Governance Attack Propagation

Governance attack propagation describes how a malicious actor gaining control of a protocol’s governance token can use that power to drain funds or alter protocol rules, affecting all users and integrated platforms. By changing parameters like collateral factors or interest rates, an attacker can manipulate the system to favor their own positions or directly extract value.

If the affected protocol is used as collateral elsewhere, the attack can trigger a wave of liquidations and instability in other systems. This risk is inherent in decentralized governance models where token distribution and voting power can be centralized or bought.

Protecting against this requires robust governance safeguards, such as time-locks and multi-signature requirements.