Voter Apathy Risks

Voter apathy risks occur when a small percentage of token holders participate in governance, making the protocol susceptible to takeover by minority interests. When participation is low, it requires fewer tokens to reach a quorum or pass a proposal, lowering the cost of an attack.

In derivative protocols, this can lead to situations where a small group of users changes risk parameters to favor their own positions, such as lowering collateral requirements for specific assets. Protocols often try to combat this through delegation, where users assign their voting power to active participants.

However, if delegation is concentrated, it can lead to central points of failure and influence.