The Yearn ecosystem is controlled by YFI token holders who submit and vote on off-chain proposals that govern the ecosystem. Proposals that generate a majority support (>50% of the vote) are implemented by a 9 member multi-signature wallet. Transactions must be signed by 6 out of the 9 signers in order to be implemented. The members of the multi-signature wallet were voted in by YFI holders and are subject to change by future Yearn Improvement Proposals (YIP).
The YFI token is a tool for coordination between Yearn's contributors, community, and associated protocols. It was created to decentralize the management and development of yearn products while providing an environment for fast paced innovation.
Responsibilities of YFI token holders, and how the token itself plays into the Yearn is meant to be dynamic. All of its functions can be modified by the community at any time, and there have been multiple instances of this already.
From the week of YFI's emergence, there was extensive discussion around emissions, supply, and powers of YFI holders.
Since YIP-61: Governance 2.0 passed on April 25th, 2021, Yearn began the transition into a multi-DAO structure, managed by constrained delegation. This approach allows protocol development to not be stiffened by bureaucracy while maintaining a sufficient level of decentralization.
Multi-DAO refers to the fluid number of decentralized autonomous organizations (DAOs) that contribute to the protocol in some unique way. These independent groups consist of YFI holders, yTeams and the Multisig.
Learn more about Yearn's governance and operations model.