several qualified auditing firms, DeFi Moon stood out as a talented and genuine team eager to take on the challenge. During this time they performed an informal audit of FiRM contracts prior to the Code4Rena bug bounty contest. Pre-launch audit can be found [here.](https://github.com/Defimoonorg/Audit-Report/blob/main/InverseFinance.pdf) DefiMoon also provided security consulting and auditing for the [Convex Fed](https://www.inverse.finance/governance/proposals/mills/66), [Aura Fed](https://www.inverse.finance/governance/proposals/mills/71), and [Velo Fed](https://www.inverse.finance/governance/proposals/mills/68) contracts. Their expertise helped us identify and address potential risks and improve the safety and security of these deployments. We’re grateful for their support.
Peckshield - Debt Converter/Repayer An audit of the bad debt repayment products and a new INV oracle solution was performed by Peckshield in Q2 2022. Their report can be found [here](https://drive.google.com/file/d/1LWNG08mib2GcI1WqnMt5IdFoW73QU2F8/view).
# Bug Bounty Inverse Finance has selected Sherlock as host platform for our [Bug Bounty Program](https://immunefi.com/bounty/inversefinance/). We've set up a maximum bounty size of 100,000 DOLA. Users can report bugs anonymously through Sherlock to be reviewed by our committee. Read more about the Bug Bounty Program here.
*** ### **Assets in Scope** Only items explicitly listed in the [program's homepage](https://audits.sherlock.xyz/bug-bounties/233) and below are considered eligible for Inverse’s bug bounty program and, therefore, in-scope. We consider bug bounties to be a lasting complement to any external or in-house security audit capabilities that Inverse Finance develops. As such, smart contracts will only be eligible for the Bug Bounty Program once they have undergone our review process which may include rigorous testing by a third party auditor. The RWG actively manages the program with regular scope updates to reflect the latest protocol deployments. Our scope undergoes continuous review to ensure security researchers focus their efforts on active, production-critical contracts while deprecated components are promptly removed. *** ### **Impacts in Scope** Only the following impacts are accepted within this bug bounty program. All other impacts are not considered as in-scope, even if they affect something in the assets in scope table.
In Scope **Critical** * Manipulation of governance voting result deviating from voted outcome and resulting in a direct change from intended effect of original results * Direct theft of any user funds, whether at-rest or in-motion, other than unclaimed yield. * Direct theft of any user NFTs, whether at-rest or in-motion, other than unclaimed royalties * Permanent freezing of funds * Permanent freezing of NFTs * Unauthorized minting of NFTs * Predictable or manipulable RNG that results in abuse of the principal or NFT * Unintended alteration of what the NFT represents (e.g. token URI, payload, artistic content) * Protocol insolvency * Theft of unclaimed yield * Theft of unclaimed royalties * Permanent freezing of unclaimed yield * Permanent freezing of unclaimed royalties Websites and Applications * Direct theft of user funds * Malicious interactions with an already-connected wallet, such as: Modifying transaction arguments or parameters, Substituting contract addresses, Submitting malicious transactions **High** * Temporary freezing of funds * Temporary freezing of NFTs **Medium** * Smart contract unable to operate due to lack of token funds * Block stuffing * Griefing (e.g. no profit motive for an attacker, but damage to the users or the protocol) * Theft of gas * Unbounded gas consumption **Low** * Contract fails to deliver promised returns, but doesn't lose value
Out of Scope These impacts are out of scope for this bug bounty program. **All Categories:** * Impacts requiring attacks that the reporter has already exploited themselves, leading to damage * Impacts caused by attacks requiring access to leaked keys/credentials * Impacts caused by attacks requiring access to privileged addresses (governance, strategist) except in such cases where the contracts are intended to have no privileged access to functions that make the attack possible * Impacts relying on attacks involving the depegging of an external stablecoin where the attacker does not directly cause the depegging due to a bug in code * Mentions of secrets, access tokens, API keys, private keys, etc. in Github will be considered out of scope without proof that they are in-use in production * Best practice recommendations * Feature requests * Impacts on test files and configuration files unless stated otherwise in the bug bounty program **Blockchain/DLT & Smart Contract Specific:** * Incorrect data supplied by third party oracles * Not to exclude oracle manipulation/flash loan attacks * Impacts requiring basic economic and governance attacks (e.g. 51% attack) * Lack of liquidity impacts * Impacts from Sybil attacks * Impacts involving centralization risks **Websites and Apps** * Theoretical impacts without any proof or demonstration * Impacts involving attacks requiring physical access to the victim device * Impacts involving attacks requiring access to the local network of the victim * Reflected plain text injection (e.g. url parameters, path, etc.) * This does not exclude reflected HTML injection with or without JavaScript * This does not exclude persistent plain text injection * Any impacts involving self-XSS * Captcha bypass using OCR without impact demonstration * CSRF with no state modifying security impact (e.g. logout CSRF) * Impacts related to missing HTTP Security Headers (such as X-FRAME-OPTIONS) or cookie security flags (such as “httponly”) without demonstration of impact * Server-side non-confidential information disclosure, such as IPs, server names, and most stack traces * Impacts causing only the enumeration or confirmation of the existence of users or tenants * Impacts caused by vulnerabilities requiring un-prompted, in-app user actions that are not part of the normal app workflows * Lack of SSL/TLS best practices * Impacts that only require DDoS * UX and UI impacts that do not materially disrupt use of the platform * Impacts primarily caused by browser/plugin defects * Leakage of non sensitive API keys (e.g. Etherscan, Infura, Alchemy, etc.) * Any vulnerability exploit requiring browser bugs for exploitation (e.g. CSP bypass) * SPF/DMARC misconfigured records) * Missing HTTP Headers without demonstrated impact * Automated scanner reports without demonstrated impact * UI/UX best practice recommendations * Non-future-proof NFT rendering
*** ### **Rules** The following activities are prohibited by this bug bounty program: * Any testing on mainnet or public testnet deployed code; all testing should be done on local-forks of either public testnet or mainnet * Any testing with pricing oracles or third-party smart contracts * Attempting phishing or other social engineering attacks against our employees and/or customers * Any testing with third-party systems and applications (e.g. browser extensions) as well as websites (e.g. SSO providers, advertising networks) * Any denial of service attacks that are executed against project assets * Automated testing of services that generates significant amounts of traffic * Public disclosure of an unpatched vulnerability in an embargoed bounty Please feel free to contact the Risk Working Group via our Discord Server with any questions about the rules or rewards for this program. *** ### **Direct-to-Inverse Submissions** The RWG primarily processes vulnerability reports through our official Sherlock program. However, under extraordinary circumstances and at the sole discretion of the RWG, we may accept direct submissions outside the traditional bug bounty platform. Researchers considering a direct submission should first contact the Risk Working Group via our [Discord Server](https://discord.gg/inversefinance) to discuss whether their situation warrants this alternative channel. If approved, we will provide guidance on secure file sharing practices, proof-of-concept requirements, and applicable reward policies. {% hint style="info" %} **Note:** Direct submissions are evaluated on a case-by-case basis and acceptance is not guaranteed. We strongly encourage all researchers to use our Sherlock program for standard vulnerability disclosures. {% endhint %} # Safe Harbor Agreement In March 2025, Inverse Finance DAO[ adopted the **SEAL Whitehat Safe Harbor Agreement**](https://www.inverse.finance/governance/proposals/mills/273) to strengthen our protocol’s ability to respond swiftly to active exploits. Safe Harbor represents a breakthrough in blockchain security, allowing vetted whitehats to legally intervene during live attacks, rescue imperiled assets, and redirect them to protocol-owned vaults. This process not only deters malicious actors but also rewards proactive defenders, enhancing our overall security posture.
*** ### **Why It Matters** Traditional responsible disclosure processes and bug bounties are reactive, guiding whitehats to report vulnerabilities once they’ve discovered them. However, during an ongoing exploit, timely intervention can make the difference between a small loss and a catastrophic one. Safe Harbor legally empowers whitehats to act immediately, recovering funds without fearing legal repercussions. By coupling financial incentives with explicit legal clarity, Safe Harbor fosters a community-driven approach to real-time security, filling a critical gap in DeFi’s defense mechanisms. *** ### **Implementation at Inverse Finance** * **Bounty Terms**: Whitehats receive up to 10% of the recovered assets, capped at $1,000,000. * **Recovery Addresses**: Funds are sent to specific on-chain addresses managed by Inverse Finance. * **Anonymous Participation**: Whitehats can remain anonymous, requiring no identity verification to ensure broader participation and faster rescues. * **On-Chain Registration**: The agreement is registered on Ethereum via the Safe Harbor Registry, guaranteeing transparency and immutability. * **Ongoing Scope Updates**: Newly deployed contracts can be added to the Safe Harbor scope via governance, ensuring continued coverage. *** ### EXHIBIT D: USER ADOPTION PROCEDURES **User Agreement to be Bound By Agreement, Consent to Attempted Eligible Funds Rescues and Payment of Bounties** The User hereby acknowledges and agrees to, and consents to be bound by the terms and conditions of, that certain Safe Harbor Agreement for Whitehats, adopted by the Inverse Finance DAO on March 5th, 2025 (the “Whitehat Agreement”), available [here](https://www.inverse.finance/governance/proposals/mills/273), as a “User” and member of the “Protocol Community” thereunder. Without limiting the generality of the foregoing: * the User hereby consents to Whitehats attempting Eligible Funds Rescues of any and all Tokens deposited into the Protocol by the User and the deduction of Bounties out of User’s deposited Tokens to compensate Eligible Whitehats for successful Eligible Funds Rescues; * the User acknowledges and agrees that Tokens may be lost, stolen, suffer diminished value, or become disabled or frozen in connection with attempts at Eligible Funds Rescues, and assumes all the risk of the foregoing; * the User acknowledges and agrees that payment of the Bounty as a deduction from User’s Tokens to an Eligible Whitehat may constitute a taxable disposition by the User of the deducted Tokens, and agrees to assume to all risk of such adverse tax treatment; and * the User agrees to hold the other Protocol Community Members harmless from any loss, liability or other damages suffered by the User in connection with attempted Eligible Funds Exploits under the Whitehat Agreement. # About # Organization Inverse Finance is organized as a Decentralized Autonomous Organization (DAO) driven by community members who hold the INV token along with contributors that work full-time for the DAO. Contributors collectively bring many years of experience in cryptocurrency, DeFi, and blockchain development. *** ### **Contributors**
Nour/dev. Discord: Nour#6042. Twitter: @NourHaridy/files/GjafE6JpIPqIjVyI7gl2
0xMT/dev. Discord: 0xMT#2776. Twitter: @08xmt/files/Lgqw8HjNuWEv8ST2Z1FW
Alien/dev. Discord: theAlienTourist#3740. Twitter: @theAlienTourist /files/ANS0979zx4cdKHqyZM1L
cryptoharry/treasury. cryptoharry#5597. #0xCryptoHarry /files/ZVtoXlRr4KDgFufWkC9r
Edo/risk. Discord: edo#4889. Twitter: @EdoInv /files/A3jdkPYJJdnhBq01WAAo
Karm/risk. Karm#8074. @karmatron0x/files/XfivYOJ9uFFBaFz6DLkz
Tabboz/dev. Discord: Tabboz. Twitter: @tabboz23/files/A4i1zaiojJ2yxg02POyo
*** ### Working Groups The DAO delegates specific decision-making powers to working groups through governance proposals. Each working group operates with limited autonomy and defined budgets, allowing for fast execution within their domain while maintaining accountability through progress reports and periodic reapplication for funding. Delegates have visibility into working group discussions on Discord, and any group can be modified or disbanded by DAO vote at any time.

🛠️ Product Working Group (PWG)

Mission: Drive product innovation and maintenance across all Inverse Finance products.

The PWG is a multidisciplinary team of core contributors who take product ideas from initial ideation through validation (user needs, business case, technical feasibility) to final implementation and ongoing maintenance. The team ensures Inverse products remain competitive, secure, and aligned with market demand.

💰 Treasury Working Group (TWG)

Mission: Optimize treasury asset management to support the DOLA ecosystem and protocol growth.

The TWG enables fast, dynamic decisions around OTC deals, protocol-owned liquidity allocation, and DeFi opportunities across multiple chains including Ethereum, Optimism, Base, Arbitrum, and Polygon. The TWG also absorbed the Growth Working Group's functions, now handling business development, marketing, partnerships, and community initiatives aimed at expanding DOLA circulation and protocol revenue.

⚖️ Risk Working Group (RWG)

Mission: Provide sound risk analysis, ongoing monitoring, and support for all Inverse Finance functions.

The RWG supports DOLA expansion initiatives through comprehensive risk assessments, manages ongoing monitoring of existing products, and provides risk guidance to other working groups. The RWG also absorbed analytics functions, now providing data dashboards, API endpoints, on-chain alerts, and monitoring tools through Inverse.Watch. For detailed information about RWG operations, see their dedicated documentation.

*** Working groups are held accountable by DAO governance, are required to produce progress reports, and periodically re-apply for budget renewals. Delegates have insight into relevant Discord conversations and working groups can be modified or disbanded by a DAO vote. The DAO may also vote at any time to launch a new working group. *** {% hint style="success" %} **Want to get involved?** Join the conversation in Discord, participate in working group discussions, and consider contributing your skills to help build the future of Inverse Finance. {% endhint %} # Transparency Inverse Finance strives to operate amongst DeFi's most transparent DAOs. Our [Transparency Portal ](https://inverse.finance/transparency.)provides real-time data on every aspect of protocol operations including treasury holdings, liquidity positions, governance activity, FiRM market metrics, DBR supply dynamics, DOLA backing sources, and bad debt repayment progress. All data is pulled directly from on-chain sources and updated continuously, ensuring anyone can verify the protocol's financial health and operational status at any time. *** ### Why Transparency Matters Transparency is a core principle of DeFi, but many protocols treat it as an afterthought. Inverse Finance takes the opposite approach — comprehensive transparency is built into the protocol's culture and infrastructure. The transparency portal serves multiple purposes: it allows INV holders to make informed governance decisions, enables DOLA users to verify the stablecoin's backing in real-time, helps risk analysts assess protocol health, and provides accountability for working group operations and treasury management. Unlike centralized finance where financial data is released quarterly and subject to manipulation, Inverse Finance's transparency portal updates every few minutes with data pulled directly from Ethereum and other chains. The "Don't trust, verify" motto appears at the top of the transparency portal — this isn't mere rhetoric. Every number, every chart, every metric can be independently verified by querying the blockchain directly. There's no lag, no sanitization, and no opportunity to hide unfavorable metrics. When markets are volatile, users can see exactly how FiRM collateral values are holding up. When bad debt accumulates, the exact amount and repayment progress are visible immediately. This level of radical transparency builds trust and allows the community to respond quickly to changing conditions. The transparency portal is designed for different user types with varying levels of sophistication. Casual DOLA users might only check the DOLA & Feds page occasionally to verify backing, while active INV governance participants likely monitor multiple pages regularly to inform voting decisions. Risk analysts and auditors can dive deep into granular transaction data and historical charts to assess protocol health comprehensively. *** ### Key Metrics Overview
The [Key Metrics page](https://www.inverse.finance/transparency/keymetrics) provides a high-level snapshot of protocol health across all major categories. This is typically the first stop for users checking in on Inverse Finance's current state. The top row displays core protocol statistics including FiRM's total value locked (TVL), total borrows outstanding, number of active borrowers, DOLA's circulating supply, and INV's market capitalization. These numbers give an immediate sense of protocol scale and usage. Below the headline metrics, several visualizations break down the data by category. The "TVL by Market" chart shows which FiRM collateral types hold the most value, indicating where users are most actively depositing assets. The "Borrows by Market" chart reveals borrowing patterns, showing which collateral types borrowers prefer for DOLA loans. The "DOLA Backing Sources" chart is particularly important — it shows exactly what assets back the DOLA stablecoin, breaking down the proportion backed by collateral on FiRM versus other sources. Currently, over 97% of DOLA is backed by collateral deposited on FiRM, making FiRM's health directly tied to DOLA's stability. The page also includes historical charts tracking FiRM revenues and fees over time, as well as the relationship between total collateral value and outstanding borrows. These charts help identify trends in protocol usage and revenue generation. *** ### Treasury Holdings The [Treasury page](https://www.inverse.finance/transparency/treasury) provides complete visibility into the DAO's financial reserves across multiple chains and asset types. Understanding treasury composition is critical for evaluating the protocol's runway and ability to fund operations, incentivize liquidity, and weather market downturns. The "Treasury Evolution" chart at the top of the page shows how total treasury value has changed over time, reflecting capital inflows from revenue, outflows from operational expenses, and market value fluctuations of treasury assets. The current treasury value is displayed prominently alongside a breakdown by asset category. Several sections break down treasury holdings by type and location. The "Total Treasury Holdings" chart shows the proportion held in veNFTs (vote-escrowed NFTs from protocols like Aerodrome and Velodrome) versus other stable and volatile assets. The "Total Stable Reserves" section specifically tracks stablecoin holdings across different yield strategies, showing exactly how much stable liquidity the DAO has available for immediate expenses or market interventions. The "Multisigs' Holdings" section deserves special attention — it shows how much value each working group multisig controls across different chains. The Treasury Working Group (TWG) holds the largest portion, managing assets on Base, Ethereum, and other chains for liquidity operations and strategic deployments. This transparency ensures working groups remain accountable for the funds they control. The "In Treasury Contract" section shows assets held directly in the main treasury smart contract, including DBR, DOLA, and other tokens. These assets are controlled exclusively by governance and require on-chain votes to move, providing an extra layer of security for the protocol's most critical reserves. *** ### Liquidity Analysis
The [Liquidity page](https://www.inverse.finance/transparency/liquidity) provides exhaustive detail on every DOLA liquidity pool across all chains and protocols. This is where DOLA's peg stability mechanisms become transparent — deep, well-distributed liquidity is essential for maintaining DOLA's $1 peg under all market conditions. The page opens with current DOLA price and 24-hour trading volume, followed by three main categories: total DOLA liquidity (all pools), stable liquidity (DOLA paired with stablecoins like USDC or USDebtcoins), and volatile liquidity (DOLA paired with volatile assets like ETH). Each category displays total value locked, average DOLA weight in the pools, and total pairing depth (the value of non-DOLA assets paired with DOLA). The pie charts break down liquidity distribution by pair type, chain, protocol, and strategy (with Fed vs. without Fed). These visualizations quickly reveal whether liquidity is concentrated in a few pools or well-distributed across venues, which chains host the most DOLA activity, and what proportion of liquidity receives Fed support (automatic DOLA supply management based on demand). The detailed "Liquidity Pools Details" table lists every active DOLA pool with comprehensive data including TVL, pairing depth, DOLA balance and weight, APY, pool dominance (percentage of total DOLA liquidity), profit/loss (PnL), daily earnings, and whether the pool has a Fed contract managing supply. This table allows sophisticated users to identify the most efficient liquidity venues and evaluate whether liquidity is properly distributed to support healthy DOLA trading. Users can filter the table by stable/volatile pairs, specific chains, or whether pools have Fed support. The "Zap" column provides direct links to add liquidity to specific pools, making it easy to contribute to DOLA liquidity where it's most needed. *** ### INV & DAO Metrics
The [INV & DAO page](https://www.inverse.finance/transparency/dao) covers governance token distribution, voting power concentration, DAO activity levels, contributor compensation, and multisig operations. This section provides accountability for how the DAO operates and ensures power isn't overly concentrated. The "INV price adjusted to Circ. Supply" chart shows INV's market price adjusted for circulating supply variations over time, providing a more accurate historical pricing view that accounts for supply expansions and contractions. This helps evaluate INV's value trajectory independent of supply changes. The "DAO voting & INV" section reveals voting power distribution across the token holder base. The pie chart shows what percentage of total INV participates in governance versus remains inactive or is held by non-voting holders. The "DAO Proposals" bar chart displays governance activity over the past 12 months, showing how many proposals were submitted each month and whether the DAO is actively evolving or stagnant. Two sections track contributor compensation: "DOLA monthly payrolls" shows the current monthly burn rate by working group (Engineering, Treasury, Growth, Risk, Analytics, Founder), while "Unclaimed payrolls" reveals how much compensation has been earned but not yet claimed by contributors. These sections ensure transparent accounting of DAO operational expenses. The "INV Granted" section tracks vested INV allocations, particularly the 2-year vesting schedule used for strategic investor grants (like the bad debt repayment INV swap discussed in the tokenomics section). This shows how much unvested INV exists and when it will become liquid. The INV supply section breaks down token distribution across chains (Ethereum holds 99.95% of INV), staking participation rates, and the division between INV staked on FiRM versus staked through the founder's allocation. The multisigs diagram visualizes which DAO contributors hold signing authority on critical multisig wallets, showing the distribution of operational control across trusted community members. Finally, the "DAO Transactions on Ethereum" table lists every recent governance action, multisig transaction, and contract interaction, providing a complete audit trail of DAO operations. *** ### DBR Supply Dynamics
The [DBR & FiRM page](https://www.inverse.finance/transparency/dbr) tracks the DBR token's supply, issuance, burn rate, and inventory levels. Since DBR is consumed to service DOLA loans on FiRM, understanding DBR dynamics reveals borrowing demand and protocol revenue flows. The headline metrics show annualized DBR issuance (new DBR minted and distributed to INV stakers), annualized DBR burn (DBR consumed by FiRM borrowers), inventory days (how long current DBR supply would last at current burn rates), DBR claimed by stakers, and total DBR burned by borrowers. When burn exceeds issuance, DBR becomes deflationary — this occurred frequently during peak FiRM usage periods in 2024-2025. The "DBR annualized burn & issuance over time" chart shows these dynamics historically, with burn depicted in one color and issuance in another. When the burn area rises above issuance, it indicates strong borrowing demand. When issuance exceeds burn, it suggests borrowing has slowed and DBR is accumulating in staker balances. The "FiRM Borrows & DBR inventory days" chart correlates total DOLA borrows outstanding against DBR inventory levels. High borrows with low inventory indicates tight DBR supply and healthy borrowing demand. Low borrows with high inventory suggests excess DBR capacity and potential for borrowing growth. The "DBR Daily Net-Issuance Rate" chart shows day-to-day fluctuations in net DBR issuance (issuance minus burns), revealing short-term trends in borrowing activity. The "DBR burned in the last 12 months" and "Accumulated DBR burned" charts show total historical burn, demonstrating the cumulative demand for FiRM borrowing over time. Together, these metrics provide complete transparency into FiRM's revenue model — DBR burns represent real protocol revenue, as borrowers must acquire DBR (either by staking INV or buying on the market) to service their loans. High burn rates indicate healthy revenue generation. *** ### DOLA Supply & Fed Management
The [DOLA & Feds page](https://www.inverse.finance/transparency/dola) reveals exactly where every DOLA comes from and how Fed contracts manage supply to maintain the peg. This is arguably the most critical transparency page for DOLA users, as it shows the stablecoin's backing in real-time. The "DOLA sources overview" pie chart breaks down DOLA's circulating supply by source: FiRM Fed (DOLA backed by collateral on FiRM), Frontier Fed (DOLA from the deprecated Frontier lending protocol), and PSM Fed (DOLA from the Peg Stability Module). Currently, over 97% of DOLA comes from the FiRM Fed, meaning it's backed by overcollateralized borrowing positions on FiRM. The "Detailed DOLA sources" chart drills down further, showing exactly which FiRM markets contribute what percentage of total DOLA supply. For example, the sUSDe-DOLA market might represent 51% of all DOLA, the sUSDS-DOLA market 20%, and so on. This granular breakdown helps risk analysts understand concentration risk — if one market dominates DOLA supply and experiences issues, it could impact the entire stablecoin. The "Active DOLA Feds Overview" table lists each Fed contract with its contract address, type (isolated lending, cross-lending, or PSM), total DOLA supply supported by that Fed, how much has been borrowed or used, and the current utilization percentage. Each Fed has a "More Data" link leading to detailed analytics on that specific Fed's operations. The "DOLA Circulating Supply Evolution" chart shows how total DOLA supply has changed over time, excluding DOLA sitting in FiRM markets or Fed Farmers (these are protocol-controlled and not truly circulating). Major supply expansions or contractions are clearly visible, often corresponding to new market launches, debt repayments, or changing DOLA demand. The "DOLA 24h volumes" chart tracks daily trading volume across all venues, providing insight into DOLA's market activity and liquidity depth. High volume relative to circulating supply suggests healthy, active usage. *** ### Fed Policy & Revenue
The [Feds Policy page](https://www.inverse.finance/transparency/feds) provides detailed transaction-level data on every Fed contract operation. While the DOLA & Feds page shows current state, this page shows the historical record of how Feds have expanded or contracted DOLA supply over time. The "All Feds Supply Evaluation" chart tracks total DOLA supply managed by all Feds combined, showing major expansions (when Feds mint new DOLA to meet demand) and contractions (when DOLA is repaid and burned). The current total Fed supply is displayed prominently at the top. Below the chart, users can filter Fed transactions by specific Fed contracts (FiRM, Frontier, PSM, Yearn, Convex, Scream, Velo, Auro, AuroEuler, ArbiFed, PSM) to isolate activity from particular venues. The transaction table shows every Fed operation chronologically, including the transaction hash (linking to Etherscan), event type (Expansion or Contraction), the amount of DOLA minted or burned, new Fed supply after the transaction, new total Fed supply across all Feds, and timestamps. This granular data allows auditing of Fed behavior — users can verify that expansions occur when DOLA trades above peg (excess demand) and contractions occur when DOLA trades below peg (excess supply). It also reveals which Feds are most active in managing supply, indicating where DOLA demand is strongest. The right sidebar provides context about DOLA's backing, Fed contracts' role in the DOLA ecosystem, Fed revenue sources, and current DOLA supply across different chains and venues. This educational content helps users interpret the raw transaction data. *** ### Bad Debt Tracking
The [Bad debts page](https://www.inverse.finance/transparency/bad-debts) documents the protocol's bad debt situation with complete transparency, including the source of the debt, repayment progress, and remaining obligations. This level of transparency about a sensitive topic demonstrates Inverse Finance's commitment to honesty even when the news is unfavorable. The "DOLA Bad Debt Repayment Progress" bar at the top shows that 81.02% of DOLA bad debt has been repaid as of the latest update. This reflects the ongoing repayment plan detailed in the July 2025 governance proposal discussed in the INV tokenomics section. The "DOLA Bad Debt Evolution" chart shows how bad debt accumulated following the April 2022 Frontier exploit, peaked around $6M, and has been steadily declining through systematic repayment using strategic investor swaps, protocol revenues, and veNFT-backed loans. The current bad debt stands at $2.72M, down dramatically from the peak. The "Total Repayments in USD" section shows that over $15.3M has been repaid toward various bad debts since the exploit. The chart below breaks this down by repayment frequency and timing, showing consistent monthly repayments with occasional larger payments when strategic opportunities arise. The "Bad Debt Recap & Repayments" table provides asset-by-asset accounting of what was lost, what's been repaid, what remains, and the repayment percentage for each asset. DOLA leads with 81.02% repaid, while WBTC (44.75%), YFI (34.05%), ETH (21.21%), and IOU tokens (0.12%) follow. An important note clarifies that "DOLA bad debt is the only bad debt that poses direct risk to the DAO; bad debts in other assets such as WBTC are related to Frontier's users deposits and don't directly pose risk to the DAO's survival." This distinction is critical — DOLA bad debt represents unbacked stablecoin supply that threatens the peg, while other bad debts are liabilities to Frontier depositors but don't endanger the core protocol. The "Annex: Bad Debt Converter and Repayer" section documents specialized contracts deployed to facilitate repayment, showing exactly how much has been repaid through each mechanism and how many IOUs (debt acknowledgment tokens) have been issued to affected users. *** ### Resources * [**Transparency Portal**](https://inverse.finance/transparency) * [**Contract Addresses**](/inverse-finance/inverse-finance/technical/smart-contracts) * [**Risk Documentation**](https://docs.inverse.finance/inverse-finance-risk) *** {% hint style="info" %} **Data-Driven Governance:** The transparency portal exists to empower informed decision-making. Before voting on any proposal, check relevant transparency pages to understand the current state and potential impact of proposed changes. {% endhint %} # Disclaimer 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](https://www.inverse.finance/frontier), [Inverse Finance](https://www.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**](https://v2.nexusmutual.io/cover/product/207) – Provides coverage against exploits or failures specifically impacting FiRM, including smart-contract hacks and governance attacks. 2. [**Inverse Finance sDOLA Cover**](https://v2.nexusmutual.io/cover/product/208) – Protects user funds involved in sDOLA, safeguarding against contract vulnerabilities and malicious liquidations. 3. [**DOLA Depeg Cover**](https://v2.nexusmutual.io/cover/product/286) – 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. # Legacy Products # ⚠️ DCA Vaults DCA Vaults (deprecated) Inverse Finance’s first product launched was the DCA (dollar cost average) vaults. The DCA Vaults generate yield on stablecoins and continuously invested the yield in a target token e.g. ETH. While initially a very successful product, the DAO decided to focus resources on the growth of DOLA rather than improvements to the DCA Vaults. As the profitability of the Vaults to the Inverse Finance Treasury decreased, it was decided that the vaults would be deprecated, meaning they would be no longer funded with ETH in order to cover the gas required to invest in the target token. *** ### How to Withdraw from DCA Vaults Despite being deprecated, the DCA Vaults smart contracts are still live and active on Ethereum Mainnet (and will be forever). It is recommended that users who still have crypto held within these smart contracts should withdraw their capital from them. The DCA Vaults are no longer displayed on the current Inverse Finance UI. However, the vaults can be accessed through the UI of the old Inverse Finance website. This website can be accessed through the following link: Users will be able to claim any profits and withdraw all capital using this website. ![](/files/BbqpCYvwU9BxDTvmKR9D) # ⚠️ Frontier/Anchor {% hint style="danger" %} **Borrowing is paused on Frontier.** All INV stakers need to migrate their stake to FiRM to receive DBR APY. {% endhint %} [Frontier ](https://www.inverse.finance/frontier)is a money-market smart-contract protocol similar to Maker, Compound and Synthetix, but it facilitates capital efficient lending & borrowing via the issuance of synthetic tokens (DOLA) & or tokens deposited into Frontier (borrowing tokens such as ETH). Frontier launched on the 25th February 2021 under the name Anchor. *** ### Price Manipulation Incidents In April 2022, Frontier (at the time named “Anchor”) suffered a price oracle manipulation incident. Via a sophisticated and capital-intensive market manipulation, a hacker was able to withdraw over[ $15.6M](https://twitter.com/inversefinance/status/1510282040809299972) in user funds. By successfully manipulating the price of $INV, the hacker heavily inflated the value of INV which was used as collateral. This allowed them to borrow from Anchor’s pools. According to sources [here](https://www.defisafety.com/app/pqrs/199) and [here](https://rekt.news/inverse-finance-rekt/), the hacker’s tactic revealed an unforeseen attack vector. In other words, this was not an obvious vulnerability. Altogether, the hacker was able to run away with 1,588 ETH, 94 WBTC, 39 YFI, and 3,999,669 DOLA (a combined $15.6M at the time). For more detail on this incident, refer to any of the resources shared above or the Inverse[ blog post](https://www.inverse.finance/blog/posts/en-US/inv-price-manipulation-incident). A second incident occurred in June 2022. Inverse Finance’s Frontier money market was subject to an oracle price manipulation incident that resulted in a net loss of $5.83 million in DOLA with the attacker earning a total of $1.2 million. The affected market—yvcrv3crypto—utilized Chainlink price data instead of the internal exchange rate of the Curve protocol, which allowed the attacker to flash-borrow 27,000 in wBTC and trade it into the tricrypto pool, which caused the price of the yvcrv3crypto LP token to jump in value in the eyes of the oracle. This created an opportunity to borrow DOLA against that collateral in Frontier. Read more about this incident[ here](https://www.inverse.finance/blog/posts/en-US/june-16-incident-summary).
The two attacks left many Anchor users stuck with IOU tokens (called anTokens). Over 24% of the TVL at that time was stolen, leaving Inverse Finance with a significant bad debt. As an initial response, Anchor was paused and the DAO began working on solutions to repay the bad debt and reimburse affected users. Repaying debt in a fair manner, where sophisticated users don’t hold an advantage, is hard. In the case of Inverse Finance, we prioritized making sure that enough liquidity enters the system so that remaining loans can be liquidated. Had we not prioritized that, even more bad debt would have built up over time. However, as all liquidity that entered the system was sniped by liquidators, and any leftovers were quickly scooped up by sophisticated users running bots leaving regular users on the bottom rung, it was clear something had to be done. A governance[ vote](https://www.inverse.finance/governance/proposals/mills/57) enacted the deployment of the DebtRepayer and the DebtConverter. These two contracts were developed to mitigate the impact to the DAO and to help users who want access to their funds sooner. *** ### Debt Converter The[ Debt Converter](https://www.inverse.finance/frontier/debt-converter) contract lets users convert their stuck collateral denominated in YFI/ETH/wBTC to be DOLA denominated instead. It does this by letting affected users willingly transfer their anTokens to a converter, which issues them DOLA IOUs in exchange. The motivation for the user is the ability to lock in a DOLA denominated value for their assets. The benefit for Inverse Finance DAO is the ability to turn our debt from volatile tokens into stable coins. It also allows users, who are not quick to withdraw their funds, to gradually withdraw as InverseDAO repays its debt. DOLA IOUs will accrue interest with variable APY which is controlled by governance. The contract allows users to convert their bad debt anTokens into an equal DOLA amount worth of DOLA IOUs. The anTokens will be valued at their current market price in dollars, which is fetched from ChainLink feeds. There is no discount for this debt conversion as there is for the Debt Repayer. Governance can set a maxConvertPrice for each anToken which represents the maximum value this contract will pay per underlying token. For example, assume anETH has a maxConvertPrice of 1,500e18 & a market price of $1,600. A user that redeems 1 ETH worth of anETH will only receive 1500 DOLA worth of IOUs. *** ### Debt Repayer The core idea of the[ Debt Repayer](https://www.inverse.finance/frontier/debt-repayer) is to let people pull their money out before others, if they’re willing to receive less than the full amount in doing so. s it is opt-in, it’s a fair ordering mechanism that reduces the total debt burden. This means that every time someone decides to exit early, the date of the last repayment comes a little bit closer. Essentially, users that exit early will push forward the date of the last user to exit. This contract allows users to redeem bad debt anTokens for the native asset that they represent, but at a discount. The smart contract works on a reserve basis, where as long as there is 15% or more of liquidity stored in the contract compared to the total outstanding debt, users can exit without any cut. As Inverse Finance adds assets to the market and the debt reserves of the contract increase, the discount is reduced using a linear model with parameters set by governance. Those wishing to redeem their anTokens early, before much reserves have had time to accumulate, will take a steeper discount than those redeeming later when reserves are higher. anTokens will eventually be redeemable at one-to-one value with their underlying, once a certain threshold of reserves are met. What reduction in payout can a user expect below 15%? It depends on the total amount of reserves. The payout has a linear progression from keeping 45% of book value at 0% reserves, up to keeping 100% of book value at 15% reserves and above.
Reserve ratio is calculated for each asset by dividing the total amount in each V1 market by the borrow balance of the exploiter. The debt repayer contract was deployed with the following parameters: Max Discount: 55% Zero discount reserve threshold: 15%. Both the minimum payout and the reserve requirements are subject to change by Inverse Finance DAO governance. **A usage example could be as follows:** The ETH/WBTC/YFI V1 market anToken discount is dynamic so please check the current exchange rate on the interface, and it was set to be redeemable at an initial discount of 55% when the debt repayment contract has a reserve ratio of 0%. The zero discount reserve threshold is 15%. As the Treasury Working Group dollar-cost average buys the bad debt assets, a proportion of these buys are sent to the debt repayment contract which causes the stores of YFI, Eth and wBTC in the contract to slowly fill, raising the reserve ratio for each asset. At 5% reserves, a user can redeem their Eth debt at a 36.6% discount. At 10% reserves, the discount falls to 18.3%. At 15% reserves or more, the discount will be at 0%. Reserve ratios are calculated separately for each debt asset. If there is 75 ETH stored in the debt repayment contract, and there is 1,000 ETH currently stuck in the ETH V1 market on Frontier then the reserve ratio will be 7.5%, meaning currently the available discount is 27.5%. If a user with 34.5 ETH stuck in V1 markets decides to withdraw all of their ETH in this moment, they’ll receive 25 ETH from the debt contract (27.5% discount). This reduces the debt contract’s ETH balance to 50 ETH, and the reserve ratio to 5%, meaning that the next available discount to a user will be 36.6%. At this point, the 34.5 ETH of anETH is sent to the TWG. The TWG can then use currently stored ETH in the Treasury to repay this full 34.5 ETH from the bad debt, meaning the new total of ETH in V1 markets becomes 965.5 ETH (1,000 - 34.5). The TWG will direct a proportion of ETH/WBTC/YFI assets for repayment to this contract. This proportion will be determined each time based on the current context of the repayment situation. The rest of the ETH/WBTC/YFI will be used for liquidations and adding liquidity to the V1 markets like before. *** ### Bad Debt Dashboard This[ dashboard](https://www.inverse.finance/transparency/bad-debts) shows the bad debts and repayments both over time and per transaction. There are two types of DOLA bad debt: * DOLA bad debt is debt that originated from a DOLA fed, ie the backing of DOLA. * Debt that originates from users borrowing DOLA in Frontier without repaying (exploiter).