What Is Inverse.finance (INV)?

Inverse.finance (INV) is used as a collateral asset in its own product anchor1. In other words, not everyone is comfortable with market buying because of the risk of losing capital. Thus, Inverse.finance is designed for individuals who are averse to risk. The Inverse.finance platform is a suite of trustless, decentralized finance tools that are governed by  the Inverse DAO(decentralized autonomous organization). A DAO is the control divided among various computers, networks, and nodes instead of a single central authority. Further, the DAO runs on the Ethereum blockchain.

As per the official docs, the Inverse.finance protocol allows a passive, lossless purchase and holding of any token by following a dollar-cost averaging (DCA) strategy using stablecoin yield. This means capital accrued in the stablecoin vault is utilized in part to mitigate the risk of volatility on the overall purchase. Hence, the platform's strategy suits those individuals who are not willing to risk their capital in acquiring the target token directly and who are reluctant to trade in the volatile markets. 

Let us get a brief outline of how the protocol aims to function. Users can deposit one stablecoin like DAI or USDC and receive one vault token, i.e., 1:1 ratio. Then, the vault uses this stablecoin to fund the yield optimizer protocol, such as Yearn. The yield optimizer uses data analysis and optimization strategies to increase the performance and returns in purchasing volatile tokens like ETH or BTC. The returns are continuously swapped to volatile tokens and distributed to depositors as long as they hold the vault token. One can withdraw their stablecoin deposit at any time. On withdrawal of stablecoin, the vault token is burned, and users receive the deposited stablecoins back. Also, one can claim their earnings at any time without having to withdraw their stablecoin. 

From the platform's functioning, two important intended benefits can be listed for users. The first benefit is gas fee savings, as the vault converts all users' yield at one go. The second benefit is that it permits the user to follow a DCA strategy in purchasing a target token using the stablecoin return over a long period. Currently, there are four vaults available for such earnings. They are USDC to ETH, DAI to WBTC, DAI to YFI, and DAI to ETH. 

The two important products of the platform are Anchor and DOLA. Anchor is a money market and synthetic asset protocol that intends to enable capital-efficient borrowing and lending. Importantly, Anchor is an experimental and unaudited protocol. In contrast, DOLAis a stablecoin token that tracks the price of $1. DOLA can be minted using other assets on Anchor as collateral. Similarly, one can use DOLA as collateral to borrow other assets on Anchor. So, the platform functions on two tokens, i.e., INV and DOLA.

Lastly, the Inverse.finance token (INV) is thegovernance and utility token of the Inverse.finance platform. The INV token provides voting power in the Inverse DAO. Therefore, INV holders can directly control several important parameters and aspects of the Inverse treasury and products. 

History of Inverse.finance (INV)

Inverse.finance was claimed to have been created by a sole developer and launched on December 18, 2020, but the platform is governed and run by its community of token holders and elected delegates. Anchor was launched on February 25, 2021.