Definition ∞ Protocol policy simulation involves modeling the potential effects of proposed changes to a decentralized network’s rules or parameters before their actual implementation. This process uses virtual environments to test various scenarios and predict how a protocol might react to different economic conditions, user behaviors, or technical modifications. The aim is to identify unforeseen consequences and optimize policy decisions. It provides a risk-free method for evaluating governance proposals.
Context ∞ The increasing sophistication of these simulation tools is a frequent subject in discussions about improving decentralized governance, particularly for complex financial protocols. News often covers how major upgrades are tested extensively through simulations to mitigate risks.
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