> For the complete documentation index, see [llms.txt](https://docs.omnipact.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.omnipact.io/developers/omnipact-technology-white-paper/readme/usdpact-tokenomics-and-governance/8.2-governance-dao.md).

# 8.2 Governance (DAO )

The governance of OmniPact is not a simple "one token, one vote (1 Token = 1 Vote)" system, as this model is highly vulnerable to lending attacks (voting with borrowed tokens) or short-sighted capital behaviors. We adopt the vePACT (Vote-Escrowed PACT) model to ensure that only stakeholders who have made long-term commitments to the protocol can steer the ship.

#### 8.2.1 vePACT Implementation 

1\. Mechanism Definition

vePACT is a non-transferable, time-weighted governance right. Users must lock their $PACT tokens in the VotingEscrow contract to obtain vePACT.

Voting weight formula:

The user's voting weight $w$ depends on the number of locked assets $a$ and the remaining lock-up time $t$:

$$
w = a \times \frac{t\_{unlock} - t\_{now}}{t\_{max}}
$$

* Tmax$$ $t\_{max}$ $$: Maximum lock-up period (set to 4 years).
* Linear Decay: As time passes, the remaining lock-up period shortens, and the balance of vePACT held will decrease linearly. To maintain voting rights, users must continuously extend the lock-up period.

2\. Incentive Alignment

* Time weighting: The voting power of 1 token locked for 4 years is equivalent to that of 4 tokens locked for 1 year. This gives long-term believers more say than short-term speculators.
* Flash Loan Resistance: Since voting rights are based on locked positions (with a snapshot taken at block $N-1$), attackers cannot borrow coins, vote, and return them within a single block using flash loans.
* Earnings Boost: Users holding vePACT can receive a maximum 2.5x $PACT reward boost when participating in arbitration or providing liquidity.

#### 8.2.2 Governance Scope & Parameter Adjustment 

DAO does not manage everything. For the sake of security, we have divided governance rights into two categories: sensitive parameters and logical upgrades, and implemented strict execution delays.

1\. Governable Parameters

vePACT holders can modify the following core variables through on-chain proposals (OIP - OmniPact Improvement Proposal):

* Protocol Fee Rate ($$ $\phi$ $$):Transaction fee rate(Scope limit: 0% - 2%).
* Jurisdiction Whitelist: Approve the addition of new arbitrator nodes or the removal of malicious nodes.
* Vault Strategies: Approve the whitelist of DeFi protocols where idle funds can be invested (such as adding the Aave V3 strategy).
* Inflation Rate: Adjust the inflation/release curve of the token (if any).

2\. Time-delays & Security

To prevent funds from being stolen due to "malicious proposals being suddenly passed", all proposals must be subject to the constraints of the TimelockController contract.

* Process:
  1. Propose: Only users holding more than 1% of vePACT can initiate a proposal.
  2. Vote:Voting period (3 - 7 days).
  3. Queue:After the proposal is passed, it enters the "public notice and queuing period" (Timelock Delay).
  4. Execute: After the queuing period ends, anyone can trigger the execution.
* Emergency Brake\
  Set Delay = 48 hours.

  These 48 hours are the "escape window" of the protocol. If a malicious proposal is passed (such as changing the rate to 100%), the community and the Guardian Multisig will have time before the code takes effect to:

  * User: Withdraw funds (Rage Quit).
  * Guardian: Trigger `veto()` Veto power (only for extremely urgent safety accidents).

3\. Guardian Multisig

Before a DAO is fully mature (during the Progressive Decentralization phase), a 6-of-9 multi-signature wallet composed of the core team and well-known community members has limited permissions:

* Permissions: Only able to Pause the protocol (in case of a hack) or Veto malicious proposals.
* Restrictions: Guardians cannot withdraw funds nor modify the logic code.
* Sunset Clause: It is expected that 24 months after the mainnet goes live, the guardian rights will be completely removed through hard coding to achieve 100% decentralization.

***

> This section demonstrates the maturity of OmniPact in governance design: it not only empowers the community but also prevents the abuse of such power through mathematical models (veToken) and security mechanisms (Timelock).