# kaal:claim:3962614-035

**Claim.** The hybrid smart contracting model is defective because VCs are partially incentivized to fund and stake only the best deals while staking on less optimal deals that the market mostly funds, which undermines their long term reputation accumulation.

**Type.** failure  **Support.** argued

**Holds when.**

- models where VCs can stake reputation without proportionate capital commitment

**Source quote.**

> The problem with this model is that VCs are incentivized partially to fund and stake only on the best deals and stake on the less optimal deals that are mostly funded by the market. This undermines their long-term reputation accumulation

**From.** Wulf A. Kaal, *REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu* (2021), V.3. Hybrid VC Model with Smart Contracting, page 21

**Cite as.** Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614

**Verify.** sha256 of source PDF `c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202021%20-%20REPUTATION%20AS%20CAPITAL%20%E2%80%93%20How%20Decentralized%20Autonomous%20Organizations%20Address%20Shortcomings%20in%20the%20Ventu.pdf

**Failure mode.** Reputation gaming through selective staking  (family: reputation-system-gaming)

**Topics.** ai-and-agents, risk-and-incentives, reputation, regulatory-failure, dao

**Keywords.** incentive-misalignment, reputation-gaming, hybrid-model, dao

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