# kaal:claim:3782216-013

**Claim.** A decentralized chit fund can let people bootstrap financial security with no initial reserve backing, but only if the reputation system is strong enough to hold defaults to a low percentage.

**Type.** condition  **Support.** argued

**Holds when.**

- requires a sufficiently strong reputation system

**Source quote.**

> With no initial reserve backing, this allows people to bootstrap their way to greater financial security and stability, assuming the reputation system is sufficiently strong to guarantee a low percentage of defaults.

**From.** Craig Calcaterra, Wulf A. Kaal, *Decentralized Finance (DeFi)* (2021), Chit fund example

**Cite as.** Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216

**Verify.** sha256 of source PDF `f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Calcaterra%20and%20Kaal%20-%202021%20-%20Decentralized%20Finance%20%28DeFi%29.pdf

**Topics.** reputation

**Keywords.** chit-funds, bootstrapping, reputation, collateral

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