Proposal: Adding an FXN Gauge to DOLA/fxSAVE Pair

f(x) Protocol Improvement Proposals
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Proposal: Adding an FXN Gauge to DOLA/fxSAVE Pair

Introduction

Inverse Finance suggests adding an FXN gauge to the DOLA/fxSAVE pair to incentivize the pool. This could enable the LP token to be used as collateral on FiRM, Inverse Finance’s fixed-rate lending protocol. Users could leverage up to 10x using the DOLA/fxSAVE LP token as collateral, increasing their exposure. Additionally, DOLA is one of the most liquid decentralized stablecoins on Ethereum, with large pools that include top-tier stablecoins such as sUSDe, USR, sUSDS, and others. This pool would offer an easy route for fxSAVE (and thus fxUSD) traders to access these tokens.

Reference

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Protocol Description

Inverse Finance is an on-chain decentralized autonomous organization that develops and manages a suite of permissionless and decentralized financial products using blockchain smart contract technology. Originally founded by Nour Haridy in late 2020, the protocol is now governed by Inverse Finance DAO, a collective of crypto enthusiasts.

Inverse Finance’s main products are:

  • FiRM, a fixed-rate lending market
  • DOLA, a stablecoin pegged to the US Dollar
  • sDOLA, yield-bearing version of the DOLA stablecoin
  • DBR, a new DeFi primitive that enables holders to service a DOLA loan on FiRM.

DOLA is a debt-backed USD stablecoin which is added into and removed from circulation;

  • On the supply side of money markets, such as DAO-owned protocol FiRM, by Inverse Finance’s “Fed” contracts and is then made available to be borrowed through over-collateralized loans.

Specifications:

You can view analytics for DOLA on Defillama. To learn more about the protocol, please visit our official docs, governance and our transparency pages.

Governance

Decisions for the DAO are made by using INV in the Governor Mills voting contract but as it takes a minimum of five days to vote through a proposal, Inverse Finance DAO has delegated decision-making power to several working groups with limited autonomy and budget. The scope of these working groups is determined in their proposals and they exist to meet fast-moving market conditions, to transfer specific or minor decisions to relieve token voters from information overload, and to create a reliable and enjoyable work environment.

Working groups are held accountable to DAO governance, are required to produce progress reports and periodically apply for budget renewals. Delegates have insight into all discord conversations and working groups can be altered or disbanded by a DAO vote.

A detailed description of our governance can be found here.

Oralces

The Fixed Rate Market or “FiRM,” is Inverse Finance’s Fixed Rate Market lending protocol. FiRM makes use of Chainlink price oracles or Curve’s ema, depending on the market, in combination with our native Pessimistic Price Oracle (PPO). This novel approach to price oracles for borrows and liquidations in FiRM uses the lower of two recorded prices: either a) the current collateral price on the oracle feed, or b) the 48-hour low price as observed by the PPO on the oracle feed, divided by the collateral factor. For example, if the current Chainlink price for wETH is $1,500, the 48-hour low was $1,000 and the collateral factor is 80%, the PPO returns $1,250. ($1,000 / .80 = $1,250).

Note: for some assets without a Chainlink price feed (such as cvxCRV and INV), Curve’s EMA oracle (found in ng pools) is used instead.

Audits

Inverse Finance has undergone multiple audits, including the likes of yAudit, Nomoi, Peckshield and DeFiMoon. Inverse has also hosted a bug bounty contest on Code4rena to conduct a comprehensive audit of FiRM, and has an active bug bounty program live on ImmuneFi. All relevant audit information can be found here. The DAO also has dedicated members overseeing risk, what we call the Risk Working Group.

Centralization Risks

The protocol itself is completely decentralized, and requires no human interaction to work as is. However, DAO working groups have been formed and are active in order to improve efficiencies is various operational areas within the DAO. Often, these working groups will have a Multisig wallet that the DAO governance awards certain roles and limited treasury asset allowances in order to carry out required work. All granted privileges and allowances can be reclaimed/disabled by INV token controlled governance. These are:

  • Treasury Working Group (TWG): 3 of 5 Multisig with allowances giving access to Treasury funds to optimize treasury management.
  • Risk Working Group (RWG): 1 of 3 Multisig with privileges to pause new borrows on FiRM markets.
  • Policy Committee (PC): 5 of 9 Multisig that can change staking reward rate to INV stakers.
  • Fed Chair: 2 of 7 Multisig with the operator role on DOLA Fed Contracts, which allows for DOLA to be expanded/contracted under the Fed smart contract logic (bounded by market conditions)

Please see our Multisig Wallet section of the transparency portal here.

Market History

DOLA has been live for almost 5 years, and currently has a circulating supply of ~$130m.

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