# kaal:claim:3396522-012

**Claim.** Cryptocurrency backed tokens are more expensive than fiat backed tokens because stability is sourced from far more volatile assets, so such tokens must be backed by substantially more than 100 percent of the collateral's current value to survive a drop in the collateral basket.

**Type.** mechanism  **Support.** argued

**Holds when.**

- holds while the backing cryptocurrencies remain more volatile than fiat

**Source quote.**

> Any cryptocurrency-backed token must be backed with much more than 100% of the current value of the cryptocurrency in case the basket of other crypto currencies' value drops.

**From.** Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, *Stable Cryptocurrencies* (2019), IV. Stable Cryptocurrencies, page 25

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

**Verify.** sha256 of source PDF `ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Calcaterra%20et%20al.%20-%202019%20-%20Stable%20Cryptocurrencies.pdf

**Failure mode.** collateral-value-collapse  (family: valuation-and-pricing-failure)

**Topics.** tokenomics

**Keywords.** over-collateralization, makerdao, crypto-collateral, volatility, stablecoins

**Related claims.**

- restated_by: https://wulfkaal.github.io/claims/3402701-004
- restated_by: https://wulfkaal.github.io/claims/3782216-030

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.