> For the complete documentation index, see [llms.txt](https://docs.ambient.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ambient.finance/governance-and-policy/policy.md).

# Policy

*The policy controller* is an intermediate layer that sits between DAO governance and the DEX contract itself. Policy is coordinated by the `CrocPolicy` smart contract which has direct administrative authority over the DEX contract. Governance decisions are called as *resolutions* in the policy contract, which directly pass through an arbitrary *protocol commands* to the DEX contract interface. 

Protocol commands can be invoked with or without escalated privilege (*sudo mode*). Sudo mode is required for all major operations in the `CrocSwapDex`contract, including upgrading code, transferring authority to a new controller or disbursing accumulated protocol fees. Only the treasury and emergency multisigs can call protocol commands in sudo mode.

The policy layer can also delegate a restricted set of administrative controls on the `CrocSwapDex` contract to external *policy oracles*. Governance can install a *policy conduit* which defines a narrow mapping between a fixed address and a narrow subset of protocol commands. The policy oracle can then independently and directly invoke these protocol commands.

The purpose of a policy oracle is to dynamically extend the base capabilities of the protocol in a modular, safely contained and pre-defined avenue without having to directly upgrade the underlying DEX contract code. An example of a policy oracle is a smart contract that dynamically adjusts the liquidity fee in a pool based on market conditions. This allows governance to offload that responsibility to a deterministic oracle.