kaal:claim:3949098-001

Decentralized finance is structurally disadvantaged against traditional finance because decentralized products must be backed with full collateral, typically 100 percent and 200 percent on secondary layers such as MakerDAO, a collateralization burden that would be unthinkable in traditional markets.

Decentralized markets are overcollateralized, giving traditional markets a fundamental advantage. To enable a decentralized financial transaction, such as a loan or insurance policy, decentralized products typically need to be backed with 100% collateral.

Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021), I. Introduction, p. 4
https://ssrn.com/abstract=3949098 · source PDF

Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098

• digital asset markets as of 2021
• decentralized loans, insurance and similar products
• absence of alternatives to collateral

failuresupport: arguedfailure: Overcollateralization Penaltyfamily: liquidity-and-market-structure-failuredecentralizationdefi

• restates kaal:claim:3782216-036 The inability of anonymous participants to trust one another is crippling the DeFi market and forces decentral...

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