Instant Governance is a feature that allows the community to vote for specific protocol settings. The Aggregation Protocol and Liquidity Protocol each have their own Instant Governance module.
The Aggregation Protocol Instant Governance module allows community members to vote on how the Swap Surplus revenue stream is split between the Treasury and the referrers.
The Liquidity Protocol Instant Governance module allows the community to vote directly on major Liquidity Protocol parameters: the price impact fee, the swap fee, the Treasury accrual rate, the referral reward, and the decay period.
There are two levels of Liquidity Protocol Instance Governance:
Pool governance only allows for the configuration of parameters specific to each pool. These parameters include the swap fee, the price impact fee, and the decay period. Liquidity providers may participate in pool governance by using that pool's LP tokens -- the weight of each user’s vote is proportional to the amount of LP tokens they have. The Liquidity Protocol uses a weighted average of all votes and applies it linearly over 24 hours.
Factory governance is responsible for parameters shared by all pools. These include the default swap fee, the default price impact fee, the default decay period, the referral reward and the Treasury accrual rate.
The decay period is a unique feature that protects traders from front-running attacks and prevents arbitrage traders from easily extracting value from pools. Longer decay periods lead to a wider price spread in the pool after trades. 1INCH stakers can set a decay period between 15 seconds and 1 hour.
This reward is a part of the swap fee and the price impact fee which will be dedicated to referrers (dApps and wallets that attract users and trading volume). Referrers can subsequently claim their share of 1INCH tokens from all pools in one gas-efficient claim transaction.
All protocol revenue not sent to the referrers is instead sent to the Treasury.