Governance-Led Recapitulation

Governance-led recapitulation is the process by which a protocol's decentralized governance community votes to inject new capital or restructure debt in response to a major financial crisis. If a protocol suffers losses that exceed its insurance fund, the community may decide to issue new tokens, raise capital from investors, or modify the protocol's economic parameters to restore solvency.

This is a form of collective crisis management that relies on the engagement and alignment of the protocol's stakeholders. While it provides a mechanism for recovery, it can also lead to token dilution or changes in the protocol's long-term economic model.

It is a powerful tool that underscores the importance of active and informed governance in decentralized finance.