DOLA FAQ

Where does the DOLA that I borrow come from?

Inverse Finance Fed contracts mint DOLA directly to the supply side of lending markets or to the DOLA-3CRV Curve pool as demand increases, or they retract and burn DOLA from the supply when demand decreases. This includes Frontier and any lending market officially partnered with Inverse Finance. Check out our Transparency page to find an up-to-date list of our partners.
Being able to expand and contract the supply side allows Inverse Finance to control the interest rates on these DOLA lending markets, and therefore exert pressure on the DOLA peg as people become more and less incentivised to buy DOLA to repay their loans. This is important as it enables Inverse Finance to ensure that the growth of DOLA is done sustainably and this system has proven to be very resilient in harsh market conditions.
Users can also exchange DAI for DOLA or DOLA for DAI for a 0.1% fee using The Stabilizer. When swapping DAI for DOLA in the stabilizer, DOLA is minted and sent to the user’s wallet. The DAI will remain in The Stabilizer until another user initiates a swap of DOLA for DAI. The Stabilizer will then take the 0.1% fee and burn the rest of the DOLA.

Is DOLA algorithmic? Is it backed by INV?

No. DOLA is debt-backed which means that you don't burn or redeem another token to create it, each DOLA is instead backed by collateral assets locked in as debt lending markets. INV is not used to mint or redeem DOLA. INV is however one of the collateral assets typically used as collateral for DOLA loans in Frontier.

What is the advantage of DOLA?

In the world of DeFi, there is no shortage of stablecoins currently available on the market. What makes DOLA unique and advantageous compared with other stablecoins is the ability for Inverse Finance to mint it onto the lending side of partnered protocols.
This is a massive advantage to a lending market that is looking to grow rapidly, as borrowable stablecoin liquidity can be instantly supplied by Inverse Finance at low interest rates for borrowers. We call this a win-win-win situation:
  1. 1.
    The partnered lending protocol wins as they can expand their protocol’s TVL rapidly while taking a cut of the profits from DOLA borrowers
  2. 2.
    Borrowers win as they have access to the most capital-efficient, decentralized stablecoin on the market at low interest rates
  3. 3.
    Inverse Finance wins as the treasury earns interest from DOLA borrowers
Also, this allows for Inverse Finance to seamlessly expand DOLA’s use on chains other than Ethereum, where Frontier does not have a presence. This is done by partnering with well-established lending protocols on the other blockchain and through bridges like Multichain/Anyswap. Inverse Finance has demonstrated the success of this advantage already by partnering with Scream on the Fantom blockchain.

DOLA Yield Opportunities

Take a look at the current Yield Opportunities for DOLA.

How are official lending partners selected?

The Inverse DAO selects and controls which lending markets get ‘whitelisted’ to have DOLA minted onto their ‘supply’ side. First, potential lending markets are discussed in the Inverse Finance Discord, where pros and cons are discussed. The next stage is for a proposal to go to the Inverse Finance Forum; at this stage, vetting of the protocol is carried out along with the collateral options in the lending pool. The Inverse Finance DAO takes a low-risk approach when deciding whether to ‘whitelist’ a lending market for DOLA minting. The final stage is to take it to an official on-chain governance vote in the Inverse DAO, where INV and xINV token holders can vote ‘for’ or ‘against’. If the proposal passes, then the lending protocol will become an official partner, and Inverse Finance will have the ability to mint DOLA onto the ‘supply’ side of the pool.
If you are member of a lending protocol interested in being whitelisted for DOLA minting, then jump into our Discord.
To see an example of a lending protocol being voted through in the DAO, check out Proposal 27 from the Alpha era, where Rari Fuse Pool 6 was whitelisted for DOLA minting (among many other actions).
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Outline
Where does the DOLA that I borrow come from?
Is DOLA algorithmic? Is it backed by INV?
What is the advantage of DOLA?
DOLA Yield Opportunities
How are official lending partners selected?