Q4 2023 INV Mint Proposal

Forum post: https://forum.inverse.finance/t/q4-2023-inv-mint-proposal/338

Summary

Mint 75,000 INV tokens to the Inverse Finance DAO treasury so that the following DAO operations can continue: xINV staking rewards, DOLA liquidity incentivization, INV liquidity incentivization, bonding and OTC swaps. TWAP sells may be explored as a potential method to replace bonding in the quarter.

Background

Since the launch of INV+ in January 2022, the tokenomics of the INV token has been inflationary, with regular DAO proposals to execute on the mints. The key principle of INV+ was to ensure that INV stakers are protected against inflation via the dilution protection program. This is where the Policy Committee ensures that a larger portion of Treasury INV is directed towards INV stakers compared with what is used in operations such as liquidity incentives and bonds. This leads to an exponentially inflationary supply so long as this policy remains unchanged, and ensures dilution protection for stakers, at the expense of non-staked INV holders (such as INV LPs and holders on CEX’s).

Overview

This proposal seeks to mint 75,000 INV to allow for continued DAO operations for the next 3-month period. Current INV inflation is roughy ~20k per month, with the majority of this going to xINV stakers. An additional 15k INV has been added to bring the Treasury INV balance to 40k (required for the OTC deal) + 60k for the next 3 months. While there is always a focus on reducing expenditures where possible, it is sometimes required to maintain or even increase expenditures to maintain and grow the lending capacity of FiRM. The 3-month spend amount is forecasted, meaning in reality the INV expenditure of the Treasury could either be less or more than what is set out in the proposal. As the DAO repays DOLA bad debt (track it here), liquidity spend will get more and more efficient for the DAO. This minted supply will support the necessary resources for the following activities:

1. xINV Staking Rewards: Allocate a portion of the minted INV tokens to provide staking rewards to xINV holders. In line with our dilution protection program, the allocation will match INV spent supporting other functions, and rewards will be updated biweekly if needed to account for any change in INV spend during the specified period.
2. DOLA Liquidity Incentivization: Allocate a portion of the minted INV tokens to bribe ecosystem stakeholders either privately or on platforms such as Hidden Hand to drive incentives for liquidity providers in DOLA pools on supported decentralized exchanges. Note, Inverse Finance DAO treasury holds emission-controlling tokens that are utilized in support of this function.
3. INV Liquidity Incentivization: Similar to DOLA liquidity incentivisation, a portion of the minted INV tokens will be utilized to incentivize liquidity providers in INV pools.
4. Bonding: Utilize a portion of the minted INV tokens to support the bonding program. The Policy Committee makes use of the bonding service offered by Bonding Protocol (previously Olympus Pro) to cover DAO operational expenses and pay down bad debt. Users have the opportunity to purchase locked INV tokens at a discount, and any changes to the bonding process, duration options, and reward mechanisms will always be preceded by an announcement to the community.
5. TWAP Sells: The Policy Committee may experiment with TWAP Sells, using services such as CowSwap, to explore replacing bonding. While this may lead to more INV hitting the market, it’s expected that the DAO will get far more DOLA per INV from this method compared to bonding. The DOLA will be used similarly to bonding DOLA, for DAO operational expenses and paying down bad debt.
6. OTC Swaps: Allocate a portion of the minted INV tokens to facilitate efficient and direct OTC swaps to new and prospective INV holders. The specific OTC swap amounts, rates, and any consideration with regard to counterparties, is up to the discretion of the TWG.

On-Chain Actions

• Mint 75,000 INV to the Inverse Finance DAO Treasury
• Grant 15,000 INV allowance to the Policy Committee (bonding and potentially TWAP sells)
• Grant 45,000 INV allowance to the xINV contract (dilution protection xINV rewards)