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