**Inverse Finance** is a [decentralized autonomous organization (DAO)](https://iq.wiki/wiki/dao) overseeing the development and operation of the FiRM fixed-rate lending protocol, [DOLA](https://iq.wiki/wiki/dola), a decentralized [stablecoin](https://iq.wiki/wiki/stablecoin) backed by debt, and sDOLA, which generates yields. Established by [Nour Haridy](https://iq.wiki/wiki/nour-haridy) in late 2020, the protocol is governed by the Inverse Finance [DAO](https://iq.wiki/wiki/dao), a community-driven collective. [\[1\]](#cite-id-nwhl7g0jro8)  
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# Overview  
  
Inverse Finance is a [decentralized autonomous organization (DAO)](https://iq.wiki/wiki/dao) overseeing the FiRM fixed-rate lending protocol, [DOLA](https://iq.wiki/wiki/dola) decentralized [stablecoin](https://iq.wiki/wiki/stablecoin), and sDOLA yield generator. Governed by the Inverse Finance [DAO](https://iq.wiki/wiki/dao), the project aims to provide [decentralized finance (DeFi)](https://iq.wiki/wiki/defi) tools for borrowing, lending, and synthetic asset creation. The FiRM protocol, a key component of Inverse Finance, offers a fixed lending rate, addressing the issue of volatile interest rates in decentralized borrowing platforms. Utilizing [DOLA](https://iq.wiki/wiki/dola) and sDOLA, it facilitates debt-backed [stablecoins](https://iq.wiki/wiki/stablecoin) and yield-bearing assets. [\[1\]](#cite-id-nwhl7g0jro8)[\[2\]](#cite-id-0ym7b5bhlpih)  
  
Users can access fixed interest rates and trade their borrowing rights through the protocol, providing flexibility and speculative opportunities. Inverse Finance's ecosystem includes [liquidity pools](https://iq.wiki/wiki/liquidity-pool), the FiRM protocol, and personal [collateral](https://iq.wiki/wiki/collateral) escrow, enabling diverse [DeFi](https://iq.wiki/wiki/defi) functionalities. [\[1\]](#cite-id-nwhl7g0jro8)[\[2\]](#cite-id-0ym7b5bhlpih)  
  
## History  
  
Launched on [Ethereum](https://iq.wiki/wiki/ethereum) in 2020 by Nour Haridy, the Inverse Finance [DAO](https://iq.wiki/wiki/dao) operates autonomously through its [governance token](https://iq.wiki/wiki/governance-tokens), INV. In April 2021, it acquired Tonic Finance for $1.6 million, expanding its offerings to include features like quick payments and investment options. However, in April 2022, Inverse Finance faced a major setback when a hacker exploited the Anchor money market, resulting in a loss of $15.6 million. Another attempted hack in June of the same year caused a further loss of $1.2 million, primarily through price manipulation, resulting in a total net loss of $5.83 million in stable [DOLA](https://iq.wiki/wiki/dola). To address these vulnerabilities, the project underwent a third-party audit of its smart contracts to enhance security measures and prevent future attacks. [\[2\]](#cite-id-0ym7b5bhlpih)  
  
# Products  
  
## FiRM  
  
The Fixed Rate Market (FiRM) introduced by Inverse Finance addresses the need for stability in borrowing protocols within the [cryptocurrency](https://iq.wiki/wiki/cryptocurrency) space. Using concepts like [DOLA](https://iq.wiki/wiki/dola) Borrowing Rights and [DOLA](https://iq.wiki/wiki/dola), FiRM offers fixed borrowing rates to mitigate the volatility common in traditional borrowing protocols. [DOLA](https://iq.wiki/wiki/dola) Borrowing Rights (DBR) prove that a user can borrow a set amount of [DOLA](https://iq.wiki/wiki/dola) for a specified period at a predetermined rate. These rights are represented by [ERC-20](https://iq.wiki/wiki/erc-20) tokens that enable the borrowing of [DOLA](https://iq.wiki/wiki/dola) on a 1:1 basis, available for purchase on compatible exchanges. [\[2\]](#cite-id-0ym7b5bhlpih)[\[3\]](#cite-id-qwf0185gnhp)  
  
FiRM incorporates the Accelerated Leverage Engine (ALE), allowing users to borrow against single [collateral](https://iq.wiki/wiki/collateral) and magnify their borrowing up to eight times the original loan amount. While this feature entails additional risk, it provides a reliable multiplier based on fixed rates, appealing to entities seeking certainty in financing costs. To utilize FiRM and borrow [DOLA](https://iq.wiki/wiki/dola) tokens, users must initially deposit collateral such as [wBTC](https://iq.wiki/wiki/wrapped-bitcoin-wbtc), cvxFXS, [DAI](https://iq.wiki/wiki/dai), INV, [wETH](https://iq.wiki/wiki/weth-wrapped-eth), or [CRV](https://iq.wiki/wiki/curve-dao-token) on the platform. Subsequently, they acquire [DOLA](https://iq.wiki/wiki/dola) borrowing rights to facilitate debt servicing and obtain the borrowed [DOLA](https://iq.wiki/wiki/dola). [\[2\]](#cite-id-0ym7b5bhlpih)[\[3\]](#cite-id-qwf0185gnhp)  
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# DOLA Feds  
  
[DOLA](https://iq.wiki/wiki/dola) Fed contracts regulate the supply of [DOLA](https://iq.wiki/wiki/dola) under the governance of Inverse Finance, aiding in managing [DOLA's](https://iq.wiki/wiki/dola) peg. There are two variants of Fed contracts, both capable of expanding [DOLA](https://iq.wiki/wiki/dola) supply by minting and providing [DOLA](https://iq.wiki/wiki/dola) to associated [liquidity pools](https://iq.wiki/wiki/liquidity-pool) or lending markets and contracting it by withdrawing and burning [DOLA](https://iq.wiki/wiki/dola). [\[4\]](#cite-id-pqwkhme5j6s)  
  
## FiRM Fed  
  
The [DOLA](https://iq.wiki/wiki/dola) Fed on FiRM oversees the expansion and contraction of the [DOLA](https://iq.wiki/wiki/dola) supply within its lending market. Governed by Inverse Finance, it imposes both a global [DOLA](https://iq.wiki/wiki/dola) limit and a market-specific limit regulated by the Fed Chair. [\[4\]](#cite-id-pqwkhme5j6s)  
  
## DEX Liquidity Feds  
  
The [DOLA](https://iq.wiki/wiki/dola) [DEX](https://iq.wiki/wiki/decentralized-exchange) Liquidity Feds oversee the expansion and contraction of [DOLA](https://iq.wiki/wiki/dola) supply within [decentralized exchange (DEX)](https://iq.wiki/wiki/decentralized-exchange) [liquidity pools](https://iq.wiki/wiki/liquidity-pool). These actions are responsive to fluctuations in demand for [DOLA](https://iq.wiki/wiki/dola) within specific pools. During expansions, the Fed mints and supplies [DOLA](https://iq.wiki/wiki/dola) directly to the [liquidity pool](https://iq.wiki/wiki/liquidity-pool), while contractions involve withdrawing and burning [DOLA](https://iq.wiki/wiki/dola) from the pool. These adjustments are made to maintain balance in the pool's [DOLA](https://iq.wiki/wiki/dola) reserves. [\[4\]](#cite-id-pqwkhme5j6s)  
  
Expansions may involve supplying [DOLA](https://iq.wiki/wiki/dola) backed by counterparty assets in the pool, ensuring that the Fed's [DOLA](https://iq.wiki/wiki/dola) liquidity remains separate from regular circulation. The process is reversed upon completion, potentially creating arbitrage opportunities for the [DAO](https://iq.wiki/wiki/dao) treasury. Expansions are triggered by increased demand for [DOLA](https://iq.wiki/wiki/dola), often resulting from user deposits or swaps, while contractions occur when demand decreases. This mechanism helps stabilize [DOLA's](https://iq.wiki/wiki/dola) price peg to $1.00. [\[4\]](#cite-id-pqwkhme5j6s)  
  
The overarching goal is to achieve equilibrium for [DOLA](https://iq.wiki/wiki/dola): [\[4\]](#cite-id-pqwkhme5j6s)  
  
* Increased demand prompts [DOLA](https://iq.wiki/wiki/dola) supply expansion.  
* Decreased demand leads to [DOLA](https://iq.wiki/wiki/dola) supply contraction.  
  
This mechanism enables Inverse Finance to swiftly adjust [DOLA](https://iq.wiki/wiki/dola) supply within each [liquidity pool](https://iq.wiki/wiki/liquidity-pool), enhancing [peg](https://iq.wiki/wiki/currency-peg) stability even during volatile market conditions. While [DOLA](https://iq.wiki/wiki/dola) is held in [liquidity pools](https://iq.wiki/wiki/liquidity-pool), the Fed earns rewards sent to [liquidity providers (LPs)](https://iq.wiki/wiki/liquidity-providers), which are then directed back to the [DAO](https://iq.wiki/wiki/dao) Treasury. These rewards are recycled into [liquidity pool](https://iq.wiki/wiki/liquidity-pool) incentives, reducing the [DAO's](https://iq.wiki/wiki/dao) liquidity expenses. [\[4\]](#cite-id-pqwkhme5j6s)  
  
# Tokens  
  
## INV  
  
The INV token is the native [utility token](https://iq.wiki/wiki/utility-token) in the Inverse Finance ecosystem, enabling governance and voting for platform upgrades. While the project operates with three primary tokens—INV, [DOLA](https://iq.wiki/wiki/dola), and DBR—INV specifically offers governance and [staking](https://iq.wiki/wiki/staking) functionalities. As an [ERC-20](https://iq.wiki/wiki/erc-20) token, it is compatible with self-custody wallets like [Trust Wallet](https://iq.wiki/wiki/trust-wallet) and [MetaMask](https://iq.wiki/wiki/metamask). [\[2\]](#cite-id-0ym7b5bhlpih)  
  
### Tokenomics  
  
The INV token has a total supply of 555,000 tokens. Among these, 10% are designated for the team, 32.7% are allocated as community [airdrops](https://iq.wiki/wiki/airdrop), and the remaining 57.3% are reserved for the operation and advancement of the Inverse Finance ecosystem. [\[2\]](#cite-id-0ym7b5bhlpih)  
  
## DOLA  
  
[DOLA](https://iq.wiki/wiki/dola) operates as an [ERC-20](https://iq.wiki/wiki/erc-20) token on [Ethereum](https://iq.wiki/wiki/ethereum) and [Optimism](https://iq.wiki/wiki/optimism), a [Layer 2](https://iq.wiki/wiki/layer-2) solution for [Ethereum](https://iq.wiki/wiki/ethereum), where it utilizes [ETH](https://iq.wiki/wiki/ethereum) as [gas](https://iq.wiki/wiki/gas) (OETH when bridged to [Optimism](https://iq.wiki/wiki/optimism)). While also available on the [BNB Chain](https://iq.wiki/wiki/binance-smart-chain), Multichain temporarily halts bridging. [DOLA](https://iq.wiki/wiki/dola) is a synthetic [stablecoin](https://iq.wiki/wiki/stablecoin) [pegged](https://iq.wiki/wiki/currency-peg) to the US Dollar, aiming to maintain a value close to $1 with minimal volatility. Unlike algorithmic [stablecoins](https://iq.wiki/wiki/stablecoin), [DOLA](https://iq.wiki/wiki/dola) is backed by retractable debt, ensuring stability. [\[5\]](#cite-id-ix6gou83n5n)  
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### sDOLA  
  
sDOLA is a tokenized wrapper ([ERC-4626](https://iq.wiki/wiki/erc-4626)) around a [DOLA](https://iq.wiki/wiki/dola) Savings Account (DSA) smart contract, continuously rewarding [DOLA](https://iq.wiki/wiki/dola) stakers with DBR tokens. These rewards are auto-compounded into additional [DOLA](https://iq.wiki/wiki/dola), progressively boosting the [DOLA](https://iq.wiki/wiki/dola):sDOLA exchange rate. As a yield-bearing synthetic [stablecoin](https://iq.wiki/wiki/stablecoin), sDOLA generates yield from FiRM's fixed-rate lending market revenues. [\[6\]](#cite-id-sxd83y1yw3i)  
  
[Staking](https://iq.wiki/wiki/staking) [DOLA](https://iq.wiki/wiki/dola) for sDOLA encourages long-term holding, reducing liquidity costs per circulating [DOLA](https://iq.wiki/wiki/dola) and enhancing the protocol's unit economics. Notably, each [DOLA](https://iq.wiki/wiki/dola) staked into sDOLA corresponds to increased lending capacity on FiRM due to rising demand for holding [DOLA](https://iq.wiki/wiki/dola), amplifying FiRM revenue. [\[6\]](#cite-id-sxd83y1yw3i)  
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## DBR  
  
The [DOLA](https://iq.wiki/wiki/dola) Borrowing Right (DBR) is an [ERC-20](https://iq.wiki/wiki/erc-20) token representing the user's entitlement to borrow [DOLA](https://iq.wiki/wiki/dola) within FiRM, Inverse's fixed rate lending protocol. Each DBR permits borrowing one [DOLA](https://iq.wiki/wiki/dola) [stablecoin](https://iq.wiki/wiki/stablecoin) for up to one year without incurring interest. DBRs address the issue of fluctuating interest rates prevalent in traditional variable rate lending. DBRs offer users the predictability of borrowing costs by providing fixed-rate loans while eliminating many constraints associated with conventional fixed-rate lending in [DeFi](https://iq.wiki/wiki/defi). Users benefit from both short- and long-term flexibility with DBRs, which allows them to adjust the borrowing duration according to their needs. For instance, users can borrow different amounts of [DOLA](https://iq.wiki/wiki/dola) for varying periods, gradually consuming the DBR token with each borrowing transaction. [\[7\]](#cite-id-jbdw6p376g9)  
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# Working Groups  
  
The [DAO](https://iq.wiki/wiki/dao) empowers working groups with decision-making authority, granting them limited autonomy and budget through governance voting. These groups are tasked with various responsibilities, ensuring the [DAO](https://iq.wiki/wiki/dao) adapts to market changes, maintains product development, and fosters community engagement. The [DAO](https://iq.wiki/wiki/dao) holds them accountable through progress reports and budget renewals. Delegates oversee relevant Discord discussions, and working groups can be adjusted or dissolved through [DAO](https://iq.wiki/wiki/dao) voting. Additionally, the [DAO](https://iq.wiki/wiki/dao) can initiate new working groups by voting at any time. [\[8\]](#cite-id-7wejk83i1xb)  
  
* **Product Working Group** spearheads product innovation and maintenance, overseeing the entire product lifecycle from ideation to implementation.  
* **Growth Working Group** focuses on business development, marketing, and community engagement to drive [DOLA](https://iq.wiki/wiki/dola) circulation and revenue growth.  
* **Treasury Working Group** optimizes treasury asset management to support the [DOLA](https://iq.wiki/wiki/dola) ecosystem, making dynamic decisions and extending liquidity management across multiple blockchains.  
* **Risk Working Group** provides risk analysis, management, and ongoing monitoring for [DOLA](https://iq.wiki/wiki/dola) expansion and supports other working groups' efforts.  
* **Analytics Working Group** empowers users with data access and analysis tools, supporting informed decision-making and providing analysis dashboards and API endpoints.  
  
# Partnerships  
  
## Frax Finance  
  
On July 18th, 2023, Inverse Finance announced the launch of the new cvxFXS, a yield-bearing token generated through the staking and locking [FXS](https://iq.wiki/wiki/frax-share) tokens on [Convex Finance](https://iq.wiki/wiki/convex-finance), market on FiRM. The [CRV](https://iq.wiki/wiki/curve-dao-token) and cvxCRV markets had proven highly successful, and the team anticipated a similar level of demand for cvxFXS. The introduction of the cvxFXS market aimed to provide [FXS](https://iq.wiki/wiki/frax-share) holders with liquidity for their [FXS](https://iq.wiki/wiki/frax-share) assets without requiring them to lock their [FXS](https://iq.wiki/wiki/frax-share) as veFXS. Unlike veFXS, which is non-tradeable and ineligible as loan [collateral](https://iq.wiki/wiki/collateral), cvxFXS deposited on FiRM continued to earn cvxFXS staking yield, boasting over 9% [APY](https://iq.wiki/wiki/annual-percentage-yield-apy). [\[9\]](#cite-id-4wbzju5x39n)  
  
## Base  
  
On August 31st, 2023, Inverse Finance's [DOLA](https://iq.wiki/wiki/dola) went live on [Base](https://iq.wiki/wiki/base), [Coinbase's](https://iq.wiki/wiki/coinbase) [L2](https://iq.wiki/wiki/layer-2) network. [\[10\]](#cite-id-h8amtfse36)  
  
## DeFi Moon  
  
On September 12th, 2022, Inverse Finance announced the onboarding of DeFi Moon, a boutique auditing firm, as the newest member of its security partner team. DeFi Moon's expertise would complement the internal QA and testing conducted by the Product Working Group, which is crucial in Inverse's refined, smart contract review process. This partnership was expected to strengthen Inverse Finance's security infrastructure, building upon its recent audit collaboration with Peckshield, especially as the company prepared to introduce a new line of products in the upcoming weeks and months. [\[11\]](#cite-id-8uf1338a3tg)  
  
## Velodrome  
  
On October 12th, 2022, Inverse Finance announced its latest Fed deployment, the [Velo](https://iq.wiki/wiki/velodrome-finance) Fed, as part of its continuous endeavor to enhance liquidity for [DOLA](https://iq.wiki/wiki/dola) on new exchanges. This new [DOLA](https://iq.wiki/wiki/dola) Fed was soon approved by Inverse governance and aimed to bolster the [DOLA](https://iq.wiki/wiki/dola)-[USDC](https://iq.wiki/wiki/usdc) pool on [Velodrome](https://iq.wiki/wiki/velodrome-finance). [\[12\]](#cite-id-ymkz96yx74d)  
  
## DWF Labs  
  
On February 23rd, 2023, Inverse Finance announced an exciting partnership and a $1,000,000 investment from [DWF Labs](https://iq.wiki/wiki/dwf-labs), a [Web3](https://iq.wiki/wiki/web3) multi-stage investment firm. [\[13\]](#cite-id-xeu8kovkic)  
  
## Satin Exchange  
  
On March 16th, 2023, Inverse Finance proudly announced its selection as a launch partner for Satin Exchange, a [decentralized exchange](https://iq.wiki/wiki/decentralized-exchange) and [automated market maker](https://iq.wiki/wiki/automated-market-maker) set to launch on [Polygon](https://iq.wiki/wiki/polygon). As part of this partnership, Inverse will receive an expiring veNFT representing 1% of $ SATIN's initial token supply, providing valuable support as it enters the [Polygon](https://iq.wiki/wiki/polygon) chain. [\[14\]](#cite-id-6855md3uk0q)  
  
## ImmuneFi  
  
On November 30th, 2023, Inverse Finance expanded its ongoing commitment to the Inverse bug bounty program by establishing a new vault on the ImmuneFi platform and allocating 43,000 [DOLA](https://iq.wiki/wiki/dola) to initiate rewards. This decision follows a thorough assessment of various host platforms' current status. ImmuneFi, a bug bounty and security services platform for [Web3](https://iq.wiki/wiki/web3), safeguards tens of billions in users' funds across projects such as [MakerDAO](https://iq.wiki/wiki/makerdao), [Polygon](https://iq.wiki/wiki/polygon), [Arbitrum](https://iq.wiki/wiki/arbitrum), [Lido](https://iq.wiki/wiki/lido-dao), [Stacks](https://iq.wiki/wiki/stacks), [Optimism](https://iq.wiki/wiki/optimism), and others. [\[15\]](#cite-id-4e8b2dyu4vb)

DOLA, a capital-efficient stablecoin from Inverse Finance, was launched in February 2021

DOLA Token Launch

Inverse Finance was founded in 2022 by Nour Haridy

Date Founded

In March 2023, Inverse Finance was selected as a launch partner for Satin Exchange, a decentralized platform and automated market maker launched on the Polygon network

Launch Partner for Satin Exchange

In May 2023, FiRM underwent a security audit carried out by Nomoi, an independent auditing firm

Security Audit

In July 2023, Inverse Finance announced the launch of the new cvxFXS market on FiRM

Launch of cvxFXS Market

Nour Haridy

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DBR formula.png

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Inverse Finance is a Decentralized Autonomous Organization (DAO) that provides fixed-rate lending, debt-backed stablecoin and yield generation in the decentrali...

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