What is Inverse Finance (INV)?
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🟢 The simple version
Plain English — no jargon. Start here.
Inverse Finance is a DeFi protocol on Ethereum that issues DOLA — a CDP stablecoin pegged to $1 — where you deposit approved collateral (ETH, WBTC, stablecoins) to borrow DOLA at fixed or variable interest rates, and INV is the governance token that controls protocol parameters and earns a share of interest income.
Inverse Finance — what it does
Inverse Finance focuses on DOLA, its stablecoin. DOLA can be minted by depositing collateral into Inverse's "FiRM" (Fixed Rate Market) lending system. The key differentiator: FiRM offers fixed-rate borrowing — you lock in a borrowing rate for a period rather than facing variable rates that change with market conditions. For borrowers who want predictable costs, fixed rates are more useful than variable rates that can spike during high-utilisation periods.
DOLA is also used extensively in DeFi — it has deep liquidity on Curve, is integrated with Convex, and DOLA/3pool remains one of the larger Curve pools. Inverse has positioned DOLA as a yield-generating stablecoin asset for DeFi protocols.
The two exploits — documented
Inverse Finance suffered two significant exploits in 2022. In April 2022, an attacker manipulated INV's price oracle to inflate the INV collateral price, then borrowed $15.6M against the inflated value — a price oracle manipulation attack similar to the Mango Markets exploit. In June 2022, another oracle manipulation attack drained $1.2M. Both exploits exploited the same vulnerability type: oracle manipulation of thinly-traded collateral. The protocol responded by migrating to Chainlink oracles and implementing additional safeguards, then rebuilding with FiRM.
Is INV legal in India?
Yes. INV qualifies as a Virtual Digital Asset (VDA) under Indian law. 30% tax on gains and 1% TDS applies. Always consult a tax professional.
🟡 A bit more detail
For when you want to go a little deeper.
FiRM — Fixed Rate Market
FiRM is Inverse's rebuilt lending market. Each collateral type has a separate, isolated market — eliminating the risk pooling where one bad collateral can affect all depositors (similar to Morpho Blue's isolated market design). Fixed-rate borrowing works through "DOLA Borrowing Rights" (DBRs) — you need to hold DBRs to borrow DOLA. Each DBR allows you to borrow 1 DOLA for 1 year. DBRs are purchased at a market rate, which is effectively the fixed borrowing cost for your DOLA loan. This DBR model pre-markets borrowing capacity and creates a secondary market for fixed-rate DeFi loans.
DOLA in the Curve/Convex ecosystem
DOLA has significant liquidity on Curve through Inverse governance's participation in the veCRV voting system (voting their CRV and CVX holdings to direct emissions to DOLA pools). This deep Curve integration gives DOLA better liquidity than most smaller CDP stablecoins — users can swap DOLA for USDC/USDT at minimal slippage, supporting the $1 peg through arbitrage.
Two oracle manipulation exploits in 2022 totalling ~$16.8M are material to understanding Inverse Finance. The protocol compensated affected users using treasury funds and DOLA issuance, and rebuilt with improved oracle security. The response demonstrates protocol resilience, but the events happened and affected the protocol's reputation and TVL significantly. Live data: CoinGecko
🟣 The full technical picture
For the technically curious.
Key facts
- Token: INV (governance, 100,000 max supply — very low supply, high per-token price)
- Stablecoin: DOLA ($1 CDP)
- Chain: Ethereum
- Lending: FiRM — Fixed Rate Market (DBR-based fixed-rate borrowing)
- April 2022 exploit: $15.6M via oracle price manipulation of INV collateral
- June 2022 exploit: $1.2M — second oracle manipulation attack
- Response: Migrated to Chainlink oracles; rebuilt with FiRM isolated markets
- DOLA integration: Curve pools, Convex voting, deep DeFi liquidity
- INV supply: ~100,000 — very scarce, similar to YFI's supply model
DBR — DOLA Borrowing Rights
DBRs are a novel mechanism for fixed-rate borrowing. To borrow 1 DOLA for 1 year, you need 1 DBR. DBRs are priced in the market based on demand for fixed-rate DOLA borrowing — when many people want to borrow DOLA, DBR prices rise, effectively increasing the fixed borrowing rate. When demand is low, DBR prices fall. This creates a forward curve for DeFi interest rates — the DBR price at different maturities reveals what the market expects fixed rates to be. If you hold DBRs and don't borrow, they slowly expire (burn over time, creating deflationary pressure). If you borrow more DOLA than your DBR balance covers, you accrue DBR debt at the current market rate.