Governance
Governance Structure
LiquitX implements a multi-tiered governance system that balances security with operational flexibility:
Governable Parameters
Protocol-Level Parameters
| Parameter | Current Value | Range | Timelock |
|---|---|---|---|
| Swap fee | 0.30% | 0.01% - 1% | 48h |
| Protocol fee share | 20% | 5% - 50% | 48h |
| Insurance contribution | 5% | 1% - 10% | 48h |
| Max management fee | 5% | 1% - 10% | 7 days |
Risk Parameters
| Parameter | Authority | Timelock |
|---|---|---|
| LTV ratios per bucket | Risk Committee | 24h |
| Liquidation bonus | Risk Committee | 24h |
| Interest rate model | DAO | 48h |
| Exposure caps | Risk Committee | 24h |
| Circuit breaker thresholds | DAO | 48h |
Manager Governance
Manager approval and removal is governed through a structured process:
Manager Approval
- Application: Submit credentials, track record, and compliance documentation
- Due Diligence: Risk Committee reviews off-chain (legal, financial, operational)
- DAO Vote: Token holders approve/reject (simple majority, 5% quorum)
- Registration: On-chain registration after approval
Manager Revocation
Revocation Triggers
- Performance: Default rate > 10% (automatic proposal)
- Compliance: Regulatory violation (Risk Committee escalation)
- Governance: Community proposal (10% token threshold)
- Emergency: Guardian action (requires DAO ratification)
Proposal Types
| Type | Threshold | Quorum | Voting Period | Timelock |
|---|---|---|---|---|
| Parameter change | 1% tokens | 5% | 3 days | 48h |
| Manager approval | 1% tokens | 5% | 5 days | 24h |
| Contract upgrade | 5% tokens | 10% | 7 days | 7 days |
| Emergency action | Guardian only | N/A | Immediate | None |
Timelock Mechanism
All non-emergency governance actions pass through a timelock contract:
During Delay Period
- Community can review changes
- Guardian can cancel malicious proposals
- No automatic execution (requires manual trigger)
Emergency Procedures
Guardian Powers
The Guardian is a 2-of-3 multisig with limited emergency powers:
- Pause: Halt deposits, borrows, or swaps on specific pools
- Cancel: Veto queued timelock transactions
- Circuit Breaker: Activate emergency halt mode
Limitations
- Cannot upgrade contracts
- Cannot modify parameters
- Cannot access user funds
- All actions require DAO ratification within 7 days
Progressive Decentralization
LiquitX follows a phased approach to decentralization:
| Phase | Control | Characteristics |
|---|---|---|
| Phase 1 | Team multisig | Rapid iteration, bug fixes, initial deployment |
| Phase 2 | Hybrid | DAO for major decisions, team for operations |
| Phase 3 | Full DAO | All decisions through governance, team as contributors |
Voting Mechanics
Vote Weight
Vote weight = tokens held + delegated tokens- Users can delegate voting power without transferring tokens
- Delegation is revocable at any time
- Delegators can override on specific proposals
Quorum Calculation
Quorum = (votes_for + votes_against) / total_supply × 100Example: With 100M total supply and 6M votes cast → 6% quorum (passes 5% threshold)