# YIP-81: Prepare for Full On-Chain Governance **URL:** \ **Category:** Protocol and Governance\ **Created:** [22 November 2024 19:31 UTC](https://gov.yearn.fi/t/yip-81-prepare-for-full-on-chain-governance/14282 "2024-11-22T19:31:18Z")\ **Posts on this page:** 3\ **Page:** 1
**Author:** ![0xPickles](https://dub1.discourse-cdn.com/flex013/user_avatar/gov.yearn.fi/0xpickles/32/4235_2.png) [@0xPickles](https://gov.yearn.fi/u/0xPickles)\ **Post date:** [22 November 2024 19:31 UTC](https://gov.yearn.fi/t/yip-81-prepare-for-full-on-chain-governance/14282/1 "2024-11-22T19:31:19Z")
## Summary This proposal outlines the preparatory steps for implementing on-chain governance (OCG). By formalizing processes, parameters, and roles while governance is still off-chain, we aim to iterate and refine the system before its deployment. ### Status **Discussion** This proposal is in the discussion phase. Following the voting rules in YIP-55, it will remain open for at least 3 days, accompanied by a non-binding forum poll to gauge sentiment. Afterward, it may be assigned a YIP number and progress to Snapshot for a binding vote by veYFI holders. ## Abstract **If adopted,** this proposal will: 1. Extend the veYFI system to cover all governance proposals, beyond gauge emissions and parameter changes. 2. Formalize yChad’s role as protocol Guardian. 3. Establish percentage-based voting requirements for Liquid Locker Protocols (LLPs). 4. Enable optional extensions like veYFI delegation and budget requests. The goal is to ensure a smooth transition to full OCG while addressing potential design flaws during this preparatory phase. ## Background YIP-65 [[1]](#references) introduced the veYFI system for governance, and YIP-73 [[2]](#references) further formalized it with gauges, epochs, and a voting process. This proposal expands veYFI’s scope to include all governance proposals, facilitating the DAO’s move away from Snapshot voting. ### Out of Scope - Governance of yPools (e.g., yETH, yUSD), which remains with respective staked token holders. - Governance of yTeams, managed by their contributors. - No new tokens or airdrops are proposed. ## Motivation Refining the governance system during the off-chain phase enables us to identify and address flaws, ensuring a robust foundation before the full OCG deployment. ### Future Possibilities - Directing protocol income dynamically during epochs via OCG. - Allocating YFI dynamically during epochs via OCG. - Appointing governance bodies or councils with specific powers. ### Risks - Design or implementation flaws causing unexpected behavior. - Low veYFI lock rates, voter apathy, and/or lack of attention/incentives leading to limited participation. - Domination by a single Liquid Locker Protocol, posing systemic risks. ## Specification ### 1. tl;dr 1. Apply YIP-73’s operational framework to all governance proposals, including Yearn Improvement Proposals (YIPs). 2. Formalize yChad’s role as protocol Guardian. 3. Enforce percentage-based voting for LLPs. 4. Enable optional extensions where technically feasible. ### 2. Apply YIP-73 Framework to All Governance Proposals 1. Use the 2-week epoch pattern from YIP-73: proposals are submitted in the first half and voted on in the second half of a veYFI epoch. 2. Require a minimum of 1 veYFI for proposal submission. 3. Proposals pass with a simple majority (\>50% of veYFI votes). 4. Apply the quorum and vote decay parameters from YIP-73 to all proposals. 5. Snapshot voting remains the venue for voting until OCG is active. ### 3. Formalize Protocol Guardian Role 1. yChad’s role as protocol Guardian is formalized and encoded in the protocol. 2. The Guardian can nullify a proposal or governance decision but cannot make proposals. 3. Guardian powers are implemented before OCG and persist after deployment. 4. The Guardian role can be reassigned via a YIP vote. ### 4. Liquid Locker Percentage-Based Voting 1. Define LLPs as protocols that lock veYFI on behalf of users and aggregate dYFI boosts. 2. Require LLPs to support percentage-based voting, ensuring user preferences are accurately reflected. - Example: If an LLP’s users vote 55% FOR and 45% AGAINST, the LLP votes 55% FOR and 45% AGAINST. 3. LLPs failing to comply may have their votes rescinded by the Guardian. ### 5. Optional Extensions #### 5.1 veYFI Delegation - Enable delegation of veYFI voting power to external addresses or smart contracts, similar to the mechanism already used via the Snapshot system. #### 5.2 Budget Requests 1. Allow budget requests and funding proposals to be submitted via veYFI governance. 2. Ensure on-chain execution for approved proposals. 3. Maintain Guardian oversight to rescind adopted requests. ### 6. Implementation 1. Changes take effect immediately where feasible. 2. Features not supported by Snapshot remain disabled until OCG is live. 3. Contributors are authorized to deploy necessary smart contracts post-design, development, and audits. ### 7. Iterative Improvements 1. Run the system as a public beta to identify friction points or flaws. 2. Significant changes require additional YIPs for approval. 3. veYFI voters can propose design adjustments through new proposals. ### 8. Use at Own Risk Yearn protocols are governed by veYFI holders, who make strategic decisions. Contributors are not liable for failures or losses resulting from veYFI or governance usage. ## Vote ### Non-binding signaling poll _Poll ([view on site](https://gov.yearn.fi/t/yip-81-prepare-for-full-on-chain-governance/14282/1))_ ## References 1. [YIP-65: Evolving YFI Tokenomics](https://gov.yearn.fi/t/yip-65-evolving-yfi-tokenomics/11994) 2. [YIP-73: Activate veYFI Rewards with dYFI Gauges](https://gov.yearn.fi/t/yip-73-activate-veyfi-rewards-with-dyfi-gauges/13414) ## Changelog - Initial draft - Assigning YIP# ---
**Author:** ![system](https://europe1.discourse-cdn.com/flex013/uploads/yearn/original/2X/9/9ae7183c96201b2e9a60ad06d0d7664a3e90aeb0.png) [@system](https://gov.yearn.fi/u/system)\ **Post date:** [29 November 2024 19:32 UTC](https://gov.yearn.fi/t/yip-81-prepare-for-full-on-chain-governance/14282/2 "2024-11-29T19:32:18Z")
Closed on 29 November 2024 19:32 UTC This topic was automatically closed 7 days after the last reply. New replies are no longer allowed. ---
**Author:** ![0xPickles](https://dub1.discourse-cdn.com/flex013/user_avatar/gov.yearn.fi/0xpickles/32/4235_2.png) [@0xPickles](https://gov.yearn.fi/u/0xPickles)\ **Post date:** [2 December 2024 16:20 UTC](https://gov.yearn.fi/t/yip-81-prepare-for-full-on-chain-governance/14282/3 "2024-12-02T16:20:32Z")
This proposal was voted on and passed as YIP-81: [Snapshot](https://snapshot.org/#/veyfi.eth/proposal/0x6f3082db2cef3e0c254e569580d063cb14130a92d0bf1729bef342a386e419f2)