Can Centralized Exchanges Prevent a Death Spiral by Intervening?

Centralized exchanges (CEXs) can attempt to mitigate the effects of a death spiral by halting trading, delisting the unstable stablecoin, or converting user balances to a more stable asset. However, they cannot prevent the underlying protocol failure.

Their intervention is a reactive measure to protect their own solvency and their users from further loss, but it often comes after significant damage has occurred.