In the event of extreme protocol insolvency, staked SLICE is used to cover protocol deficits. For this to materialize, Tranche B returns would be negative for an extended period of time and the community does not agree on a reduction in Tranche A fixed rates. In addition, a "bank-run" would need to occur in which all Tranche A and B holders withdraw their deposits, and the Treasury is completed depleted of all funds to cover these losses.