# On-Chain Governance Models ⎊ Area ⎊ Resource 5

---

## What is the Protocol of On-Chain Governance Models?

On-chain governance models define the rules and procedures for making changes to a decentralized protocol directly through smart contracts. These models empower token holders to vote on proposals that affect the protocol's operation, including updates to risk parameters for derivatives. The implementation of governance ensures that the protocol evolves in a transparent and decentralized manner.

## What is the Decision of On-Chain Governance Models?

The governance process involves submitting proposals, debating their merits, and voting on their implementation. Decisions made through on-chain governance can include adjusting interest rates, modifying collateral requirements, or adding new assets to a derivatives platform. The outcome of these votes directly impacts the risk profile and functionality of the protocol.

## What is the Risk of On-Chain Governance Models?

In decentralized derivatives markets, on-chain governance is critical for managing systemic risk. Token holders vote on parameters such as liquidation thresholds and margin ratios, which directly influence the platform's stability. The effectiveness of the governance model determines its ability to respond quickly to market events and maintain the integrity of the derivatives contracts.


---

## [Collateral Transparency](https://term.greeks.live/definition/collateral-transparency/)

## [Latency Reduction](https://term.greeks.live/term/latency-reduction/)

## [Real-Time Market Adaptation](https://term.greeks.live/term/real-time-market-adaptation/)

## [Stablecoin Peg Mechanisms](https://term.greeks.live/term/stablecoin-peg-mechanisms/)

## [Structural Integrity Pricing](https://term.greeks.live/term/structural-integrity-pricing/)

## [Counterparty Risk Reduction](https://term.greeks.live/term/counterparty-risk-reduction/)

## [Cross Chain Settlement Synchrony](https://term.greeks.live/term/cross-chain-settlement-synchrony/)

## [Settlement Risk Premium Pricing](https://term.greeks.live/term/settlement-risk-premium-pricing/)

## [Flash Loan Integrity](https://term.greeks.live/term/flash-loan-integrity/)

## [Collateral Liquidation Threshold](https://term.greeks.live/definition/collateral-liquidation-threshold/)

---

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---

**Original URL:** https://term.greeks.live/area/on-chain-governance-models/resource/5/