YIP-XX: Annul & Remove Protocol Guardian Role

[Humpy]

Annul and Remove the Protocol Guardian Role to Mitigate Legal and Decentralization Risks

Abstract
This proposal seeks to annul and permanently remove the Protocol Guardian Role established under YIP-81, retroactively used to override the community-approved whitelisting of gauge GOLD/st-yETH.
The Protocol Guardian Role, intended for emergency use, was leveraged to override a democratic outcome ratified before the role’s creation, mirroring an ex post facto law thereby exposing Yearn DAO to legal risks.

This YIP will:

1. Revoke the Protocol Guardian’s authority by amending yearn documentation.
2. Nullify actions taken under the role that conflict with prior governance decisions.
3. Eliminate regulatory and legal liabilities tied to centralized veto powers.

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Motivation: Legal Risks and Decentralization Imperatives

The Protocol Guardian Role, ratified post-YIP-81 Snapshot vote, was first used to retroactively reverse the community-approved GOLD/st-yETH gauge. This act parallels an ex post facto law, undermining governance legitimacy. Beyond this, the Guardian role introduces critical risks:

1. Regulatory Risk: False Advertising and SEC Scrutiny

Yearn markets itself as a decentralized protocol, but the Guardian’s unilateral veto power contradicts this claim. The SEC’s framework for “sufficient decentralization” (Hinman Speech) asserts that protocols with centralized control points may qualify as securities under the Howey Test. Retaining the Guardian role risks regulatory action by misrepresenting Yearn’s decentralization status.

2. Centralized Governance and Fiduciary Liability

The Guardian (yChad) holds veto power over governance outcomes, effectively centralizing decision-making. This creates fiduciary-like obligations:

• If the Guardian acts arbitrarily (e.g., blocking proposals for self-interest), token holders could pursue legal claims for breach of duty or misrepresentation.
• Courts may interpret the Guardian as a de facto governing body, exposing Yearn to liability for negligence in governance decisions (e.g., approving vulnerable contracts).

3. Legal Exposure for the Guardian

The Guardian assumes personal liability for governance failures:

• Negligence: If a veto failure leads to financial loss (e.g., approving an exploit-prone proposal), affected parties could sue for damages.
• Abuse of Power: Self-serving vetoes (e.g., favoring specific stakeholders) could trigger civil litigation from token holders or liquidity providers.

Retaining this role jeopardizes Yearn’s compliance with decentralization norms and invites legal challenges.

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Specifications

To be queued to execute immediately upon passage of this proposal:

1. Revocation of Guardian Authority:
   • Update documentation at (Yearn Multisig | Yearn Docs) and remove all text under heading “Protocol Guardian role”, and rescind yChad ability to act as Guardian.

• Relinquish further usage of contract at 0xC813F688cA38D37e35845fB2Eb180efBc5002e76

2. Nullification of Retroactive Actions:

   • Reinstate the GOLD/st-yETH gauge unless a new community vote under current governance rules approves its deactivation.

3. Governance Process Updates:

   • Amend Yearn documentation to prohibit retroactive application of governance changes.

For and Against Positions

For the Proposal:

• Regulatory Compliance: Aligns with SEC decentralization standards, reducing security classification risks.
• Legal Safeguards: Eliminates fiduciary liabilities tied to centralized veto powers.
• Decentralization: Restores community trust by removing unilateral override capabilities.

Against the Proposal:

• Emergency Utility: The Guardian role provides a critical failsafe for urgent protocol risks (e.g., exploits).
• Operational Efficiency: Centralized intervention can resolve governance gridlock during crises.

Poll

• For
• Against

[concernedwaifu]

All this legal mumbojumbo holds little water. Fact of the matter is that the veto powers were established by veYFI governance to protect the protocol against malicious actors. It seems to me that in this situation clearly the guardian worked as intended. It has protected the community by vetoing a proposal that is harmful and extractive. A single entity controls practically all of the GOLD supply, so granting dYFI emissions to a vault containing GOLD does nothing more than enrich that same entity, to the detriment of everyone else. Therefore I urge everyone to vote against this proposal.