Re-Onboard sDOLA/scrvUSD LP as Collateral

FiRM
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Proposal to Re-Onboard sDOLA/scrvUSD LP as Collateral

Summary

This proposal seeks community support to re-onboard the sDOLA/scrvUSD Curve LP token as collateral on FiRM.

The market was previously offboarded due to heightened uncertainty around crvUSD following the launch and rapid growth of Yield Basis. At the time, this effectively reset part of crvUSD’s “lindy” and made it harder to assess the asset under the new operating model.

Yield Basis has now been live for a meaningful period, and the original reason for keeping sDOLA/scrvUSD fully offboarded is less compelling. Given the strategic and business benefits of this collateral, it is appropriate to revisit onboarding.

Rationale

1. Strong expected borrow demand

sDOLA/scrvUSD is a high-yield LP, combining:

  • sDOLA yield
  • scrvUSD yield
  • boosted CRV incentives

This creates clear looping demand when the net spread versus FiRM borrowing costs is attractive. FiRM benefits most from collateral that users actively want to lever, and sDOLA/scrvUSD fits that profile.

2. Diversification for FiRM

FiRM debt has been falling and has become increasingly concentrated around DOLA/sUSDe.

Re-onboarding sDOLA/scrvUSD would add a differentiated source of demand, diversify the collateral base, and help shift current momentum without needing to rely entirely on existing dominant markets.

3. Strategic alignment with Curve

Inverse is deeply embedded in the Curve ecosystem. Curve remains one of the most important venues for DOLA liquidity, routing, and sDOLA growth.

Supporting sDOLA/scrvUSD as FiRM collateral strengthens that relationship and reinforces Inverse’s commitment to Curve as a core ecosystem partner.

4. More volume through DOLA

DOLA has historically benefited from being used as a routing and hop asset across Curve pools.

In recent months, the number of active DOLA LPs has reduced, particularly with USR and deUSD pools going offline. As a result, DOLA has been doing less volume as a hop token.

Re-onboarding sDOLA/scrvUSD would help address this by creating a new deep DOLA-adjacent LP against crvUSD, one of Curve’s highest-volume stable assets. This should support more routing through DOLA, improve DOLA’s role in Curve liquidity paths, and help maintain the volume profile needed for infrastructure such as the Chainlink DOLA price feed.

Stake DAO OnlyBoost Escrow

Unlike previous Curve LP markets on FiRM, this market would launch using Stake DAO’s new OnlyBoost escrow rather than the standard Convex escrow.

OnlyBoost is a better fit for this market because it optimizes between Stake DAO and Convex boosts, rather than routing deposits exclusively through one venue.

Benefits include:

  • Optimized balance between Stake DAO and Convex boosts
  • Improved reward capture for depositors
  • Instant reward crediting after harvest
  • Continued reward accrual while the LP is used as FiRM collateral
  • Fee-share benefits for the Inverse Treasury from Stake DAO revenue

This makes the re-onboarding more valuable than simply restoring the previous market. It also upgrades the escrow model used for this collateral.

Parameters

Market parameters are TBC and should be provided by RWG.

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Parameter Recomendations

Posting parameter recommendations as well as a short note from the RWG on the risk work behind this one.
Supply Ceiling 5,000,000
Daily Borrow Limit 500,000
Collateral Factor 87%
Liquidation Factor 100%
Liquidation Incentive 5%
Minimum Debt Amount 3000

This reintroduction is the output of a full risk refresh, not a parameter tweak. We held crvUSD-LP collaterals offboarded since February specifically until the Yield Basis migration that drove the original risk had matured, and we treated the reassessment as a real question with a chance of staying closed. What changed our view was evidence rather than time passing: the v3 pools redesign targets the exact failure mode behind the offboarding, and June’s ~23% BTC drawdown let us measure it live rather than in simulation. The temporary redemption discount that ran to 41–45% for a month under the old design peaked near 4.8% and cleared in about three days under v3, at comparable drawdown depth.

The parameters here are deliberately conservative, an 87% CF and a 5% liquidation incentive, sized so that a worst-case redemption discount at the depths v3 hasn’t yet faced is absorbed without loss to FiRM. Periodic reviews and a phased approach lets exposure grow as lindy accrues without forcing borrowers to deleverage if our read changes. We’d rather under-size and earn the deeper observation on live exposure than overextend and have to backtrack.

This is also FiRM’s first market on a Stake DAO OnlyBoost v2 escrow, so it carried its own due-diligence track alongside the crvUSD work. The escrow stakes the LP into a RewardVault that we verified on-chain as a strict 1:1, non-upgradeable wrapper, which means the collateral always unwraps to the exact LP quantity staked and yield is paid as separate reward tokens rather than compounded into the price, leaving no share-price manipulation surface on the valuation. We reviewed the four public Stake DAO audits against FiRM’s liquidation model and found no Critical or High residual to FiRM; the two Pashov Criticals target a Stake DAO lending product FiRM doesn’t use. The residual risk concentrates in one place, the integrity of the Stake DAO withdraw path, since the 1:1-no-haircut design means a Stake-DAO-side shortfall surfaces as a liquidation revert rather than a graceful markdown. Most of that is shared with our existing Convex escrows; the net-new piece is a custody-substitution lever (re-pointing the staking strategy) that sits behind a delay window governance Timelock fronted by a single multisig. We treat that 5-day window as the defense, not the multisig, and we’ve built a dedicated monitor on the shared Stake DAO Timelock that pages on any unexpected custody op so we can trigger the escrow’s guardian withdrawal, pulling positions to plain LP, before a hostile change could mature. We’ve also raised two hardening asks with the Stake DAO team directly: making the Timelock its own admin, and granting cancel rights to an independent security council so the delay becomes a true veto rather than just an observation window.

The full reasoning, contract-surface analysis, Yield Basis counterparty and v3 work, the live June stress evidence, the oracle and Stake DAO escrow design, and the parameter rationale, is in the reassessment document. Happy to take questions here.