What Is the Risk of a Protocol Modifying Its Token Burn Mechanism?

The primary risk is that a governance vote could reverse or reduce the burn rate, instantly increasing the effective future token supply and significantly lowering the perceived intrinsic value. This governance risk is a key factor in the risk premium of the valuation model.

Investors must assess the concentration of voting power and the incentive alignment of the largest token holders. A clear, immutable, and smart-contract-enforced burn mechanism reduces this risk.