How Does the Velocity of Token Selling Accelerate the Spiral?

As the stablecoin de-pegs, the protocol or users sell the governance token to restore the peg or exit their position. High velocity (rapid selling) of the governance token floods the market, driving its price down very quickly.

This rapid depreciation further erodes the value of the mechanism intended to back the stablecoin, accelerating the loss of confidence and the stablecoin's collapse.