Governance Documentation

Clynto is a decentralized finance platform that utilizes community-driven governance, allowing CLY token holders to influence key decisions such as interest rates and liquidation thresholds. The governance structure includes proposal submission, voting mechanisms, and regular updates to ensure transparency and participation. Future enhancements aim to improve voting processes and integrate cross-chain governance. The system emphasizes security through smart contract audits and a dispute resolution mechanism, ensuring a fair and democratic environment for all stakeholders.

Objectives:

Ensure transparent and democratic decision-making.
Enable the community to influence key platform parameters.
Promote active participation from all stakeholders.
Maintain the integrity and security of the platform.
Reward governance participation through Clynto Nectar points.

Logistics

Community Participation:

Discussion Forums:
- Purpose: Facilitate discussions on governance proposals and platform improvements.
- Access: Open to all CLY token holders and community members.
- Moderation: Managed by the Governance Committee to ensure productive and respectful discussions.
Regular Updates:
- Transparency: Provide regular updates on governance activities, proposals, and outcomes.
- Engagement: Encourage active participation through newsletters, AMAs, and community calls.

Security and Integrity:

Smart Contract Audits:
- Regular Audits: Conduct regular audits of governance-related smart contracts to ensure security and functionality.
- Third-Party Audits: Engage independent auditors to review and validate smart contract code.
Dispute Resolution:
- Mechanism: Establish a dispute resolution mechanism to address conflicts and grievances related to governance decisions.
- Transparency: Ensure transparency and fairness in resolving disputes.
Backup and Recovery:
- Data Security: Implement robust backup and recovery procedures for governance data and smart contracts.
- Redundancy: Ensure redundancy and availability of governance infrastructure.

Future Enhancements:

Enhanced Voting Mechanisms:
- Quadratic Voting: Explore the implementation of quadratic voting to provide a more balanced decision-making process.
- Delegated Voting: Introduce delegated voting to allow token holders to delegate their voting power to trusted representatives.
Incentive Programs:
- Participation Rewards: Develop incentive programs to reward active participation in governance activities.
- Bounties: Introduce bounties for identifying issues, suggesting improvements, and contributing to platform development.
Cross-Chain Governance:
- Integration: Explore integration with other blockchain networks to enable cross-chain governance and broaden community participation.
- Interoperability: Ensure interoperability of governance processes across multiple blockchain ecosystems.

Governance Structure

1. Governance Token (CLY)

Purpose: CLY tokens are used to vote on proposals and participate in governance decisions.
Distribution: CLY tokens are distributed through various means, including staking rewards, liquidity mining, and initial token distribution events.

2. Voting Mechanism

Eligibility: All holders of CLY tokens are eligible to participate in voting, with specific rules for different types of voting.
Voting Power: Each CLY token represents one vote.
Proposals: Community members can submit proposals for changes to the platform, which are then voted on by CLY token holders.

3. Proposal Lifecycle

Submission: Proposals can be submitted by any CLY token holder with staked CLYs for feature requests.
Review: Submitted proposals are reviewed for compliance with platform rules and completeness.
Voting Period: Once approved for voting, proposals enter a defined voting period (e.g., 7 days).
Quorum: A minimum number of votes (quorum) is required for a proposal to be valid. The quorum threshold is set by governance.
Approval: Proposals that receive a majority of votes (above a defined threshold) are approved and implemented.

Key Governance Parameters

1. Loan-to-Value (LTV) Tiers

Definition: LTV tiers define the maximum LTV ratios for different risk categories.
Governance Role: The community votes on the boundaries and definitions of LTV tiers.
Impact: Determines the risk and interest rate categories for loans.

2. Interest Rate (APR) Tiers

Definition: APR tiers correspond to different LTV tiers and define the maximum allowable interest rates.
Governance Role: The community sets and adjusts APR tiers through voting.
Impact: Influences the cost of borrowing and the attractiveness of lending.

3. Liquidation Thresholds

Definition: The LTV ratio at which collateral is liquidated to protect lenders.
Governance Role: The community determines the liquidation thresholds to balance borrower protection and lender risk.
Impact: Affects the security and stability of the platform.

Governance Processes

1. Proposal Submission

Eligibility: Any CLY token holder with staked CLYs can submit a feature request proposal.
Format: Proposals must be submitted in a standard format, including the title, description, rationale, and expected impact.
Review: Proposals are reviewed for compliance and clarity before being accepted for voting.

2. Voting Types

Feature Request Voting: i. Eligibility: Any CLY token holder with staked CLYs can submit a proposal for new features. ii. Process: Proposals are submitted, reviewed, and voted on by the community.
Interest Rate and LTV Governance Voting: i. Eligibility: Any CLY token holder can participate, staking required. ii. Process: Weekly voting on low, mid, and high-risk LTV tiers and their maximum allowed interest rates. iii. Outcome: Determines the interest rates and LTV ratios for the protocol and Protocol liquidation point for loans

3. Voting

Notification: Proposals accepted for voting are announced to the community.
Voting Period: The community has a defined period (e.g., 7 days) to vote on proposals.
Casting Votes: Token holders cast votes proportional to their CLY holdings.
Quorum: A minimum number of votes is required for a proposal to be valid.

4. Implementation

Approval: Proposals that meet the quorum and receive majority approval are implemented.
Execution: The development team or smart contract automation executes the approved changes.
Monitoring: The impact of implemented changes is monitored and reported to the community.

Liquidation Mechanisms

1. Lenders' Liquidation Cases

Liquidation Notice: i. Can only be issued if the liquidation point is not reached and the loan duration has not been exceeded. ii. Minimum investment liquidation period (defined by governance) must be reached. iii. Governance defines the minimum number of days required to issue a liquidation notice. iv. Lenders issuing a liquidation notice cease to accrue interest for the liquidation notice period. v. Example: A 30-day liquidation notice results in no interest accrued during the 30 days.
Instant Liquidation: i. Lenders can liquidate instantly if:
The loan duration has passed (optionally picked by the borrower).
The liquidation point is reached (as defined by governance).
Liquidation Process: i. Any lender can liquidate a portion of the collateral. ii. Assets are swapped and transferred to the lender.

2. APR Calculation

Accrue Interest Daily. ii. Ensure interest accrual stops when early liquidation triggered
Lenders Requesting Liquidation:
1. Before reaching the liquidation point:
  1. A 7-day liquidation notice is required, during which no interest is accrued for the final 7 days.
2. On or past the liquidation point:
  1. Instant liquidation is allowed.

Conclusion

Clynto's governance system empowers its community to drive the platform's development and operations. By participating in governance, CLY token holders ensure that the platform remains fair, transparent, and aligned with the community's needs. The structured approach to liquidation, APR calculation, and loan term adjustments ensures that both borrowers and lenders can operate with confidence within the Clynto ecosystem.