1. Summary
Proposal for Inverse Finance DAO to cover operations of the Product Working Group (PWG) in Season 2, running from May 1st to November 31st.
2. PWG @ Inverse Finance
The core responsibility of the Product Working Group is the design, development, deployment and maintenance of Inverse Finance smart contract systems and associated interfaces.
The transition to a fully empowered PWG started with Proposal 100, which established the Product Working Group multisig and gave it funding to pay for ad-hoc auditing work. It has since been given further resources to pay for a trial period of a part time smart contract developer.
The product life cycle at Inverse Finance typically go through the following steps:
- Ideation of new product or feature for existing product.
- Evaluation of the idea across the entire team of core contributors.
- Design and specification of the idea.
- Development of necessary code to support the idea.
- Testing of the new product or feature.
- Review of the new product or feature both internally and externally.
- Deployment of the new product or feature.
- Maintenance of the new product or feature.
The core contributors of the product working group take a deep part in all of these steps, and fully own accountability for steps 3-7. Part of that ownership is not just to execute on the tasks, but to make sure that it’s being done in a manner that maximizes security of the developed systems.
2.1 Goals
The northstar of season 2 at Inverse Finance remains the reduction of bad debt. This can both be done by making current operations more efficient, making our current offerings more desirable for customers, or making new products that increase revenues for the DAO. The Product Working Group is well positioned to positively impact all of these.
An operational flaw of season 1 was the lack of focus on making generalized solutions for code that is deployed often with minor modifications. Feds and new FiRM markets often share most of their functionality with similar contracts, but due to a focus on shipping fast, we often end up having to rewrite and retest small modifications to the code, rather than having generalized solutions where only the new changes need to be reviewed and tested. For season 2 we plan on putting in an effort to make the deployment and testing of these types of contracts as easy as possible, by using generalized base contracts and test harnesses.
As for increasing user adoption, the PWG will maintain the security and usability of our current product offerings, along with:
- Deliver on projects mentioned in the 2.3 Projects section.
- Expand the selection of attractive FiRM markets both on mainnet and layer 2’s
- Expand DOLA to networks with attractive opportunities
2.2 Responsibilities:
- Hosting and maintaining https://www.inverse.finance/
- Offering best in class transparency dashboards for applicable Inverse products.
- Integrate with third-parties technology solutions
- Develop and implement new types of escrows for FiRM unlocking new collaterals
- Expansion of new Feds to ensure the efficiency and availability of DOLA liquidity.
- Continuously improving our product development process both in terms of transparency, security and productivity.
- Assure product security by:
- Stress testing internal systems and checks
- Continuous built out of testing suites
- Continuous engagement with high-quality 3rd party code quality & security consultants
2.3 Projects
Along with the incremental improvements of products and systems, the PWG plans three major releases for season 1:
Cross Chain sDOLA:
Our native yield DOLA staking solution will be integrated with the chainlink bridging protocol, to allow for swift transfer of sDOLA to any supported L2, along with updating exchange rates across L2s, allowing for closer integrations into things like Balancers smart stable pools. By expanding access to native sDOLA yield, we hope to offer a compelling DOLA demand sink, which in turn will let us expand our FiRM market offerings.
sINV:
The mechanism of auto-compounding sDOLA with xy=k auctions will be extended to sINV as well, giving INV holders an opportunity to auto-compound their INV holdings in a socialized manner. This adds a constant source of buy pressure for INV tokens, tied to the success of FiRM, while also lessening the transaction cost burden for individuals. As the implementation will be heavily based on what we learned with sDOLA, with some improvements, we fully expect the sINV contract to be compatible with the bridging solution developed for sDOLA.
FiRM v2:
FiRM v2 will be split into three subprojects, which can be built and deployed independently:
- Updated Oracle:
While the current FiRM oracle contract achieves what it set out to do, we’ve identified multiple avenues for improvement. These include adjustable pessimistic price windows, fallback feeds built directly into the oracle, and the option for markets to be served different price information depending on the FiRM market operation (Borrows and liquidations often have opposing security trade offs, that make it hard to give pessimistic prices based off of a single function). - Updated Market:
For the market update, we especially want to focus on updating the liquidation engine, allowing markets to provide different parameters based on position information. For example, a very small position may need to have a large portion of its collateral be liquidateable and with a fee to match, while much larger positions can get away with much smaller liquidations. This will ultimately give governance more freedom to design the parameter space around lending, allowing us to give better terms to safe borrowers, while preserving security. - Partner SDK:
The partner SDK will be a set of tools designed to share revenue with partners driving borrow and DOLA demand, generating mutually beneficial incentive structures.
FiRM on Superchain
As borrow capacity increases in the bull market and fees follow along, we hope to experiment with launching FiRM on the superchain stack. While a final network has yet to be decided upon, it is likely to be one of the chains that have benefited from the liquidity work that our TWG have been doing with Velo/Aerodrome. This will open up FiRMs fixed rate innovations to borrowers who can’t necessarily afford to spend the mainnet gas fees currently required.
2.4 Success Metrics
The PWG will measure its success in the following ways:
No major security incidents or major bug bounty payouts.
Security has become an ingrained part of the process at Inverse Finance, and we hold ourselves to the highest standards of the industry. Not only do we consider major security incidents that cause a loss of funds a failure, but even the discovery of a failure mode in deployed code that isn’t exploited or activated, is considered a failure of our process as well. We will measure success in this area by the amount of high impact bugs and high payout bug bounties. We aim for 0 on both.
Adoption of new functionality.
It’s not only important to build secure products, but also useful ones. A clear metric for success for the PWG is how much our products are used. This is primarily measured as revenue growth for the DAO, and TVL growth, with revenue growth being more of a lagging indicator and TVL growth being more of a forward looking one.
2.5 Decision Making Power
The PWG will reserve the power to pursue product opportunities as they become apparent. While we plan on delivering on the projects as outlined earlier, the crypto space is a dynamic one, and we may find a golden opportunity that will take precedence on execution. Last season this autonomy was used to pursue sDOLA and xy=k auctions instead of FiRM v2, to try to stimulate borrowing capacity rather than increased borrowing demand, as our capacity was all but tapped out.
The PWG will maintain its role as the “Gas Clerk” of cross L2 governance contracts. This privileged role only has the power to set parameters related to transaction execution, and cannot operate any underlying business logic. The PWG will request the authority to maintain servers hosting the Inverse Finance website, along with write access for its members to the public github code repository associated with Inverse Finance.
Budget
In Season 1 Contributors agreed to move to a standard compensation banding system. You can view the full compensation bands here 1.
Season 1 expenditures
Season 1 used way below our allowed funding, primarily due to tabboz remaining as a halftime contributor, partly due to the efficiency of our third party reviewer, and minimally due to no red team bounty being alloted and price appreciation of $INV.
| S1 $DOLA allowance | S1 $DOLA spent | S1 $INV allowance | S1 $INV spent | |
|---|---|---|---|---|
| Contributors | 210,000 | 210,000 | 0 | 0 |
| Ad Hoc & Tooling | 10,000 | 2193.75 | 390 | 62.36 |
| Flexible Budget | 40,000 | 0 | 0 | 0 |
| Total | 260,000 | 212,193.75 | 390 | 62.36 |
2. Contributors
Contributors will be active within PWG, to be paid as follows.
| Name | FTE | Band | Pro-rata Monthly Salary | Total for Season 1 |
|---|---|---|---|---|
| 0xMT | 1 | A | 14,500 | 87,000 |
| theAlienTourist | 1 | A | 14,500 | 87,000 |
| Tabboz | 1 | B | 12,000 | 72,000 |
| Total | 3 | 41,000 | 246,000 |
0xMT [WGL]
While initially on-boarded as a smart contract engineer, 0xMT has since taken on increasing amounts of responsibility, driving improvements to the internal security and product development process, along with taking part in protocol design and business strategy discussions. His expertise in both maintaining and further developing Inverse Finance smart contract systems along with his importance in driving the internal product development, makes him a crucial contributor.
theAlienTourist
Thealientourist has been with the Inverse Finance DAO for a long time, and is the backbone of all things user facing. His contributions make sure that our web front-end and back-end operates without a hitch, that we integrate with some third-parties (Zapper, Defillama, etc), and he lends his expertise to review of smart contract code and business logic as well. Without him, all user facing logic would grind to a halt.
Tabboz
Tabboz has proved himself to be a dependable and competent contributor, and we ask that the DAO bring him on as a full time contributor. He’s proven to fit well into the decentralized, fully remote culture of the development team and have delivered flagship features like the ALE. As a fulltime contributor he will be able to focus all of creative attention on Inverse finance, and we believe that this will easily be worth the additional expenditure.
3. 3rd Party Review
| Details | Type | Requested $INV | Requested $DOLA |
|---|---|---|---|
| External expert review | Security | 210 | 10,000 |
Part of the Inverse Finance DAO product development process is continued learning and improvement, and one of the key parts of that has been engaging with 3rd party smart contract development domain experts. While only a little over 20% of season 1’s allowance was actually spent on review, we will keep the asked for budget inline with last season, as we will hopefully have more development capacity, necessitating more frequent review.
The agreed upon rate is $225/hour, paid 50% in DOLA and 50% in INV tokens.
4. Request of intention to support additional hire
One of the limitations of season 1 have been a lack of development capacity to pursue interesting but experimental product directions. With tabboz coming on as a full time contributor, we expect to be able to lift both the maintenance and exploitation burden of our current product suite, but will lack capacity to explore beyond that. By voting yes to this proposal, we ask that you give permission for the PWG to start looking for a new high quality contributor, who has the curiosity and imagination to build new products. Searching for the right talent often takes a long time, and it may be multiple months before we find the right candidate, as we’re not interested in a mediocre developer. However, should our search be fruitful, we request this permission be honored in the future, by having anyone who votes for this proposal also vote for adding that prospective candidate as a full time contributor. To be clear, this will require a second vote from governance, but having this permission will allow us to start the process of finding this talent.
5. Summary
In summary PWG requested the following budget for the 6 months of Season 1.
| S1 $DOLA allowance | S1 $INV allowance | |
|---|---|---|
| Contributors | 246,000 | |
| 3rd Party Review | 10,000 | 210 |
| Potential new contributor | 60,000-87,000 | |
| Total | 316,000-336,000 | 210 |