What is Inverse Finance (INV)?

Deep Dive

1. Purpose & Value Proposition

Inverse Finance addresses DeFi’s interest rate volatility with FiRM, its flagship fixed-rate lending protocol. Unlike variable-rate platforms where borrowing costs fluctuate, FiRM lets users lock in rates for set terms, reducing uncertainty for businesses and individuals. This appeals to institutions seeking predictable capital costs and retail users hedging against market swings.

The protocol also issues DOLA, a decentralized stablecoin collateralized by crypto assets, and sDOLA, which automatically compounds yields from lending activities. This dual approach aims to merge price stability (via DOLA) with passive income (via sDOLA).

2. Technology & Architecture

FiRM uses smart contracts to enforce fixed-rate agreements, automatically adjusting collateral ratios to maintain stability. DOLA’s peg is sustained through overcollateralized debt positions and arbitrage incentives, while sDOLA’s yield derives from interest paid by FiRM borrowers.

The system is Ethereum-based but cross-chain compatible, with governance conducted via Snapshot off-chain voting to reduce gas fees. Security audits by OpenZeppelin and others underpin critical contracts (Inverse Finance).

3. Tokenomics & Governance

INV (total supply: 719,000) grants voting power over protocol parameters like loan terms, asset listings, and treasury spending. Notably, INV also acts as a “risk absorber” – during deficits (e.g., bad debt from past exploits), tokens are minted and sold to recapitalize the system, as seen in July 2025’s $2.6M debt repayment (Yahoo Finance).

Conclusion

Inverse Finance positions itself as a DeFi stabilizer through fixed-rate lending and algorithmic stablecoins, governed by a DAO committed to repaying debts and mitigating risks. As FiRM’s TVL grows 37% monthly, can the protocol maintain its security-first ethos while scaling adoption?