kaal:claim:3782216-015

Because underwriting mints new reputation tokens, passive holders see their proportional ownership in the DAO fall over time, which is designed to incentivize agents to underwrite actively while still allowing passive investors to earn income.

Source quote, verbatim

Thus, the total number of tokens grows over time. This implies that "passive" agents who hold the tokens purely to receive a share of future premia will find their proportional ownership in the DAO decrease over time.

From

Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021), Decentralized architecture
https://ssrn.com/abstract=3782216 · source PDF

Cite as

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

Holds when

Underwriting DAO that rewards underwriting with newly minted tokens

Classification

mechanismsupport: argueddaodefireputationtokenomicsrisk-and-incentives

Related claims

restates kaal:claim:3396542-008 Because newly minted reward tokens go only to agents who stake tokens on policies, passive holders are diluted...
extends kaal:claim:3396542-005 Tokens in the proposed DAO function as reputation because an agent's proportional token holdings will grow ove...

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