# kaal:claim:3402701-002

**Claim.** Fiat currency collateralization is expensive and inefficient because the entire backing value must be held liquid; anything less opens arbitrage attacks of the kind Soros used against the Bank of England.

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

**Holds when.**

- fiat-backed pegs claiming full collateralization

**Source quote.**

> 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

**From.** Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, *Stable Cryptocurrencies - First Order Principles* (2019), 1 INTRODUCTION, page 6

**Cite as.** Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701

**Verify.** sha256 of source PDF `72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Calcaterra%20et%20al.%20-%202019%20-%20Stable%20Cryptocurrencies%20-%20First%20Order%20Principles.pdf

**Failure mode.** soros-style-peg-arbitrage  (family: valuation-and-pricing-failure)

**Topics.** defi, consensus-and-security

**Keywords.** fiat-collateralization, arbitrage, liquidity, soros-attack

**Related claims.**

- restates: https://wulfkaal.github.io/claims/3396522-010
- extends: https://wulfkaal.github.io/claims/3396522-009

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