@n521369o
Do protocol upgrades cause temporary APY spikes or drops?
Protocol upgrades can cause both temporary APY spikes and drops, creating volatility. They often cause a temporary drop in the immediate lead-up and execution of the upgrade. Operators may voluntarily unstake or become less active to avoid potential bugs associated with the new code, reducing the staking pool and creating short-term upward pressure on APY for those who remain staked. However, if the upgrade is successful and introduces new features that drive demand for AVS services or improve efficiency, it can lead to a sustained spike in APY afterwards. The uncertainty itself is a source of volatility, as the market prices in the risk of a failed upgrade versus the potential for enhanced protocol utility.
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