Summary
Launch Inverse Points program to spur demand for DOLA and INV that leverages potential allocation of Inverse sister project fee switch or governance tokens to Inverse Finance DAO.
Background
Inverse contributors are in an advanced stage of designing a sister project following on the vision set forth in last year’s Inverse Federation proposal. While no sister project or sister project token has yet been announced, if and when launched a percentage of the sister project’s governance or fee switch tokens will be allocated to Inverse Finance DAO. Designating that allocation - which this proposal assumes will be comparable to other DeFi sister projects - for users of DOLA and INV via a points program will serve to both reward existing users but also attract new users, increase revenue for the DAO, and reduce liquidity costs.
Points programs have proven to be useful demand generation tools for other stablecoin (e.g. Ethena) and lending market (Morpho, Ondo) protocols. While Inverse has an earlier “vintage”, the launch of a new sister project makes a points program an efficient way to apply its benefits to Inverse Finance DAO today.
A points program adds no additional smart contract risk for the DAO, can be implemented with modest engineering resources, and post-launch support can be largely self-driven.
A points program is particularly useful as the DAO expands to new L1 and L2 chains where points may supplement Treasury incentives and provide an added layer of novelty to induce new users to try Inverse products.
Concept
Accumulate “Inverse Points” by holding DOLA or INV in order to earn airdrops of a future Inverse sister project token. Earn points when you:
- Hold DOLA
- Hold sDOLA
- Hold sINV
- Stake INV on FiRM; and eventually
- Hold a DOLA, sDOLA, INV, sINV, or DBR LP position
Points are redeemable for sister project fee switch tokens once allocated by Inverse Finance DAO governance.
How It Works
Creating Points
- 2 trillion points are created and rewarded over a 24-month period. The large number of total points per Season provides both flexibility and a small unit bias which has been employed successfully in other points programs. For reference, another popular points project awards over 11 trillion points per season.
- Points are not redeemable and are non-transferable until a point redemption event is announced. Inverse Finance DAO makes no warrant or guarantee of a future point redemption event.
Organizing Points Into Seasons
- The program is currently scheduled to last for 24 months
- Like other points programs, Inverse’s program is also organized into “Seasons”
Governance approves via Snapshot vote the total points budgeted per season and allocation across categories, making adjustments on a season-to-season basis
- We propose four Seasons of approximately six months each with approximately 25% of the program’s total point budget, adjustable by governance.
Eligibility
Users are eligible to earn based on the following usage categories:
- DOLA, sDOLA holders. A primary focus for Inverse Points is the growth in demand for DOLA and sDOLA. As sDOLA is introduced on new chains, increased demand correlates positively with increased DOLA lending capacity on FiRM, leading to increased revenues for xINV and sINV holders. For DOLA and sDOLA holders who also hold sINV or stake INV on FiRM, points are amplified according to the amount of INV.
- INV stakers. xINV and sINV holders benefit from the program’s focus on DOLA but receive special focus as DOLA users who also hold xINV or sINV receive Inverse Points at a greatly accelerated rate, further increasing demand for INV. Points for INV stakers also leads to improvement in our bribe efficiency and leads to lower INV spend and dilution.
- Liquidity Providers. As liquidity options for all Inverse products expand across chains and in collaboration with partner protocols, points further enhance attractiveness of already-attractive DOLA, INV, and DBR liquidity pools.
- Other. A portion of its points budget is used to incentivize activities which indirectly benefit DOLA and INV, including:
- New Use Cases. Inverse Points may be allocated to new partners promoting new or emerging use cases for DOLA through partners or via Inverse which may benefit from the stimulus of points.
-
Referral Program. A permissionless referral program design to-date has failed to prevent gamification, however the use of points in lieu of a commission would mitigate though not entirely eliminate the gamification risk.
-
Affiliates. Points may be used to accelerate the DAO’s recently-announced Affiliate program.
-
Creators/Influencers. Similarly, in lieu of or in addition to paying DOLA or INV to content creators and social media influencers, Inverse Points can help accelerate those efforts.
- Risk mitigation. In addition to current fees (penalties) for liquidators, points may be allocated to encourage participation by larger numbers of liquidators.
- Community Quests. Points may be awarded to community members who engage in community building, social media, and other activities on behalf of the DAO.
Categorizing Points
Within each Season, the DAO votes on how points are to be allocated according to the high level categories described above for eligibility. An example of points allocation during a Season:
Organizing Seasons Into “Epochs”
- In order to allow rapid experimentation as well as the use of short term “promotional” allocations of points for new partnerships, markets, products, etc., each Season includes two or more “Epochs” whose time window is usually measured in weeks.
- For example, for a new partnership with particular strategic importance, extra or “boosted” points could be allocated for DOLA borrowed on a partner lending protocol. The new partnership and its addition to the points program could be announced in conjunction with the start of a new Epoch.
- As we observe results on a week-by-week basis as well as market conditions, Epochs allow for tactical adjustments in point allocations to better help us achieve DAO goals.
- The GWG solicits ongoing feedback points performance during live Epochs and solicits feedback on proposed point allocations for the subsequent Epoch.
- Generally, when an allocation to a category during an Epoch is exhausted, no additional points are allocated to that sub-category until the following Epoch.
- For example, a single 4-week Epoch might distribute points across the following (hypothetical) users and (disguised) protocols:
Award Methodology
- Points are awarded on a per unit basis. For example, using the table below, a user that posts 1,000 sDOLA (1,000 units) as collateral on Fraxlend (hypothetically) would receive 25,000 Inverse Points per day during the Season.
- Points are calculated on a per-block basis, allowing daily rewards to accrue with each newly mined Ethereum block and allowing users the flexibility to add or subtract from positions as well as initiate new positions at any time.
- The principles of the award methodology can roughly follow these criteria:
- Multi-product usage. Using more than one of our products brings enhanced rewards vs. using just one of our products.
- Loyalty. Loyalty is rewarded from Season to Season to incentivize long-term staking
- Partner Support. Using Inverse products in conjunction with partners is rewarded vs. simply holding DOLA or INV.
Here is a hypothetical “menu” of points options using placeholder values as it might appear to users during a “Season 2”:
| Points Per Day | |
|---|---|
| Buy and hold DOLA | 50 |
| Stake and hold sDOLA | 25 |
| sDOLA on Protocol X | 60 |
| sDOLA on Protocol Y | 60 |
| sDOLA on Protocol Z | 60 |
| sDOLA on Protocol A | 60 |
| sDOLA on Protocol B | 60 |
| Stake INV on FiRM | 100 |
| Hold sINV on Base | 100 |
| sINV on Protocol C | 125 |
In addition, “boosts” for multi-product usage and loyalty could, hypothetically, look like:
| % Increase in Points | |
|---|---|
| Buy and hold DOLA while holding sINV or xINV | 20-100% |
| Stake and hold sDOLA while holding sINV or xINV | 20-100% |
| Maintain DOLA or sDOLA position for 2nd Season | 50% |
| Maintain sINV or xINV position for 2nd Season | 50% |
Lastly, single-Epoch boosts for new partner or chain integrations may also receive temporary boosts in order to encourage early participation:
| % Increase in Points | |
|---|---|
| Borrow DOLA on FiRM | 25% |
| Stake sDOLA on Protocol C on OP | 50% |
| Stake sDOLA on Protocol S on Mainnet | 50% |
| Stake sINV on Protocol G on Base | 25% |
| Hold sDOLA or sINV on Berachain | 25% |
| Hold sDOLA or sINV on Solana | 25% |
To receive points and point boosts, users will be subject to meeting a TBA minimum average balance during a given Season.
Tracking & Redemptions
- Direct Tracking
- The Analytics Working Group is leading the tracking of user points using Inverse Watch, the DAO’s internal data analytics platform. Balances per block are calculated by listening to contract events directly through our RPCs for all targeted chains, and the figures are aggregated using SQL.
- Read-only contracts, per chain, may be used as utility contracts to get the “current score per block” of an address by getting the relevant supported asset balances for the Season on that chain and applying the relevant multipliers.
- Other redundancy and security features for the points tracking feature are under discussion.
- The Analytics Working Group is leading the tracking of user points using Inverse Watch, the DAO’s internal data analytics platform. Balances per block are calculated by listening to contract events directly through our RPCs for all targeted chains, and the figures are aggregated using SQL.
- Tracking for Partner Protocols
- Users who utilize partner protocols will be able to take advantage of Inverse Points through a partner’s implementation of a TBA adapter that enables the AWG to track and present the activity via a dashboard.
- User Dashboards
- Users will be able to view their accrued points on a dedicated dashboard on inverse.finance/points
- A leaderboard of point accruals by top users will assist in the gamification aspect of the program.
- Point Redemptions
- While there is no announced fee switch or governance token for the aforementioned sister project, upon availability of a token for redemption a redemption process and redemption time window will be announced.
- While there is no implied value today for Inverse Points nor for a potential sister project token, the value of a single point at the time of redemption should be equal to the total allocation of sister project fee switch or governance tokens to Inverse Finance DAO divided by the total number of points issued during the 24-months of this points program. Additional costs of redemption including fees like gas, slippage, etc. will be born by the user. In the event there is no sister project fee switch or governance token allocated to Inverse Finance DAO, a user’s accumulated points are assumed to have a redemption value of zero.
- Currently, points will accrue passively for users during a Season, i.e. there is no need to claim points proactively, and there is no requirement to redeem points until a point redemption window begins.
- Point redemption windows will be no shorter than 30 days and users will redeem points on Ethereum mainnet via a dedicated redemption page.
- Un-redeemed points are distributed pro-rata to sINV holders and xINV stakers on FiRM and wil be redeemable during a subsequent point redemption window.
Schedule & Governance
-
Proposed Schedule for Seasons
- Season 1: October 15, 2024 - April 14, 2025
- Season 2: April 15, 2025 - October 14, 2025
- Season 3: October 15, 2025 - April 14, 2026
- Season 4: April 15, 2026 - October 14, 2026
-
Governance
- Allocation of Seasonal points by category will be proposed by GWG in the Forum in advance of the beginning of a new Season and subject to governance approval using Snapshot
Measuring Success
- Reporting. In collaboration with the Analytics Working Group, real-time transparency into program awards will be visible to any viewer.
- Community Discussion. A dedicated Discord channel will provide a venue for community discussion around themes and allocations for upcoming Epochs and Seasons as well as for general support purposes.
- Governance voting. For each Season, GWG will collect input on program success and recommend modifications for the following Season. New Seasons require governance approval via Snapshot.
- Unused or un-redeemed points. sINV and INV stakers on FiRM are the ultimate recipients of any unused or unclaimed points.
Program Management
- The Growth Working Group will lead the ongoing promotion and management of Inverse Points. The Analytics Working Group will provide ongoing support for tracking and reporting. The Product Working Group will provide user interface and support for partner integrations.
Program Rollout
- Season 1 can be launched in a phased manner:
- Pre-launch - ~30 days
- Announcement
- Program Design
- UI
- Docs
- Test
- Governance
- Phase I (Beta) - ~30 days
- DOLA, sDOLA, sINV, and xINV support
- Ethereum mainnet only
- Phase II - ~30 days
- Expansion to L2’s
- Begin support for partner integrations
- Phase III
- Begin adding rewards for LP tokens where feasible
- Pre-launch - ~30 days
Benefits for Inverse Finance DAO
- Increased demand for DOLA, INV
- Increased retention of existing holders
- Improved DOLA, INV, and DBR liquidity
- Facilitates new partnerships
- New marketing and community development opportunities
- No INV dilution
- Boosts market interest in upcoming Inverse sister project
Next Steps
- Incorporate community feedback
- Snapshot vote