Inverse FinancePrice

(INV)

Unlike many tokens, INV has an uncapped supply to fund protocol liquidity and operations. To prevent dilution, Inverse Finance employs an anti-dilution mechanism. This system ensures that INV stakers receive rewards (xINV) designed to exceed the rate at which new supply expands. Consequently, stakers' proportional ownership of the network is intended to increase over time, protecting their stake from the effects of the expanding supply.

Points and Multipliers are key features designed to enhance user rewards. Points are earned through active engagement and various on-chain activities within the Inverse Finance protocol. Multipliers, on the other hand, are granted based on specific user actions and commitments. These include the duration for which users lock their tokens (staking for longer periods), as well as their active participation in governance, such as voting on proposals or delegating their voting power to others. Both systems encourage active and committed participation.

FiRM utilizes DBR (DOLA Borrowing Rights) to enable fixed-rate borrowing without a fixed maturity date. Each DBR allows a user to borrow 1 DOLA for a duration of 1 year. Instead of a variable interest rate, borrowers acquire or earn DBRs to "fuel" their loan. As long as a borrower has sufficient DBRs, their loan remains active at a fixed cost. If a borrower's DBR balance reaches zero, a "DBR replenishment" can occur, where DBRs are bought at a premium and added to the debt to keep the loan active.

sDOLA is a yield-bearing version of the DOLA stablecoin. Its yield is generated directly from the DBR fees paid by borrowers on the FiRM platform. A crucial aspect of sDOLA's design, which addresses common safety concerns, is that the DOLA held within the sDOLA contract is never rehypothecated or loaned out to third parties. This means the underlying DOLA remains within the contract, providing a transparent and isolated source for the yield without engaging in additional lending activities common in other decentralized finance protocols.

After the 2022 exploits, Inverse Finance significantly overhauled its security framework. A key development is the new FiRM architecture, which incorporates "Personal Collateral Escrows." This design isolates each user's collateral in its own smart contract, effectively preventing "cross-contamination" risks that were present in traditional lending pools like Aave or Compound. Additionally, the Frontier Protocol was established specifically to repay victims of the past exploits. The protocol emphasizes robust audit reports from firms like Neume and Code4rena and encourages checking independent safety scores.

To submit a formal governance proposal on-chain, a user or their designated delegate must hold at least 1,500 INV in voting power. This threshold ensures proposals have a significant backing. For smaller token holders who do not meet this individual requirement, the primary method for participation is through delegation. Users can delegate their voting power to a "Delegate," who then votes on their behalf. This mechanism allows broader community involvement in governance without every individual needing to meet the high INV threshold for direct proposal submission.