Add sSwanUSD as Collateral on FiRM

Forum Post: https://forum.inverse.finance/t/add-sswanusd-as-collateral-on-firm/695

Summary

This proposal seeks to onboard sSwanUSD as collateral on FiRM, with a 5 million DOLA supply ceiling and a 500,000 DOLA daily borrow limit. Users would be able to borrow DOLA while continuing to earn SwanUSD staking yield and SWAN rewards.

Current staking yield of approximately 169% is significantly above FiRM borrowing costs. This creates a strong opportunity for leveraged staking, supporting the growth of Monolith while increasing demand for DOLA and DBR.

Background

SwanUSD is a wstETH-backed stablecoin launched on Monolith, the stablecoin protocol developed by Inverse DAO. It combines redeemable, interest-free debt with a paid borrowing option, with an autonomous interest rate controller adjusting rates according to the availability of redemption liquidity.

Users stake SwanUSD to receive sSwanUSD, which earns a share of the interest paid by borrowers through an increasing exchange rate. sSwanUSD can then be deposited into the SWAN rewards contract to earn SwanDAO’s governance token alongside this underlying yield.

SwanUSD also has a USDS peg stability module, with its reserves held in sUSDS, providing an additional route for entering and exiting the stablecoin.

Business Case

1. Strong expected borrow demand

As of 28 October 2026, sSwanUSD staking yield is approximately 169%, with around 168% coming from SWAN rewards. This is significantly above the cost of borrowing on FiRM, creating a strong incentive to borrow DOLA and increase exposure to the position.

Users would be able to deposit sSwanUSD, borrow DOLA and acquire additional sSwanUSD, retaining vault yield and SWAN rewards through the deployed staking escrow. FiRM lets them fix borrowing costs for their chosen period while increasing the amount of capital earning rewards.

The large initial spread leaves room to attract additional capital as SWAN emissions are shared across a larger staking base. Each loop increases the amount of DOLA borrowed and the associated DBR demand, directly connecting Swan’s growth with FiRM usage.

Existing holders would also gain access to DOLA liquidity without selling their sSwanUSD or giving up their rewards.

2. Grow FiRM and Monolith together

FiRM can provide a useful source of demand for SwanUSD at an early stage in its growth. Users acquiring newly issued SwanUSD through the PSM add reserve assets, while users minting against wstETH expand Monolith borrowing. Buying existing SwanUSD supports demand for the token but does not itself create new Monolith debt or PSM reserves. The effect on redemption liquidity will depend on which routes users choose and whether new borrowers select free or paid debt.

For Inverse, this would connect two of the DAO’s products. More sSwanUSD collateral on FiRM can generate additional DOLA borrowing and DBR demand, while a larger SwanUSD ecosystem demonstrates the utility of Monolith to future stablecoin issuers.

3. Direct alignment with Swan’s success

Inverse’s SWAN allocation gives the DAO an economic interest in Swan’s growth alongside the benefits to FiRM and Monolith.

Where growth generates additional interest from paid borrowing or PSM revenue, it can also increase distributions to SWAN stakers. Staking the DAO’s SWAN allocation allows Inverse to participate in those distributions. Income depends on the DAO’s share of stake and the revenue actually generated.

4. Give launch participants a reason to stay

The Swan launch has introduced the ecosystem to existing Curve, Convex, Yearn, Stake DAO and Inverse users. A FiRM integration would give these holders another use for their sSwanUSD after the initial launch campaign, rather than requiring them to exit their position to access liquidity.

Building useful integrations while this attention is still present can help turn initial participation into longer-term borrowing, staking and governance activity.

Pricing

The market uses a FeedSwitch to choose between a fixed $1 SwanUSD price and the existing $1-capped Curve EMA-based feed. The RWG multisig acts as guardian and can switch between the two. The sSwanUSD vault exchange rate is then applied to value the collateral.

In fixed-price mode, an underlying price below the configured $0.96 threshold, or a failed underlying read, makes the feed return a stale-price signal. FiRM’s borrowing controller uses that signal to block new borrowing while collateral valuation remains at the fixed reference, adjusted by the vault exchange rate.

Deployed Contracts

• FiRM market: 0x529203f9F07c66d2D96812E3D942387312Fab0Ee
• Escrow implementation: 0xD591d4573e867967596a934724AA8492b025A22c
• Price feed: 0xd22D0287c6aA9FC4D07e7e1a11BDcF2daad406b7

Parameters

The earlier draft’s 500,000 DOLA ceiling and 100,000 DOLA daily borrow limit were sized against direct EMA pricing from a thin Curve pool. The RWG supports the following revised parameters with the FeedSwitch design:

The Fed Chair should ramp up the market’s DOLA funding gradually, pacing expansions against available exit liquidity.