Governance

Current

Like most DeFi protocols, there is initially some degree of centralization as the project is developed and released. Namely, the early contributor team will have a hand in selecting which markets to trade, collateralization ratios, design elements, allocation decisions, etc. Not only is this out of necessity, but it is also to be able to provide quick reaction to empirical and qualitative feedback observed in early trading. From a trading perspective, ensuring that the appropriate initial assets are chosen should lead to deeper liquidity and tighter spreads which can mitigate some risk around adoption and liquidation.

Short term

In the near future, we expect to turn market selection and determination of certain trading characteristics (lot size, settlement date, margin requirements, etc.) over to the community for voting. This will be a key milestone in decentralization from a technical aspect as well as in the eyes of global regulators, for whom contract standardization is one characteristic of a formalized exchange as opposed to OTC peer-to-peer trading. In the future, the $CYPH token will also be able to be staked to earn trading fee reductions. There will be a handful of tiers allowing reductions in fees and in some cases, it could provide rebates to incentivize market makers.

Long term

In the longer term, we see the community providing many of the user safeguards of existing self-regulatory and enforcement bodies. Increasingly more efficient margin requirements and capital efficiency mechanisms can be put in place. Companies can be incentivized to share information / interviews about their operations. And new product offerings such as structured ETFs or native digital equity can be created. Also, as protocol revenues grow, a portion of the protocol fees will be distributed as rewards to users who are staking the the native $CYPH token.