kaal:claim:3396542-008

Because newly minted reward tokens go only to agents who stake tokens on policies, passive holders are diluted over time, which pushes agents toward active underwriting while still permitting passive investment.

Source quote, verbatim

Thus, the total number of tokens grows over time. This implies that "passive" agents who hold the tokens purely to receive a share of future premia will find their proportional ownership in the DAO decrease over time.

From

Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019), II. The Design of the Underwriting DAO, p. 5
https://ssrn.com/abstract=3396542 · source PDF

Cite as

Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542

Holds when

reward tokens minted per policy underwritten

Classification

mechanismsupport: arguedtokenomicsrisk-and-incentivesdao

Related claims

restated_by kaal:claim:3782216-015 Because underwriting mints new reputation tokens, passive holders see their proportional ownership in the DAO ...

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