How Does a Proposal Deposit Requirement Act as a ‘Skin in the Game’ Mechanism?

By requiring a proposer to lock up a significant amount of the governance token, a financial cost is associated with submitting a proposal. If the proposal is malicious, fails to meet a minimum threshold, or is rejected, the deposit is often forfeited (slashed).

This financial penalty discourages frivolous or harmful proposals, ensuring that only those with genuine belief and a financial stake in the protocol's success participate.