kaal:claim:3396522-010

Fiat currency collateralization is expensive and inefficient because the entire backing value must be held liquid; anything less opens arbitrage opportunities of the Soros type.

Fiat currency collateralization is expensive and inefficient because all of the value that is backing the cryptocurrency needs to be liquid, otherwise arbitrage opportunities, such as the Soros attack, are possible.

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

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

• assumes the backing must remain fully liquid to prevent arbitrage

mechanismsupport: arguedfailure: illiquid-collateral-arbitragefamily: liquidity-and-market-structure-failuredeficonsensus-and-securitytokenomics

• restated_by kaal:claim:3402701-002 Fiat currency collateralization is expensive and inefficient because the entire backing value must be held liq...
• restated_by kaal:claim:3782216-029 Maintaining a full reserve is too expensive to be efficient, because every unit of reserve value backing the c...

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