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Governance and Operations


Since YIP-61: Governance 2.0 passed on April 25th, 2021, yearn began the transition into a multi-DAO structure, managed by constrained delegation. This approach allows protocol development to not be stiffened by bureaucracy while maintaining a sufficient level of decentralization.

Multi-DAO refers to the fluid number of decentralized autonomous organizations (DAOs) that contribute to the protocol in some unique way. These independent groups consist of YFI holders, yTeams and the Multisig.

  • YFI holders vote for changes to the protocol or the protocols governance structure
  • yTeams focus on specific aspects of the protocol or relevant operations
  • Multisig members execute or veto any on-chain decisions

Token holders have ultimate say over what yTeams exist, who is part of the Multisig, and the limitations of each group's operational control. The term 'constrained delgation' originates from token holders delegating specific powers to various groups that build and manage yearn.

A simplified flow of governance would look like this:

1. YFI holders create, destroy and define limitations of yTeams2. yTeam notifies yTx of a decision3. yTx creates a delegated transaction and send it to the Multisig4. Multisig executes or vetos the transaction

DAO Responsibilities#

Token Holders#

it is the YFI token holder's duty to create and vote for proposals that improve the protocol.

ProposalsDescriptions
Yearn Improvement Proposal (YIP)A proposal to execute on any power delegated to YFI holders or outside the scope of enumerated powers
Yearn Delegation Proposal (YDP)A proposal to change where any discrete decision-making power is delegated
Yearn Signaling Proposal (YSP)A non-binding proposal to signal community feelings or intent on any issue

Specifically, these proposals allow token holders to make the following decisions:

PowerDescription
Manage PowersYFI holders can vote to create, assign, or revoke discrete powers to or from yTeams
Change YFI Token ContractAny interaction with the YFI token contract, such as to mint YFI or burn the minting keys, remains under the control of YFI holders.
Set FeesSet the standard fee structures in the Yearn Protocol
Change Multisig SignersAs the Multisig will continue to hold critical powers over the near term, only YFI holders can vote to change its signers
Ratify yTeamsFormally ratify or deratify yTeams to control which yTeams can hold delegated powers
Change yOps SignersAs yOps has the power to change signers of other yTeams, this is a special power to change the signers of yOps
Spend Treasury FundsSpend funds from the treasury
YIP PowerYFI Holders have the power to propose a YIP on anything not already delegated

yTeams#

Each yTeam has an objective and discrete powers which are defined by token holders. They can be broken further into membership pools, which are separate groups of contributors working towards similar goals as the overarching team. Additionally, one membership pool can bet a part of multiple yTeams.

yTeamObjectiveMembership Pool
yGuardProtect the vaultsYFI Protocol Dev, YFI Strategists, YFI Mechanics, YFI Secret Admirers
yBrainManage the stratsYFI Strategists
yDevManage the protocolYFI Protocol Dev
yPeopleCurate the teamYFI Compensation Working Group, YFI Advisors
yBudgetSpend money wellYFI Finances, YFI Advisors
yFarmGrow the treasuryYFI Secret Admirers, YFI Secret Entrance
yTxWrite transactionsYFI Doers
yOpsCoordinate contributorsYFI Ops

Each yTeam is assigned specific decision-making powers, defined by YIP-61:

yTeamPowerDescription
yGuardEmergency PowersImmediately intervene in case of attack or bug to shutdown or rollback strategies or vaults
yBrainManage StrategiesActivate, deactivate, tune, and maintain strategies
yDevDefine Yearn ProtocolDecide what code is considered part of yearn and what isn’t
yDevManage ProtocolMaintain and improve the Yearn Protocol
yDevAdd StrategiesAdd new strategies to vaults
yTxDelegate TransactionsCreate delegated transactions for the multisig to sign and execute
yPeoplePay TeamCreate, deploy, modify, or terminate Yearn compensation packages
yBudgetSet BudgetsCreate budgets for coordinape, grants, hiring, operations, or other workstreams
yFarmFarm TreasuryFarm with the treasury and make decisions on airdrops
yOpsRatify yTeam SignersFormally approve or remove signers for each yTeam

Multisig#

Decisions issued by yTeams will be executed on-chain by the Multisig until a more decentralized system is approved for implementation. In the mean time, the Multisig controls the following:

PowerDescription
Execution PowerThe power to execute decisions made by YFI holders and yTeams on-chain
Veto PowerThis power allows the Multisig to veto any decision and ideally should not be needed
Transitionary PowerA temporary power enabling the Multisig to operate under the mandate of YIP-41 until the set of decision-making powers covers all needed transactions

Future Implementations#

Yearn is continuously paving the way towards an ideal balance of DAO decentralization and productivity. The current phase of efforts impliment changes mostly on the social layer, and in the future we will be moving towards software implementations such as:

  • Multisig consensus mechanisms that allows each yTeam to have execution power
  • Move from proxy voting to on-chain voting
  • tokenize decision-making powers as NFTs
  • Utilize Coordinape for things like budget allocation and compensation