kaal:claim:3396522-011

The minimum price of a fiat backed stable cryptocurrency is the interest rate of the fiat currency it is pegged to, because the collateral must sit liquid rather than earn a return.

Source quote, verbatim

Therefore, the price tag of fiat-backed tokens is, at a minimum, the interest rate of the pegged fiat currency.

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 fully collateralized fiat backed tokens

Classification

mechanismsupport: arguedtokenomics

Related claims

restated_by kaal:claim:3402701-003 The minimum cost of a fiat-backed token equals the interest rate of the pegged fiat currency, because the back...

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