Reduce the Virtual Auction Minimum Bad Debt Repayment and Begin Treasury INV Buybacks

Inverse Finance DAO
1

Reduce the Virtual Auction Minimum Bad Debt Repayment and Begin Treasury INV Buybacks

Summary

This proposal seeks to reduce the minRepayBps of the Virtual Auction to 0% from 20%, and to start a new auction that sells DBR for INV, accumulating INV in the Treasury via rate-limited DBR issuance. This is in response to the current state of the crypto markets, which are both squeezing margins in the core lending business and leading to significant price declines in many volatile assets, including the INV governance token.

Background

  • The virtual auction launched in early 2024, with 100% of proceeds initially being directed to DOLA bad debt repayment
  • In January 2025, the SaleHandler was updated to introduce a governance-controlled minRepayBps and a live repayBps adjustable by the TWG beneficiary between minRepayBps and 100%
  • DBR Auction v2 infrastructure allows for governance to create new DBR for assets without needing new customized code

Motivation

Virtual Auction

The current 20% minimum repayment requirement makes the core lending business unsustainable during poor market periods, requiring incentives to be subsidized by other revenue sources (such as veNFTs). Reducing the minimum to 0%, gives the TWG flexibility to dynamically adjust the level of repayment used, based on current margins and market conditions. This ensures a more sustainable business at all times, thereby protecting the DAO’s runway during weaker market periods.

INV Buybacks

With current market conditions pushing the INV governance token to its all-time low in USD at the time of writing, it represents a good opportunity for the DAO to begin price-sensitive DCA buybacks using the DBR Auction v2 infrastructure. The INV bought will be stored in the DAO Treasury and can be utilized by governance in the future.

INV Auction Parameters

The proposed operator is the Treasury Working Group multisig, which will manage the DBR rate allocated to the auction, in conjunction with DBR issuance budget elsewhere, and also INVs USD price.

  • Starting DBR Reserve = 500,000
  • Starting INV Reserve = 1,250
  • Min DBR rate per year = 0
  • Max DBR rate per year = 50,000,000 (note: this is the ceiling, the expected initial rate will be lower)

On-Chain Actions

  • Set minRepayBps on VA Sales Handler to 0
  • Grant DBR minting rights to INV Auction
  • Override reserves on INV auction to 500,000 and 1,250
  • Set the Operator to the TWG Multisig
  • Set the min DBR rate per year to 0
  • Set the max DBR rate per year to 50,000,000
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