Proposal to Launch DBR Token
Summary:
This proposal aims to authorize liquidity contracts for Inverse’s newest token, “DBR” or DOLA Borrow Rights, as well as grant the rights needed for initial operations to the TWG multisig.
Background:
The DOLA Borrow Rights token, known as DBR, provides holders with the right to borrow one DOLA for a period of one year. It is best thought of as an initial upfront cost of borrowing, replacing the ongoing interest accumulation that is commonly seen throughout DeFi borrowing. This means that when DBR’s are purchased by a user, that cost of borrowing has been locked in - so the user is unaffected if future interest rates rise for that particular loan.
The amount of DBR’s needed to borrow DOLA on FiRM can be represented by the table below, assuming DBR cost is $0.04:
| DOLA to Borrow | Terms rated | DBR Needed | DBR Cost |
|---|---|---|---|
| 1000 | 1 year | 1000 * 1 = 1000 | 1000 * $0.04 = $40 |
| 1000 | 2.5 years | 1000 * 2.5 = 2500 | 2500 * $0.04 = $100 |
| 1000 | 3 months | 1000 * 0.25 =250 | 250 * $0.04 = $10 |
While a user has an outstanding DOLA loan, the DBR token is gradually burned from their wallet. This burn rate is always at a pro-rata basis at a rate equivalent to 1 DBR per 1 DOLA borrowed per 1 year. This is a burn rate of 0.00273973 DBR’s per day per DOLA borrowed.
It should be noted that users may elect to limit their upfront DBR expense when executing a loan and instead add more DBR’s later. Users may add additional DBR’s to their wallet at any time to extend the length of the loan or support additional loans. There are no maturity dates. Additional DBR’s may be procured from the open market at any time. Also, many users will simply roll the costs of their DBR’s into their DOLA loan at the time of origination.
Launch Tokenomics
DBR total supply on launch = 4,646,000
On execution of this proposal), 1,096,000 DBR will become available to claim to users who participated in the airdrop. The criteria for this is:
- INV Stakers on October 30th: 2,000 DBR
- FiRM alpha testers: 1,000 DBR
- 114 randomly selected accounts from airdrop signup form: 1,000 DBR. NOTE: Airdrop signups were heavily botted, meaning Inverse Analytics had to cleanse data, removing suspected bot addresses
- Inverse Finance DAO Core Contributors: 1,000 DBR
Please see Google Sheet with full breakdown of DBR airdrop distribution: DBR_Launch_Distribution
Airdrop smart contract: TBC
In order to support the open market liquidity, the TWG will be given an allowance of 1,250,000 DBR to pair with 50,000 DOLA, to be deployed on Balancer V2. This starts DBR with an initial launch price of $0.04. This liquidity is intended to be passively managed
To further support DBR open market liquidity, a further 300,000 DBR allowance is allocated to the TWG that will be paired with ~10,000 DOLA. This will be actively managed within a UniSwap V3 position as part of a trial to determine if greater market and capital efficiency can be achieved via a tight range.
It should be noted that the TWG will need to manually set up DBR liquidity on execution of this proposal. Therefore, there will be a short amount of time between this proposal being executed and there being protocol-owned liquidity on the market (for users looking to buy/sell DBR).
An additional allowance of 2,000,000 DBR will be given to the TWG for the purpose of executing small-scale vested OTC sales with future partners when future opportunities arise.
To summarize:
| Purpose | DBR Minted |
|---|---|
| Community Airdrop | 1,096,000 |
| Passive market liquidity | 1,250,000 |
| Actively managed market liquidity | 300,000 |
| Future OTC Sales allowance | 2,000,000 |
| Total | 4,646,000 |
DBR Issuance
At launch, the issuance of new DBR tokens will be 0.
Due to the current DOLA liquidity environment, along with FiRM’s launch being ‘guarded’, no additional DBR’s will need to enter the market at launch as DOLA loans will be limited. The initial supply of DBR’s will be sufficient to facilitate FiRM’s launch.
When it is determined that additional DBR supply is needed to facilitate more aggressive DOLA lending on FiRM, a subsequent proposal will be submitted to the DAO - ‘Proposal to begin issuance of new DBR tokens’ outlining the scale and policy behind the expansion.
On-Chain Actions:
- Call setReplenishMentPriceBps with 100000 for 1000% DBR APY
- Call mint for 3,550,000 amount of DBR to Treasury to set up initial liquidity and future OTC swaps
- Set TWG DBR allowance to 3,550,000
- Call mint for 1,096,000 amount of DBR to Aidrop merkledrop address
- Call addMarket with WETH market address