The minimum cost of a fiat-backed token equals the interest rate of the pegged fiat currency, because the backing capital must sit idle and liquid.
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 - First Order Principles (2019), 1 INTRODUCTION, p. 6 https://ssrn.com/abstract=3402701 · source PDF
Cite as
Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701
Classification
mechanismsupport: arguedtokenomics
Related claims
restateskaal:claim:3396522-011 The minimum price of a fiat backed stable cryptocurrency is the interest rate of the fiat currency it is pegge...
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