Cryptocurrency-backed tokens must be overcollateralized well beyond 100 percent of current value because the backing basket can fall, which makes them even more expensive than fiat-backed tokens.
Source quote, verbatim
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 - 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
Holds when
backing assets are volatile cryptocurrencies
Classification
conditionsupport: arguedtokenomics
Related claims
restateskaal:claim:3396522-012 Cryptocurrency backed tokens are more expensive than fiat backed tokens because stability is sourced from far ...
restated_bykaal:claim:3782216-030 Cryptocurrency backed stablecoins are even more expensive than fiat backed ones, because stability is being so...
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