Overview
VRLA has two primary functions: governance (voting on protocol parameters) and utility (fee sharing, staking, and boosts).Governance
VRLA holders can govern protocol parameters through on-chain voting.Varla’s contracts already enforce permissions via OpenZeppelin AccessManager (RBAC).
Governance is implemented above RBAC using a Governor + Timelock that holds the relevant roles.
What Can Be Governed
| Category | Parameters |
|---|---|
| Risk Parameters | Tier LTV values (80/65/50%), per-position LTV overrides, liquidation thresholds |
| Liquidation Config | Target health factor, bonus curve (min/max), protocol fee |
| Interest Rates | Optimal utilization, base rate, slope1, slope2 |
| Protocol Caps | Deposit cap, borrow cap (per chain) |
| Oracle Settings | Max staleness, liquidation grace period, early-closure window |
| Treasury | Grants, partnerships, ecosystem spending |
| Upgrades | Contract upgrades, new chain deployments, new collateral types |
What Cannot Be Governed (Hardcoded)
| Parameter | Value | Why |
|---|---|---|
| Reserve fee | 10% | Consistent first-loss coverage |
| Min borrow | 10 units | Dust prevention |
| Repay delay | 1 minute | Flash loan protection |
| Liquidation threshold | HF < 1.0 | Core safety invariant |
Voting Process
Proposal submission
Any holder or group of holders with ≥1% of delegated total supply can submit a proposal.
Delegation
You can delegate your voting power to another address without transferring tokens. Delegation is revocable at any time.Fee Sharing
Protocol revenue flows to $VRLA stakers.Revenue Sources
| Source | Rate | Description |
|---|---|---|
| Liquidation protocol fees | Variable (per tier config) | Treasury revenue from liquidations |
| Reserve withdrawals (governance policy) | N/A | Governance can withdraw excess Pool reserve to Treasury |
Staking for Revenue
Stake VRLA in the Varla Staking contract to receive a pro-rata share of Treasury-funded USDC/USDT distributions.The Pool’s 10% reserve fee is accumulated as
reserveBalance for bad-debt protection.
Fee sharing is funded from the Treasury (primarily from liquidation protocol fees, and optionally from
governance-approved reserve withdrawals).- 70% to stakers
- 20% to Treasury
- 10% to Insurance Fund top-up
Minimum stake: 100 VRLA (enforced on-chain). Your active stake must be either 0 or ≥100 VRLA (no “dust” stakes).
Unstaking has a cooldown (default 5 days; governance-configurable up to 50 days).
Liquidator boosts and fee-sharing rewards are based on your staked VRLA balance.
Insurance Staking
Backstop the protocol and earn additional yield.How It Works
The protocol’s on-chain first-loss coverage is the Pool’s reserve balance (funded by 10% of borrower interest). In v1, “insurance staking” is implemented as an additional rewards policy for stakers (funded by Treasury). True recapitalization via VRLA auctions/buybacks is a later phase. As an Insurance Staker:- Stake $VRLA in the Insurance Pool
- Earn boosted yield (base APY + insurance premium)
- Accept risk: your stake may be slashed in a shortfall event
Risk/Reward (v1)
| Metric | Value |
|---|---|
| Base APY | Same as Fee Sharing |
| Insurance Premium | +5–15% additional APY (Treasury-funded) |
| Slash Risk | Not automatic in v1 (future phase) |
| Cooldown | Same staking cooldown |
Insurance stakers accept the risk of partial principal loss in exchange for higher yield. Only stake what you can afford to lose.
Liquidator Boost
VRLA stakers get preferential liquidation terms.Fee Rebate Tiers (protocol fee rebate)
Liquidator “boosts” are implemented as a rebate on the protocol fee (the Treasury’s cut), based on your staked VRLA balance.| Active Staked $VRLA | Protocol fee rebate |
|---|---|
| 0 | 0% |
| 1,000+ | 5% |
| 10,000+ | 10% |
| 100,000+ | 15% |
The protocol does not increase the borrower’s liquidation penalty for stakers.
Instead, eligible liquidators receive a rebate from the protocol fee (the Treasury’s cut).
Borrower collateral seized remains unchanged.
The Liquidator Boost is optional. Anyone can liquidate without staking VRLA.