@i175316j
Can leverage be dynamically adjusted by protocol governance?
Yes, and this is a likely and critical feature for managing systemic risk. Protocol governance could implement dynamic leverage caps that adjust based on real-time network metrics. For example:
Lowering Caps During Stress: Automatically reducing the maximum allowed leverage across the protocol during periods of high network congestion, high volatility, or after a slashing event.
AVS-Specific Caps: Setting lower leverage limits for riskier, newer AVSes and higher limits for established, stable ones.
Based on Utilization: Adjusting caps based on the total leverage utilization in the system to prevent over-concentration.
This would act as a circuit breaker, mechanically de-risking the ecosystem when conditions become turbulent, much like a central bank adjusting margin requirements.
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