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What is DOLA (DOLA)?

Quick Facts

  • Type: Decentralized, overcollateralized stablecoin
  • Issuer: Inverse Finance DAO
  • Peg: 1:1 to the US dollar
  • Primary chain: Ethereum, with deployments on Base, Arbitrum, BNB Smart Chain, and more
  • Minting methods: FiRM borrowing and Peg Stability Module (PSM)
  • Yield-bearing version: sDOLA
  • Governance token: INV

Introduction

DOLA is the native decentralized stablecoin of Inverse Finance, designed to maintain a stable value of $1 USD. Unlike stablecoins backed by bank deposits, DOLA is created entirely through overcollateralized borrowing and reserve-backed swaps, making it a crypto-native alternative with transparent on-chain backing.

History & Background

Inverse Finance was launched on Ethereum in 2020 by Nour Haridy, with the protocol governed from day one by its community through the INV token. DOLA was introduced in early 2021 as a core primitive for the ecosystem. In April 2022, a price oracle exploit on the legacy Anchor lending product created bad debt for the protocol — a setback that Inverse Finance has been actively repaying through ongoing DAO treasury operations.

How DOLA Works

DOLA enters circulation through two primary channels. The first is FiRM (Fixed Rate Market), where users deposit eligible collateral and borrow DOLA at a fixed interest rate. A key component here is DOLA Borrowing Rights (DBR) — an ERC-20 token that grants the holder the right to borrow one DOLA for up to one year. DBRs are consumed gradually as a loan accrues, creating a novel fixed-rate borrowing experience.

The second channel is the Peg Stability Module (PSM), which accepts USDS at a 1:1 rate and mints an equivalent amount of DOLA. This provides a direct on-ramp from liquid stablecoins and serves as a backstop during peg stress events.

Special smart contracts called Feds manage DOLA supply across lending markets and liquidity pools, expanding or contracting availability based on demand.

Tokenomics

DOLA is minted only when backed by collateral or equivalent reserve assets, ensuring every token in circulation is supported. The PSM reserves are deployed into yield-generating vaults, producing revenue for the DAO treasury. sDOLA, the yield-bearing version of DOLA, passes a portion of FiRM lending revenue back to sDOLA holders, creating a real-yield loop anchored in actual protocol activity.

Circulating Supply ? 74.54 million DOLA
Total supply ? 108.87 million DOLA
Max supply ? -- DOLA
Updated 3d ago

Ecosystem & Use Cases

DOLA's primary use cases include fixed-rate borrowing on FiRM, liquidity provision in AMM pools, and earning yield via sDOLA. The stablecoin is deployed across multiple networks — Ethereum, Base, Arbitrum, BNB Smart Chain, Optimism, and Fantom — making it accessible across a wide DeFi landscape.

Team, Governance & Community

Inverse Finance operates as a fully on-chain DAO, governed by INV token holders who vote on proposals covering collateral policies, Fed limits, DBR issuance rates, and treasury use. Working groups are empowered with limited autonomy and budgets through governance votes. The protocol maintains a public Transparency Portal where anyone can verify DOLA backing, bad debt progress, and treasury health in real time.

Advantages

  • Fixed-rate borrowing via the DBR mechanism eliminates variable-rate uncertainty
  • Fully on-chain collateralization — no bank deposits or off-chain custodians
  • Real yield via sDOLA — returns come from actual protocol revenue, not inflation
  • Multi-chain availability expands access and liquidity across DeFi
  • Transparent operations with a live on-chain Transparency Portal

Risks & Challenges

  • Historical bad debt from the 2022 Anchor exploit remains a long-term repayment obligation
  • Peg stability depends on sufficient collateral quality and Fed contract management
  • Smart contract risk inherent in complex DeFi systems with multiple interconnected contracts
  • Liquidity concentration across multiple chains can dilute depth on any single network

Long-Term Vision

Inverse Finance aims to position DOLA as a leading decentralized stablecoin for fixed-rate DeFi borrowing. By expanding FiRM markets, growing sDOLA adoption, and continuing transparent bad debt repayment, the protocol seeks to build a sustainable, community-governed stablecoin ecosystem that offers genuine alternatives to both algorithmic and fiat-backed stablecoins.

Frequently Asked Questions

DOLA is the native decentralized stablecoin of Inverse Finance, pegged 1:1 to the US dollar. It is created exclusively through overcollateralized borrowing on the FiRM protocol or reserve swaps via the Peg Stability Module.

Unlike fiat-backed stablecoins that rely on bank deposits, DOLA is fully on-chain and collateral-backed. It also introduces the DBR (DOLA Borrowing Rights) model, enabling fixed-rate borrowing with no variable interest surprises.

A DBR is an ERC-20 token that grants its holder the right to borrow one DOLA for up to one year. DBRs are gradually consumed as a loan accrues, functioning as a prepaid fixed-rate borrowing fee.

sDOLA is the yield-bearing version of DOLA. It earns real yield generated from FiRM lending market revenue, distributing protocol income directly to sDOLA holders.

The PSM allows users to swap supported stablecoins like USDS into DOLA at a 1:1 rate with no fee for minting, and a small fee for redeeming. It acts as a direct peg-defense mechanism during periods of stress.

In April 2022, a price oracle exploit on the legacy Anchor lending product resulted in bad debt for the protocol. Inverse Finance has been actively repaying this debt over time through DAO treasury revenue.

DOLA's parameters — including Fed supply limits, collateral eligibility, and DBR issuance rates — are governed by INV token holders through on-chain DAO proposals. Working groups operate with limited autonomy under governance-approved budgets.

DOLA is available on Ethereum (its primary chain), as well as Base, Arbitrum, BNB Smart Chain, Optimism, and Fantom, giving users multi-chain access to the stablecoin and its DeFi integrations.