# Governance Risks

### Centralization and Upgrade Authority

The Zoth Foundation's exclusive authority to upgrade protocol contracts represents a centralization vector that users should understand and assess. While this centralized upgrade capability enables rapid security response and protocol evolution, it also creates trust assumptions regarding Foundation competence and integrity.

The Foundation can theoretically deploy malicious contract upgrades, modify economic parameters, or intervene in vault operations in ways that harm users. These risks are mitigated through multi-signature controls, internal governance processes, and the Foundation's long-term incentive alignment with protocol success. However, users accepting this trust model should recognize that Zoth is not fully trustless in the way that immutable, decentralized protocols are.

### Governance Threshold and Participation

ZOTH token governance requires approval from at least 10% of circulating supply for proposals to take effect. This relatively low threshold enables nimble governance and prevents small minority stakeholders from blocking needed protocol changes. However, it also means that concentrated token holders or coordinated voting blocs could potentially pass proposals that serve narrow interests rather than broad protocol welfare.

Users should monitor governance activity and participate in votes affecting their interests. The protocol publishes governance proposals with sufficient advance notice to allow community review and discussion before votes occur. Active governance participation by diverse stakeholders provides the best protection against governance capture or misaligned decision-making.

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