In February 2021, Inverse Finance launched its first decentralized money market, Anchor, and our fully-recallable, debt-backed stablecoin, DOLA. Less than two years later, we are pleased to announce the publication of a whitepaper that provides an overview of a new fixed rate lending protocol soon to be proposed in governance – FiRM – which stands for Fixed Rate Markets.
Our experiences with variable rate lending markets, cross-collateral asset pools, and volatility in the markets this year led us to re-examine several assumptions about our business and challenge several assumptions about the broader DeFi lending market.
While Inverse has played in variable rate lending markets in 2021 and much of 2022, we are increasingly convinced that hyper-growth in DeFi lending will not occur via historically volatile variable interest rate lending but rather through more predictable and more coherent fixed-rate lending. Fixed-rate DeFi lending TVL today is a fraction of variable rate lending due to a combination of high rates, short maturities, and otherwise user-unfriendly business models.
Similarly, the concept of cross-collateral asset pools is ripe for re-invention both from the standpoint of security as well as flexibility and composability.
With these two industry-wide problems in mind, we present FiRM. Our vision is a world where decentralized stablecoins are used for most goods and services and the ability to extend credit in innovative ways is central to that vision. With FiRM, there is an opportunity to radically scale fixed-rate DeFi lending in ways not previously possible.
We invite you to dive into the FiRM whitepaper now and then consider becoming a contributor to the Inverse Finance community by joining the conversations on Discord or Twitter. More details about FiRM, governance voting, and the launch are coming soon!