# kaal:claim:3402701-020

**Claim.** The reserve argument depends on two requirements, and failing either one grounds a criticism of an existing protocol: the stable-value requirement criticizes MakerDAO and the maintenance-cost requirement criticizes the Reserve protocol.

**Type.** failure  **Support.** argued

**Holds when.**

- reserve held in a volatile asset
- reserve maintenance cost exceeds arbitrage profit

**Source quote.**

> The first requirement leads to a criticism of the MakerDAO protocol (e.g.), the second requirement leads to a criticism of the Reserve protocol (e.g

**From.** Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, *Stable Cryptocurrencies - First Order Principles* (2019), 3.1.2.2 Reserves, page 20

**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.** unstable-or-costly-reserve  (family: valuation-and-pricing-failure)

**Topics.** institutional-design

**Keywords.** reserves, makerdao, reserve-protocol, peg-defense

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