kaal:claim:3396522-009

A fiat backed stable cryptocurrency that is not fully collateralized is exposed to arbitrage trade attacks of the kind George Soros used against the pound sterling; full collateralization is therefore a necessary defense.

Source quote, verbatim

Without a 100% fiat collateralization, such projects would run the risk of arbitrage trade attacks similar to what Financier George Soros used to "break the bank of England

From

Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019), IV. Stable Cryptocurrencies, p. 24
https://ssrn.com/abstract=3396522 · source PDF

Cite as

Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522

Holds when

applies to stable cryptocurrencies claiming a fiat peg

Classification

conditionsupport: arguedfailure: under-collateralization-arbitrage-attackfamily: valuation-and-pricing-failureconsensus-and-securitytokenomics

Related claims

restated_by kaal:claim:3782216-028 The lesson of the Soros attack is that when a cryptocurrency is pegged above its true market value, the differ...
extended_by kaal:claim:3402701-002 Fiat currency collateralization is expensive and inefficient because the entire backing value must be held liq...

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