We are pleased to introduce the DOLA Peg Stability Module (PSM) as the newest layer in DOLA peg protection and risk mitigation for Inverse Finance.
A Quick Look Back: The DOLA Stabilizer
Back in February 2021, we launched the DOLA Stabilizer, one of Inverse’s original products. It was a simple 1:1 swap mechanism for DOLA and DAI, with a 15 million DOLA capacity. It served us well, but as we rolled out DOLA AMM Feds and shifted to a more expansionary DOLA Fed policy, the Stabilizer became less critical. To avoid potential vulnerabilities from maintaining a redundant contract, we deprecated it in October 2023. Still, the need for immediate DOLA liquidity -- especially for liquidators -- never went away.
Enter the PSM.
The PSM: Smarter, Safer, Future-proof
The DOLA Peg Stability Module is a more feature-rich successor to the Stabilizer, built from the ground-up to address the Stabilizer's limitations and while adding flexibility. Here’s what makes the PSM better:
Yield on Reserves: The PSM implements ERC4626 vaults (starting with sUSDS), so reserves can earn yield while helping to keep DOLA stable.
Governance Flexibility: We can migrate to new vaults if needed
Configurable Fees: Buy/sell fees and profit routing are fully customizable by governance
Improved Security: Safeguards against inflation-style attacks, including minimum total supply checks.
Modular Design: Separate PSM, PSMFed, and Controller contracts for cleaner, safer operations.
Gas Efficiency: Optimized for arbitrage and liquidation support, keeping costs low for users.
How It Works
When DOLA is above its USD peg (or USDS is below DOLA’s price), you can swap USDS for DOLA 1:1.
When DOLA is below its peg (or USDS is above its peg), you can swap 1 DOLA for 0.998 USDS, with a small 20 bps fee.
This setup ensures liquidators have instant access to DOLA, supporting orderly and efficient liquidations on FiRM while keeping the peg stable. You can try it out right here: https://www.inverse.finance/psm
