Today we are excited to announce the launch of our new fixed-rate lending market, FiRM!
We’ve written about FiRM before, but here are five reasons to be excited about how this important new product will re-shape the DeFi landscape..
This is a smarter way to do long-term DeFi borrowing, especially at scale. Many investors have capital planning strategies which won’t tolerate the interest rate volatility in most DeFi loans. Other fixed rate DeFi lending offerings today require short-term maturities or near-usurious interest rates. FiRM solves for both volatility and short maturities, but will likely see the DBR cost of borrowing in FiRM be well below what other “stable” rate lenders charge their borrowers.
It is hard to overstate the importance of borrowing rights as a breakthrough for DeFi. Not only do borrowing rights offer new levels of optionality and flexibility for borrowers, but they also bring a more rational way for the marketplace to participate in setting fixed lending rates. Behaving similar to perpetual call options where exercise means the ability to borrow DOLA, this opens up the opportunity for completely new markets for borrowing rights. Here’s the whitepaper for FiRM.
A few years ago, Compound invented the cross-collateral asset pooling concept which became the convention for DeFi borrowing to this day. With FiRM, user deposits are isolated both by user and by collateral type. This alone makes the up-front expense for potential attackers exponentially more costly, not to mention the fact that collateral in your Personal Collateral Escrow can by default not be loaned to anyone else.
Beyond the benefits to borrowers, FiRM offers a new way for liquidity providers and market makers to earn returns on their DBR’s while simultaneously contributing to greater market efficiency in DBR pricing.
Finally, FiRM is an ongoing exercise in prudence and safety for Inverse Finance. We experienced oracle price manipulation incidents in 2022 and the lessons learned drove us to create not only new internal controls but new innovation altogether. While our expectations for FiRM are huge, you’ll notice a conservative approach to lending during our guarded launch period.
We believe FiRM is the biggest DeFi idea of 2022. Fixed-rate lending markets are a trillion-dollar opportunity that remains almost completely untouched by DeFi lending today. Borrowers now have a way to lock in long-term borrowing costs while preserving the optionality of short-term lending through the use of early loan repayment and DBR sales.
Come take FiRM for a test drive. We believe FiRM is the start of something very important for DeFi and a giant step for Inverse Finance and our DAO community. We hope you’ll join us for the ride!