# Governance & Alignment

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](https://safe.global/) multisigs arranged in a nested hierarchy:

| Multisig                      | Role                                          | Address                                                                                 |
| ----------------------------- | --------------------------------------------- | --------------------------------------------------------------------------------------- |
| **ETH Strategy Multisig**     | Root authority — owns core protocol contracts | [0xC53CCed...](https://etherscan.io/address/0xC53CCed6332D06972A7eaEDc64FDF6d4aF5220b8) |
| **Liquidity Multisig**        | Manages protocol-owned liquidity operations   | [0xaA1A5A7...](https://etherscan.io/address/0xaA1A5A784BE986baE07E8686566bb402c74DFe42) |
| **Staking Multisig**          | Manages staking reward distribution           | [0xF89f49e...](https://etherscan.io/address/0xF89f49e21A2Bd1fb24332462cB21dc1378aA25e1) |
| **Puttable Warrant Multisig** | Manages presale warrant mechanics             | [0x75eFa08...](https://etherscan.io/address/0x75eFa088E34DA03966a5D2b84fA16C77fF25Adfa) |
| **Perpetual Note Multisig**   | Manages ESPN vault operations                 | [0x823EfFF...](https://etherscan.io/address/0x823EfFFA08f946233D2a502a1B073C5E16Fea16b) |

Each sub-multisig inherits from the main ETH Strategy Multisig, creating functional separation while maintaining a unified governance root. For all addresses, see [Contracts](/references/contracts.md).

## 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

| Parameter                        | What It Controls                                                                                                                        | Who Can Change It             |
| -------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------- |
| **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

| Parameter            | What It Controls                                                                     | Who Can Change It |
| -------------------- | ------------------------------------------------------------------------------------ | ----------------- |
| **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

| Parameter   | What It Controls                          | Who Can Change It |
| ----------- | ----------------------------------------- | ----------------- |
| **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)

| Parameter                | What It Controls                                                                    | Who Can Change It               |
| ------------------------ | ----------------------------------------------------------------------------------- | ------------------------------- |
| **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`

| Parameter                      | What It Controls                                            | Who Can Change It            |
| ------------------------------ | ----------------------------------------------------------- | ---------------------------- |
| **Borrow 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)

| Parameter        | What It Controls                                       | Who Can Change It |
| ---------------- | ------------------------------------------------------ | ----------------- |
| **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 changes
* `BorrowRateUpdated`, `LoanDurationUpdated`, `DelinquentFeeUpdated` — lending parameter changes
* `DepositCapUpdated`, `WithdrawalsDisabledUpdated`, `ManagerUpdated` — ESPN vault changes
* `TokenConfigUpdated`, `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:

1. **Current state** — Team-controlled via Safe multisigs with nested hierarchy. All parameter changes are transparent (on-chain events).
2. **Near-term** — Publish governance parameter change logs. Establish norms around parameter change cadence and communication.
3. **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.
4. **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](https://blog.ethstrat.xyz/) and [@eth\_strategy](https://twitter.com/eth_strategy) for governance updates.

## Further Reading

* [Contracts](/references/contracts.md) — all deployed addresses including multisigs
* [Risks — Governance Risks](/security-and-risk/risks.md#governance-risks) — risks associated with the current governance model
* [Roadmap](/introduction/roadmap.md) — governance decentralization as part of the Full Protocol phase


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