The lifecycle usually runs forum discussion, a temperature check, then a binding on-chain vote with a fixed voting period and a governance-quorum. Passing proposals queue in a timelock before execution.
Proposals move markets directly. Cutting a collateral-factor pushes existing borrowers towards liquidation, changing an emission schedule alters the yield that attracted capital, and adding a new collateral asset changes the protocol's risk profile for everyone in it. Anyone holding a position should read them.
They are also an attack surface. Malicious proposals have disguised treasury drains inside routine-looking parameter changes, and voting power has been rented or borrowed for a single block to force one through. The safest protocols pair long timelocks with a veto path.
Related: dao, governance-quorum, timelock, governance-token