What Happens to the Governance Token’s Value during a Sustained Stablecoin De-Peg?
During a sustained de-peg, the governance token's value typically crashes dramatically. This is because the protocol issues a large volume of the token to incentivize the burning of the de-pegged stablecoin.
The sudden increase in supply, combined with a loss of confidence in the entire system, creates intense selling pressure on the governance token, accelerating the death spiral.
