Skip to main content

Inverse Finance seizes tokens, ships code: Launches stablecoin lending protocol

One of DeFi's strangest experiments continues to push the envelope in both governance and architecture.

Shortly after culling its community of inactive members, one of decentralized finance’s (DeFi) strangest experiments is launching a new stablecoin lending product.

On Wednesday Inverse Finance revealed the Anchor Protocol, a money market built around DOLA, a protocol-native synthetic stablecoin. Based on “a modified fork of Compound,” in a blog post Inverse Finance founder Nour Haridy compares Anchor to Synthetix, which issues credit in the form of synthetic assets back by overleveraged collateral, and Compound, which issues credit in the form of crypto asset loans also backed by overleveraged collateral.

Ultimately, Haridy sees these models as providing the same utility.

“Lending and synthetic protocols both offer the same service: credit. Anchor brings the gap between them by combining them into a unified borrowing protocol.”

Anchor aims to accomplish this with a unique architecture that always treats the DOLA token as “$1 collateral that can be used to borrow other assets regardless of DOLA’s market conditions or peg.” Users deposit collateral, mint DOLA, and then can use DOLA to take out loans in other crypto assets or simply earn yield on DOLA. 

“For over-collateralized borrowers and leveraged traders, we offer them a one stop shop where they can share their collaterals across their synthetic and token borrowing positions, allowing higher capital efficiency and higher leverage,” says Haridy.

Haridy envisions Anchor will use DOLA for protocol-to-protocol lending similar to Cream’s Iron Bank, for undercollateralized lending (long a prize in DeFi), and for the protocol to “lend itself” credit to pursue yield farming opportunities.

No dead weight

Perhaps more interesting than Inverse’s development at the protocol layer are the moves they made earlier in the week at the governance layer. 

In what may be a DeFi governance first, On Saturday Feb. 20, Inverse community members put forth two governance proposals to seize INV — Inverse’s currently non-transferrable governance token — from inactive community members. On Thursday Feb. 25, the proposals passed, and not everyone was happy with the result.

Haridy says that the timing was intentional — right as Anchor, a protocol that might generate revenue for the DAO, prepares to launch, the community sheds freeloaders. 

“We needed to weed out our dead weight to reclaim some tokens for re-distribution to new active members soon. We also created an INV grants committee with the power to reward contributors and add new members to the DAO. Additionally, when free riders are removed, active members become more incentivized to contribute because they get a larger piece of the pie.”

While the unprecedented move may seem harsh, it’s also simply applying to governance the kind of aggressive style that put Inverse Finance on the map in the first place. By forcing token holders to participate under the threat of seized tokens, it’s helped with the development of Anchor as well. 

“This is a collaborative effort among many DAO members starting from ideation to development to internal reviews and testing,” says Haridy.

The next step for Inverse will be getting Anchor off the ground, and preparing for a world in which INV becomes tradable. Haridy says there’s a growing consensus in the community for tradability. This would mean that the DAO would give up the power to seize tokens, which could alter Inverse’s community landscape.

Haridy, however, seems unfazed by the looming shifts, already preparing the next innovation.

“This will significantly change the existing incentives and may reduce participation. Fortunately, there’s some work on a new alternative governance model that’s been happening internally to address this problem.”


from https://ift.tt/3dTtgGc
https://ift.tt/2ZWTEqx
Labels:

Comments

Post a Comment

Any questions, Please.

Popular posts from this blog

DeFi isn’t dead, it just needs to fix these 3 critical problems

It’s been a rough year for DeFi, and it may not get any better until projects focus more on security, regulation and usability. The persistent challenges  decentralized finance  face have been well documented by a handful of analysts and the recent collapse of the Terra ecosystem re-enforced the fact that something is critically wrong with DeFi. I think DeFi today is completely broken for 99% of the population. The promise of a more transparent financial system has been overtaken by greed. UST/LUNA is just the latest in a string of bad developments: — Peter Yang (@petergyang) May 11, 2022 Let's take a look at what experts say DeFi needs to do in order to have another revival.  Improved usability To date, the promise of open and uncensored access to a global decentralized financial system has been largely hampered by the complicated interface, confusing multi-step staking processes and lack of clarity surrounding the yields on various tokens. What do you thi...
Post a Comment
Read more

ENS DAO delegates offer perspective on DAO governance and decentralized identity

AlphaWallet CEO and Spruce co-founder talk about their roles as contributors to the Ethereum Name Service following the project's recent airdrop. Earlier this month, the Ethereum Name Service, or ENS, formed a decentralized autonomous organization, or DAO, for the ENS community.  Cointelegraph spoke to two ENS DAO delegates who applied for the opportunity to represent the community and stay involved in the decision making process: Victor Zhang, CEO of AlphaWallet, an open source Ethereum wallet, and Gregory Rocco, co-founder of Spruce, a decentralized ID and data toolkit for developers. Zhang spoke about his experience as an external contributor to ENS and an early supporter since 2018. Zhang initially sought to help ENS by offering Alpha Wallet as a user-friendly tool for  resolving .eth names and cryptocurrency wallet addresses. Essentially, if a user inputs an .eth name in the AlphaWallet, it will show the wallet address, and vice versa using reverse resolution. Alpha...
Post a Comment
Read more

National Futures Association adds rules for members handling digital assets

The CFTC-linked self-regulatory organization (SRO) has disclosure rules for members engaging in activities with BTC and ETH; now, standards of conduct are being added. The National Futures Association (NFA), the United States self-regulatory organization for derivatives markets, has issued a new compliance rule addressing members’ conduct. The new rule complements requirements issued in 2018. The NFA has “well over 100” members that engage in activities with digital asset commodities, but no way to address fraud or misconduct committed by those members, the organization explained to secretary of the Commodity Futures Trading Commission (CFTC) Christopher Kirkpatrick in a Feb. 28 letter as it submitted the proposed new rule for approval. The new rule is modelled on the NFA’s antifraud rules for exchange traded futures and swaps transaction and retail foreign exchange. The NFA is the only registered self-regulatory organization that has delegated authority from the CFTC, giving it a...
Post a Comment
Read more