Kaal claims by topic: institutional-design, page 2

879 atomic, individually citable claims from the published work of Wulf A. Kaal tagged institutional-design.

The collective action problem of rulemaking, the problems of trial and error rulemaking, and regulatory cycles all derive largely from the nature of stable and presumptively optimal rules rather than from independent causes. 2016
Adaptive rulemaking reduces the collective action problem because with fewer stable rules, latent majority groups and dominant minority groups have fewer opportunities to influence a continuously and timely adapting rulemaking process. 2016
Dynamic regulatory tools let rulemakers adapt to regulatory contingencies as they arise, because feedback effects deliver relevant, timely, decentralized, and institution specific information ex ante. 2016
Regulation is mostly reactive and follows business cycles rather than preempting crises, because of the collective action problem of regulation, path dependencies, and political inertia, so rules arrive when governance improvements are least available. 2016
Private rulemakers hold a comparative advantage over public rulemakers because, unlike their public counterparts, they can produce the comparable, decentralized, and institution specific information that rulemaking requires. 2016
The existing framework for optimal rules is self reinforcing: it perpetuates rulemaking processes that produce more optimal rules requiring costly revision, updating, and revocation, so suboptimal rules and suboptimal processes reproduce each other. 2016
First time managers are disproportionately affected by the new fee environment: unlike in the recent past they are now often forced to share the business budget, such as rent and employee salaries, in order to justify a 1.5% management fee. 2017
Early limited partnership investors increasingly use their leverage to negotiate tough fee terms with first time managers. 2017
Market evidence of pressure on the fee structure includes investor withdrawals of $70.1 billion from the private investment fund industry in 2016 and 1,057 fund closures in 2016, exceeding the 1,023 liquidations in 2009 and approaching the record 1,471 closures in 2008. 2017
The new fee structure also results from fund managers foregoing market rate management fees, larger investors requiring reduced management fees as a condition of investing, and side-by-side co-investment vehicles charging less than 2% management fees. 2017
Traditional per transaction fee models failed because settlement and calculation created a prohibitive amount of work that made such operations very difficult to execute; blockchain technology overcomes all of these restrictions. 2017
Manual per transaction fee calculation and settlement is prone to human error, and these errors are removed through the use of blockchain technology. 2017
Running a private fund adviser portfolio on the blockchain costs only protocol determined core usage fees, modular commissions set by module developers amounting to a fraction of a cent or a fraction of trade volume per usage, and Ethereum infrastructure costs. 2017
Digital ownership interests in private investment funds may fall outside the commodity definition because crypto limited partnership interests cannot be uniform across producers, unlike Bitcoin whose uniformity underlies the CFTC's commodity classification. 2017
The IRS position that virtual currency is taxed as property is expressly limited to convertible virtual currency, which leaves the tax treatment of crypto limited partnership interests unaddressed. 2017
The market for private investment funds that invest in and utilize blockchain technology is close to equally divided between the United States and the European Union, with Russia and China playing significant roles. 2017
The size distribution of blockchain using funds differs sharply across regions: in the United States most such funds hold between one and fifty million dollars in AUM, while in Europe funds with more than two hundred million dollars in AUM are the majority. 2017
Because of societal perceptions of minorities, minority groups face an uphill battle navigating the political environment of corporate America, which in turn significantly affects their positioning and success there. 2017
Minorities can overcome the promotion gap in corporate America if their superiors see them as value enhancers, and promoted minorities tend to share characteristics such as risk-taking, overconfidence, team play, and a perceived capacity to manage other non-whites. 2017
Promotion to high level executive positions turns on subjectively assessed skillsets such as leadership, personality, judgment, attitude and initiative, and these facially objective criteria can be distorted with relative ease. 2017
Diversity programs fail when managers are defined as the source of the problem and succeed when they engage managers in finding solutions, as with task forces and targeted recruiting. 2017
The clone syndrome, meaning companies' desire to hire people similar to the existing workforce, causes minority underrepresentation and makes it difficult for minorities and women to break into jobs predominantly held by white men. 2017
People who work for a DAO are free from existing corporate hierarchies and their possible discriminatory effects because they are not subject to a supervisor, boss, or CEO. 2017
Unlike traditional hierarchical organizations where face-time and unproductive meetings are the norm, the self-governing DAO token optimizer avoids corporate hierarchy inefficiencies and the bad outcomes that come from top-down direction. 2017
Contingent capital securities are a largely overlooked dynamic regulatory mechanism, and their regulatory value lies in their capacity to generate feedback effects, optimized timing, and improved information for regulation. 2017
Supplementing the existing regulatory infrastructure with dynamic elements can reduce suboptimal regulatory outcomes, because dynamic regulation as a supplement addresses the shortcomings of the existing rulemaking framework and curtails increased demands on the institutional infrastructure. 2017
Feedback effects, defined as informational exchange processes between public and private rulemakers, between outcomes and institutions, between rules and rulemaking processes, and across jurisdictions, are a central tenet of the theory of dynamic regulation. 2017
Feedback effects change the timing of regulatory information: instead of acquiring necessary information only after rules have already proven suboptimal, they increase the availability of relevant information ex ante and support anticipation of necessary revisions. 2017
Anticipatory regulation, which uses institution-specific and timely information together with feedback effects to create new rules, can minimize costly and suboptimal ex-post trial-and-error experimentation with stable and presumptively optimal rules. 2017
Deferred prosecution agreements and venture capital investment decisions function as dynamic regulatory tools because they increase the availability of relevant, decentralized, and timely information for rulemaking and facilitate feedback effects. 2017
Contingent capital qualifies as a dynamic regulatory mechanism because capital injection is available only if and when needed and because the conversion of contingent capital securities into near worthless equity signals impending regulatory issues to regulators, which creates feedback effects. 2017
Contingent capital creates feedback effects because the conversion of debt to equity signals to regulators that the entity's management was unable to avoid the trigger, which is itself a call for increased regulatory scrutiny. 2017
Most of the design features of contingent capital securities and their triggering events remain underdeveloped, yet despite these shortcomings such securities could still help regulators anticipate regulatory needs in real time through feedback effects and improved information. 2017
Associated with the lack of an existing product is the inability of most crypto platforms to generate revenue to offset costs the way traditional businesses do, since they typically have neither employees who create and advertise a product nor customers who generate revenue. 2017
The Gnosis ICO shows how a reverse dutch auction can mitigate the inefficiencies and risks of a capped sale: the offering was capped at $12.5 million and the time needed to complete the sale determined the quantity of tokens distributed to investors, with the rest held by the start-up team. 2017
Through continuous evolution and improvement of ICO practices, the ICO industry and the underlying crypto businesses can become the foundation of the emerging crypto economy. 2017
The curriculum of American law schools has changed only marginally over the past thirty plus years, even as the practice environment has been transformed. 2017
Legal Tech startups will force the legal profession to innovate perpetually, a demand that overextended and cumbersome legal organizations which have lost the capacity for agile reinvention cannot easily meet. 2017
Investor suitability standards requiring independent verification of an investor's ability to evaluate complex financial products and investment risk would make wealth redundant as a proxy for sophistication in determining investor eligibility. 2017
Rules become adaptable when institutions and rulemaking processes integrate feedback effects, including feedback between industry and regulators, that generate timely, relevant, and decentralized information before rules are finalized. 2017
The existing regulatory infrastructure cannot sufficiently distinguish beneficial innovation from other innovation, and therefore cannot harness it. 2017
There is a systematic disconnect between the facts regulators identify as important and the actual experience and wishes of most consumers. 2017
The post truth diagnosis is self defeating as a basis for regulation: if there is no objective basis on which to act, the conclusion is inertia or reproduction of the status quo, which is precisely the regulatory paralysis the diagnosis purports to describe. 2017
Using investment data would let regulators act proactively, avoid wasting resources on technologies unlikely to reach the market, and define the scope of a technology more accurately by focusing on the type of firm attracting investor attention. 2017
Data on the timing of investment is a reliable indicator of a technology's commercial maturity, because high levels of investor activity signal that the technology is about to be ready for commercial exploitation, which tells regulators when to intervene. 2017
A principle based approach gives regulators greater openness and flexibility and prevents innovative technologies and the companies developing them from becoming bogged down in the regulatory thicket produced by a rule focused approach. 2017
The regulatory sandbox provides a safe space in which innovative products and services can be tested without being forced to comply with the otherwise applicable set of rules and regulations. 2017
The most interesting feature of the sandbox is that ideas, products, and services are tested in a live environment, made possible by a set of default parameters the FCA defined that can be altered case by case. 2017
A shareholder agreement authorized under MBCA Section 7.32 ceases to be effective once the corporation's stock is listed on a national securities exchange or regularly traded in a dealer maintained market, so the going public event terminates the arrangement. 2017
MBCA Section 7.32 requires unanimity, so agreements that bind only a block of shareholders rather than all of them cannot rely on that section and must find authorization elsewhere. 2017
The Model Act conditions the arrangement on notice to the market for shares by requiring a legend on the stock certificates that flags the agreement to purchasers of covered shares. 2017
Under the MBCA a purchaser of shares who bought without knowledge of an existing shareholder control agreement may obtain rescission of the purchase. 2017
Transfer restrictions cannot be imposed on shareholders who did not consent: Delaware refuses to allow them unless the holders are parties to the agreement or voted for the restriction, and courts have refused to apply restrictions retroactively to nonconsenting shares. 2017
Drag-along rights raise the price the majority can obtain because a buyer facing the prospect of continuing with remaining minority shareholders would otherwise discount its offer for the majority stake. 2017
Drag-along rights are likely enforceable in Delaware absent fraud or duress, because Delaware rejects the de facto merger doctrine and therefore does not trigger statutory formalities such as appraisal rights. 2017
Standstill agreements defraud shareholders who are not parties to them in two distinct ways: by violating the shareholder's right to the best available merger or transaction and by discouraging unsolicited tender offers in which a significant control premium could be realized. 2017
Standstill agreements entrench management and can lead a company into stagnation, so they may operate prejudicially on shareholders' property rights. 2017
Because shareholder agreements are designed to displace corporate formalities such as majority rule, it is reasonable to require that the intended degree of deviation be set out explicitly in the agreement. 2017
Damages are usually an inadequate remedy for breach of a shareholder agreement because they are too speculative, even where the aggrieved shareholder holds a direct cause of action. 2017
Much corporate governance reform consists of repackaging old content under new or revised labels rather than introducing new governance. 2017
Traditional coordination through hierarchy, command, and control is suboptimal for generating the innovation a firm needs to survive. 2017
Inclusive and unmediated stakeholder relationships demand a much higher degree of cooperation, loyalty, and mutual trust than control-oriented, centralized, and vertical organizational forms do. 2017
Even after recent reforms, the corporate governance framework remains framed in terms of hierarchy, which is why it fits poorly with looser and unmediated stakeholder relationships. 2017
Centralized, hierarchical environments do not value honesty and reward good news only, so nobody wants to carry bad news upward, and problems are therefore detected late. 2017
Unmediated corporate communications generate real-time feedback for executives, because social media platforms return instant crowd reactions in the form of comments, likes, and shares that can be measured and acted on. 2017
The platform's ability to function among anonymous and potentially hostile users is conditional: it holds only if smart contracts that engage experts for off-platform work voluntarily include the recommended protocol choices, which the minimal core itself does not require. 2018
The tragedy of the commons arises in any system lacking a well designed incentive structure; in blockchain proof of stake design this is the nothing at stake problem, where unregulated systems lead pseudonymous users to abuse the system. 2018
Tyranny of the majority is countered by a time delay in announcing upvote results, so that experts cannot see the majority position before they commit their own stake. 2018
If tokens minted for each post carry equal weight, then uncontroversial comments are not rewarded at all, because a universally upvoted improvement leaves no contrarian reputation staked and lost for the poster to win. 2018
Because micro tasks require human judgment that machines cannot currently replace, they let organizations build products and outcomes that machines alone could not synthesize. 2018
Human shortcomings in micro task work such as limited attention span, irrationality, and inaccuracy create a need for verification, but manual verification fails as a remedy because the verifiers are subject to the same human limitations. 2018
A key design goal is a minimal and robust architecture, because minimality is what permits later construction of more complex automated validation logic and machine expert validators. 2018
The payment design allows secure off chain payments without gas consumption, with settlement transferred onto the Ethereum blockchain at a later date, which the author claims is superior to the payment channel approach used by decentralized competitors. 2018
Gamification is stipulated as the process of adding games or game like elements, such as a micro task, in order to encourage active worker participation, boost motivation, and increase user loyalty. 2018
Building interface modules as reusable open source components lets future requesters build new modules on existing ones, which generates network effects within the platform. 2018
Centralized platforms cannot simply drop identity verification, because they need it to keep malicious actors from abusing the network and to ensure work quality; this is the tradeoff a staking based design is meant to dissolve. 2018
Few governments have prohibited financial investors from investing in ICOs, a greater number have suggested not taking part, and many have issued warnings without any recommendation to citizens either way. 2018
If a digital token security falls outside Monetary Authority of Singapore regulation, no duty of fair dealing applies to it. 2018
Israel taxes cryptocurrency as property: profits are subject to capital gains tax at rates between twenty and twenty-five percent, and individuals mining or trading cryptocurrencies in connection with businesses must also pay a seventeen percent value-added tax. 2018
Poland's Ministry of Finance interpretation states that selling or exchanging cryptocurrency for traditional currency, or exchanging one cryptocurrency for another, could create a VAT tax obligation. 2018
The National Bank of Serbia holds that financial institutions may not participate in ICOs or other cryptocurrency investments because cryptocurrencies are not legal tender. 2018
World governments largely either apply existing laws to cryptocurrencies or wait to see how other countries react to the crypto evolution. 2018
The deep architecture of a digital world regulates behavior in many ways, and those regulatory effects cannot be seen or understood unless one examines the nature of the underlying code and how it operates. 2018
The most important consequence of legal startups is that the legal profession will be forced to innovate in perpetuity, a task that overextended and cumbersome legal organizations which have lost the capacity for rapid re-invention cannot easily accomplish. 2018
Many new innovation driven firms that replaced hierarchy with a best-idea-wins culture have struggled to maintain that governance model and to fulfill their initial promise. 2018
DAOs will eventually overtake any organization that lacks their incentives and efficiencies, and because DAOs are cheap and straightforward to clone this will potentially lead to more competition. 2018
Adding more regulations, processes and procedures cannot restore confidence in institutions, because the traditional trust and cohesion mechanisms have already reached their limits. 2018
Producing a bad block is punished by slashing, since the producer loses the availability stakes they posted to be considered in the random selection of block producers. 2018
Identity verification does not fix the sockpuppet problem, because whenever the reputation is genuinely valuable a sockpuppet operator can afford to clear whatever verification hoops are in place, including stealing biometric data, and then inflate reputation as before. 2018
In the weighted directed acyclic graph precedent system, more reputation weight and salary flow to forum posts that other posts continuously reference, and as a precedent dissipates over time new precedent emerges naturally to replace the older one. 2018
The combined efficiencies of the DAO model suggest that DAO businesses could overcome collective action problems and outcompete existing internet based businesses such as Uber. 2018
A successful proof of stake protocol must be flexible enough to continually police new attack strategies, because changing market forces and network performance keep creating new opportunities to profit at the expense of the majority. 2018
A secure proof of stake protocol requires an incentive structure that perpetually motivates users to do three things at once: produce valuable blocks, police blocks that violate protocol, and improve the production protocols in response to gaming. Incentivizing only block production is insufficient. 2018
Staking tokens with the potential for slashing is necessary to avoid the tragedy of the commons in a validation pool. Voting without something at risk does not produce honest evaluation of contributions. 2018
If a blockchain cannot restart or regenerate autonomously after going offline or losing most active nodes, it needs social coordination between nodes; that requirement threatens anonymity and forces reliance on famous nodes. 2018
SPoS makes stake grinding impossible by deriving the pseudo random seed from a hash of the alphabetized join of the symmetric keys all validators submit during vote revealing; the protocol holds even if only a single validator is not colluding. 2018
In a distributed system, which cannot achieve constant perfect communication between nodes, it is never possible to determine with certainty that a block producer was censoring particular transactions rather than simply being unaware of them. 2018
A healthy expertise will have near unanimous consensus on every evidence of work validation pool, and that very unanimity creates an impediment to development, because honest members risk their stakes by voting for untested changes. 2018
Because producer selection falls back to the seed from the last block whose validation pool concluded, any network outage shorter than the history of the blockchain will not permanently disrupt chain production, and block production continues even if the network loses all but one node. 2018
A 67% active validator requirement would improve finality but is excluded from the initial SPoS implementation because, by the CAP theorem, it limits the availability of the system and arbitrarily punishes randomly selected producers when the network is partitioned. 2018
Centralized, hierarchical organizations are defined by three features: a centralized source of authority, a closed formal hierarchy with functionally differentiated roles, and standardized bureaucratic procedures dictated and policed by that hierarchy. 2018
Earlier technological revolutions produced greater organizational centralization, because societies responded to the uncertain meaning, effects, and risks of new technology by pooling authority; the current digital transformation reverses this pattern. 2018
Centralized, hierarchical organizations fail on two fronts in a fast changing environment: they adapt too slowly to changing reality and they are losing public trust. 2018
A disconnect is emerging between traditional regulatory models and the actual form of contemporary business organizations, so understanding the new organizational forms is a precondition for developing regulatory models suited to a digital age. 2018
A platform creates value not by producing goods itself but by facilitating exchanges between two distinct but interdependent groups, and it then captures profit for its owner-shareholders from the interactions it mediates. 2018
Platform businesses grow through a self-reinforcing loop: registered users and consumers add content that attracts further creators and consumers, which is why platforms benefit enormously from network effects. 2018
What distinguishes a platform style organization is not its technology but its internal organization: it uses stakeholder input and feedback to continuously improve user experience and engagement with its products and services. 2018
Against the view that blockchain is merely hype, the authors argue that the widespread proliferation of blockchain initiatives, and in particular the fact that so many old world organizations are exploring blockchain and smart contract uses, indicates that adoption is near a tipping point. 2018
A particular problem with old world centralized, hierarchical organizations is that their decision-making processes become slow, cumbersome and costly, which is a competitive problem for incumbents in a fast-paced consumer-driven economy. 2018
The design premise of the DAO was that because people do not always follow rules even when the rules are well designed, it is better to use computer code to manage an organization. 2018
Firms that embed new technology into every aspect of their organization and governance build an open, unmediated, tech-driven culture that gives them a competitive advantage in attracting talent, raising capital, finding partners and remaining relevant in hyper-competitive global markets. 2018
Decentralized systems become more attack resistant and grow quickly because their information flow is optimized through dynamic feedback effects, which lets them mutate and change very easily. 2019
DAOs can be more productive than hierarchical organizations because their information allocation and feedback effects allow them to distribute the optimal amount of power to the optimal talent at the optimal point in time. 2019
Feedback effects in decentralized systems raise the availability of relevant information for governance rules ex ante and allow necessary revisions to be anticipated before rules emerge as suboptimal, rather than acquiring that information ex post. 2019
Ex post code based majoritarian rules generated by DAOs are superior to ex ante majoritarian default rules because they rest on more accurate real time information from the edge and decentralized feedback effects, and are not subject to the same information asymmetries. 2019
DAO incentives are intrinsic rather than extrinsic: the core common denominator for all DAO token members is the unifying desire to optimize the DAO structure and reputation token value, whereas hierarchical organizations rely predominantly on extrinsic structures such as wages. 2019
The net and compress model used by post trade service providers exists because not every trade must be processed; on some estimates, processing every trade would require an additional 2.9 million orders per day. 2019
Vermont's prudent approach is well founded on its own analysis: the state concluded that at present the costs and challenges of using blockchain for public recordkeeping outweigh the identifiable benefits, while the first mover advantage remains difficult to quantify. 2019
Development of blockchain based processes will take several years if not decades, so the most likely outcome is that legacy and blockchain based issuance, trading, and settlement systems coexist side by side for the foreseeable future. 2019
Government-sponsored organizational experimentation that enables new business models and new organizational structures is desirable and may be one of the few ways to facilitate the needed corporate governance reform. 2019
The continued popularity of existing corporate governance mechanisms may be a product of path dependencies created by the historical evolution of internal and external monitoring mechanisms, rather than of their effectiveness. 2019
Smart contracts enabled by blockchain technology allow comprehensive, near error free, and zero transaction and agency cost coordination of agency relationships. 2019
Because the DAO structure functions without supervisors, token holders who conclude they cannot add value on a task can move to more productive endeavors without incurring the penalties that would exist in a traditional hierarchical corporate structure. 2019
Blockchain-based corporate governance solutions in DAOs require evolutionary blockchain governance protocols, and socially optimal hard-forking rules cannot suffice. 2019
The basis of coded blockchain guarantees will itself evolve and require protocol upgrades, and without evolutionary governance upgrades the cost reduction achieved for the agency relationship cannot be maintained. 2019
Decentralized systems lack a central intelligence or leadership hierarchy; instead intelligence is distributed through the system and information enters at the edges, closer to where action occurs and where real time information is generated. 2019
Because information flow in decentralized systems is optimized through dynamic feedback effects, such systems mutate and change easily, which makes them more attack resistant and allows them to grow very quickly. 2019
Decentralized Autonomous Organizations challenge the core belief that governance necessitates agency, because a DAO can operate a governance structure built entirely on software, code, and smart contracts. 2019
Transacting in cash costs United States consumers roughly 200 billion dollars annually, about 637 dollars per person, driven by counting, managing, storing, transporting, guarding, and accounting for bank notes. 2019
The poor and those with less access to institutions bear a disproportionate share of the costs of using cash. 2019
Mass adoption of decentralized protocols will remain out of reach so long as users must discern and manage public and private keys to wallets, because user access and usability fall short of mass adoption needs. 2019
Legacy insurers will not underwrite smart contracts that sit outside the traditional legal framework, and even if they eventually enter the DApp market their actuarial risk assessment methods may be only partially compatible with rapidly evolving decentralized products. 2019
Decentralization is not merely the redistribution of centrally organized authority or revenue, nor the delegation of centralized authority to managers at all organizational levels; the author stipulates these negative boundaries to separate decentralization from centralized reform. 2019
Decentralized systems mutate and change easily because their information flow is optimized through dynamic feedback effects, and this capacity to mutate is what makes them more attack resistant on multiple levels. 2019
The five types of decentralization, governmental and regulatory, technological, organizational, market, and societal, are not independent: as one type proliferates it progressively affects the others through feedback effects, producing compounding change. 2019
General Electric's decentralization under Jack Welch worked because each business unit was made fully accountable through its own profit and loss statement and market price internal transactions, which removed inefficiencies and drove up market value. 2019
Decentralized Autonomous Organizations challenge the core belief that governance necessitates agency, attacking organizational design at a fundamental level rather than merely reforming it. 2019
Without intuitive consumer access points comparable to iTunes, decentralized systems cannot reach mainstream consumer adoption, because users currently must manage their own security, keys, and wallets. 2019
Smart contracts are evolving quickly, and that evolution will allow most business logic to be encoded in smart contracts over time. 2019
Trust barometers such as the Edelman report show a radical depreciation of trust in centralized institutions between 2017 and 2018. 2019
Centralized capitalist institutions have been built entirely around centralized and hierarchical reputation systems, which is why replacing them requires a decentralized reputation substitute. 2019
The margin m is stipulated as the premium per dollar in excess of the probability of a claim occurring at some point in the policy's life, and this margin is the quantity that must exceed a derived threshold for the design to hold. 2019
Raising the margin is the available remedy for an insolvency shock, but it is not a clean fix because the effect of a higher margin on future demand must itself be considered. 2019
The complex trading, investing and corporate structures of active international hedge funds are a major constraint on effective prudential supervision. 2019
A well established stable cryptocurrency and a universal exchange form a positive feedback loop: the exchange's liquidity is enhanced by the stable cryptocurrency, and the stable currency's stability and adoption are enhanced by the exchange. 2019
Because hardcoded cryptocurrency policy is transparent and therefore predictable, market participants can anticipate policy and adjust behavior in advance, and such anticipatory reactions could over time make actual policy making the exception rather than the rule. 2019
The quantity theory calculations behind minting and burning hold only in the ideal case; in practice the success of a stabilization scheme depends on how the money is actually printed, distributed or burned. 2019
A Basis-style bond scheme succeeds only while demand for the currency grows at a sufficient rate; the authors' simulations show it fails when demand is stagnant at equilibrium. 2019
Because bonds sell below their redemption value, an open-ended bond queue grows without bound, depressing bond prices and creating a positive feedback loop that ends in a death spiral and failure of the peg. 2019
Reserves, not bonds, are the necessary mechanism for currency instability caused by hot money, that is money frequently moved between institutions or currencies to maximize gain. 2019
Selling currency into a reserve when price is above the peg and buying it back with the reserve when price is below the peg yields an arbitrage profit, so a reserve can fund its own defense of the peg. 2019
The reserve argument depends on two requirements, and failing either one grounds a criticism of an existing protocol: the stable-value requirement criticizes MakerDAO and the maintenance-cost requirement criticizes the Reserve protocol. 2019
Contesting the common assumption that a 100 percent reserve is required to guarantee a peg, the authors argue full reserves are not always necessary for any currency that has intrinsic worth. 2019
In the contemporary climate these taxes and fees are unlikely to be implemented appropriately, because internet culture has trained users to expect free service from nodes and to hide the costs of running them. 2019
For any long-lived currency, a major shift in perceived value is eventually inevitable, and such a shift is not covered by reserves defending against hot money or by bonds defending against temporary economic instability. 2019
Centralized coordination of behavior for the common good risks undermining individual effort, whereas blockchain technology's autonomous and anonymous decentralized coordination of individual action can deliver common good outcomes without suppressing individualism and its welfare enhancing effects. 2020
The centuries long tension between socialist and capitalist principles for organizing society has itself undermined societal goals for the betterment of humanity, because society forms power structures and political hierarchies that serve the competing ideologies. 2020
Decentralism, unlike capitalism and socialism, does not resolve who owns assets but rather calls the concept of ownership itself into question and reorients the question toward the largest possible utility of assets for humankind. 2020
Decentralism generates efficiency through higher levels of connectivity rather than through the linear cost cutting and economies of scale that capitalism and socialism debate. 2020
Decentralism produces greater equality not through markets or governmental redistribution but through preserving diversity of content, diversity of data sources, and enhanced node connectivity. 2020
Redistribution in decentralism is grounded in ownership rights in each person's individuality derived data that creates economic value, rather than in taxation or market determined income. 2020
Because decentralism pursues growth through connectivity and network effects rather than per unit cost reduction and economies of scale, negative externalities are minimized without any centralized planning. 2020
Trust created by law is often limited because it is only indirectly democratically legitimized, inflexible, untimely, resistant to change, dependent on fallible human centric decision processes, and constrained to human speed. 2020
Microdemocracies must confront the tragedy of the commons, because voters acting on self-interest independent of the totality of voters may, without controls, deplete or spoil shared resources such as the environment and public goods. 2020
Majority rule in a microdemocracy can produce discrimination, because a majority that is itself unaffected by a rule it enacts can impose a disproportionate burden on the minority the rule does affect. 2020
Representative democracies in the early 2020s were slow and inflexible because of their constitutional and institutional infrastructure and their legal systems, with change typically depending on the election of a new government after around four years at the earliest. 2020
Developing and third world countries, unlike developed countries, will likely be enabled by blockchain technology to leapfrog several stages of development that legacy systems would otherwise require. 2020
Blockchain based land title records can serve as collateral for credit or as identity verification, removing a requirement that is often challenging and prohibitive for accessing both financial and non-financial services. 2020
Because most people have health records held by multiple uncoordinated organizations, blockchain enabled secure shared access to those records can significantly lower fraud in healthcare payments, address coverage gaps, and eliminate misinformation provided to healthcare providers. 2020
Coordinating large numbers of decentralized energy resources from a central point of control is slow, inefficient, and resource intensive, a vulnerability demonstrated by the 2001 U.S. Western Energy Crisis and the 2003 Northeast Blackout. 2020
Government departments operate without sufficient integration with one another, and that separation produces an inability to share information across agencies, which creates red tape and delay and degrades the delivery of government services. 2020
The longevity of a DAO depends on its ability to maintain the fluidity and decentralized order that existed in the DAO's initial stages. 2020
Absent continual effort to maintain decentralized order, the very values that initially unite DAO members tend to produce ever tighter and more complex hierarchical structures inside the DAO, ending in a fully centralized tree structure. 2020
Equity funding and token funding are substitutes: because equity investment in a blockchain startup makes issuing a digital currency both less likely and less necessary as a funding source, a market shift back toward equity funding should shrink the total volume of digital currencies issued. 2020
The funding sources for digital asset and blockchain startups cycled through four stages since 2016 and 2017: equity funding, then initial coin offerings, then equity offerings, then initial exchange offerings, and back to equity funding by the early 2020s. 2020
Initial exchange offerings emerged as a market response to the near disappearance of the ICO market in January 2019, driven by the cryptocurrency exchanges that were most affected by the collapse. 2020
Regulatory uncertainty is curtailing the growth of the digital asset industry because investor classes across the spectrum, from retail investors to the largest institutions, are hesitant to participate while the legal treatment of digital assets remains unclear. 2020
Institutional investors face a distinct barrier beyond volatility: fiduciary responsibility to their clients limits the type of risk they may take on, and the lack of custody solutions recognized by regulators compounds the problem. 2020
Immature markets such as the market for digital assets in 2020 often cannot attract the institutional investors and venture capitalists who have sufficient operating experience in that market, which is a self reinforcing constraint on market development. 2020
Cyber security incidents contribute to the volatility of the digital asset market through a specific channel: consumers instantaneously withdraw their assets from an exchange affected by an incident. 2020
Although the public realm of coins could not exist without prior private experimentation, it is possible that the public realm will impact or even pre empt private coin development, for example if central banks attempt to censor the use of digital currencies they did not issue. 2020
Decentralized governance must be dynamic and evolutionary, otherwise the system becomes centralized and brittle over time; most DAOs fail to accomplish this. 2021
Working with suboptimal layer 1 blockchain solutions that carry high gas fees and low throughput delays the evolution of DAO infrastructure design, because innovation is inhibited by those layer 1 features. 2021
Effective institutional governance requires a duality of incentives, namely incentives for actors to improve their own utility while their actions simultaneously benefit the whole institution over the long run, in order to defeat rational and opportunistic attempts to game the design. 2021
Without continual effort to maintain decentralized order, the values that initially unite DAO members tend to produce ever tighter and more complex hierarchical structures inside the DAO. 2021
Precedent in the DAO of DAOs is replaced dynamically: if a newer template is referenced more often it becomes the prevailing precedent, while the old precedent dissipates over time through non use. 2021
The opportunity loss from having reputation slashed grows as the network grows, because a larger network means more competition for the reputation tokens that determine fungible salary shares. 2021
In the DAO of DAOs, algorithms can exclude cheating members from market access, so punishment becomes automated and therefore credible, and free riding in policing is at least partially eliminated by automation. 2021
Strict letter of the law regimes, which the authors call protocol centralization, produce rigid and temporarily efficient hierarchies, but that same rigidity generates instability and eventual collapse. 2021
It is impossible to set up formal rules that keep a group behaving cooperatively in the long run, even if those rules are policed perfectly; the spirit of the law matters more than the letter of the law. 2021
Reputation policing games explain why a business will rationally tolerate a small level of theft when policing costs more than the loss, which also explains the rationality of long-term parasitic and bullying relationships and creates a need for careful protocol design to prevent that corruption. 2021
Any set of rules that can be designed will need amendment as the environment changes, and a network that relies eternally on a static rule set will inevitably become corrupt or irrelevant. 2021
Since no algorithm can be perfectly secure in all circumstances, protocol developers should redirect effort from proving algorithms correct to building a governance process that updates the algorithm as network circumstances change, rewarding protocol improvement with meaningful reputation instead of leaving attack as the profitable option. 2021
The deterrent power of reputation tokens grows with network size, because the loss of opportunity from having reputation slashed increases as the network gets larger. 2021
Social media platform owners do not know and cannot choose which content will matter; the answers are held in the behavior of the network of users, and the companies merely monitor network transactions and analyze them statistically with automated algorithms. 2021
The social media coordination function remains largely flawed and corruptible because the incentive design underlying social proof is suboptimal. 2021
Social networks grow exponentially more powerful through the network effect, but they are stifled by the centralized ownership and governance of the Web 2.0 companies that run them; governing decentralized information flow requires decentralized incentive designs. 2021
The incentive design in which originators of TCP requests pay the bill failed to solve web hosting costs, because the Tragedy of the Commons asserted itself and porn and pirated file sharing, sometimes set up by the ISPs themselves to game the payment design, consumed available bandwidth. 2021
Per connection pricing by ISPs penalized success: creators whose pages became popular faced charges scaling with traffic, and individuals with popular pages were forced to delete their content. 2021
A truly decentralized organization requires that its rules be transparently available to all members; otherwise the keepers of the knowledge acquire higher status and a hierarchy forms. 2021