# Governance Given that Dahlia is a permissionless protocol, anyone can create a lending market. This significantly reduces the need for heavy-handed governance and instead shifts focus to managing risk and setting key parameters. Dahlia’s governance plays a limited but critical role in ensuring the stability and safety of the protocol through carefully controlled **pre-deployment** and **post-deployment** parameters. ### Pre-Deployment Parameters 1. **LLTV Range**: Defines the permissible range of Liquidation Loan-to-Value (LLTV) ratios that users can apply when creating new markets. The default LLTV range is set to **10%-98%**, offering market deployers flexibility to align with specific risk profiles. 2. **Liquidation Bonus Range**: Specifies the range of liquidation bonus rates, determining the portion of collateral awarded to liquidators during liquidation. This ensures bonuses remain attractive without imposing excessive penalties on borrowers. 3. **Allowed Interest Rate Models (IRM)**: Controls the list of interest rate models that can be used to regulate interest accrual. By maintaining a whitelist of IRM models, governance ensures predictable and consistent protocol behavior. ### Post-Deployment Parameters 1. **Protocol Fee**: A percentage fee deducted from the borrower’s APY and directed to the DAO treasury. This fee is set at **3%** of the interest earned by lenders and can be adjusted by governance to fund protocol improvements, development, and community initiatives. 2. **Reserve Fee**: A fee collected to form a reserve or insurance buffer for each market, helping protect against bad debt. The default reserve fee is set to **0%** but can be adjusted by governance as needed. 3. **Flashloan Fee**: A fee applied to the use of the flashloan feature. By default, this fee is **0%**, though governance can update it to align with market needs. 4. **Repay Period**: The duration allowed for borrowers to **repay their debt and claim collateral** in the event of a stalled market. It is set to **2 weeks** by default and can be adjusted by governance. 5. **Dahlia Registry Control**: Manages protocol-wide settings such as addresses for critical integrations (e.g., Royco IAM), ensuring smooth and secure connections across the ecosystem. 6. **Market Actions**: * [**Pause/Unpause Market**:](/key-concepts/market-modes.md#pause-mode) Allows governance to temporarily pause or unpause a market in the event of emergencies or risk concerns. * [**Market Deprecate**:](/key-concepts/market-modes.md#deprecation-mode) If a market is deemed unsafe or inactive, governance can permanently deprecate it, preventing further interactions. * [**Stall Market**:](/key-concepts/market-modes.md#oracle-stalled-mode) In the event of an oracle malfunction or data delay, governance can place a market in **Oracle Stalled Mode**. During this period, no actions requiring fresh price data (e.g., borrowing, liquidations, collateral withdrawals) can occur. ### Interim Governance Structure At launch, Dahlia will operate under an **interim governance structure** until decentralized governance contracts are fully deployed. During this period, a **Guardian Multisig** will manage the protocol, consisting of **5 members** with a voting threshold of **3 out of 5**. This multisig will include Dahlia Foundation members and core protocol contributors to ensure fast, reliable decision-making while maintaining decentralization. ### Future of Governance: The Default Framework Dahlia’s governance will evolve to adopt the **Default Framework**, a modular system that allows governance interactions through *policies* and *modules*. This flexible architecture empowers the community to implement governance upgrades, manage risk parameters, and adapt to evolving market dynamics efficiently. The Default Framework prioritizes: * **Decentralization**: Shifting control to stakeholders and the broader community. * **Scalability**: Allowing governance to adapt to new features and markets without requiring core protocol changes. * **Security and Stability**: Ensuring governance changes maintain the safety and integrity of the protocol. By embracing the Default Framework, Dahlia will achieve a governance structure that is robust, adaptive, and inclusive, empowering its community to actively participate in shaping the future of the protocol. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.dahlia.xyz/governance-and-fees/governance.md?ask= ``` The question should be specific, self-contained, and written in natural language. 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