Governance & Alignment
Who controls what, which parameters are tunable, and the path toward decentralization.
ETH Strategy is currently governed by the team via a multisig structure. This page documents exactly what the team can and cannot change, how governance is structured today, and where it's headed.
Current Governance Structure
The protocol is controlled through Safe multisigs arranged in a nested hierarchy:
Each sub-multisig inherits from the main ETH Strategy Multisig, creating functional separation while maintaining a unified governance root. For all addresses, see Contracts.
What Governance Can Change
Every governance-tunable parameter is listed below, organized by contract. Understanding these parameters is essential for assessing the protocol's risk profile.
Convertible Notes
PCF (Premium Control Factor)
Scales the premium term in conversion entitlement pricing. Higher PCF → higher conversion price → fewer tokens per bond
Owner (ETH Strategy Multisig)
GCF (GAV Control Factor)
Scales the GAV (Gross Asset Value) term in conversion entitlement pricing. Higher GCF → higher conversion price → fewer tokens per bond
Owner
These two parameters govern the conversion rate for new notes — effectively controlling how many STRAT and esETH tokens a buyer receives per dollar of USD notional. Increasing either factor makes new notes less generous; decreasing either makes them more generous. They do not affect existing notes — entitlements are fixed in the NFT at purchase time.
esETH
Token configs
Which LSTs can be minted/redeemed for esETH (token type, mintable, redeemable flags)
Owner
Yield receiver
Address that receives harvested LST yield
Owner
Treasury manager
Address with elevated permissions (can mint/redeem non-whitelisted tokens)
Owner
STRAT & CDT Tokens
Minters
Addresses authorized to mint STRAT or CDT
Owner
Minting authorization is tightly controlled. STRAT is only minted through the convertible note conversion mechanism. CDT is only minted through bonding.
ESPN (Perpetual Note)
Deposit cap
Maximum total assets the ESPN vault will accept
Owner (Perpetual Note Multisig)
Withdrawals disabled
Whether direct vault withdrawals are enabled (redemption queue remains operational)
Owner
Manager
Address that receives deposited assets for strategy deployment
Owner
Treasury Lending Roadmap
RoadmapBorrow rate
APR for new borrows and rollovers
Rate setter (delegated role)
Loan duration
Term length for new loans (default: 180 days)
Owner
Delinquent fee rate
Fee reserved at origination, forfeited on default
Fee setter (delegated role)
Interest revenue recipient
Address receiving interest payments (intended: StakedStrat)
Owner
Rate setter
Address authorized to change the borrow rate
Owner
Fee setter
Address authorized to change the delinquent fee rate
Owner
Treasury Lending uses delegated roles — the owner can authorize specific addresses to change rates and fees without granting full ownership. This enables operational flexibility (e.g., adjusting rates in response to market conditions) while limiting the scope of delegated authority.
STRAT Staking (StakedStrat)
Reward token
Token distributed as staking rewards (intended: esETH)
Owner
What Governance Cannot Change
Certain protocol mechanics are immutable once a position is created:
Conversion entitlements — the STRAT and esETH amounts a note holder can claim are set at bonding time and stored in the NFT. No governance action can alter them retroactively.
Settlement entitlement — the USD notional value redeemable after expiry is fixed at bonding.
Timelock and expiry — set at bonding (~6.9 days and ~4.2 years respectively). Cannot be extended or shortened for existing notes.
Loan terms — borrow rate, duration, and delinquent fee for an existing treasury loan are snapshotted at origination. Parameter changes only affect new loans.
CDT supply accounting — CDT is only created through bonding and only destroyed through conversion or redemption. There is no admin mint function for CDT.
ESPN redemption queue positions — once queued, the dollar value owed is fixed. The sweeper address on the redemption queue contract is immutable (set at construction).
This design ensures that existing position holders are protected from governance changes. New parameters only affect new participants.
Transparency
All parameter changes emit on-chain events:
OwnerChangedPCF,OwnerChangedGCF— convertible note pricing changesBorrowRateUpdated,LoanDurationUpdated,DelinquentFeeUpdated— lending parameter changesDepositCapUpdated,WithdrawalsDisabledUpdated,ManagerUpdated— ESPN vault changesTokenConfigUpdated,YieldReceiverUpdated,TreasuryManagerUpdated— esETH configuration changes
These events enable anyone to monitor governance actions in real-time using standard blockchain indexing tools.
Path to Decentralization
The team controls the protocol today. This is intentional for the launch phase — rapid parameter tuning and operational responsiveness are more important than governance theater during the period when the protocol is finding product-market fit.
The plan for governance decentralization:
Current state — Team-controlled via Safe multisigs with nested hierarchy. All parameter changes are transparent (on-chain events).
Near-term — Publish governance parameter change logs. Establish norms around parameter change cadence and communication.
Medium-term — Transition to community governance. The exact structure — whether a BORG (Boring Onchain Regulated Governance), token voting, or another model — will be shaped by public discourse post-launch. The team believes governance design should be informed by real usage patterns, not predetermined before the protocol has live users.
Long-term — Full decentralization of parameter control, with appropriate guardrails to prevent governance attacks.
No specific timeline is committed for decentralization milestones. Follow the blog and @eth_strategy for governance updates.
Further Reading
Contracts — all deployed addresses including multisigs
Risks — Governance Risks — risks associated with the current governance model
Roadmap — governance decentralization as part of the Full Protocol phase
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