Summary
This proposal pauses borrows on the FiRM INV market and redirects new borrowing demand against INV toward Monolith. The decision is strategic, not risk-driven. The market is not under stress today and existing borrowers are unaffected. Pausing borrows blocks new debt issuance against INV on FiRM while leaving open positions free to be managed, topped up, or repaid at borrower discretion. A secondary effect is to cap DOLA’s exposure to INV, a reflexive collateral, by halting further issuance against the protocol’s own governance token.
Background
The INV market on FiRM has operated since proposal #139, providing DOLA borrowing capacity against the Inverse governance token. INV is reflexive collateral: stress affecting the protocol can correlate with INV price, and DOLA debt backed by INV is partially backed by an equity claim on the entity issuing the DOLA.
Monolith is Inverse Finance’s stablecoin-as-a-service protocol. It’s invusd market provides an alternative venue for borrowing against INV, separate from DOLA and FiRM’s collateralized lending model. Directing new INV-collateralized borrowing interest toward Monolith does two things at once: it builds Monolith adoption at a stage where flow concentration matters, and it lets FiRM reduce reflexive collateral exposure without requiring borrower action. As Monolith scales, the protocol benefits from concentrating new INV borrowing demand in the venue best positioned to absorb it.
The only operation prevented is the creation of new debt against INV on FiRM. CF, LF, liquidation incentive, and supply ceiling are all unchanged. Open positions can still be managed, topped up, or repaid on existing terms.
Looking Ahead
This proposal does not pre-commit to further action on the INV market. If the RWG or Inverse governance later determines that additional INV-market wind-down steps are warranted, whether to deepen the reflexive-exposure reduction or for unrelated strategic reasons, those will be proposed separately. The RWG retains its standing mandate to escalate parameter changes on the INV market should risk conditions deteriorate, independent of this proposal.
Actions
Action 1: Pause borrows on FiRM INV Market