DOLA (DOLA)

DOLA is a decentralized stablecoin introduced by Inverse Finance. It is a debt and asset-backed, capital-efficient cryptocurrency.

Overview of DOLA

DOLA is a synthetic stablecoin pegged to the US Dollar, designed to maintain a value close to $1 with minimal volatility. It was launched in February 2021 and operates as a debt-backed stablecoin rather than being algorithmic. Initially, DOLA was launched on Ethereum as an ERC-20 token but is also available on chains like Optimism, Arbitrum, BNB, and Avalanche. DOLA is introduced into the market through "Fed" smart contracts, which mint and burn DOLA in response to market demand, thereby managing its supply effectively. In September 2023, DOLA expanded to the Base network using a native Base bridge, initially supported by a custom user interface provided by Inverse Finance.

Technology behind DOLA

Yield-bearing collateral

Ticker	DOLA
Category	Stablecoins
Website	https://www.inverse.finance/
Twitter	@InverseFinance
Telegram	InverseFinance
Contract Addresses
ethereum	0x86...e4Copied!
optimistic-ethereum	0x8a...84Copied!
binance-smart-chain	0x2f...40Copied!
arbitrum-one	0x6a...b6Copied!
base	0x46...91Copied!
fantom	0x31...3cCopied!

DOLA's collateral is deposited within Inverse's Anchor protocol and is yield-bearing. Unlike MakerDAO's DAI, where the collateral does not generate returns, DOLA's collateral, such as ETH staked in Anchor, is lent to borrowers, allowing Inverse Finance to share interest earnings with depositors.

Yield-bearing stablecoin

Users can stake borrowed DOLA on Anchor to earn interest or engage in other yield-bearing activities. This strategy enables borrowers to optimize their profits by borrowing, staking, and re-borrowing against the initial collateral.

Staking yield-bearing assets

DOLA enhances capital efficiency by allowing staking of yield-bearing assets. For instance, users can stake ETH on Lido to obtain stETH, which is then staked on Anchor as collateral. This allows borrowing DOLA against the staked stETH, adding an extra layer of capital efficiency.

DOLA stability using Fed

To maintain stability, DOLA relies on the DOLA Fed, a DAO-controlled function that manages its supply and ensures it maintains its USD peg. The DOLA Fed adjusts lending rates to influence DOLA demand and supply. If DOLA's price falls below $1, repaid DOLA can be burned to reduce supply and stabilize the price. The DOLA Fed's effectiveness was demonstrated during a price manipulation incident, showcasing its resilience.

INV and DOLA

While DOLA operates independently of governance tokens, the INV token supports its ecosystem. INV sales contribute liquidity to the DOLA network, and holders can stake INV in the Anchor market to earn rewards. INV also serves as collateral for borrowing DOLA and plays a significant role in the Inverse Finance DAO, providing governance voting power. INV stakers receive a share of DOLA lending revenue, which enhances its demand and protocol liquidity.

sDOLA

Announced on February 8, 2024, sDOLA is a tokenized wrapper around a DOLA Savings Account (DSA) smart contract. It continuously rewards DOLA stakers with DBR tokens that are auto-compounded into additional DOLA, increasing the DOLA:sDOLA exchange rate over time. As a yield-bearing synthetic stablecoin, sDOLA generates returns from FiRM's fixed-rate lending market revenues, encouraging long-term DOLA holding and enhancing protocol economics.