Misestimating the hot money ratio fails in both directions: overestimation makes the currency more costly to use, and underestimation leaves it insecure, so efficiency and security are in direct tension.
Source quote, verbatim
A currency that overestimates this hot money ratio will cost more to use. A currency that underestimates the ratio will be insecure
From
Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019), 3.1.2.3 Hot Money Ratio, p. 21 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
restated_bykaal:claim:3782216-032 Determining what fraction of a currency is hot money is necessary for efficiently defending its stability: ove...
extended_bykaal:claim:3782216-033 Because the tension between efficiency and security demands a careful estimate of the hot money ratio, a sophi...
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