How Can Decentralized Governance Mitigate the Risk of a Death Spiral? ▴ Learn

How Can Decentralized Governance Mitigate the Risk of a Death Spiral?

Decentralized governance can mitigate risk by proactively adjusting critical protocol parameters, such as stability fees, collateralization ratios, and liquidation penalties, in response to market stress. By having a broad base of token holders, the protocol can theoretically make faster, more resilient decisions than a centralized entity.

However, slow or apathetic governance can exacerbate the crisis.

What Is a “Death Spiral” in the Context of Rebase Tokens?

Can a Halving Event Trigger a “Mining Death Spiral”?

How Does the Difficulty Adjustment Period Mitigate the Risk of a Mining Death Spiral?

How Does the Inflation Rate Affect the Risk of a ‘Death Spiral’ in an Algorithmic Stablecoin?