# kaal:claim:3406323-027

**Claim.** Democratized decentralized underwriting is more secure and stable than centralized underwriting because diversifying lenders and underwriters adds liquidity in all states of the economy and silos losses so that there is less cascading during economic crises.

**Type.** design  **Support.** argued

**Holds when.**

- decentralized underwriting organized through an underwriting DAO

**Source quote.**

> it diversifies lenders and underwriters, which adds liquidity in all states of the economy; 2. this diversity silo losses so there is less cascading during economic crises;

**From.** Wulf A. Kaal, *Decentralization - A Primer on the New Economy* (2019), VI. Evolution, page 14

**Cite as.** Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323

**Verify.** sha256 of source PDF `6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202019%20-%20Decentralization%20-%20A%20Primer%20on%20the%20New%20Economy.pdf

**Topics.** decentralization, defi, systemic-risk, risk-and-incentives

**Keywords.** decentralized-underwriting, systemic-risk, diversification, liquidity, contagion

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