Alpaca Finance to Roll Out New Governance Vault Model

The decentralized autonomous organization of Alpaca Finance, a leading lending protocol that facilitates leveraged yield farming, has ratified a proposal seeking to modify the protocol’s existing governance vault. Notably, the current governance vault’s time-based locking system will be replaced with a more flexible staking model.

According to the proposal, Alpaca currently uses a decay model for its governance vault. In this model, users must choose the period they want to lock their token (from 1 week up to 1 year), with higher rewards going to those that stake for a longer period. However, some members of the DAO have faulted the effectiveness of this model given the “current state of Alpaca Finance and the market conditions.”

“With zero emissions and relatively low yields, users are less incentivized to lock for a long time which makes locking ALPACA in the current vault less attractive.”

The newly ratified proposal will remove the restrictions on staking and withdrawal, meaning users will no longer need to specify how long to lock the tokens for. On the flip side, it will introduce a “cooldown” period before users can claim their tokens. During this period, users can choose to cancel withdraw and re-stake the tokens.

Meanwhile, more than 95% of the voting power, representing 20 million xALPACA tokens, supported the proposal. However, roughly 3% of the voters wanted to maintain the status quo.

The prolonged bearish market conditions have been biting hard on several decentralized organizations and crypto-based projects forcing them to either downsize or out-rightly halt operations.