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Governance and Decentralization

Yeap Finance is committed to a progressively decentralized governance model, ensuring that the protocol evolves in alignment with the interests of its users and the broader community, fostering resilience and long-term sustainability.

Vault-Level Governance: Empowerment at the Source​

A unique and defining aspect of Yeap Finance is its emphasis on decentralized governance at the individual vault level, providing unprecedented autonomy to vault creators and their communities.

  • Creator-Defined Governance: When a vault is created, its initiator (an individual, a multisig group, or a DAO) defines the specific governance rules and operational parameters for that particular vault. This includes, but is not limited to:
    • Selection and configuration of the Interest Rate Model (IRM).
    • Determination of which Borrow Protocols can interface with the vault.
    • Setting parameters for each enabled Borrow Protocol (e.g., accepted collateral types, LTVs, LLTVs for a Position Protocol; supported LP tokens, their LTVs, and specific risk parameters for a Leveraged LP Token Protocol).
    • Defining origination fees, flash loan fees, liquidation penalties/bonuses, and other applicable charges.
    • Specifying the allocation of collected fees.
    • Whitelisting or enabling new Borrow Protocol types for use with the vault over time.
  • Flexible Governance Structures: This model supports a variety of control mechanisms:
    • Individual Control: Ideal for rapid experimentation or personal use.
    • Multisig Control: For teams or investment groups requiring shared responsibility.
    • DAO Governance: For projects or communities managing vaults via token-based voting.

Protocol-Level Governance (Potential Future State with $YEAP Token)​

While vault-level governance provides immediate decentralization, a native protocol token (e.g., $YEAP) could facilitate broader, protocol-wide governance in the future. Its potential functions would typically involve:

  • Upgrading Core Protocol Contracts: Approving new versions or critical updates.
  • Managing the Protocol Treasury: Overseeing collection and allocation of protocol-level fees.
  • Ratifying New Standardized Borrow Protocols: Voting on "officially recognized" Borrow Protocol types.
  • Setting Global Protocol Parameters: If any such parameters exist that are not vault-specific.
  • Oracle Network Selection/Prioritization: Influencing decisions on supported oracle networks.
  • Ecosystem Development Initiatives: Directing resources towards strategic partnerships and community growth.

Path to Full Decentralization​

Yeap Finance is envisioned to transition towards increasing community ownership and control over time. The long-term objective is for $YEAP token holders (if implemented) or a similar robust decentralized mechanism to have ultimate authority over the protocol's evolution.

The following diagram illustrates the two-tiered governance model:

Smart Contract Upgradeability​

Protocol upgrades are essential and will be approached with caution, transparency, and security best practices:

  • Mandatory Timelocks: Significant upgrades to protocol-level contracts will be subject to a mandatory timelock, allowing time for review and community response.
  • Governance Control over Upgrades: Authority for protocol-level upgrades will reside with the Yeap Finance DAO. Vault-level upgradeability depends on the creator's chosen mechanism.
  • Clarity and Documentation: Clear documentation will delineate upgradeable and immutable contracts.
  • Emergency Mechanisms (Highly Restricted & Phased Out): A narrowly defined emergency override, controlled by a security multisig, might exist initially but would be phased out as DAO governance matures.