All About Transparency at Inverse Finance


Web3 dev


3 min

Cover Image for All About Transparency at Inverse Finance

If you want to measure DeFi projects on something that matters, study transparency. In fact, a project’s claim to decentralization depends a lot on how transparently they expose the essentials of the project: DAO treasuries, bad debt, smart contract interdependencies, multisig wallet permissions, analytics, etc. The less transparent a project is, the less confident you can be that their project may be censored or even rugged.

Everything is out there on the blockchain…but without the proper tools to get, aggregate, and visualize all the relevant data it can be very hard or impossible for non-technical users to get an idea of how the DAO is managed and how everything interacts with each other. 

That’s where the Inverse Transparency Portal comes in.

Transparency at a Glance

Most DeFi projects just point users to their Docs if they want to know more about how the project works, and most of the time the docs are not good enough for everyone, being either too tech-oriented or not detailed enough.

In our Transparency Portal, it’s easy to get a large overview of Inverse Finance at a glance:

In the image above you can see all the main contracts of Inverse Finance and how they interact together, which contract role does what and on the right-hand side some key numbers are displayed like the funds in the Treasury contract.

After having a good overview first, one can then be interested in digging deeper by checking out the other sections as we’ll see now.

Bad Debt in Frontier

As you may know, Frontier experienced two manipulation incidents via economical attacks on price oracles which led to bad debt in the lending protocol. The shortfalling accounts of the attackers (and all the other shortfalling positions) can be seen in the Shortfalls section where you can check all the details regarding the amounts and the assets.

Show Me The Multisig Wallets, Ser

On-chain governance means that most of the funds are handled directly by on-chain proposals. Nonetheless, to be efficient some day-to-day operations need to be handled without the constraint of a 5-day process required by Inverse’s on-chain proposals, that’s why some operations like managing DOLA Fed policies to contract or expand supply and guardian actions like pausing markets are handled by multisig wallets. All the multisig wallets used by Inverse Finance are publicly disclosed and detailed.

Below is an example of the Treasury Working Group (TWG) Multisig on Ethereum:

For each multisig wallet, you will be able to see who are the owners, the quorum, the purpose of the multisig, the funds, allowances, as well as which Governance Proposal approved the Multisig.

Voting Power Distribution, Governance & DAO Operations

All INV holders can vote to decide the future of the project like adding new collaterals for example, but how is the voting power distributed between the active contributors and the others? In the DAO section you can see this distribution (at this time around 60% of the power is held by non-contributors), also visible are the monthly DOLA costs, and the INV granted to active contributors.

Another thing you can see in this section is all the on-chain transactions made by the DAO! The actions made by the multisig wallets, Governance actions, Fed policies, etc, there’s a lot going on every week!

Transparency Into the DAO Treasury

One of the most important parts of a DAO is the Treasury, most of it is in a specific contract directly controlled by Governance, but some part of it is also spread out in other contracts such as Frontier reserves, Liquidity Pools on DEXes or the TWG multisig, to easily have an overview of all the Treasury funds and allowances, users can head to the Treasury section of the Transparency portal:

Interest Rates

Ever wondered how DOLA Borrowing interests are actually calculated on Frontier?

Simply head to the dedicated section and check out the chart to see why the interest rate is at the current level and how it can vary according to the Utilization Rate and other parameters:

The Feds

One key element to understanding how DOLA works is understanding the Feds and the policies applied.

In short, DOLA is provided to different lending protocols (like Frontier) thanks to special contracts called Feds, those contracts are used to expand or contract DOLA supply on those lending protocols which lowers or increases the Utilization Rate (and thus the Borrowing Interests), thanks to this mechanism, DOLA is “recallable” meaning that if DOLA demand goes to zero Inverse Finance can call back Borrowed DOLA by increasing the Borrowing Rates which incentivizes Borrowers to repay their debt which will help maintain DOLA’s peg regardless of the market’s conditions.

In the image below you can see all the history behind DOLA’s Fed policies, all the contractions and expansions changing DOLA’s supply:

Borrowing Interests means revenue for Inverse Finance, we recently reached the $1M revenue milestone generated by the Feds as you can see below:

Going Further

You can also find more information about INV, DOLA and the Stabilizer in the other Transparency sections not mentioned in this article.

Still looking for more details?

Head out to our awesome Analytics page and our docs!

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