Shortly after culling its community of inactive members, one of decentralized finance’s (DeFi) strangest experiments is launching a new stablecoin lending product.
On Wednesday Inverse Finance revealed the Anchor Protocol, a money market built around DOLA, a protocol-native synthetic stablecoin. Based on “a modified fork of Compound,” in a blog post Inverse Finance founder Nour Haridy compares Anchor to Synthetix, which issues credit in the form of synthetic assets back by overleveraged collateral, and Compound, which issues credit in the form of crypto asset loans also backed by overleveraged collateral.
Ultimately, Haridy sees these models as providing the same utility.
“Lending and synthetic protocols both offer the same service: credit. Anchor brings the gap between them by combining them into a unified borrowing protocol.”
Anchor aims to accomplish this with a unique architecture that always treats the DOLA token as “$1 collateral that can be used to borrow other assets regardless of DOLA’s market conditions or peg.” Users deposit collateral, mint DOLA, and then can use DOLA to take out loans in other crypto assets or simply earn yield on DOLA.
Introducing Anchor & DOLA: Capital efficient lending, borrowing and synthetic assets (and much more)
Brought to you by Inverse DAOhttps://t.co/pOOkp8ECsR
Summary thread below ⬇️
— Inverse.Finance (@InverseFinance) February 25, 2021
“For over-collateralized borrowers and leveraged traders, we offer them a one stop shop where they can share their collaterals across their synthetic and token borrowing positions, allowing higher capital efficiency and higher leverage,” says Haridy.
Haridy envisions Anchor will use DOLA for protocol-to-protocol lending similar to Cream’s Iron Bank, for undercollateralized lending (long a prize in DeFi), and for the protocol to “lend itself” credit to pursue yield farming opportunities.
No dead weight
Perhaps more interesting than Inverse’s…