Currently, DeFi has a problem: wanting to prevent power from concentrating in one person's hands slows down operations; wanting to make operations more convenient lacks security guarantees, and no one can control power. Huma relies on layered permission management, ensuring safety while clearly defining power and mutual oversight, becoming a good example of DeFi governance.
1. The highest layer: Power is not concentrated, and operations are also convenient.
Huma's most core power design considers both sides:
- Managing the most core matters requires several people to sign together: to avoid one person messing up, important decisions can be verified multiple times.
- Specially responsible for key matters: Adjusting protocol rules, arranging capital pool managers, lifting suspensions, transferring income to the treasury; can handle urgent matters quickly.
- Separate accounts: The accounts for managing matters and the treasury for receiving money are not mixed, preventing power from being concentrated in one person's hands, making the money safer.
2. In case of urgent matters: Multiple protections ensure the safety of money.
Huma places great importance on safety, setting up several 'safety valves':
- There is a 'suspension officer': If a serious safety issue arises (for example, someone sabotaging), the suspension officer can immediately halt the entire protocol, preventing money from flowing out.
- More than one suspension officer: Several can be appointed or even hire external security companies, enabling better oversight of different security risks and faster responses.
- Only the core layer can restore: Only the highest layer can restart the protocol, preventing someone from pausing it randomly and being unable to restore it.
3. Managing the capital pool: Money is well-managed and not troublesome.
Management of the capital pool saves trouble and controls risk:
- The person managing the pool must be approved: They must receive consent from the highest layer to be in charge, responsible for building the capital pool, setting rules, and selecting loan approvers, and can also receive rewards, having their own dedicated treasury with low risk.
- Operators handle specific tasks: checking user identities, approving who can lend, and other minor matters do not require as many signatures as the core layer—requirements are set according to the risk level of roles.
4. Loan approvers: Professional and serious.
The person assisting with loan approvals (called EA) is core, designed very practically:
- One person manages one pool: Whoever makes the decision is responsible, and it is easy to find someone when issues arise;
- Flexible loan approvals: Simple loans are automatically approved, while complex ones undergo manual review, making errors less likely;
- They also invest money: They must invest money into the capital pool they manage, making profits and losses relevant to themselves, which makes them more cautious when approving loans.
5. When replacing people: No delays, everyone is not at a loss.
- People who change loans: Those who manage the capital pool can change, but newcomers must first invest money to ensure operations continue; when older members leave, they can immediately receive all rewards, which are calculated clearly.
- Everyone involved has guarantees: Those lending money can earn returns and are more willing to participate; those borrowing money can receive funds immediately upon approval and are required to pay interest (some also need to repay a portion of the principal), making it clear how money flows in and out of the capital pool.
6. Usefulness to the industry
Huma's layered permission management approach combines the advantages of traditional finance in controlling risk with the transparency of blockchain, resulting in a governance method that is 'safe and flexible'. It provides a good reference for the entire DeFi industry, especially solving the problem of 'wanting to prevent power concentration while making operations convenient'—more platforms may learn from this approach in the future, making DeFi more professional and standardized.
@Huma Finance 🟣 #HumaFinance $HUMA
