Proposal to add INV/ETH to the Gauge Controller

Gauge Proposals
#1

Summary:

Proposal to add INV/ETH to the Curve Gauge Controller.
Pool deployed here.
Gauge deployed here.

References/Useful Links:

About Inverse Finance

Protocol Description:

Inverse Finance is a community of crypto enthusiasts organized as a DAO and started on December 26th 2020. Inverse DAO governs and develops a suite of permissionless and decentralized financial tools using blockchain smart contract technology. The code base is open source and maintained by the community.

Inverse DAO’s core product is DOLA, a debt-backed USD stablecoin. DOLA is added into and removed from circulation;

  • On the supply side of money markets, such as DAO-owned protocol FiRM, by Inverse Finance’s “Fed” contracts and is then made available to be borrowed through over-collateralized loans.
  • Via injection/contractions into pools such as the Curve DOLA/FraxBP (currently $36M TVL), DOLA/USDC on Velodrome ($55M TVL), DOLA/USDC on Balancer ($9.6M TVL) and DOLA/bb-e-USD on Balancer ($4.2M TVL)
  • Via purchase with DAI stablecoin using The Stabilizer.

DOLA is not “algorithmic” and the INV governance token is not used to mint or redeem DOLA.

The INV token is used to govern the DAO’s fully on-chain and decentralized governance. The two deepest sources of on-chain liquidity lie on Balancer (INV/DOLA pair at $1.1M TVL) and Uniswap V2 (INV/WETH pair at $585k TVL).

Motivation:

This proposal aims to add INV-ETH Curve v2 pool to the gauge controller. Currently, the majority of INV liquidity paired directly with WETH or ETH is on Uniswap V2 - we are looking to have this liquidity migrated to Curve V2 with an increase in TVL due to the incentivization that we’ll be able to provide to LPs. With the more sophisticated AMM mechanics of Curve v2 compared with Uniswap V2 and greater TVL, we expect much greater volume to flow through this on-chain pair than currently on Uniswap. Presently, the majority of trading volume for INV happens off-chain on CEX’s, such as Coinbse, we believe that a deep Curve v2 INV-ETH pool will bring the majority of trading volume back to on-chain DEX’s.

Volume for INV-WETH on Uniswap is, however, impressive. At the time of writing, from the dates between 29th January and 27th February inclusive, the pair had a total trading volume of $3,921,054. This is an average of $130,702 per day - based on today’s TVL of $584,390 the pair had an average daily utilization of 22.37%. We expect this pair to contribute meaningful trading fees to veCRV holders once TVL is built on Curve V2.

Specifications:

To learn more about the protocol, please visit our official docs, governance and our transparency pages.

  1. Governance: Provide current information on the protocol’s governance structure. Provide links to any admin and/or multisig addresses, and describe the powers afforded to these addresses. If there are plans to change the governance system in the future, please explain.

The Inverse Finance DAO has fully on-chain, token-voting controlled governance. A detailed description of our governance can be found here. Equally, check out our transparency portal here which gives a visual representation of Inverse Finance Governance. The current social consensus for governance proposals (to maximize chances of it passing) is for proposals to be posted to the Inverse Finance forum for at least 24 hours, where discussion can take place and then be posted to governor mills as a draft for at least another 24 hours. Then the proposal can be pushed on-chain for voting by INV and xINV (staked INV) tokens holders and delegates, once on-chain the voting is open for 17,280 blocks (~2.5 days), and should the proposal be successful it can be pushed into the queue timelock (48 hours exactly) where it can be executed on completion.

  1. Oracles: Does the protocol rely on external oracles? If so, provide details about the oracles and their implementation in the protocol.

Inverse Finance’s new fixed-rate money market, FiRM, uses Chainlink price oracle for its wETH, stETH and gOHM market. Inverse Finance’s previous lending market, Frontier, relied on both Chainlink and non ChainLink oracles, however, borrows have been disabled since June 2022 with no current plans to re-enable.

  1. Audits: Provide links to audit reports and any relevant details about security practices.

As part of our renewed smart-contract review process, Inverse Finance hosted a bug bounty contest on the Code4rena platform to conduct a comprehensive audit of our fixed rate lending protocol, FiRM. Inverse has also recently expanded its bug bounty program by launching a vault on the Hats.finance platform. FiRM contracts were also reviewed by boutique auditing firm DefiMoon, who have been our official security partners during Q4. In addition to providing security consulting and auditing services for FiRM, DefiMoon has also played a role in our recent deployments of FraxBP Fed, Aura Fed, and Velo Fed. In the immediate aftermath of our price manipulation incident, Inverse had hired leading security firm PeckShield in Q3 to perform an audit of our renewed INV oracle, as well as our bad debt repayment product. Their report can be found here.

The DAO also now has dedicated members overseeing risk, what we call the Risk Working Group. An announcement of the team’s formation can be found here.

  1. Centralization Vectors: Is there any component of the protocol that has centralization vectors? E.g. if only 1 dev manages the project, that is a centralized vector. If price oracles need to be updated by a bot, that is a centralized vector. If liquidations are done by the protocol, that is also a centralization vector.

Within the DAO working groups have been formed to deliver work in specific areas. Often, these working groups will have a Multisig wallet that through DAO governance awards certain roles and limited DOLA or INV allowances in order to carry out required work. All granted privileges and allowances can be reclaimed/disabled by INV token-controlled governance. These are:

  • Treasury Working Group (TWG): 3 of 4 Multisig with allowances giving access to Treasury funds to optimize treasury management.
  • Risk Working Group (RWG): 1 of 3 Multisig with privileges to pause actions in our lending market.
  • Policy Committee (PC): 5 of 9 Multisig that can change staking reward rate to INV stakers.
  • Fed Chair: 2 of 5 Multisig that can call the expansion and contraction functions (to mint/burn DOLA) on the Fed Contracts.

Please see our Multisig Wallet section of the transparency portal here.

  1. Market History: Has the asset observed severe volatility? In the case of stablecoins, has it depegged? In the case of an unpegged asset, have there been extreme price change events in the past? Provide specific information about the Curve pool: how long has it been active, TVL, historical volume

As an unpegged asset, the INV token experiences volatility day to day.

As a newly deployed, unincentivized pool on Curve the TVL is very low.

INV-WETH on Uniswap V2:

TVL: $584,390

Average Daily Volume (30d): $130,702