Minimized governance

Governance is too central in most of lending protocols

The governance activity of lending protocols has significantly grown and become more complex over time. Managing the risks of pools has been progressively delegated to experts, whose mission is to monitor the asset markets and update pools’ risk parameters. This involves assessing multiple risk factors, such as assets’ on-chain liquidity, their price volatility and market capitalization.

Governance-driven risk management hinders protocols from scaling horizontally. The more assets are listed, the greater the number of risk parameters that need to be monitored and updated in real-time. The DAO, with its limited scope for attention and complex decision process, becomes a bottleneck in expanding to more chains and assets.

Moreover, protocols’ solvency is still at risk of a lack of due diligence or governance failure.

LendBook, on the path to full decentralization

Lending Limit Order Book is fully algorithmic and automated.

As pools’ solvency does not rely on team’s interventions or governance by a DAO, full decentralization becomes a credible objective which LendBook will actively pursue. The protocol will ultimately be governance free with non-upgradeable smart contracts and parameters set at the time of contract deployment.

No governance process will be needed to whitelist approved tokens. Markets will be created permissionlessly by calling a factory contract. The number of assets that could be listed is only limited by the existence of a reliable price feed in LendBook V1. LendBook V2 will expand to long-tail assets by getting rid of price oracles.