8.3 Governance Parameters

Protocol governance is conducted through the Parax DAO, a modular governance system responsible for managing economic parameters, smart contract upgrades, oracle integrations, validator sets, and treasury allocations. Governance rights are distributed via a native token model, wherein voting power is proportional to time-weighted stake and augmented by participation scores.

Key parameters subject to governance include asset class onboarding thresholds, verification fee schedules, LTV ratios, liquidation penalty curves, validator reputation scoring, and dispute escalation bonding requirements. All changes are executed through on-chain proposals subject to a quorum and time-delay mechanism, ensuring transparency and auditability.

The DAO further maintains governance committees for technical review, risk analysis, and compliance, each of which may operate as multi-signature councils with scoped authority. Emergency protocol changes, such as pausing transfers or blacklisting compromised oracle feeds, are subject to a fast-track governance route requiring elevated quorum and reduced latency but with automatic expiration unless ratified in the next full cycle.

Governance modules are upgradeable through proxy contracts and modular registries, allowing Parax to evolve in response to emerging legal, economic, and technical conditions without sacrificing system coherence or introducing centralization vectors.