Governance Parameters

Definition ∞ Governance parameters are the configurable settings and rules that dictate how a decentralized protocol or system operates and evolves. These parameters include variables such as transaction fees, inflation rates, collateral requirements, or voting thresholds for proposals. They are typically adjustable through a community-driven voting process, allowing stakeholders to collectively direct the system’s future. Effective governance parameters are vital for the long-term health and adaptability of decentralized autonomous organizations.
Context ∞ In decentralized finance and blockchain governance, governance parameters are continuously debated and adjusted to optimize protocol performance, security, and fairness. Discussions often focus on balancing efficiency with decentralization, and preventing undue influence from large token holders. News about significant protocol upgrades or contentious community votes frequently highlights the impact and importance of these parameters.