INV Market Grand Re-opening on FiRM
We are back! After pausing borrowing against INV following the April 2022 price oracle manipulation incident, we’ve completely re-thought not only the lending market (FiRM) but also the way we think about INV and how we can lend safely against it. This is an exciting moment for the DAO since there are so many INV holders so let’s dive in for the benefit of both the OG’s and the new INV stakers!
Fortifying the INV Market on FiRM
Since April 2022, the DAO has made a series of innovations to our lending markets as part of an ongoing effort to bolster the security profile of FiRM as well as DOLA. These innovations include:
FiRM’s Personal Collateral Escrows (PCE’s) are a major innovation that allows for secure self-custody of the collateral, but retaining the flexibility to stake the tokens or participate in governance voting in several protocols. The PCE allows the user to maintain custody of their collateral while still subjecting it to the rules of FiRM, enabling replenishments and liquidations.
FiRM uses a Pessimistic Price Oracle (PPO) to greatly reduce the risk of price manipulation attacks. The PPO uses the lower of two recorded prices: either a) the current collateral price on Chainlink, or b) the 48-hour low price as observed by the PPO on Chainlink, divided by the collateral factor. Read more in the PPO blog.
In addition to the PPO, FiRM uses an Exponential Moving Average (EMA) which combines the EMA price from the INV pool on Curve and the chainlink CRV-USD price as price feed.
The Risk Working Group has produced a risk analysis for the INV market and recommends unpausing borrows with the market launching with a constrained DOLA lending supply and a fairly low collateral factor. The Analytics working group has created an advanced alerts platform which reports any significant on-chain activity to the Risk and Treasury Working Groups.
You may have heard that DOLA borrowers in FiRM pay a fixed rate in DBR, read more in the docs. No maximum maturity length, and you can repay your loan at any time … or extend it.
FiRM is the smartest way to do fixed rate DeFi borrowing - in case you haven’t explored it, here’s a link to the explainer video and our docs.
The New INV
Today’s announcement is a continuation of a stream of innovations around the INV governance token. We began re-thinking the utility of gov tokens with INV+ in Feb 2022, distinguishing INV from typical useless gov tokens
With INV+, stakers began to receive anti-dilution rewards, meaning INV stakers are shielded from dilution from the use of INV tokens for bonds, building protocol owned liquidity and other liquidity activities.
In Q2 2023 INV+ took another step in its evolution and revenue sharing rewards were announced as DBR streaming rewards - INV holders get a continual stream of DBR’s to claim. Streamed DBR’s can be used to finance borrowing, can be swapped out for other tokens, or held as a hedge against future rate increases or for speculative purposes. More in DBR streaming here.
INV staking on FiRM means your collateral is never lent out to others - it is isolated in the PCE. This means your governance - voting - rights are retained and INV holders can continue to vote on Inverse governance proposals, even if there is a loan outstanding.
How Do I Borrow Against INV?
You can combine deposits, borrows and purchasing DBR for convenience in FiRM’s interface with the minimal number of transactions!
Prepare your desired position in the UI and FiRM will let you confirm approvals and transactions in sequence when you’re done. Note that the INV market’s collateral factor initially is set to 30%, make sure that your position is healthy or you risk recharging or liquidation.
Deposit INV into the FiRM market.
Purchase DBR for your desired duration. Again your DBR purchase is included in the borrow transaction for max convenience, or you are free to acquire your own DBR in a separate transaction.
You can also perform any of these actions individually after your position has been created - add more INV, borrow more DOLA, add more DBR to extend the life of your loan, etc. To reduce or exit position, just click the “Unstake” button.
Where to Get INV
INV is currently available on Ethereum mainnet via DEX’s including Curve as well as Balancer. INV also available on Coinbase for CEX lovers, though users will need to migrate to an on-chain wallet rather than their Coinbase account in order to stake/borrow in FiRM.
It is important to do your own research (DYOR) before depositing your INV tokens into FiRM. There always is some risk involved in any investment, and you should make sure that you understand the risks before you proceed.
I hope this blog post has been helpful. If you have any other questions, please feel free to ask in Discord.
I hope this blog post has been helpful. If you have any other questions, please feel free to ask in Discord. Feel free to drop in to the community and ask questions on our Discord server. You can find more detailed information in our docs and here is a link to a more general FiRM & DBR explainer.