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 yTeams

  2. yTeam notifies yTx of a decision

  3. yTx creates a delegated transaction and send it to the Multisig

  4. 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.

Proposals

Descriptions

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:

Power

Description

Manage Powers

YFI holders can vote to create, assign, or revoke discrete powers to or from yTeams

Change YFI Token Contract

Any interaction with the YFI token contract, such as to mint YFI or burn the minting keys, remains under the control of YFI holders.

Set Fees

Set the standard fee structures in the Yearn Protocol

Change Multisig Signers

As the Multisig will continue to hold critical powers over the near term, only YFI holders can vote to change its signers

Ratify yTeams

Formally ratify or deratify yTeams to control which yTeams can hold delegated powers

Change yOps Signers

As yOps has the power to change signers of other yTeams, this is a special power to change the signers of yOps

Spend Treasury Funds

Spend funds from the treasury

YIP Power

YFI 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 be a part of multiple yTeams.

yTeam

Objective

Membership Pool

yGuard

Protect the vaults

YFI Protocol Dev, YFI Strategists, YFI Mechanics, YFI Secret Admirers

yBrain

Manage the strats

YFI Strategists

yDev

Manage the protocol

YFI Protocol Dev

yPeople

Curate the team

YFI Compensation Working Group, YFI Advisors

yBudget

Spend money well

YFI Finances, YFI Advisors

yFarm

Grow the treasury

YFI Secret Admirers, YFI Secret Entrance

yTx

Write transactions

YFI Doers

yOps

Coordinate contributors

YFI Ops

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

yTeam

Power

Description

yGuard

Emergency Powers

Immediately intervene in case of attack or bug to shutdown or rollback strategies or vaults

yBrain

Manage Strategies

Activate, deactivate, tune, and maintain strategies

yDev

Define Yearn Protocol

Decide what code is considered part of yearn and what isn’t

yDev

Manage Protocol

Maintain and improve the Yearn Protocol

yDev

Add Strategies

Add new strategies to vaults

yTx

Delegate Transactions

Create delegated transactions for the multisig to sign and execute

yPeople

Pay Team

Create, deploy, modify, or terminate Yearn compensation packages

yBudget

Set Budgets

Create budgets for coordinape, grants, hiring, operations, or other workstreams

yFarm

Farm Treasury

Farm with the treasury and make decisions on airdrops

yOps

Ratify yTeam Signers

Formally 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 implimentation. In the mean time, the Multisig controls the following:

Power

Description

Execution Power

The power to execute decisions made by YFI holders and yTeams on-chain

Veto Power

This power allows the Multisig to veto any decision and ideally should not be needed

Transitionary Power

A 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