Inverse Finance is an open-source protocol for lending and borrowing digital assets. The platform has a native token, INV. It confers voting rights within the Inverse Finance DAO. INV is also rewarded to lenders who share their funds with the network and can be staked to the protocol for an annual yield.

The platform works by sourcing liquidity from a decentralized cadre of depositors incentivized to facilitate blockchain-based lending and borrowing services.

Frontier is the Inverse’s decentralized money market. Within the platform, users can their deposit digital assets to various lending pools to provide tokenized liquidity. In exchange for their liquidity, depositors are said to earn a monthly INV-based reward.

Inverse enables liquidity providers to use deposits as collateral from which they can borrow against. Per documentation, the protocol adheres to a strict overcollateralization policy whereby users can only borrow up to 85% of their current deposit balance.

Should a particular borrower’s debt-to-collateral ratio rise above 100% at any time as the result of a downside price movement, the party is immediately considered insolvent and can be liquidated.

According to project documentation, Inverse enables users to borrow a range of ERC-20 assets as well as DOLA, a debt backed, protocol-native stablecoin pegged to the USD. Like the platform’s lending/borrowing services, DOLA is overcollateralized, meaning the debt backing each individual token is worth more than $1 USD in value.

In times that DOLA’s price sways from its $1 peg, users can leverage the platform’s Stabilizer pool to eliminate the price discrepancy by swapping their DOLA tokens for DAI (or vice versa) at a 1:1 ratio. Moreover, the protocol supports a series of pools across independent protocols like Curve, Uniswap and Sushi to ensure that DOLA remains liquid across all markets.

Inverse also supports a series of so called DCA Vaults that allow users to deposit stablecoins and earn a yield which is subsequently reinvested into risk bearing assets like ETH and wBTC.

As of August 2022, some $20.4 million worth of tokenized value was locked on the Inverse platform.

When was INV created and how much was it worth?

Inverse Finance was created in 2020 by blockchain developer Nour Hairdy. Prior to his work with Inverse, Hairdy first gained recognition as the lead blockchain architect at Mosendo, a digital payments wallet/application. Likewise, Inverse boasts a team with prior experience at projects such as Index Coop, Concave and Station0x.

While Inverse’s core development team does work to support the protocol, governance is ultimately controlled via the Inverse Finance DAO.

INV, the platform’s native governance/rewards token was first disseminated in December of 2020. Neither a public nor private sale was held; rather, tokens were set aside to be claimed by eligible community members. 

Price data from CoinGecko shows INV performed well in the months following its initial distribution, hitting a record high of $2,075 in March of 2021. This was followed by a rather drastic drop in price which saw INV lose more than 90% of its value within a 12-week span.

After a near four-month consolidation over the summer of 2021, INV went parabolic in September, reaching about $1,450. But it has been subjected to downside pressure in 2022.

How is the price of INV determined?

While INV is technically an inflationary asset with no hard cap, the token’s circulating supply is extremely limited, hence its high valuation. As of August 2022, there were just 156,000 INV tokens in circulation. According to project documentation, all future supply emissions will be dictated by the Inverse Finance DAO. Currently, INV is distributed periodically to the protocol’s decentralized network of lenders and token stakers.

Why does INV have value?

Because it enables users to unlock funding, save on fees and earn passive income, making Inverse “a smart network to keep an eye on moving forward,” said David Hamilton of Securities.io.

Is INV secure?

Inverse Finance is a controversial project within the lending protocol space and that owes to not one but two oracle/flash loan exploits, first in April of 2022 and then again in June of 2022, Halborn explained.

Inverse has since hired Risk DAO to add additional security operations, AMBCrypto said.

What are the main benefits of INV?

• Inverse allows users to lend and borrow funds within a decentralized framework, obviating the need for any centralized intermediaries.
• Users can earn a tokenized yield by depositing funds into an Inverse-backed lending pool.

What do critics say about INV?

Security breaches are a concern. Additionally, the Inverse Finance DAO’s decision to strip inactive community members of their INVs has not gone down well, CoinTelegraph explained.