In the DeFi stack, stablecoins, automated market-makers (AMMs), and lending markets are the core financial primitives that unlock the ability to create unique permissionless banking tools and applications. Using these building blocks, money markets such as Compound, Maker, and Synthetix, have paved the way to allow users to get a line of credit in exchange for putting up collateral - which is received by the borrower in the form of a synthetic token (usd-pegged stablecoin). These protocols are essential to the broader ecosystem as they create leverage and expand the supply of capital to facilitate risk-taking. However, they’re not very capital efficient and this is where Inverse Finance differentiates themselves from the other protocols.
Inverse is building a suite of permissionless DeFi tools governed by Inverse DAO and has two core products, Anchor (money market protocol) and DOLA (stablecoin). DOLA is a debt based USD stablecoin that can also be used as collateral within Anchor. In the Anchor money-market, users can supply DOLA and/or other tokens as collateral to take out a loan in DOLA or other tokens.
- Capital Efficient Lending & Borrowing - Although similar to Compound, Maker, and Synthetix, Anchor has greater capital efficiency through the issuance of synthetic tokens (DOLA) and non-synthetic credit (inspired by Iron Bank). For example, DAI can’t be used as collateral to borrow assets from Maker, whereas DOLA can be used as collateral to borrow assets from Anchor
- Native Yield Bearing Asset - DOLA borrowers also earn interest on their collateral thus reducing the opportunity cost of holding DOLA
- DCA Vaults - Users can also deposit their stablecoin yield into assets such as BTC, ETH, and YFI
Concave and Inverse partnership
Inverse is an extremely innovative protocol in this space with a grand vision to become a global decentralized central bank. Concave believes in this vision and we believe we can help realize this vision through a mutually beneficial partnership that will also support the growth of Concave.
Concave aims to accumulate DOLA and INV into the treasury. Accumulating DOLA will grow the treasury’s reserve assets. From a utility perspective, DOLA in our treasury can also be used for creating leverage and native yield, but the main purpose will be for Concave to hold safe stable assets in the treasury. Accumulating INV will grow Concave’s governing power over Inverse Finance. The INV token gives voting power to a number of important parameters (when staked). Concave aims to stake the INV tokens for xINV tokens which will accumulate staking rewards. On top of this, xINV tokens can also be used as collateral and borrowed against in Anchor. This strategic move can be very beneficial in the future as Inverse grows as a protocol because this enables Concave to have a bigger line of credit down the line if needed.
Additionally, once Concave Policy (on-chain hedge fund) has profitable yield-generating strategies, Inverse can be used to create leverage to maximize gains and increase treasury revenue. Inverse allows for protocol to protocol lending and opens up the possibility for under-collateralized lending. The Governance token INV thus will become an essential asset as there are many parameters that are governed by the DAO.
For Inverse, increasing the issuance of DOLA and creating deeper liquidity for their tokens is a top priority. We are able to provide an avenue for Inverse to increase issuance and create demand for the stablecoin DOLA as our treasury effectively becomes a sink for those tokens. Concave can also help Inverse to build deeper liquidity with our trading pairs. Ultimately, both communities collaborating can create a net positive effect for more innovation and growth helping realize the vision where both protocols emerge as big players in the DeFi space.