# kaal:claim:3782205-033

**Claim.** Every type of economic action becomes more efficient when decisions are hedged, because hedging lets participants confidently change investments and keeps the market liquid, and lending and insurance therefore require someone to underwrite the risk.

**Type.** mechanism  **Support.** argued

**Source quote.**

> Every type of economic action is made more efficient when decisions are hedged, so we can confidently change our investments, keeping the market liquid. Lending and insurance are essential catalysts for business, that require someone to underwrite the risk.

**From.** Craig Calcaterra, Wulf A. Kaal, *Eight Institutions for the Evolution of Decentralization* (2021), Chapter 9. Eight institutions, page 4

**Cite as.** Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205

**Verify.** sha256 of source PDF `5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Calcaterra%20and%20Kaal%20-%202021%20-%20Eight%20Institutions%20for%20the%20Evolution%20of%20Decentralization.pdf

**Topics.** defi

**Keywords.** underwriting, hedging, liquidity, lending, insurance

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