Local Governance

Governance Over Lending Network Changes

Local governance relates to changes that can be done at the LeN level. Unlike Uniswap Pairs that are 100% immutable, Ola leaves some room for creators to change and reconfigure their LeNs. LeNs possess more moving parts than Uniswap Pairs so in most cases giving this power to creators would result in better functioning LeNs.

That said, updating a LeN maliciously is a possible attack vector whereby a LeN creator attracts liquidity and then changes the parameters in a way that enables them to steal funds. For example, a LeN creator can start by setting the Liquidation Factor of some token to 70% and then suddenly reduce it to 20% forcing many positions into liquidation. We mitigate these risks with 2 important measures:

1. We restrict the changes that LeN creators can perform. In regards to the example given above, we do not allow LeN creators to reduce the Liquidation Factor - only to increase it. Alternatively, they can reduce the Collateral Factor.

2. LeN creators can set the admin of their LeN to be a Timelock contract, such that any change they introduce would take a period of time before going into effect. This should give sufficient time for users to respond to any upcoming change.

Listing Tokens

Creators can list new tokens to their LeNs. A token must have an oracle within the Ola platform in order to be listed (See Price Oracles). Additionally, there is a maximum of 30 tokens that can take part in a single LeN.

Tuning Lending Network Parameters

Creators can tune certain parameters in their LeNs. For example, increase/decrease the Collateral Factor, increase the Liquidation Factor, increase/decrease the Liquidation Incentive, etc. Tunable parameters have hard ranges that must be respected by LeN creators. Other restrictions might apply depending on the significance and risk tied to every parameter.

Accepting Platform-Level Upgrades

Certain fundamental upgrades that change the rules or mechanics of the lending networks might become available after a decision passes in Ola's global governance. By default, however, LeNs will not automatically accept these upgrades. LeN creators have the authority to employ the new rules to their LeNs by actively accepting the upgrade. If they do nothing, the upgrade will not apply to their LeNs.