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What is governance and what it can do on the protocol
Apart from lenders and borrowers who are the main actors when it comes to token lending on the protocol, governance also plays an important part on Atlendis.
Governance is a role that can be given to an address on the protocol. It gives the right to trigger the following actions:
- Pool life cyle management:
- Pool creation: governance can create new pools, and choose all its parameters (i.e asset, maturity, fees rates, min rate, max deposit rate, rate spacing etc.). Typically, pool creation will be the last stage of a borrower onboarding request, the beginning of the process being held off chain.
- Pool closing: closing a pool prevents borrowers from taking further loans from it, as well as lenders from depositing in it. It will typically be used to signal the end of a pool support after multiple or a single loan has been taken. Closing pools still allows the borrower to repay the loans, and lenders to withdraw their funds.
- Non standard repayment: governance can set the pool in a non standard repayment to handle cases that diverge from the simple revolving loans cycles. A pool in a non standard repayment phase can be set as defaulted, partially defaulted, or early repaid. In particular, a pool will be flagged as defaulted if a borrower fails to repay its loan after a certain amount of time. Defaulting process will be handled off chain, while the on chain action will serve as a security measure while the mitigation process is ongoing. Defaulting a pool only lets lenders withdraw their unmatched funds, while part or all the funds they borrowed will typically not be repaid through the protocol. The mitigation process in case of defaults leads to lenders minting a debt NFT to be used later.
- Pool parameters management:
- Set max borrowable amount: governance can allow a borrower to have a higher borrowing ceiling on a pool. This will allow borrowers to start slow, and ramp up a pool capacity over time.
- Set fees rate: governance can modify the amount of fees paid to the protocol. This will be done with borrowers agreements, and leaves flexibility on how fees are paid to the protocol. Fees are typically taken on every action, and rates vary depending on the pool use case.
- Activate optional features: governance can activate early repayment, loan rollover and position exit depending on the terms of the pool as negotiated with the borrowers
- Roles attribution:
- Borrower address allowing and disallowing: right after the creation of a pool, the borrower cannot yet borrow from the pool. Borrowers will have to propose addresses to the governance, which will have the right to borrow and repay loans. A borrower can seamlessly use multiple addresses to do these actions. The same way governance can allow addresses, it can also remove the rights from an authorised address.
- Lender address allowing and disallowing: pools in the Atlendis protocol will typically be permissioned, meaning that users will have to go through a KYC or KYB process in order to deposit in the pool. Once the checks are passed, governance or a subordinate account will give the lender role to the users address, allowing them to interact with the pool. The same way governance can allow addresses, it can also remove the rights from an authorised address.