[BIP-65] Enable INV/DOLA 50/50 Gauge on Ethereum

Gauge Proposal Template:

Summary:

Whitelist the gauge for the pool 50% INV / 50% DOLA

INV-DOLA Weighted Pool: 0x441b8a1980f2F2E43A9397099d15CC2Fe6D36250
Gauge Address: 0x46804462f147fF96e9CAFB20cA35A3B2600656DF

References/Useful links:

Website: https://www.inverse.finance/
Documentation:ABOUT INVERSE - Inverse Finance
Transparency: Inverse Finance - Transparency Overview
Github Page: InverseFinance
Communities: Discord
Defillama: DOLA: TVL and stats

Protocol Description:

Inverse Finance is a community of crypto enthusiasts organized as a Decentralized Autonomous Organization (DAO), started on December 26th 2020. Inverse DAO governs and develops a suite of permissionless and decentralized financial tools using blockchain smart contract technology. The code base is open source and maintained by the community.

Inverse DAO’s core product is DOLA, a debt-backed USD stablecoin. DOLA is added into and removed from circulation;

  • On the supply side of money markets by Inverse Finance’s “Fed” contracts and is then made available to be borrowed through over-collateralized loans.
  • Via injection/contractions into pools such as the Curve DOLA-3POOL through our partnership with Yearn (currently $93M TVL).
  • Via purchase with DAI stablecoin using The Stabilizer.

DOLA is not “algorithmic” and the INV governance token is not used to mint or redeem DOLA.

Motivation:

The Inverse Finance Team aims to be a major adopter of Balancer technology and bribe incentivizer for BAL emissions utilizing Redacted Cartel’s Hidden Hand (“HH”) platform to help accelerate and deepen our liquidity pool.

Current onchain liquidity for INV-DOLA is sitting at just over $800,000 between Sushi and Uni LP. The Sushi pool is incentivized through our own platform with around 950 INV per month (~$75,000 at current prices) in rewards and this has brought $366,000 in depth. This is a poor return, which we believe is due to our platform, Frontier, not having borrows active since June 2022. We believe we can achieve much better ‘ROI’ by migrating INV-DOLA liquidity to Balancer and making full use of the bribe efficiency of the Aura / Balancer platforms, this is as there are way more users checking the platform regularly for yield opportunities.

Once the 50/50 INV-DOLA pool is whitelisted for BAL rewards, our bribe incentives program would begin to promote trading, bribing, LP farming activity on Balancer.

Specifications:

You can view analytics for DOLA on Defillama. To learn more about the protocol, please visit our official docs, governance and our transparency pages.

  1. Governance: Provide current information on the protocol’s governance structure. Provide links to any admin and/or multisig addresses, and describe the powers afforded to these addresses. If there are plans to change the governance system in the future, please explain.

Inverse Finance Fed contracts mint DOLA directly to the supply side of lending markets or to the DOLA-3CRV Curve pool as demand increases, or they retract and burn DOLA from the supply when demand decreases. This includes Frontier and any lending market officially partnered with Inverse Finance. The Fed contracts are governed by the Inverse Finance DAO, which is controlled by INV holders through governance. A detailed description of our governance can be found here. Equally, check out our transparency portal here which gives a visual representation of Inverse Finance Governance.

  1. Oracles: Does the protocol rely on external oracles? If so, provide details about the oracles and their implementation in the protocol.

A custom INV oracle with both a price ceiling and borrow cap feature has been in use following a price manipulation incident on April 2nd. This oracle has been reviewed by Peckshield and is actively managed by Inverse’s Risk team.

Inverse Finance’s new lending market is due to release later this year after audits and will use ChainLink price oracles. Inverse Finance’s old lending market relied on both ChainLink and non ChainLink oracles, however, borrows have been disabled since June 2022 with no current plans to re-enable.

  1. Audits: Provide links to audit reports and any relevant details about security practices.

Inverse DAO has recently established a working relationship with Peckshield. A first round audit of a recent product was produced (here), and an audit of relevant legacy code is in progress. The DAO also now has dedicated members overseeing risk, what we call the Risk Working Group. A recent announcement of the team’s formation can be found here.

  1. Centralization vectors: Is there any component of the protocol that has centralization vectors? E.g. if only 1 dev manages the project, that is a centralized vector. If price oracles need to be updated by a bot, that is a centralized vector. If liquidations are done by the protocol, that is also a centralization vector.

Within the DAO working groups have been formed to deliver work in specific areas. Often, these working groups will have a Multisig wallet that the DAO governance awards certain roles and limited DOLA or INV allowances in order to carry out required work. All granted privileges and allowances can be reclaimed/disabled by INV token controlled governance. These are:

  • Treasury Working Group (TWG): 3 of 4 Multisig with allowances giving access to Treasury funds to optimize treasury management.
  • Risk Working Group (RWG): 1 of 3 Multisig with privileges to pause actions in our (now disabled) lending market.
  • Policy Committee (PC): 5 of 9 Multisig that can change staking reward rate to INV stakers.
  • Fed Chair: 2 of 5 Multisig that can call the expansion and contraction functions (to mint/burn DOLA) on the Fed Contracts.

Please see our Multisig Wallet section of the transparency portal here.

DOLA stablecoin is fully decentralized, with no possibility to pause or blacklist any addresses, even if INV governance wanted to do so.

  1. Market History: Has the asset observed severe volatility? In the case of stablecoins, has it depegged? In the case of an unpegged asset, have there been extreme price change events in the past? Provide specific information about the Balancer pool: how long has it been active, TVL, historical volume? You must provide a direct link to the pool AND a link to your pool’s gauge.

Inverse Finance DAO launched DOLA In February of 2021. Through the “Feds”, Inverse maintains the flexibility to adjust borrowing rates across one or even all partner lending markets in order to optimize supply and demand for DOLA and to maintain its USD peg. DOLA’s Fed mechanics have proven to be highly resilient at defending the peg, even during times of extreme stress. The DOLA-3Pool experienced 3Pool bank runs twice (on the days of oracle exploits) on April 2nd and June 16th; both times DOLA depegged for very short periods of time. Please see our graph below of DOLA’s peg YTD.

  1. Value: Is this pool intended to be the primary source of liquidity for the token(s)? If this is not the case, explain the expected value add to Balancer (can this pool generate consistent fees?)

This pool is intended to be the primary source of liquidity for INV on decentralized exchanges.

6 Likes

Through discussions with the proposer, if this gauge is approved it will enter with a 2% cap. I will be voting in favor.

Capped gauge: 0x46804462f147fF96e9CAFB20cA35A3B2600656DF

3 Likes

https://snapshot.org/#/balancer.eth/proposal/0x0678e2094fa6b3adf61e319c3000b6080f84d43d7555552510dfd2949fa8c4c0

2 Likes