YFI holders can provide capital to DAOs approved to accept funding in the DAO vault ecosystem. DAOs wishing to receive funding are required to setup Gitcoin Grants page and apply for funding via the Yearn governance forum. If there is sufficient interest to approve the DAO for funding an off-chain vote will be conducted (https://vote.yearn.finance). If voting is successful the DAO will be added to the DAO vault ecosystem.
Governance determines weekly, monthly, and yearly credit limits that the DAO can access via the DAO vault. The DAO is free to repay the credit line on their own terms, and in tokens or other collateral options accepted in the yearn ecosystem. Any profits are shared between vault LPs.
Medium article: Delegated Funding DAO Vaults