# kaal:claim:3402701-024

**Claim.** 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.

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

**Source quote.**

> 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, page 21

**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.** hot-money-ratio-misestimation  (family: measurement-and-metric-failure)

**Topics.** consensus-and-security, economics, tokenomics

**Keywords.** hot-money-ratio, efficiency-security-tradeoff, reserves, stablecoin-design

**Related claims.**

- restated_by: https://wulfkaal.github.io/claims/3782216-032
- extended_by: https://wulfkaal.github.io/claims/3782216-033

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