{
 "name": "Kaal Corpus Claim Layer",
 "description": "Atomic, individually citable claims extracted from the published works of Wulf A. Kaal, each bound to a verbatim source quote and a content hashed source PDF.",
 "author": "Wulf A. Kaal",
 "orcid": "0000-0003-0757-275X",
 "canonical_index": "https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=460345",
 "count": 5033,
 "works_covered": 124,
 "failure_mode_count": 2037,
 "typed_edges": 2169,
 "edge_relations": [
  "restates",
  "extends",
  "supersedes",
  "specializes",
  "supports",
  "contests"
 ],
 "html_view": "https://wulfkaal.github.io/claims/<id>.html",
 "bulk": "https://wulfkaal.github.io/claims/all.jsonl",
 "verification": "Every supporting quote is checked against its source PDF after normalization: whitespace collapsed, typographic punctuation folded to ASCII, ligatures expanded. Wording and word order are unchanged, but quotes are NOT byte-identical to raw pdftotext output, so apply the same normalization to both sides before comparing. An independent audit of all 5,033 claims against the 124 local source PDFs located 4,862 (96.6%). Every source PDF hash matched. 171 quotes were not located, of which 37 belong to a scanned work with no text layer that no text method can verify.",
 "attestation_service": "https://wulfkaal.github.io/colloquium/",
 "license_note": "Read, index, quote, and cite with attribution to the canonical URL.",
 "claims": [
  {
   "id": "kaal:claim:617681-001",
   "url": "https://wulfkaal.github.io/claims/617681-001",
   "claim": "Bundling substantive corporate law together with adjudication, the arrangement that succeeded in Delaware, is likely to cause difficulties in Europe; Member States are most likely to succeed in post Centros and Inspire Art regulatory competition if they unbundle the corporate law product.",
   "type": "design",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "EU Member States competing for corporate charters after Centros and Inspire Art",
    "short term and possibly longer"
   ],
   "supporting_quote": "This bundling of statutory law and adjudication might, however, cause difficulties in Europe. We suggest that Member States are most likely to succeed in the regulatory competition following Centros and Inspire Art if they unbundle the corporate law product"
  },
  {
   "id": "kaal:claim:617681-002",
   "url": "https://wulfkaal.github.io/claims/617681-002",
   "claim": "Under the seat theory, competition with respect to corporate law alone is impractical, because a corporation cannot choose a state's corporate law without also locating its principal place of business there and thereby submitting to that jurisdiction's other laws.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions applying the seat theory"
   ],
   "supporting_quote": "this context is impractical, because a corporation cannot choose the corporate law of a state without locating its principal place of business there and thus becoming subject to that jurisdiction's other laws."
  },
  {
   "id": "kaal:claim:617681-003",
   "url": "https://wulfkaal.github.io/claims/617681-003",
   "claim": "The Societas Europaea has drawn a less than enthusiastic initial reaction, plausibly because its rules are the product of years of negotiation and political compromise rather than a response to market forces.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "the SE as of 2004, shortly before it entered into force"
   ],
   "supporting_quote": "It has yet to be seen whether managers and investors view the SE as a viable alternative, but initial reaction has been less than enthusiastic, perhaps because the rules governing an SE are the product of years of negotiation and political compromise rather than a response to market forces."
  },
  {
   "id": "kaal:claim:617681-004",
   "url": "https://wulfkaal.github.io/claims/617681-004",
   "claim": "Even if the ECJ has embraced the incorporation theory, Member States can still frustrate Type B regulatory competition through tax law, capital market law, listing requirements and other mechanisms, so the seat theory may retain de facto dominance.",
   "type": "predictive",
   "topics": [
    "economics",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "Member States willing to use adjacent bodies of law to deter reincorporation"
   ],
   "supporting_quote": "tax law,16 capital market law17 and listing requirements18 or other mechanisms to frustrate Type B regulatory competition after ECJ's rulings in Centros and Inspire Art, the seat theory may continue its de facto dominance."
  },
  {
   "id": "kaal:claim:617681-005",
   "url": "https://wulfkaal.github.io/claims/617681-005",
   "claim": "The authors propose that private ordering can design an adjudication system for European corporate law better than public ordering by Member States that are marketing their corporate laws to managers and investors abroad.",
   "type": "design",
   "topics": [
    "risk-and-incentives",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "Member States exporting corporate law beyond their borders"
   ],
   "supporting_quote": "We rather propose that private ordering can better design an adjudication system than can public ordering by Member States marketing their corporate laws to managers and investors outside their borders."
  },
  {
   "id": "kaal:claim:617681-006",
   "url": "https://wulfkaal.github.io/claims/617681-006",
   "claim": "Rule switching costs for a jurisdiction are probably higher when it must make substantial new demands on its courts in addition to changing its statutes, which raises the cost of competing with a bundled corporate law product.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions considering changing corporate law rules to attract charters"
   ],
   "supporting_quote": "Most important to the analysis in this paper, these rule switching costs are probably higher if the jurisdiction has to make substantial new demands on its courts as well as make changes to its statutes."
  },
  {
   "id": "kaal:claim:617681-007",
   "url": "https://wulfkaal.github.io/claims/617681-007",
   "claim": "Mobility costs for a corporation are probably higher when changing the jurisdiction of incorporation means changing not only the applicable corporate law but also the courts that will apply it.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "supporting_quote": "Finally, mobility costs are probably higher if changing jurisdictions of incorporation means changing not just the applicable corporate law, but also the courts that will apply that law."
  },
  {
   "id": "kaal:claim:617681-008",
   "url": "https://wulfkaal.github.io/claims/617681-008",
   "claim": "Regulatory competition for a bundled product of statutes plus courts is only a realistic possibility if relatively high supply side hurdles can be overcome to induce states to enter the market for corporate law.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "markets for a bundled corporate law product"
   ],
   "supporting_quote": "In sum, regulatory competition for a bundled product is only a realistic possibility if relatively high supply side hurdles can be overcome to induce states to enter the market for corporate law."
  },
  {
   "id": "kaal:claim:617681-009",
   "url": "https://wulfkaal.github.io/claims/617681-009",
   "claim": "A jurisdiction supplying corporate law as an unbundled statutory product faces low fixed costs, principally statute drafting, and near zero marginal costs, because additional users impose no new adjudication costs and registration costs are insignificant.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "statutes offered without adjudication by the state of incorporation"
   ],
   "supporting_quote": "Fixed investment would be principally in drafting statutes. Each additional user of the jurisdiction's corporate law would not impose new adjudication costs, and the cost of registering additional corporate charters are relatively insignificant."
  },
  {
   "id": "kaal:claim:617681-010",
   "url": "https://wulfkaal.github.io/claims/617681-010",
   "claim": "For an unbundled product of statutes only, the key to successful regulatory competition shifts from the supply side to the demand side: drafting statutes that appeal to large numbers of managers and investors outside the jurisdiction.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "unbundled statutory product"
   ],
   "supporting_quote": "For this unbundled product of statutes only, the key to successful competition would be the demand side: drafting statutes that appeal to large numbers of managers and investors outside the jurisdiction so they will incorporate there."
  },
  {
   "id": "kaal:claim:617681-011",
   "url": "https://wulfkaal.github.io/claims/617681-011",
   "claim": "The quality problems in Delaware adjudication mean it is not a foregone conclusion that the bundled product of statutes plus specialized courts leads to optimal results.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. corporate law and Delaware in particular"
   ],
   "supporting_quote": "These questions about the quality of Delaware adjudication suggest that it is not a foregone conclusion that the bundled product leads to optimal results."
  },
  {
   "id": "kaal:claim:617681-012",
   "url": "https://wulfkaal.github.io/claims/617681-012",
   "claim": "Delaware itself acknowledges the utility of unbundling statutes from adjudication, though not in its corporate law: its LLC statute specifically allows members or managers to agree in writing to arbitration of claims under the LLC agreement.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "evidenced",
   "scope_conditions": [
    "Delaware limited liability companies, not Delaware corporations"
   ],
   "supporting_quote": "Delaware itself acknowledges the utility of unbundling statutes from adjudication, although not in its corporate law. In its LLC statute, Delaware specifically allows members or managers to agree in the LLC agreement, or in another writing, for arbitration of claims under the agreement."
  },
  {
   "id": "kaal:claim:617681-013",
   "url": "https://wulfkaal.github.io/claims/617681-013",
   "claim": "To the extent adjudication over U.K. corporate law is expected to take place outside the U.K., the U.K. has not in fact exported a bundled product; its users are demonstrating a preference for an unbundled package.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "small closely held enterprises incorporating in the U.K. after Inspire Art"
   ],
   "supporting_quote": "To the extent adjudication over U.K. corporate law is expected to be carried out somewhere other than the U.K. the U.K. has not exported a bundled product at all."
  },
  {
   "id": "kaal:claim:617681-014",
   "url": "https://wulfkaal.github.io/claims/617681-014",
   "claim": "Conducting judicial proceedings through interpreters is cumbersome and confusing and creates a perceived bias in favor of litigants and lawyers fluent in the language of the proceedings, which is a barrier to exporting adjudication.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "Member States whose courts do not conduct proceedings in English"
   ],
   "supporting_quote": "Conducting judicial proceedings through interpreters, however, is cumbersome and confusing, and also creates a perceived bias in favor of litigants and lawyers who are fluent in the language of the proceedings."
  },
  {
   "id": "kaal:claim:617681-015",
   "url": "https://wulfkaal.github.io/claims/617681-015",
   "claim": "Member States unwilling to incur the rule switching costs of conducting judicial proceedings in English could be precluded from marketing their corporate charters in other Member States that do not share their language.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "English being the only language widely understood throughout the EU"
   ],
   "supporting_quote": "Member States unwilling to incur the rule switching costs involved with using English in judicial proceedings could be precluded from marketing their corporate charters in other Member States that do not speak the same language."
  },
  {
   "id": "kaal:claim:617681-016",
   "url": "https://wulfkaal.github.io/claims/617681-016",
   "claim": "The weak link in a bundled package offered by a civil law Member State is likely to be its system of adjudication rather than its statute.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "civil law Member States marketing corporate law to investors used to common law systems"
   ],
   "supporting_quote": "The weak link in the bundled package offered by a civil law jurisdiction is thus likely to be its system of adjudication rather its statute."
  },
  {
   "id": "kaal:claim:617681-017",
   "url": "https://wulfkaal.github.io/claims/617681-017",
   "claim": "Defects in a civil law jurisdiction's corporate statute, such as inadequate minority shareholder protection, are more easily fixed than defects in a judiciary that fails to apply the statute predictably and uniformly.",
   "type": "mechanism",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "civil law jurisdictions"
   ],
   "supporting_quote": "Problems with a civil law jurisdiction's underlying statute – for example if it gives inadequate protection for minority shareholders – are also more easily fixed than problems with a judiciary that fails to apply the statute in a predictable and uniform manner."
  },
  {
   "id": "kaal:claim:617681-018",
   "url": "https://wulfkaal.github.io/claims/617681-018",
   "claim": "Because the English common law system is gravitating toward a civil law approach that weights statutes more heavily than judicial interpretation, the value of a bundled package of statutes plus adjudication even in a European common law jurisdiction may not greatly exceed the value of the statutes standing alone.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "European common law jurisdictions, in contrast with Delaware"
   ],
   "supporting_quote": "The value of the \"bundled package\" of statutory law and adjudication provided by the state of incorporation even in a common law jurisdiction thus may not greatly exceed the value of the statutory law standing alone."
  },
  {
   "id": "kaal:claim:617681-019",
   "url": "https://wulfkaal.github.io/claims/617681-019",
   "claim": "European lawyers may advise clients to incorporate at home simply because those lawyers do not want to deal with the courts and lawyers of another Member State, which suppresses cross border incorporation independently of statute quality.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "European legal education and practice, where procedural differences across Member States are large"
   ],
   "supporting_quote": "European lawyers thus may advise clients to incorporate at home simply because these lawyers do not want to deal with the courts and lawyers of another Member State."
  },
  {
   "id": "kaal:claim:617681-020",
   "url": "https://wulfkaal.github.io/claims/617681-020",
   "claim": "No Member State currently has courts specializing in corporate law comparable to the Delaware Court of Chancery, and establishing such courts or upgrading existing ones would be expensive for most Member States, with high marginal costs as usage grows.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "Member States considering exporting adjudication along with statutes"
   ],
   "supporting_quote": "No Member State currently has courts that specialize in corporate law as does the Delaware Court of Chancery. Establishing such specialized courts, or raising the level of expertise of existing courts, would be expensive for most Member States"
  },
  {
   "id": "kaal:claim:617681-021",
   "url": "https://wulfkaal.github.io/claims/617681-021",
   "claim": "The two sources that finance Delaware's bundled package, franchise taxes and legal fees for local counsel, might not be as lucrative for a European Member State, so the expensive package of statutes plus adjudication may have no viable funding model.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "European Member States with tax systems built around taxing operations within their borders"
   ],
   "supporting_quote": "Two of the most often mentioned sources for financing Delaware's bundled package in the United States, franchise taxes and legal fees for Delaware counsel, unfortunately might not be as lucrative for a European Member State."
  },
  {
   "id": "kaal:claim:617681-022",
   "url": "https://wulfkaal.github.io/claims/617681-022",
   "claim": "With an unbundled product more Member States might participate in regulatory competition over corporate law, which would speed up the learning process and likely result in better substantive corporate law.",
   "type": "predictive",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "New Institutional Economics framework in which experimentation drives learning"
   ],
   "supporting_quote": "With the unbundled product, more member states thus might participate in regulatory competition over corporate law, which would speed up the learning process76 and likely result in better substantive corporate law."
  },
  {
   "id": "kaal:claim:617681-023",
   "url": "https://wulfkaal.github.io/claims/617681-023",
   "claim": "Fear of judicial bias operates through risk premiums: because investors and managers are uncertain how foreign judges will behave and may assume the worst, they price a decision to incorporate in another Member State higher.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "bounded rationality and incomplete information about foreign judges"
   ],
   "supporting_quote": "Risk premiums charged by actors often reflect both bounded rationality and incomplete information, and managers and investors thus may put a higher price on a decision to incorporate in another Member State."
  },
  {
   "id": "kaal:claim:617681-024",
   "url": "https://wulfkaal.github.io/claims/617681-024",
   "claim": "If statutes are unbundled from adjudication the judicial bias problem largely disappears, because statutes are at least facially neutral and discriminatory statutes would violate the EU treaty.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "EU law, under which discriminatory national provisions violate freedom of establishment"
   ],
   "supporting_quote": "If on the other hand, statutes are unbundled from adjudication, this problem largely disappears because statutes are at least facially neutral"
  },
  {
   "id": "kaal:claim:617681-025",
   "url": "https://wulfkaal.github.io/claims/617681-025",
   "claim": "Conflict of laws problems become more complex and pose a much greater threat to the entire system of regulatory competition once a jurisdiction markets its corporate law as a separate product under Type B competition.",
   "type": "failure",
   "topics": [
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "Type B regulatory competition under the incorporation theory"
   ],
   "supporting_quote": "Conflict of laws problems, however, become more complex, and are a much greater threat to the entire system of regulatory competition, once a jurisdiction markets its corporate law as a separate product in Type B regulatory competition."
  },
  {
   "id": "kaal:claim:617681-026",
   "url": "https://wulfkaal.github.io/claims/617681-026",
   "claim": "The success of Europe's experiment with Type B regulatory competition will turn largely on whether there is a clear understanding of what is corporate law and what is not.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "boundaries between corporate law, capital market law, labor law and creditor protection law"
   ],
   "supporting_quote": "The answer to such questions, and perhaps the success of Europe's experiment with Type B regulatory competition, will turn largely on whether there is a clear understanding of what is corporate law and what is not."
  },
  {
   "id": "kaal:claim:617681-027",
   "url": "https://wulfkaal.github.io/claims/617681-027",
   "claim": "Member States can avoid at least part of the result in Centros and Inspire Art by recharacterizing what used to be corporate law as creditor protection law, provided the recharacterized rule does not discriminate against foreign corporations.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "non discriminatory national measures"
   ],
   "supporting_quote": "this answer suggests that Member States can avoid at least part of the result in Centros and Inspire Art by recharacterizing what used to be corporate law as creditor protection law."
  },
  {
   "id": "kaal:claim:617681-028",
   "url": "https://wulfkaal.github.io/claims/617681-028",
   "claim": "To the extent judges are biased toward expansively interpreting the reach of their own Member State's corporate law, corporations may unexpectedly be bound by rules of the state of incorporation on subject matter they believed lay outside corporate law.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "adjudication by courts of the Member State of incorporation"
   ],
   "supporting_quote": "To the extent judges are biased in favour of expansively interpreting the reach of their own Member State's corporate law, corporations might unexpectedly be bound by the Member State of incorporation's rules governing subject matter such as takeover defenses,"
  },
  {
   "id": "kaal:claim:617681-029",
   "url": "https://wulfkaal.github.io/claims/617681-029",
   "claim": "A single body of arbitrators affiliated through an association is better positioned than the courts of separate Member States to develop a systematic and consistent approach to the conflict of laws problems unique to the incorporation theory.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "early stages of Type B regulatory competition in Europe"
   ],
   "supporting_quote": "A single body of arbitrators, affiliated through an association, is theoretically at least in a better position to develop a more systematic and consistent approach to conflict of laws problems unique to the incorporation theory."
  },
  {
   "id": "kaal:claim:617681-030",
   "url": "https://wulfkaal.github.io/claims/617681-030",
   "claim": "For cross border enforcement the critical question is not whether a judgment will be enforced in another Member State but when: eventual enforcement is insufficient if a party has time to remove assets, and delayed injunctions can be worthless.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "EU Member States that generally do enforce each other's judgments"
   ],
   "supporting_quote": "In many instances, the critical question is not whether a judgment will be enforced in another Member State, but when. \"Eventually\" is an insufficient answer if damages cannot be collected because a party has time to remove assets elsewhere."
  },
  {
   "id": "kaal:claim:617681-031",
   "url": "https://wulfkaal.github.io/claims/617681-031",
   "claim": "Because the judiciary in many European jurisdictions is a specialized career entered shortly after university and without significant private practice experience, European judges lack the practice background that facilitates learning to adjudicate complex corporate disputes.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "most EU Member States other than the United States model of lateral judicial appointment"
   ],
   "supporting_quote": "the judiciary is a specialized career that one enters shortly after university training and without significant experience in private practice. Lack of practice experience does not facilitate learning how to adjudicate disputes arising out of complex corporate transactions."
  },
  {
   "id": "kaal:claim:617681-032",
   "url": "https://wulfkaal.github.io/claims/617681-032",
   "claim": "Error correction is weak for Member State corporate law adjudication: national legislatures are unlikely to intervene unless judicial error affects domestic interests, so managers and investors would rather face slow learning judges in their home country.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "EU level intervention being slow and therefore a weak deterrent"
   ],
   "supporting_quote": "National legislatures could intervene and change corporate law, but unless judicial error affects domestic interests, legislatures are unlikely to do so. Managers and investors thus would probably prefer to confront slow learning judges in their home country."
  },
  {
   "id": "kaal:claim:617681-033",
   "url": "https://wulfkaal.github.io/claims/617681-033",
   "claim": "Forum unbundling is the arrangement in which the incorporation jurisdiction's statutes and interpretive case law are unbundled only from the adjudication services of its courts, so corporations may choose a different adjudicator in their charters.",
   "type": "definitional",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "asserted",
   "supporting_quote": "The second alternative is \"forum unbundling\" in which the incorporation jurisdiction's statutes and interpretive caselaw are unbundled from the adjudication services of its courts. Corporations may in their charters choose an adjudicator other than the courts of the state of incorporation."
  },
  {
   "id": "kaal:claim:617681-034",
   "url": "https://wulfkaal.github.io/claims/617681-034",
   "claim": "None of the Delaware based solutions, whether importing bundled or unbundled Delaware law, is likely to be viable for Europe.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "the four options canvassed: Delaware charters, partial copying, wholesale statutory copying, and copying statutes plus case law"
   ],
   "supporting_quote": "For all of the above mentioned reasons, it is likely that none of the \"Delaware based\" solutions, whether involving bundled or unbundled Delaware law, is viable for Europe."
  },
  {
   "id": "kaal:claim:617681-035",
   "url": "https://wulfkaal.github.io/claims/617681-035",
   "claim": "Choosing another Member State's courts as the forum can silently strip substantive rights: if the forum state treats an unavailable remedy such as money damages as procedural and refuses to hear the claim, the charter has opted out of substantive law of the state of incorporation that ordinarily could not be waived.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "Member States such as Germany that limit or deny money damages in internal affairs disputes"
   ],
   "supporting_quote": "If so, the corporate charter, by selecting Member State B as a forum opts out of an important part of the substantive corporate law of Member State A, even if Member State A ordinarily does not allow corporate charters to opt out of suits for money damages."
  },
  {
   "id": "kaal:claim:617681-036",
   "url": "https://wulfkaal.github.io/claims/617681-036",
   "claim": "Member States should provide in their corporate statutes an arbitration enabling provision allowing corporate charters to mandate arbitration of internal affairs disputes instead of adjudication in national courts.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "Member States wishing to offer an unbundled corporate law product"
   ],
   "supporting_quote": "Member States could specifically provide in their statutes an \"arbitration enabling provision\" allowing corporate charters to mandate arbitration of disputes over the internal affairs of the corporation instead of adjudication in national courts."
  },
  {
   "id": "kaal:claim:617681-037",
   "url": "https://wulfkaal.github.io/claims/617681-037",
   "claim": "Compensating arbitrators by the number of cases they hear gives litigants a substantial role in shaping the system but may yield decisions so eager to please all parties that they lack decisiveness, sound reasoning and value as precedent.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "conventional arbitration in which litigants select and pay arbitrators"
   ],
   "supporting_quote": "This approach gives litigants a substantial role in shaping the arbitration system, but may result in decisions that are so eager to please all parties that they lack decisiveness or sound legal reasoning and thus lack value as precedent."
  },
  {
   "id": "kaal:claim:617681-038",
   "url": "https://wulfkaal.github.io/claims/617681-038",
   "claim": "Arbitration of corporate governance disputes has not emerged in the United States because arbitration is at best the next best alternative to Delaware, and a second place finish does not justify the investment needed to design a workable arbitration framework.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "United States, where Delaware's adjudication system commands high confidence"
   ],
   "supporting_quote": "Arbitration of corporate law disputes may be the next best alternative to Delaware, but a second place finish in regulatory competition probably does not justify the investment needed to design an arbitration framework that overcomes many of Coffee's specific objections."
  },
  {
   "id": "kaal:claim:617681-039",
   "url": "https://wulfkaal.github.io/claims/617681-039",
   "claim": "Europe has no equivalent of Delaware with which arbitration would have to compete, since incorporation theory is only beginning to take hold and no Member State has established a commanding lead in marketing its corporate law abroad.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "Europe shortly after Centros and Inspire Art"
   ],
   "supporting_quote": "Europe, however, has no equivalent of Delaware with which arbitration would have to compete. Incorporation theory is just beginning to take hold on the Continent and no Member State has yet established a commanding lead in marketing its corporate law outside its borders."
  },
  {
   "id": "kaal:claim:617681-040",
   "url": "https://wulfkaal.github.io/claims/617681-040",
   "claim": "One objection to arbitration of corporate governance disputes holds in Europe as in the United States: arbitration as ordinarily used yields little relevant precedent.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "arbitration as it is used in most commercial contexts"
   ],
   "supporting_quote": "Coffee has one objection to arbitration of corporate governance disputes that is as persuasive in Europe as in the United States. Arbitration, as it is used in most contexts, yields little relevant precedent."
  },
  {
   "id": "kaal:claim:617681-041",
   "url": "https://wulfkaal.github.io/claims/617681-041",
   "claim": "Expert judges in national courts who cannot understand the arguments of lawyers before them or read documents written in another language may not be experts at all, so the American model of state appointed expert corporate judges does not transfer to multilingual Europe.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "Europe, in contrast with the single language United States"
   ],
   "supporting_quote": "but in Europe \"expert\" judges in national courts who cannot understand the arguments of lawyers before them or who cannot read underlying documents written in another language may not be experts at all."
  },
  {
   "id": "kaal:claim:617681-042",
   "url": "https://wulfkaal.github.io/claims/617681-042",
   "claim": "Unless the Member State of incorporation specifically provides in its corporate statute that arbitration is permissible when allowed in the charter or a shareholders agreement, investors run the risk that courts refuse to enforce the arbitration provision.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "argued",
   "scope_conditions": [
    "closely held corporations may rely on a shareholders agreement instead of the charter"
   ],
   "supporting_quote": "specifically provide in its corporate statute that arbitration is permissible if allowed in either the corporate charter or (for a closely held corporation) in a shareholders' agreement. Otherwise, investors run the risk that courts refuse to enforce the arbitration provision."
  },
  {
   "id": "kaal:claim:617681-043",
   "url": "https://wulfkaal.github.io/claims/617681-043",
   "claim": "Empirically, at least 48 companies with German names carrying the GmbH designation were formed as private limited companies under U.K. law in the ten months after the Inspire Art decision, indicating that charter migration accelerated after the ruling.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681",
   "year": "2004",
   "source_sha256": "e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834",
   "confidence": "evidenced",
   "scope_conditions": [
    "some of these companies may also do business in the U.K. or be affiliated with a German GmbH"
   ],
   "supporting_quote": "In the ten months after the Inspire Art decision, at least 48 such companies with German names and the designation GmbH in their names were formed as private limited companies under U.K. law."
  },
  {
   "id": "kaal:claim:1428387-001",
   "url": "https://wulfkaal.github.io/claims/1428387-001",
   "claim": "A uniform approach to hedge fund valuation is not possible because the variety of hedge fund investments and strategies means some positions, such as non-concentrated positions in liquid securities, are far easier to value than others.",
   "type": "condition",
   "topics": [
    "private-funds",
    "economics",
    "research-methods",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "applies across the range of hedge fund investment strategies"
   ],
   "supporting_quote": "The variety of hedge fund investments and strategies does not allow for a uniform approach to valuation because some types of investments, such as non-concentrated positions in liquid securities, are easier to value than other investments. To the extent that recent"
  },
  {
   "id": "kaal:claim:1428387-002",
   "url": "https://wulfkaal.github.io/claims/1428387-002",
   "claim": "Broker quotes are an unreliable fallback for valuation: they can be hard to obtain and can vary by 20 to 30 percent for instruments such as mortgage-backed securities, which makes accurate valuation of those securities difficult.",
   "type": "failure",
   "topics": [
    "securities-law",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "asserted",
   "scope_conditions": [
    "where recent transaction prices and marketable bids and offers are not readily available"
   ],
   "supporting_quote": "In addition, broker quotes may be difficult to obtain and can be quite unreliable—mortgage-backed securities, for example, can sometimes vary by 20 to 30 percent—making accurate valuation of these securities difficult."
  },
  {
   "id": "kaal:claim:1428387-003",
   "url": "https://wulfkaal.github.io/claims/1428387-003",
   "claim": "Existing international proposals and guidelines on hedge fund valuation fail because they do not adequately distinguish between retail and qualified investors, and as of 2009 no legislature has issued an exhaustive set of rules addressing the factors that cause inaccurate valuation.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "as of the time of writing, 2009"
   ],
   "supporting_quote": "They also do not adequately distinguish between retail investors and qualified investors.11 So far, no legislature has issued an exhaustive set of rules to address the factors that lead to inaccurate valuation."
  },
  {
   "id": "kaal:claim:1428387-004",
   "url": "https://wulfkaal.github.io/claims/1428387-004",
   "claim": "Valuation is very likely to become the next major issue for the hedge fund industry, because most jurisdictions lack regulatory oversight of valuation and the industry generally lacks self-discipline and internal controls.",
   "type": "predictive",
   "topics": [
    "private-funds",
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "absent regulatory oversight",
    "absent industry self-discipline and internal controls"
   ],
   "supporting_quote": "With the lack of regulatory oversight in most jurisdictions, as well as the general lack of self- discipline and internal controls, valuation is very likely to become the next major issue for the hedge fund industry.13"
  },
  {
   "id": "kaal:claim:1428387-005",
   "url": "https://wulfkaal.github.io/claims/1428387-005",
   "claim": "When hedge funds adopt private equity strategies by adding private companies to their portfolios, they exacerbate valuation problems, and the convergence of the two asset classes makes it more difficult to accurately assess the value of each.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "where hedge funds hold private, non-traded portfolio companies"
   ],
   "supporting_quote": "If hedge funds engage in private equity strategies, i.e. adding private companies to their portfolio, they may exacerbate the valuation issues. The convergence of hedge funds and private-equity funds makes it more difficult to accurately assess the value of each asset class."
  },
  {
   "id": "kaal:claim:1428387-006",
   "url": "https://wulfkaal.github.io/claims/1428387-006",
   "claim": "Because realization events for private equity investments occur infrequently, hedge fund managers have an incentive to avoid side pockets and to use estimated valuations for those investments instead.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "where the hedge fund holds private equity style investments",
    "where performance fees cannot be charged on side-pocketed assets"
   ],
   "supporting_quote": "The infrequency of realization events of private equity investments creates incentives for hedge fund managers to avoid side pockets and instead use estimates for the valuation of private equity investments."
  },
  {
   "id": "kaal:claim:1428387-007",
   "url": "https://wulfkaal.github.io/claims/1428387-007",
   "claim": "The hedge fund fee structure creates very strong financial incentives for managers to hide weak performance through valuation.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "where fees run up to 30 percent of profits and one to three percent of assets under management",
    "where high water marks apply"
   ],
   "supporting_quote": "The fee structure of hedge funds creates very strong financial incentives to hide weak performance by way of valuation. Hedge"
  },
  {
   "id": "kaal:claim:1428387-008",
   "url": "https://wulfkaal.github.io/claims/1428387-008",
   "claim": "Because structured debt instruments and over-the-counter derivatives used by hedge funds can be highly complex, the hedge fund manager may be the only person competent to assess their value.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "for highly complex structured debt and OTC derivatives"
   ],
   "supporting_quote": "As structured debt instruments and over-the-counter derivatives used by hedge funds can be highly complex, the hedge fund manager may be the only person who is in a position to competently assess the value. This unique competency is particularly"
  },
  {
   "id": "kaal:claim:1428387-009",
   "url": "https://wulfkaal.github.io/claims/1428387-009",
   "claim": "Because net asset value drives subscriptions, redemptions, performance calculations, advertising, and fees, managers who both manage and value the portfolio have both an incentive and the ability to inappropriately over-value their portfolios.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "where the manager performs or controls valuation",
    "where NAV is the basis for fees and performance figures"
   ],
   "supporting_quote": "Given the conflicting responsibilities, managers have an incentive and the ability to inappropriately over-value their portfolios.27"
  },
  {
   "id": "kaal:claim:1428387-010",
   "url": "https://wulfkaal.github.io/claims/1428387-010",
   "claim": "Independent administrators and valuation committees do not solve the independence problem for startup funds, because a majority of hedge funds in their startup phase try to keep overheads down and so may have independence problems precisely when independence is most crucial.",
   "type": "failure",
   "topics": [
    "innovation",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "hedge funds in their startup phase"
   ],
   "supporting_quote": "Even if independent administrators and valuation committees are used, it is important to note that a majority of hedge funds in their startup phase try to keep overheads down. Thus, they may have problems with independence in a phase when independence would be crucial."
  },
  {
   "id": "kaal:claim:1428387-011",
   "url": "https://wulfkaal.github.io/claims/1428387-011",
   "claim": "Outsourcing valuation to an independent administrator can be nominal rather than real: the administrator may lack the understanding of complex securities products needed to value the positions, so the manager remains in charge of valuation even though the function has formally been externalized.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "where positions involve complex securities products",
    "where the administrator is paid by the hedge fund manager"
   ],
   "supporting_quote": "The administrator may not have the understanding of complex securities products required to appropriately value the positions, and the manager may remain the person in charge of valuation even though formally that position has"
  },
  {
   "id": "kaal:claim:1428387-012",
   "url": "https://wulfkaal.github.io/claims/1428387-012",
   "claim": "There is an adverse selection problem in independent valuation: an administrator who actually had the knowledge and understanding of complex instruments required for the task would probably be incentivized to use that expertise in a more profitable setting instead.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "for administrators valuing highly complex instruments"
   ],
   "supporting_quote": "Had the administrator the required knowledge and understanding of the complexities, he or she would probably be incentivized to use that experience and understanding in a more profitable setting."
  },
  {
   "id": "kaal:claim:1428387-013",
   "url": "https://wulfkaal.github.io/claims/1428387-013",
   "claim": "Valuing thinly traded assets with exchange quotes is unsound because the price for less frequently traded assets may not indicate fair market value at the time of valuation, yet nearly a quarter of surveyed funds relied exclusively on such quotes.",
   "type": "failure",
   "topics": [
    "defi",
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "evidenced",
   "scope_conditions": [
    "thinly traded or infrequently traded assets"
   ],
   "supporting_quote": "Using exchange quotes is problematic if applied to thinly traded assets, as the price for less frequently traded assets may not be indicative of fair market value at the time of valuation,46 and nearly a quarter of survey participants relied exclusively on these quotes to value assets."
  },
  {
   "id": "kaal:claim:1428387-014",
   "url": "https://wulfkaal.github.io/claims/1428387-014",
   "claim": "Because new hedge fund managers concentrate on highly complex and profitable instruments where pricing and valuation problems are most prevalent, it becomes very difficult for managers to guarantee investors standard or accurate pricing procedures.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "for newly launched funds run by managers leaving large institutions"
   ],
   "supporting_quote": "Most of these new managers focus their attention on highly complex and profitable instruments where pricing and valuation issues are most prevalent. This trend can make it very difficult for hedge fund managers to guarantee their investors standard or accurate pricing procedures."
  },
  {
   "id": "kaal:claim:1428387-015",
   "url": "https://wulfkaal.github.io/claims/1428387-015",
   "claim": "Post-1998 hedge fund regulatory proposals were misdirected because LTCM was unique among its peers in leverage, position size, and market-making ability, so the proposals mostly addressed LTCM as a single case rather than the range of issues affecting all hedge funds.",
   "type": "failure",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "regulatory proposals issued in the aftermath of the LTCM near-collapse"
   ],
   "supporting_quote": "Because LTCM was so unique among its peers due to its leverage, the size of its positions and its market making abilities, regulatory proposals mostly addressed LCTM as a single case119 rather than the range of issues pertaining to all hedge funds."
  },
  {
   "id": "kaal:claim:1428387-016",
   "url": "https://wulfkaal.github.io/claims/1428387-016",
   "claim": "The regulatory proposals that appeared soon after LTCM did not adequately take valuation problems into account.",
   "type": "failure",
   "topics": [
    "economics",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "asserted",
   "scope_conditions": [
    "regulatory proposals issued shortly after the LTCM collapse"
   ],
   "supporting_quote": "The regulatory proposals appearing soon after LTCM did not adequately take valuation problems into account."
  },
  {
   "id": "kaal:claim:1428387-017",
   "url": "https://wulfkaal.github.io/claims/1428387-017",
   "claim": "Although regulators and legislatures in many jurisdictions recognize that hedge fund issues affect retail investors, they have so far not addressed valuation and its interplay with retail investors.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "as of 2009, across the surveyed jurisdictions"
   ],
   "supporting_quote": "So far, however, regulators and legislatures have not addressed the issue of valuation and its interplay with retail investors. The"
  },
  {
   "id": "kaal:claim:1428387-018",
   "url": "https://wulfkaal.github.io/claims/1428387-018",
   "claim": "State de minimis investment adviser registration exemptions can be an attractive alternative to federal law for hedge fund managers, especially in a fund's start-up phase, because state registration would require an ADV filing and significant transaction costs the manager wants to avoid.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "start-up phase of a hedge fund",
    "where investors reside in states with de minimis exemptions"
   ],
   "supporting_quote": "Accordingly, certain state de minimis investment adviser registration exemptions for investors could be an attractive alternative to federal laws for hedge fund manager, especially in the start-up phase of a hedge fund."
  },
  {
   "id": "kaal:claim:1428387-019",
   "url": "https://wulfkaal.github.io/claims/1428387-019",
   "claim": "State Blue Sky investment adviser registration exemptions are not by themselves sufficient to explain retailization or to justify the absence of data on it; they only indicate theoretically how previously unqualified investors could gain access to hedge funds.",
   "type": "failure",
   "topics": [
    "securities-law",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "as an explanatory account of the retailization phenomenon"
   ],
   "supporting_quote": "Investment adviser registration exemptions under state Blue Sky laws would probably not suffice to explain the phenomenon of retailization or justify any data insufficiencies."
  },
  {
   "id": "kaal:claim:1428387-020",
   "url": "https://wulfkaal.github.io/claims/1428387-020",
   "claim": "The Commodity Exchange Act family and friends exemption allows a qualifying manager to trade options and futures for fifteen individuals who need not be sophisticated or qualified investors, which circumvents accredited investor standards and admits retail investors into hedge funds.",
   "type": "mechanism",
   "topics": [
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "where the fund manager qualifies for the families and friends CTA registration exemption"
   ],
   "supporting_quote": "\"families and friends\" program, he or she will be able to trade options and futures for 15 individuals who will not have to qualify as sophisticated or qualified investors. This helps to circumvent accredited investor standards and allow retail investors into hedge funds."
  },
  {
   "id": "kaal:claim:1428387-021",
   "url": "https://wulfkaal.github.io/claims/1428387-021",
   "claim": "The principal-agent problem in complex financial products is exacerbated by hierarchies in financial institutions, which create multiple layers of agency relationships between the traders using the products and the principals bearing the real economic risk.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "corporate-governance",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "in banks and large institutions trading complex financial products"
   ],
   "supporting_quote": "The principal-agent problem is further exacerbated by hierarchies in financial institutions that often create multiple layers of agency relationships to trade and invest in complex financial products."
  },
  {
   "id": "kaal:claim:1428387-022",
   "url": "https://wulfkaal.github.io/claims/1428387-022",
   "claim": "Moral hazard is worsened when the financial products traded are so complex that the agents, mostly on the buy side, do not entirely understand them and trade for the principal on the basis of incomplete and asymmetric information.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "where instruments are highly complex",
    "buy side agents in particular"
   ],
   "supporting_quote": "The moral hazard problem is further exacerbated when the financial products involved in many of these transactions are so highly complex that the agents, mostly on the buy side, do not entirely understand them and trade for the principal based on incomplete and asymmetric information."
  },
  {
   "id": "kaal:claim:1428387-023",
   "url": "https://wulfkaal.github.io/claims/1428387-023",
   "claim": "Because rating agencies are paid by CDO issuers while the ratings' main users are buyers, the agency as agent has an incentive to issue high ratings to satisfy its issuer principal, and the buyer has no means of controlling the agency other than through its relationship with the issuer.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "under the issuer-pays model for structured finance ratings"
   ],
   "supporting_quote": "The rating agency as the agent would probably have an incentive to issue high ratings to satisfy the issuer of a CDO as its principal. The buyer as the beneficiary of the rating has no means of controlling the rating agencies and its ratings other than through its relationship with the issuer."
  },
  {
   "id": "kaal:claim:1428387-024",
   "url": "https://wulfkaal.github.io/claims/1428387-024",
   "claim": "The issuer-buyer relationship and the incentives inside it are unlikely to be able to adequately control the principal-agent relationship between issuer and rating agency so as to ensure accurate ratings.",
   "type": "failure",
   "topics": [
    "compliance",
    "ai-and-agents",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "under the issuer-pays rating model for CDOs"
   ],
   "supporting_quote": "It seems unlikely that the issuer-buyer relationship and the incentives inherent within could adequately control the principal-agent relationship between issuer and rating agency to ensure accurate ratings."
  },
  {
   "id": "kaal:claim:1428387-025",
   "url": "https://wulfkaal.github.io/claims/1428387-025",
   "claim": "Qualified investors have strong incentives to accept valuation problems rather than contest them, because contesting would jeopardize their relationships with management and other industry participants and damage their own reputations.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "qualified investors with industry relationships and reputational stakes"
   ],
   "supporting_quote": "Even though their preference may be to obtain accurate valuation when needed, they have strong incentives to accept valuation problems in order to maintain the relationships with management and other industry participants and protect their reputations. Managers are also dependent on their"
  },
  {
   "id": "kaal:claim:1428387-026",
   "url": "https://wulfkaal.github.io/claims/1428387-026",
   "claim": "Because industry practices and informal rules already protect their relationships and investments, qualified investors may neither desire nor require extended investor protection rules to optimize hedge fund valuation.",
   "type": "normative",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "qualified investors embedded in industry networks"
   ],
   "supporting_quote": "Given their role in the industry, and the industry practices and informal rules that protect their relationships and investments, qualified investors may not desire nor require extended investor protection rules to optimize valuation of hedge funds."
  },
  {
   "id": "kaal:claim:1428387-027",
   "url": "https://wulfkaal.github.io/claims/1428387-027",
   "claim": "Retail investors are more likely to benefit from investor protection rules that optimize hedge fund valuation, because their minority position in the industry, the absence of informal rules, and management's lack of incentive to protect them leave them unprotected.",
   "type": "normative",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "retail investors in hedge funds and hedge fund like vehicles"
   ],
   "supporting_quote": "Given their minority position in the industry and the lack of informal rules and management's disincentives to protect their investments, retail investors are more likely to benefit from investor protection rules that optimize valuation of hedge funds."
  },
  {
   "id": "kaal:claim:1428387-028",
   "url": "https://wulfkaal.github.io/claims/1428387-028",
   "claim": "Investor suitability standards are the author's preferred regulatory option because they would probably protect retail investors' interests without unduly burdening the hedge fund industry and other market participants.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "compared against limiting complex products, raising qualification thresholds, mandating disclosure, and retail-level triggers"
   ],
   "supporting_quote": "Investor suitability standards seem the most preferable to this author because they would probably protect the interests of retail investors while at the same time not unduly burdening the hedge fund industry and other market participants."
  },
  {
   "id": "kaal:claim:1428387-029",
   "url": "https://wulfkaal.github.io/claims/1428387-029",
   "claim": "Limiting the use of hard-to-value assets and complex financial products is very unlikely to have positive effects, because the implicit inhibition of financial innovation would probably limit investors' use of hedging products and interfere with economic expansion.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "where regulators respond to systemic risk by restricting instrument use"
   ],
   "supporting_quote": "assets. It is very unlikely that limiting the use of financial instruments will have positive effects. The implicit inhibition of financial innovation would probably limit investors' use of hedging products and interfere with economic expansion.232"
  },
  {
   "id": "kaal:claim:1428387-030",
   "url": "https://wulfkaal.github.io/claims/1428387-030",
   "claim": "Unless an investor's business is primarily to invest in hard-to-value assets, that investor's sophistication cannot be assumed regardless of personal wealth.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "for investments in hard-to-value assets and complex financial instruments"
   ],
   "supporting_quote": "Unless the business of an investor is to primarily invest in certain hard-to-value assets, the sophistication of such investor can probably not be assumed, regardless of personal wealth. Investors who could"
  },
  {
   "id": "kaal:claim:1428387-031",
   "url": "https://wulfkaal.github.io/claims/1428387-031",
   "claim": "Raising the Regulation D numerical tests by adding an investable assets requirement would probably not address how to remedy investors' lack of understanding of hard-to-value assets.",
   "type": "failure",
   "topics": [
    "securities-law",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "under the SEC proposal to add a 2.5 million dollar investments requirement"
   ],
   "supporting_quote": "raising the numerical tests by adding an investable assets requirement236 would probably not address the question of how the lack of understanding of certain hard-to-value assets could be addressed."
  },
  {
   "id": "kaal:claim:1428387-032",
   "url": "https://wulfkaal.github.io/claims/1428387-032",
   "claim": "More disclosure does not always mean better governance, because the information provided may be hard to assess and evaluate.",
   "type": "failure",
   "topics": [
    "disclosure",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "where disclosed valuation and risk data is complex"
   ],
   "supporting_quote": "More disclosure may not, however, always mean better governance if the information provided is hard to assess and evaluate."
  },
  {
   "id": "kaal:claim:1428387-033",
   "url": "https://wulfkaal.github.io/claims/1428387-033",
   "claim": "Mandatory risk disclosure to the SEC would probably fail on staffing grounds, because professionals capable of understanding hedge fund risk data would be disincentivized to use that knowledge for supervision rather than economic gain, finding the private sector far more lucrative.",
   "type": "failure",
   "topics": [
    "securities-law",
    "disclosure",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "where the regulator must interpret data on hard-to-value assets and complex instruments"
   ],
   "supporting_quote": "Professionals who could understand the risk data would probably be disincentivized to use their knowledge for purposes of supervision rather than economic gain. Knowledgeable risk analysts may find the private sector much more lucrative than the public sector."
  },
  {
   "id": "kaal:claim:1428387-034",
   "url": "https://wulfkaal.github.io/claims/1428387-034",
   "claim": "Requiring hedge funds to supply risk and valuation data in a simplified format would in fact impose a significant burden on the industry, since simplification requirements would raise transaction costs, require pre-screening, and possibly additional staff.",
   "type": "failure",
   "topics": [
    "disclosure",
    "economics",
    "securities-law",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "where the SEC prescribes a simplified reporting format"
   ],
   "supporting_quote": "In addition to the utilization problem, if the SEC should require hedge funds to provide risk and valuation data in a certain simplified format, the SEC would in fact impose a significant burden on the hedge fund industry."
  },
  {
   "id": "kaal:claim:1428387-035",
   "url": "https://wulfkaal.github.io/claims/1428387-035",
   "claim": "Limiting complex financial instruments in the portfolios of hedge funds open to retail investors, triggered once retail commitments exceed a set level of assets under management, would likely protect retail investors while limiting undue burdens on the industry.",
   "type": "design",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "where retail commitments exceed a threshold such as 20 percent of assets under management"
   ],
   "supporting_quote": "limiting complex financial instruments in portfolios of hedge funds open to retail investors, if commitments from retail investors exceed some level of assets under management, would likely protect the interests of retail investors while at the same time limiting undue burdens for the industry."
  },
  {
   "id": "kaal:claim:1428387-036",
   "url": "https://wulfkaal.github.io/claims/1428387-036",
   "claim": "A retail investor asset threshold would be gamed: managers would be incentivized to keep retail assets under the applicable threshold, thereby keeping the fund in the existing regulatory scheme without implementing additional retail investor protection.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "where regulation is triggered by a retail asset threshold"
   ],
   "supporting_quote": "Managers would be incentivized to keep the assets from retail investors under the applicable retail investor asset threshold. Therefore, they would keep the fund in the current regulatory scheme without implementing additional protection for retail investors. Arguably, this would at least make"
  },
  {
   "id": "kaal:claim:1428387-037",
   "url": "https://wulfkaal.github.io/claims/1428387-037",
   "claim": "Regulation targeted only at retail investors is misdirected, because incomplete and asymmetric information, bounded rationality, and moral hazard make it difficult even for professional and semi professional investors to discern the characteristics of highly complex instruments and hard-to-value assets.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "for highly complex financial instruments and hard-to-value assets"
   ],
   "supporting_quote": "Incomplete and asymmetric information, bounded rationality of decision makers and moral hazard make it difficult for professional and semi professional investors to discern the different characteristics of many highly complex financial instruments and"
  },
  {
   "id": "kaal:claim:1428387-038",
   "url": "https://wulfkaal.github.io/claims/1428387-038",
   "claim": "Recent SEC proposals to toughen the numerical wealth requirements for hedge fund investing fail, because they do not ascertain the appropriate level of sophistication or adequate understanding of highly complex financial instruments.",
   "type": "failure",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "SEC proposals to amend Regulation D wealth thresholds"
   ],
   "supporting_quote": "Recent proposals by the SEC to toughen the numeracy wealth requirements for hedge fund investing fail to ascertain the appropriate level of sophistication and adequate understanding of highly complex financial instruments."
  },
  {
   "id": "kaal:claim:1428387-039",
   "url": "https://wulfkaal.github.io/claims/1428387-039",
   "claim": "Investor suitability standards would address the sophistication problem by requiring independent verification that investors in highly complex financial products can evaluate investment risk independently and are capable of making independent investment decisions.",
   "type": "design",
   "topics": [
    "economics",
    "risk-and-incentives",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "for investments in highly complex financial products"
   ],
   "supporting_quote": "Investor suitability standards would address these concerns by requiring independent verification that investors in highly complex financial products have the capability to evaluate investment risk independently and are capable of making independent investment decisions."
  },
  {
   "id": "kaal:claim:1428387-040",
   "url": "https://wulfkaal.github.io/claims/1428387-040",
   "claim": "Regulating on the basis of retailization would not currently be justifiable, because retailization cannot be quantified with any degree of certainty and regulation premised on speculation without proof or data validation would probably produce inadequate results.",
   "type": "failure",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "year": "2009",
   "source_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "confidence": "argued",
   "scope_conditions": [
    "as of 2009, absent data quantifying retail participation in hedge funds"
   ],
   "supporting_quote": "Using a form of regulation that is premised on speculation without any proof or form of validation through data analysis would probably produce inadequate results and therefore would not be justifiable. (The SEC has not yet raised the"
  },
  {
   "id": "kaal:claim:1664809-001",
   "url": "https://wulfkaal.github.io/claims/1664809-001",
   "claim": "In securities regulation the SEC has continuously expanded its extraterritorial reach, and it has done so with strong support from the judiciary, most notably the Second Circuit Court of Appeals.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "asserted",
   "supporting_quote": "the SEC has continuously expanded its extraterritorial reach"
  },
  {
   "id": "kaal:claim:1664809-002",
   "url": "https://wulfkaal.github.io/claims/1664809-002",
   "claim": "Congress intended the federal securities laws to cover only purchases and sales of securities that occur within the United States, a conclusion the authors reached with twenty-one law professors after reviewing the legislative history.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "reading of the 1933 Act and 1934 Act legislative history"
   ],
   "supporting_quote": "had intended the federal securities laws only to cover purchases"
  },
  {
   "id": "kaal:claim:1664809-003",
   "url": "https://wulfkaal.github.io/claims/1664809-003",
   "claim": "The Second Circuit's conduct and effect test was too unpredictable, and a clear rule keyed to the location of the securities transaction would be more predictable for issuers and investors.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "cases where the location of conduct and the location of the transaction diverge"
   ],
   "supporting_quote": "Circuit was too unpredictable. A clear rule focused on the location"
  },
  {
   "id": "kaal:claim:1664809-004",
   "url": "https://wulfkaal.github.io/claims/1664809-004",
   "claim": "Allowing foreign plaintiffs to sue foreign defendants in US courts over securities purchased and sold in foreign countries would turn the United States into the global arbiter of securities fraud allegations.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "foreign cubed litigation permitted in US courts"
   ],
   "supporting_quote": "United States into the global arbiter of securities fraud allegations,"
  },
  {
   "id": "kaal:claim:1664809-005",
   "url": "https://wulfkaal.github.io/claims/1664809-005",
   "claim": "Because many countries choose to combat securities fraud through government enforcement rather than private litigation, the United States should respect the right of other countries to regulate their own markets.",
   "type": "normative",
   "topics": [
    "compliance",
    "law-and-legal-systems",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "countries that rely on public enforcement rather than private class actions"
   ],
   "supporting_quote": "respect the right of other countries to regulate their own markets."
  },
  {
   "id": "kaal:claim:1664809-006",
   "url": "https://wulfkaal.github.io/claims/1664809-006",
   "claim": "Regardless of how the Supreme Court rules in Morrison v. NAB, Congress could overrule the holding, because the question presented is one of statutory construction and Congress may amend a statute whose interpretation it dislikes.",
   "type": "mechanism",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "holdings that rest on statutory interpretation rather than constitutional grounds"
   ],
   "supporting_quote": "Congress could overrule the holding in that case because this is"
  },
  {
   "id": "kaal:claim:1664809-007",
   "url": "https://wulfkaal.github.io/claims/1664809-007",
   "claim": "The Lehman Repo 105 transactions, consummated in London but booked as sales in Lehman's US securities filings, underscore the effect that conduct in one country can have on markets elsewhere.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "evidenced",
   "scope_conditions": [
    "cross-border transactions structured to exploit differences in national law"
   ],
   "supporting_quote": "the affect that conduct in one country can have on markets"
  },
  {
   "id": "kaal:claim:1664809-008",
   "url": "https://wulfkaal.github.io/claims/1664809-008",
   "claim": "Section 7216 of the Wall Street Reform and Consumer Protection Act of 2009 would extend federal antifraud jurisdiction to conduct within the United States constituting significant steps in furtherance of a violation, even when the securities transaction occurs abroad and involves only foreign investors.",
   "type": "definitional",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "asserted",
   "scope_conditions": [
    "if section 7216 is enacted in the form introduced"
   ],
   "supporting_quote": "conduct within the United States that constitutes significant steps in furtherance of the violation, even if the securities transaction occurs outside the United States and"
  },
  {
   "id": "kaal:claim:1664809-009",
   "url": "https://wulfkaal.github.io/claims/1664809-009",
   "claim": "The significant steps standard of section 7216 is probably broader than the Second Circuit's conduct and effect test, and the proposed statutory language would therefore reach a wider range of defendants.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of section 7216 language with existing Second Circuit doctrine"
   ],
   "supporting_quote": "statutory language in section 7216 is arguably broader than the"
  },
  {
   "id": "kaal:claim:1664809-010",
   "url": "https://wulfkaal.github.io/claims/1664809-010",
   "claim": "If section 7216 is enacted and covers section 10(b), the United States could become a magnet for global class actions, and US lawyers would benefit from securities litigation tourism much as UK lawyers have benefited from libel tourism.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "enactment of section 7216 including section 10(b) of the 1934 Act"
   ],
   "supporting_quote": "a magnet for global class actions'. 24 US lawyers may benefit"
  },
  {
   "id": "kaal:claim:1664809-011",
   "url": "https://wulfkaal.github.io/claims/1664809-011",
   "claim": "Foreign cubed cases in US courts rose over the decade preceding 2010, and in 2008 the number of such cases exceeded any previous year.",
   "type": "empirical",
   "topics": [
    "disclosure",
    "empirical-evidence",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "evidenced",
   "scope_conditions": [
    "US federal securities class action filings through 2009"
   ],
   "supporting_quote": "In 2008, foreign cubed cases exceeded any previous year"
  },
  {
   "id": "kaal:claim:1664809-012",
   "url": "https://wulfkaal.github.io/claims/1664809-012",
   "claim": "The lack of securities class actions in European jurisdictions creates a void that increases the incentives for forum shopping by plaintiffs' lawyers.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "European jurisdictions that do not offer securities class actions"
   ],
   "supporting_quote": "This void increases incentives for forum shopping by"
  },
  {
   "id": "kaal:claim:1664809-013",
   "url": "https://wulfkaal.github.io/claims/1664809-013",
   "claim": "If section 7216 becomes law and permits extraterritorial application of US antifraud provisions, it would further incentivize forum shopping by plaintiffs' attorneys.",
   "type": "predictive",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "enactment of section 7216"
   ],
   "supporting_quote": "further incentivize forum shopping by plaintiffs' attorneys."
  },
  {
   "id": "kaal:claim:1664809-014",
   "url": "https://wulfkaal.github.io/claims/1664809-014",
   "claim": "Over time, extraterritorial US securities litigation may drive European jurisdictions to adopt portions of US law in order to discourage forum shopping, a form of legal assimilation.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "sustained forum shopping pressure on European jurisdictions"
   ],
   "supporting_quote": "portions of US law in order to discourage forum shopping."
  },
  {
   "id": "kaal:claim:1664809-015",
   "url": "https://wulfkaal.github.io/claims/1664809-015",
   "claim": "Assimilation of US legal rules into European regulatory approaches may itself increase transaction costs for the jurisdiction that changes its law.",
   "type": "mechanism",
   "topics": [
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions that alter their law in response to US extraterritorial reach"
   ],
   "supporting_quote": "Assimilation of US legal rules in turn may result in increased"
  },
  {
   "id": "kaal:claim:1664809-016",
   "url": "https://wulfkaal.github.io/claims/1664809-016",
   "claim": "For European jurisdictions the extraterritorial application of US law creates confusion and legal uncertainty and makes it harder to regulate private parties who engage in regulatory arbitrage by taking their litigation to the United States when convenient.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "regulatory-failure",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "European jurisdictions whose parties can access US courts"
   ],
   "supporting_quote": "US law can create confusion, legal uncertainty, and difficulties"
  },
  {
   "id": "kaal:claim:1664809-017",
   "url": "https://wulfkaal.github.io/claims/1664809-017",
   "claim": "In US securities class actions plaintiffs may proceed on the fraud on the market theory rather than proving actual reliance on misleading statements, an approach that has been rejected in most other countries.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "evidenced",
   "scope_conditions": [
    "US securities class actions under section 10(b) and Rule 10b-5"
   ],
   "supporting_quote": "theory' rather than requiring plaintiffs to prove actual reliance on"
  },
  {
   "id": "kaal:claim:1664809-018",
   "url": "https://wulfkaal.github.io/claims/1664809-018",
   "claim": "Applying section 10(b) and Rule 10b-5 together with the fraud on the market theory substantially increases the potential liability of issuers and can lead to questionable results, which is why EU jurisdictions may not want that rule applied to their securities markets.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "securities markets subjected to US antifraud litigation"
   ],
   "supporting_quote": "theory substantially increases the potential liability of issuers and"
  },
  {
   "id": "kaal:claim:1664809-019",
   "url": "https://wulfkaal.github.io/claims/1664809-019",
   "claim": "Under section 7216 US law could apply to EU companies accused of conduct violating US securities laws even if those companies have no securities traded in the United States.",
   "type": "condition",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "enactment of section 7216"
   ],
   "supporting_quote": "conduct violating US securities laws, even if they have no securi-"
  },
  {
   "id": "kaal:claim:1664809-020",
   "url": "https://wulfkaal.github.io/claims/1664809-020",
   "claim": "Section 7216 could have the opposite effect of forcefully exporting US law onto other jurisdictions including Europe, even though it would be preferable for other nations to decide for themselves whether to have a class action litigation system.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "countries that have deliberately declined to adopt class action litigation"
   ],
   "supporting_quote": "7216 could have the opposite effect of forcefully exporting US law"
  },
  {
   "id": "kaal:claim:1664809-021",
   "url": "https://wulfkaal.github.io/claims/1664809-021",
   "claim": "A European company retains some ability to avoid the Sarbanes-Oxley Act by declining to list its securities in the United States, an escape route that expansive extraterritorial securities litigation would close.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "companies not listed on a US exchange"
   ],
   "supporting_quote": "A European company, however, has some ability to avoid the Sarbanes-Oxley Act if it avoids listing its securities in the"
  },
  {
   "id": "kaal:claim:1664809-022",
   "url": "https://wulfkaal.github.io/claims/1664809-022",
   "claim": "Overlapping regulation and inconsistent legal rules create uncertainty, so that individual board members of European companies and their attorneys will not know which legal rules apply or what effects those rules may have.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "companies exposed to more than one regulatory regime"
   ],
   "supporting_quote": "Overlapping regulation and inconsistent legal rules create uncer-"
  },
  {
   "id": "kaal:claim:1664809-023",
   "url": "https://wulfkaal.github.io/claims/1664809-023",
   "claim": "Legal uncertainty generates transaction costs, and European company boards will inevitably incur costs minimizing the information asymmetries created by different legal regimes that may or may not apply to their company.",
   "type": "mechanism",
   "topics": [
    "economics",
    "law-and-legal-systems",
    "disclosure",
    "compliance",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "evidenced",
   "scope_conditions": [
    "firms facing more than one potentially applicable legal regime"
   ],
   "supporting_quote": "Legal uncertainty generates transaction costs."
  },
  {
   "id": "kaal:claim:1664809-024",
   "url": "https://wulfkaal.github.io/claims/1664809-024",
   "claim": "Relative to the total number of US securities fraud and securities class action cases, foreign cubed cases are still relatively rare, although there was a substantial increase in them in 2008.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems",
    "empirical-evidence",
    "securities-law",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "evidenced",
   "scope_conditions": [
    "US securities litigation as of 2010"
   ],
   "supporting_quote": "are now relatively rare45 - although there has been a substantial"
  },
  {
   "id": "kaal:claim:1664809-025",
   "url": "https://wulfkaal.github.io/claims/1664809-025",
   "claim": "Enactment of section 7216 could make foreign cubed cases an integral part of the legal landscape in the United States and hence in Europe, ending the current situation in which most European companies are unaware of or unconcerned with that risk.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "enactment of section 7216"
   ],
   "supporting_quote": "make foreign cubed cases an integral part of the legal landscape"
  },
  {
   "id": "kaal:claim:1664809-026",
   "url": "https://wulfkaal.github.io/claims/1664809-026",
   "claim": "Banks, brokers and other financial intermediaries figure in a large proportion of US securities fraud cases because they often have the deep pockets that plaintiffs' lawyers are looking for.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "US securities fraud litigation driven by private plaintiffs"
   ],
   "supporting_quote": "often have the 'deep pockets' that plaintiffs' lawyers are looking"
  },
  {
   "id": "kaal:claim:1664809-027",
   "url": "https://wulfkaal.github.io/claims/1664809-027",
   "claim": "If section 7216 extends US securities fraud provisions to non-US securities transactions, European financial intermediaries could become the dominant target for plaintiffs' attorneys.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "enactment of section 7216 covering non-US transactions"
   ],
   "supporting_quote": "intermediaries could become the dominant target for plaintiff's"
  },
  {
   "id": "kaal:claim:1664809-028",
   "url": "https://wulfkaal.github.io/claims/1664809-028",
   "claim": "Non-US individuals and companies are expressly prohibited by US law from contributing to US political campaigns and have a relatively weak lobby in Washington, which places EU financial intermediaries at a competitive disadvantage in the US political system.",
   "type": "mechanism",
   "topics": [
    "economics",
    "regulatory-failure"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "US legislative processes influenced by campaign contributions"
   ],
   "supporting_quote": "prohibited by US law from contributing to US political cam-"
  },
  {
   "id": "kaal:claim:1664809-029",
   "url": "https://wulfkaal.github.io/claims/1664809-029",
   "claim": "The defendants harmed by section 7216 would almost all be non-US financial intermediaries and issuers who are less able to defend themselves in the US political system, which helps explain why Congress is not seriously considering repeal of the PSLRA but is seriously considering section 7216.",
   "type": "mechanism",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "US legislative politics after the 2008 financial crisis"
   ],
   "supporting_quote": "be non-US financial intermediaries and issuers who are less able"
  },
  {
   "id": "kaal:claim:1664809-030",
   "url": "https://wulfkaal.github.io/claims/1664809-030",
   "claim": "If section 7216 is enacted, European plaintiffs and defendants will likely turn to the expertise of American law firms, which would further exacerbate the already difficult competitive situation of European law firms.",
   "type": "predictive",
   "topics": [
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "enactment of section 7216"
   ],
   "supporting_quote": "will likely turn to the expertise of American law firms."
  },
  {
   "id": "kaal:claim:1664809-031",
   "url": "https://wulfkaal.github.io/claims/1664809-031",
   "claim": "Regardless of the relative merits of securities regulation in the United States and Europe, European investors are most likely to benefit if Europe addresses the problem of investor protection itself rather than through US courts.",
   "type": "normative",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "choice between European reform and access to US litigation"
   ],
   "supporting_quote": "European investors are most likely to benefit if Europe addresses"
  },
  {
   "id": "kaal:claim:1664809-032",
   "url": "https://wulfkaal.github.io/claims/1664809-032",
   "claim": "If Congress enacts section 7216, EU investors will on the whole probably earn a lower return on their investments than they otherwise would, because the substantial costs the US litigation system imposes on EU companies will be passed on to investors.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "enactment of section 7216",
    "costs of US litigation borne by EU issuers"
   ],
   "supporting_quote": "enacts section 7216, EU investors will, on the whole probably, earn"
  },
  {
   "id": "kaal:claim:1664809-033",
   "url": "https://wulfkaal.github.io/claims/1664809-033",
   "claim": "Overlapping regulation must be distinguished from conflicting regulation: only conflicting regulation could violate international law, because the territorial integrity of a state is breached only where there is a specific true conflict in the substantive legal norms of the respective states.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "analysis of extraterritorial jurisdiction under public international law"
   ],
   "supporting_quote": "It is important to distinguish 'overlapping' from 'conflicting' regulation. Conflicting regulation could violate international law."
  },
  {
   "id": "kaal:claim:1664809-034",
   "url": "https://wulfkaal.github.io/claims/1664809-034",
   "claim": "If US law requires disclosure of information that another country's law prohibits from being disclosed, whether for privacy or other reasons, there could be a true conflict of law and a credible case that the United States is in breach of international law.",
   "type": "condition",
   "topics": [
    "disclosure",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "a genuine incompatibility between US disclosure duties and foreign prohibitions"
   ],
   "supporting_quote": "disclosure of information that another country's law would prohibit to be disclosed, whether for privacy reasons or other reasons, there could be a true conflict of law and a credible case that the United States is in breach of international law."
  },
  {
   "id": "kaal:claim:1664809-035",
   "url": "https://wulfkaal.github.io/claims/1664809-035",
   "claim": "Section 7216 could be one more impediment to good diplomatic relations if the United States is perceived as establishing its courts as international courts in securities matters with universal jurisdiction.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "perception by European governments of US judicial overreach"
   ],
   "supporting_quote": "7216 could be one more impediment to good diplomatic relations if the United States is perceived as establishing its courts as inter- national courts in securities matters with universal jurisdiction."
  },
  {
   "id": "kaal:claim:1664809-036",
   "url": "https://wulfkaal.github.io/claims/1664809-036",
   "claim": "Exporting and imposing rules through extraterritorial reach could be counterproductive not only for US diplomacy but also for international cooperation in combating securities fraud, whereas cooperative mutual adjustment between the US and the EU is the better course.",
   "type": "design",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "cross-border securities fraud enforcement"
   ],
   "supporting_quote": "Exporting and imposing rules through extraterritorial reach, on the other hand, could be counterproductive not only for US diplomacy but also for international cooperation in combating"
  },
  {
   "id": "kaal:claim:1664809-037",
   "url": "https://wulfkaal.github.io/claims/1664809-037",
   "claim": "If national securities regulators are unable or unwilling to cooperate with each other, there is likely to be more securities fraud.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "argued",
   "scope_conditions": [
    "cross-border securities markets with multiple national regulators"
   ],
   "supporting_quote": "If national securities regulators are unable or unwilling to cooperate with each other, there is likely to be more"
  },
  {
   "id": "kaal:claim:1664809-038",
   "url": "https://wulfkaal.github.io/claims/1664809-038",
   "claim": "European boards of directors and company lawyers should follow the Morrison decision and the section 7216 legislative process closely, prepare for the resulting changes, and ask Congress to reconsider section 7216.",
   "type": "normative",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Richard W. Painter, Wulf A. Kaal, Extraterritorial Application of US Securities Law – Will the US Become the Default Jurisdiction for (2010). SSRN: https://ssrn.com/abstract=1664809",
   "year": "2010",
   "source_sha256": "2d5c8c30f969f8eb613bfa1fe6888a7cfa1a452e1027bcda0489618ceac62c20",
   "confidence": "asserted",
   "scope_conditions": [
    "pending outcome of Morrison v. NAB and of section 7216"
   ],
   "supporting_quote": "European Boards of Directors and company lawyers should fol- low upcoming events closely and prepare themselves for these impending changes. They should also ask Congress to reconsider"
  },
  {
   "id": "kaal:claim:1558614-001",
   "url": "https://wulfkaal.github.io/claims/1558614-001",
   "claim": "German banks' exposure to CDO risk ran through credit enhancement and liquidity guarantees given to off balance sheet conduits, and because that exposure was often kept out of their accounting the inherent risk only surfaced once the CDO market collapsed.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "systemic-risk",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "evidenced",
   "scope_conditions": [
    "banks guaranteeing conduits located outside German banking supervision",
    "guarantee exposure not consolidated into bank accounts"
   ],
   "supporting_quote": "was often hidden and not included in their accounting. The in- herent risk of the guarantees to the banks, however, became appar- 10 ent when the market for CDOs collapsed."
  },
  {
   "id": "kaal:claim:1558614-002",
   "url": "https://wulfkaal.github.io/claims/1558614-002",
   "claim": "The German ABCP conduit model, which financed long term American mortgage loans with short term paper and pocketed the spread, was profitable only for as long as new buyers for the short term paper could be found, so the model collapsed the moment institutional buyers withdrew.",
   "type": "mechanism",
   "topics": [
    "defi",
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "evidenced",
   "scope_conditions": [
    "long term assets funded by short term asset backed commercial paper",
    "sponsor bank provides credit enhancement and liquidity to the conduit"
   ],
   "supporting_quote": "A signifi- cant downside of this business model, however, was liquidity and re- sale risk—profiting through the spread only worked while the con- duit (i.e. Rhineland Funding) found buyers for the ABCP it issued"
  },
  {
   "id": "kaal:claim:1558614-003",
   "url": "https://wulfkaal.github.io/claims/1558614-003",
   "claim": "Contesting the view that the 2008 crisis was an American problem inflicted on foreign victims, the authors argue that non U.S. institutions such as German banks were willing participants in the risk taking, even where they did not fully understand the risks they assumed.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to European banks that bought or sponsored U.S. structured credit products"
   ],
   "supporting_quote": "The experience of German banks with CDOs, however, revealed that some of the non- U.S. victims were willing participants in the risk, even if they did not always fully understand the risks."
  },
  {
   "id": "kaal:claim:1558614-004",
   "url": "https://wulfkaal.github.io/claims/1558614-004",
   "claim": "Beliefs about whether markets fail are causally consequential rather than merely academic: bankers who believe markets fail invest more cautiously, and regulators who believe markets fail regulate more aggressively.",
   "type": "mechanism",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "holds across both national settings the authors compare"
   ],
   "supporting_quote": "Bankers who believe that markets fail may be more cautious when investing in markets, and regulators who believe that markets fail may be more aggressive when regulating markets."
  },
  {
   "id": "kaal:claim:1558614-005",
   "url": "https://wulfkaal.github.io/claims/1558614-005",
   "claim": "Law generally declines to adopt a general principle barring managers from incurring risk above a defined standard because such a standard is hard to define; corporate law instead insulates managers' risk decisions through the business judgment rule.",
   "type": "condition",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "outside the scope of rules that constrain specific named types of risk"
   ],
   "supporting_quote": "The law does not do so in most instances because defining such a stan- dard is difficult. Corporate law instead protects the risk decisions of bank managers from challenge through a concept known as the \"business judgment rule.\""
  },
  {
   "id": "kaal:claim:1558614-006",
   "url": "https://wulfkaal.github.io/claims/1558614-006",
   "claim": "Although the business judgment rule is articulated differently in the two countries and German law leaves somewhat more room to challenge risky decisions, in both the United States and Germany the rule is highly protective of corporate managers.",
   "type": "empirical",
   "topics": [
    "corporate-governance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "supporting_quote": "the business judgment rule is articulated differently in the United States and in Germany, and there may be more latitude to challenge some risky decisions in Germany, but in both countries the rule is highly protective of corporate managers"
  },
  {
   "id": "kaal:claim:1558614-007",
   "url": "https://wulfkaal.github.io/claims/1558614-007",
   "claim": "The business judgment rule can be read not as a balanced middle ground but as excessively deferential to management, signaling that corporate law is ceding risk regulation to targeted rules aimed at particular risks in particular institutions.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "offered as an alternative reading to the middle ground account of the rule"
   ],
   "supporting_quote": "Alternatively, one could view the business judgment rule as be- ing too deferential to management, and an indication that corporate law is abandoning the field of risk regulation to more specific rules aimed at specific types of risk in specific types of institutions"
  },
  {
   "id": "kaal:claim:1558614-008",
   "url": "https://wulfkaal.github.io/claims/1558614-008",
   "claim": "Because German banks absorbed both the 2008 credit crisis and the 2010 sovereign debt crisis while American banks faced only the first, German regulators and bankers are likely to impose stricter substantive risk management rules than countries that faced only one of those shocks.",
   "type": "predictive",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "written before the sovereign debt crisis had fully played out",
    "assumes the two shocks compound rather than offset"
   ],
   "supporting_quote": "German banks, like Ameri- can banks, have been exposed to the 2008 credit crisis, and unlike their American rivals, German banks also face a second threat in their exposure to the 2010 sovereign debt crisis"
  },
  {
   "id": "kaal:claim:1558614-009",
   "url": "https://wulfkaal.github.io/claims/1558614-009",
   "claim": "The cost of tightening directors' duty to monitor risk depends not just on how far the requirement is tightened but on how it is tightened: the mix of agency enforcement versus civil litigation, and of substantive versus procedural change, drives the shape of the cost curve.",
   "type": "mechanism",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "illustrative model, not based on actual data"
   ],
   "supporting_quote": "from a cost perspective the way in which the monitoring requirement be- comes more stringent matters. The mix between agency enforcement and civil litigation matters; the mix between changes to substantive and procedural rules matters"
  },
  {
   "id": "kaal:claim:1558614-010",
   "url": "https://wulfkaal.github.io/claims/1558614-010",
   "claim": "The same combination of substantive and procedural rules imposes different monitoring costs in different cultural settings, so a rule package that is cheap in one country can be expensive in another.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "illustrative cost model rather than measured data"
   ],
   "supporting_quote": "The cultural context also matters; a particular combination of substantive and procedural rules in one setting—for example, the U.S.—may result in a sharply rising solid line whereas the same combination in another setting"
  },
  {
   "id": "kaal:claim:1558614-011",
   "url": "https://wulfkaal.github.io/claims/1558614-011",
   "claim": "A country whose bankers do not embrace intentional risk taking is still exposed to risk, both through the collateral effects of intentional risk taking abroad and through unintentional risk taking at home, so domestic cultural restraint is not a sufficient safeguard.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "systemic-risk",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "open financial systems with cross border bank activity"
   ],
   "supporting_quote": "Countries where bankers do not typically embrace intentional risk taking are still vulnerable to collateral effects of intentional risk taking in other countries as well as unintentional risk taking in their own financial institutions"
  },
  {
   "id": "kaal:claim:1558614-012",
   "url": "https://wulfkaal.github.io/claims/1558614-012",
   "claim": "Hindsight bias exerts a stronger influence on how excessive risk is defined in countries culturally predisposed to dwell on their own past, while countries oriented toward a future unlike the past more easily dismiss earlier financial lessons as irrelevant.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the ex post characterization of risk as excessive"
   ],
   "supporting_quote": "Hindsight bias and other concep- tual approaches rooted in past experience—including valid lessons learned from past experience—may exert a more powerful influence in a country that is otherwise predisposed to be concerned with its past"
  },
  {
   "id": "kaal:claim:1558614-013",
   "url": "https://wulfkaal.github.io/claims/1558614-013",
   "claim": "Limited liability lets managers and shareholders capture most of the benefits of excessive risk taking while not bearing all of its costs, which is one explanation for why bankers take excessive risk.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "corporation protected by limited liability",
    "corporation may lack assets sufficient to pay creditors"
   ],
   "supporting_quote": "Accordingly, both managers and shareholders of a corporation enjoy most of the benefits of excessive 62 risk taking but do not bear all of the costs."
  },
  {
   "id": "kaal:claim:1558614-014",
   "url": "https://wulfkaal.github.io/claims/1558614-014",
   "claim": "The U.S. governance structure, built on periodic disclosure of performance data and stock price maximization, encourages risk taking because managers feel compelled to meet shareholder expectations at every reporting interval.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "disclosure",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "governance systems that emphasize periodic performance disclosure and stock price"
   ],
   "supporting_quote": "Risk taking in this context may be encour- aged by the perceived need to satisfy expectations of shareholders. Managers feel compelled to fulfill performance expectations whenev- er results are disclosed, be it quarterly, bi-annually, or annually."
  },
  {
   "id": "kaal:claim:1558614-015",
   "url": "https://wulfkaal.github.io/claims/1558614-015",
   "claim": "German corporate law's historical focus on conflicts between controlling and minority shareholders leaves it poorly equipped to address managerial abuse of power, including excessive risk taking by managers.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "systems where ownership is concentrated and the central conflict is shareholder against shareholder"
   ],
   "supporting_quote": "Ar- guably, a legal system that focuses on the interaction of controlling and minority shareholders is not as well equipped to deal with mana- gerial abuse of power, including excessive risk taking by managers."
  },
  {
   "id": "kaal:claim:1558614-016",
   "url": "https://wulfkaal.github.io/claims/1558614-016",
   "claim": "U.S. corporate law centers so heavily on shareholder manager conflicts of interest that, absent a demonstrable conflict, it treats risk taking as a situation where managers' and shareholders' interests are aligned and legal intervention is unwarranted.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "no demonstrable conflict of interest is shown"
   ],
   "supporting_quote": "Risk taking is one of those situations where U.S. corporate law assumes that managers' and shareholders' interests are aligned, or at least not sufficiently di- vergent that legal intervention is justified."
  },
  {
   "id": "kaal:claim:1558614-017",
   "url": "https://wulfkaal.github.io/claims/1558614-017",
   "claim": "For different structural reasons in each country, corporate law in both Germany and the United States has little to say about the problem of excessive risk.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "supporting_quote": "Thus, perhaps for differ- ent reasons, corporate law in both countries may have little to say about the problem of excessive risk."
  },
  {
   "id": "kaal:claim:1558614-018",
   "url": "https://wulfkaal.github.io/claims/1558614-018",
   "claim": "Codetermination makes the German supervisory board's decision making more cumbersome, so a co determined Aufsichtsrat may not respond quickly enough to fast moving events such as an escalation of portfolio risk or a liquidity crisis.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "compliance",
    "defi",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "corporations large enough to trigger employee representation on the supervisory board",
    "employee representatives may also carry union political objectives"
   ],
   "supporting_quote": "It may be difficult for a co-determined Aufsichtsrat to respond quickly to rapidly changing developments, such as an escala- tion of financial risk in a securities portfolio or a liquidity crisis."
  },
  {
   "id": "kaal:claim:1558614-019",
   "url": "https://wulfkaal.github.io/claims/1558614-019",
   "claim": "Because the Aufsichtsrat owes its duty of loyalty to the firm rather than to shareholders alone, and because non shareholder constituencies such as employees and creditors are more risk averse than diversified shareholders, German supervisory boards may take a more conservative attitude toward risk than U.S. shareholder oriented boards.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "German courts treat the duty as protecting the interests of the firm, not only shareholders",
    "reinforced by codetermination"
   ],
   "supporting_quote": "The Aufsichtsrat's legal duty of loyalty to the firm as distinct from its shareholders thus may dictate a more conservative attitude toward risk than that of a shareholder oriented board of di- rectors in the United States."
  },
  {
   "id": "kaal:claim:1558614-020",
   "url": "https://wulfkaal.github.io/claims/1558614-020",
   "claim": "Director independence does not produce effective risk monitoring: as the failure of independent director oversight at Lehman Brothers and other large U.S. financial firms shows, independent directors cannot monitor risk when managers, accountants and lawyers keep them in the dark.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "disclosure",
    "compliance",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. style independence defined by lack of financial ties to the company",
    "information flow to the board controlled by insiders"
   ],
   "supporting_quote": "independent directors cannot effectively monitor for risk if they are kept in the dark by the firm's managers, accountants, lawyers, and other persons familiar with its business"
  },
  {
   "id": "kaal:claim:1558614-021",
   "url": "https://wulfkaal.github.io/claims/1558614-021",
   "claim": "Because U.S. companies historically financed themselves through markets rather than through each other, U.S. managers are less attuned to risks accumulating at other firms, a blind spot that mattered once swaps and other complex instruments made firms directly vulnerable to each other's conditions.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "applies once counterparty exposure through swaps and complex instruments becomes significant"
   ],
   "supporting_quote": "Historically, U.S. companies have relied on markets for financing more than they have relied on each other, meaning U.S. managers are perhaps less aware than they should be of the risks that are being incurred by companies other than their own."
  },
  {
   "id": "kaal:claim:1558614-022",
   "url": "https://wulfkaal.github.io/claims/1558614-022",
   "claim": "The German and U.S. business judgment rules diverge most sharply at the German rule's fifth element, the requirement of no hazard decision or excessive risk taking, which German law presumes but allows to be rebutted.",
   "type": "definitional",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "German rule is code based in the Aktiengesetz; the U.S. rule is case law of the state of incorporation"
   ],
   "supporting_quote": "As pointed out below, it is in this last element where the business judgment rules in the United States and in Germany diverge the most. German law presumes no hazard and excessive risk, but this presumption can be rebutted."
  },
  {
   "id": "kaal:claim:1558614-023",
   "url": "https://wulfkaal.github.io/claims/1558614-023",
   "claim": "Because U.S. law frames the inquiry around corporate waste, and most risk taking does not meet the waste standard, showing that a decision was hazardous or excessively risky is not enough to rebut the business judgment rule in the United States.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "corporate-governance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. courts presume absence of corporate waste and ask only whether that presumption is rebutted"
   ],
   "supporting_quote": "Because most risk taking does not meet the definition of corporate waste, a showing of hazard or excessive risk is insufficient to rebut the 98 business judgment rule in the United States."
  },
  {
   "id": "kaal:claim:1558614-024",
   "url": "https://wulfkaal.github.io/claims/1558614-024",
   "claim": "Under the German business judgment rule's benefit of the corporation element, management cannot be acting for the corporation's benefit when its actions threaten the corporation's existence and economic survival.",
   "type": "condition",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "asserted",
   "scope_conditions": [
    "German business judgment rule, second element"
   ],
   "supporting_quote": "management does not act for the benefit of the corporation if its actions threaten the existence and economic survival of the corporation"
  },
  {
   "id": "kaal:claim:1558614-025",
   "url": "https://wulfkaal.github.io/claims/1558614-025",
   "claim": "The U.S. requirement that directors act on an informed basis is watered down because many states permit charter provisions exculpating directors from liability for breach of the duty of care, including the duty to act on an informed basis.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "evidenced",
   "scope_conditions": [
    "states with exculpation statutes such as Delaware, Illinois and New Jersey"
   ],
   "supporting_quote": "This requirement, however, is watered down in the United States by many states that allow corporations to adopt charter provisions that exculpate the directors from liability to the corporation for breach of a duty of care"
  },
  {
   "id": "kaal:claim:1558614-026",
   "url": "https://wulfkaal.github.io/claims/1558614-026",
   "claim": "Under the German hazard decision doctrine, no manager acts reasonably, whether a bank officer or a board member, if the risks taken on the corporation's behalf would destroy the corporation should they be realized.",
   "type": "condition",
   "topics": [
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "evidenced",
   "scope_conditions": [
    "German business judgment rule as elaborated in the ARAG decision of the Bundesgerichtshof",
    "risk must be such that its realization ends the corporation"
   ],
   "supporting_quote": "no manager, regardless of whether the manager is a bank officer or board member, acts reasonably if he or she takes on risks on behalf of the corporation that, if realized, will result in the demise of the cor- 130 poration"
  },
  {
   "id": "kaal:claim:1558614-027",
   "url": "https://wulfkaal.github.io/claims/1558614-027",
   "claim": "In In re Citigroup the Delaware Court of Chancery refused to extend the Caremark oversight duty, which concerns monitoring for illegal conduct, into oversight liability for business risk, so an inability to predict the future and an incorrect evaluation of business risk are not breaches of a director's oversight responsibilities.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Delaware law; derivative claims premised on subprime exposure",
    "oversight liability requires showing the directors knew they were not discharging their duties or consciously disregarded them"
   ],
   "supporting_quote": "under the Caremark line of cases would 133 not be extended to impose oversight liability for business risk"
  },
  {
   "id": "kaal:claim:1558614-028",
   "url": "https://wulfkaal.github.io/claims/1558614-028",
   "claim": "The EU's Market Abuse, Transparency, Markets in Financial Instruments and Prospectus Directives improved European securities regulation but still do not mandate coherent and comprehensive disclosure, leaving issuers free to disclose in disparate ways.",
   "type": "failure",
   "topics": [
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "evidenced",
   "scope_conditions": [
    "European Union as of 2010, with no central securities agency and no centralized filing system"
   ],
   "supporting_quote": "Despite many improvements, the directives do not mandate cohe- rent and comprehensive disclosure, and issuers continue to make 150 disclosures in disparate ways."
  },
  {
   "id": "kaal:claim:1558614-029",
   "url": "https://wulfkaal.github.io/claims/1558614-029",
   "claim": "Routine engagement in highly complex transactions lets public companies conceal risky transactions from investors and even from their own directors, which is a structural weakness in the supposedly rigorous U.S. disclosure regime.",
   "type": "failure",
   "topics": [
    "disclosure",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "evidenced",
   "scope_conditions": [
    "companies whose ordinary business consists of highly complex transactions"
   ],
   "supporting_quote": "Public companies that engage in highly complex transactions as a matter of course can easily conceal risky transactions from investors. Indeed, management can also conceal these transactions from the company's own direc- 160 tors."
  },
  {
   "id": "kaal:claim:1558614-030",
   "url": "https://wulfkaal.github.io/claims/1558614-030",
   "claim": "The more a country leads in financial innovation, the more exposed its disclosure regime is to misrepresentation and fraud, which makes the U.S. regime more vulnerable than Germany's despite being formally stricter.",
   "type": "mechanism",
   "topics": [
    "innovation",
    "disclosure",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "assumes U.S. financial innovation runs ahead of German financial innovation"
   ],
   "supporting_quote": "to the extent financial innovation in the United States is ahead of that in Germany, the U.S. disclosure regime may be more vulnerable to misrepresentation and fraud"
  },
  {
   "id": "kaal:claim:1558614-031",
   "url": "https://wulfkaal.github.io/claims/1558614-031",
   "claim": "The United States compensates for its lenient corporate law treatment of risk taking under the business judgment rule with a comparatively strict disclosure regime and a robust securities class action litigation regime; substantive corporate law pushes the monitoring requirement toward leniency while securities enforcement pushes it back toward stringency.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "law-and-legal-systems",
    "disclosure",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "supporting_quote": "In sum, what the United States lacks in its lenient approach to risk taking in the application of the business judgment rule the Unit- ed States may make up for with its relatively strict disclosure regime and robust securities class action litigation regime."
  },
  {
   "id": "kaal:claim:1558614-032",
   "url": "https://wulfkaal.github.io/claims/1558614-032",
   "claim": "In the United States the duty to disclose risk indirectly generates risk monitoring, because directors who know they are responsible for disclosing risk have reason to monitor it even though corporate law imposes no explicit duty to monitor.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "disclosure",
    "corporate-governance",
    "law-and-legal-systems",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "risk must be of a kind that securities law requires to be disclosed"
   ],
   "supporting_quote": "Directors thus may monitor for risk because they know they are responsible for dis- closing it."
  },
  {
   "id": "kaal:claim:1558614-033",
   "url": "https://wulfkaal.github.io/claims/1558614-033",
   "claim": "U.S. courts applying the business judgment rule give little or no weight to the overall health of the company or to whether the risk jeopardizes the company's very existence, so managers are permitted to incur most of the risks they wish to incur.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "supporting_quote": "courts applying the business judgment rule in the United States give little or no consideration to the overall health of the company or even whether the risk is jeopardizing the company's very existence"
  },
  {
   "id": "kaal:claim:1558614-034",
   "url": "https://wulfkaal.github.io/claims/1558614-034",
   "claim": "The U.S. approach left both of its risk controls ineffective: the securities disclosure regime failed to prevent the 2008 financial crisis, while the expansive business judgment rule that permitted the risk taking in the first place survived the crisis unchanged.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "supporting_quote": "The much-touted U.S. securities disclosure regime failed to prevent the 2008 financial crisis, yet the expansive U.S. version of the business judgment rule in cor- porate law that allowed the risk taking to begin with has remained in- tact."
  },
  {
   "id": "kaal:claim:1558614-035",
   "url": "https://wulfkaal.github.io/claims/1558614-035",
   "claim": "Germany's 2005 introduction of the derivative suit tightened the standard of care only partially, because section 148(1) of the AktG conditions shareholder standing on holding shares worth roughly 100,000 euros, a threshold with no U.S. counterpart.",
   "type": "design",
   "topics": [
    "reputation",
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "evidenced",
   "scope_conditions": [
    "German derivative suits under section 148(1) AktG as amended by the UMAG",
    "partly counterbalanced by VorstAG liability and compensation reduction provisions"
   ],
   "supporting_quote": "section 148(1) of the AktG requires a threshold ownership of shares totaling !100,000 (about $127,090) for shareholders to have standing to sue on behalf 174 of the corporation in German courts"
  },
  {
   "id": "kaal:claim:1558614-036",
   "url": "https://wulfkaal.github.io/claims/1558614-036",
   "claim": "The German legislature enacted the VorstAG on the premise that managers who emphasize short term parameters lose sight of the corporation's long term benefit and are thereby incentivized to take irresponsible risks, and it accordingly required compensation reduction in a corporate crisis, a D&O deductible, and deferred payout of performance based pay.",
   "type": "design",
   "topics": [
    "corporate-governance",
    "risk-and-incentives",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "evidenced",
   "scope_conditions": [
    "German stock corporations subject to the VorstAG of August 2009"
   ],
   "supporting_quote": "\"managers who emphasize short-term parameters in manage- ment lose sight of the long-term benefit of the corporation and are 185 incentivized to take irresponsible risks,\""
  },
  {
   "id": "kaal:claim:1558614-037",
   "url": "https://wulfkaal.github.io/claims/1558614-037",
   "claim": "The Dodd-Frank Act is notable for what it omits: it does not break up the largest banks, does little to help smaller and regional banks compete, and because compliance is burdensome and expensive may actually have raised the barrier to entry into financial services.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "supporting_quote": "It does little to help smaller and regional banks compete with the big banks. Because complying with regulation is burdensome and expensive, the Act may have raised the barrier for entry into the financial services industry."
  },
  {
   "id": "kaal:claim:1558614-038",
   "url": "https://wulfkaal.github.io/claims/1558614-038",
   "claim": "Dodd-Frank's mandatory risk committee is a significant change because most boards then delegated risk oversight to the audit committee, and it may generate new litigation if committee composition or alleged committee failure becomes a basis for shareholder suits.",
   "type": "predictive",
   "topics": [
    "risk-and-incentives",
    "corporate-governance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "publicly traded non bank financial companies supervised by the Federal Reserve and bank holding companies with more than $10 billion in assets"
   ],
   "supporting_quote": "This requirement also could result in more litigation if the composition of the risk committee or its alleged fail- ure to do its job appropriately becomes a basis for additional share- holder suits."
  },
  {
   "id": "kaal:claim:1558614-039",
   "url": "https://wulfkaal.github.io/claims/1558614-039",
   "claim": "Delaware courts have not explicitly imposed a duty to monitor risk, but that omission may be moot: because failing to disclose risk violates federal securities law, unmonitored risk is likely to become undisclosed risk and therefore actionable.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "disclosure",
    "securities-law",
    "corporate-governance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "risk of a kind that federal securities law requires to be disclosed"
   ],
   "supporting_quote": "In the United States, Delaware courts have not explicitly im- posed a duty to monitor risk. Because failure to disclose risk is a vi- olation of federal securities laws, however, this may be a moot point. Unmonitored risk is likely to be undisclosed risk."
  },
  {
   "id": "kaal:claim:1558614-040",
   "url": "https://wulfkaal.github.io/claims/1558614-040",
   "claim": "Because of the political climate and concern about the social externalities of business failure, monitoring requirements and their enforcement procedures are likely to become more severe regardless of whether the increased monitoring costs are offset by fewer bad business decisions.",
   "type": "predictive",
   "topics": [
    "compliance",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614",
   "year": "2010",
   "source_sha256": "e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b",
   "confidence": "argued",
   "scope_conditions": [
    "post crisis political climate in both Germany and the United States",
    "the company's own cost perspective may not govern"
   ],
   "supporting_quote": "The severity of the substantive moni- toring requirement and the procedures used to enforce it may in- crease regardless of net costs to the company."
  },
  {
   "id": "kaal:claim:1908473-001",
   "url": "https://wulfkaal.github.io/claims/1908473-001",
   "claim": "Contingent capital is defined as the predefined conversion of a financial institution's debt securities into equity securities upon a triggering event, and this stipulated definition governs the whole analysis.",
   "type": "definitional",
   "topics": [
    "contingent-capital",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "asserted",
   "supporting_quote": "Contingent capital is the predefined conversion of financial institutions' debt securities upon a triggering event into equity securities."
  },
  {
   "id": "kaal:claim:1908473-002",
   "url": "https://wulfkaal.github.io/claims/1908473-002",
   "claim": "Contrary to proposals that would replace Chapter 11 with contingent capital, the authors argue Chapter 11 needs no replacement; contingent capital should instead stabilize large financial firms for which Chapter 11 reorganization is not ideal or not legally available.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Applies to banks and other financial institutions ineligible for or poorly served by Chapter 11",
    "Particularly relevant from the European perspective"
   ],
   "supporting_quote": "we do not suggest that Chapter 11 needs replacement. Rather, contingent capital can help stabilize large financial firms for which a Chapter 11 reorganization is not the ideal solution or not an option."
  },
  {
   "id": "kaal:claim:1908473-003",
   "url": "https://wulfkaal.github.io/claims/1908473-003",
   "claim": "If conversion of contingent capital securities is triggered too early, before a real financial need for an equity injection exists, the expected financial impact of that injection may dissipate.",
   "type": "failure",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Trigger fires absent genuine need for equity capital and additional voting shareholders"
   ],
   "supporting_quote": "If conversion of CCS from debt into equity is triggered too early without a real financial need for an equity capital injection and additional voting shareholders, the expected financial impact of the equity capital injection may dissipate."
  },
  {
   "id": "kaal:claim:1908473-004",
   "url": "https://wulfkaal.github.io/claims/1908473-004",
   "claim": "If conversion from debt to equity is triggered too late, the institution may already be in the resolution stage, and conversion at that point may not supply enough equity to produce the intended financial improvement.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Institution has already entered the resolution stage when conversion occurs"
   ],
   "supporting_quote": "On the other hand, if conversion from debt to equity is triggered too late, the financial institution may already be in the resolution stage, and conversion at that stage may not supply the company with sufficient equity to facilitate the desired financial improvement."
  },
  {
   "id": "kaal:claim:1908473-005",
   "url": "https://wulfkaal.github.io/claims/1908473-005",
   "claim": "Because policymakers may adopt a suboptimal single trigger design, and because contingent capital has uses at several points in a firm's life cycle, contingent capital securities should be built with sequential triggers rather than one.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Assumes mandatory issuance of contingent capital securities"
   ],
   "supporting_quote": "Given the risk that policymakers could structure contingent capital rules with a suboptimal trigger design combined with the multiple benefits of using contingent capital in different phases of a company's life cycle, this Article suggests a sequential trigger design for CCS."
  },
  {
   "id": "kaal:claim:1908473-006",
   "url": "https://wulfkaal.github.io/claims/1908473-006",
   "claim": "The second trigger, which increases voting rights before resolution, should fire on evidence that conversion into equity was unsuccessful, that conversion came too early or too late, or that the firm's financial performance keeps trending downward.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "governance-design",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Applies after the first trigger has already converted debt into equity",
    "Applies before authorities initiate resolution"
   ],
   "supporting_quote": "Increasing the voting rights pre-resolution could be triggered by evidence that the conversion into equity was not successful, that conversion was triggered too early or too late, or that there is an overall continuing downward trend in the financial performance of the company."
  },
  {
   "id": "kaal:claim:1908473-007",
   "url": "https://wulfkaal.github.io/claims/1908473-007",
   "claim": "Beyond super-voting rights and dilution, the second trigger functions as a reorganization tool that operates independently of management decisions and of corrective action by regulators.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "asserted",
   "supporting_quote": "Besides providing for super-voting rights and increasing dilution, the second trigger would also be a reorganization tool independent of management decisions or corrective action by regulators."
  },
  {
   "id": "kaal:claim:1908473-008",
   "url": "https://wulfkaal.github.io/claims/1908473-008",
   "claim": "The first trigger should be based on a threshold in market value rather than accounting measures, because a market value trigger avoids total reliance on accounting methods that are open to manipulation.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "The authors decline to take a general position in the first trigger debate"
   ],
   "supporting_quote": "The core argument for this design feature is that it helps avoid total reliance on accounting methods that could otherwise be subject to manipulation."
  },
  {
   "id": "kaal:claim:1908473-009",
   "url": "https://wulfkaal.github.io/claims/1908473-009",
   "claim": "The volume of contingent capital issuance should be large enough that conversion produces sufficient dilution, and the trigger timeframe should be roughly ninety days.",
   "type": "design",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "asserted",
   "scope_conditions": [
    "Stated as a probable rather than settled design choice"
   ],
   "supporting_quote": "The volume of CCS issuance should probably be large enough to result in sufficient dilution upon conversion,47 and the timeframe for the trigger should probably be around ninety days."
  },
  {
   "id": "kaal:claim:1908473-010",
   "url": "https://wulfkaal.github.io/claims/1908473-010",
   "claim": "Contingent capital offers only limited protection against information asymmetries, principal and agent conflicts, and collective action problems, so it cannot by itself prevent economic failure.",
   "type": "failure",
   "topics": [
    "disclosure",
    "ai-and-agents",
    "corporate-governance",
    "institutional-design",
    "contingent-capital"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "supporting_quote": "Contingent capital can only limitedly protect against information asymmetries, principal/agent issues, and collective action problems."
  },
  {
   "id": "kaal:claim:1908473-011",
   "url": "https://wulfkaal.github.io/claims/1908473-011",
   "claim": "Existing proposals for implementing contingent capital do not explain how they would address the information asymmetries and principal and agent problems that may lie at the core of the credit crisis.",
   "type": "failure",
   "topics": [
    "disclosure",
    "ai-and-agents",
    "corporate-governance",
    "contingent-capital"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Assumes information asymmetries and principal agent problems were central causes of the crisis"
   ],
   "supporting_quote": "Although contingent capital has many beneficial attributes, existing proposals for implementing contingent capital are unclear as to how they will address information asymmetries and principal/agent problems."
  },
  {
   "id": "kaal:claim:1908473-012",
   "url": "https://wulfkaal.github.io/claims/1908473-012",
   "claim": "Because contingent capital is a hybrid instrument that pays fixed returns while bearing equity like risk, it may receive low or no ratings, attract a much smaller investor base, and carry higher funding costs.",
   "type": "failure",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Holds while rating methodologies for hybrid contingent instruments remain unsettled"
   ],
   "supporting_quote": "As a hybrid security, contingent capital may receive low or no ratings and may have a much smaller investor base and higher costs of funding."
  },
  {
   "id": "kaal:claim:1908473-013",
   "url": "https://wulfkaal.github.io/claims/1908473-013",
   "claim": "Letting national regulators keep their existing Tier 1 capital definitions creates a collective action problem: countries with stricter definitions appear to have less capital and thinner cushions than countries with broader ones.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Applies where EU wide harmonization of the Tier 1 definition is absent"
   ],
   "supporting_quote": "This creates collective action problems. A country that uses stricter definitions of Tier 1 capital could appear to have less capital and thinner capital cushions than banks in countries with broader definitions for Tier 1 capital."
  },
  {
   "id": "kaal:claim:1908473-014",
   "url": "https://wulfkaal.github.io/claims/1908473-014",
   "claim": "The incentive effects of corporate governance controls may not operate in systemically important financial institutions, because managers and owners who anticipate a bailout commitment adjust their risk preferences upward.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "systemic-risk",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Applies to institutions considered too big to fail"
   ],
   "supporting_quote": "the incentives originating from corporate governance controls may not work in SIFIs. SIFIs are often considered too big to fail and may be bailed out.108 If that is the case, SIFI principals-managers-owners may anticipate a bailout commitment and adjust their risk preferences upwards."
  },
  {
   "id": "kaal:claim:1908473-015",
   "url": "https://wulfkaal.github.io/claims/1908473-015",
   "claim": "Switching to contingent capital financing may reinforce rather than reduce risk incentives, and whether the risk incentives generated by contingent capital outweigh its risk reduction potential remains unresolved.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "contingent-capital"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Turns on the design features of the securities and on how much control equity holders retain after conversion"
   ],
   "supporting_quote": "In effect, however, switching to CCS financing could reinforce risk incentives. Additional research may be needed to determine if risk incentives generated by CCS113 may outweigh their potential for risk reduction."
  },
  {
   "id": "kaal:claim:1908473-016",
   "url": "https://wulfkaal.github.io/claims/1908473-016",
   "claim": "By internalizing the costs of bank failure, contingent capital can reduce moral hazard, and because a contingent debt security with a conversion trigger would presumably not default, it helps avoid contagion and systemic spillovers.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "systemic-risk",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Assumes the conversion trigger operates as designed"
   ],
   "supporting_quote": "By internalizing bank failure costs, contingent capital may contribute to minimizing moral hazard. A contingent debt security with a conversion trigger would presumably not default and could thus help avoid contagion and systemic spillover effects, which in turn may limit systemic risk."
  },
  {
   "id": "kaal:claim:1908473-017",
   "url": "https://wulfkaal.github.io/claims/1908473-017",
   "claim": "Contingent capital securities are likely to be more efficient than raising capital requirements, because the capital arrives only when it is needed.",
   "type": "mechanism",
   "topics": [
    "economics",
    "contingent-capital",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "asserted",
   "supporting_quote": "CCS will likely be more efficient than raising capital requirements because the capital arrives only when it is needed."
  },
  {
   "id": "kaal:claim:1908473-018",
   "url": "https://wulfkaal.github.io/claims/1908473-018",
   "claim": "The threat of loss on conversion and the implicit dilution of existing stock holdings reduce shareholders' incentive to press management for higher risk in pursuit of higher returns.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "corporate-governance",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "supporting_quote": "The threat of loss due to conversion of CCS and the implicit dilution of stock holdings could reduce incentives for shareholders to encourage management to take higher risks for higher returns."
  },
  {
   "id": "kaal:claim:1908473-019",
   "url": "https://wulfkaal.github.io/claims/1908473-019",
   "claim": "Mandatory contingent capital issuance requires the creation of a new market, and market creation takes time: the European hybrid market established in 1997 needed five years to reach critical mass.",
   "type": "empirical",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "evidenced",
   "supporting_quote": "Market creation will take time. For instance, the European hybrid market, established in 1997, took five years to gain critical mass."
  },
  {
   "id": "kaal:claim:1908473-020",
   "url": "https://wulfkaal.github.io/claims/1908473-020",
   "claim": "Requiring financial institutions to sell high volumes of contingent capital securities, on the order of four to nineteen percent of risk weighted assets, could raise pricing pressure and increase their cost of funding.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Applies at the issuance volumes contemplated by the EU Commission working document"
   ],
   "supporting_quote": "High volumes sold by financial institutions—some estimates suggest between four and nineteen percent of risk-weighted assets of financial institutions104—could lead to increased pricing pressure and increased cost of funding."
  },
  {
   "id": "kaal:claim:1908473-021",
   "url": "https://wulfkaal.github.io/claims/1908473-021",
   "claim": "Without a degree of international convergence in contingent capital rules, regulatory arbitrage could undermine the establishment of contingent capital as an integral part of financial markets.",
   "type": "condition",
   "topics": [
    "regulatory-failure",
    "contingent-capital"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Assumes jurisdictions legislate contingent capital independently of one another"
   ],
   "supporting_quote": "Without a certain level of convergence in contingent capital rules,105 regulatory arbitrage could have an adverse effect on establishing contingent capital as an integral part of financial markets."
  },
  {
   "id": "kaal:claim:1908473-022",
   "url": "https://wulfkaal.github.io/claims/1908473-022",
   "claim": "Although the EU debt write-down proposal gives regulators certainty and discretion, it could produce greater market uncertainty, raise costs, and have the unintended effect of increasing the size of financial institutions.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "contingent-capital"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Applies to the debt write-down element of the EU Commission proposal"
   ],
   "supporting_quote": "Although the concept may provide greater certainty and discretion to regulators, it could result in greater market uncertainty, which is likely to increase costs, and could have the unintended effect of actually increasing the size of financial institutions."
  },
  {
   "id": "kaal:claim:1908473-023",
   "url": "https://wulfkaal.github.io/claims/1908473-023",
   "claim": "A dual trigger that relies on a financial institution index gains from its use of market prices but is vulnerable to index manipulation and to bondholders attempting to force the institution into bankruptcy.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Applies to dual price trigger designs that include a sector or system index component"
   ],
   "supporting_quote": "Although the strength of this proposal is its reliance on market prices, a disadvantage could be the index trigger, which could result in index manipulation or an attempt to force the entity into bankruptcy."
  },
  {
   "id": "kaal:claim:1908473-024",
   "url": "https://wulfkaal.github.io/claims/1908473-024",
   "claim": "Departing from Coffee's design, super-voting rights should be allocated to contingent capital holders only if the first trigger failed to improve the institution's financial health; at the first trigger the new shareholder gets one vote per share.",
   "type": "design",
   "topics": [
    "governance-design",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Voting rights escalate only on a continuing downward trend after the first conversion"
   ],
   "supporting_quote": "Although we agree with the need for increased voting rights, the proposal in this Article would allocate super-voting rights to CCS holders only if the first trigger did not result in an improvement of the financial institution's financial health."
  },
  {
   "id": "kaal:claim:1908473-025",
   "url": "https://wulfkaal.github.io/claims/1908473-025",
   "claim": "To balance constituent incentives and prevent abuse, the voting rights increase should be calibrated so that contingent capital holders obtain a majority stake only in combination with the largest institutional shareholder.",
   "type": "design",
   "topics": [
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Change of control limited to the case where the first trigger failed"
   ],
   "supporting_quote": "To balance the constituents' incentives and avoid abuse,194 the voting rights increase could be calibrated to give CCS holders a majority stake in the company only with, for instance, the largest institutional shareholder."
  },
  {
   "id": "kaal:claim:1908473-026",
   "url": "https://wulfkaal.github.io/claims/1908473-026",
   "claim": "Sequential triggers invite manipulation of the triggering events and abusive practices such as asset stripping near bankruptcy, a risk the contract or corporate charter can counter by imposing a mandatory holding period on contingent capital securities.",
   "type": "failure",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Holding period could be extended until after bankruptcy"
   ],
   "supporting_quote": "manipulation of the sequential triggering events and abusive practices, such as asset stripping in the vicinity of bankruptcy. To avoid such practices, the CCS contract or the charter of the corporation could require a mandatory holding period for CCS."
  },
  {
   "id": "kaal:claim:1908473-027",
   "url": "https://wulfkaal.github.io/claims/1908473-027",
   "claim": "Conversion at the first trigger under this proposal lacks the finality of Coffee's design, because it does not necessarily hand the institution to creditors unless the firm deteriorates further.",
   "type": "design",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "supporting_quote": "The conversion following the first trigger does not have the same finality as that in Coffee's proposal; it does not necessarily mean that creditors will take over the institution, unless it further deteriorates."
  },
  {
   "id": "kaal:claim:1908473-028",
   "url": "https://wulfkaal.github.io/claims/1908473-028",
   "claim": "The second trigger should be an objective, automatic, institution specific trigger, with improvement measured through a combination of debt to equity ratio improvement and credit default swap spread narrowing after conversion.",
   "type": "design",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "The precise arithmetic must be institution specific"
   ],
   "supporting_quote": "the approach of this Article favors an objective automatic institution-specific second trigger for the voting rights increase. The improvement of the financial institution could be measured objectively through a combination of debt-equity ratio improvement and CDS spread narrowing after conversion."
  },
  {
   "id": "kaal:claim:1908473-029",
   "url": "https://wulfkaal.github.io/claims/1908473-029",
   "claim": "Information asymmetries between market participants and a systemically important institution's management before default can be reduced if a financial weakening after conversion of contingent capital triggers a voting rights increase.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "systemic-risk",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Requires that the weakening occur after contingent capital has converted into equity"
   ],
   "supporting_quote": "The information asymmetries between market participants and a SIFI's management before a SIFI defaults199 could be minimized if a financial weakening of the SIFI after conversion of CCS triggers a voting rights increase."
  },
  {
   "id": "kaal:claim:1908473-030",
   "url": "https://wulfkaal.github.io/claims/1908473-030",
   "claim": "The second trigger voting rights increase should never actually be triggered; its function is to level the playing field between constituents, incentivize negotiation, and provide an alternative to reorganization.",
   "type": "normative",
   "topics": [
    "governance-design",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "supporting_quote": "The second trigger voting rights increase should never actually be triggered. Rather, it should help level the playing field between constituents and incentivize negotiation and provide an alternative to reorganization."
  },
  {
   "id": "kaal:claim:1908473-031",
   "url": "https://wulfkaal.github.io/claims/1908473-031",
   "claim": "German corporate law permits increases in voting rights only in very limited circumstances, such as grandfathered multiple voting shares, so the proposed voting rights increase would require statutory reform in Germany.",
   "type": "condition",
   "topics": [
    "governance-design",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Höchststimmrechte were banned for listed German corporations in 1998",
    "France and the United Kingdom by contrast permit multiple votes per share"
   ],
   "supporting_quote": "German corporate law allows an increase in voting rights only in very limited circumstances, such as grandfathering provisions for shares with multiple voting rights that were created before the enactment of the Corporations Act"
  },
  {
   "id": "kaal:claim:1908473-032",
   "url": "https://wulfkaal.github.io/claims/1908473-032",
   "claim": "Allocating super-voting stock to contingent capital holders satisfies Delaware's legitimate business purpose requirement, because the allocation serves to avoid insolvency and dissolution of the institution.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Delaware permits alternative voting arrangements if the charter provides for them or is amended",
    "Increases are limited if inequitable or in breach of fiduciary duty"
   ],
   "supporting_quote": "Allocating super-voting stock, as proposed herein, would be for the legitimate business purpose of avoiding both insolvency and dissolution."
  },
  {
   "id": "kaal:claim:1908473-033",
   "url": "https://wulfkaal.github.io/claims/1908473-033",
   "claim": "Exchange uniform voting rights policies should not be applied to contingent capital securities, and the NYSE and Nasdaq would themselves benefit from an exemption because it could increase marketability and trading on each exchange.",
   "type": "normative",
   "topics": [
    "defi",
    "governance-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Exchange policies allow dual class capitalization but bar midstream dilutive changes in voting rights"
   ],
   "supporting_quote": "we believe these restrictions should not be applied to CCS. NYSE and Nasdaq would benefit from exempting CCS from their respective policies because an exemption from the policies could increase the marketability and the trading on each exchange."
  },
  {
   "id": "kaal:claim:1908473-034",
   "url": "https://wulfkaal.github.io/claims/1908473-034",
   "claim": "A substantial voting rights increase at the second trigger could raise the cost of contingent capital securities, with issuers demanding premiums that push primary issuance toward institutional investors interested in the change of control possibility.",
   "type": "failure",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Especially where the voting rights increase can reach the level of change of control"
   ],
   "supporting_quote": "Especially if the voting rights increase could reach the level of change of control over the entity, the premium charged by the issuers could rise dramatically and could result in a primary issuance to institutional investors who have an interest in the change of control possibility."
  },
  {
   "id": "kaal:claim:1908473-035",
   "url": "https://wulfkaal.github.io/claims/1908473-035",
   "claim": "Contingent capital holders, as former creditors whose main interest is realizing their claims, have a natural interest in continuity and are therefore likely to support incumbent management after conversion.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Analogy to the debtor in possession concept under Chapter 11"
   ],
   "supporting_quote": "CCS holders as former creditors will have a natural interest in consistency. It is their main interest to realize their claims. CCS holders are therefore likely to support incumbent management."
  },
  {
   "id": "kaal:claim:1908473-036",
   "url": "https://wulfkaal.github.io/claims/1908473-036",
   "claim": "Contingent capital with increased voting rights delivers a more flexible and efficient outcome than Chapter 11, because it requires neither court involvement nor a threshold of creditor approval.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Contingent capital holders with increased voting rights hold powers comparable to a creditors' committee"
   ],
   "supporting_quote": "The proposal in this Article would, however, create a far more flexible and efficient solution than Chapter 11. Neither court involvement nor a threshold of creditor approval would be required."
  },
  {
   "id": "kaal:claim:1908473-037",
   "url": "https://wulfkaal.github.io/claims/1908473-037",
   "claim": "Reorganization through contingent capital eliminates the holdout problem, because the majority of contingent capital holders, or those holders together with shareholders, determine governance after conversion, so a lone dissenter cannot collect more than other creditors.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Applies after conversion and before resolution",
    "The holdout who becomes a shareholder shares losses proportionate to equity ownership"
   ],
   "supporting_quote": "The majority of CCS holders, or CCS holders and shareholders combined, determine corporate governance after conversion and prior to resolution. A sole holdout of consent will therefore not enable any creditor to collect more than any other creditor."
  },
  {
   "id": "kaal:claim:1908473-038",
   "url": "https://wulfkaal.github.io/claims/1908473-038",
   "claim": "Because the Bankruptcy Code does not define adequate information, prepackaged plans risk inadequate disclosure, creditor challenge, and unusable prepetition votes that force the case into the longer ordinary Chapter 11 confirmation procedure.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "supporting_quote": "Given this shortcoming, the agreement may be challenged by creditors. In many cases, the prepetition votes cannot be utilized, forcing the reorganization into the ordinary and much longer plan confirmation procedure under Chapter 11."
  },
  {
   "id": "kaal:claim:1908473-039",
   "url": "https://wulfkaal.github.io/claims/1908473-039",
   "claim": "Contingent capital is more efficient than prepackaged plans or preplan sales because it provides a resolution mechanism outside formal proceedings and free of their restrictions, since the Bankruptcy Code does not regulate conversion or the use of increased voting rights.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Contingent capital securities are for the most part privately negotiated contracts"
   ],
   "supporting_quote": "CCS could be more efficient because CCS could provide the basis for a resolution mechanism outside of formal resolution proceedings and without the restrictions of prepackaged plans or preplan sales. The Bankruptcy Code does not regulate CCS conversion or the use of increased voting rights."
  },
  {
   "id": "kaal:claim:1908473-040",
   "url": "https://wulfkaal.github.io/claims/1908473-040",
   "claim": "Strategic maneuvering by creditors before a bankruptcy filing or during plan negotiations could distort the incentive structure the sequential trigger proposal depends on.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "contingent-capital"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473",
   "year": "2011",
   "source_sha256": "9d578dac663357529edd1f6453fcfe69bdc59ac882408d9edfde5a4c2916befa",
   "confidence": "argued",
   "scope_conditions": [
    "Strategic behavior can arise equally at the conversion stage and at the voting rights increase"
   ],
   "supporting_quote": "Strategic maneuvering of creditors prior to filing for bankruptcy protection or during the negotiations leading up to plan confirmation could distort the herein-proposed incentives for constituents."
  },
  {
   "id": "kaal:claim:1806252-001",
   "url": "https://wulfkaal.github.io/claims/1806252-001",
   "claim": "Contrary to critics who blame the Basel Accords, harmonization through Basel II is not what made banks hold similar assets; banks held similar assets because those assets were profitable.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "supporting_quote": "harmonization through Basel II that made banks hold similar assets: banks held similar assets because of the profitability of these assets."
  },
  {
   "id": "kaal:claim:1806252-002",
   "url": "https://wulfkaal.github.io/claims/1806252-002",
   "claim": "Because hedge funds play a large role in the credit derivatives market and that market recently failed, an increased regulatory emphasis on banks' lending exposure to hedge funds is justified.",
   "type": "design",
   "topics": [
    "systemic-risk",
    "defi",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "credit derivatives market experienced recent failure",
    "hedge funds are major users of credit default swaps"
   ],
   "supporting_quote": "Because of hedge funds' role in the credit derivatives market, in combination with the market's recent failure, this Article suggests that an increased emphasis on hedge fund lending exposure could be justified."
  },
  {
   "id": "kaal:claim:1806252-003",
   "url": "https://wulfkaal.github.io/claims/1806252-003",
   "claim": "Building on the increase in capital requirements for counterparty risk already suggested in Basel III, Basel III could add a charge on banks' assets based on their lending exposure to hedge funds.",
   "type": "design",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "Basel Committee adopts the proposal"
   ],
   "supporting_quote": "Basel III could also include a charge for banks' assets based on their lending exposure to hedge funds."
  },
  {
   "id": "kaal:claim:1806252-004",
   "url": "https://wulfkaal.github.io/claims/1806252-004",
   "claim": "Asymmetric hedge fund regulation, in which Dodd-Frank and the AIFM Directive regulate banks and hedge funds separately and differently, is counterproductive.",
   "type": "failure",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "US and EU hedge funds operate in the same markets with similar strategies"
   ],
   "supporting_quote": "Asymmetric hedge fund regulation in Dodd—Frank and the AIFM Directive is counterproductive."
  },
  {
   "id": "kaal:claim:1806252-005",
   "url": "https://wulfkaal.github.io/claims/1806252-005",
   "claim": "The AIFM Directive could create incentives for regulatory arbitrage and could provoke retaliatory action by countries outside the European Union.",
   "type": "predictive",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "non-EU funds and managers face restricted access to EU markets"
   ],
   "supporting_quote": "The AIFM Directive could create incentives for regulatory arbitrage and potentially cause retaliatory action by non-EU countries."
  },
  {
   "id": "kaal:claim:1806252-006",
   "url": "https://wulfkaal.github.io/claims/1806252-006",
   "claim": "Regulating entities that operate in the same markets under asymmetric rules creates legal uncertainty and significant transaction costs.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "entities compete in the same markets"
   ],
   "supporting_quote": "Asymmetric regulation of entities operating in the same markets creates legal uncertainty and significant transaction costs."
  },
  {
   "id": "kaal:claim:1806252-007",
   "url": "https://wulfkaal.github.io/claims/1806252-007",
   "claim": "Hedge fund managers subjected to stricter rules in one jurisdiction while competing with funds in less restrictive jurisdictions could be placed at a comparative disadvantage.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "managers compete for the same clients and profit margins across jurisdictions"
   ],
   "supporting_quote": "If hedge fund managers are subjected to stricter rules in one jurisdiction while competing for clients and profit margins with funds in jurisdictions that impose less restrictive rules, they could be at a comparative disadvantage."
  },
  {
   "id": "kaal:claim:1806252-008",
   "url": "https://wulfkaal.github.io/claims/1806252-008",
   "claim": "If regulators lack the resources to protect against systemic risk, hedge fund regulation could be futile.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "securities-law",
    "private-funds",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "regulators are given a systemic risk mandate they lack capacity to execute"
   ],
   "supporting_quote": "If regulators lack the resources to protect against systemic risk, hedge fund regulation could be futile."
  },
  {
   "id": "kaal:claim:1806252-009",
   "url": "https://wulfkaal.github.io/claims/1806252-009",
   "claim": "Regulators who obtain hedge funds' proprietary information could inadvertently pass it to third parties, and because that information is highly valuable to competitors in the same markets, such leakage could undermine trading strategies and the long-term viability of hedge funds.",
   "type": "failure",
   "topics": [
    "disclosure",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "mandatory disclosure of trading positions and strategies to regulators"
   ],
   "supporting_quote": "The confidential nature of this information makes it highly valuable for third parties who engage in the same markets as the owner of the proprietary information, and this form of leakage could undermine trading strategies and the long-term viability of hedge funds."
  },
  {
   "id": "kaal:claim:1806252-010",
   "url": "https://wulfkaal.github.io/claims/1806252-010",
   "claim": "Because hedge fund trading strategies depend on confidentiality, required disclosures that let other market participants trade along or anticipate a fund's transactions can negatively affect the fund's absolute returns.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "strategies rely on interpreting market environments not yet priced in by others"
   ],
   "supporting_quote": "If other market participants trade along or are enabled to anticipate certain transactions by a hedge fund because of required disclosures, the disclosing hedge fund may not be able to fulfill its mandate to maximize shareholders' value"
  },
  {
   "id": "kaal:claim:1806252-011",
   "url": "https://wulfkaal.github.io/claims/1806252-011",
   "claim": "Banks' lending practices and counterparty credit risk management can curtail hedge funds' excessive risk taking because banks can use the threat of cutting off future lending to change a fund's behavior.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "systemic-risk",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "the bank has an ongoing lending relationship with the fund"
   ],
   "supporting_quote": "counterparty credit risk management (CCRM) may allow them to curtail excessive risk taking, because they are in a position to use the threat of cutting off future lending to improve a hedge fund's behavior."
  },
  {
   "id": "kaal:claim:1806252-012",
   "url": "https://wulfkaal.github.io/claims/1806252-012",
   "claim": "Banks are ideally positioned to deal with asymmetric information, moral hazard, and systemic issues pertaining to hedge funds, which is why hedge fund regulation should run through bank regulation.",
   "type": "design",
   "topics": [
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "supporting_quote": "Banks are ideally positioned to deal with asymmetric information, moral hazard, and systemic issues pertaining to hedge funds."
  },
  {
   "id": "kaal:claim:1806252-013",
   "url": "https://wulfkaal.github.io/claims/1806252-013",
   "claim": "Because banks expect to be bailed out with taxpayer funds, they may have less incentive to monitor their hedge fund lending activities, even though hedge funds are not themselves counterparties in government bailouts.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "systemic-risk",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "governments are presumed willing to bail out banks"
   ],
   "supporting_quote": "Hedge funds are not counterparties in government bailouts, but if banks get bailed out, they may have less incentive to monitor their hedge fund lending activities or other hedge fund-related business."
  },
  {
   "id": "kaal:claim:1806252-014",
   "url": "https://wulfkaal.github.io/claims/1806252-014",
   "claim": "Systemic risk and financial market stability are public goods, so individual banks free ride on other banks' hedge fund credit risk management and are not incentivized to adequately monitor or limit their own hedge fund risk exposure.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "systemic-risk",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "supporting_quote": "Systemic risk and financial market stability generate public good and free-rider problems: banks are not incentivized to adequately monitor or limit hedge fund risk exposure because of their reliance on hedge fund credit risk management by other banks."
  },
  {
   "id": "kaal:claim:1806252-015",
   "url": "https://wulfkaal.github.io/claims/1806252-015",
   "claim": "An institution or a country creates externalities when it manages its own hedge fund generated systemic risk without considering how its actions or inactions affect risk in the system as a whole.",
   "type": "definitional",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "asserted",
   "supporting_quote": "An institution or country creates externalities if it manages its own hedge fund-generated systemic risk without considering the impact of its actions or inactions on the risk in the system as a whole."
  },
  {
   "id": "kaal:claim:1806252-016",
   "url": "https://wulfkaal.github.io/claims/1806252-016",
   "claim": "Even if hedge fund investing does have systemic implications, systemic risk is multifaceted enough that addressing it could require more than one regulator in a single jurisdiction, so the SEC alone may be unable to accomplish the task.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "institutional-design",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "systemic risk is difficult to measure and the required information is widely dispersed"
   ],
   "supporting_quote": "Even assuming that systemic implications arise from hedge fund investing, systemic risk is such a multifaceted issue that it could require the involvement of more than one regulator in one jurisdiction."
  },
  {
   "id": "kaal:claim:1806252-017",
   "url": "https://wulfkaal.github.io/claims/1806252-017",
   "claim": "The SEC would be better advised to interpret the rulemaking authority it received from Congress than to increase requirements on hedge funds in order to address concerns over potential systemic risk.",
   "type": "normative",
   "topics": [
    "securities-law",
    "dynamic-regulation",
    "systemic-risk",
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "indicia suggest hedge funds may not pose systemic risk"
   ],
   "supporting_quote": "Perhaps the SEC would be well advised to interpret the authority it received from Congress rather than to increase the requirements on hedge funds to address concerns over potential systemic risk."
  },
  {
   "id": "kaal:claim:1806252-018",
   "url": "https://wulfkaal.github.io/claims/1806252-018",
   "claim": "A lack of regulatory guidance creates legal uncertainty, and legal uncertainty in turn generates transaction costs.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "economics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "regulator relies on no-action letters rather than rules"
   ],
   "supporting_quote": "A lack of guidance may create legal uncertainty,!4° and legal uncertainty generates transaction costs."
  },
  {
   "id": "kaal:claim:1806252-019",
   "url": "https://wulfkaal.github.io/claims/1806252-019",
   "claim": "Because the AIFM Directive exposes depositaries to strict liability in certain circumstances, depositaries must weigh the risks and benefits of serving EU alternative investment funds, and a negative assessment would harm the depository business and, implicitly, hedge funds.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "AIFM Directive retains elements of strict depositary liability",
    "depositaries reassess whether to serve alternative investment funds in the European Union"
   ],
   "supporting_quote": "If this risk assessment turns out negative, the business of depositories and, implicitly, hedge funds could be affected."
  },
  {
   "id": "kaal:claim:1806252-020",
   "url": "https://wulfkaal.github.io/claims/1806252-020",
   "claim": "Discrimination against non-EU jurisdictions under the AIFM Directive could provoke retaliatory action, and retaliation combined with a lack of intra-European cooperation could damage the European financial services industry and the whole European economy.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "obstacles to EU market access for non-EU funds and managers persist"
   ],
   "supporting_quote": "Discrimination against non-EU jurisdictions could provoke retaliatory action. As a consequence, retaliatory actions and a lack of intra-European cooperation could damage the European financial services industry and the whole European economy."
  },
  {
   "id": "kaal:claim:1806252-021",
   "url": "https://wulfkaal.github.io/claims/1806252-021",
   "claim": "Market failure in complex financial instruments, rather than hedge fund activity as such, could have been a contributing factor in the recent credit crisis.",
   "type": "empirical",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "evidence drawn from the 2007 collapse of the CDO and CDS markets"
   ],
   "supporting_quote": "Market failure in complex financial instruments could have been a contributing factor in the recent credit crisis."
  },
  {
   "id": "kaal:claim:1806252-022",
   "url": "https://wulfkaal.github.io/claims/1806252-022",
   "claim": "Although hedge funds manage only a small proportion of the investment universe compared with banks, they do manage a proportionally large part of complex financial instruments such as CDOs and other derivatives.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "evidenced",
   "supporting_quote": "However, it appears that hedge funds do manage a proportionally large part of complex financial instruments, such as CDOs and other derivatives."
  },
  {
   "id": "kaal:claim:1806252-023",
   "url": "https://wulfkaal.github.io/claims/1806252-023",
   "claim": "British Bankers' Association data show that since 2000 hedge funds steadily increased their share of the credit derivatives market while banks' role in that market progressively declined.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "evidenced",
   "scope_conditions": [
    "data cover 2000 to 2006; the BBA discontinued the series in 2007"
   ],
   "supporting_quote": "Table 1 shows that since 2000, hedge funds have steadily increased their share in the credit derivatives market while banks' role in the market for credit derivatives has progressively declined."
  },
  {
   "id": "kaal:claim:1806252-024",
   "url": "https://wulfkaal.github.io/claims/1806252-024",
   "claim": "Legislators had disincentives to impose harsher requirements on the hedge fund industry before the crisis, because harsher regulation could have driven franchise taxes and other business to offshore centers.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure",
    "law-and-legal-systems",
    "economics",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "a significant number of hedge funds operate through offshore centers"
   ],
   "supporting_quote": "Legislators also had disincentives to impose harsher requirements on the hedge fund industry, because harsher regulation could have resulted in a loss of franchise taxes and other business to offshore centers."
  },
  {
   "id": "kaal:claim:1806252-025",
   "url": "https://wulfkaal.github.io/claims/1806252-025",
   "claim": "Basel III capital charges based on a bank's lending exposure to hedge funds could help address the threat of regulatory arbitrage.",
   "type": "design",
   "topics": [
    "systemic-risk",
    "regulatory-failure",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "banks participating in the Basel framework lend to the funds"
   ],
   "supporting_quote": "Basel III capital charges based on a bank's lending exposure to hedge funds could help to address the threat of regulatory arbitrage."
  },
  {
   "id": "kaal:claim:1806252-026",
   "url": "https://wulfkaal.github.io/claims/1806252-026",
   "claim": "Implementing the hedge fund lending charge through Basel III would require no separate national implementation, because compliance falls on banks that have already joined the framework, so transaction costs for national regulators would be avoided.",
   "type": "design",
   "topics": [
    "systemic-risk",
    "economics",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "the bank has joined the Basel framework"
   ],
   "supporting_quote": "Once the bank has signed on to join the framework, it would merely be the responsibility of the participating banks to comply with the framework. Hence, transaction costs for national regulators would be avoided."
  },
  {
   "id": "kaal:claim:1806252-027",
   "url": "https://wulfkaal.github.io/claims/1806252-027",
   "claim": "Even combining hedge fund regulation via Basel III rules with the de minimis investment rules in Dodd-Frank could leave some issues open, and calibrating such a regulatory combination requires time and experience.",
   "type": "condition",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "supporting_quote": "Even the combination of hedge fund regulation via rules in Basel III and de minimis investment rules in Dodd—Frank could leave open some issues. The calibration of such a regulatory combination requires time and experience."
  },
  {
   "id": "kaal:claim:1806252-028",
   "url": "https://wulfkaal.github.io/claims/1806252-028",
   "claim": "A standard objection to indirect regulation is that counterparty credit risk management will not work effectively unless the lending bank has an exclusive relationship with the hedge fund that lets it control the relationship.",
   "type": "condition",
   "topics": [
    "risk-and-incentives",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "a hedge fund borrows from more than one bank, so no single bank sees its overall risk exposure"
   ],
   "supporting_quote": "CCRM will not work effectively unless the bank has an exclusive relationship with the hedge fund that allows it to control the relationship."
  },
  {
   "id": "kaal:claim:1806252-029",
   "url": "https://wulfkaal.github.io/claims/1806252-029",
   "claim": "Contesting the exclusivity objection, exclusivity of a banking relationship is not the only effective way to exercise control and manage risk: the intensity, endurance, and quality of the relationship also influence how much control a bank can exercise over a hedge fund.",
   "type": "condition",
   "topics": [
    "risk-and-incentives",
    "systemic-risk",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "most hedge funds maintain more than one banking relationship"
   ],
   "supporting_quote": "The exclusivity of a banking relationship is perhaps not the only effective way to exercise control and manage risk. The intensity, endurance, and quality of the relationship also influence the level of control a bank may exercise over a hedge fund."
  },
  {
   "id": "kaal:claim:1806252-030",
   "url": "https://wulfkaal.github.io/claims/1806252-030",
   "claim": "Because some hedge fund trading strategies depend on the immediate availability of capital and will not work without sufficient lines of credit, banks may retain enough influence over hedge funds even where funds use multiple lenders.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "fund uses dynamic trading strategies requiring additional capital on short notice"
   ],
   "supporting_quote": "Without sufficient lines of credit to supply required additional capital, these trading strategies may not work. Perhaps banks will have enough influence over hedge funds even if hedge funds have multiple lending relationships."
  },
  {
   "id": "kaal:claim:1806252-031",
   "url": "https://wulfkaal.github.io/claims/1806252-031",
   "claim": "Banks' role in monitoring hedge funds is not easily comparable to the principal agent problem between securities buyers and credit rating agencies, because banks have more influence over hedge funds than securities buyers have over rating agencies and their ratings.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "corporate-governance",
    "systemic-risk",
    "compliance",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "supporting_quote": "Banks have perhaps more influence over hedge funds than buyers of securities over credit rating agencies and their ratings."
  },
  {
   "id": "kaal:claim:1806252-032",
   "url": "https://wulfkaal.github.io/claims/1806252-032",
   "claim": "The numerical wealth requirements used to define qualified hedge fund investors fail as a regulatory device, because investors who meet the wealth thresholds do not always have the knowledge, understanding, and sophistication needed to invest in highly complex financial instruments.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "accredited investor standards under Regulation D and PFIARA"
   ],
   "supporting_quote": "The policy fails to take into account investors who technically fulfill the numerical wealth requirements but lack an adequate level of financial sophistication."
  },
  {
   "id": "kaal:claim:1806252-033",
   "url": "https://wulfkaal.github.io/claims/1806252-033",
   "claim": "Requiring advisers to adopt written policies to prevent and detect securities law violations presumes those violations are foreseeable, yet because Dodd-Frank substantially changed securities law, the foreseeability of potential violations is itself further curtailed.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "PFIARA requires written compliance policies just after Dodd-Frank changed the underlying law"
   ],
   "supporting_quote": "But because securities law has been substantially changed under the Dodd—Frank Act, the foreseeability of potential violations could be further curtailed."
  },
  {
   "id": "kaal:claim:1806252-034",
   "url": "https://wulfkaal.github.io/claims/1806252-034",
   "claim": "Without the threat of systemic risk and without a clear delineation of the social externalities that hedge funds cause, the purpose of direct hedge fund regulation is unclear.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "argued",
   "scope_conditions": [
    "hedge funds have fewer assets and less leverage than banks",
    "collapses such as Amaranth in 2006 and large redemptions did not cause systemic problems"
   ],
   "supporting_quote": "Without the threat of systemic risk and without a clear delineation of social externalities caused by hedge funds, the purpose of direct hedge fund regulation is unclear."
  },
  {
   "id": "kaal:claim:1806252-035",
   "url": "https://wulfkaal.github.io/claims/1806252-035",
   "claim": "Registering hedge funds with regulators and requiring disclosure of pertinent information could help minimize the moral hazard, social externalities, and systemic risk generated by the hedge fund industry.",
   "type": "design",
   "topics": [
    "securities-law",
    "private-funds",
    "disclosure",
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252",
   "year": "2011",
   "source_sha256": "3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d",
   "confidence": "asserted",
   "scope_conditions": [
    "extent of hedge fund involvement in the 2008 to 2009 credit crisis remains unclear"
   ],
   "supporting_quote": "Recent attempts at regulating hedge funds by registering them with regulators and requiring disclosure of pertinent information could help to minimize moral hazard, social externalities, and systemic risk generated by the hedge fund industry."
  },
  {
   "id": "kaal:claim:1765901-001",
   "url": "https://wulfkaal.github.io/claims/1765901-001",
   "claim": "Because Morrison ties Section 10(b) to the location of the securities transaction rather than to the place where the deception originated, the logic of the holding implies that the SEC likewise has no enforcement rights over securities transactions occurring outside the United States.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "Section 10(b) claims",
    "transactions executed outside the United States"
   ],
   "supporting_quote": "The logic of the holding strongly suggests that there would also be no enforcement rights for the SEC with respect to securities transactions taking place outside the United States"
  },
  {
   "id": "kaal:claim:1765901-002",
   "url": "https://wulfkaal.github.io/claims/1765901-002",
   "claim": "Before Morrison, U.S. courts refused to adopt a bright line rule for the extraterritorial reach of Section 10(b), and the resulting case by case conduct and effects analysis was applied inconsistently.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "pre-Morrison case law",
    "foreign-cubed securities litigation"
   ],
   "supporting_quote": "U.S. courts had avoided a bright line rule for determining which cases can be litigated in U.S. courts and which cannot. As a result, U.S, courts applied the conduct and effects tests inconsistently'."
  },
  {
   "id": "kaal:claim:1765901-003",
   "url": "https://wulfkaal.github.io/claims/1765901-003",
   "claim": "The plaintiffs' reading that Section 10(b) covers transactions anywhere in any security of a class listed on a U.S. exchange is inconsistent with Morrison, because the opinion turns on the location of the transaction and on the holding that Section 10(b) has no extraterritorial application.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "dually listed securities",
    "transactions executed on a foreign exchange"
   ],
   "supporting_quote": "This interpretation is inconsistent with the basic thrust of the Morrison opin- ion, which focuses on the location of the transactions and the fact that Section 10(b) does not apply extraterritorially,"
  },
  {
   "id": "kaal:claim:1765901-004",
   "url": "https://wulfkaal.github.io/claims/1765901-004",
   "claim": "Morrison itself refutes a listing based reading of Section 10(b): the Court knew that National Australia Bank had registered and listed shares in New York, yet held that Section 10(b) did not reach trades in those ordinary shares in Australia.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "foreign issuers with U.S. registered ADRs or listed shares"
   ],
   "supporting_quote": "The entire point of the Morrison opinion, however, is that Section 10(b) did not apply to trades in NAB's ordinary shares in Australia. This is inconsistent with a theory that the Court would apply Section 10(b) to any security listed on a U.S. exchange"
  },
  {
   "id": "kaal:claim:1765901-005",
   "url": "https://wulfkaal.github.io/claims/1765901-005",
   "claim": "There is no substantive difference between a foreign issuer listing ADRs on a U.S. exchange and listing its ordinary shares there, so Section 10(b) coverage of foreign transactions should not turn on which arrangement the issuer chose.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "foreign issuers accessing U.S. markets through ADRs"
   ],
   "supporting_quote": "It also makes little sense to argue that the result would be different, and Section 10(b) would apply to transactions in NAB's ordinary shares outside the United States, if NAB had listed its ordinary shares for trading on the NYSE instead of listing the ADRs."
  },
  {
   "id": "kaal:claim:1765901-006",
   "url": "https://wulfkaal.github.io/claims/1765901-006",
   "claim": "Section 30 of the Exchange Act is Congress's only articulation of the extraterritorial reach of Section 10(b), and Congress did not intend the Exchange Act to have extraterritorial effect beyond that provision.",
   "type": "condition",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "Exchange Act antifraud provisions"
   ],
   "supporting_quote": "The Morrison opinion also makes it clear that Con- gress did not intend the extraterritorial effect of the Exchange Act to go beyond the specific provisions of Section 30, which is Congress's only artic- ulation of the extraterritorial reach of Section 10(b)?2."
  },
  {
   "id": "kaal:claim:1765901-007",
   "url": "https://wulfkaal.github.io/claims/1765901-007",
   "claim": "The Supreme Court should have summarized its Morrison holding in language matching the opinion's logic, namely that Section 10(b) applies only to securities bought or sold in the United States; the Court's summary language instead invited confusion.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "judicial opinion drafting",
    "summary language of Morrison"
   ],
   "supporting_quote": "The Supreme Court should have avoided confusion by summarizing its hold- ing in language that conforms with the logic of the opinion, which clearly supports the conclusion that Section 10(b) applies only to securities bought or sold in the United States."
  },
  {
   "id": "kaal:claim:1765901-008",
   "url": "https://wulfkaal.github.io/claims/1765901-008",
   "claim": "Permitting Section 10(b) suits over dually listed securities traded outside the United States would undermine Morrison's own policy rationale, because it would interfere with the laws of other countries and turn the United States into a haven for plaintiffs' lawyers suing over foreign exchange purchases.",
   "type": "failure",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "dually listed securities",
    "purchases on foreign exchanges"
   ],
   "supporting_quote": "Furthermore, allowing Section 10(b) suits over dually listed securities traded outside the United States would undermine the strongest policy arguments discussed in the Morrison opinion -that applying Section 10(b) to foreign exchanges would interfere with the laws of other countries"
  },
  {
   "id": "kaal:claim:1765901-009",
   "url": "https://wulfkaal.github.io/claims/1765901-009",
   "claim": "Judge Baer's dismissal of the Porsche complaint reaches the correct result under Morrison, but parts of his reasoning require further refinement.",
   "type": "normative",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "security-based swap agreements referencing foreign traded stock"
   ],
   "supporting_quote": "In sum, Judge Baer's holding is correct under Morrison, but some of the reasoning needs further refinement."
  },
  {
   "id": "kaal:claim:1765901-010",
   "url": "https://wulfkaal.github.io/claims/1765901-010",
   "claim": "The Porsche swap transactions were not the functional equivalent of a transaction on a U.S. securities exchange, but neither were they the functional equivalent of a transaction on a German exchange, contrary to the implication of Judge Baer's opinion.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "over-the-counter security-based swap agreements"
   ],
   "supporting_quote": "In the actual Porsche case, however, the swap transactions were not the func- tional equivalent of a transaction on a U.S. securities exchange, even if they also were not the functional equivalent of a transaction on an exchange in Germany."
  },
  {
   "id": "kaal:claim:1765901-011",
   "url": "https://wulfkaal.github.io/claims/1765901-011",
   "claim": "The economic reality of swap agreements does not justify fixing the location of the transaction in every case solely by reference to the market where the reference security trades, even though Judge Baer was right that the Porsche swaps were not U.S. transactions.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "privately negotiated swap agreements",
    "application of Morrison to derivatives"
   ],
   "supporting_quote": "Judge Baer was right that these swap agreements were not transactions in the United States, but the \"economic reality\" of swap agree- ments does not support fixing a location for the transaction in every case based solely on the market for the reference security."
  },
  {
   "id": "kaal:claim:1765901-012",
   "url": "https://wulfkaal.github.io/claims/1765901-012",
   "claim": "Morrison provides no clear parameters for classifying privately negotiated transactions as domestic or foreign, because the case involved publicly traded securities and never reached the question.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "privately negotiated securities and derivative transactions"
   ],
   "supporting_quote": "There are currently no clear parameters for defining the location of privately negotiated transactions as domestic or foreign transactions under Morrison. Morrison did not explore this issue because that case involved securities that were publicly traded — in Australia."
  },
  {
   "id": "kaal:claim:1765901-013",
   "url": "https://wulfkaal.github.io/claims/1765901-013",
   "claim": "If the presence of a single U.S. party sufficed to locate a privately negotiated derivative transaction in the United States, U.S. parties could sue in U.S. courts regardless of other factors such as where the counterparties were located.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "privately negotiated derivative transactions",
    "a one party location test"
   ],
   "supporting_quote": "If the presence of one party alone should suffice, U.S. parties to privately negotiated derivative transactions would be able to sue in U.S. courts regardless of other factors, such as where the counterparties were located,"
  },
  {
   "id": "kaal:claim:1765901-014",
   "url": "https://wulfkaal.github.io/claims/1765901-014",
   "claim": "Locating a private transaction by the location of the parties is often unworkable, because the parties are frequently institutions simultaneously present in the United States and abroad, and individual parties are often in transit.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "private transactions in conventional securities",
    "institutional and mobile parties"
   ],
   "supporting_quote": "Parties to a private transaction are often institutions having a simultaneous presence in the U.S. and abroad. Individual parties to a private transaction are often in transit."
  },
  {
   "id": "kaal:claim:1765901-015",
   "url": "https://wulfkaal.github.io/claims/1765901-015",
   "claim": "Given the defects of a party location analysis, courts should de-emphasize where the parties are and instead use a totality of the circumstances approach to determine where a privately negotiated derivative transaction took place.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "privately negotiated derivative transactions under Morrison"
   ],
   "supporting_quote": "perhaps de-emphasizing the location of the parties while focusing on the totality of the circumstances could help establish appropriate parameters to determine where a privately negotiated derivative transaction took place."
  },
  {
   "id": "kaal:claim:1765901-016",
   "url": "https://wulfkaal.github.io/claims/1765901-016",
   "claim": "Treating the U.S. location of a broker as making the securities purchase domestic would circumvent most of the Morrison holding, since a foreign buyer of foreign securities could invoke U.S. law simply by routing the order through a U.S. broker.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "orders placed through U.S. brokers for execution on foreign exchanges"
   ],
   "supporting_quote": "The U.S. broker places the order based on an order from a foreign client, and U.S. securities law arguably would apply to the securities purchase, even if executed on a non-US. exchange. This line of argument would circum- vent most of the holding in Morrison."
  },
  {
   "id": "kaal:claim:1765901-017",
   "url": "https://wulfkaal.github.io/claims/1765901-017",
   "claim": "Non-U.S. investors have a strong incentive to route foreign trades through U.S. brokers if that preserves a U.S. cause of action, because their home jurisdictions rarely offer the attractive features of the U.S. system such as broad discovery, higher damages, class actions, and no exposure to defendants' costs.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "a broker location theory accepted by U.S. courts",
    "non-U.S. clients trading non-U.S. securities"
   ],
   "supporting_quote": "Indeed, the home jurisdiction of non-U.S. clients of U.S. brokers is not likely to provide many of the attractive features of the U.S. legal system, such as unparalleled discovery, a tendency towards higher damages and settle- ment amounts, the availability of securities class actions"
  },
  {
   "id": "kaal:claim:1765901-018",
   "url": "https://wulfkaal.github.io/claims/1765901-018",
   "claim": "For exchange traded securities, the location of the exchange rather than the location of the plaintiff's broker should be the controlling factor under Morrison, although it is uncertain whether all courts will adopt this bright line test.",
   "type": "design",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "exchange traded securities",
    "claims analyzed under Morrison"
   ],
   "supporting_quote": "location of the exchange, not the location of the plaintiff's broker, should be the controlling factor, but it remains to be seen whether this bright line test will in fact be the rule adopted by all courts."
  },
  {
   "id": "kaal:claim:1765901-019",
   "url": "https://wulfkaal.github.io/claims/1765901-019",
   "claim": "Porsche could be exposed to substantial U.S. sanctions even though neither its own common stock nor Volkswagen's traded in the United States, solely because of swap agreements to which Porsche was not a party.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "derivative contracts referencing foreign traded shares",
    "foreign issuers with no U.S. listing"
   ],
   "supporting_quote": "Albeit seemingly without its own common stock trading in the U.S. or the common stock of Volkswagen trading in the U.S., Porsche could be ex- posed to substantial sanctions in the U.S. merely because of swap agreements in which Porsche had no involvement."
  },
  {
   "id": "kaal:claim:1765901-020",
   "url": "https://wulfkaal.github.io/claims/1765901-020",
   "claim": "If Section 10(b) were held to reach swap agreements based on stocks traded outside the United States, plaintiffs' attorneys would use that holding as precedent to limit Morrison broadly, and other courts might create a general exception for U.S. derivative contracts referencing non-U.S. securities.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "appellate reversal of the Porsche dismissal",
    "U.S. derivative contracts referencing foreign securities"
   ],
   "supporting_quote": "If Section 10(b) is held to apply to cases involving swap agreements based on stocks traded outside the U.S., plaintiffs' attorneys would be encouraged to use such a holding in Porsche as precedent to limit the application of Morrison in a wide range of contexts."
  },
  {
   "id": "kaal:claim:1765901-021",
   "url": "https://wulfkaal.github.io/claims/1765901-021",
   "claim": "Unless courts can construe Morrison for swap agreements and other derivatives consistently with both the logic and the language of the opinion, Congress will have to enact new clarifying legislation.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "derivative transactions with extraterritorial components"
   ],
   "supporting_quote": "Unless courts can clearly construe Morrison in the context of swap agreements and other derivative securities, in a manner that is consistent with the logic as well as the language of the Court's opinion, Congress will have to enact new legislation that clarifies this issue."
  },
  {
   "id": "kaal:claim:1765901-022",
   "url": "https://wulfkaal.github.io/claims/1765901-022",
   "claim": "The Second Circuit should uphold Judge Baer's ruling on a totality of the circumstances basis and explain more fully how those circumstances determine the location of a swap agreement under Morrison.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "asserted",
   "scope_conditions": [
    "appeal of the Porsche dismissal"
   ],
   "supporting_quote": "The Second Circuit should uphold Judge Baer's ruling based on the totality of the circumstances and also explain more completely how these circumstances should be evaluated for the purpose of determining the location of a swap agreement under Morrison."
  },
  {
   "id": "kaal:claim:1765901-023",
   "url": "https://wulfkaal.github.io/claims/1765901-023",
   "claim": "On its face Section 929P(b) of the Dodd-Frank Act addresses only the jurisdiction of the district courts and does not expand the geographic scope of the substantive provisions of U.S. securities law.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "suits brought by the SEC or the Department of Justice",
    "the enacted text as distinct from legislative history"
   ],
   "supporting_quote": "On its face, the language of Section 929P(b) does not expand the geographic scope of substantive regula- tory provisions of the U.S. Securities laws."
  },
  {
   "id": "kaal:claim:1765901-024",
   "url": "https://wulfkaal.github.io/claims/1765901-024",
   "claim": "There is a substantial likelihood that U.S. courts will read the Dodd-Frank Act as giving some extraterritorial effect to SEC and DOJ suits, so Morrison cannot be expected to survive intact in actions brought under Section 929P(b).",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "enforcement suits brought by the SEC or DOJ"
   ],
   "supporting_quote": "There is substantial likelihood that U.S. courts could find that Congress has provided for some extraterritorial effect for SEC and DOJ suits in the Dodd-Frank Act and that therefore Morrison cannot be upheld in its entirety in suits by the SEC or the DOJ under Section 929P(b)."
  },
  {
   "id": "kaal:claim:1765901-025",
   "url": "https://wulfkaal.github.io/claims/1765901-025",
   "claim": "Section 929P(b) may not have been necessary, because Section 10(b) already gives the SEC enforcement authority whenever a single U.S. securities transaction is affected by the alleged fraud.",
   "type": "condition",
   "topics": [
    "securities-law",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "SEC enforcement authority after Morrison"
   ],
   "supporting_quote": "Section 929P(b) furthermore may not have been necessary. Section 10(b) al- ready gives the SEC enforcement authority whenever a single U.S. securities transaction is affected by the alleged fraud."
  },
  {
   "id": "kaal:claim:1765901-026",
   "url": "https://wulfkaal.github.io/claims/1765901-026",
   "claim": "Foreign-cubed rulings such as Morrison determined the size of the plaintiff class in private suits, but were irrelevant to the SEC's ability to enforce wherever a U.S. securities transaction is connected to the alleged fraud.",
   "type": "condition",
   "topics": [
    "securities-law",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "private class actions compared with SEC enforcement"
   ],
   "supporting_quote": "Morrison and other foreign-cubed cases determined the size of the plaintiff class in private suits, an issue relevant to the compensation of plaintiffs' lawyers, but the rulings in these cases were irrelevant to whether the SEC could pursue enforcement"
  },
  {
   "id": "kaal:claim:1765901-027",
   "url": "https://wulfkaal.github.io/claims/1765901-027",
   "claim": "Read as more than a jurisdictional grant, the Dodd-Frank provision becomes an open-ended statute rather than the targeted authority the SEC already held under Section 10(b) and Section 30, and it is undesirable for the SEC to use such powers unilaterally without consulting foreign regulators and the U.S. foreign policy establishment.",
   "type": "normative",
   "topics": [
    "securities-law",
    "compliance",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "if Section 929P(b) is construed to confer substantive powers"
   ],
   "supporting_quote": "To the extent the provision gives the SEC additional powers, it may not be desirable that the SEC use these powers unilaterally without consulting with both foreign se- curities regulators and the United States foreign policy establishment."
  },
  {
   "id": "kaal:claim:1765901-028",
   "url": "https://wulfkaal.github.io/claims/1765901-028",
   "claim": "Section 929P(b) risks complications where the SEC proceeds unilaterally in situations in which coordinated enforcement with foreign regulators would be more effective, for example insider trading cases involving exchanges whose home regimes do not recognize comparable insider trading rules.",
   "type": "failure",
   "topics": [
    "securities-law",
    "compliance",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "unilateral SEC enforcement over foreign exchange transactions"
   ],
   "supporting_quote": "The provision risks complications if the SEC pursues cases unilaterally when coordinated enforcement with foreign regulators would be more effective."
  },
  {
   "id": "kaal:claim:1765901-029",
   "url": "https://wulfkaal.github.io/claims/1765901-029",
   "claim": "Expanded SEC enforcement under the Dodd-Frank provision runs a serious risk of being perceived as an encroachment on the corporate governance of foreign companies.",
   "type": "predictive",
   "topics": [
    "governance-design",
    "corporate-governance",
    "securities-law",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "expanded extraterritorial enforcement by the SEC or DOJ"
   ],
   "supporting_quote": "There is serious risk that such SEC enforcement actions would be perceived to encroach upon the corporate governance of foreign companies"
  },
  {
   "id": "kaal:claim:1765901-030",
   "url": "https://wulfkaal.github.io/claims/1765901-030",
   "claim": "Overuse of the Dodd-Frank extraterritorial enforcement provision by the SEC or the DOJ could deter foreign companies from having U.S. operations.",
   "type": "predictive",
   "topics": [
    "securities-law",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "frequent extraterritorial enforcement under Section 929P(b)"
   ],
   "supporting_quote": "Overuse of this provision by the SEC or DOJ could deter foreign companies from having U.S. operations."
  },
  {
   "id": "kaal:claim:1765901-031",
   "url": "https://wulfkaal.github.io/claims/1765901-031",
   "claim": "Extending private rights of action extraterritorially would expose non-U.S. companies to Section 10(b) liability based on any U.S. conduct, including conduct inside U.S. business operations alleged to have produced securities fraud abroad, and much of global securities litigation would migrate to the United States.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "if Congress legislatively overrules Morrison for private plaintiffs"
   ],
   "supporting_quote": "Non-U.S. companies could be subject to liability under Section 10(b) if they have any conduct in the U.S. - for example conduct inside U.S. business operations — that could be alleged to have resulted in securities fraud outside the U.S."
  },
  {
   "id": "kaal:claim:1765901-032",
   "url": "https://wulfkaal.github.io/claims/1765901-032",
   "claim": "A private right of action in foreign-cubed cases would compel EU companies to modify U.S. business operations that expose them to Section 10(b) litigation, including operations unrelated to U.S. securities markets or U.S. investors.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "if Congress imposes a private right of action in foreign-cubed cases",
    "EU companies with U.S. operations"
   ],
   "supporting_quote": "If Congress decided to impose a private right of action in foreign-cubed cases, EU companies could be compelled to modify their U.S. business operations that expose them to Section 10(b) litigation, including business operations that have nothing to do with U.S. securities markets"
  },
  {
   "id": "kaal:claim:1765901-033",
   "url": "https://wulfkaal.github.io/claims/1765901-033",
   "claim": "Changing national rules in a spirit of cooperation among states and regulators is more productive for preventing securities fraud than imposing U.S. rules on foreign nations through extraterritorial imperialism.",
   "type": "normative",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "cross border securities fraud enforcement"
   ],
   "supporting_quote": "Cooperation among nation states and their regulators to prevent securities fraud could help improve foreign relations. Changing national rules in the spirit of cooperation is likely to be more productive than imposing rules on foreign nations through extraterritorial imperialism."
  },
  {
   "id": "kaal:claim:1765901-034",
   "url": "https://wulfkaal.github.io/claims/1765901-034",
   "claim": "Regardless of what the SEC study concludes, Congress should decline to reinstate private rights of action in foreign-cubed cases.",
   "type": "normative",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "asserted",
   "scope_conditions": [
    "the Section 929Y study of private rights of action"
   ],
   "supporting_quote": "An SEC study of private rights of action is also required by the Dodd-Frank Act, but regardless of the outcome of this study, Congress should decline to reinstate private rights of action in \"foreign-cubed\" cases."
  },
  {
   "id": "kaal:claim:1765901-035",
   "url": "https://wulfkaal.github.io/claims/1765901-035",
   "claim": "The SEC study is very unlikely to produce an extraterritorial extension of private rights of action so long as Republicans control the House of Representatives.",
   "type": "predictive",
   "topics": [
    "securities-law",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "asserted",
   "scope_conditions": [
    "U.S. political control of the House of Representatives"
   ],
   "supporting_quote": "The SEC study, whatever it recommends, is very unlikely to result in extend- ing private rights of action extraterritorially so long as the Republicans control the House of Representatives."
  },
  {
   "id": "kaal:claim:1765901-036",
   "url": "https://wulfkaal.github.io/claims/1765901-036",
   "claim": "Because of the ambiguities in Morrison and Dodd-Frank and the consequences of a broad reading for persons and companies in European and other jurisdictions, Congress should clarify its intent in Section 929P(b) with respect to SEC and DOJ suits over securities transactions outside the United States.",
   "type": "design",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "SEC and DOJ suits over securities transactions outside the United States"
   ],
   "supporting_quote": "Congress should also clarify its intent in Section 929P(b) with respect to SEC and DOJ suits over securities transac- tions outside the United States."
  },
  {
   "id": "kaal:claim:1765901-037",
   "url": "https://wulfkaal.github.io/claims/1765901-037",
   "claim": "A clear and restrained U.S. approach to extraterritoriality will bring predictability to global securities markets and avoid a downturn in international economic cooperation.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "securities-law",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Painter, The Aftermath of Morrison v. National Australia Bank and Elliott Associates v. Porsche (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765901",
   "year": "2011",
   "source_sha256": "7b08b8a15f7d72b4eeed41be2d17c20428cb4727269077a6575c5d22e31ecdc5",
   "confidence": "argued",
   "scope_conditions": [
    "restraint and clarification of U.S. extraterritorial securities law"
   ],
   "supporting_quote": "A clear and restrained approach to extraterri- toriality in the U.S. will bring predictability to global securities markets and avoid a downturn in international economic cooperation."
  },
  {
   "id": "kaal:claim:2061166-001",
   "url": "https://wulfkaal.github.io/claims/2061166-001",
   "claim": "Where bank resolution regimes are not coordinated across jurisdictions, the same systemically important financial institution can be handled in opposite ways: it might petition for reorganization under German law and emerge leaner and more competitive, while its United States operations are liquidated under the Boxer Amendment of the Dodd-Frank Act.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "SIFIs with operations in multiple countries",
    "absent coordination and convergence of resolution regimes"
   ],
   "supporting_quote": "it is possible that a SIFI with operations in multiple countries could petition for reorganization under German law, for instance, and emerge as a more competitive and leaner business while the same SIFI in the United States may be liquidated under the Boxer Amendment of the Dodd-Frank Act."
  },
  {
   "id": "kaal:claim:2061166-002",
   "url": "https://wulfkaal.github.io/claims/2061166-002",
   "claim": "The authors contend that the European Commission's goal of maximum harmonization through a global single rule book may not be achievable, and that a legal framework for private ordering of contingent capital is the more realistic route to an adequate level of convergence.",
   "type": "design",
   "topics": [
    "risk-and-incentives",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "European Union bank resolution and restructuring regimes"
   ],
   "supporting_quote": "The European Commission's objective of creating maximum harmonization through a global \"single rule book\"22 may not be feasible. However, setting up a legal framework for private ordering in the context of contingent capital23 could provide an adequate level of convergence"
  },
  {
   "id": "kaal:claim:2061166-003",
   "url": "https://wulfkaal.github.io/claims/2061166-003",
   "claim": "Contingent capital is stipulated as the predefined conversion of a financial institution's debt securities into equity securities, and on that definition it supplies an option for the efficient restructuring and resolution of failing financial institutions.",
   "type": "definitional",
   "topics": [
    "contingent-capital",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "asserted",
   "supporting_quote": "Contingent capital is the predefined conversion of a financial institution's debt securities into equity securities.24 Contingent capital provides an option for the efficient restructuring and resolution of failing financial institutions."
  },
  {
   "id": "kaal:claim:2061166-004",
   "url": "https://wulfkaal.github.io/claims/2061166-004",
   "claim": "Purely national crisis measures proved ineffective during the financial crisis because they could not reach cross-border banking operations or contain contagion, as the failures of Lehman Brothers, Fortis, the Icelandic banks, Northern Rock and Hypo Real Estate Holding demonstrated.",
   "type": "failure",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "evidenced",
   "scope_conditions": [
    "bank failures with cross-border operations",
    "2007 to 2009 financial crisis"
   ],
   "supporting_quote": "national measures proved ineffective and failed to address cross-border banking operations or contagion."
  },
  {
   "id": "kaal:claim:2061166-005",
   "url": "https://wulfkaal.github.io/claims/2061166-005",
   "claim": "Because most national crisis responses took the form of public bail-outs adopted without broad international consensus, they increased the threat of international regulatory arbitrage and damaged the global competitiveness of national financial markets.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "regulatory-failure",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "crisis-era emergency measures adopted without international coordination"
   ],
   "supporting_quote": "Most national measures took the form of public bail-outs without broad international consensus,44 thereby increasing the threat of international regulatory arbitrage as well as negatively impacting the global competitiveness of national financial markets."
  },
  {
   "id": "kaal:claim:2061166-006",
   "url": "https://wulfkaal.github.io/claims/2061166-006",
   "claim": "Mutual recognition of countercyclical capital buffers hollows out the national discretion the Commission proposal appears to grant: the financially strongest Member States with the largest financial sectors will effectively set the buffer size for smaller Member States whose institutions do business there.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "countercyclical buffers up to the 2.5 percent mutual recognition ceiling",
    "institutions with branches or subsidiaries in the buffer-setting Member State"
   ],
   "supporting_quote": "Therefore, the financially stronger Member States with the largest financial sectors may dictate the size of countercyclical buffers for smaller Member States, thereby practically reducing any proposed national discretion."
  },
  {
   "id": "kaal:claim:2061166-007",
   "url": "https://wulfkaal.github.io/claims/2061166-007",
   "claim": "Even the residual national discretion to set countercyclical buffers between 2.5 and 5 percent is misleading, because a Member State such as the United Kingdom is unlikely to sustain a 5 percent buffer while Germany requires only 2.5 percent and thereby hands German banks a competitive advantage.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "buffers set above the 2.5 percent mutual recognition ceiling",
    "competing national banking sectors, especially where the state holds bank ownership stakes"
   ],
   "supporting_quote": "The Commission proposal explicitly allows Member States to implement countercyclical buffers of up to 5%, but limits mutual recognition to the 2.5% ceiling. Even in these instances, the proposed discretion may be misleading."
  },
  {
   "id": "kaal:claim:2061166-008",
   "url": "https://wulfkaal.github.io/claims/2061166-008",
   "claim": "The authors identify a drafting defect in the proposed CRD IV Regulation: the distinction drawn by financial institution in Article 51(a) is ambiguous and the cross reference to the institution referred to in point (a) of Article 87 is unclear and indeterminate, so the provision requires clarification or amendment.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "Article 51 of the proposed CRD IV Regulation as drafted"
   ],
   "supporting_quote": "the distinction is ambiguous and requires further clarification or amendment. Specifically, the statutory reference in § 51, ¶ (a) (\"of the institution referred to in point (a) of Article 87\") is unclear and indeterminate."
  },
  {
   "id": "kaal:claim:2061166-009",
   "url": "https://wulfkaal.github.io/claims/2061166-009",
   "claim": "Placing bank reorganization in the hands of an administrative supervisory authority rather than a bankruptcy court, as Swiss law does, trades better sector knowledge and a faster procedure against the cost of very broad agency discretion.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "civil law jurisdictions where the supervisor is also the resolution authority",
    "Swiss Federal Law on Banks and Savings and Loans"
   ],
   "supporting_quote": "The perceived advantage is better knowledge of the banking sector that may result in a more efficient and expeditious procedure. The clear disadvantage is the broad discretion of the agency in overseeing financial institutions."
  },
  {
   "id": "kaal:claim:2061166-010",
   "url": "https://wulfkaal.github.io/claims/2061166-010",
   "claim": "Reliance on public bail-outs, unaccompanied by any threat that management, shareholders and creditors would share significant losses, created an asymmetric incentive for excessive risk taking by financial institutions.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "Germany and the United States during the height of the financial crisis",
    "where insolvency was not a credible threat"
   ],
   "supporting_quote": "The reliance on a public bail-out without the threat of any significant losses shared by management, shareholders and creditors may have created an asymmetric incentive for excessive risk taking by financial institutions."
  },
  {
   "id": "kaal:claim:2061166-011",
   "url": "https://wulfkaal.github.io/claims/2061166-011",
   "claim": "Before the 2010 reform, the German regulatory intervention regime for financial institutions contained no procedure that would have reliably permitted a bank to be operated as a going concern during the financial crisis.",
   "type": "failure",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "German law prior to the Financial Institution Reorganization Act entering into force on January 1, 2011"
   ],
   "supporting_quote": "In addition, the German regulatory intervention regime for financial institutions did not allow for any procedure that would have reliably permitted operating a bank as a going concern during the financial crisis."
  },
  {
   "id": "kaal:claim:2061166-012",
   "url": "https://wulfkaal.github.io/claims/2061166-012",
   "claim": "The German provision allowing appropriate compensation of shareholders whose rights are impaired can defeat the statute's own purpose, because time is of the essence in bank reorganization and the appointment of a court-appointed expert to value shareholder claims may significantly slow the procedure.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "corporate-governance",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "reorganization procedure under the German Financial Institution Reorganization Act",
    "where shareholders' rights are permanently impaired by the plan"
   ],
   "supporting_quote": "Time is of the essence in any bank reorganization and the appointment of an expert may significantly slow down the procedure, making it less effective."
  },
  {
   "id": "kaal:claim:2061166-013",
   "url": "https://wulfkaal.github.io/claims/2061166-013",
   "claim": "The German voluntary reorganization procedure has a structural gap: groups of financial institutions, financial holding groups and conglomerates cannot petition for protection under it, even though these are precisely the entities that qualify as systemically important and pose the highest risk to market stability on failure.",
   "type": "failure",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "voluntary reorganization procedure under the German Financial Institution Reorganization Act",
    "not applicable to the involuntary procedure initiated by the supervisor under the German Banking Act"
   ],
   "supporting_quote": "Unlike the involuntary reorganization procedure initiated by the Supervisory Authority under the German Banking Act,333 groups of financial institutions, financial holding groups, or conglomerates are not eligible to petition for protection under the voluntary reorganization procedure."
  },
  {
   "id": "kaal:claim:2061166-014",
   "url": "https://wulfkaal.github.io/claims/2061166-014",
   "claim": "Because German law fixes no threshold conditions or determining factors for market reception or market confidence, the systemic relevance and contagion determinations that turn on those factors can never be made in a reliable and objective manner.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "determination of systemic threat under the German Banking Act"
   ],
   "supporting_quote": "The German law does not stipulate any threshold conditions or determining factors for market reception or confidence. As a result, it will always be difficult to determine any of these factors in a reliable and objective manner."
  },
  {
   "id": "kaal:claim:2061166-015",
   "url": "https://wulfkaal.github.io/claims/2061166-015",
   "claim": "Because the amendments to the German Banking Act sharply increase the supervisor's intervention powers, the prospect that any systemically important bank would voluntarily petition under the German stabilization or reorganization procedure is remote at best.",
   "type": "predictive",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "systemically important banks in Germany",
    "after the increase of BaFin intervention powers, which also reach groups, financial holdings and conglomerates"
   ],
   "supporting_quote": "Furthermore, in context of these increased powers the likelihood that any systemically important bank may file a voluntary petition under the German stabilization or reorganization procedure seems remote at best."
  },
  {
   "id": "kaal:claim:2061166-016",
   "url": "https://wulfkaal.github.io/claims/2061166-016",
   "claim": "The supervisor's discretion to set a deadline for a recovery plan before issuing a transfer order is unlikely ever to be exercised in practice, because in a crisis time will be of the essence to prevent contagion.",
   "type": "failure",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "asset transfer to a bridge bank under the German Banking Act",
    "crisis conditions with contagion risk"
   ],
   "supporting_quote": "Considering the turmoil of the financial crisis, it is doubtful that the Authority will ever have the privilege to exercise this discretion as time will be of the essence to prevent contagion."
  },
  {
   "id": "kaal:claim:2061166-017",
   "url": "https://wulfkaal.github.io/claims/2061166-017",
   "claim": "Requiring only that consideration be commensurate with the value of transferred assets invites frequent and significant disputes over valuation, a problem compounded when the consideration consists of shares in the bridge bank, whose own value must then also be assessed.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "asset transfers to a bridge bank under the German Banking Act",
    "consideration paid in shares of the transferee entity"
   ],
   "supporting_quote": "However, because the required consideration must only be commensurate with the value of the transferred assets,419 there may often be significant disagreements over the issue of valuation."
  },
  {
   "id": "kaal:claim:2061166-018",
   "url": "https://wulfkaal.github.io/claims/2061166-018",
   "claim": "The German bank levy is internally inconsistent because financial institutions without systemic relevance must contribute to the reorganization fund yet are ineligible to receive support payments from it.",
   "type": "failure",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "German reorganization fund financed by a levy on all German banks"
   ],
   "supporting_quote": "The German levy system is problematic because financial institutions without systemic relevance are required to contribute to the fund, yet are not able to receive fund support payments."
  },
  {
   "id": "kaal:claim:2061166-019",
   "url": "https://wulfkaal.github.io/claims/2061166-019",
   "claim": "The German reorganization fund's maximum volume of 70 billion euros may not suffice in a financial crisis, and the availability of those funds and the time needed to raise them are an even greater concern than the ceiling itself.",
   "type": "failure",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "German reorganization fund under the Restructuring Fund Law"
   ],
   "supporting_quote": "Another point of contention is the size of the fund with a maximum volume of 70 billion euros.447 It is questionable if this amount will suffice during a financial crisis. The availability of these funds and the time it will take to raise them is of even greater concern."
  },
  {
   "id": "kaal:claim:2061166-020",
   "url": "https://wulfkaal.github.io/claims/2061166-020",
   "claim": "The German Banking Act requirement that a bridge bank have its head office inside Germany is of highly questionable compatibility with European Union law, specifically the principle of free movement of capital under Article 63 TFEU.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "bridge bank transferee requirements under the German Banking Act"
   ],
   "supporting_quote": "It is highly questionable whether this requirement conforms to the Law of the European Union, namely the principal of free movement of capital, TFEU, art. 63."
  },
  {
   "id": "kaal:claim:2061166-021",
   "url": "https://wulfkaal.github.io/claims/2061166-021",
   "claim": "Contingent capital supports general risk control and reduces moral hazard by holding shareholders responsible and internalizing the costs of bank failure rather than externalizing them onto taxpayers.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "risk-and-incentives",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "supporting_quote": "Contingent capital may also support general risk control in financial institutions454 and may contribute to minimizing moral hazard by holding shareholders responsible and internalizing bank failure costs."
  },
  {
   "id": "kaal:claim:2061166-022",
   "url": "https://wulfkaal.github.io/claims/2061166-022",
   "claim": "Because conversion carries a threat of loss and implicit dilution of stock holdings, contingent capital reduces shareholders' incentive to push management toward higher risk in pursuit of higher returns.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "risk-and-incentives",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "conversion terms that dilute existing equity holders"
   ],
   "supporting_quote": "Moreover, given the threat of loss due to conversion and the implicit dilution of stock holdings, contingent capital has the potential to reduce incentives for shareholders to encourage management to take higher risks for higher returns."
  },
  {
   "id": "kaal:claim:2061166-023",
   "url": "https://wulfkaal.github.io/claims/2061166-023",
   "claim": "The authors contend that the European Commission's suggested floor of 4 to 19 percent of risk-weighted assets in pre-qualified bail-inable debt under the targeted approach is unrealistically high.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "contingent-capital",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "targeted approach in the DG Internal Market working document"
   ],
   "supporting_quote": "The Commission suggests that the pre-qualified amount of debt could include a fixed minimum for all institutions between 4 and 19 per cent of risk-weighted assets.470 Although these numbers seem unrealistically high"
  },
  {
   "id": "kaal:claim:2061166-024",
   "url": "https://wulfkaal.github.io/claims/2061166-024",
   "claim": "Implementing the European Commission's debt write-down proposal has the potential to increase funding costs for financial institutions and to make their funding more volatile.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "contingent-capital"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "evidenced",
   "scope_conditions": [
    "statutory bail-in regime as proposed by the Commission"
   ],
   "supporting_quote": "The implementation of the debt write-down in the European Commission proposal also has the potential of increasing funding costs for financial institutions475 and could make funding more volatile."
  },
  {
   "id": "kaal:claim:2061166-025",
   "url": "https://wulfkaal.github.io/claims/2061166-025",
   "claim": "Article 13 of the Swiss Banking Act, which authorizes boards of systemically important banks to issue mandatory convertible bonds subject to disclosure of the conversion triggering event and permits tranches with multiple triggers, could serve as a model for other European legislators and for the United States legislator.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "systemically important banks",
    "issuance within the scope of the articles of incorporation with disclosed trigger events"
   ],
   "supporting_quote": "The Swiss approach in Article 13 could perhaps become a model for other European legislators and perhaps even the U.S. legislator."
  },
  {
   "id": "kaal:claim:2061166-026",
   "url": "https://wulfkaal.github.io/claims/2061166-026",
   "claim": "Enacting the proposed German Corporation Act amendments that would give contingent capital securities a statutory basis would require substantial changes across other areas of German law, and is unlikely to be achieved unless European Union law requires it and the standards are internationally recognized.",
   "type": "condition",
   "topics": [
    "contingent-capital",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "proposed amendments to Sections 192, 194 and 221 of the German Corporation Act"
   ],
   "supporting_quote": "Implementing the amendments would require substantial changes in other areas of German law.519 This may not be easily achieved unless required under European Union law and internationally recognized."
  },
  {
   "id": "kaal:claim:2061166-027",
   "url": "https://wulfkaal.github.io/claims/2061166-027",
   "claim": "Efficient calibration of the triggering event is the central design problem for contingent capital, and the optimal design of a trigger that converts debt into equity remains unclear.",
   "type": "design",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "supporting_quote": "The efficient calibration of triggering events is central to the design of contingent capital. The optimal design for a trigger event that converts debt into equity is unclear."
  },
  {
   "id": "kaal:claim:2061166-028",
   "url": "https://wulfkaal.github.io/claims/2061166-028",
   "claim": "Mandating the issuance of contingent capital does not guarantee that a viable market in contingent capital securities will develop.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "economics",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "mandatory minimum issuance requirements imposed by regulators"
   ],
   "supporting_quote": "Mandatory issuance of contingent capital does not guarantee that a viable market in contingent capital securities will develop."
  },
  {
   "id": "kaal:claim:2061166-029",
   "url": "https://wulfkaal.github.io/claims/2061166-029",
   "claim": "Building critical mass in the contingent capital securities market could require banks and other financial institutions to buy their competitors' contingent capital securities, which would raise ethical, antitrust and incentive concerns.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "reputation",
    "economics",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "where non-bank demand is insufficient to absorb issuance volumes"
   ],
   "supporting_quote": "Developing a critical mass for the market in contingent capital securities could require banks and other financial institutions to purchase their competitors' contingent capital securities.533 That could raise ethical, antitrust, and incentive concerns."
  },
  {
   "id": "kaal:claim:2061166-030",
   "url": "https://wulfkaal.github.io/claims/2061166-030",
   "claim": "The authors posit an inverse relationship between trigger uncertainty and market development: as the uncertainty generated by trigger designs increases, issuance volume of contingent capital securities falls, while the risk and the pre-conversion interest rate on those securities rises.",
   "type": "mechanism",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "speculative",
   "scope_conditions": [
    "the interplay of trigger structure, uncertainty and market development has not been systematically studied"
   ],
   "supporting_quote": "Line 1 shows that, as the uncertainty generated by the trigger designs increases, the volume of CCS could decrease. Line 2 suggests that risk and the interest rates of CCS (before conversion) will increase with the level of uncertainty in the trigger design"
  },
  {
   "id": "kaal:claim:2061166-031",
   "url": "https://wulfkaal.github.io/claims/2061166-031",
   "claim": "A trigger that fires too early wastes the equity injection: conversion occurs without a real need for capital or additional voting shareholders, and the effect of the injection may have dissipated by the time it is actually needed.",
   "type": "failure",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "contingent capital converting on a trigger set too far from distress"
   ],
   "supporting_quote": "If conversion is triggered too early without a real need for an equity capital injection (and additional voting shareholders), the impact of the equity capital injection may have dissipated and may no longer be available when actually needed."
  },
  {
   "id": "kaal:claim:2061166-032",
   "url": "https://wulfkaal.github.io/claims/2061166-032",
   "claim": "A trigger that fires too late is equally useless: by then the financial institution may already be in the resolution stage, and conversion at that point will not supply enough equity to turn the company around.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "contingent capital converting only at or near the point of non-viability"
   ],
   "supporting_quote": "If conversion from debt to equity is triggered too late, the financial institution may already be in the resolution stage and conversion at that stage would not supply the company with sufficient equity to turn the company around."
  },
  {
   "id": "kaal:claim:2061166-033",
   "url": "https://wulfkaal.github.io/claims/2061166-033",
   "claim": "Dual trigger proposals draw their central strength from reliance on market prices, but the index leg is a major disadvantage because it can create incentives to manipulate the index or to force an entity into bankruptcy before conversion occurs.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "dual trigger designs combining a firm stock price trigger with a financial institutions index trigger"
   ],
   "supporting_quote": "A central strength of the dual trigger proposals is their reliance on market prices. A major disadvantage is the index trigger, which could potentially create incentives to manipulate the index or to try to force an entity into bankruptcy."
  },
  {
   "id": "kaal:claim:2061166-034",
   "url": "https://wulfkaal.github.io/claims/2061166-034",
   "claim": "A second, sequential trigger placed before reorganization or resolution cushions the risk that policy makers misstructure the first trigger, absorbing the negative effects of inadequate or untimely conversion at the moment the institution needs capital.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "systemic-risk",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "contingent capital with sequential triggers spanning going and gone concern",
    "where the first trigger proves unsuccessful"
   ],
   "supporting_quote": "Given the risk that policy makers may not structure the trigger appropriately, the negative effects of inadequate or untimely conversion of debt into equity at a time when the company requires a capital injection could be cushioned with a second trigger"
  },
  {
   "id": "kaal:claim:2061166-035",
   "url": "https://wulfkaal.github.io/claims/2061166-035",
   "claim": "Conversion of contingent capital securities from debt to equity should be timed to occur once problems are first detected but before the early intervention powers of regulatory authorities are triggered.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "asserted",
   "scope_conditions": [
    "European Union bank resolution framework with early intervention powers"
   ],
   "supporting_quote": "Conversion of CCS from debt to equity should take place when problems are first detected but before early intervention powers of regulatory authorities are triggered."
  },
  {
   "id": "kaal:claim:2061166-036",
   "url": "https://wulfkaal.github.io/claims/2061166-036",
   "claim": "Using contingent capital as a preventative tool does not foreclose the statutory core power or the debt write-down tool within resolution; if early contractual write-down and conversion fail, authorities remain free to intervene and impose a haircut on shareholders, debt investors and other private parties.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "contractual conversion at an early stage that does not achieve the desired result"
   ],
   "supporting_quote": "Contingent capital as a preventative tool would not impede the statutory core power or debt write-down tool of bail-inables within resolution."
  },
  {
   "id": "kaal:claim:2061166-037",
   "url": "https://wulfkaal.github.io/claims/2061166-037",
   "claim": "Convergence of contingent capital standards is impeded by a first mover problem: single jurisdictions hesitate to impose contingent capital requirements before they know how competing jurisdictions and their financial institutions will structure their own rules.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions whose banks compete internationally"
   ],
   "supporting_quote": "This could partially be due to a first mover problem. Single jurisdictions could be hesitant to implement contingent capital requirements without first knowing how other jurisdictions and financial institutions that compete with their home institutions may structure their contingent capital rules."
  },
  {
   "id": "kaal:claim:2061166-038",
   "url": "https://wulfkaal.github.io/claims/2061166-038",
   "claim": "Without a degree of similarity and convergence in bank resolution and contingent capital rules, regulatory arbitrage will work against establishing contingent capital as an integral part of financial markets.",
   "type": "condition",
   "topics": [
    "regulatory-failure",
    "contingent-capital",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "absent international convergence of resolution and contingent capital rules"
   ],
   "supporting_quote": "Without a degree of similarity and convergence in bank resolution and contingent capital rules, regulatory arbitrage could have an adverse effect on establishing contingent capital as an integral part of financial markets."
  },
  {
   "id": "kaal:claim:2061166-039",
   "url": "https://wulfkaal.github.io/claims/2061166-039",
   "claim": "Given the European initiatives on contingent capital and the nascent European market in contingent capital securities, the Board of Governors of the United States Federal Reserve would be well advised to consider implementing contingent capital standards.",
   "type": "normative",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "argued",
   "scope_conditions": [
    "United States regulators acting under Dodd-Frank authority contingent on the mandated feasibility study"
   ],
   "supporting_quote": "Given the European initiatives on contingent capital and the nascent market in European contingent capital securities, the Board of Governors of the United States Federal Reserve would be well advised to consider implementing contingent capital standards."
  },
  {
   "id": "kaal:claim:2061166-040",
   "url": "https://wulfkaal.github.io/claims/2061166-040",
   "claim": "The Basel Committee rejected European Union Member State requests to allow contingent capital to satisfy the new capital buffer requirements under Basel III, deciding instead that systemically important institutions must meet heightened capital requirements with retained earnings and ordinary shares.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166",
   "year": "2012",
   "source_sha256": "43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Basel III capital buffer requirements for systemically important financial institutions"
   ],
   "supporting_quote": "The Basel Committee rejected requests from EU Member States to use contingent capital to satisfy the new capital buffer requirements under Basel III."
  },
  {
   "id": "kaal:claim:2097160-001",
   "url": "https://wulfkaal.github.io/claims/2097160-001",
   "claim": "Early European initiatives to put contingent convertible bonds into executive pay lack governance-improving designs; contingent convertible bonds with an early conversion trigger should be used in executive compensation instead.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "corporate-governance",
    "governance-design",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "systemically important financial institutions",
    "executive compensation packages"
   ],
   "supporting_quote": "Early initiatives by European SIFIs to include contingent convertible bonds in executive compensation packages lack governance-improving designs. This Article suggests the use of contingent convertible bonds with an early conversion trigger in executive compensation."
  },
  {
   "id": "kaal:claim:2097160-002",
   "url": "https://wulfkaal.github.io/claims/2097160-002",
   "claim": "The methodological assumptions of incomplete contract theory improve the analysis of executive compensation arrangements relative to the classical and spot contract models normally used.",
   "type": "design",
   "topics": [
    "economics",
    "institutional-design",
    "corporate-governance",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "supporting_quote": "The methodological assumptions of incomplete contract theory can improve the analysis of executive compensation arrangements."
  },
  {
   "id": "kaal:claim:2097160-003",
   "url": "https://wulfkaal.github.io/claims/2097160-003",
   "claim": "Contingent convertible bonds placed in executive compensation serve a different purpose than those sold to investors: the point is not capital infusion during a crisis but governance-improving design that optimizes management incentives.",
   "type": "definitional",
   "topics": [
    "contingent-capital",
    "corporate-governance",
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "contingent convertible bonds held by executives rather than outside investors"
   ],
   "supporting_quote": "bonds issued to investors, the emphasis for contingent convertible bonds in executive compensation is not on a capital infusion when the Systematically Important Financial Institution (SIFI) is in a crisis,13 but rather on governance-improving designs to help optimize management's incentives.14"
  },
  {
   "id": "kaal:claim:2097160-004",
   "url": "https://wulfkaal.github.io/claims/2097160-004",
   "claim": "The conversion feature of contingent convertible bonds affects corporate governance in a SIFI only if issuance volumes are sufficient and design features are adequate, because the governance effect runs through the threat of dilution of existing equity positions.",
   "type": "condition",
   "topics": [
    "contingent-capital",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "sufficient volume of contingent convertible bond issuance",
    "adequate design features"
   ],
   "supporting_quote": "If sufficient volumes of contingent convertible bond issuances are combined with adequate design features, the conversion feature of contingent convertible bonds and the threat of dilution of equity positions in SIFIs could affect corporate governance in SIFIs.108"
  },
  {
   "id": "kaal:claim:2097160-005",
   "url": "https://wulfkaal.github.io/claims/2097160-005",
   "claim": "Market solutions and private ordering alone are unlikely to produce contingent capital designs that improve corporate governance in SIFIs, because privately negotiated sales so far have not produced governance-sensitive designs.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "contingent-capital",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "market for contingent convertible bonds still in its infancy"
   ],
   "supporting_quote": "It is doubtful if market solutions and private ordering alone will produce contingent capital designs that help improve corporate governance in SIFIs."
  },
  {
   "id": "kaal:claim:2097160-006",
   "url": "https://wulfkaal.github.io/claims/2097160-006",
   "claim": "Analyzing executive compensation as a single contract between an executive agent and a corporate principal fails, because it ignores the informal relational element of the principal agent relationship that often overshadows the legal terms of the agreement.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "executive compensation contracts",
    "classical contract model or spot contract model"
   ],
   "supporting_quote": "Using a model for the analysis of executive contracts that is based on the single contract between the executive–agent and corporation–principal would ignore the informal relational element of this principal– agent relationship."
  },
  {
   "id": "kaal:claim:2097160-007",
   "url": "https://wulfkaal.github.io/claims/2097160-007",
   "claim": "Control rights in executive compensation contracts cannot sufficiently constrain ex post opportunism by executives, because of incomplete information, information asymmetry, bounded rationality, limited foresight, and transaction costs.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "principal agent relationship under incomplete contracting"
   ],
   "supporting_quote": "bounded rationality of contracting parties, the parties' limited cognition and foresight, and transaction costs, control rights in executive compensation contracts cannot account sufficiently for ex post opportunism of agents."
  },
  {
   "id": "kaal:claim:2097160-008",
   "url": "https://wulfkaal.github.io/claims/2097160-008",
   "claim": "Adding contingent convertible bonds with an early trigger to executive compensation packages creates a corporate governance mechanism that addresses the inability of contractual control rights to constrain executive opportunism.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "supporting_quote": "Adding contingent convertible bonds with an early trigger to executive compensation packages can create a corporate governance mechanism that helps address these shortcomings.128"
  },
  {
   "id": "kaal:claim:2097160-009",
   "url": "https://wulfkaal.github.io/claims/2097160-009",
   "claim": "Barclays's Contingent Capital Plan uses synthetic CoCos that simply lapse when the Group Core Tier 1 capital ratio falls below seven percent, rather than converting into equity.",
   "type": "empirical",
   "topics": [
    "contingent-capital",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "evidenced",
   "scope_conditions": [
    "Barclays Contingent Capital Plan as of the 2010 annual report"
   ],
   "supporting_quote": "Under Barclays's CCP, its \"synthetic CoCos\" simply lapse when the capital ratio falls below 7%.135"
  },
  {
   "id": "kaal:claim:2097160-010",
   "url": "https://wulfkaal.github.io/claims/2097160-010",
   "claim": "Because the Barclays award falls away rather than converting, it does not create a fixed claim giving managers a stake in the firm's liquidation value, and therefore it does not lower agency cost.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "contingent capital awards that lapse instead of converting"
   ],
   "supporting_quote": "it does not create a fixed claim for managers with a stake in the firm's liquidation value because it falls away when converted.141 Barclays's CCA, therefore, also does not lower agency cost."
  },
  {
   "id": "kaal:claim:2097160-011",
   "url": "https://wulfkaal.github.io/claims/2097160-011",
   "claim": "A contingent capital award to executives without a conversion feature yields only limited governance improvement and only limited incentive to lower risk-taking; in its current form it operates as a mere compensation supplement.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "risk-and-incentives",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "contingent capital awards without conversion into equity"
   ],
   "supporting_quote": "Barclays's issuance of contingent convertible bonds without a conversion feature to its executives shows limited governance improvements. Without a conversion to equity, Barclays provides only limited incentives for its executives to lower risk-taking."
  },
  {
   "id": "kaal:claim:2097160-012",
   "url": "https://wulfkaal.github.io/claims/2097160-012",
   "claim": "Contingent convertible bonds issued to executives are typically too small in volume to dilute investors' equity holdings or to supply a meaningful equity infusion during a crisis, so copying investor CoCo designs for executive pay produces suboptimal outcomes.",
   "type": "failure",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "contingent convertible bonds issued only to executives",
    "volumes smaller than investor issuances"
   ],
   "supporting_quote": "contingent convertible bonds may be issued to executives in volumes that may not suffice to dilute investors' equity holdings. The lower volume of contingent convertible bonds issued to executives may not provide a sufficiently strong equity infusion during a crisis."
  },
  {
   "id": "kaal:claim:2097160-013",
   "url": "https://wulfkaal.github.io/claims/2097160-013",
   "claim": "The early trigger converts only the executives' portion of debt into equity, ahead of investors' contingent convertible bonds and while the entity is still sound on a micro-prudential basis, which is what makes it an early warning system rather than a recapitalization device.",
   "type": "definitional",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "entity still sound on a micro-prudential basis at the time of conversion"
   ],
   "supporting_quote": "The early trigger converts only the portion of executives' debt to equity, before investors' contingent convertible bonds are converted, when the entity is still sound on a micro-prudential basis."
  },
  {
   "id": "kaal:claim:2097160-014",
   "url": "https://wulfkaal.github.io/claims/2097160-014",
   "claim": "Regulatory triggers generate the highest level of uncertainty and can produce ad hoc regulatory decisions and adverse market responses, so they are not the best option for contingent convertible bonds in executive compensation.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "triggers left to regulatory discretion"
   ],
   "supporting_quote": "Regulatory triggers may lead to market uncertainty and ad hoc decisions by regulators and result in adverse market responses. Because regulatory triggers generate the highest level of uncertainty,152 they may not be the best option"
  },
  {
   "id": "kaal:claim:2097160-015",
   "url": "https://wulfkaal.github.io/claims/2097160-015",
   "claim": "Regulatory triggers insufficiently incentivize executives to lower risk, because executives would not have to self-monitor and adjust their own risk-taking preferences in order to avoid the trigger.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "compliance",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "conversion decided by regulators rather than by an automatic institution-specific term"
   ],
   "supporting_quote": "regulatory triggers may insufficiently incentivize executives to lower risk because the executives would not have to self-monitor and adjust their risk-taking preferences to avoid the trigger."
  },
  {
   "id": "kaal:claim:2097160-016",
   "url": "https://wulfkaal.github.io/claims/2097160-016",
   "claim": "Market-based trigger measures are vulnerable to market manipulation and bank runs, while accounting-based measures are updated too infrequently to respond adequately in a financial crisis.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "economics",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "institution-specific automatic triggers keyed to market or accounting metrics"
   ],
   "supporting_quote": "However, market-based measures may be susceptible to market manipulation and banking runs.156 Accounting-based measures in institution- specific automatic triggers are arguably too infrequently updated to respond adequately in a financial crisis."
  },
  {
   "id": "kaal:claim:2097160-017",
   "url": "https://wulfkaal.github.io/claims/2097160-017",
   "claim": "Institution-specific automatic triggers are the preferred basis for early trigger designs because they are flexible and independent of regulatory discretion.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "institutional-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "supporting_quote": "Because institution-specific automatic triggers are flexible and independent from regulatory discretion, they constitute a good option for early trigger designs."
  },
  {
   "id": "kaal:claim:2097160-018",
   "url": "https://wulfkaal.github.io/claims/2097160-018",
   "claim": "To be effective, early triggers must be set well above the Basel III capital requirement threshold, and capital-ratio early triggers should be independent of regulatory demands about capitalization levels.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "early triggers expressed as capital ratios",
    "Basel III capital regime"
   ],
   "supporting_quote": "To be effective, early triggers should be well above the threshold for capital requirements under Basel III.164 But early triggers in the form of capital ratios should be independent of regulatory demands pertaining to capitalization levels."
  },
  {
   "id": "kaal:claim:2097160-019",
   "url": "https://wulfkaal.github.io/claims/2097160-019",
   "claim": "Because conversion damages both the debt portion and the surviving equity portion of an executive's package at the moment equity matters most for total pay, the combined effect is a strong incentive for executives to lower risk in order to avoid the triggering event.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "ai-and-agents",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "executive package combines contingent convertible bonds with equity-based compensation"
   ],
   "supporting_quote": "convertible bonds portion is converted and when equity is increasingly important to maintain the overall value of executive compensation.174 The combined effect could be a strong incentive for executives to take lower risks in order to avoid the triggering event.175"
  },
  {
   "id": "kaal:claim:2097160-020",
   "url": "https://wulfkaal.github.io/claims/2097160-020",
   "claim": "Ordinary SIFI creditors have suboptimal incentives to monitor management because they implicitly expect that the government will provide bailout funding given the nature of the entity.",
   "type": "failure",
   "topics": [
    "compliance",
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "systemically important financial institutions carrying implicit government guarantees"
   ],
   "supporting_quote": "Because of an implicit expectation that the government will provide bailout funding due to the nature of the entity, ordinary SIFI creditors may have suboptimal incentives to monitor the performance of management.177"
  },
  {
   "id": "kaal:claim:2097160-021",
   "url": "https://wulfkaal.github.io/claims/2097160-021",
   "claim": "The impending threat of dilution from a possible conversion of investor-held contingent convertible bonds can motivate existing shareholders to become actively involved in the governance of the entity.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "compliance",
    "governance-design",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "investors also hold contingent convertible bonds subject to a later trigger"
   ],
   "supporting_quote": "The impending threat of dilution for existing shareholders due to the possible conversion of the contingent convertible bonds held by investors may motivate existing shareholders to get actively involved in the governance of the entity.181"
  },
  {
   "id": "kaal:claim:2097160-022",
   "url": "https://wulfkaal.github.io/claims/2097160-022",
   "claim": "Early triggers in executive compensation improve the signaling of default risk by producing the signal while default risk is present but still somewhat remote.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "contingent-capital",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "supporting_quote": "Early triggers for contingent convertible bonds in executive compensation packages may increase and optimize the signaling of default risk at a time when the risk of default is present but still somewhat remote."
  },
  {
   "id": "kaal:claim:2097160-023",
   "url": "https://wulfkaal.github.io/claims/2097160-023",
   "claim": "Existing default risk signals were inadequate: CAMEL ratings and credit default swap pricing did not suffice to signal default risk at Lehman Brothers, Bear Stearns, or Merrill Lynch.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "asserted",
   "scope_conditions": [
    "the 2008 to 2009 financial crisis"
   ],
   "supporting_quote": "CAMEL ratings and credit default swap pricing did not suffice to signal default risk in the cases of Lehman Brothers, Bear Stearns, and Merrill Lynch."
  },
  {
   "id": "kaal:claim:2097160-024",
   "url": "https://wulfkaal.github.io/claims/2097160-024",
   "claim": "Before conversion, executives holding securities with long-term maturities and coupon payments have incentives to manage the company with debt-holders' interests in mind.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "before any conversion into equity",
    "strength depends on the proportion of debt in the package"
   ],
   "supporting_quote": "Because executives would be holding securities with long-term maturities and coupon payments, executives would have incentives to manage the company with the interests of debt-holders in mind.184"
  },
  {
   "id": "kaal:claim:2097160-025",
   "url": "https://wulfkaal.github.io/claims/2097160-025",
   "claim": "Replacing stock options with contingent convertible bonds both lowers total executive compensation and disincentivizes short-termism and the executive focus on quarterly stock price performance.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "contingent convertible bonds substitute for equity-based compensation rather than adding to it"
   ],
   "supporting_quote": "If stock options are replaced with CCBs, not only would the total compensation for executives be lowered; short-termism and executives' focus on quarterly stock price performance would also be disincentivized."
  },
  {
   "id": "kaal:claim:2097160-026",
   "url": "https://wulfkaal.github.io/claims/2097160-026",
   "claim": "Path dependencies in United States executive compensation culture could make it difficult to lower overall executive pay or to add new design elements such as contingent convertible bonds.",
   "type": "predictive",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "United States executive compensation practice"
   ],
   "supporting_quote": "However, it is important to note that path dependencies in the executive compensation culture191 in the United States could make the lowering of overall compensation for executives and the addition of new design elements in executive compensation difficult."
  },
  {
   "id": "kaal:claim:2097160-027",
   "url": "https://wulfkaal.github.io/claims/2097160-027",
   "claim": "Executives paid in contingent convertible bonds have an opportunistic reason to manipulate the triggering event, because conversion at a depressed price before or during a crisis hands them cheap stock.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "executives compensated with contingent convertible bond instruments",
    "payoff from conversion is substantial"
   ],
   "supporting_quote": "If SIFI executives are compensated with contingent convertible bond instruments, opportunism could lead them to manipulate the triggering event to obtain stock upon contingent convertible bonds' conversion at a depressed price before or during a crisis.192"
  },
  {
   "id": "kaal:claim:2097160-028",
   "url": "https://wulfkaal.github.io/claims/2097160-028",
   "claim": "Where rules and regulatory guidance are absent, fiduciary duties are the only constraint on executives, and existing fiduciary duties could prove insufficient to limit opportunism and abuse when the payoff is substantial.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "no rules or regulatory guidance on contingent convertible bond design and issuance",
    "substantial payoff to executives"
   ],
   "supporting_quote": "Without rules and regulatory guidance regarding the design and issuance of contingent convertible bonds, SIFI executives may only be curtailed by their fiduciary duties. Existing fiduciary duties could prove insufficient to limit opportunism and abuse if the payoff for executives is substantial.193"
  },
  {
   "id": "kaal:claim:2097160-029",
   "url": "https://wulfkaal.github.io/claims/2097160-029",
   "claim": "A mandatory holding period covering all equity securities executives hold in the entity they manage, applied after their contingent convertible bonds convert, would limit abuse of the trigger.",
   "type": "design",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "after conversion of the executives' contingent convertible bonds into equity"
   ],
   "supporting_quote": "A mandatory holding period for all equity securities held by executives in the entity they manage195 after the conversion of their contingent convertible bonds into equity takes place would help limit possible abuse."
  },
  {
   "id": "kaal:claim:2097160-030",
   "url": "https://wulfkaal.github.io/claims/2097160-030",
   "claim": "If executives influence the drafting of their own trigger, opportunism within the bounds of fiduciary duty will produce suboptimal early triggers and increase the potential for abuse, because executives can use the trigger to obtain cheap stock during a crisis.",
   "type": "failure",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "executives involved in the executive compensation and trigger design process"
   ],
   "supporting_quote": "Executives' opportunism and involvement in drafting the trigger could result in suboptimal early triggers in contingent convertible bonds issued to executives. If the trigger design allows executives to influence the early trigger, the suboptimal early trigger could increase the potential for abuse"
  },
  {
   "id": "kaal:claim:2097160-031",
   "url": "https://wulfkaal.github.io/claims/2097160-031",
   "claim": "Regulatory guidance on contingent capital design and issuance may be needed to curtail executive involvement in designing these instruments and to produce socially optimal designs.",
   "type": "normative",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "regulators unlikely to supply rules or best practice guidance in the near term"
   ],
   "supporting_quote": "Regulatory guidance on contingent capital designs and issuances may be needed to curtail the involvement of executives in the design of contingent convertible bonds and create socially optimal designs.200"
  },
  {
   "id": "kaal:claim:2097160-032",
   "url": "https://wulfkaal.github.io/claims/2097160-032",
   "claim": "The governance benefits of traditional inside debt, incentive optimization and reduced agency costs, all depend on the entity remaining solvent, and inside debt supplies no mechanism of its own to ensure that solvency.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "inside debt without a conversion feature, such as pensions and deferred compensation"
   ],
   "supporting_quote": "value and the associated governance benefits215 incentive optimization216 and reduction of agency costs217 depend on the solvency of the respective entity. Inside debt without a conversion feature provides no mechanism to ensure the solvency of the entity."
  },
  {
   "id": "kaal:claim:2097160-033",
   "url": "https://wulfkaal.github.io/claims/2097160-033",
   "claim": "Contingent convertible bonds with a conversion feature add what plain inside debt lacks: an early warning system and a buffer before insolvency that can help the entity avoid default.",
   "type": "mechanism",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "conversion feature rather than write-down",
    "trigger set before insolvency"
   ],
   "supporting_quote": "Contingent convertible bonds with a conversion feature offer the additional benefit of creating an early warning system and a buffer before insolvency that can help an entity avoid default.218"
  },
  {
   "id": "kaal:claim:2097160-034",
   "url": "https://wulfkaal.github.io/claims/2097160-034",
   "claim": "Unlike the liquidation value backing traditional inside debt, equity received by executives on early conversion can still appreciate, because the early trigger creates a substantial buffer before insolvency.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "conversion occurs early, before bankruptcy"
   ],
   "supporting_quote": "Unlike the liquidation value of traditional inside debt, the equity in executives' portfolios after the conversion of the contingent convertible bonds can still be increased because the early trigger creates a substantial buffer before insolvency.222"
  },
  {
   "id": "kaal:claim:2097160-035",
   "url": "https://wulfkaal.github.io/claims/2097160-035",
   "claim": "Before conversion, contingent convertible bonds incentivize executives to lower risk-taking because their prices are sensitive to the downside risks of SIFIs, including default risk.",
   "type": "mechanism",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "before conversion into equity",
    "market prices for the instrument are observable"
   ],
   "supporting_quote": "before conversion into equity, contingent convertible bonds can incentivize executives to lower their risk-taking because contingent convertible bond prices are sensitive to downside risks of SIFIs, including the risk of default.226"
  },
  {
   "id": "kaal:claim:2097160-036",
   "url": "https://wulfkaal.github.io/claims/2097160-036",
   "claim": "Against the critique that long-term debt in pay does not deter short-run risky bets because expected short-term gains exceed the discounted value of the debt, adding early-trigger contingent convertible bonds changes managers' incentives by forcing them to weigh the effects of triggering events rather than only the debt to equity mix of their portfolio.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "early trigger attached to a substantial portion of the executive's debt holdings"
   ],
   "supporting_quote": "portion of executives' compensation packages could change managers' incentives. Executives would no longer simply focus on the debt versus equity portion of their portfolio; they would also consider the effects of triggering events.237"
  },
  {
   "id": "kaal:claim:2097160-037",
   "url": "https://wulfkaal.github.io/claims/2097160-037",
   "claim": "Contrary to Gordon's view that contingent convertible bonds do not address the Fuld Problem, if executive packages do not include a large equity portion, managers have no incentive to block an equity infusion in order to preserve the value of their own equity.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "a large part of equity-based executive compensation is replaced with contingent convertible bonds"
   ],
   "supporting_quote": "If executives' compensation packages do not include a large equity portion, managers have no incentive to avoid an equity infusion to preserve the value of their own equity.257"
  },
  {
   "id": "kaal:claim:2097160-038",
   "url": "https://wulfkaal.github.io/claims/2097160-038",
   "claim": "Trigger designs that work well in institutions with the traditional mix of debt-holders and shareholders may be suboptimal once executives themselves hold contingent convertible bonds.",
   "type": "condition",
   "topics": [
    "contingent-capital",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "scope_conditions": [
    "executives hold debt instruments in the form of contingent convertible bonds"
   ],
   "supporting_quote": "Trigger designs that may work well in financial institutions with the traditional mix of debt- holders and shareholders may be suboptimal if executives also hold debt instruments in the form of contingent convertible bonds.275"
  },
  {
   "id": "kaal:claim:2097160-039",
   "url": "https://wulfkaal.github.io/claims/2097160-039",
   "claim": "Who owns the contingent convertible bonds affects the efficiency, effectiveness, and corporate governance results of a trigger design, so ownership characteristics belong in the design analysis.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "supporting_quote": "The nature of ownership of contingent convertible bonds may create different demands on the design features. Who owns the contingent convertible bonds can impact the efficiency, effectiveness, and corporate governance results of trigger designs.276"
  },
  {
   "id": "kaal:claim:2097160-040",
   "url": "https://wulfkaal.github.io/claims/2097160-040",
   "claim": "An early trigger design for contingent convertible bonds in executive compensation enables earlier signaling of default risk, increases incentives for creditors and shareholders to monitor, and increases executives' incentives to lower risk-taking.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "risk-and-incentives",
    "compliance",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160",
   "year": "2012",
   "source_sha256": "1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc",
   "confidence": "argued",
   "supporting_quote": "Contingent convertible bonds with an early trigger design enable earlier signaling of default risk; they provide increased incentives for monitoring by creditors and shareholders as well as incentives for executives to lower their risk-taking.282"
  },
  {
   "id": "kaal:claim:2029983-001",
   "url": "https://wulfkaal.github.io/claims/2029983-001",
   "claim": "After Morrison, parties to securities transactions can be confident that U.S. law will not apply in private suits so long as their transactions are definitively located outside the United States, a certainty that did not exist under the prior conduct and effects tests.",
   "type": "condition",
   "topics": [
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "private lawsuits, not SEC or DOJ enforcement",
    "transaction location is unambiguous"
   ],
   "supporting_quote": "after Morrison transacting parties can be confident that U.S. law will not apply in private suits provided their transac- tions are definitively outside the United States."
  },
  {
   "id": "kaal:claim:2029983-002",
   "url": "https://wulfkaal.github.io/claims/2029983-002",
   "claim": "The authors stipulate that Choice of Law Competition is a subcategory of jurisdictional competition in which jurisdictions compete on substantive legal rules to attract contracting parties ex ante, with adjudication of disputes a secondary consideration.",
   "type": "definitional",
   "topics": [
    "economics",
    "law-and-legal-systems",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "asserted",
   "supporting_quote": "Choice of Law Competition is a subcategory of jurisdictional competi- tion. The emphasis in Choice of Law Competition is on substantive legal rules to attract contracting parties. Adjudication of disputes may be of secondary importance in Choice of Law Competition."
  },
  {
   "id": "kaal:claim:2029983-003",
   "url": "https://wulfkaal.github.io/claims/2029983-003",
   "claim": "The authors stipulate that jurisdictions which take steps only to expand the jurisdiction of their courts as venues for litigation, rather than to attract transactions, engage in Forum Competition.",
   "type": "definitional",
   "topics": [
    "economics",
    "law-and-legal-systems",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "asserted",
   "supporting_quote": "Jurisdictions that take steps only to expand the jurisdic- tion of their courts as venues for litigation engage in \"Forum Competition.\""
  },
  {
   "id": "kaal:claim:2029983-004",
   "url": "https://wulfkaal.github.io/claims/2029983-004",
   "claim": "Most Forum Competition turns on a jurisdiction's attractiveness to lawyers ex post: such jurisdictions ignore the preferences of transacting parties at the time of contracting and appeal only to the preferences of some parties and their lawyers after a dispute has arisen.",
   "type": "mechanism",
   "topics": [
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the ex post variant of Forum Competition, not to ex ante forum selection clauses"
   ],
   "supporting_quote": "but most Forum Competition turns on a jurisdiction's attractiveness to lawyers ex post. These jurisdictions ignore the preferences of transact- ing parties ex ante and appeal only to the preferences of some transacting parties and their lawyers after a dispute has aris-"
  },
  {
   "id": "kaal:claim:2029983-005",
   "url": "https://wulfkaal.github.io/claims/2029983-005",
   "claim": "Because Morrison limits U.S. securities law to transactions inside the United States, plaintiffs' attorneys are predicted to look increasingly to European countries and other venues in which to file securities class actions and similar suits.",
   "type": "predictive",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "holds for private securities class actions after Morrison"
   ],
   "supporting_quote": "As a result of the Morrison decision, limiting application of U.S. securities laws to transactions inside the United States, plaintiffs' attorneys may increasingly look to European coun- tries and other venues to file securities class actions and simi- lar suits."
  },
  {
   "id": "kaal:claim:2029983-006",
   "url": "https://wulfkaal.github.io/claims/2029983-006",
   "claim": "Jurisdictional competition adapts legal rules to changed economic circumstances faster than harmonization does, because a single jurisdiction can change its rule unilaterally whereas harmonized regimes require all jurisdictions to agree on a rule before it can change.",
   "type": "mechanism",
   "topics": [
    "economics",
    "law-and-legal-systems",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "underlying market conditions are changing",
    "actors have imperfect information about optimal rules"
   ],
   "supporting_quote": "When underlying economic circumstances change, it is more likely that a jurisdiction will change its rules if there is juris- dictional competition than if all jurisdictions are bound to agree upon the same rule before they change it."
  },
  {
   "id": "kaal:claim:2029983-007",
   "url": "https://wulfkaal.github.io/claims/2029983-007",
   "claim": "Harmonization can fail on the merits: the harmonious rule may be the wrong rule for the problem it addresses, or it may become the wrong rule later as circumstances change.",
   "type": "failure",
   "topics": [
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "most acute in fast evolving areas such as financial regulation"
   ],
   "supporting_quote": "\"harmonious\" rule may be the wrong rule for solving a particu- lar problem, or the rule could become wrong later based on changing circumstances."
  },
  {
   "id": "kaal:claim:2029983-008",
   "url": "https://wulfkaal.github.io/claims/2029983-008",
   "claim": "Harmonization is politically unattainable absent either a central authority able to preempt the law of many jurisdictions or a single jurisdiction with enough economic clout to impose its rules on others, which makes harmonization especially difficult beyond national borders.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "cross border harmonization",
    "no supranational preemptive authority exists"
   ],
   "supporting_quote": "Second, harmonization is difficult to accomplish politi- cally unless there is a central authority that can preempt the law in a multitude of jurisdictions or, alternatively, a jurisdic- tion has so much economic clout that it can impose its rules on others."
  },
  {
   "id": "kaal:claim:2029983-009",
   "url": "https://wulfkaal.github.io/claims/2029983-009",
   "claim": "Harmonization invites its own defeat by creating an incentive for rogue jurisdictions to attract, into their legal systems, the private actors who do not agree with the harmonized rule.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "applies even within organized communities of jurisdictions such as the European Union"
   ],
   "supporting_quote": "Third, harmonization invites efforts to undermine harmony by \"rogue\" jurisdictions that seek to benefit by attracting to their legal systems private actors who do not agree with the harmonization."
  },
  {
   "id": "kaal:claim:2029983-010",
   "url": "https://wulfkaal.github.io/claims/2029983-010",
   "claim": "Defined geographic borders for securities transactions, the overarching assumption behind Morrison, are an unstable basis for limiting the extraterritorial reach of either private litigation or government regulation.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "securities transactions whose location is contestable",
    "applies to both private suits and regulatory enforcement"
   ],
   "supporting_quote": "Defined geographic borders for securities transactions—the overarching assumption behind the Morrison decision—are an unstable basis for limiting the extraterritorial reach of both private litigation and government regulation."
  },
  {
   "id": "kaal:claim:2029983-011",
   "url": "https://wulfkaal.github.io/claims/2029983-011",
   "claim": "Jurisdictional competition in global securities litigation after Morrison will be bifurcated, because some jurisdictions recognize private rights of action while others do not, and some, including the United States, extend government enforcement extraterritorially where private suits are barred.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "post-Morrison global securities litigation"
   ],
   "supporting_quote": "Bifurcated jurisdictional competition will characterize global securities litigation after Morrison because some juris- dictions recognize private rights of action whereas others do not,"
  },
  {
   "id": "kaal:claim:2029983-012",
   "url": "https://wulfkaal.github.io/claims/2029983-012",
   "claim": "Bifurcation lets a party to a disputed offshore transaction reintroduce U.S. law into the civil liability regime by threatening to involve the SEC or DOJ unless the other party offers an attractive settlement.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "transaction located outside the United States",
    "Section 929P enforcement remains available"
   ],
   "supporting_quote": "A party to a disputed transaction outside the United States can even reintroduce U.S. law into the civil liability re- gime by threatening to involve the SEC or DOJ if the other par- ty does not offer an attractive settlement."
  },
  {
   "id": "kaal:claim:2029983-013",
   "url": "https://wulfkaal.github.io/claims/2029983-013",
   "claim": "Because Section 929P did not restore private rights of action, the most powerful weapon in plaintiffs' arsenal, the fraud-on-the-market theory in class actions, is thwarted wherever the transaction took place outside the United States.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "private class actions over non-U.S. transactions",
    "SEC and DOJ actions remain possible"
   ],
   "supporting_quote": "most powerful weapon in plaintiffs' arsenal, the fraud-on-the- market theory in class actions, is thus thwarted in those in- stances where transactions are outside the United States."
  },
  {
   "id": "kaal:claim:2029983-014",
   "url": "https://wulfkaal.github.io/claims/2029983-014",
   "claim": "Government enforcement acts as a backstop that makes the case for choice of law freedom stronger: allowing parties to choose their legal regime is more defensible when bad choices, such as moving transactions to regimes with little regulation, do not thwart government enforcement.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "SEC and DOJ retain extraterritorial enforcement power under Section 929P"
   ],
   "supporting_quote": "The ar- gument for allowing choice of law freedom for transacting par- ties is more persuasive when bad choices by contracting par- ties—such as moving securities transactions offshore to regimes with little or no regulation—do not thwart enforcement action by government authorities."
  },
  {
   "id": "kaal:claim:2029983-015",
   "url": "https://wulfkaal.github.io/claims/2029983-015",
   "claim": "Geographic tests create the risk of a no man's land transaction: defendants may persuade the courts of every jurisdiction that the transaction took place outside their borders, leaving the transaction governed by no law and with no available forum.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "transactions whose geographic location is ambiguous",
    "courts in all candidate jurisdictions apply geographic tests"
   ],
   "supporting_quote": "Alternatively, defendants might successfully persuade courts in all jurisdictions that a transaction took place outside their borders or for some other reason outside their jurisdictions. Such a \"no man's land\" transaction would be governed by no law and there would be no forum."
  },
  {
   "id": "kaal:claim:2029983-016",
   "url": "https://wulfkaal.github.io/claims/2029983-016",
   "claim": "Without an opt-out mechanism, European class sizes will likely be substantially smaller than their U.S. counterparts, which in turn depresses settlement amounts and damages awards.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "European collective procedures that require plaintiffs to opt in"
   ],
   "supporting_quote": "Without an opt-out mechanism, European class sizes will likely be substantially smaller than their U.S. counterparts."
  },
  {
   "id": "kaal:claim:2029983-017",
   "url": "https://wulfkaal.github.io/claims/2029983-017",
   "claim": "The requirement that each plaintiff show individual reliance, followed in most jurisdictions outside the United States, is not merely a substantive difference: it undermines collective litigation because class procedures work only when plaintiffs share common questions of law and fact.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions that reject the fraud-on-the-market theory"
   ],
   "supporting_quote": "This difference in substantive law has an impact on procedural issues because class action lit- igation and collective procedures are easier if plaintiffs in the class share common questions of law and fact."
  },
  {
   "id": "kaal:claim:2029983-018",
   "url": "https://wulfkaal.github.io/claims/2029983-018",
   "claim": "Despite signs of movement in that direction, there is as yet no genuine European substitute for the U.S. securities class action brought under the fraud-on-the-market theory.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "as of the article's 2012 assessment of European collective procedures"
   ],
   "supporting_quote": "There are some signs that European law could be moving in this direction, although thus far there is no genuine Europe- an substitute for the U.S. securities class action under the fraud-on-the-market theory."
  },
  {
   "id": "kaal:claim:2029983-019",
   "url": "https://wulfkaal.github.io/claims/2029983-019",
   "claim": "The German KapMuG does not relieve trial judges of deciding the legal issues in every individual case, so it remains administratively burdensome even though its model case judgment binds the trial courts.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "German model case proceedings for capital markets claims"
   ],
   "supporting_quote": "The KapMuG, how- ever, does not discharge the trial judges from addressing the legal issues in each and every case individually."
  },
  {
   "id": "kaal:claim:2029983-020",
   "url": "https://wulfkaal.github.io/claims/2029983-020",
   "claim": "The WCAM's requirement that a court evaluate procedural and substantive fairness and the efficiency of the settlement lets the Dutch system avoid blackmail settlements, where a defendant pays simply to escape endless proceedings and reputational loss.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "Dutch collective settlements certified by the Amsterdam Court of Appeal"
   ],
   "supporting_quote": "The WCAM, thus, avoids black- mail settlements in which a defendant offers a payment to get out of a class action to avoid the prospect of endless proceedings"
  },
  {
   "id": "kaal:claim:2029983-021",
   "url": "https://wulfkaal.github.io/claims/2029983-021",
   "claim": "The Dutch unfair trade practice and misrepresentation provisions invoked in Fortis, taken together, approximate the legal protections available in the United States under Section 10(b) and Rule 10b-5, which makes the Dutch legal system a possible avenue for circumventing the restrictions imposed by Morrison.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "claims brought under Dutch civil law and the Dutch Financial Supervision Act"
   ],
   "supporting_quote": "Combined, these sections approximate legal protections available in the United States under Section 10(b) and Rule 10b-5. Given the comparability, the Dutch legal system could present a possible avenue for circumventing the restrictions imposed by the Morrison decision."
  },
  {
   "id": "kaal:claim:2029983-022",
   "url": "https://wulfkaal.github.io/claims/2029983-022",
   "claim": "In Converium the Amsterdam Court of Appeal declared an international collective settlement binding on the parties even though the class members had only tenuous connections to the Netherlands.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "evidenced",
   "scope_conditions": [
    "WCAM collective settlement proceedings",
    "none of the defendants and only a few plaintiffs were domiciled in the Netherlands",
    "alleged wrongdoing occurred outside the Netherlands and claims were not brought under Dutch law"
   ],
   "supporting_quote": "The Amsterdam Court of Appeal in its Converium decision declared an international collective settlement binding on the parties to a settlement where the class members had rather tenuous connections to the Netherlands (none of the defendants"
  },
  {
   "id": "kaal:claim:2029983-023",
   "url": "https://wulfkaal.github.io/claims/2029983-023",
   "claim": "By approving U.S.-style fee arrangements, the Converium decision adds an important incentive for plaintiffs' attorneys to bring claims in the Netherlands.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "attorney fees of about twenty percent of the settlement payment"
   ],
   "supporting_quote": "By allowing U.S.-style fee arrangements, the Converium decision adds an important incentive for plaintiffs' attorneys to bring claims in the Netherlands."
  },
  {
   "id": "kaal:claim:2029983-024",
   "url": "https://wulfkaal.github.io/claims/2029983-024",
   "claim": "The Converium fee holding is a weak predictor of Dutch practice because lead counsel's work in that case was performed largely within the American legal system and by U.S. law firms, so it remains to be seen whether a case litigated in Dutch courts without U.S. exposure would yield a comparable fee structure.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "cases litigated in Dutch courts without exposure to the U.S. legal system"
   ],
   "supporting_quote": "remains to be seen whether a case that is litigated in Dutch courts without exposure to the U.S. legal system will yield a comparable fee structure."
  },
  {
   "id": "kaal:claim:2029983-025",
   "url": "https://wulfkaal.github.io/claims/2029983-025",
   "claim": "The Netherlands is already Europe's most attractive venue for collective settlements because it is the only European country that allows a collective settlement in mass litigation to bind all class members who do not opt out.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "European jurisdictions as of 2012"
   ],
   "supporting_quote": "The Netherlands is already Europe's most attractive venue to facilitate such settlements because it is the only European country that allows a collective settlement in a mass litigation to be binding on all class members who do not opt-out of the"
  },
  {
   "id": "kaal:claim:2029983-026",
   "url": "https://wulfkaal.github.io/claims/2029983-026",
   "claim": "Given the Fortis and Converium decisions, it is conceivable that Dutch courts will expand their extraterritorial reach beyond the enforcement of settlements to cases litigated as class actions.",
   "type": "predictive",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "continuation of the trend visible in Fortis and Converium"
   ],
   "supporting_quote": "Given the developments in the Fortis and Converium decisions, it is conceivable that Dutch courts could expand their exterritorial reach beyond settlements."
  },
  {
   "id": "kaal:claim:2029983-027",
   "url": "https://wulfkaal.github.io/claims/2029983-027",
   "claim": "Because the Dutch Supreme Court's World Online presumption of reliance can be extended to ad hoc disclosure violations and misleading periodic reports, the Dutch legal system could compete effectively with the United States by lowering the crucial reliance threshold in securities actions.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "Dutch courts extend World Online beyond prospectus liability"
   ],
   "supporting_quote": "These developments suggest that the Dutch legal system could effectively compete with the United States, at least as it pertains to lowering the crucial threshold re- quirement of reliance in securities actions."
  },
  {
   "id": "kaal:claim:2029983-028",
   "url": "https://wulfkaal.github.io/claims/2029983-028",
   "claim": "The WCAM requirement that a court approved foundation pursue the action makes the Dutch regime more burdensome than the U.S. system, which requires only a lead plaintiff and class approval.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "Dutch collective proceedings under the WCAM"
   ],
   "supporting_quote": "This WCAM re- quirement makes the Dutch regime somewhat more burdensome than the United States' system, which simply re- quires a lead plaintiff and class approval."
  },
  {
   "id": "kaal:claim:2029983-029",
   "url": "https://wulfkaal.github.io/claims/2029983-029",
   "claim": "The WCAM's structural limits could reduce the number of successful settlements: while the largest cases such as Shell and Fortis give plaintiffs enough leverage to force large settlements, smaller cases may not be successfully settled in Dutch courts.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "smaller claims with limited settlement leverage"
   ],
   "supporting_quote": "While the largest cases, such as Shell and Fortis, would probably still provide sufficient lev- erage for the plaintiffs to result in large settlements with de- fendants, smaller cases may not be successfully settled in Dutch courts."
  },
  {
   "id": "kaal:claim:2029983-030",
   "url": "https://wulfkaal.github.io/claims/2029983-030",
   "claim": "Canada could engage in Forum Competition with the United States if its courts allow suits under Canadian law over all transactions in securities listed for trading in Canada, even transactions executed in the United States, assembling a class of Canadian and U.S. investors that Morrison forbids in U.S. courts.",
   "type": "condition",
   "topics": [
    "economics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "Canadian courts adopt a posture different from U.S. courts applying Morrison"
   ],
   "supporting_quote": "Canada thus has an opportunity to engage in Forum Competition with the United States if its courts assume a different posture and allow suits under Canadian law with respect to all transactions in securities listed for trading in Canada, even if some of those transactions take place in the"
  },
  {
   "id": "kaal:claim:2029983-031",
   "url": "https://wulfkaal.github.io/claims/2029983-031",
   "claim": "Morrison's transactional test could prove relatively short lived because it is rooted in geography while an increasing number of securities transactions defy geographical boundaries.",
   "type": "predictive",
   "topics": [
    "citation-and-knowledge",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "transactions off organized exchanges and on exchanges that cross borders"
   ],
   "supporting_quote": "The transactional test in Morrison could be relatively short lived because it is rooted in geography and an increasing num- ber of securities transactions defy geographical boundaries."
  },
  {
   "id": "kaal:claim:2029983-032",
   "url": "https://wulfkaal.github.io/claims/2029983-032",
   "claim": "The Second Circuit's Absolute Activist test, locating a transaction where title transfers or irrevocable liability is incurred, is easy to manipulate: parties can arrange for irrevocable liability to arise outside the United States, for example by conditioning liability on approval by an agent located abroad.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "private securities transactions off organized exchanges"
   ],
   "supporting_quote": "this test is easy to ma- nipulate by agreeing that one or both parties will take steps to create irrevocable liability outside the United States, for exam- ple, by making liability on the transaction contingent upon ap- proval of the transaction by an agent located outside the United States."
  },
  {
   "id": "kaal:claim:2029983-033",
   "url": "https://wulfkaal.github.io/claims/2029983-033",
   "claim": "The authors propose a rule under which, unless a transaction is unambiguously inside the United States, the transaction is not inside the United States if the parties have expressly stated that intent; this can be harmonized with both Morrison and the existing statutory framework.",
   "type": "design",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "geographically ambiguous transactions only",
    "does not apply to transactions unequivocally inside the United States"
   ],
   "supporting_quote": "rule would stipulate that unless a transaction is unambiguous- ly inside the United States, the transaction does not take place inside the United States if the parties have expressly stated their intent that it does not take place inside the United States."
  },
  {
   "id": "kaal:claim:2029983-034",
   "url": "https://wulfkaal.github.io/claims/2029983-034",
   "claim": "The race to the bottom objection to a contract based approach is weaker than assumed because a race to the bottom requires the consent of both buyers and sellers, and the objection assumes that buyers will simply accept whatever securities law sellers choose.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "private transactions where geography is ambiguous and buyers are sophisticated",
    "weaker as an objection for exchange traded securities"
   ],
   "supporting_quote": "Such a race to the bottom, however, requires at least the consent of both parties (buyers as well as sellers); the race to the bottom argument assumes that buyers will simply accept whatever securities laws sellers choose."
  },
  {
   "id": "kaal:claim:2029983-035",
   "url": "https://wulfkaal.github.io/claims/2029983-035",
   "claim": "The SEC, rather than the courts or Congress, is the institution positioned to implement a choice of law regime for securities transactions, through rulemaking.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "Chevron deference to agency interpretation of statutes it administers"
   ],
   "supporting_quote": "This is where the SEC could step in to implement a choice of law regime through rulemaking."
  },
  {
   "id": "kaal:claim:2029983-036",
   "url": "https://wulfkaal.github.io/claims/2029983-036",
   "claim": "U.S. courts have only a limited capacity to integrate parties' choice of law into a post-Morrison regime for defining transaction location, and adding variables raises the risk of inconsistent case law across districts and circuits.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "absent a clear mandate in Morrison and given the statutory bar on opting out"
   ],
   "supporting_quote": "The complexities in the above discussion suggest, however, that U.S. courts have a limited capacity to integrate choice of law into a post-Morrison regime defining transaction location."
  },
  {
   "id": "kaal:claim:2029983-037",
   "url": "https://wulfkaal.github.io/claims/2029983-037",
   "claim": "A contract selecting non-U.S. securities law can fail entirely: if the chosen jurisdiction's courts decline jurisdiction because the transaction did not clear there or the parties lack a local presence, the contract may as a practical matter mean that no law applies.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "the chosen foreign jurisdiction must actually accept jurisdiction and apply its law",
    "one party may be better informed about this risk than the other"
   ],
   "supporting_quote": "If so, the contract to apply non- U.S. law might as a practical matter mean that no law applies."
  },
  {
   "id": "kaal:claim:2029983-038",
   "url": "https://wulfkaal.github.io/claims/2029983-038",
   "claim": "Choice of law should replace the geographically based transactional test in those circumstances where geography is ambiguous.",
   "type": "normative",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "limited to transactions whose geographic location is ambiguous"
   ],
   "supporting_quote": "In sum, choice of law should replace the geographically- based transactional test in those circumstances where geogra- phy is ambiguous."
  },
  {
   "id": "kaal:claim:2029983-039",
   "url": "https://wulfkaal.github.io/claims/2029983-039",
   "claim": "If Forum Competition between the United States and Europe expands, the acceptable outer bounds of jurisdictional competition may eventually have to be defined by treaty or other multilateral agreement.",
   "type": "design",
   "topics": [
    "institutional-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "speculative",
   "scope_conditions": [
    "depends on future expansion of Dutch and other non-U.S. jurisdiction"
   ],
   "supporting_quote": "Depending on future developments in this context, however, the acceptable outer bounds of jurisdictional competition by both Europe and the United States might eventually be defined by treaty or other multilateral agreement."
  },
  {
   "id": "kaal:claim:2029983-040",
   "url": "https://wulfkaal.github.io/claims/2029983-040",
   "claim": "Although many jurisdictions may protect investors less well than the United States, it is not at all certain that U.S. law does a better job of deterring securities fraud.",
   "type": "normative",
   "topics": [
    "securities-law",
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Richard W. Painter, Forum Competition and Choice of Law Competition in Securities Law after Morrison v. National Austral (2012). SSRN: https://ssrn.com/abstract=2029983",
   "year": "2012",
   "source_sha256": "fde2ff611420eb283cbb49a6b681a2ae8efa2b4603ae71480e2d91483f0295f2",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of deterrence, not of investor protection generally"
   ],
   "supporting_quote": "While many jurisdictions could be worse than the United States at protecting investors, it is not at all certain that U.S. law does a better job of deterring securities fraud."
  },
  {
   "id": "kaal:claim:2150377-001",
   "url": "https://wulfkaal.github.io/claims/2150377-001",
   "claim": "Freedom from supervision and disclosure obligations was functional rather than incidental for hedge funds: it enabled successful fund launches, helped generate higher returns, and attracted investors, which is why manager registration is contested.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "asserted",
   "scope_conditions": [
    "hedge funds operating before the Dodd-Frank Act",
    "funds investing in global markets"
   ],
   "supporting_quote": "Hedge funds' ability to invest in global markets without supervision and significant disclosure obligations was important for successful hedge fund launches, helped generate higher returns, and attracted investors."
  },
  {
   "id": "kaal:claim:2150377-002",
   "url": "https://wulfkaal.github.io/claims/2150377-002",
   "claim": "The immediate deregistration of hedge fund advisers following Goldstein v. SEC is revealed-preference evidence of the industry's opposition to registration and disclosure requirements, not merely a technical response to the vacatur.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "argued",
   "scope_conditions": [
    "advisers who had registered under the SEC's 2004 rule",
    "2006, immediately after the Goldstein decision"
   ],
   "supporting_quote": "The advisers' decision to deregister in 2006 seems to confirm the industry's opposition to registration and disclosure requirements."
  },
  {
   "id": "kaal:claim:2150377-003",
   "url": "https://wulfkaal.github.io/claims/2150377-003",
   "claim": "The client counting safe harbor, which let an adviser count a pooled entity rather than each investor as a single client, allowed advisers to manage large amounts of securities indirectly for several hundreds of investors across multiple hedge funds while remaining outside registration and supervision.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "argued",
   "scope_conditions": [
    "under the 1985 safe harbor as broadened in 1997",
    "before the Dodd-Frank Act repealed the private adviser exemption"
   ],
   "supporting_quote": "This safe harbor allowed investment advisers to manage large amounts of securities indirectly for several hundreds of investors in several hedge funds.53"
  },
  {
   "id": "kaal:claim:2150377-004",
   "url": "https://wulfkaal.github.io/claims/2150377-004",
   "claim": "Before Dodd-Frank the perimeter of hedge fund regulation was set by SEC no-action letters on client counting and by courts that gave very limited and sometimes contradictory guidance, so compliance rested on an unstable and uncertain base rather than on rules.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "securities-law",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "argued",
   "scope_conditions": [
    "the period between the 1968 Merrill Lynch action and the 1985 safe harbor rule",
    "advisers seeking to stay exempt from securities regulation"
   ],
   "supporting_quote": "However, the SEC continued to provide guidance mostly in the form of no-action letters to help investment advisers determine the counting of clients to stay exempt from securities regulation.44 Courts also provided very limited and sometimes contradictory guidance.45"
  },
  {
   "id": "kaal:claim:2150377-005",
   "url": "https://wulfkaal.github.io/claims/2150377-005",
   "claim": "Losing the private adviser exemption imposed a bundle of obligations, disclosure duties and code of ethics requirements on top of inspections and record keeping, and the direct consequence was significantly higher legal fees for hedge funds.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "law-and-legal-systems",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "asserted",
   "scope_conditions": [
    "advisers subject to the SEC's 2004 registration rule"
   ],
   "supporting_quote": "Without the private adviser exemption, hedge funds were also faced with disclosure requirements62 and code of ethics requirements63 resulting in significantly higher legal fees."
  },
  {
   "id": "kaal:claim:2150377-006",
   "url": "https://wulfkaal.github.io/claims/2150377-006",
   "claim": "The SEC's 2004 attempt to reach hedge fund advisers failed as a matter of administrative law: in July 2006 the D.C. Circuit vacated the hedge fund rule in Goldstein v. SEC as an instance of arbitrary rulemaking, because the SEC had no authority to define a term the Advisers Act left undefined.",
   "type": "failure",
   "topics": [
    "securities-law",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC rulemaking under the Investment Advisers Act",
    "where the statutory term client is not otherwise defined"
   ],
   "supporting_quote": "Eventually, in July 2006, the D.C. Circuit in Goldstein v. SEC vacated the hedge fund rule as an instance of arbitrary rulemaking by the SEC.71"
  },
  {
   "id": "kaal:claim:2150377-007",
   "url": "https://wulfkaal.github.io/claims/2150377-007",
   "claim": "Under the Private Fund Investment Advisers Registration Act, hedge funds with more than $150 million in assets under management must register as investment advisers and disclose information about their trades and portfolios to the SEC, making assets under management the operative trigger for the regime.",
   "type": "definitional",
   "topics": [
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "advisers acting solely as advisers to private funds",
    "assets under management measured in the United States"
   ],
   "supporting_quote": "Under the PFIARA, hedge funds with more than $150 million assets under management (AUM) are required to register as investment advisers and have to disclose information about their trades and portfolios to the SEC.81"
  },
  {
   "id": "kaal:claim:2150377-008",
   "url": "https://wulfkaal.github.io/claims/2150377-008",
   "claim": "Because Title IV's registration exemptions are broad enough to threaten the rule they qualify, the Dodd-Frank Act deliberately gives the SEC rulemaking authority to keep the exemptions from swallowing the rules.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "securities-law",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "asserted",
   "scope_conditions": [
    "exemptions for private fund advisers, venture capital advisers, and foreign private advisers under Title IV"
   ],
   "supporting_quote": "The Dodd-Frank Act also empowers the SEC to utilize its rulemaking authority to prevent the exemptions from registration to \"swallow the rules.\"100"
  },
  {
   "id": "kaal:claim:2150377-009",
   "url": "https://wulfkaal.github.io/claims/2150377-009",
   "claim": "Revised Form ADV requires advisers to report gross rather than net regulatory assets under management and narrows their discretion to include or exclude assets, so the registration threshold becomes harder to manage down through reporting choices.",
   "type": "design",
   "topics": [
    "private-funds",
    "disclosure",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "advisers filing the November 2011 revised Form ADV"
   ],
   "supporting_quote": "To increase consistency, revised Form ADV also gives investment advisers less room to exercise discretion in counting or excluding assets from RAUM.115"
  },
  {
   "id": "kaal:claim:2150377-010",
   "url": "https://wulfkaal.github.io/claims/2150377-010",
   "claim": "Form PF reporting achieves broad coverage of systemic exposure with narrow coverage of firms: the SEC expects the small set of large filers to account for eighty percent of total hedge fund assets under management in the United States.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "advisers with at least $1.5 billion in RAUM attributable to hedge funds",
    "SEC estimates at the time of Form PF adoption"
   ],
   "supporting_quote": "The SEC expects this relatively small number of advisers to account for 80% of total hedge fund assets under management in the United States.145"
  },
  {
   "id": "kaal:claim:2150377-011",
   "url": "https://wulfkaal.github.io/claims/2150377-011",
   "claim": "Quarterly rather than annual Form PF updating for large hedge fund advisers is designed for timeliness: its purpose is to give the Financial Stability Oversight Council data current enough to identify emerging trends in systemic risk.",
   "type": "design",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "advisers with at least $1.5 billion RAUM attributable to hedge funds"
   ],
   "supporting_quote": "Mandatory quarterly reporting for large hedge fund advisers in the United States aligns with international trends and is intended \"to provide the FSOC with timely data to identify emerging trends in systemic risk.\"151"
  },
  {
   "id": "kaal:claim:2150377-012",
   "url": "https://wulfkaal.github.io/claims/2150377-012",
   "claim": "This Article reports the first survey study of hedge fund advisers conducted after the SEC's registration effective date, drawing on a population of 1267 private fund advisers who registered before March 30, 2012.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "law-and-legal-systems",
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States private fund advisers",
    "registration effective date of March 30, 2012"
   ],
   "supporting_quote": "This Article presents the results of the first survey study with hedge fund advisers after the SEC's registration effective date. The population consists of 1267 private fund advisers who registered before the SEC's registration effective date for private funds, March 30, 2012."
  },
  {
   "id": "kaal:claim:2150377-013",
   "url": "https://wulfkaal.github.io/claims/2150377-013",
   "claim": "The hedge fund industry's concern with confidentiality and privacy is itself an obstacle to empirical research: it made obtaining a substantial effective sample size for this study difficult, independent of the survey design.",
   "type": "failure",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "disclosure",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "surveys of hedge fund managers",
    "questions touching firm or client financial status"
   ],
   "supporting_quote": "Given the particular concern in the hedge fund industry regarding confidentiality and privacy, obtaining a substantial effective sample size for this study proved difficult."
  },
  {
   "id": "kaal:claim:2150377-014",
   "url": "https://wulfkaal.github.io/claims/2150377-014",
   "claim": "Persistent multi-channel follow-up, by fax, e-mail, and telephone, yielded ninety-four completed surveys, a 7.42% response rate from a population of 1267, which is substantially higher than response rates in prior surveys of this industry.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "private-funds",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "population of 1267 registered private fund advisers",
    "data collected within three months of March 30, 2012"
   ],
   "supporting_quote": "This procedure proved successful and yielded ninety-four completed surveys, a response rate of 7.42% of a population of 1267. This response rate is substantially higher than the response rate of prior surveys in a related context.175"
  },
  {
   "id": "kaal:claim:2150377-015",
   "url": "https://wulfkaal.github.io/claims/2150377-015",
   "claim": "Mandated disclosure does not automatically produce usable public data: although Form ADV requires advisers to disclose chief compliance officer contact information, the SEC dataset omitted it and contained no e-mail addresses, so researchers could not reach the officers responsible for compliance.",
   "type": "failure",
   "topics": [
    "private-funds",
    "disclosure",
    "empirical-evidence",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "the IARD dataset and filed Form ADVs as of 2012"
   ],
   "supporting_quote": "Although Form ADV requires advisers to disclose the contact information for their chief compliance officer, the dataset provided by the SEC did not list this information and did not include e-mail addresses."
  },
  {
   "id": "kaal:claim:2150377-016",
   "url": "https://wulfkaal.github.io/claims/2150377-016",
   "claim": "The standard remedies for selection bias are not reliably corrective: simulation studies show that many techniques used to prevent selection bias problems have mixed success rates, can worsen rather than improve estimates, and may skew results under ordinary circumstances.",
   "type": "failure",
   "topics": [
    "research-methods",
    "empirical-evidence",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "statistical corrections for sample selection bias in social research"
   ],
   "supporting_quote": "Simulation studies have shown that many of the techniques used to prevent selection bias problems have mixed success rates, can worsen rather than improve estimates, and may skew results under ordinary circumstances.187"
  },
  {
   "id": "kaal:claim:2150377-017",
   "url": "https://wulfkaal.github.io/claims/2150377-017",
   "claim": "A treatment and control design is unavailable for studying registration effects, because managers who did not have to register have no exposure to the treatment and therefore cannot generate informative responses about its effects.",
   "type": "design",
   "topics": [
    "empirical-evidence",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "argued",
   "scope_conditions": [
    "survey research on the effects of mandatory registration",
    "where the treatment is exposure to the registration requirement itself"
   ],
   "supporting_quote": "Interviewing the treatment group, hedge fund managers who had to register, and a control group, hedge fund managers who did not have to register, would not have yielded appropriate responses because the control group would have had no exposure to the effect of the treatment, registration."
  },
  {
   "id": "kaal:claim:2150377-018",
   "url": "https://wulfkaal.github.io/claims/2150377-018",
   "claim": "Managers who avoided registration by restructuring, for example by changing organizational form or assets under management, are practically and administratively very difficult to identify, so the population that adapted away from the rule remains largely unobservable to researchers.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "argued",
   "scope_conditions": [
    "identification of advisers who altered structure or AUM to avoid registration"
   ],
   "supporting_quote": "Identifying hedge fund managers who had been exposed to the treatment and decided to avoid the treatment, by changing their organizational structure, AUM, et cetera, proved practically and administratively very difficult and would have resulted in a very small sample size for the control group."
  },
  {
   "id": "kaal:claim:2150377-019",
   "url": "https://wulfkaal.github.io/claims/2150377-019",
   "claim": "Comparison of the responding sample against the full registered population on Form ADV parameters shows the sample is not biased toward any particular subgroup of hedge fund advisers, and gives no indication that respondents differ from nonrespondents.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "private-funds",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "parameters reported on Form ADV such as organizational form, client numbers, adviser type, region, AUM, and advisory services"
   ],
   "supporting_quote": "The descriptive statistics demonstrate that the sample is not biased and does not favor a particular subgroup of hedge fund advisers.189 There is no indication that respondents who did respond to the survey were different from individuals who did not respond."
  },
  {
   "id": "kaal:claim:2150377-020",
   "url": "https://wulfkaal.github.io/claims/2150377-020",
   "claim": "Advisers responded to Dodd-Frank registration mainly through administrative and advisory adjustments: the most common actions were outsourcing compliance work, hiring additional counsel, instituting new record keeping policies, hiring additional staff, changing marketing materials, and changing investor communications.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents, n=94",
    "within three months of the March 30, 2012 registration effective date"
   ],
   "supporting_quote": "The most common actions taken include: (1) outsourced compliance work, (2) hired additional counsel, (3) instituted new record-keeping policies, (4) hired additional staff, (5) changed marketing materials, and (6) changed communications with investors."
  },
  {
   "id": "kaal:claim:2150377-021",
   "url": "https://wulfkaal.github.io/claims/2150377-021",
   "claim": "Structural and portfolio level responses to registration were rare: only a minority of respondents severed an advising relationship, changed a fund's legal structure, liquidated positions, changed investment styles, changed portfolio structure, or closed funds to new investors.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents, n=94",
    "measured shortly after the registration effective date"
   ],
   "supporting_quote": "A minority of respondents: (1) severed an advising relationship, (2) changed funds' (legal) structure, (3) liquidated positions, (4) changed investment styles, (5) changed portfolio structure, or (6) closed funds to new investors."
  },
  {
   "id": "kaal:claim:2150377-022",
   "url": "https://wulfkaal.github.io/claims/2150377-022",
   "claim": "A majority of surveyed advisers, 72.09%, do not plan any strategic response to the Dodd-Frank Act registration and reporting requirements.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "securities-law",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents to Question 3",
    "shortly after the registration effective date"
   ],
   "supporting_quote": "Figure 4.0 indicates that a majority (72.09%) of survey respondents do not plan a strategic response to the Dodd-Frank Act registration and reporting requirements."
  },
  {
   "id": "kaal:claim:2150377-023",
   "url": "https://wulfkaal.github.io/claims/2150377-023",
   "claim": "Compliance with the registration and disclosure requirements cost a majority of surveyed advisers between $50,000 and $200,000, while a significant minority estimated total compliance cost from $200,000 to over $400,000.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents estimating cost of compliance with Dodd-Frank registration and disclosure rules"
   ],
   "supporting_quote": "A majority of respondents found the compliance cost will range from $50,000 to $200,000. However, a significant minority estimates the total compliance cost will range from $200,000 to over $400,000."
  },
  {
   "id": "kaal:claim:2150377-024",
   "url": "https://wulfkaal.github.io/claims/2150377-024",
   "claim": "The time burden of complying with all federal rules applicable to hedge fund advisers has a median of 500 hours per year, with three quarters of respondents at 750 hours or less and a quarter above that, so the burden distribution is skewed rather than uniform.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "respondents to survey Question 6.a.ii",
    "compliance with all federal rules including Treasury, SEC, and CFTC"
   ],
   "supporting_quote": "The median response was 500 hours per year. Seventy-five percent of respondents believed the federal rules would take 750 hours or less each year. On the other hand, 25% indicated the federal rules would require more than 750 hours."
  },
  {
   "id": "kaal:claim:2150377-025",
   "url": "https://wulfkaal.github.io/claims/2150377-025",
   "claim": "The regulatory regime does not drive fund sizing for most advisers: 82.02% of respondents would not take the current regulatory regime into account in determining the assets under management size of their funds.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "respondents to survey Questions 7.a and 7.b"
   ],
   "supporting_quote": "Of those who responded, 82.02% would not have taken the current regulatory regime into account in determining the AUM size of their funds."
  },
  {
   "id": "kaal:claim:2150377-026",
   "url": "https://wulfkaal.github.io/claims/2150377-026",
   "claim": "Among the minority of advisers who do factor regulation into fund sizing, the pressure runs in both directions: about 25% would go smaller to avoid regulatory hassle while about 50% would grow or need a certain size to cover the increased expenses.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "respondents who answered yes to survey Question 7.b"
   ],
   "supporting_quote": "A significant number (25%) would go smaller to avoid the regulatory hassle. A larger percentage (50%) expressed either increasing current AUM size to cover expenses or mentioned the need for a certain size in order to account for the increase in expenses."
  },
  {
   "id": "kaal:claim:2150377-027",
   "url": "https://wulfkaal.github.io/claims/2150377-027",
   "claim": "The Form PF quarterly reporting threshold of $1.5 billion in assets under management is not a binding sizing constraint for most advisers: 80.46% would not take it into account in determining fund size, while 19.54% would.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "respondents to survey Question 10",
    "measured shortly after the registration effective date"
   ],
   "supporting_quote": "Of those who responded, 80.46% would not take the Form PF threshold for quarterly reporting of $1.5 billion AUM into account in determining the appropriate size of AUM for the fund(s) they manage, whereas 19.54% would take it into account."
  },
  {
   "id": "kaal:claim:2150377-028",
   "url": "https://wulfkaal.github.io/claims/2150377-028",
   "claim": "Where the Form PF quarterly reporting threshold does influence behavior, it distorts fund size downward: a majority of the advisers who take the threshold into account plan to stay under $1.5 billion in assets under management, and some would close funds to new investors to do so.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "regulatory-failure",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "the 19.54% of respondents who would take the Form PF threshold into account"
   ],
   "supporting_quote": "A majority of those respondents who would take it into account plan to stay under the Form PF threshold for quarterly reporting of $1.5 billion AUM."
  },
  {
   "id": "kaal:claim:2150377-029",
   "url": "https://wulfkaal.github.io/claims/2150377-029",
   "claim": "Registration and disclosure costs had not reached investors at the time of the survey: 76.09% of respondents reported that their investors' rate of return was not affected, while 23.91% believed investors would be affected.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "respondents to survey Questions 11a and 11b",
    "measured within three months of the registration effective date"
   ],
   "supporting_quote": "Of those who responded, 76.09% stated that their investors' rate of return has not been affected by the registration and disclosure requirements, whereas 23.91% of respondents believe their investors will be affected by the registration and disclosure requirements."
  },
  {
   "id": "kaal:claim:2150377-030",
   "url": "https://wulfkaal.github.io/claims/2150377-030",
   "claim": "The incidence of Dodd-Frank compliance cost falls on the management company rather than the fund: the responses indicate that the management company bears the brunt of registration and disclosure costs, and whether and how those expenses will be passed to investors over time is unclear.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "argued",
   "scope_conditions": [
    "the pool of respondents in this study",
    "short run, within months of the registration effective date"
   ],
   "supporting_quote": "In the pool of respondents for this study, the responses seem to indicate that it is the management company that bears the brunt of costs associated with the registration and disclosure requirements. It is unclear whether and how the increased expenses will be passed on to investors over time."
  },
  {
   "id": "kaal:claim:2150377-031",
   "url": "https://wulfkaal.github.io/claims/2150377-031",
   "claim": "Of the respondents reporting an effect on management company profits, 87.50% attributed it specifically to increased costs and decreased profits caused by the registration and reporting requirements.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "the 78.26% of respondents who reported that management company profits were affected"
   ],
   "supporting_quote": "Of those who responded, 87.50% indicated that the profits of their investment company were affected by increased costs and decreased profits as a result of the registration and reporting requirements."
  },
  {
   "id": "kaal:claim:2150377-032",
   "url": "https://wulfkaal.github.io/claims/2150377-032",
   "claim": "Registration and disclosure did not push advisers to change what they invest in: only 2.44% of respondents said they would have to change strategy significantly over five years, while 4.88% expressly reported no strategy change.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "respondents to survey Question 4 on effects over the next five years"
   ],
   "supporting_quote": "Only 2.44% of respondents indicated that they would have to change their strategy significantly as a result of the registration and disclosure requirements, but 4.88% reported that the new requirements would not result in a strategy change."
  },
  {
   "id": "kaal:claim:2150377-033",
   "url": "https://wulfkaal.github.io/claims/2150377-033",
   "claim": "Respondents identified the creation of barriers to entry as an industry level effect of the registration and disclosure requirements, because the rules make the market environment for private funds less attractive to new entrants.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "private-funds",
    "empirical-evidence",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "respondent projections for the private fund industry over five years",
    "survey Question 5 response clusters"
   ],
   "supporting_quote": "Another response cluster that merits mentioning is the creation of barriers to entry for other funds because of a less attractive market environment for private funds as a result of the registration and disclosure requirements."
  },
  {
   "id": "kaal:claim:2150377-034",
   "url": "https://wulfkaal.github.io/claims/2150377-034",
   "claim": "The compliance burden has raised the minimum viable scale for launching a hedge fund: an adviser reports that the capital needed to start a fund in New York rose from roughly $25 to $50 million to at least $100 million because of the increased cost of compliance with the registration and disclosure requirements.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "innovation",
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "startup hedge funds in New York",
    "single respondent account highlighted by the Author"
   ],
   "supporting_quote": "It used to take 25– 50 mil. to start a hedge fund in NY and then buil[d] a record and grow. Today it is at least 100 mil. [b]ecause of the increased cost of compliance with the registration and disclosure requirements."
  },
  {
   "id": "kaal:claim:2150377-035",
   "url": "https://wulfkaal.github.io/claims/2150377-035",
   "claim": "Prior surveys of hedge fund manager expectations left the central questions unanswered because they were fielded before the registration effective date and used substantially smaller samples, so they measured anticipation rather than experience.",
   "type": "failure",
   "topics": [
    "empirical-evidence",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "argued",
   "scope_conditions": [
    "surveys conducted before March 30, 2012",
    "including the EisnerAmper and Rothstein Kass studies"
   ],
   "supporting_quote": "These prior studies left many questions unanswered because they were conducted before the registration effective date and had substantially lower sample sizes.204"
  },
  {
   "id": "kaal:claim:2150377-036",
   "url": "https://wulfkaal.github.io/claims/2150377-036",
   "claim": "Despite documented cost concerns, the hedge fund industry appears to be only modestly affected by the Dodd-Frank reporting and disclosure requirements and is adapting well to the new regulatory environment.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "argued",
   "scope_conditions": [
    "the first months after the March 30, 2012 registration effective date",
    "survey respondents, n=94"
   ],
   "supporting_quote": "Despite these concerns, the hedge fund industry appears to be only modestly affected by the Dodd-Frank reporting and disclosure requirements and is adapting well to the new regulatory environment."
  },
  {
   "id": "kaal:claim:2150377-037",
   "url": "https://wulfkaal.github.io/claims/2150377-037",
   "claim": "Strategic adjustment to registration is a function of firm size: firms that planned a strategic response to Dodd-Frank were smaller than firms that did not.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents, n=94, comparing the twenty-four advisers planning a strategic response with the sixty-two who did not"
   ],
   "supporting_quote": "Firms that planned a strategic response were smaller than those firms that did not plan a strategic response."
  },
  {
   "id": "kaal:claim:2150377-038",
   "url": "https://wulfkaal.github.io/claims/2150377-038",
   "claim": "Quick absorption of registration costs does not settle the policy question: even if advisers absorb the reported cost implications relatively quickly after registration, the long-term cost implications of registration and reporting obligations could still affect the private fund industry.",
   "type": "predictive",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "argued",
   "scope_conditions": [
    "private fund industry beyond the short observation window of this study"
   ],
   "supporting_quote": "Although hedge fund advisers may absorb the reported cost implications of registration and disclosure rules relatively quickly after registration, the long-term cost implications of registration and reporting obligations could affect the private fund industry."
  },
  {
   "id": "kaal:claim:2150377-039",
   "url": "https://wulfkaal.github.io/claims/2150377-039",
   "claim": "Mandatory reporting does not guarantee informative reporting: anecdotal evidence indicates that advisers can present the information required in Forms ADV and PF in ways that in effect flatten out and sanitize the disclosures.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "disclosure",
    "compliance",
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "speculative",
   "scope_conditions": [
    "anecdotal evidence, the level of sanitizing cannot be verified"
   ],
   "supporting_quote": "Anecdotal evidence suggests that the information disclosed by hedge fund advisers in the required Forms ADV and PF can be presented in ways that in effect \"flatten out\" and \"sanitize\" the disclosures."
  },
  {
   "id": "kaal:claim:2150377-040",
   "url": "https://wulfkaal.github.io/claims/2150377-040",
   "claim": "If advisers sanitize their Form ADV and Form PF filings, the disclosures become less useful for FSOC and SEC evaluation and undermine the very determination of systemic risk posed by private funds that the reporting regime was built to enable.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "disclosure",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "speculative",
   "scope_conditions": [
    "to the extent disclosures are in fact sanitized, which the Author states cannot be verified"
   ],
   "supporting_quote": "Although the level of sanitizing of disclosures cannot be verified, sanitized disclosures could be less useful for FSCO and SEC evaluation and their determination of the systemic risk posed by private funds."
  },
  {
   "id": "kaal:claim:2150377-041",
   "url": "https://wulfkaal.github.io/claims/2150377-041",
   "claim": "The study's findings are bounded in time: because the data was collected within three months of the registration effective date, the study shows trends and perceptions but does not provide insights on the long-term implications of the registration and disclosure requirements.",
   "type": "condition",
   "topics": [
    "empirical-evidence",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Fund Manager Registration Under the Dodd-Frank Act (2012). SSRN: https://ssrn.com/abstract=2150377",
   "year": "2012",
   "source_sha256": "0b58bb409cac7674d78515f5374096f9a349de3bbd1983c990e0edc85a635a09",
   "confidence": "asserted",
   "scope_conditions": [
    "data collected within three months of March 30, 2012"
   ],
   "supporting_quote": "Although this study shows trends and perceptions within the industry, it does not provide insights on the long-term implications of the registration and disclosure requirements because the data was collected within a relatively short time period after the registration requirements took effect."
  },
  {
   "id": "kaal:claim:1998455-001",
   "url": "https://wulfkaal.github.io/claims/1998455-001",
   "claim": "Government bailouts of systemically important financial institutions create strong incentives for those institutions to externalize the cost of their risk taking onto taxpayers.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where governments provide bailout funding to systemically important financial institutions"
   ],
   "supporting_quote": "Government bailouts create strong incentives to externalize the cost of SIFIs' risk taking onto taxpayers."
  },
  {
   "id": "kaal:claim:1998455-002",
   "url": "https://wulfkaal.github.io/claims/1998455-002",
   "claim": "The implicit guarantees contained in a bailout multiply the incentives for systemically important financial institutions to increase leverage, because those guarantees make debt cheaper than equity.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where market participants expect governments to bail out systemically important firms"
   ],
   "supporting_quote": "The implicit guarantees in a bailout may also multiply the incentives for SIFIs to increase leverage because the guarantees could make debt cheaper than equity."
  },
  {
   "id": "kaal:claim:1998455-003",
   "url": "https://wulfkaal.github.io/claims/1998455-003",
   "claim": "Because governments prioritize the rescue of systemically important financial institutions over other entities, those institutions are incentivized to adopt similar risk profiles and to correlate their risks.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where governments visibly prioritize SIFI bailouts because of systemic implications"
   ],
   "supporting_quote": "Government prioritization of SIFI bailouts could incentivize SIFIs to adopt similar risk profiles and correlate risks."
  },
  {
   "id": "kaal:claim:1998455-004",
   "url": "https://wulfkaal.github.io/claims/1998455-004",
   "claim": "Because both European regulatory initiatives and the United States academic debate concentrate on the technical design features of contingent capital securities, the possible corporate governance applications of those securities are mostly ignored.",
   "type": "empirical",
   "topics": [
    "contingent-capital",
    "governance-design",
    "corporate-governance",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "asserted",
   "scope_conditions": [
    "state of the debate as of 2012 in Europe and the United States"
   ],
   "supporting_quote": "Regulatory initiatives in Europe and the academic debate in the United States focus on improving the technical design fea- tures of contingent capital securities. Given the importance of technical design features, possible applications of CCS for corpo- rate governance are mostly ignored."
  },
  {
   "id": "kaal:claim:1998455-005",
   "url": "https://wulfkaal.github.io/claims/1998455-005",
   "claim": "Combined with other corporate governance mechanisms, contingent capital securities function as an internal, institution specific mechanism that could fill the void left by regulators' apparent inability to supervise financial institutions effectively.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "governance-design",
    "corporate-governance",
    "institutional-design",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where CCS are used alongside, not instead of, other corporate governance mechanisms"
   ],
   "supporting_quote": "Com- bined with other corporate governance mechanisms, CCSs, as an internal institution-specific mechanism, could help fill a void left by regulators' seeming inability to supervise financial institutions effectively."
  },
  {
   "id": "kaal:claim:1998455-006",
   "url": "https://wulfkaal.github.io/claims/1998455-006",
   "claim": "The anecdotal record of ethically questionable conduct by leaders of systemically important financial institutions is not dispositive and does not establish an underlying trend, but it does show that some of the most pervasive cases of unethical conduct involved such institutions.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on the high profile cases surveyed: Citigroup, Bear Stearns, AIG, Merrill Lynch, Lehman Brothers"
   ],
   "supporting_quote": "The anecdotal evidence pertaining to ethically questionable conduct of SIFI leaders is certainly not dispositive or indicative of underlying trends. It does seem to show, however, that some of the most pervasive cases of unethical conduct did involve SI- FIs."
  },
  {
   "id": "kaal:claim:1998455-007",
   "url": "https://wulfkaal.github.io/claims/1998455-007",
   "claim": "For purposes of this Article contingent capital is stipulated to be the predefined conversion of a certain percentage of a financial institution's debt securities into equity securities.",
   "type": "definitional",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "asserted",
   "scope_conditions": [
    "stipulated definition used throughout the Article"
   ],
   "supporting_quote": "For purposes of this Article, contingent capi- tal is the predefined conversion of a certain percentage of finan- cial institutions' debt securities into equity securities."
  },
  {
   "id": "kaal:claim:1998455-008",
   "url": "https://wulfkaal.github.io/claims/1998455-008",
   "claim": "Contingent capital contributes to minimizing moral hazard by internalizing bank failure costs, that is, by placing those costs on the institution's own security holders rather than on the public.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where the conversion feature actually shifts failure costs to CCS holders and shareholders"
   ],
   "supporting_quote": "By inter- nalizing bank failure costs, contingent capital could contribute to minimizing moral hazard."
  },
  {
   "id": "kaal:claim:1998455-009",
   "url": "https://wulfkaal.github.io/claims/1998455-009",
   "claim": "Installing contingent capital can be more efficient than raising capital requirements, because the capital injection becomes available only when it is needed and only enough securities convert to recapitalize the firm.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "economics",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "assumes a functioning trigger that fires at the right time",
    "assumes incremental or calibrated conversion"
   ],
   "supporting_quote": "Installing contingent capital could be more efficient than raising capital requirements because the capital injection is available only when it is needed."
  },
  {
   "id": "kaal:claim:1998455-010",
   "url": "https://wulfkaal.github.io/claims/1998455-010",
   "claim": "The threat of dilution of stock holdings, combined with the threat of loss on conversion, reduces the pressure shareholders place on the management of systemically important financial institutions to take higher risks.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "risk-and-incentives",
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where conversion dilutes existing common shareholders"
   ],
   "supporting_quote": "The threat of dilution of stock holdings in combination with a threat of loss due to conversion could help reduce shareholder pressure on SIFI management to take higher risks."
  },
  {
   "id": "kaal:claim:1998455-011",
   "url": "https://wulfkaal.github.io/claims/1998455-011",
   "claim": "Trigger designs can be ranked by the certainty they give market participants: institution specific triggers presumably grant the most certainty, while regulatory trigger designs provide lower levels of certainty.",
   "type": "condition",
   "topics": [
    "contingent-capital",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "comparing institution specific triggers against regulatory or systemic triggers"
   ],
   "supporting_quote": "While institution-specific triggers would presum- ably grant most certainty to market participants, regulatory trig- ger designs could provide lower levels of certainty."
  },
  {
   "id": "kaal:claim:1998455-012",
   "url": "https://wulfkaal.github.io/claims/1998455-012",
   "claim": "Converting contingent capital securities prematurely, while the institution can still operate without an equity injection, dissipates the benefit: the injection is no longer available at the later moment when the institution cannot obtain other funding.",
   "type": "failure",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where the trigger fires before the institution has exhausted other funding sources"
   ],
   "supporting_quote": "Converting CCS into equity prematurely at a time when the financial institutions can still operate without an equity capi- tal injection could mean that the CCS capital injection would no longer be available when the financial institution will be unable to obtain other funding."
  },
  {
   "id": "kaal:claim:1998455-013",
   "url": "https://wulfkaal.github.io/claims/1998455-013",
   "claim": "Converting contingent capital securities too late makes the capital injection superfluous, because by that stage the institution may face unresolvable difficulties that a capital injection can only marginally soften, and conversion may not suffice once the institution has entered resolution.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where the trigger fires after the institution's difficulties have become unresolvable",
    "especially once the institution has entered the resolution stage"
   ],
   "supporting_quote": "On the other hand, converting CCS too late could make the capital injection superfluous. At that stage, the financial institu- tion may have experienced unresolvable financial difficulties that may only marginally be softened with a capital injection."
  },
  {
   "id": "kaal:claim:1998455-014",
   "url": "https://wulfkaal.github.io/claims/1998455-014",
   "claim": "Contingent capital by itself, without additional measures and supplemental corporate governance improvements, may not prevent firm failure; its real potential unfolds only when it supplements other corporate governance improvements.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where contingent capital is deployed as a standalone regulatory tool"
   ],
   "supporting_quote": "In sum, contingent capital without additional measures and supplemental corporate governance improvements may not pre- vent firm failure.115 The real potential of contingent capital could unfold if it would be used to supplement other corporate govern- ance improvements."
  },
  {
   "id": "kaal:claim:1998455-015",
   "url": "https://wulfkaal.github.io/claims/1998455-015",
   "claim": "Divergent national definitions of Tier 1 capital produce a distortion: financial institutions in countries with stricter definitions that exclude contingent capital appear to hold less capital and thinner capital cushions than institutions in countries with broader definitions, and investors may read that appearance as a negative attribute.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure",
    "systemic-risk",
    "contingent-capital"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "absent harmonized EU wide or international standards for Tier 1 capital"
   ],
   "supporting_quote": "Financial institutions in countries that use stricter definitions on Tier 1 capital and do not recognize contin- gent capital as Tier 1 capital could appear to have less capital and thinner capital cushions than financial institutions in countries with broader definitions for Tier 1 capital."
  },
  {
   "id": "kaal:claim:1998455-016",
   "url": "https://wulfkaal.github.io/claims/1998455-016",
   "claim": "If a market evolves in which contingent capital designs appear to provide sufficient protection against systemic risk and contagion, decision makers may come to rely on the design of those securities and neglect their own role as monitors.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "compliance",
    "consensus-and-security",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "speculative",
   "scope_conditions": [
    "theoretical possibility flagged by the author",
    "presupposes CCS designs that appear protective"
   ],
   "supporting_quote": "it seems theoretically possible that decision makers could rely on the design of CCS and neglect their role as monitors."
  },
  {
   "id": "kaal:claim:1998455-017",
   "url": "https://wulfkaal.github.io/claims/1998455-017",
   "claim": "Contingent capital rules could contribute to overriding the moral reasoning of decision makers, in which case contingent capital would actually increase, not reduce, risk incentives for institutions that are too big to fail.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where decision makers operate under an illusion of heightened protection",
    "where the underlying contingent capital design is flawed"
   ],
   "supporting_quote": "This could mean that contingent capital rules could actually contribute to overriding decision maker's moral reasoning. In that case, contingent capital could actually increase risk incentives for SI- FIs that are too big to fail."
  },
  {
   "id": "kaal:claim:1998455-018",
   "url": "https://wulfkaal.github.io/claims/1998455-018",
   "claim": "Regular corporate governance controls may not work in systemically important financial institutions, because those institutions are considered too big to fail and their leaders, anticipating a bailout commitment, are incentivized to shift their risk preferences upwards.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where the institution is treated as too big to fail and a bailout is anticipated"
   ],
   "supporting_quote": "the regular corporate governance controls may not work in SIFIs. SIFIs are often considered too big to fail and may be bailed out. If that is the case, SIFI leaders may anticipate a bail-out com- mitment and may be incentivized to shift their risk preferences upwards."
  },
  {
   "id": "kaal:claim:1998455-019",
   "url": "https://wulfkaal.github.io/claims/1998455-019",
   "claim": "Switching to contingent capital financing could reinforce rather than dampen risk incentives, and these distorted risk incentives are a drawback of contingent capital issuances.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where the issuing institution is already treated as too big to fail",
    "the author notes these drawbacks are unlikely to materialize in the near term given the nascent market"
   ],
   "supporting_quote": "In effect, switching to CCS financing could reinforce risk in- centives and these distorted risk incentives could create draw- backs for CCS issuances."
  },
  {
   "id": "kaal:claim:1998455-020",
   "url": "https://wulfkaal.github.io/claims/1998455-020",
   "claim": "A mandatory contingent capital issuance regime induces institutions to buy their competitors' securities to satisfy regulatory obligations rather than for economic reasons, and the resulting cross holdings among systemically important institutions undermine the ability of contingent capital to limit systemic risk and contagion.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "under a regime requiring mandatory CCS issuance",
    "where SIFIs are permitted to purchase each other's CCS"
   ],
   "supporting_quote": "A detrimental result of such a practice could be CCS cross holdings among SIFIs. Cross holdings of CCS by SIFIs could undermine the effectiveness of CCS and its ability to limit systemic risk and contagion."
  },
  {
   "id": "kaal:claim:1998455-021",
   "url": "https://wulfkaal.github.io/claims/1998455-021",
   "claim": "Where institutions hold each other's contingent capital and share similar risk profiles, they will be hesitant after conversion to vote for necessary organizational changes at a competitor or otherwise exercise their voting rights, because they are similarly exposed and may face reciprocal voting power.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where SIFIs hold similar risk profiles and CCS positions in similarly exposed entities",
    "especially where cross holdings are reciprocal"
   ],
   "supporting_quote": "With sim- ilar risk profiles and CCS positions in similarly exposed entities, SIFIs could be hesitant to vote for necessary organizational changes or otherwise exercise their voting rights on a competitor after conversion of CCS into equity."
  },
  {
   "id": "kaal:claim:1998455-022",
   "url": "https://wulfkaal.github.io/claims/1998455-022",
   "claim": "Absent cross holdings, the opposite conflict arises: institutions holding a competitor's converted contingent capital could be tempted to exercise their voting rights against the interests of that competitor.",
   "type": "failure",
   "topics": [
    "governance-design",
    "contingent-capital",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where a SIFI holds a competitor's CCS without a reciprocal position",
    "after a conversion to equity has been triggered"
   ],
   "supporting_quote": "Without CCS cross holdings, SIFIs could be tempted to exercise their voting rights against the interests of the competitor if a con- version to equity should have been triggered."
  },
  {
   "id": "kaal:claim:1998455-023",
   "url": "https://wulfkaal.github.io/claims/1998455-023",
   "claim": "Coupon rates between seven and nine and a half percent attracted sufficient investor interest in European contingent capital securities to establish what appears to be a sustainable market in those securities.",
   "type": "empirical",
   "topics": [
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "evidenced",
   "scope_conditions": [
    "European CCS issuances through 2011",
    "based on the Lloyds, Credit Suisse and Bank of Cyprus offerings and industry interviews"
   ],
   "supporting_quote": "CCS coupon rates between 7% and 9.5% attracted sufficient investor interest and seem to have established a sustainable market in these securities."
  },
  {
   "id": "kaal:claim:1998455-024",
   "url": "https://wulfkaal.github.io/claims/1998455-024",
   "claim": "The combination of demonstrated investor interest and an underdeveloped regulatory structure in the United States presents a unique opportunity to experiment with contingent capital designs and with their application to the corporate governance of systemically important financial institutions.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "governance-design",
    "corporate-governance",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "United States market conditions as of 2012",
    "structurally different debt and equity markets from Europe"
   ],
   "supporting_quote": "The combination of investor interest and an underdeveloped regulatory structure in the United States, pertaining to this market segment, could present a unique opportunity to experiment with contingent capital designs and their possible application in corpo- rate governance of SIFIs."
  },
  {
   "id": "kaal:claim:1998455-025",
   "url": "https://wulfkaal.github.io/claims/1998455-025",
   "claim": "The political economy of financial regulation ensures that the expansion of regulatory oversight induced by Dodd-Frank will be followed by a phase of relaxation, since historically the introduction of regulatory regimes after a crisis is followed by a gradual easing of regulatory strictures.",
   "type": "predictive",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "post crisis regulatory regimes generally",
    "based on historical patterns of financial regulation"
   ],
   "supporting_quote": "The political economy of financial regulation ensures that af- ter the Dodd-Frank-induced expansion of regulatory oversight there will be a subsequent phase of relaxation of regulatory over- sight."
  },
  {
   "id": "kaal:claim:1998455-026",
   "url": "https://wulfkaal.github.io/claims/1998455-026",
   "claim": "Harmonization and coordination can facilitate experimentation and learning, but experimentation is most effective when several different approaches are tried simultaneously in different jurisdictions.",
   "type": "design",
   "topics": [
    "economics",
    "law-and-legal-systems",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where multiple jurisdictions are free to adopt divergent rules"
   ],
   "supporting_quote": "Harmonization and coordination can help facilitate experimentation and a learning process, but experimentation is probably most effective when several different approaches can be tried simultaneously in dif- ferent jurisdictions."
  },
  {
   "id": "kaal:claim:1998455-027",
   "url": "https://wulfkaal.github.io/claims/1998455-027",
   "claim": "Where jurisdictions are not compelled to agree on the same rule, some jurisdiction will try a different rule, and will do so more quickly, when changed economic circumstances make a different rule optimal.",
   "type": "mechanism",
   "topics": [
    "economics",
    "dynamic-regulation",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where jurisdictions are not compelled to converge on a single rule",
    "where underlying economic circumstances change so that a different rule would be optimal"
   ],
   "supporting_quote": "diction will try a different rule, and will do so more quickly, than if all jurisdictions felt compelled to agree upon the same rule."
  },
  {
   "id": "kaal:claim:1998455-028",
   "url": "https://wulfkaal.github.io/claims/1998455-028",
   "claim": "Contingent capital securities approximate the characteristics of a quasi-public good: just as ships cannot readily be excluded from a lighthouse, systemically important institutions benefit from the issuance of contingent capital by other such institutions whenever the design minimizes systemic risk and contagion.",
   "type": "definitional",
   "topics": [
    "contingent-capital",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "only if the CCS design actually minimizes systemic risk and contagion"
   ],
   "supporting_quote": "CCS could have the potential to approximate quasi-public good characteristics. Similar to the difficulty of excluding ships from using the services of a lighthouse,219 SIFIs may benefit from the issuance of CCS by other SIFIs if the CCS design min- imizes systemic risk and contagion."
  },
  {
   "id": "kaal:claim:1998455-029",
   "url": "https://wulfkaal.github.io/claims/1998455-029",
   "claim": "The social welfare maximization potential of contingent capital securities is lower if their design features are left entirely to private ordering, because private parties do not necessarily structure those features with a view toward the common good, the avoidance of future bailouts, or the limitation of systemic risk and contagion.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "contingent-capital",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where regulators leave CCS design features entirely to industry groups and private parties"
   ],
   "supporting_quote": "The social welfare maximization potential of CCS could be lower if the design features are entirely left to private ordering."
  },
  {
   "id": "kaal:claim:1998455-030",
   "url": "https://wulfkaal.github.io/claims/1998455-030",
   "claim": "Under strong institutional and cultural forces, decision makers in financial institutions tend to compartmentalize their lives and disconnect their moral reasoning from their conduct in the workplace, so that even a leader with strong personal values can engage in questionable conduct.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where industry, institutional and peer pressure shape decision making"
   ],
   "supporting_quote": "Influenced by strong institutional and cultural forces, deci- sion makers may have a tendency to compartmentalize their lives and disconnect their moral reasoning from their actions in the workplace."
  },
  {
   "id": "kaal:claim:1998455-031",
   "url": "https://wulfkaal.github.io/claims/1998455-031",
   "claim": "Issuing contingent capital securities with a conversion feature is a way for a banking entity to signal to its market that it will adhere to stricter standards, ethical or otherwise.",
   "type": "design",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where the market can observe and interpret the issuance as a commitment",
    "the author notes the signaling effect of any particular issuance is difficult to ascertain"
   ],
   "supporting_quote": "The issuance of contingent capital securities with a conver- sion feature could signal adherence to stricter standards."
  },
  {
   "id": "kaal:claim:1998455-032",
   "url": "https://wulfkaal.github.io/claims/1998455-032",
   "claim": "A contingent capital design that increases voting rights on conversion allows systemically important institutions to lower risk taking implicitly and to achieve an indirect, institution specific form of corporate governance reform through increased checks and balances.",
   "type": "design",
   "topics": [
    "governance-design",
    "contingent-capital",
    "corporate-governance",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where CCS are issued with a voting rights increase upon conversion",
    "issuance may be voluntary or mandatory"
   ],
   "supporting_quote": "With a design that increases voting rights, SI- FIs could implicitly lower risk-taking and allow for a form of in- direct and institution- specific corporate governance reform, i.e., increased checks and balances."
  },
  {
   "id": "kaal:claim:1998455-033",
   "url": "https://wulfkaal.github.io/claims/1998455-033",
   "claim": "Because the threat of a change of control leads leaders to take fewer risks in order to avoid triggering conversion, a contingent capital design with increased voting rights allows those leaders to act more in accordance with their moral convictions and conscience.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where conversion carries a credible threat of change of control",
    "where shareholders respond by allowing management more discretion over risk taking"
   ],
   "supporting_quote": "It could allow SIFI leaders to increasingly act in accordance with their moral convictions and conscience because the threat of change of control may influence SIFI leaders to take fewer risks to avoid triggering the conversion of CCS and a possible change of con- trol."
  },
  {
   "id": "kaal:claim:1998455-034",
   "url": "https://wulfkaal.github.io/claims/1998455-034",
   "claim": "Management incentives for risk control are heightened upon conversion, especially where management knows that holders of converted contingent capital would command a majority vote, with or without institutional shareholders.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "governance-design",
    "contingent-capital",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "depends on the volume of CCS issuance, which determines the influence of CCS holders"
   ],
   "supporting_quote": "More importantly, management incen- tives for risk control could be heightened upon conversion, espe- cially if management knows that CCS holders would have a ma- jority vote upon conversion (with or without institutional shareholders)."
  },
  {
   "id": "kaal:claim:1998455-035",
   "url": "https://wulfkaal.github.io/claims/1998455-035",
   "claim": "Treating the price of contingent capital securities as an indicator of how much people care about market integrity and moral hazard would require altruistic motives on the part of purchasers, and the author doubts this: the nascent market appears to have been built on investors' expectation of above average returns.",
   "type": "empirical",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "based on the observed nascent market in CCS"
   ],
   "supporting_quote": "This would imply, however, altruistic motives of CCS purchasers. It is unclear if altruism in CCS purchases would be realistic. The nascent market in CCS seems to have been built on investors' expectation of above- average returns."
  },
  {
   "id": "kaal:claim:1998455-036",
   "url": "https://wulfkaal.github.io/claims/1998455-036",
   "claim": "If central banks were to purchase contingent capital securities issued by systemically important institutions in the primary or secondary market as part of monetary policy, the prospect of internalizing bank failure costs would be undermined, and primary market purchases could also undermine market participants' confidence in these instruments.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "contingent-capital",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where central banks are permitted to purchase CCS issued by SIFIs"
   ],
   "supporting_quote": "If the U.S. Federal Reserve Bank, the European Central Bank, and other central banks, as part of their monetary policy, were to purchase CCS issued by SIFIs in the primary or second- ary market, the prospect of internalizing bank failure costs could be undermined."
  },
  {
   "id": "kaal:claim:1998455-037",
   "url": "https://wulfkaal.github.io/claims/1998455-037",
   "claim": "Combining the existing prioritization of bailouts for systemically important institutions with central bank purchases of their contingent capital in a given jurisdiction would further incentivize those institutions to adopt similar risk profiles and correlate their risks.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "in a jurisdiction where both bailout prioritization and central bank CCS purchases occur"
   ],
   "supporting_quote": "Combining bailout prioritization with central bank CCS purchases in a given jurisdiction could further incentivize SIFIs to adopt similar risk profiles and corre- late risks."
  },
  {
   "id": "kaal:claim:1998455-038",
   "url": "https://wulfkaal.github.io/claims/1998455-038",
   "claim": "Rather than banning purchases by systemically important institutions of each other's contingent capital, which could be detrimental to market evolution, the design should require disclosure of the purchaser's identity and approval by the issuer.",
   "type": "design",
   "topics": [
    "disclosure",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where the concern is competitors acquiring voting rights as equity holders upon conversion"
   ],
   "supporting_quote": "An outright ban of SIFI CCS purchases, or at least purchases in other SIFI CCS issuances, could be detrimental for CCS mar- ket evolution. Perhaps a mechanism that requires disclosure of the identity of the purchaser for SIFIs and approval by the issuer could address these concerns."
  },
  {
   "id": "kaal:claim:1998455-039",
   "url": "https://wulfkaal.github.io/claims/1998455-039",
   "claim": "An outright retroactive charge for government subsidies or for actions taken by regulators could backfire, because it would legitimize the bailout and perpetuate its socially suboptimal consequences.",
   "type": "failure",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where the counter-subsidy takes the form of a retroactive charge on bailout recipients"
   ],
   "supporting_quote": "On the other hand, an outright retroactive charge for government subsi- dies or actions taken by regulators could actually legitimize the bailout and perpetuate its socially suboptimal consequences."
  },
  {
   "id": "kaal:claim:1998455-040",
   "url": "https://wulfkaal.github.io/claims/1998455-040",
   "claim": "Contingent capital can facilitate an incentive structure that lets regulators rely partially on private party contracting for the design of these securities while still accounting for systemic risk.",
   "type": "design",
   "topics": [
    "risk-and-incentives",
    "dynamic-regulation",
    "systemic-risk",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455",
   "year": "2012",
   "source_sha256": "1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c",
   "confidence": "argued",
   "scope_conditions": [
    "where a general regulatory framework enables rather than displaces private ordering"
   ],
   "supporting_quote": "Contingent capital could help fa- cilitate an incentive structure that allows regulators to rely par- tially on private party contracting for the design of CCS to ac- count for systemic risk."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-001",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-001",
   "claim": "The nearly insurmountable standard for liability in oversight cases in the United States undermines the signalling of the expected standard of conduct, and this could have long-term implications for American corporate law.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "law-and-legal-systems",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "United States, Delaware corporate law",
    "oversight or duty to monitor claims"
   ],
   "supporting_quote": "The nearly insurmountable standard for liability in oversight cases and its effect on signalling the expected standard of conduct could have long-term implications for corporate law in the United States."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-002",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-002",
   "claim": "Stable rules may not suffice to make directors' oversight role more robust, so contractual and quasi law forms of dynamic governance are a promising supplement for improving the duty of oversight.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "United States corporate governance",
    "duty of oversight"
   ],
   "supporting_quote": "After outlining why stable rules may not suffice to make directors' oversight role more robust, the author provides some initial thoughts on how contractual and quasi law forms of dynamic governance could help improve the duty of oversight."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-003",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-003",
   "claim": "Without a workable duty of oversight, corporate directors who seek to comply with the oversight duty lack meaningful guidance about the conduct expected of them.",
   "type": "condition",
   "topics": [
    "corporate-governance",
    "law-and-legal-systems",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "doctrine of oversight remains immature and incoherent"
   ],
   "supporting_quote": "Without a workable duty of oversight, corporate directors seeking to comply with the oversight duty lack meaningful guidance as to the expected conduct."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-004",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-004",
   "claim": "Because directors serve part-time as outsiders, it is unreasonable to expect them to have the knowledge, capacity, and expertise needed to monitor effectively the business affairs of large and increasingly complex corporations.",
   "type": "condition",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "large and complex modern corporations",
    "outside directors serving part time"
   ],
   "supporting_quote": "that, because directors serve part-time as outsiders, it may be unreasonable to expect directors to have the knowledge, capacity, and expertise to \"effectively monitor the"
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-005",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-005",
   "claim": "Under Delaware law as applied in In re Citigroup, directors' incorrect evaluation of business risk and their inability to predict the future do not violate the duty of oversight, so the Caremark duty to monitor is not extended to business risk.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "corporate-governance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "evidenced",
   "scope_conditions": [
    "Delaware law",
    "claims framed as failures to monitor business risk"
   ],
   "supporting_quote": "According to the Delaware Chancery court, directors' incorrect evaluation of business risk and their inability to predict the future did not violate directors' duty of oversight."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-006",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-006",
   "claim": "Losses alone are not sufficient to hold directors personally liable for taking risks that lead to those losses, because risk is inherent in maximizing shareholder value.",
   "type": "condition",
   "topics": [
    "corporate-governance",
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "evidenced",
   "scope_conditions": [
    "Delaware law",
    "risk taking that produces corporate losses"
   ],
   "supporting_quote": "Losses alone were not sufficient to hold directors personally liable for taking risks that lead to losses because risk is inherent in maximizing shareholder value."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-007",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-007",
   "claim": "Oversight liability in Delaware can be established only on a showing that the directors knew they were not discharging their fiduciary duties or consciously disregarded their responsibilities.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "evidenced",
   "scope_conditions": [
    "Delaware oversight litigation"
   ],
   "supporting_quote": "However, oversight liability can be established if the plaintiff showed that \"the directors knew that they were not discharging their fiduciary [duties] or that the directors demonstrated a conscious disregard for their"
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-008",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-008",
   "claim": "Delaware's signalling of expected conduct is undermined when the state simultaneously imposes a near insurmountable standard for liability in cases involving breaches of the duty of oversight.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "Delaware as the signalling jurisdiction",
    "oversight breach claims"
   ],
   "supporting_quote": "Most importantly, Professor Fairfax explains why, while Delaware law may signal the most appropriate standard of conduct, 15 Delaware's signaling of expected conduct is undermined if it imposes a near insurmountable standard for liability in cases involving breaches of the duty of oversight."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-009",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-009",
   "claim": "Courts often provide very specific language about the standard of conduct expected of directors, but lawyers do not sufficiently communicate that expected conduct to directors.",
   "type": "empirical",
   "topics": [
    "corporate-governance",
    "law-and-legal-systems",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States corporate officers and directors"
   ],
   "supporting_quote": "Professors Johnson & Garvis show in an empirical study that courts often provide very specific language regarding the appropriate standard of conduct for directors.17 However, their study highlights that lawyers do not sufficiently communicate to directors what conduct is expected of them."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-010",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-010",
   "claim": "Directors who are inadequately informed about the expected standard of conduct will underestimate their personal liability exposure and engage in riskier behavior than is desirable for the company itself.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "corporate-governance",
    "law-and-legal-systems",
    "disclosure",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "directors depend on counsel for fiduciary duty guidance"
   ],
   "supporting_quote": "Inadequately informed directors may underestimate their personal liability exposure and engage in more risky behavior than is desirable for the company itself."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-011",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-011",
   "claim": "Germany has taken a much stricter approach than the United States to cases involving a breach of the duty of oversight, even though the German business judgment rule formally requires a showing of the same elements as the American one.",
   "type": "empirical",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of German and Delaware corporate law"
   ],
   "supporting_quote": "For instance, Germany has taken a much stricter approach to cases involving a breach of the duty of oversight."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-012",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-012",
   "claim": "Under German law, directors' business decisions lose the protection of the business judgment rule where the business risk taken was inappropriately excessive, a standard German courts announced in ARAG/Garmenbeck.",
   "type": "condition",
   "topics": [
    "risk-and-incentives",
    "corporate-governance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "evidenced",
   "scope_conditions": [
    "German stock corporation law",
    "Section 93 AktG business judgment rule"
   ],
   "supporting_quote": "explained that if the \"business risk was inappropriately excessive,\" directors' business decisions are not protected under the 23 German business judgment rule."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-013",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-013",
   "claim": "German commentators, whose expertise German courts rely on heavily, concluded after the financial crisis that managers do not act reasonably under the German business judgment rule if the risks they take on behalf of the corporation result in the demise of the corporation.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "corporate-governance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "evidenced",
   "scope_conditions": [
    "Germany",
    "post financial crisis evaluation of liability rules"
   ],
   "supporting_quote": "German commentators (contrary to their counterparts in the United States, German courts rely heavily on the expertise of commentators) concluded that managers do not act reasonably in terms of the German business judgment rule if risks"
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-014",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-014",
   "claim": "The German ARAG/Garmenbeck holding is diametrically opposed to In re Citigroup, where the Delaware Chancery Court declared that directors' incorrect evaluation of business risk did not violate the duty of oversight.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of German and Delaware case law on business risk"
   ],
   "supporting_quote": "This holding is diametrically opposed to the holding in In re Citigroup where the Delaware Chancery Court declared that directors' incorrect evaluation of business risk did not violate directors' duty of oversight."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-015",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-015",
   "claim": "The German Federal Court of Justice held in Mannesmann that directors breached their fiduciary duty by awarding a bonus of roughly seventeen million dollars to a chief executive whose tenure had substantially increased shareholder value, whereas Delaware courts imposed no liability for the far larger Ovitz payout in Disney.",
   "type": "empirical",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "evidenced",
   "scope_conditions": [
    "executive compensation decisions",
    "German versus Delaware adjudication"
   ],
   "supporting_quote": "decision in Mannesmann28 determined that the directors of the German Mannesmann AG breached their fiduciary duty to the company by awarding a bonus of approximately $17 million to the Mannesmann CEO whose tenure at Mannesmann resulted in a substantial increase of shareholder value."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-016",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-016",
   "claim": "Comparative corporate law research is challenging and may include inaccuracies because countries differ in legal history, legal origins, and legal cultures.",
   "type": "mechanism",
   "topics": [
    "research-methods",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "cross country comparison of adjudicated cases"
   ],
   "supporting_quote": "Comparative corporate law research is challenging and may include inaccuracies as a result of countries' different legal history, legal origins, and legal cultures."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-017",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-017",
   "claim": "Despite the limits of the comparison, had In re Citigroup and Disney been decided in Germany the allocation of liability would have been different, because German courts are generally more willing than Delaware courts to second-guess directors' decisions.",
   "type": "empirical",
   "topics": [
    "corporate-governance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "cases involving extreme facts at the cusp of culpable conduct"
   ],
   "supporting_quote": "it seems difficult to escape the conclusion that had the two American cases, In re Citigroup and Disney, been decided in Germany, the liability allocation would have been different. German courts generally seem more willing to second-guess directors' decisions than Delaware courts."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-018",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-018",
   "claim": "The different legal standards for allocating liability in Germany and the United States illustrate rather different legal and societal attitudes toward managers' risk-taking.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "supporting_quote": "The different legal standards for liability allocation in Germany and the United States illustrate their rather different legal and societal attitudes towards managers' risk-taking."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-019",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-019",
   "claim": "Delaware's signalling of expected conduct could be dramatically improved by adopting a moderate rather than near insurmountable standard for liability in cases involving breaches of the duty of oversight.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "United States, Delaware corporate law",
    "breaches of the duty of oversight"
   ],
   "supporting_quote": "signaling of expected conduct29 could be dramatically improved with a moderate standard for liability in cases involving breaches of the duty of oversight."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-020",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-020",
   "claim": "If the liability standard were lowered, directors and officers would take their increased personal liability exposure into account and could be incentivized to engage in less risky behavior.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "corporate-governance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "a moderate liability standard for oversight breaches is adopted"
   ],
   "supporting_quote": "Directors and officers would take their increased personal liability exposure into account and could be incentivized to engage in less risky behavior."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-021",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-021",
   "claim": "Increasing oversight liability would give courts an opportunity to clarify the oversight doctrine, so that it could evolve into a mature and coherent doctrine rather than remaining immature and incoherent.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "more oversight suits reach the merits"
   ],
   "supporting_quote": "With an increase in liability, courts would also have an opportunity to clarify the oversight doctrine."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-022",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-022",
   "claim": "Increased liability is no panacea and cannot alone adequately address the central shortcomings of the duty of oversight and of corporate governance in the United States, because heightened liability does not give part-time outside directors the capacity to monitor complex corporations.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "large and increasingly complex corporations",
    "directors serving part time as outsiders"
   ],
   "supporting_quote": "Increased liability is no panacea and cannot, alone adequately address the central shortcomings of the duty of oversight and corporate governance in the United States that Professor Fairfax identifies."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-023",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-023",
   "claim": "Cost increases and path dependencies may make it nearly impossible to relax the close to insurmountable standard for liability in oversight cases.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "United States corporate law",
    "existing liability regime already entrenched"
   ],
   "supporting_quote": "Moreover, cost increases and path dependencies may make it nearly impossible to relax the close to insurmountable standard for liability in oversight cases."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-024",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-024",
   "claim": "The author endorses the conclusion that attempts to enhance oversight in the United States may fail and that emphasizing improved oversight as a means of enhancing corporate governance could be ill-advised.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "United States corporate governance"
   ],
   "supporting_quote": "This weighs in favour of Professor Fairfax's conclusion that attempts to enhance oversight in the United States may fail and an emphasis on emphasizing improving oversight as a means of enhancing corporate governance could be ill-advised."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-025",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-025",
   "claim": "The common denominator between the Sarbanes-Oxley Act, the Dodd-Frank Act, and other reform proposals is a top down regulatory approach of direct regulatory intervention with stable and supposedly optimal rules.",
   "type": "definitional",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "asserted",
   "scope_conditions": [
    "United States corporate governance reform since 2002"
   ],
   "supporting_quote": "a noteworthy common denominator between SOX and Dodd-Frank and other reform proposals is the use of a top down regulatory approach, i.e. direct regulatory intervention with stable and supposedly optimal rules."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-026",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-026",
   "claim": "Governance adjustments made through stable rules in reaction to a systemic shock can result in suboptimal governance outcomes, market volatility, and economic loss.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "reforms enacted in the immediate aftermath of a crisis"
   ],
   "supporting_quote": "Governance adjustments via stable rules in reaction to a systemic shock can result in suboptimal governance outcomes, market volatility, and economic loss."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-027",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-027",
   "claim": "Governance adjustments are often enacted merely to address the problem perceived in the given market environment and the then existing economic conditions, without regard to possible future developments.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "crisis driven governance reform"
   ],
   "supporting_quote": "Governance adjustments are often enacted merely to address the then perceived problem in the given market environment and in the then existing economic conditions, without regard to possible future developments."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-028",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-028",
   "claim": "Following enactment, governance adjustments are often later repealed or diluted, and anticipation of future developments plays no significant role in the top down approach to regulation.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "top down regulatory approach"
   ],
   "supporting_quote": "Worse yet, following the enactment, governance adjustments are often later repealed or diluted. 41 Anticipation of future developments and pre-emption of possible future crises does not play a significant role in the top down approach to"
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-029",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-029",
   "claim": "The economic conditions and the corresponding requirements for optimal and stable rules are constantly evolving, so rules fixed at one moment lose their fit over time.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "evolving market environments"
   ],
   "supporting_quote": "However, the economic conditions and the corresponding requirements for optimal and stable rules are constantly evolving."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-030",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-030",
   "claim": "Financial innovation, the globalization of markets, transnationalism, ethical challenges, and the bounded rationality of humans are likely to create and increase future challenges that require additional and more extensive governance adjustments.",
   "type": "predictive",
   "topics": [
    "innovation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "continuing financial innovation and globalization"
   ],
   "supporting_quote": "Financial innovation, the globalization of markets, transnationalism, ethical challenges, and the bounded rationality of humans, among many other factors, are likely to create and perhaps increase future challenges that may require additional and perhaps more extensive governance adjustments."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-031",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-031",
   "claim": "The shortcomings of stable rules, especially the perpetual need for rule enactment and revision, justify a supplemental dynamic approach to regulating the financial industry that enhances and extends the established regulatory framework rather than replacing it.",
   "type": "design",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "financial industry regulation"
   ],
   "supporting_quote": "The shortcomings of stable rules, especially the perpetual need for rule enactment and revision, could justify a supplemental dynamic approach to regulating the financial industry.43 Dynamic regulation would not replace the established regulatory framework but could enhance and extend it."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-032",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-032",
   "claim": "Dynamic Regulation is defined as an adapting governance mechanism that is constantly evolving and adjusting to the given market environment, financial innovation, and regulatory environment.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "asserted",
   "supporting_quote": "1.) Dynamic Regulation suggests an adapting governance mechanism that is constantly evolving and adjusting to the given market environment, financial innovation, and the given regulatory environment;"
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-033",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-033",
   "claim": "Dynamic Regulation could help avoid the regulatory sine curve and its negative and costly consequences, and could provide a self enforcement mechanism independent of the existing regulatory structure and agency enforcement.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "asserted",
   "scope_conditions": [
    "dynamic regulation deployed as a supplement to stable rules"
   ],
   "supporting_quote": "2.) Dynamic Regulation may help avoid the regulatory sine curve46 and its negative and costly consequences; 3.) Dynamic Regulation could provide a self – enforcement mechanism, independent from the existing regulatory structure and agency enforcement;"
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-034",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-034",
   "claim": "Dynamic Regulation may enable regulators to anticipate future changes and challenges and to adapt stable rules accordingly.",
   "type": "design",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "asserted",
   "scope_conditions": [
    "dynamic regulation supplements the existing framework"
   ],
   "supporting_quote": "4.) Dynamic Regulation may enable regulators to anticipate future changes and challenges and adapt stable rules accordingly."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-035",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-035",
   "claim": "Using court decisions and stable rules to make the oversight role more robust could be insufficient, whereas contractual and quasi law forms of dynamic governance could help improve the duty of oversight.",
   "type": "design",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "argued",
   "scope_conditions": [
    "directors are outsiders working part time",
    "increasing complexity of modern corporations"
   ],
   "supporting_quote": "Using court decisions and stable rules to make \"the oversight role more robust to ensure that directors pay greater attention to their monitoring responsibilities\" 49 could be insufficient. By contrast, contractual and quasi law forms of dynamic governance could help improve the duty of oversight."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-036",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-036",
   "claim": "Corporate Integrity Agreements are one form of dynamic governance that may be able to temporarily increase fiduciary duties as a form of quasi law.",
   "type": "design",
   "topics": [
    "compliance",
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "asserted",
   "scope_conditions": [
    "corporations subject to a Corporate Integrity Agreement"
   ],
   "supporting_quote": "Corporate Integrity Agreements (CIAs), for instance, could be one form of dynamic governance that may be able to temporarily increase fiduciary duties as a form of quasi law."
  },
  {
   "id": "kaal:claim:kaal-2013-acomparativeperspectiveo-037",
   "url": "https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-037",
   "claim": "More research is needed to understand how dynamic forms of governance could help improve fiduciary duties and corporate governance.",
   "type": "predictive",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)",
   "year": "2013",
   "source_sha256": "ac5c955fe01209c54c78c4575c0b8bf570e5f1259c3f855510697cf51a32e59a",
   "confidence": "speculative",
   "supporting_quote": "More research may be needed to understand how dynamic forms of governance could help improve fiduciary duties and corporate governance."
  },
  {
   "id": "kaal:claim:2273857-001",
   "url": "https://wulfkaal.github.io/claims/2273857-001",
   "claim": "Governance adjustments enacted via stable rules in reaction to financial crises are inevitably followed by relaxation, revision, and retraction of those rules.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to rules enacted as a reaction to financial crises"
   ],
   "supporting_quote": "Governance adjustments via stable rules in reaction to financial crises are inevitably followed by relaxation, revision, and retraction."
  },
  {
   "id": "kaal:claim:2273857-002",
   "url": "https://wulfkaal.github.io/claims/2273857-002",
   "claim": "Because economic conditions and the corresponding requirements for optimal and stable rules are constantly evolving, a rule set that is optimal at enactment ceases to be optimal over time.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "economic and market conditions continue to evolve after enactment"
   ],
   "supporting_quote": "The economic conditions and the corresponding requirements for optimal and stable rules are constantly evolving, suggesting that a different set of rules could be optimal."
  },
  {
   "id": "kaal:claim:2273857-003",
   "url": "https://wulfkaal.github.io/claims/2273857-003",
   "claim": "Dynamic regulation could dampen the volatility of both the cosine curve describing common elements of financial crises and the regulatory sine curve, by creating an anticipatory rather than reactive regulatory response.",
   "type": "predictive",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "dynamic elements are actually implemented in the regulatory framework"
   ],
   "supporting_quote": "Dynamic regulation could help dampen the degree of volatility of both the cosine curve and the regulatory sine curve by creating an anticipatory regulatory response to financial crises."
  },
  {
   "id": "kaal:claim:2273857-004",
   "url": "https://wulfkaal.github.io/claims/2273857-004",
   "claim": "Financial regulation is characteristically enacted only in the aftermath of financial crises rather than in advance of them.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "evidenced",
   "supporting_quote": "Financial regulation is usually enacted in the aftermath of financial crises."
  },
  {
   "id": "kaal:claim:2273857-005",
   "url": "https://wulfkaal.github.io/claims/2273857-005",
   "claim": "Since 2002 United States corporate governance has been substantially upgraded twice in response to crises, following more than seventy years of comparative regulatory inactivity, a concentration of regulatory activity in a short timespan that is itself striking.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States corporate governance regime",
    "period since 2002"
   ],
   "supporting_quote": "Since 2002, corporate governance in the United States has been, not just once but twice, substantially upgraded in response to crises, after more than seventy years of comparative regulatory inactivity."
  },
  {
   "id": "kaal:claim:2273857-006",
   "url": "https://wulfkaal.github.io/claims/2273857-006",
   "claim": "The existing literature on financial regulation has not adequately addressed the underlying causes and consequences of cyclical regulation.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "supporting_quote": "The literature on financial regulation may not have addressed the underlying causes and consequences of cyclical regulation adequately."
  },
  {
   "id": "kaal:claim:2273857-007",
   "url": "https://wulfkaal.github.io/claims/2273857-007",
   "claim": "Initiatives for sustainable financial regulation are largely missing, because anticipation of unknown future contingencies and preemption of possible future crises play no significant role either in the current regulatory framework or in the literature on financial regulation.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "supporting_quote": "However, initiatives for sustainable financial regulation are still largely missing. Anticipation of unknown future contingencies and the preemption of possible future crises do not play a significant role in the current regulatory framework or in the literature on financial regulation."
  },
  {
   "id": "kaal:claim:2273857-008",
   "url": "https://wulfkaal.github.io/claims/2273857-008",
   "claim": "Congress, financial regulators, and the financial regulation literature rely almost exclusively on rules presumed to be stable and optimal, which is the common denominator of regulatory responses to crises.",
   "type": "empirical",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "United States rulemaking institutions"
   ],
   "supporting_quote": "Congress, financial regulators, and the literature on financial regulation rely almost exclusively on \"stable\" and presumptively \"optimal\" rules."
  },
  {
   "id": "kaal:claim:2273857-009",
   "url": "https://wulfkaal.github.io/claims/2273857-009",
   "claim": "Rulemakers discount or willingly accept unknown future contingencies and the inevitable need for later revision, amendment, and retraction, because they are pursuing certainty and predictability in the rules they enact.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "rulemakers prioritize certainty and predictability"
   ],
   "supporting_quote": "To attain certainty and increase predictability, rulemakers discount or often willingly accept unknown future contingencies and the inevitable need for rule revision, amendments, and retractions."
  },
  {
   "id": "kaal:claim:2273857-010",
   "url": "https://wulfkaal.github.io/claims/2273857-010",
   "claim": "A regulatory framework that relies exclusively on stable and presumptively optimal rules cannot adequately address future challenges, and the amendments, revisions, and retractions such a framework generates create substantial transaction costs and uncertainty.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "framework relies exclusively on stable rules"
   ],
   "supporting_quote": "A regulatory framework that relies exclusively on stable and presumptively optimal rules may not be able to adequately address future challenges. Amendments, revisions, and retractions of existing rules create substantial transaction costs and uncertainty."
  },
  {
   "id": "kaal:claim:2273857-011",
   "url": "https://wulfkaal.github.io/claims/2273857-011",
   "claim": "Rules established in reaction to financial crises inevitably fail to soften, curtail, or preempt the effects of financial crises, because reactive rules are tailored to the economic and regulatory issues existing at the time of enactment and ignore possible future contingencies.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "rules enacted reactively after a crisis"
   ],
   "supporting_quote": "Rules established in reaction to financial crises also inevitably fail to soften, curtail, or preempt the effects of financial crises because reactive rules are mostly tailored to the economic and regulatory issues at the time of their enactment and often ignore possible future contingencies."
  },
  {
   "id": "kaal:claim:2273857-012",
   "url": "https://wulfkaal.github.io/claims/2273857-012",
   "claim": "Dynamic elements built into the regulatory structure would allow regulators to continually adapt to new market environments, to financial innovation, and to changes in financial markets that are themselves caused by financial regulation.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "dynamic elements are incorporated into the regulatory structure"
   ],
   "supporting_quote": "Dynamic elements in the regulatory structure may allow regulators to continually adapt to new market environments, financial innovation, and to changes in financial markets as a result of financial regulation."
  },
  {
   "id": "kaal:claim:2273857-013",
   "url": "https://wulfkaal.github.io/claims/2273857-013",
   "claim": "Although implementing dynamic elements in regulatory structures remains uncertain, promising regulatory tools with dynamic elements already exist, including contingent capital securities, corporate integrity agreements, and deferred prosecution agreements.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "existing instruments serve as building blocks rather than new institutions"
   ],
   "supporting_quote": "Although the implementation of dynamic elements in regulatory structures is uncertain, some promising regulatory tools with dynamic elements already exist, including contingent capital securities, corporate integrity agreements, and deferred prosecution agreements."
  },
  {
   "id": "kaal:claim:2273857-014",
   "url": "https://wulfkaal.github.io/claims/2273857-014",
   "claim": "The regulatory sine curve itself may be inevitable, but its costly and suboptimal regulatory effects can nonetheless be limited.",
   "type": "condition",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "supporting_quote": "While the sine curve may be inevitable, its costly and suboptimal regulatory effects can be limited."
  },
  {
   "id": "kaal:claim:2273857-015",
   "url": "https://wulfkaal.github.io/claims/2273857-015",
   "claim": "Financial rulemaking is most needed ex-ante before financial crises, not ex-post after crises have already imposed steep costs on the economy, markets, and financial institutions and have distorted the rulemaking process itself.",
   "type": "condition",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "supporting_quote": "Financial rulemaking is most needed ex-ante before financial crises, not ex-post after crises created steep costs on the economy, impacted markets and financial institutions, and affected the rulemaking process."
  },
  {
   "id": "kaal:claim:2273857-016",
   "url": "https://wulfkaal.github.io/claims/2273857-016",
   "claim": "The aftermath of a financial crisis creates shock conditions that constitute a suboptimal environment for rulemaking.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "regulatory-failure",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "period immediately following a financial crisis"
   ],
   "supporting_quote": "The aftermath of financial crises creates suboptimal conditions (shock conditions) for rulemaking."
  },
  {
   "id": "kaal:claim:2273857-017",
   "url": "https://wulfkaal.github.io/claims/2273857-017",
   "claim": "Post-crisis rulemaking occurs in an economic, political, and legal environment whose sense of urgency prevents a full evaluation of the consequences of new rules for all affected constituencies.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "rulemaking under post-crisis urgency"
   ],
   "supporting_quote": "Rulemaking takes place in an economic, political, and legal environment that creates a sense of urgency for rulemaking and may not permit a full evaluation of the possible consequences for all constituencies."
  },
  {
   "id": "kaal:claim:2273857-018",
   "url": "https://wulfkaal.github.io/claims/2273857-018",
   "claim": "The shock conditions that trigger calls for rulemaking have typically not been analyzed or absorbed systematically, so rulemaking under those conditions is associated with high levels of incomplete information.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "rulemaking triggered by an unabsorbed shock"
   ],
   "supporting_quote": "Shock conditions that call for rulemaking often have not been appropriately analyzed and absorbed in a systematic fashion and are, thus, often associated with high levels of incomplete information."
  },
  {
   "id": "kaal:claim:2273857-019",
   "url": "https://wulfkaal.github.io/claims/2273857-019",
   "claim": "The bounded rationality of public rulemakers aggravates shock conditions during rulemaking, because rulemakers satisfy their own constituencies rather than all affected parties and are therefore more willing to act on incomplete information.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "public rulemakers accountable to particular constituencies"
   ],
   "supporting_quote": "The bounded rationality of public rulemakers—who are satisfying their respective constituencies rather than all affected parties and, therefore, may be more willing to act in an environment of incomplete information—can aggravate shock conditions during the rulemaking process."
  },
  {
   "id": "kaal:claim:2273857-020",
   "url": "https://wulfkaal.github.io/claims/2273857-020",
   "claim": "Financial regulation is characterized and controlled by a classic collective action problem, and as a consequence regulatory oversight is never constant.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "supporting_quote": "Financial regulation is characterized and controlled by a classic collective action problem. As a result, regulatory oversight is never constant."
  },
  {
   "id": "kaal:claim:2273857-021",
   "url": "https://wulfkaal.github.io/claims/2273857-021",
   "claim": "In the competition to shape financial policy through rulemaking, small and well organized special interest groups such as the financial industry dominate latent groups such as dispersed investors.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "regulatory-failure",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "evidenced",
   "scope_conditions": [
    "ordinary, non-crisis periods"
   ],
   "supporting_quote": "In the competition to shape policies and attain the most favorable conditions for themselves via rulemaking, small and well- organized special interest groups (such as the financial industry) dominate latent groups (such as dispersed investors)."
  },
  {
   "id": "kaal:claim:2273857-022",
   "url": "https://wulfkaal.github.io/claims/2273857-022",
   "claim": "During and after crises, political entrepreneurs assume the transaction costs of organizing otherwise disinterested latent groups, which temporarily overcomes the predominance of special interest groups in rulemaking.",
   "type": "mechanism",
   "topics": [
    "innovation",
    "institutional-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "evidenced",
   "scope_conditions": [
    "during and immediately after a crisis"
   ],
   "supporting_quote": "During and after crises, however, political entrepreneurs assume the transaction costs of organizing the otherwise disinterested latent groups to temporarily overcome the predominance of special interest groups in the rulemaking process."
  },
  {
   "id": "kaal:claim:2273857-023",
   "url": "https://wulfkaal.github.io/claims/2273857-023",
   "claim": "Once crises recede, regulatory oversight diminishes as societies and markets return to their prior equilibrium, and this dichotomy causes reform legislation and deregulatory legislation to be enacted in quick succession.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "after markets return to normalcy"
   ],
   "supporting_quote": "Following crises, the process is reversed and regulatory oversight diminishes as societies and markets return to their prior equilibrium. As a result of this dichotomy, reform and deregulatory legislation are often enacted in quick succession."
  },
  {
   "id": "kaal:claim:2273857-024",
   "url": "https://wulfkaal.github.io/claims/2273857-024",
   "claim": "Bank crises share four core common elements: an exogenous shock, a favorable response to that shock, the dissipation of favorable conditions, and a systemic rise in bank failures.",
   "type": "definitional",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "evidenced",
   "scope_conditions": [
    "banking crises generally"
   ],
   "supporting_quote": "The common characteristics include the following core elements: (i) an exogenous shock, (ii) a favorable response to the exogenous shock, (iii) favorable conditions dissipate, and (iv) a systemic rise in bank failures."
  },
  {
   "id": "kaal:claim:2273857-025",
   "url": "https://wulfkaal.github.io/claims/2273857-025",
   "claim": "An exogenous shock, often a fundamental technological advancement, starts the crisis sequence by creating conditions for optimism in the real and financial sectors of the economy.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "evidenced",
   "scope_conditions": [
    "historical pattern of banking crises"
   ],
   "supporting_quote": "An exogenous shock in the economy often starts this sequence of events by creating conditions for optimism in the real and financial sectors of the economy."
  },
  {
   "id": "kaal:claim:2273857-026",
   "url": "https://wulfkaal.github.io/claims/2273857-026",
   "claim": "The cyclical nature of public rulemaking under incomplete information and bounded rationality is costly and produces suboptimal regulatory outcomes with long-term implications for financial markets and the economy.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "rulemaking conducted cyclically under incomplete information"
   ],
   "supporting_quote": "The cyclical nature of public rulemaking under conditions of incomplete information and bounded rationality is costly and can produce suboptimal regulatory outcomes, often with long-term implications for financial markets and the economy."
  },
  {
   "id": "kaal:claim:2273857-027",
   "url": "https://wulfkaal.github.io/claims/2273857-027",
   "claim": "Regulatory cycles make it nearly impossible to address financial regulatory concerns adequately, and systemic risk in particular is difficult to address if rules are enacted in a cyclical and reactive format.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "rules enacted cyclically and reactively"
   ],
   "supporting_quote": "Regulatory cycles also make it nearly impossible to adequately address financial regulatory concerns. Systemic risk is particularly difficult to address if rules are enacted in a cyclical and reactive format."
  },
  {
   "id": "kaal:claim:2273857-028",
   "url": "https://wulfkaal.github.io/claims/2273857-028",
   "claim": "The regulatory sine curve is the pattern of governance adjustments made in reaction to financial crises together with the inevitable relaxation, revision, and retraction of the rules enacted as part of that adjustment.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "asserted",
   "supporting_quote": "The regulatory sine curve describes governance adjustments in reaction to financial crises and the inevitable relaxation, revision, and retraction of rules that were enacted as part of the governance adjustment."
  },
  {
   "id": "kaal:claim:2273857-029",
   "url": "https://wulfkaal.github.io/claims/2273857-029",
   "claim": "Regulatory intensity is never constant: it increases after a market crash and then wanes as society and the market return to normalcy.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "following a market crash"
   ],
   "supporting_quote": "The phrase \"regulatory sine curve,\" means: \"that (1) regulatory intensity is never constant, but rather increases after a market crash, and then wanes as (and to the extent that) society and the market return to normalcy"
  },
  {
   "id": "kaal:claim:2273857-030",
   "url": "https://wulfkaal.github.io/claims/2273857-030",
   "claim": "In the absence of crises the intensity of regulation diminishes, because regulators cannot commit to long-term regulatory strategies and instead fall back on private strategies such as self-regulation to overcome resource constraints.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "evidenced",
   "scope_conditions": [
    "non-crisis periods",
    "regulators facing resource constraints"
   ],
   "supporting_quote": "In the absence of crises, however, the intensity of regulation diminishes because regulators are unable to commit to long-term regulatory strategies and instead use private strategies like self-regulation to overcome resource constraints."
  },
  {
   "id": "kaal:claim:2273857-031",
   "url": "https://wulfkaal.github.io/claims/2273857-031",
   "claim": "The regulatory expansion that follows crises inevitably leads to amendments, revisions, and retractions of the previously established rules.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "rules created during post-crisis regulatory expansion"
   ],
   "supporting_quote": "The regulatory expansion that follows crises inevitably leads to amendments, revisions, and retractions of previously established rules."
  },
  {
   "id": "kaal:claim:2273857-032",
   "url": "https://wulfkaal.github.io/claims/2273857-032",
   "claim": "Both the Sarbanes-Oxley Act and the Dodd-Frank Act were amended and revised, and some of their most controversial provisions were never enforced.",
   "type": "empirical",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States federal securities and financial regulation"
   ],
   "supporting_quote": "Both SOX and the Dodd-Frank Act were amended and revised. Some of their most controversial provisions were not enforced."
  },
  {
   "id": "kaal:claim:2273857-033",
   "url": "https://wulfkaal.github.io/claims/2273857-033",
   "claim": "Section 307 of Sarbanes-Oxley, the attorney up-the-ladder reporting mandate, has gone effectively unenforced: there is no evidence that the SEC ever charged an attorney with a violation of that section, even though lawyers were inevitably aware of executive misconduct in numerous instances.",
   "type": "empirical",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC enforcement practice under Section 307 of SOX"
   ],
   "supporting_quote": "there is no evidence that the SEC ever charged an attorney with a violation of Section 307."
  },
  {
   "id": "kaal:claim:2273857-034",
   "url": "https://wulfkaal.github.io/claims/2273857-034",
   "claim": "The SEC never actually interpreted Section 402 of Sarbanes-Oxley and instead merely acquiesced in a law firm memorandum interpreting the provision, so private entities in effect fulfilled the SEC's statutory mandate.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "evidenced",
   "scope_conditions": [
    "Section 402 of SOX, the prohibition on issuer credit to directors and officers"
   ],
   "supporting_quote": "The SEC, however, never actually interpreted section 402 and merely acquiesced with a law firm memorandum interpreting section 402."
  },
  {
   "id": "kaal:claim:2273857-035",
   "url": "https://wulfkaal.github.io/claims/2273857-035",
   "claim": "The SEC's failure to interpret Section 402 of Sarbanes-Oxley, while not a formal retraction, shows that Section 402 is another instance of politically motivated rulemaking that later has to be scaled back.",
   "type": "failure",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "rules enacted under post-crisis political pressure"
   ],
   "supporting_quote": "While not a formal retraction, the SEC's lack of interpretation underscores that section 402 provides another instance of politically motivated rulemaking that later has to be scaled back."
  },
  {
   "id": "kaal:claim:2273857-036",
   "url": "https://wulfkaal.github.io/claims/2273857-036",
   "claim": "The partial repeal of Section 404 of Sarbanes-Oxley through the Dodd-Frank Act illustrates that broad rules enacted during times of political expediency are often later retracted.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "evidenced",
   "scope_conditions": [
    "broad rules enacted under political expediency"
   ],
   "supporting_quote": "The partial repeal of section 404 of SOX70 via the Dodd-Frank Act is another example that illustrates how broad rules enacted during times of political expediency are often later retracted."
  },
  {
   "id": "kaal:claim:2273857-037",
   "url": "https://wulfkaal.github.io/claims/2273857-037",
   "claim": "Foreign issuers began delisting from United States exchanges after the enactment of Section 404 of Sarbanes-Oxley and identified that section as a leading cause of their decision to delist.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "asserted",
   "scope_conditions": [
    "foreign issuers listed on U.S. exchanges after 2002"
   ],
   "supporting_quote": "Foreign issuers began to delist from U.S. exchanges after the enactment of section 404, referred to this section as a leading cause for their decision to delist."
  },
  {
   "id": "kaal:claim:2273857-038",
   "url": "https://wulfkaal.github.io/claims/2273857-038",
   "claim": "The Jumpstart Our Business Startups Act exemptions for emerging growth companies from Section 404(b), from say-on-pay, and from pay ratio disclosure illustrate the post-crisis easing of constraints imposed on the financial services industry.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "evidenced",
   "scope_conditions": [
    "emerging growth companies under the JOBS Act"
   ],
   "supporting_quote": "These exemptions again illustrate the easing of constraints imposed on the financial services industry after a crisis."
  },
  {
   "id": "kaal:claim:2273857-039",
   "url": "https://wulfkaal.github.io/claims/2273857-039",
   "claim": "In the current regulatory environment the relationship between the regulatory sine curve and the common elements of banking and financial crises is suboptimal, because regulatory activity only begins its ascent once bank failures are already increasing.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "current regulatory framework without dynamic elements"
   ],
   "supporting_quote": "In the current regulatory environment a suboptimal relationship exists between the regulatory sine curve and the common elements of banking and financial crises."
  },
  {
   "id": "kaal:claim:2273857-040",
   "url": "https://wulfkaal.github.io/claims/2273857-040",
   "claim": "Future financial crises may be inevitable, because globalization, financial innovation, ethical challenges, suboptimal institutional designs, and the bounded rationality of decision makers create conditions that produce crises.",
   "type": "predictive",
   "topics": [
    "risk-and-incentives",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "supporting_quote": "Future financial crises may be inevitable. Factors such as globalization, financial innovation, ethical challenges, suboptimal institutional designs, and the bounded rationality of decision makers may create conditions that result in future crises."
  },
  {
   "id": "kaal:claim:2273857-041",
   "url": "https://wulfkaal.github.io/claims/2273857-041",
   "claim": "Business and regulatory cycles will persist, but optimizing the relationship between indicators of financial crises and the regulatory sine curve, especially the timing of regulatory responses, could soften some of the effects of crises.",
   "type": "design",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "cycles themselves are taken as given"
   ],
   "supporting_quote": "While business and regulatory cycles are bound to persist, optimizing the relationship between indicators for financial crises and the regulatory sine curve, especially the timing of regulatory responses to crises, could soften some of the effects of regulatory crises."
  },
  {
   "id": "kaal:claim:2273857-042",
   "url": "https://wulfkaal.github.io/claims/2273857-042",
   "claim": "Increasing the availability of relevant information for rulemaking through a countercyclical and dynamic process is a starting point for improved rulemaking.",
   "type": "design",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "supporting_quote": "Increasing the availability of relevant information for rulemaking in a countercyclical and dynamic process could be a starting point for improved rulemaking."
  },
  {
   "id": "kaal:claim:2273857-043",
   "url": "https://wulfkaal.github.io/claims/2273857-043",
   "claim": "Dynamic regulation is the antithesis of static, stable, and presumptively optimal regulation, and it is intended to counterbalance the effects of stable and presumptively optimal rules rather than replace them.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "asserted",
   "supporting_quote": "Dynamic regulation may be seen as the antithesis of static, stable, and presumptively \"optimal\" regulation and it may help counterbalance the effects of stable and presumptively optimal rules."
  },
  {
   "id": "kaal:claim:2273857-044",
   "url": "https://wulfkaal.github.io/claims/2273857-044",
   "claim": "The increasing volatility of financial markets combined with financial innovation parallels the pace of technological development in telecommunications, the industry where dynamic regulation has predominantly been applied.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "innovation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "comparison drawn between financial and telecommunications markets"
   ],
   "supporting_quote": "The increasing volatility of financial markets in combination with financial innovation shows some parallels to the pace of technological developments in telecommunications markets."
  },
  {
   "id": "kaal:claim:2273857-045",
   "url": "https://wulfkaal.github.io/claims/2273857-045",
   "claim": "Although some regulators use the term dynamic regulation in the context of SEC exemptive powers, the literature on financial regulation mostly ignores dynamic elements for regulation.",
   "type": "empirical",
   "topics": [
    "dynamic-regulation",
    "securities-law",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "supporting_quote": "While some regulators use the term \"dynamic regulation\" in the context of SEC exemptive powers,112 the literature on financial regulation mostly ignores dynamic elements for regulation."
  },
  {
   "id": "kaal:claim:2273857-046",
   "url": "https://wulfkaal.github.io/claims/2273857-046",
   "claim": "Regulatory cycles would benefit from supplementing, rather than replacing, the existing regulatory framework with dynamic elements.",
   "type": "normative",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "dynamic elements operate as a supplement to stable rules"
   ],
   "supporting_quote": "The author identifies common elements of regulatory crises and suggests normatively that regulatory cycles could benefit from supplementing the existing regulatory framework with dynamic elements."
  },
  {
   "id": "kaal:claim:2273857-047",
   "url": "https://wulfkaal.github.io/claims/2273857-047",
   "claim": "Dynamic financial regulation is the study of financial regulatory phenomena in relation to both preceding and succeeding events, by analogy to economic dynamics.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "asserted",
   "supporting_quote": "the concept of dynamic financial regulation describes the study of financial regulatory phenomena in relation to preceding and succeeding events"
  },
  {
   "id": "kaal:claim:2273857-048",
   "url": "https://wulfkaal.github.io/claims/2273857-048",
   "claim": "In a dynamic framework rulemaking ceases to be a merely reactive process driven by the collective action problem, and instead increasingly uses institution specific and decentralized information that both reflects preceding events and anticipates future contingencies.",
   "type": "design",
   "topics": [
    "decentralization",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "dynamic elements are incorporated into the rulemaking process"
   ],
   "supporting_quote": "rulemaking in a dynamic framework increasingly utilizes institution specific and decentralized information reflecting preceding events and attempting to anticipate succeeding future contingencies."
  },
  {
   "id": "kaal:claim:2273857-049",
   "url": "https://wulfkaal.github.io/claims/2273857-049",
   "claim": "Rulemaking with dynamic elements increases the adaptive capabilities of financial regulation through the increasing use of institution specific information, including information on how financial institutions and their decision makers actually act and are expected to react to unforeseen contingencies.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "institution specific information is actually generated and available"
   ],
   "supporting_quote": "Rulemaking with dynamic elements increases the adaptive capabilities of financial regulation through the increasing use of institution specific information."
  },
  {
   "id": "kaal:claim:2273857-050",
   "url": "https://wulfkaal.github.io/claims/2273857-050",
   "claim": "The social and mental properties of decision makers in financial institutions, combined with the incentive structure of the respective institutional setup, determine a financial institution's adaptive capability.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "asserted",
   "supporting_quote": "Social and mental properties of decision makers in financial institutions together with the incentive structure in the respective institutional setups can help determine a financial institution's adaptive capability."
  },
  {
   "id": "kaal:claim:2273857-051",
   "url": "https://wulfkaal.github.io/claims/2273857-051",
   "claim": "Experimentation with different combinations of regulatory approaches is effective when several different approaches can be tried simultaneously in different jurisdictions.",
   "type": "condition",
   "topics": [
    "economics",
    "law-and-legal-systems",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "multiple jurisdictions available for parallel experimentation"
   ],
   "supporting_quote": "Experimentation with different combinations of regulatory approaches can be effective when several different approaches can be tried simultaneously in different jurisdictions."
  },
  {
   "id": "kaal:claim:2273857-052",
   "url": "https://wulfkaal.github.io/claims/2273857-052",
   "claim": "Dynamic elements can help anticipate and preempt financial crises by changing the timing of regulation, the availability and quality of information, and the emphasis of regulation.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "dynamic elements actually change timing and information flows"
   ],
   "supporting_quote": "Dynamic elements in financial regulation may even help anticipate and/or preempt financial crises by changing the timing, availability and quality of information, and the emphasis of regulation."
  },
  {
   "id": "kaal:claim:2273857-053",
   "url": "https://wulfkaal.github.io/claims/2273857-053",
   "claim": "The core problem for financial regulation is timing: governance improvements are not enacted before crises when they are most needed, because the collective action problem makes financial regulation mostly reactive and tied to business cycles.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "supporting_quote": "A core problem for financial regulation is its timing. Governance improvements are not enacted when they are most needed - before crises. Rather, because of the collective action problem, financial regulation is mostly reactive, following business cycles."
  },
  {
   "id": "kaal:claim:2273857-054",
   "url": "https://wulfkaal.github.io/claims/2273857-054",
   "claim": "Financial rulemaking often relies on centralized rather than decentralized information, which is a further defect of the existing framework.",
   "type": "failure",
   "topics": [
    "decentralization",
    "dynamic-regulation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "asserted",
   "supporting_quote": "Financial rulemaking also often utilizes centralized rather than decentralized information."
  },
  {
   "id": "kaal:claim:2273857-055",
   "url": "https://wulfkaal.github.io/claims/2273857-055",
   "claim": "Including dynamic elements converts the sine curve of financial regulation into an anticipatory sine curve in relation to the phase-shifted first derivative, the cosine curve, that describes the common elements of financial crises.",
   "type": "design",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "dynamic elements are appropriately implemented"
   ],
   "supporting_quote": "By including dynamic elements, the sine curve of financial regulation becomes an anticipatory sine curve in relation to the phase-shifted first derivative (cosine curve) that describes common elements of financial crises."
  },
  {
   "id": "kaal:claim:2273857-056",
   "url": "https://wulfkaal.github.io/claims/2273857-056",
   "claim": "Depending on their design, contingent capital securities can function as an early warning system that helps preempt financial crises.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "CoCo trigger design is institution specific and automatic"
   ],
   "supporting_quote": "Depending on the respective CoCo designs, CoCos can function as an early warning system to preempt financial crises."
  },
  {
   "id": "kaal:claim:2273857-057",
   "url": "https://wulfkaal.github.io/claims/2273857-057",
   "claim": "Institution specific automatic triggers in contingent capital securities are flexible and can be tailored to the parties' needs precisely because they operate independently of regulatory discretion.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "triggers are privately negotiated and automatic"
   ],
   "supporting_quote": "Because institution-specific automatic triggers are independent from regulatory discretion, they have the advantage of being flexible and can be tailored to the parties' respective needs."
  },
  {
   "id": "kaal:claim:2273857-058",
   "url": "https://wulfkaal.github.io/claims/2273857-058",
   "claim": "Managers are incentivized to manage their institutions so as to avoid contingent capital triggers, and that incentive itself can optimize the governance of financial institutions.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "risk-and-incentives",
    "governance-design",
    "corporate-governance",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "CoCos are outstanding with credible trigger terms"
   ],
   "supporting_quote": "Managers are incentivized to manage their respective entities to avoid CoCo triggers, which can help optimize governance of financial institutions."
  },
  {
   "id": "kaal:claim:2273857-059",
   "url": "https://wulfkaal.github.io/claims/2273857-059",
   "claim": "A contingent capital triggering event signals that management was unable to manage the entity so as to avoid the trigger, and therefore signals to rulemakers that regulatory action may be needed, information regulators cannot obtain by monitoring debt to equity and capital adequacy ratios alone.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "a CoCo trigger is actually reached in a specific institution"
   ],
   "supporting_quote": "While regulators have other means of monitoring debt/equity ratios and capital adequacy ratios, a CoCo triggering event signals that management was unable to manage the entity to avoid the triggering event, suggesting that regulatory action may be needed."
  },
  {
   "id": "kaal:claim:2273857-060",
   "url": "https://wulfkaal.github.io/claims/2273857-060",
   "claim": "Contingent capital triggers have significant design limitations: accounting based triggers may not respond adequately in financial crises because they are updated too infrequently, while market based triggers are susceptible to market manipulation and bank runs.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "economics",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "accounting based institution specific triggers",
    "market based institution specific triggers"
   ],
   "supporting_quote": "accounting-based measures in institution-specific automatic triggers may not be able to respond adequately in financial crises because they are arguably too infrequently updated. Market-based measures, on the other hand, could be susceptible to market manipulation and banking runs."
  },
  {
   "id": "kaal:claim:2273857-061",
   "url": "https://wulfkaal.github.io/claims/2273857-061",
   "claim": "Prosecutors negotiating deferred prosecution agreements may lack the expertise needed to negotiate high level corporate governance changes such as personnel changes and internal corporate and compliance procedures.",
   "type": "failure",
   "topics": [
    "compliance",
    "governance-design",
    "corporate-governance",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "deferred prosecution agreements negotiated by prosecutors"
   ],
   "supporting_quote": "While prosecutors may not have the necessary expertise to negotiate high level corporate governance changes, such as personnel changes and internal corporate and compliance procedures"
  },
  {
   "id": "kaal:claim:2273857-062",
   "url": "https://wulfkaal.github.io/claims/2273857-062",
   "claim": "The institution specific and decentralized information generated by deferred prosecution agreements allows regulators to better understand shortcomings in a particular market segment or industry, so that rulemaking can be more narrowly tailored.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "decentralization",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "DPAs are applied broadly across financial institutions"
   ],
   "supporting_quote": "With the institution specific and decentralized information generated by DPAs, regulators may be able to better understand shortcomings in a particular market segment or industry."
  },
  {
   "id": "kaal:claim:2273857-063",
   "url": "https://wulfkaal.github.io/claims/2273857-063",
   "claim": "Almost 300 deferred prosecution agreements have been executed since 2003, whereas before 2003 they were rarely used.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States federal prosecution practice"
   ],
   "supporting_quote": "Almost 300 DPAs have been executed since 2003. Before 2003, DPAs were rarely used."
  },
  {
   "id": "kaal:claim:2273857-064",
   "url": "https://wulfkaal.github.io/claims/2273857-064",
   "claim": "Corporate integrity agreements improve corporate governance because the ease of reopened prosecution, increased government scrutiny, and the potential for crippling penalties improve boards' and managements' knowledge of pertinent issues in the institution and its monitoring.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "institution operating under a corporate integrity agreement"
   ],
   "supporting_quote": "The ease of prosecution, the increased scrutiny by the government, and the potential for crippling penalties can improve boards' and managements' knowledge of pertinent issues in the institution and its monitoring. CIAs can, thus, improve corporate governance."
  },
  {
   "id": "kaal:claim:2273857-065",
   "url": "https://wulfkaal.github.io/claims/2273857-065",
   "claim": "The threat of heightened scrutiny under a deferred prosecution or corporate integrity agreement optimizes incentives because increased government monitoring attaches only after a first time offense, giving institutions a reason to comply and self-regulate in order to avoid it.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "DPAs and CIAs applied broadly to financial institutions"
   ],
   "supporting_quote": "The threat of heightened scrutiny for institutions subject to a DPA/CIA may help optimize incentives because financial institutions would be subjected to increased monitoring by government regulators only after a first time offense had occurred."
  },
  {
   "id": "kaal:claim:2273857-066",
   "url": "https://wulfkaal.github.io/claims/2273857-066",
   "claim": "A mixture of mandatory rules, market solutions, and private ordering would increase the adaptive capabilities of rulemaking, curtail the effects of the collective action problem of rulemaking, and dampen regulatory cycles.",
   "type": "design",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "mixed regime combining mandatory and private mechanisms"
   ],
   "supporting_quote": "A mixture of mandatory rules, market solutions, and private ordering could help increase the adaptive capabilities of rulemaking, curtail the effects of the collective action problem of rulemaking, and dampen regulatory cycles."
  },
  {
   "id": "kaal:claim:2273857-067",
   "url": "https://wulfkaal.github.io/claims/2273857-067",
   "claim": "Adding dynamic elements to financial regulation would cause the sine curve of financial regulation to start its upward slope before the occurrence of financial crises, thereby dampening regulatory cycles.",
   "type": "predictive",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857",
   "year": "2013",
   "source_sha256": "e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a",
   "confidence": "argued",
   "scope_conditions": [
    "dynamic elements are implemented in the regulatory framework"
   ],
   "supporting_quote": "By adding dynamic elements to financial regulation, the sine curve of financial regulation may start its upward slope before the occurrence of financial crises."
  },
  {
   "id": "kaal:claim:2267560-001",
   "url": "https://wulfkaal.github.io/claims/2267560-001",
   "claim": "Dynamic regulation is an optimization process for the learning experience in the New Institutional Economics framework, describing intra- and inter-jurisdictional feedback effects between different public rulemakers and between private and public rulemakers.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "asserted",
   "supporting_quote": "Dynamic regulation describes intra- and inter-jurisdictional feedback effects between different public rulemakers and between private and public rulemakers."
  },
  {
   "id": "kaal:claim:2267560-002",
   "url": "https://wulfkaal.github.io/claims/2267560-002",
   "claim": "Dynamic elements in the rulemaking process increase the availability of relevant information for rulemaking and thereby improve institutional design.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Dynamic elements in the rulemaking process may increase the availability of relevant information for rulemaking and may improve institutional design."
  },
  {
   "id": "kaal:claim:2267560-003",
   "url": "https://wulfkaal.github.io/claims/2267560-003",
   "claim": "Dynamic regulation as part of institutional design in the evolution of law has not been systematically analyzed, despite an existing economics literature applying dynamic regulation to telecommunications, learning by doing, and principal-agent problems.",
   "type": "empirical",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "evidenced",
   "supporting_quote": "Dynamic regulation as part of institutional design in the evolution of law has not been systematically analyzed."
  },
  {
   "id": "kaal:claim:2267560-004",
   "url": "https://wulfkaal.github.io/claims/2267560-004",
   "claim": "The institutional infrastructure for rulemaking was designed for a relatively stable society and stable economic and market environments, and it therefore fails to keep pace with rapidly evolving and increasingly complex modern markets.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "scope_conditions": [
    "rapid societal, market, and financial innovation"
   ],
   "supporting_quote": "The growing number of rule enactments, revisions, and revocations suggests that existing rules and institutional structures for rulemaking are becoming less capable of addressing the rapid pace of change."
  },
  {
   "id": "kaal:claim:2267560-005",
   "url": "https://wulfkaal.github.io/claims/2267560-005",
   "claim": "Rulemaking conducted under conditions of incomplete information and bounded rationality produces suboptimal outcomes that require costly rule revisions, retractions, and additional rulemaking.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "scope_conditions": [
    "information is systematically incomplete",
    "actors are boundedly rational"
   ],
   "supporting_quote": "Rulemaking under conditions of incomplete information and bounded rationality can lead to suboptimal outcomes that may require rule revision and/or additional rulemaking."
  },
  {
   "id": "kaal:claim:2267560-006",
   "url": "https://wulfkaal.github.io/claims/2267560-006",
   "claim": "Trial-and-error rulemaking is suboptimal because participating actors acquire the necessary information ex-post, only after rules have turned out to be suboptimal, rather than increasing the availability of relevant information ex-ante.",
   "type": "failure",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "is suboptimal for rulemaking because, rather than increasing the availability of relevant information ex-ante (through a dynamic process as proposed in this paper), participating actors acquire the necessary information ex-post after rules turn out to be suboptimal."
  },
  {
   "id": "kaal:claim:2267560-007",
   "url": "https://wulfkaal.github.io/claims/2267560-007",
   "claim": "The feedback effect between different public rulemakers and between private and public rulemakers reduces incomplete information, which in turn enables the rulemaker to modify the next action in the rulemaking process.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "The feedback effect increases the availability of relevant information for rulemaking. At the same time, the reduction of incomplete information in the rulemaking process enables the rulemaker to modify the next action in the rulemaking process."
  },
  {
   "id": "kaal:claim:2267560-008",
   "url": "https://wulfkaal.github.io/claims/2267560-008",
   "claim": "Supplementing the rulemaking process with dynamic elements increases the public rulemaker's ability to adapt public rules to unknown future states, and thereby curtails public trial-and-error rulemaking.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Supplementing the rulemaking process with dynamic elements expands the availability of relevant information and increases the public rulemaker's ability to adapt public rules to unknown future states."
  },
  {
   "id": "kaal:claim:2267560-009",
   "url": "https://wulfkaal.github.io/claims/2267560-009",
   "claim": "Rules with suboptimal characteristics are themselves the product of institutional arrangements and reinforce those suboptimal institutional arrangements and rulemaking processes, creating a self-perpetuating feedback loop.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Rules with suboptimal characteristics are the results of institutional arrangements and reinforce suboptimal institutional arrangements and rulemaking processes."
  },
  {
   "id": "kaal:claim:2267560-010",
   "url": "https://wulfkaal.github.io/claims/2267560-010",
   "claim": "Even institutional arrangements that produce optimal governance solutions generate solutions that become suboptimal over time, necessitating rule revision, updating, and revocation.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "asserted",
   "scope_conditions": [
    "passage of time and changing circumstances"
   ],
   "supporting_quote": "Even if institutional arrangements produce optimal governance solutions, these solutions can become suboptimal over time, necessitating rule revision, updating, and revocation."
  },
  {
   "id": "kaal:claim:2267560-011",
   "url": "https://wulfkaal.github.io/claims/2267560-011",
   "claim": "Rules that lack adaptability to future states of the world reinforce the very institutions and processes that produce suboptimal outcomes.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "asserted",
   "supporting_quote": "Rules that lack adaptability to future states of the world reinforce institutions and processes that produce suboptimal outcomes."
  },
  {
   "id": "kaal:claim:2267560-012",
   "url": "https://wulfkaal.github.io/claims/2267560-012",
   "claim": "Rules can be adaptable only if the institutions and rulemaking processes that produce them integrate dynamic elements that generate timely, relevant, and decentralized information for rulemaking.",
   "type": "condition",
   "topics": [
    "decentralization",
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Rules can be adaptable if institutions and rulemaking processes integrate dynamic elements that produce timely, relevant, and decentralized information for rulemaking."
  },
  {
   "id": "kaal:claim:2267560-013",
   "url": "https://wulfkaal.github.io/claims/2267560-013",
   "claim": "Dynamic regulation is a form of Popper's piecemeal social engineering rather than holistic or utopian social engineering, because it is a piecemeal optimization process for institutional design with a largely private character.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "The largely private character of dynamic regulation in combination with its piecemeal optimization features for rulemaking underscores its affiliation with piecemeal social engineering."
  },
  {
   "id": "kaal:claim:2267560-014",
   "url": "https://wulfkaal.github.io/claims/2267560-014",
   "claim": "The centralized planning of the holistic social engineer forces him to fall back on piecemeal improvisation and to engage in unintended actions, producing the phenomenon of unplanned planning.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "scope_conditions": [
    "holistic or utopian approach to regulatory reform"
   ],
   "supporting_quote": "In practice, the holistic approach continuously forces the holistic social engineer to fall back on piecemeal improvisation (Popper 1957, 68)."
  },
  {
   "id": "kaal:claim:2267560-015",
   "url": "https://wulfkaal.github.io/claims/2267560-015",
   "claim": "Under dynamic regulation a presumption of reform feasibility is unnecessary because the feedback effect makes ad-hoc decisions obsolete, curtailing centralized planning and minimizing unintended actions.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "A presumption of reform feasibility for a given regulatory environment is unnecessary because the feedback effect in dynamic regulation makes ad-hoc decisions obsolete."
  },
  {
   "id": "kaal:claim:2267560-016",
   "url": "https://wulfkaal.github.io/claims/2267560-016",
   "claim": "Because feedback effects increase the availability of relevant, decentralized, and timely information, rulemakers can predict unforeseen contingencies and adjust their actions ex-ante to avoid complex reforms and unwanted consequences.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Because the feedback effects in dynamic regulation allow rulemakers to increase the availability of relevant, decentralized, and timely information for rulemaking, rulemakers can predict unforeseen contingencies and adjust their actions ex-ante to avoid complex reforms."
  },
  {
   "id": "kaal:claim:2267560-017",
   "url": "https://wulfkaal.github.io/claims/2267560-017",
   "claim": "Rules should be promulgated only after the particularized need for the rule has been identified and possible effects on society at large have been evaluated.",
   "type": "design",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Rules are promulgated only after the particularized need for rules has been identified and possible effects on the society at large have been evaluated."
  },
  {
   "id": "kaal:claim:2267560-018",
   "url": "https://wulfkaal.github.io/claims/2267560-018",
   "claim": "Private rulemakers have a comparative advantage over public rulemakers in the dynamic regulation framework because public rulemakers lack comparable access to timely and institution-specific information.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Private rulemakers in the dynamic regulation framework have a comparative advantage over public rulemakers who do not have comparable access to timely and institution-specific information."
  },
  {
   "id": "kaal:claim:2267560-019",
   "url": "https://wulfkaal.github.io/claims/2267560-019",
   "claim": "NIE acknowledges that transaction costs, imperfect information, and bounded rationality influence the rulemaking process, with the consequence that even optimal solutions to regulatory problems become unstable and suboptimal over time.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "NIE acknowledges that transaction costs, imperfect information, and bounded rationality influence the rulemaking process (Homann and Kirchner 1995; Furubotn and Richter 2005) and even optimal solutions to regulatory problems can become unstable and suboptimal over time."
  },
  {
   "id": "kaal:claim:2267560-020",
   "url": "https://wulfkaal.github.io/claims/2267560-020",
   "claim": "In the conventional NIE learning process, the requirements for rules and their adaptability to future states become clear only after stable and presumptively optimal rules have already emerged as suboptimal, so anticipation of future developments plays no role and learning is confined to learning from mistakes.",
   "type": "failure",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "scope_conditions": [
    "conventional, non-dynamic learning process"
   ],
   "supporting_quote": "Anticipation of future developments does not play a role in this learning process."
  },
  {
   "id": "kaal:claim:2267560-021",
   "url": "https://wulfkaal.github.io/claims/2267560-021",
   "claim": "Opportunities for integrating dynamic elements into the rulemaking process include intra-jurisdictional feedback processes, feedback effects between private and public rulemakers, inter-jurisdictional feedback processes, informal rules, and organizational culture.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "asserted",
   "supporting_quote": "(i) intra-jurisdictional feedback processes such as (i) exchanges and synergies between public rulemakers and regulators, (ii) feedback effects between private and public rulemakers, (iii) inter-jurisdictional feedback processes, (iv) informal rules, and (v) organizational culture."
  },
  {
   "id": "kaal:claim:2267560-022",
   "url": "https://wulfkaal.github.io/claims/2267560-022",
   "claim": "Parties subject to informal rules signal their preferences and efficient solutions to the public rulemaker, so informal rules and practices supply additional information that modifies rulemakers' actions and improves rulemaking.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Parties who are subject to informal rules signal their preferences as well as efficient solutions to the public rulemaker. Informal rules and practices therefore provide additional information that can help modify the actions of rulemakers and improve rulemaking."
  },
  {
   "id": "kaal:claim:2267560-023",
   "url": "https://wulfkaal.github.io/claims/2267560-023",
   "claim": "Unenforceable rules are irrelevant for purposes of economic analysis because they provide neither incentives nor sanctions, and legal rules without enforcement mechanisms do not qualify as institutions in the NIE framework.",
   "type": "definitional",
   "topics": [
    "compliance",
    "institutional-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "scope_conditions": [
    "economic analysis within the NIE framework"
   ],
   "supporting_quote": "Unenforceable rules are generally irrelevant for purposes of economic analysis because they do not provide incentives and sanctions."
  },
  {
   "id": "kaal:claim:2267560-024",
   "url": "https://wulfkaal.github.io/claims/2267560-024",
   "claim": "Unlike ordinary private ordering, where formalization of informal rules can be a lengthy process that is never finalized, formalization of informal rules in the dynamic process happens sooner and is more likely to succeed if those informal rules provide relevant information for public rulemaking.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "scope_conditions": [
    "informal rules provide relevant information for the public rulemaking process"
   ],
   "supporting_quote": "the formalization of informal rules in the dynamic process may happen sooner and is more likely to succeed and be finalized if the informal rules provide relevant information for the public rulemaking process."
  },
  {
   "id": "kaal:claim:2267560-025",
   "url": "https://wulfkaal.github.io/claims/2267560-025",
   "claim": "Public rulemakers rely on stable and presumptively optimal rules because they lack necessary, comparable, decentralized, and institution-specific information.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Public rulemakers rely on stable and presumptively optimal rules because they lack necessary, comparable, de-centralized, and institution-specific information."
  },
  {
   "id": "kaal:claim:2267560-026",
   "url": "https://wulfkaal.github.io/claims/2267560-026",
   "claim": "Congressional studies do not remedy regulators' informational disadvantage because they mostly follow after Congress has already identified concerns and may not provide real-time relevant information before regulatory action is necessary.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "However, these studies mostly follow after Congress identified particular concerns in the regulatory structure or in financial markets. These studies may not provide real-time and relevant information before regulatory action by public rule-makers is necessary."
  },
  {
   "id": "kaal:claim:2267560-027",
   "url": "https://wulfkaal.github.io/claims/2267560-027",
   "claim": "Private rulemakers can work with and utilize decentralized information continuously, which enables them to react in a timely fashion to emerging, decentralized, and institution-specific information, while public rulemakers are limited in the information they can obtain.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "While public rulemakers are limited as to the information they can obtain to enact rules, private rulemakers can work with and utilize decentralized information continuously."
  },
  {
   "id": "kaal:claim:2267560-028",
   "url": "https://wulfkaal.github.io/claims/2267560-028",
   "claim": "The feedback process between public and private rulemakers increases the availability, timeliness, and quality of information available to the public rulemaker, which induces and supports a learning process and creates incentives for that learning.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "The feedback process between public and private rulemakers increases the availability, timeliness, and quality of information available to the public rulemaker. This induces and supports the learning process for the public rulemaker."
  },
  {
   "id": "kaal:claim:2267560-029",
   "url": "https://wulfkaal.github.io/claims/2267560-029",
   "claim": "Competition between legislators does not necessarily provide a feedback process in the sense of cooperation, but it nevertheless provides incentives for public rulemakers to consider regulatory solutions from other jurisdictions.",
   "type": "mechanism",
   "topics": [
    "economics",
    "law-and-legal-systems",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "the competition between legislators does not necessarily provide a feedback process in the sense of cooperation, (Kirchner, Painter and Kaal 2005; Carbonara and Parisi 2008; Kerber 2000; Heine and Kerber 2002), it can nevertheless provide incentives for public rulemakers to consider regulatory"
  },
  {
   "id": "kaal:claim:2267560-030",
   "url": "https://wulfkaal.github.io/claims/2267560-030",
   "claim": "Because competition between legislators requires public rulemakers to meet consumers' and legal addressees' quality expectations and preferences, it adds a dynamic and market-driven element with a feedback effect to the rulemaking process.",
   "type": "mechanism",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Because the competition between legislators requires public rulemakers to meet consumers' and legal addressees' quality expectations and preferences, the competition between legislators adds a dynamic and market-driven element with a feedback effect to the rulemaking process."
  },
  {
   "id": "kaal:claim:2267560-031",
   "url": "https://wulfkaal.github.io/claims/2267560-031",
   "claim": "Consumer opt-out from existing rules creates a feedback effect for the public rulemaker: when a critical mass of opt-outs signals that a different rule may be optimal, it triggers a modification of the rulemaker's next action.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "scope_conditions": [
    "a critical mass of consumer opt-outs occurs"
   ],
   "supporting_quote": "The consumer opt-out of existing rules creates a feedback effect for the public rulemaker and triggers a modification of the public rulemaker's next action in the rulemaking process."
  },
  {
   "id": "kaal:claim:2267560-032",
   "url": "https://wulfkaal.github.io/claims/2267560-032",
   "claim": "Information exchange between agents of public rulemakers, such as regulators, will not necessarily involve decentralized information, unlike feedback effects between private and public rulemakers.",
   "type": "condition",
   "topics": [
    "decentralization",
    "institutional-design",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Unlike the feedback effects between private and public rulemakers, the information exchange between agents of public rulemakers, such as regulators, will not necessarily involve decentralized information."
  },
  {
   "id": "kaal:claim:2267560-033",
   "url": "https://wulfkaal.github.io/claims/2267560-033",
   "claim": "Opportunistic behavior, transaction costs, and bounded rationality undermine comprehensive contracting, so contracting parties do not specify all of their respective obligations ex-ante because anticipating all contingencies is too costly.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Because it is too costly for contracting parties to anticipate all contingencies and to agree to necessary contract adaptations in advance (Williamson 1985), the contracting parties in the incomplete contract model do not specify all of their respective obligations under the contract ex-ante."
  },
  {
   "id": "kaal:claim:2267560-034",
   "url": "https://wulfkaal.github.io/claims/2267560-034",
   "claim": "Contractual incompleteness can be lowered through dynamic processes within the rulemaking process, because dynamic elements improve the availability, timeliness, and quality of information via the feedback process.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "This paper suggests that contractual incompleteness can be lowered through dynamic processes within the rulemaking process in the incomplete contract model. Through the feedback process, dynamic elements help to improve the availability, timeliness, and quality of information."
  },
  {
   "id": "kaal:claim:2267560-035",
   "url": "https://wulfkaal.github.io/claims/2267560-035",
   "claim": "The learning process in incomplete contract theory can be improved because experimentation with different rules, rule revision, and additional rulemaking create significant transaction costs, and postponing rulemaking until sufficient information is available may not always be possible or desirable.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Experimentation with different rules, rule revision, and additional rulemaking create significant transaction costs8 and postponing rulemaking until sufficient information is available may not always be possible or desirable."
  },
  {
   "id": "kaal:claim:2267560-036",
   "url": "https://wulfkaal.github.io/claims/2267560-036",
   "claim": "Rules, especially in financial regulation, are mostly enacted when it is politically opportune rather than when appropriate information for rulemaking is available.",
   "type": "empirical",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "evidenced",
   "scope_conditions": [
    "financial regulation in particular"
   ],
   "supporting_quote": "Financial crises throughout history (Rheinhart and Rogoff 2011) have demonstrated that rules are mostly enacted, especially in the context of financial regulation, when it is politically opportune (Coffee 2012), not when appropriate information for rulemaking is available."
  },
  {
   "id": "kaal:claim:2267560-037",
   "url": "https://wulfkaal.github.io/claims/2267560-037",
   "claim": "A classic collective action problem controls rulemaking: smaller and better organized special interest groups usually dominate latent groups such as dispersed investors in the competition to shape rules.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "regulatory-failure",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "evidenced",
   "supporting_quote": "A classic collective action problem controls rulemaking. In the competition to shape rulemaking, smaller and better organized special interest groups usually dominate latent groups (such as dispersed investors) (Olson 1965)."
  },
  {
   "id": "kaal:claim:2267560-038",
   "url": "https://wulfkaal.github.io/claims/2267560-038",
   "claim": "During and after crises, political entrepreneurs assume the transaction costs of organizing otherwise disinterested latent groups, temporarily overcoming the predominance of special interest groups in the rulemaking process.",
   "type": "mechanism",
   "topics": [
    "innovation",
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "evidenced",
   "scope_conditions": [
    "during and after crises"
   ],
   "supporting_quote": "During and after crises, however, political entrepreneurs assume the transaction costs of organizing the otherwise disinterested latent groups so as to temporarily overcome the predominance of special interest groups in the rulemaking process (Ostrom 1990)."
  },
  {
   "id": "kaal:claim:2267560-039",
   "url": "https://wulfkaal.github.io/claims/2267560-039",
   "claim": "The collective action problem and the cyclical nature of rulemaking are likely to persist, which makes alternatives and supplements to existing institutional designs for rulemaking more relevant.",
   "type": "predictive",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "The collective action problem and the cyclical nature of rulemaking (Coffee 2012) are likely to persist, making alternatives and supplements to existing institutional designs for rulemaking even more relevant."
  },
  {
   "id": "kaal:claim:2267560-040",
   "url": "https://wulfkaal.github.io/claims/2267560-040",
   "claim": "Dynamic regulation should supplement existing institutional designs for rulemaking in order to counteract the negative consequences of cyclical rulemaking and improve corresponding institutional designs.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Dynamic regulation can supplement existing institutional designs for rulemaking, help counteract negative consequences of cyclical rulemaking, and improve corresponding institutional designs."
  },
  {
   "id": "kaal:claim:2267560-041",
   "url": "https://wulfkaal.github.io/claims/2267560-041",
   "claim": "Contracting parties need to postpone the specification of obligations only if the feedback process in the dynamic framework did not generate sufficient information; where sufficient information is available, contractual incompleteness can be lowered.",
   "type": "condition",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "scope_conditions": [
    "sufficient information is generated by the feedback process"
   ],
   "supporting_quote": "Contracting parties in the incomplete contract model only postpone the specification of obligations if the feedback process in the dynamic framework did not generate sufficient information."
  },
  {
   "id": "kaal:claim:2267560-042",
   "url": "https://wulfkaal.github.io/claims/2267560-042",
   "claim": "Assessing the sufficiency of information by rulemakers alone can lead to suboptimal results because path dependencies may lead decision-makers to believe they control sufficient information for rulemaking when in fact they do not.",
   "type": "failure",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "scope_conditions": [
    "sufficiency of information assessed by rulemakers alone"
   ],
   "supporting_quote": "The sufficiency of information in this model, if assessed by rulemakers alone, could lead to suboptimal results. Path dependencies may lead decision-makers to believe they control sufficient information for rulemaking when they in fact do not."
  },
  {
   "id": "kaal:claim:2267560-043",
   "url": "https://wulfkaal.github.io/claims/2267560-043",
   "claim": "The availability of information generated through the dynamic feedback process cannot be optimized at any given point in time, because the feedback effect is intended to perpetually reinforce itself.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "the availability of information generated through this process cannot be optimized at any given point in time."
  },
  {
   "id": "kaal:claim:2267560-044",
   "url": "https://wulfkaal.github.io/claims/2267560-044",
   "claim": "Parties in the incomplete contract model cannot adapt to unforeseen contingencies because they cannot specify ex-ante how those contingencies will be met, and transactions may be foregone or become too expensive if participants cannot rely on efficient and equitable adaptation.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "At the same time, parties in the incomplete contract model cannot adapt to unforeseen contingencies because they cannot specify ex-ante how those contingencies will be met (Kreps 1990, 93)."
  },
  {
   "id": "kaal:claim:2267560-045",
   "url": "https://wulfkaal.github.io/claims/2267560-045",
   "claim": "Dynamic regulation takes issue with the broad scope of contractual incompleteness and delayed decision-making assumed by the incomplete contract model, contesting the view that such incompleteness and delay are always necessary.",
   "type": "normative",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "By expanding Kreps's model of organizational culture and applying it to the rulemaking process, dynamic regulation also takes issue with the broad scope of contractual incompleteness and delayed decision-making in the incomplete contract model."
  },
  {
   "id": "kaal:claim:2267560-046",
   "url": "https://wulfkaal.github.io/claims/2267560-046",
   "claim": "Dynamic regulation helps rulemakers anticipate how institutions will react to circumstances as they arise, because the feedback process provides decentralized, timely, and institution-specific information, allowing rules to be adjusted ex-ante in anticipation of future contingencies.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Dynamic regulation helps rulemakers anticipate how institutions will react to circumstances as they arise because the feedback process provides decentralized, timely, and institution-specific information for rulemaking. Rules are adjusted ex-ante in anticipation of future contingencies."
  },
  {
   "id": "kaal:claim:2267560-047",
   "url": "https://wulfkaal.github.io/claims/2267560-047",
   "claim": "The broad scope for contractual incompleteness and delayed decision-making stipulated by the incomplete contract model are necessary only if the feedback effect did not produce sufficient information for rulemaking.",
   "type": "condition",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "scope_conditions": [
    "feedback effect fails to produce sufficient information"
   ],
   "supporting_quote": "The broad scope for contractual incompleteness and delayed decision- making as stipulated by the incomplete contract model are necessary only if the feedback effect did not produce sufficient information for rulemaking."
  },
  {
   "id": "kaal:claim:2267560-048",
   "url": "https://wulfkaal.github.io/claims/2267560-048",
   "claim": "The feedback process in dynamic regulation may be viewed as a focal point or principle for rulemaking, enabling rulemakers to provide for contingencies ex-ante and to adopt rules that are applicable and adaptable to future states of the world.",
   "type": "design",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Dynamic regulation as a focal point or principle enables rulemakers to adapt to contingencies if and when they arise because the feedback effect provides relevant, timely, decentralized, and institution-specific information for rulemaking."
  },
  {
   "id": "kaal:claim:2267560-049",
   "url": "https://wulfkaal.github.io/claims/2267560-049",
   "claim": "Because dynamic regulation supplies information ex-ante via a feedback process before rules are finalized, certainty for involved parties is not affected ex-post after rules become effective, so contractual incompleteness is lowered while certainty in rulemaking is maintained.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Because the information is provided ex-ante via a feedback process, the certainty for all involved parties is not affected ex-post after rules became effective."
  },
  {
   "id": "kaal:claim:2267560-050",
   "url": "https://wulfkaal.github.io/claims/2267560-050",
   "claim": "The feedback effect in dynamic regulation, as part of the organizational culture of rulemaking, may allow cooperation and coordination not only among private actors but also among public rulemakers and between private and public rulemakers.",
   "type": "predictive",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "rulemaking may allow cooperation and coordination not only among private actors but also among public rulemakers and between private and public rulemakers."
  },
  {
   "id": "kaal:claim:2267560-051",
   "url": "https://wulfkaal.github.io/claims/2267560-051",
   "claim": "The combination of multiple feedback processes results in a sequence of mutually-reinforcing, information-enhancing events that minimizes ex-post trial-and-error experimentation with stable rules after those rules have already emerged as failures.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "The combination of these feedback processes can result in a sequence of mutually-reinforcing, information- enhancing events. This process can help minimize ex-post trial-and-error experimentation with stable and presumptively optimal rules after previous stable rules have emerged as failures."
  },
  {
   "id": "kaal:claim:2267560-052",
   "url": "https://wulfkaal.github.io/claims/2267560-052",
   "claim": "Under dynamic regulation, ex-ante experimentation before the enactment of rules becomes the focal point of rulemaking, and anticipation of and adaptability to future contingencies become part of the rulemaking process.",
   "type": "design",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560",
   "year": "2013",
   "source_sha256": "7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af",
   "confidence": "argued",
   "supporting_quote": "Ex-ante experimentation (before the enactment of rules) becomes the focal point of rulemaking. The feedback effect improves the availability and quality of information for rulemaking ex-ante, helping to preempt suboptimal rules."
  },
  {
   "id": "kaal:claim:2348463-001",
   "url": "https://wulfkaal.github.io/claims/2348463-001",
   "claim": "There is a substantial overlap between the systemic risk disclosure requirements imposed on hedge fund advisers under Title IV of the Dodd-Frank Act and the disclosure requirements under the fully revised version of Bankruptcy Rule 2019.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "systemic-risk",
    "disclosure",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "evidenced",
   "scope_conditions": [
    "hedge fund advisers subject to Title IV reporting",
    "creditors and groups covered by Revised Rule 2019 in chapter 9 and chapter 11 cases"
   ],
   "supporting_quote": "The author provides evidence of a substantial overlap between systemic risk disclosure requirements under Title IV and the disclosure requirements under the fully-revised version of Bankruptcy Rule 2019 (Revised Rule 2019)."
  },
  {
   "id": "kaal:claim:2348463-002",
   "url": "https://wulfkaal.github.io/claims/2348463-002",
   "claim": "Under the regulatory framework in place at the time of writing, the threat that hedge funds' systemic risk filings could be publicly disclosed through the bankruptcy process will affect hedge funds' tactics and their role in distressed investing only marginally.",
   "type": "predictive",
   "topics": [
    "systemic-risk",
    "disclosure",
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "current regulatory framework as of 2013 to 2014",
    "Form PF disclosures not yet standardized by the SEC"
   ],
   "supporting_quote": "In the current regulatory framework, the threat of public disclosure of systemic risk filings by hedge funds via the bankruptcy process may only marginally affect hedge funds' tactics and their role in distressed investing."
  },
  {
   "id": "kaal:claim:2348463-003",
   "url": "https://wulfkaal.github.io/claims/2348463-003",
   "claim": "Hedge funds' distressed and default debt investments in the United States grew dramatically over two decades, rising from roughly $70 billion in 1998 to roughly $867 billion in 2007.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States distressed and defaulted debt market",
    "1998 to 2007"
   ],
   "supporting_quote": "distressed and default debt investments in the United States have increased dramatically in the last two decades (from around $70 billion in 1998 to around $867 billion in 2007)."
  },
  {
   "id": "kaal:claim:2348463-004",
   "url": "https://wulfkaal.github.io/claims/2348463-004",
   "claim": "The proliferation of distressed-focused hedge funds gave hedge funds roughly one quarter of the total distressed-debt market and made the distressed-focused approach the fifth-largest hedge fund strategy.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States distressed-debt market",
    "period through 2007"
   ],
   "supporting_quote": "The proliferation of distressed-focused hedge funds resulted in hedge funds' market share of around one quarter of the total distressed-debt market 3 and established the distressed-focused strategy as the fifth-largest hedge fund strategy."
  },
  {
   "id": "kaal:claim:2348463-005",
   "url": "https://wulfkaal.github.io/claims/2348463-005",
   "claim": "Under Revised Rule 2019, parties acting in concert must disclose not only equity holdings and claims but also derivative instruments such as swaps, options, and short positions.",
   "type": "definitional",
   "topics": [
    "systemic-risk",
    "disclosure",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "evidenced",
   "scope_conditions": [
    "groups, committees, and entities acting in concert in chapter 9 and chapter 11 cases"
   ],
   "supporting_quote": "under Revised Rule 2019 parties acting in concert are required to disclose equity holdings and claims but also any derivative instruments, such as swaps, options, and shorts."
  },
  {
   "id": "kaal:claim:2348463-006",
   "url": "https://wulfkaal.github.io/claims/2348463-006",
   "claim": "The threat of systemic risk disclosure, combined with rising competition in the distressed-debt market, could further incentivize hedge fund managers to cooperate in the bankruptcy process.",
   "type": "predictive",
   "topics": [
    "disclosure",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "increasing competition in the distressed-debt market",
    "credible prospect that systemic risk filings become visible in bankruptcy"
   ],
   "supporting_quote": "The threat of disclosure of systemic risk filings in combination with increasing competition in the distressed-debt market could further incentivize hedge fund manager cooperation in the bankruptcy process."
  },
  {
   "id": "kaal:claim:2348463-007",
   "url": "https://wulfkaal.github.io/claims/2348463-007",
   "claim": "The SEC has not standardized the disclosures required in Form PF, and there is evidence that Form PF requirements rest on an inconsistent use of industry terms, which can in turn produce inconsistent and contradictory data reporting.",
   "type": "failure",
   "topics": [
    "private-funds",
    "systemic-risk",
    "disclosure",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "evidenced",
   "scope_conditions": [
    "Form PF as promulgated and in effect at the time of writing"
   ],
   "supporting_quote": "The SEC has not yet standardized the required disclosures in Form PF and there is some evidence that the disclosure requirements in Form PF are based on an inconsistent use of industry terms which may in turn result in inconsistent and perhaps contradictory data reporting."
  },
  {
   "id": "kaal:claim:2348463-008",
   "url": "https://wulfkaal.github.io/claims/2348463-008",
   "claim": "Creditors and shareholders in bankruptcy, unlike debtors, are typically not required to disclose their interests until they participate in the case by filing a proof of interest or claim and seeking to be heard by a judge.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States bankruptcy cases",
    "parties other than the debtor"
   ],
   "supporting_quote": "Unlike debtors, creditors and shareholders are typically not required to disclose their interests until they participate in a bankruptcy case by filing a proof of interest or claim and seek to be heard by a judge."
  },
  {
   "id": "kaal:claim:2348463-009",
   "url": "https://wulfkaal.github.io/claims/2348463-009",
   "claim": "Because creditor disclosure obligations in bankruptcy are minimal and a general statement of the type of claim often suffices, hedge funds' penchant for secrecy carries over into the bankruptcy process even when they participate as debt holders.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "systemic-risk",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "hedge funds participating as debt holders rather than as debtors"
   ],
   "supporting_quote": "As a result, hedge funds' penchant for secrecy outside the bankruptcy context continues even when they participate as debt holders in bankruptcy cases."
  },
  {
   "id": "kaal:claim:2348463-010",
   "url": "https://wulfkaal.github.io/claims/2348463-010",
   "claim": "Old Bankruptcy Rule 2019 was applied inconsistently in practice, with courts interpreting it with a high degree of variability both across and within jurisdictions.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "evidenced",
   "scope_conditions": [
    "period before the 2011 revision of Rule 2019"
   ],
   "supporting_quote": "Old Rule 2019 had been applied inconsistently in practice. Courts interpreted old Rule 2019 with a high degree of variability, both across and within jurisdictions."
  },
  {
   "id": "kaal:claim:2348463-011",
   "url": "https://wulfkaal.github.io/claims/2348463-011",
   "claim": "The growing number of conflicting decisions under old Rule 2019, and the confusion and uncertainty they produced, is what precipitated the concerted effort by bankruptcy practitioners and the federal bankruptcy bench to revise the rule.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "dynamic-regulation",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "United States bankruptcy practice in the late 2000s"
   ],
   "supporting_quote": "The growing number of conflicting cases and the resulting confusion and uncertainty precipitated a concerted effort by bankruptcy practitioners and the federal bankruptcy bench to revise old Rule 2019."
  },
  {
   "id": "kaal:claim:2348463-012",
   "url": "https://wulfkaal.github.io/claims/2348463-012",
   "claim": "Revised Rule 2019 clarifies some of the ambiguities of the old rule, but uncertainty and confusion about its application remain inevitable.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "Revised Rule 2019 as effective December 1, 2011"
   ],
   "supporting_quote": "While Revised Rule 2019 clarifies some of the ambiguities under old Rule 2019, uncertainty and confusion still seem inevitable."
  },
  {
   "id": "kaal:claim:2348463-013",
   "url": "https://wulfkaal.github.io/claims/2348463-013",
   "claim": "The scope of Revised Rule 2019 is broader than that of the old rule because it triggers disclosure for committees, entities, and groups that are acting in concert to advance common interests and that are not composed entirely of affiliates or insiders of one another.",
   "type": "definitional",
   "topics": [
    "systemic-risk",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "evidenced",
   "scope_conditions": [
    "chapter 9 and chapter 11 cases"
   ],
   "supporting_quote": "the scope of Revised Rule 2019 is broader than the scope of the old Rule because it requires disclosure from committees, entities, and groups that are \"acting in concert to advance their common interests,\" and are \"not composed entirely of affiliates or insiders of one another.\""
  },
  {
   "id": "kaal:claim:2348463-014",
   "url": "https://wulfkaal.github.io/claims/2348463-014",
   "claim": "The definition of representation in Revised Rule 2019 leaves it unclear whether attorneys who merely monitor a bankruptcy case for a client, without soliciting or advocating a position before the court, represent those clients for disclosure purposes.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "attorneys retained to monitor rather than advocate",
    "Revised Rule 2019 definitions of represents and disclosable economic interest"
   ],
   "supporting_quote": "it is unclear if attorneys who merely monitor a bankruptcy case on behalf of a client but do not solicit or advocate a position before the bankruptcy court \"represent\" their respective clients under Revised Rule 2019."
  },
  {
   "id": "kaal:claim:2348463-015",
   "url": "https://wulfkaal.github.io/claims/2348463-015",
   "claim": "The central compromise in Revised Rule 2019 is that parties need not disclose the price or the date of acquisition of disclosable economic interests, which is precisely the outcome the hedge fund industry lobbied for.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "disclosure",
    "economics",
    "regulatory-failure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "evidenced",
   "scope_conditions": [
    "Revised Rule 2019 as adopted",
    "subject to a court ordering such discovery under authority outside the rule"
   ],
   "supporting_quote": "Revised Rule 2019 does not require parties to disclose the price and the date of acquisition of such interests, which is exactly what the hedge fund industry lobbied for."
  },
  {
   "id": "kaal:claim:2348463-016",
   "url": "https://wulfkaal.github.io/claims/2348463-016",
   "claim": "Systemic risk reports filed by registered investment advisers are confidential and are not publicly available, so any effect of these filings on bankruptcy practice depends on the prospect of disclosure rather than on actual public access.",
   "type": "definitional",
   "topics": [
    "private-funds",
    "systemic-risk",
    "disclosure",
    "risk-and-incentives",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "asserted",
   "scope_conditions": [
    "reports filed with the SEC under Title IV",
    "framework as of the time of writing"
   ],
   "supporting_quote": "These reports are confidential and not publicly available."
  },
  {
   "id": "kaal:claim:2348463-017",
   "url": "https://wulfkaal.github.io/claims/2348463-017",
   "claim": "Mandatory quarterly Form PF reporting for large hedge fund advisers is designed to give the Financial Stability Oversight Council timely data for identifying emerging systemic risk trends and to align United States practice with international trends.",
   "type": "design",
   "topics": [
    "private-funds",
    "systemic-risk",
    "disclosure",
    "compliance",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "evidenced",
   "scope_conditions": [
    "advisers with at least $1.5 billion regulatory assets under management attributable to hedge funds"
   ],
   "supporting_quote": "Mandatory quarterly reporting for large hedge fund advisers in the United States is intended to provide the FSOC with timely data to identify emerging trends in systemic risk and align with international trends."
  },
  {
   "id": "kaal:claim:2348463-018",
   "url": "https://wulfkaal.github.io/claims/2348463-018",
   "claim": "Bankruptcy and systemic risk disclosure obligations for hedge funds have different origins and serve different purposes: bankruptcy disclosure is meant to level the playing field in the restructuring process, while systemic risk disclosure is meant to help regulators detect and prevent systemic consequences.",
   "type": "definitional",
   "topics": [
    "systemic-risk",
    "disclosure",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "supporting_quote": "Bankruptcy and systemic risk disclosure obligations for hedge funds have different origins and are intended for different purposes. Bankruptcy disclosures are generally intended to level the playing field in the bankruptcy and restructuring process."
  },
  {
   "id": "kaal:claim:2348463-019",
   "url": "https://wulfkaal.github.io/claims/2348463-019",
   "claim": "Under both the bankruptcy and the systemic risk disclosure regimes, filed data carries a serious risk of being out of date and less accurate at the time it is analyzed than when it was disclosed, partly because of the lag needed to collect data before filing.",
   "type": "failure",
   "topics": [
    "private-funds",
    "systemic-risk",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "any analysis of data filed under Revised Rule 2019 or Form PF"
   ],
   "supporting_quote": "It is important to note that for purposes of any analysis of filed data under either disclosure system, there is a serious risk that data may be out of date and less accurate when analysed than at the time when it was disclosed."
  },
  {
   "id": "kaal:claim:2348463-020",
   "url": "https://wulfkaal.github.io/claims/2348463-020",
   "claim": "Data staleness degrades systemic risk evaluation more than it degrades evaluation of bankruptcy disclosures, because many distressed investment strategies depend on the outcome of the restructuring process and creditors are therefore incentivized to hold their positions until it completes.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "compliance",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "distressed investment strategies tied to restructuring outcomes"
   ],
   "supporting_quote": "This lack of accuracy can affect systemic risk evaluation more than an evaluation of disclosures in the bankruptcy context because many distressed investment strategies depend on the outcome of the restructuring process"
  },
  {
   "id": "kaal:claim:2348463-021",
   "url": "https://wulfkaal.github.io/claims/2348463-021",
   "claim": "Form PF's required disclosure of a reporting fund's strategies includes a separate subcategory for event driven, distressed and restructuring strategies, which is what makes the form potentially relevant to bankruptcy proceedings.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "evidenced",
   "scope_conditions": [
    "Form PF section 1c, item B.20"
   ],
   "supporting_quote": "Importantly, Form PF's required disclosure of reporting funds' strategies includes a separate subcategory for \"Event Driven, Distressed/Restructuring\"."
  },
  {
   "id": "kaal:claim:2348463-022",
   "url": "https://wulfkaal.github.io/claims/2348463-022",
   "claim": "Form PF disclosures have not been standardized, and anecdotal evidence indicates that the SEC and the FSOC may be working with contradictory, misleading, inaccurate, and incomplete systemic risk data.",
   "type": "failure",
   "topics": [
    "private-funds",
    "systemic-risk",
    "research-methods",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "evidenced",
   "scope_conditions": [
    "Form PF filings made under the initial implementation stages"
   ],
   "supporting_quote": "Form PF disclosures have not yet been standardized, and anecdotal evidence suggests that the SEC and the FSOC could be working with contradictory, misleading, inaccurate, and incomplete systemic risk data in Form PF."
  },
  {
   "id": "kaal:claim:2348463-023",
   "url": "https://wulfkaal.github.io/claims/2348463-023",
   "claim": "Because the SEC is still working out the appropriate use of Form PF and still improving the form and its instructions, its enforcement division is unlikely to open investigations into alleged misreporting or failures to report.",
   "type": "predictive",
   "topics": [
    "private-funds",
    "securities-law",
    "compliance",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "period while Form PF remains unstandardized"
   ],
   "supporting_quote": "While the SEC is still ascertaining the appropriate use of Form PF and improving Form PF and the instructions to it, it is unlikely that the SEC's enforcement division will start investigations into alleged misreporting or failures to report."
  },
  {
   "id": "kaal:claim:2348463-024",
   "url": "https://wulfkaal.github.io/claims/2348463-024",
   "claim": "Form PF's systemic risk disclosure obligations were created, in a non-bankruptcy context, precisely to counteract the kind of shadow activity that is now resurfacing in bankruptcy under Revised Rule 2019.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "supporting_quote": "Systemic risk disclosure obligations in Form PF were created, albeit in a different context than bankruptcy, to circumvent the very shadow activities that appear to be resurfacing in the bankruptcy context under Revised Rule 2019."
  },
  {
   "id": "kaal:claim:2348463-025",
   "url": "https://wulfkaal.github.io/claims/2348463-025",
   "claim": "Revised Rule 2019 may in effect produce less overall disclosure of creditor activities in the bankruptcy process and push bankruptcy creditors into the shadows, the opposite of the transparency the revision sought.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "if the rule reaches only parties who appear publicly in court or serve on official committees",
    "groups that negotiate a plan without appearing in court"
   ],
   "supporting_quote": "Revised Rule 2019 may in effect result in less overall disclosure of creditor activities in the bankruptcy process and may push bankruptcy creditors into the shadows"
  },
  {
   "id": "kaal:claim:2348463-026",
   "url": "https://wulfkaal.github.io/claims/2348463-026",
   "claim": "Hedge fund adviser registration and disclosure requirements under Title IV and the SEC implementation rules were instituted for the opposite reason: to stop hedge funds from operating in the shadows of financial markets.",
   "type": "definitional",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "evidenced",
   "supporting_quote": "hedge fund adviser registration and disclosure requirements under Title IV and SEC implementation rules were instituted to avoid hedge funds operating in the shadows of financial markets."
  },
  {
   "id": "kaal:claim:2348463-027",
   "url": "https://wulfkaal.github.io/claims/2348463-027",
   "claim": "The overlap between hedge fund adviser disclosures under Revised Rule 2019 and systemic risk disclosures under Form PF, combined with the uncertainties Revised Rule 2019 created, points to a possible future role for systemic risk disclosures in bankruptcy.",
   "type": "predictive",
   "topics": [
    "private-funds",
    "systemic-risk",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "contingent on Revised Rule 2019 producing less overall disclosure by distressed hedge fund investors"
   ],
   "supporting_quote": "The commonalities of hedge fund adviser disclosures under Revised Rule 2019 and systemic risk disclosures under Form PF 198 in combination with the uncertainties created by Revised Rule 2019199 suggest that there could be a possible future role for systemic risk disclosures in bankruptcy."
  },
  {
   "id": "kaal:claim:2348463-028",
   "url": "https://wulfkaal.github.io/claims/2348463-028",
   "claim": "Form PF disclosures in their existing format are too generic to be appropriately applied in bankruptcy, but accumulated experience with the form and standardization of its items could yield less generic disclosures that become increasingly relevant to bankruptcy over time.",
   "type": "failure",
   "topics": [
    "private-funds",
    "systemic-risk",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "Form PF as designed at the time of writing",
    "assumes future SEC standardization"
   ],
   "supporting_quote": "While Form PF disclosures in their existing format are too generic for appropriate application in the bankruptcy context, experience with and standardization of Form PF disclosures could result in less generic disclosures that could, over time, be increasingly relevant in the bankruptcy context."
  },
  {
   "id": "kaal:claim:2348463-029",
   "url": "https://wulfkaal.github.io/claims/2348463-029",
   "claim": "If Form PF systemic risk data became publicly available, or even only available to the presiding bankruptcy judge in a chapter 9 or chapter 11 case, the hedge fund industry's strong preference for secrecy could itself precipitate a change in distressed investment practices.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "public access or judge-only access to Form PF data",
    "hedge fund industry retains its emphasis on secrecy"
   ],
   "supporting_quote": "If systemic risk data in Form PF becomes publicly available or even only available to the respective bankruptcy judge in a chapter 9 or chapter 11 case, the hedge fund industry's penchant for secrecy could perhaps precipitate a change in hedge funds' distressed investment practices."
  },
  {
   "id": "kaal:claim:2348463-030",
   "url": "https://wulfkaal.github.io/claims/2348463-030",
   "claim": "The threat that hedge fund managers' systemic risk filings could be publicly disclosed could help incentivize hedge fund investors to abstain from trading while serving on a creditors' committee and to avoid holding multiple offsetting positions in distressed entities.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "hedge funds serving on committees in bankruptcy cases"
   ],
   "supporting_quote": "The threat of public disclosure of hedge funds managers' systemic risk filing could help incentivize hedge fund investors to abstain from trading while on a committee."
  },
  {
   "id": "kaal:claim:2348463-031",
   "url": "https://wulfkaal.github.io/claims/2348463-031",
   "claim": "Disclosing otherwise private and proprietary Form PF systemic risk data exclusively to bankruptcy judges could alleviate the hedge fund industry's concerns about privacy and about the reverse engineering of its strategies and positions.",
   "type": "design",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "judge-only access, with no disclosure to debtors or other creditors"
   ],
   "supporting_quote": "Exclusive disclosure of otherwise private and proprietary systemic risk data in Form PF to bankruptcy judges could potentially alleviate the hedge fund industry's concerns over privacy and reverse engineering of strategies and positions."
  },
  {
   "id": "kaal:claim:2348463-032",
   "url": "https://wulfkaal.github.io/claims/2348463-032",
   "claim": "Restricting Form PF data to the eyes of the bankruptcy judge alone would create problems in the litigation process, because opposing parties may demand access to the same information.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "judge-only access design"
   ],
   "supporting_quote": "However, making creditors' Form PF data available for the eyes of the judge only could raise issues in the litigation process because parties may demand access to the same information."
  },
  {
   "id": "kaal:claim:2348463-033",
   "url": "https://wulfkaal.github.io/claims/2348463-033",
   "claim": "Because systemic risk disclosures are far more generic and are not tailored to any specific distressed investment, importing them into bankruptcy would improve only marginally the information available about the motives of distressed securities investors.",
   "type": "failure",
   "topics": [
    "private-funds",
    "systemic-risk",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "Form PF disclosures in their current generic form"
   ],
   "supporting_quote": "Hence, with regard to disclosure of possible motives of hedge fund investors in bankruptcy, systemic risk disclosures in the bankruptcy context would only marginally improve the availability of relevant information pertaining to possible motives of distressed securities investors."
  },
  {
   "id": "kaal:claim:2348463-034",
   "url": "https://wulfkaal.github.io/claims/2348463-034",
   "claim": "Systemic risk disclosures in the bankruptcy process would also not significantly change or limit hedge funds' influence in that process, nor would they protect against the misuse of confidential information.",
   "type": "failure",
   "topics": [
    "private-funds",
    "disclosure",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "Form PF disclosures in their current form"
   ],
   "supporting_quote": "Systemic risk disclosures in the bankruptcy process also may not significantly change or limit the influence of hedge funds in the bankruptcy process or protect against misuse of confidential information."
  },
  {
   "id": "kaal:claim:2348463-035",
   "url": "https://wulfkaal.github.io/claims/2348463-035",
   "claim": "Increased disclosure obligations let so-called pilot fish emulate hedge funds' investment strategies and positions, which makes those positions more expensive to build and strips systematic bargaining strength from the negotiation process.",
   "type": "mechanism",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "markets where competitors can observe and copy disclosed positions",
    "illiquid distressed debt markets"
   ],
   "supporting_quote": "disclosure obligations, \"pilot fish\" can increasingly emulate investment strategies and positions. As a result, investment positions can become more expensive and systematic bargaining strength is removed from the negotiation process."
  },
  {
   "id": "kaal:claim:2348463-036",
   "url": "https://wulfkaal.github.io/claims/2348463-036",
   "claim": "There is a real risk that increased disclosure through Form PF would destroy the balance of power in the restructuring process.",
   "type": "failure",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "if Form PF data were introduced into the bankruptcy process"
   ],
   "supporting_quote": "In summary, there is a real risk that increased disclosures via Form PF would destroy the balance of power in the restructuring process."
  },
  {
   "id": "kaal:claim:2348463-037",
   "url": "https://wulfkaal.github.io/claims/2348463-037",
   "claim": "Bankruptcy judges and the parties to a bankruptcy case may be unable to adequately evaluate Form PF data pertaining to a creditor, which limits the usefulness of that data in bankruptcy.",
   "type": "failure",
   "topics": [
    "private-funds",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "Form PF data as currently structured",
    "SEC and FSOC themselves have not established how to evaluate the data"
   ],
   "supporting_quote": "Bankruptcy judges and/or the respective parties in a bankruptcy case may be unable to adequately evaluate Form PF data pertaining to a creditor in a bankruptcy case."
  },
  {
   "id": "kaal:claim:2348463-038",
   "url": "https://wulfkaal.github.io/claims/2348463-038",
   "claim": "Using generic and possibly outdated systemic risk data in the bankruptcy process would not improve hedge funds' bankruptcy practices in the near term.",
   "type": "failure",
   "topics": [
    "private-funds",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "near term, before standardization of Form PF",
    "Form PF information can be out of date immediately after filing"
   ],
   "supporting_quote": "The use of generic and possibly outdated systemic risk data in the bankruptcy process would therefore not improve hedge funds' practices in bankruptcy in the near term."
  },
  {
   "id": "kaal:claim:2348463-039",
   "url": "https://wulfkaal.github.io/claims/2348463-039",
   "claim": "Public access to hedge fund managers' systemic risk disclosures under the Dodd-Frank Act and the SEC implementation rules could improve hedge funds' distressed investments and their bankruptcy practices.",
   "type": "predictive",
   "topics": [
    "disclosure",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hedge Funds’ Systemic Risk Disclosures in Bankruptcy (2013). SSRN: https://ssrn.com/abstract=2348463",
   "year": "2013",
   "source_sha256": "b3682f24c0b277b3307fb9f54cd17a4e0a87b48eecba34b40e189212f20c9a22",
   "confidence": "argued",
   "scope_conditions": [
    "assumes public access to filings that are currently confidential"
   ],
   "supporting_quote": "Public access to systemic risk disclosures by hedge fund managers under the Dodd-Frank Act and SEC implementation rules could improve hedge funds' distressed investments and their bankruptcy practices."
  },
  {
   "id": "kaal:claim:2337268-001",
   "url": "https://wulfkaal.github.io/claims/2337268-001",
   "claim": "The Investment Advisers Act prohibits contingent fee arrangements between investment advisers and their clients because such arrangements could induce inappropriate risk taking by the adviser.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "advisory contracts governed by the IAA",
    "outside the post 1985 exemption for certain qualifying large advisory contracts"
   ],
   "supporting_quote": "Because contingent fee arrangements could lead to inappropriate risk taking by investment advisers, contingent fee arrangements between investment advisers and their clients are prohibited.7"
  },
  {
   "id": "kaal:claim:2337268-002",
   "url": "https://wulfkaal.github.io/claims/2337268-002",
   "claim": "The IAA restricts the assignment of advisory contracts without client consent in order to protect investors against changes in the character or quality of the advisory services they contracted for.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "contracts between investment advisers and their clients"
   ],
   "supporting_quote": "Moreover, to protect investors against changes in the character or quality of advisory services, the IAA prohibits the assignment of contracts with clients unless the"
  },
  {
   "id": "kaal:claim:2337268-003",
   "url": "https://wulfkaal.github.io/claims/2337268-003",
   "claim": "Exemption from registration under the IAA does not exempt an adviser from the antifraud provision, which reaches both negligent misstatements and misstatements made with intent to defraud.",
   "type": "condition",
   "topics": [
    "securities-law",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "advisers exempt from SEC registration"
   ],
   "supporting_quote": "Investment advisers who are exempt from registration are still subject to the IAA's antifraud provision,6 which applies to negligent misstatements and misstatements made with the intent to defraud."
  },
  {
   "id": "kaal:claim:2337268-004",
   "url": "https://wulfkaal.github.io/claims/2337268-004",
   "claim": "Investment adviser status under the IAA requires that the advice concern a security; without a security in the dealings between adviser and client the statutory definition does not apply.",
   "type": "condition",
   "topics": [
    "private-funds",
    "consensus-and-security",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "classification of a person as an investment adviser under the IAA"
   ],
   "supporting_quote": "Providing investment advice and being considered an investment adviser under the IAA requires that a person renders advice with regard to a security."
  },
  {
   "id": "kaal:claim:2337268-005",
   "url": "https://wulfkaal.github.io/claims/2337268-005",
   "claim": "Providing investment advice without compensation makes a person less likely to fall within the IAA definition of investment adviser, but the SEC construes compensation for advisory services broadly, which narrows the practical value of that limit.",
   "type": "condition",
   "topics": [
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "determining whether a person is in the business of rendering advice"
   ],
   "supporting_quote": "While providing investment advice without compensation makes the person less likely to provide investment advice as an investment adviser under the IAA's definition, the SEC is broadly construing the meaning of compensation for advisory services."
  },
  {
   "id": "kaal:claim:2337268-006",
   "url": "https://wulfkaal.github.io/claims/2337268-006",
   "claim": "The frequency of advice helps determine adviser status: advice rendered occasionally, rarely, and in a non-periodic fashion makes classification as an investment adviser less likely.",
   "type": "condition",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "determining whether a person is in the business of rendering investment advice"
   ],
   "supporting_quote": "Finally, the frequency of rendering investment advice helps define whether a person is an investment adviser. Providing investment advice occasionally or rarely and in a non-periodic fashion makes it less likely for a person to be considered an investment adviser."
  },
  {
   "id": "kaal:claim:2337268-007",
   "url": "https://wulfkaal.github.io/claims/2337268-007",
   "claim": "A broker dealer who holds himself or herself out as a financial planner does not thereby trigger registration obligations under the IAA.",
   "type": "condition",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "broker dealers holding out as financial planners"
   ],
   "supporting_quote": "A broker dealer holding him or herself out as a financial planner alone does not trigger IAA registration obligations.14"
  },
  {
   "id": "kaal:claim:2337268-008",
   "url": "https://wulfkaal.github.io/claims/2337268-008",
   "claim": "Proof of special compensation is a necessary condition for classifying a broker dealer as an investment adviser, and the burden of proving both special compensation and that the advice exceeded the incidental is on the plaintiff.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "broker dealers whose advisory services are solely incidental to brokerage"
   ],
   "supporting_quote": "A broker-dealer cannot be classified as an investment adviser without proof of special compensation."
  },
  {
   "id": "kaal:claim:2337268-009",
   "url": "https://wulfkaal.github.io/claims/2337268-009",
   "claim": "Congress created distinct hedge fund adviser categories in Title IV of the Dodd-Frank Act because it recognized that not all hedge fund advisers pose the same systemic risks and therefore do not all require the same level of oversight.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "hedge fund advisers under Title IV of the Dodd-Frank Act"
   ],
   "supporting_quote": "When it passed the Dodd-Frank Act,17 Congress recognized that not all hedge fund advisers pose the same systemic risks and therefore require the same level of oversight. Congress therefore created different hedge fund adviser categories in Title IV of the Dodd-Frank Act.18"
  },
  {
   "id": "kaal:claim:2337268-010",
   "url": "https://wulfkaal.github.io/claims/2337268-010",
   "claim": "Title IV and the SEC forms use assets under management as a proxy for systemic threat, so that disclosure obligations scale upward with the size of the hedge fund adviser.",
   "type": "design",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "hedge fund advisers categorized by AUM under Title IV"
   ],
   "supporting_quote": "forms suggest that the larger the hedge fund advisers, as measured by their assets under management (AUM), the higher the possible systemic threat the respective fund poses. Accordingly, the disclosure requirements increase with the AUM size of hedge fund advisers."
  },
  {
   "id": "kaal:claim:2337268-011",
   "url": "https://wulfkaal.github.io/claims/2337268-011",
   "claim": "Mid-sized investment advisers, those with between $25 and $100 million AUM, fall to state authorities rather than the SEC, though they may still have to register with the state agency where their principal place of business is located.",
   "type": "definitional",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "advisers with between $25 and $100 million AUM",
    "under Title IV of the Dodd-Frank Act"
   ],
   "supporting_quote": "Under Title IV, state authorities are responsible for mid- sized investment advisers.20 While mid-sized advisers are not required to register with the SEC, they may still be required to register with the state agency in the state of their principal place of business.21"
  },
  {
   "id": "kaal:claim:2337268-012",
   "url": "https://wulfkaal.github.io/claims/2337268-012",
   "claim": "Where a state does not provide sufficient regulation of mid-sized investment advisers, oversight reverts to the SEC, so state level regulatory gaps trigger a federal backstop rather than leaving advisers unsupervised.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "mid-sized investment advisers",
    "states whose regulation is deemed insufficient"
   ],
   "supporting_quote": "Should a particular state not provide sufficient regulation, the SEC will oversee the mid-sized investment adviser.22"
  },
  {
   "id": "kaal:claim:2337268-013",
   "url": "https://wulfkaal.github.io/claims/2337268-013",
   "claim": "Advisers with more than $150 million in regulatory assets under management are defined as large private fund advisers and must register with the SEC.",
   "type": "definitional",
   "topics": [
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "advisers to one or more private funds",
    "RAUM above $150 million"
   ],
   "supporting_quote": "Investment advisers having more than $150 million regulatory assets under management (RAUM) are defined as large private fund advisers and are required to register with the SEC.23"
  },
  {
   "id": "kaal:claim:2337268-014",
   "url": "https://wulfkaal.github.io/claims/2337268-014",
   "claim": "Registering large private fund advisers works by increasing the volume of data available to regulators, which in turn may help protect against systemic risk.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "systemic-risk",
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "large private fund advisers registered with the SEC"
   ],
   "supporting_quote": "The registration of large private fund advisers increases the availability of data and may help protect against systemic risk."
  },
  {
   "id": "kaal:claim:2337268-015",
   "url": "https://wulfkaal.github.io/claims/2337268-015",
   "claim": "The pre Dodd-Frank exemption for advisers with fewer than fifteen clients failed as a regulatory boundary because most hedge fund advisers deliberately designed their operations and legal structures to fit within it and thereby escape SEC registration and supervision.",
   "type": "failure",
   "topics": [
    "securities-law",
    "regulatory-failure",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "hedge fund advisers before the enactment of Title IV in 2010"
   ],
   "supporting_quote": "Most hedge fund advisers set up their operations and legal structure to comply with the former exemption so as to avoid registration and supervision by the SEC.28"
  },
  {
   "id": "kaal:claim:2337268-016",
   "url": "https://wulfkaal.github.io/claims/2337268-016",
   "claim": "The foreign private adviser exemption that replaced the fewer than fifteen clients exemption is conjunctive: it requires fewer than fifteen U.S. clients and investors, no U.S. place of business, no holding out to the U.S. public, and less than $25 million AUM attributable to U.S. clients and investors.",
   "type": "condition",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "advisers claiming the foreign private adviser exemption after 2010"
   ],
   "supporting_quote": "have fewer than fifteen clients and investors in the United States, do not have a place of business in the United States, do not hold themselves out to the U.S. public as an investment adviser, and do not attribute more than $25 million AUM solely to U.S. clients and investors.30"
  },
  {
   "id": "kaal:claim:2337268-017",
   "url": "https://wulfkaal.github.io/claims/2337268-017",
   "claim": "The Title IV threshold registration requirement pulls a majority of the hedge fund advisers who had previously relied on the fewer than fifteen clients exemption into SEC registration.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "private fund advisers managing more than $150 million AUM"
   ],
   "supporting_quote": "The threshold registration requirement for private fund advisers under Title IV of the Dodd-Frank Act requires a majority of hedge fund advisers who had previously relied on the fewer than fifteen clients exemption31 to register with the SEC."
  },
  {
   "id": "kaal:claim:2337268-018",
   "url": "https://wulfkaal.github.io/claims/2337268-018",
   "claim": "Registration is the gateway that makes data collection and enhanced disclosure by hedge fund managers possible, and the Dodd-Frank Act raised disclosure requirements for registered advisers specifically to address systemic risk concerns.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "disclosure",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "registered investment advisers after the Dodd-Frank Act"
   ],
   "supporting_quote": "The registration of investment advisers facilitates the collection of data and enhanced disclosure by hedge fund managers. The Dodd-Frank Act increased the disclosure requirements for registered investment advisers to address concerns over systemic risk.40"
  },
  {
   "id": "kaal:claim:2337268-019",
   "url": "https://wulfkaal.github.io/claims/2337268-019",
   "claim": "Part 2 of Form ADV requires a plain English narrative brochure for prospective advisory customers, making the brochure the primary disclosure document delivered to an adviser's clients.",
   "type": "design",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "investment advisers registering with the SEC"
   ],
   "supporting_quote": "Part 2 of Form ADV requires investment advisers to provide a narrative brochure in plain English to prospective advisory customers. The brochure should contain the information set forth in Form ADV Part 2.44"
  },
  {
   "id": "kaal:claim:2337268-020",
   "url": "https://wulfkaal.github.io/claims/2337268-020",
   "claim": "Mandatory disclosure of referral compensation, related person status of brokers and dealers, and soft dollar benefits is designed to defuse conflicts of interest arising when an adviser runs several types of business and services.",
   "type": "design",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "advisers filing Form ADV Part 1A"
   ],
   "supporting_quote": "investment advisers must disclose compensation given or received for client referrals,55 related persons status of brokers and dealers,56 and soft dollar benefits, i.e., research or other products and services received in connection with client transactions.57"
  },
  {
   "id": "kaal:claim:2337268-021",
   "url": "https://wulfkaal.github.io/claims/2337268-021",
   "claim": "Form PF was created to improve SEC and CFTC investigations and examinations and to enable the Financial Stability Oversight Council to monitor systemic risk in U.S. financial markets.",
   "type": "design",
   "topics": [
    "private-funds",
    "systemic-risk",
    "compliance",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "private fund advisers required to file Form PF after October 2011"
   ],
   "supporting_quote": "Form PF was enacted in October 201164 to improve investigations and examinations by the SEC and the Commodity Futures Trading Commission (CFTC) and to facilitate the FSOC's65 monitoring of systemic risk in U.S. financial markets.66"
  },
  {
   "id": "kaal:claim:2337268-022",
   "url": "https://wulfkaal.github.io/claims/2337268-022",
   "claim": "Form PF filings, unlike Form ADV filings, are confidential and not publicly available, so the systemic risk disclosure regime is built for regulators rather than for market or investor scrutiny.",
   "type": "design",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "Form PF filings by private fund advisers"
   ],
   "supporting_quote": "Unlike Form ADV, Form PF filings are confidential and not publicly available."
  },
  {
   "id": "kaal:claim:2337268-023",
   "url": "https://wulfkaal.github.io/claims/2337268-023",
   "claim": "The frequency of Form PF reporting is keyed to size: advisers with at least $1.5 billion RAUM attributable to hedge funds must update quarterly, while advisers below that level file only annually.",
   "type": "condition",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "SEC registered advisers managing at least $150 million AUM"
   ],
   "supporting_quote": "Large private fund advisers, defined as investment advisers with at least $1.5 billion RAUM attributable to hedge funds,67 must update Form PF filings on a quarterly basis.68 Investment advisers with less than $1.5 billion RAUM only have to file Form PF on an annual basis.69"
  },
  {
   "id": "kaal:claim:2337268-024",
   "url": "https://wulfkaal.github.io/claims/2337268-024",
   "claim": "Quarterly rather than annual reporting by large private fund advisers is intended to give the FSOC data timely enough to identify emerging systemic risk trends.",
   "type": "design",
   "topics": [
    "private-funds",
    "systemic-risk",
    "disclosure",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "large private fund advisers filing Form PF quarterly"
   ],
   "supporting_quote": "The quarterly reporting for large private fund advisers is intended to provide the FSOC with timely data to identify emerging trends in systemic risk."
  },
  {
   "id": "kaal:claim:2337268-025",
   "url": "https://wulfkaal.github.io/claims/2337268-025",
   "claim": "Form PF requires disclosure of the reporting fund's positions and how long it would take to liquidate them, because the SEC needs a view of portfolio liquidity rather than positions alone.",
   "type": "design",
   "topics": [
    "private-funds",
    "defi",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "private fund advisers filing Form PF"
   ],
   "supporting_quote": "To help the SEC understand the liquidity of the reporting fund's portfolios, Form PF requires the investment adviser to disclose the reporting fund's positions and how long it would take to liquidate them.78"
  },
  {
   "id": "kaal:claim:2337268-026",
   "url": "https://wulfkaal.github.io/claims/2337268-026",
   "claim": "The division of labor in adviser regulation dates to the 1996 National Securities Markets Improvement Act, under which Congress assigned larger investment advisers to the SEC and smaller advisers to the states.",
   "type": "definitional",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "federal and state allocation of adviser oversight after 1996"
   ],
   "supporting_quote": "In 1996, with the enactment of the National Securities Markets Improvement Act (NSMIA), Congress decided that the SEC should regulate larger investment advisers while states would oversee smaller investment advisers."
  },
  {
   "id": "kaal:claim:2337268-027",
   "url": "https://wulfkaal.github.io/claims/2337268-027",
   "claim": "An adviser that would otherwise have to register in fifteen or more states because of the $100 million AUM threshold may register directly with the SEC instead, so multi-state registration burden operates as an escape hatch to federal oversight.",
   "type": "condition",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "advisers whose state registrations would reach fifteen or more states"
   ],
   "supporting_quote": "However, should the $100 million AUM threshold result in an adviser's registration with fifteen or more states, the adviser is allowed to register directly with the SEC.86"
  },
  {
   "id": "kaal:claim:2337268-028",
   "url": "https://wulfkaal.github.io/claims/2337268-028",
   "claim": "Investment advisers that provide advice exclusively through the Internet may register with the SEC regardless of how much they have under management, so the delivery channel rather than size determines the forum.",
   "type": "condition",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "advisers providing investment advice exclusively through the Internet"
   ],
   "supporting_quote": "Regardless of the amount of AUM, investment advisers that provide investment advice exclusively through the Internet may register with the SEC.88"
  },
  {
   "id": "kaal:claim:2337268-029",
   "url": "https://wulfkaal.github.io/claims/2337268-029",
   "claim": "The Dodd-Frank Act added an inflation adjustment to the qualified client standard, requiring the SEC to adjust any dollar amount test within one year of enactment and every five years thereafter.",
   "type": "condition",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "SEC use of a net asset or dollar amount test for qualified client status"
   ],
   "supporting_quote": "If the SEC uses a net asset threshold or any other dollar-amount test to determine the qualified client standard for exemption under the IAA, the SEC is required to adjust the dollar-amount test for the effects of inflation within one year after enactment and every five years thereafter.91"
  },
  {
   "id": "kaal:claim:2337268-030",
   "url": "https://wulfkaal.github.io/claims/2337268-030",
   "claim": "The SEC excludes the value of a primary residence and related debts from the qualified client net-worth test because persons who clear the threshold only by counting their home are less able to bear the risk of performance fee arrangements.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "net-worth test for qualified client status under the IAA"
   ],
   "supporting_quote": "Because persons who meet the net-worth test by virtue of including the value of their primary residence are less likely to be able to bear the risk of performance fee arrangements, the SEC excludes the value of a person's primary residence and related debts from the net-worth test."
  },
  {
   "id": "kaal:claim:2337268-031",
   "url": "https://wulfkaal.github.io/claims/2337268-031",
   "claim": "Excluding the primary residence from the net-worth test removed a large population from qualified client status: SEC estimates suggest roughly 1.3 million households no longer qualify under the revised test.",
   "type": "empirical",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "evidenced",
   "scope_conditions": [
    "households assessed under the revised net-worth test"
   ],
   "supporting_quote": "SEC estimates suggest that with the exclusion of the primary residence from the net-worth test, roughly 1.3 million households were excluded from qualifying under the revised net-worth test.93"
  },
  {
   "id": "kaal:claim:2337268-032",
   "url": "https://wulfkaal.github.io/claims/2337268-032",
   "claim": "The Dodd-Frank Act tightened custodial practice by requiring safeguards for client assets and verification by independent accountants, a response to concerns over theft and client exposure to Ponzi schemes.",
   "type": "design",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "investment advisers with custody of client assets after 2010"
   ],
   "supporting_quote": "In 2010, in an effort to address concerns over theft and to lower clients' exposure to the risks of Ponzi schemes, the Dodd-Frank Act amended the IAA, heightening custodial practices by requiring safeguards for client assets and the use of independent accountants to verify assets.96"
  },
  {
   "id": "kaal:claim:2337268-033",
   "url": "https://wulfkaal.github.io/claims/2337268-033",
   "claim": "The custodian requirements work by cutting off the operational mechanics of Ponzi finance: they curtail an adviser's ability to pay existing investors with money invested by new investors, and custodians may execute client trades but cannot remit sales proceeds to the adviser or to third parties.",
   "type": "mechanism",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "client assets held through qualified custodians under the Dodd-Frank custody rules"
   ],
   "supporting_quote": "The custodian requirements under the Dodd-Frank Act curtail investment advisers' ability to pay existing investors with the funds invested by new investors."
  },
  {
   "id": "kaal:claim:2337268-034",
   "url": "https://wulfkaal.github.io/claims/2337268-034",
   "claim": "A person who provides investment advice over the Internet escapes registration only if the advice is impersonal; personalized advice delivered through chat rooms and websites can trigger the registration requirement.",
   "type": "condition",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "persons providing investment advice via Internet chat rooms and websites"
   ],
   "supporting_quote": "Registration is not required if the person provides impersonal investment advice.97"
  },
  {
   "id": "kaal:claim:2337268-035",
   "url": "https://wulfkaal.github.io/claims/2337268-035",
   "claim": "The passive electronic bulletin board exemption holds only so long as the provider gives no advice on the merits of any particular trade and stays out of securities purchases and sale negotiations.",
   "type": "condition",
   "topics": [
    "corporate-governance",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "providers of electronic bulletin boards posting securities information"
   ],
   "supporting_quote": "In order to remain exempt from registration as an investment adviser under the IAA, the provider of a \"passive\" electronic bulletin board cannot give advice regarding the merits of any particular trade and he or she cannot be involved in the purchase of securities or sale negotiations."
  },
  {
   "id": "kaal:claim:2337268-036",
   "url": "https://wulfkaal.github.io/claims/2337268-036",
   "claim": "Because investment advisers owe a duty to obtain best execution for customer orders, they ought to evaluate the executions carried out on their clients' behalf on a periodic basis.",
   "type": "normative",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "advisers placing or directing client orders"
   ],
   "supporting_quote": "investment advisers are subject to a duty to obtain the best execution for customer orders,103 investment advisers ought to periodically evaluate the executions on behalf of their clients."
  },
  {
   "id": "kaal:claim:2337268-037",
   "url": "https://wulfkaal.github.io/claims/2337268-037",
   "claim": "Mandatory ethics codes, disclosures, and client consents are effective instruments for curtailing fraudulent practices by investment advisers.",
   "type": "design",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "registered investment advisers subject to IAA compliance rules"
   ],
   "supporting_quote": "Mandatory ethics codes, disclosures, and client consents can curtail fraudulent practices."
  },
  {
   "id": "kaal:claim:2337268-038",
   "url": "https://wulfkaal.github.io/claims/2337268-038",
   "claim": "The SEC mandated written compliance policies and procedures for investment advisers as a reaction to mutual fund industry scandals and in an effort to curb IAA violations.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "private-funds",
    "dynamic-regulation",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "registered investment advisers"
   ],
   "supporting_quote": "Reacting to several scandals in the mutual fund industry and in an effort to curb violations of the IAA, the SEC has mandated the implementation of written policies and procedures for investment advisers,106 among other compliance measures."
  },
  {
   "id": "kaal:claim:2337268-039",
   "url": "https://wulfkaal.github.io/claims/2337268-039",
   "claim": "A chief compliance officer is effective only if he or she combines sufficient knowledge of IAA obligations with adequate authority to develop and enforce policies and procedures; knowledge without authority is insufficient.",
   "type": "condition",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "registered investment advisers required to designate a chief compliance officer"
   ],
   "supporting_quote": "The chief compliance officer should have sufficient knowledge of IAA obligations and adequate authority to develop and enforce appropriate policies and procedures."
  },
  {
   "id": "kaal:claim:2337268-040",
   "url": "https://wulfkaal.github.io/claims/2337268-040",
   "claim": "Enforcement of the IAA's prohibited transactions provision is limited because the Supreme Court in Transamerica Mortgage Advisors, Inc. v. Lewis held that a violation of that provision does not support an implied private right of action.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "violations of the IAA prohibited transactions provision"
   ],
   "supporting_quote": "The enforcement of a violation of prohibited transactions under the IAA is limited. In Transamerica Mortgage Advisors, Inc. v. Lewis107 the Supreme Court determined that a violation of the IAA's prohibited transactions provision108 does not allow for implied private rights of action."
  },
  {
   "id": "kaal:claim:2337268-041",
   "url": "https://wulfkaal.github.io/claims/2337268-041",
   "claim": "With private enforcement foreclosed, enforcement of the IAA's prohibited transactions provision depends entirely on injunctive relief, administrative sanctions, and criminal prosecution, all of which require public actors to move.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "argued",
   "scope_conditions": [
    "enforcement against violations of the prohibited transactions provision"
   ],
   "supporting_quote": "Accordingly, the enforcement of the IAA's prohibited transactions provision is relegated to injunctive relief, administrative sanctions, and criminal prosecution."
  },
  {
   "id": "kaal:claim:2337268-042",
   "url": "https://wulfkaal.github.io/claims/2337268-042",
   "claim": "The IAA bars compensation tied to the performance of the client's account but permits compensation tied to the average value of the client's assets, so fee regulation targets performance linkage rather than asset based fees.",
   "type": "condition",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "fee arrangements in advisory contracts under the IAA"
   ],
   "supporting_quote": "It also prohibits performance-based compensation if the adviser's fee is linked to the performance of the client's account.110 The IAA does, however, allow investment advisers to tie their compensation to the average value of the client's assets.111"
  },
  {
   "id": "kaal:claim:2337268-043",
   "url": "https://wulfkaal.github.io/claims/2337268-043",
   "claim": "Referral fees to third parties are permitted only if the recipients are bona fide persons under securities laws, the fees are disclosed to the adviser's clients, and the fees are paid under a written agreement.",
   "type": "condition",
   "topics": [
    "disclosure",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "year": "2013",
   "source_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "confidence": "asserted",
   "scope_conditions": [
    "referral fees paid by investment advisers to third parties"
   ],
   "supporting_quote": "Advisers may pay referral fees provided the referral fee recipients are bona fide persons under securities laws, the fees have been disclosed to the investment adviser's clients, and the fees are paid in accordance with a written agreement.113"
  },
  {
   "id": "kaal:claim:2317580-001",
   "url": "https://wulfkaal.github.io/claims/2317580-001",
   "claim": "The traditional fiduciary duty doctrine is one of the most amorphous concepts in the law, and its indeterminacy produces confusion, inconsistency, and cases with problematic outcomes.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "traditional judicially developed fiduciary duty doctrine"
   ],
   "supporting_quote": "Traditional fiduciary duty doctrine is among the most amorphous concepts in the law and leads to confusion, inconsistency, and to cases with somewhat problematic outcomes."
  },
  {
   "id": "kaal:claim:2317580-002",
   "url": "https://wulfkaal.github.io/claims/2317580-002",
   "claim": "The liability standard for breach of fiduciary duty is set so high that courts rarely find directors in violation, because only a board's sustained or systematic failure to exercise oversight can produce liability.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "director oversight liability under Caremark and its progeny"
   ],
   "supporting_quote": "The standard for liability is so high that it is hard for courts to find directors in violation of their fiduciary duties.2 Only a board's sustained or systematic failure to exercise oversight can result in liability."
  },
  {
   "id": "kaal:claim:2317580-003",
   "url": "https://wulfkaal.github.io/claims/2317580-003",
   "claim": "The decades long academic debate over improving fiduciary duty doctrine has overlooked Corporate Integrity Agreements entirely, even though the debate is otherwise framed as a choice between expanding and curtailing the doctrine.",
   "type": "empirical",
   "topics": [
    "compliance",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "asserted",
   "supporting_quote": "The academic debate on options for improvement of the fiduciary duty doctrine has ignored the possible role of Corporate Integrity Agreements (CIAs)."
  },
  {
   "id": "kaal:claim:2317580-004",
   "url": "https://wulfkaal.github.io/claims/2317580-004",
   "claim": "Corporate Integrity Agreements are a hybrid instrument: they are compliance programs funded by health care companies but administratively enforced by the government, that is, contracts between health care companies and the federal government carrying costly mandatory compliance measures and penalties.",
   "type": "definitional",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "asserted",
   "scope_conditions": [
    "health care companies settling federal health care program investigations"
   ],
   "supporting_quote": "CIAs are administratively-enforced compliance programs funded by health care companies but enforced by the government. In other words, they are contracts between health care companies and the federal government and can involve costly mandatory compliance measures and penalties."
  },
  {
   "id": "kaal:claim:2317580-005",
   "url": "https://wulfkaal.github.io/claims/2317580-005",
   "claim": "Because directors contractually agree to increase compliance through an open door policy for the government, CIAs substantially raise the liability risk for companies whose directors did not act in accordance with their fiduciary responsibilities.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "corporate-governance",
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "a CIA has been executed",
    "directors granted the government access, including site visits"
   ],
   "supporting_quote": "Because the directors contractually agree to increase compliance by way of an open door policy for the government,10 CIAs can substantially increase the risk of liability for companies whose directors did not act in accordance with their fiduciary responsibilities."
  },
  {
   "id": "kaal:claim:2317580-006",
   "url": "https://wulfkaal.github.io/claims/2317580-006",
   "claim": "Although CIAs sit outside the formal legal framework that defines fiduciary duties, they belong to the penumbra of extra legal forces that clarifies what is expected of directors.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "fiduciary duty law understood as supplemented by extra legal forces"
   ],
   "supporting_quote": "While CIAs are outside the traditional legal framework that formally defines fiduciary duties, they fit into the penumbra of extra-legal forces11 that helps to clarify the expectations for directors."
  },
  {
   "id": "kaal:claim:2317580-007",
   "url": "https://wulfkaal.github.io/claims/2317580-007",
   "claim": "The contractual obligations contained in CIAs can enhance directors' default fiduciary duties, expanding the duty of care for directors of health care corporations beyond the legal standard set by Caremark and Stone v. Ritter.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "directors of health care corporations operating under an executed CIA"
   ],
   "supporting_quote": "The contractual obligations in CIAs can enhance directors' fiduciary default duties, expanding the duty of care for directors of health care corporations beyond the legal standard under Caremark and Ritter."
  },
  {
   "id": "kaal:claim:2317580-008",
   "url": "https://wulfkaal.github.io/claims/2317580-008",
   "claim": "Sarbanes-Oxley and the Dodd-Frank Act have influenced and shaped fiduciary duties, but they have not necessarily improved or clarified them.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "federal legislative responses to financial crises"
   ],
   "supporting_quote": "The Sarbanes-Oxley Act20 and the Dodd-Frank Act have influenced and shaped fiduciary duties but have not necessarily improved and clarified them."
  },
  {
   "id": "kaal:claim:2317580-009",
   "url": "https://wulfkaal.github.io/claims/2317580-009",
   "claim": "Because state fiduciary duty law is permissive rather than regulatory, fiduciary standards can legitimately develop from non-legislative sources, which makes extra legal forces a proper source for shaping fiduciary duties.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "state law fiduciary duties",
    "fiduciary responsibilities understood as largely aspirational best practices"
   ],
   "supporting_quote": "Because state fiduciary duty law is permissive rather than regulatory, fiduciary standards can develop from non-legislative sources."
  },
  {
   "id": "kaal:claim:2317580-010",
   "url": "https://wulfkaal.github.io/claims/2317580-010",
   "claim": "The OIG leverages providers' participation in federal health care programs, and the revenues that participation generates, to extract substantive CIA provisions that increase compliance with expected conduct and overall welfare.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "OIG settlements of false claims investigations",
    "providers dependent on Medicare and Medicaid revenue"
   ],
   "supporting_quote": "In effect, the OIG uses providers' participation in federal health care programs, and the revenues generated through participation, as leverage to negotiate substantive provisions in CIAs that increase compliance with expected conduct and overall welfare."
  },
  {
   "id": "kaal:claim:2317580-011",
   "url": "https://wulfkaal.github.io/claims/2317580-011",
   "claim": "Noncompliance with a CIA carries serious penalties, because the OIG may prosecute the company or seek its exclusion from federal health care programs.",
   "type": "mechanism",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "term of an executed CIA"
   ],
   "supporting_quote": "Upon noncompliance with the terms of a CIA, the OIG can prosecute the company or seek its exclusion from federal health care programs."
  },
  {
   "id": "kaal:claim:2317580-012",
   "url": "https://wulfkaal.github.io/claims/2317580-012",
   "claim": "CIA penalties reach individuals as well as entities: firms supervised by the FDA may not employ persons dismissed for CIA violations, and the careers of pharmaceutical directors and officers prosecuted over CIA violations can be severely damaged.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "FDA regulated companies",
    "pharmaceutical industry directors and officers"
   ],
   "supporting_quote": "For instance, companies subject to supervision by the Food and Drug Administration (FDA) may not employ individuals who were"
  },
  {
   "id": "kaal:claim:2317580-013",
   "url": "https://wulfkaal.github.io/claims/2317580-013",
   "claim": "Certification requirements that compel directors and officers to certify compliance with a CIA's provisions lower the procedural and enforcement hurdles for pursuing increased sanctions against noncompliant companies.",
   "type": "mechanism",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "CIAs containing board and officer certification requirements"
   ],
   "supporting_quote": "Certification requirements in CIAs, which require directors and officers to certify compliance with the CIA's provisions, can lower procedural and enforcement hurdles."
  },
  {
   "id": "kaal:claim:2317580-014",
   "url": "https://wulfkaal.github.io/claims/2317580-014",
   "claim": "As the number of individuals required to certify compliance under CIAs grows, so does the potential for false certifications and the corresponding liability, including False Claims Act and criminal false statement exposure.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "expanded certification requirements going beyond the chief compliance officer"
   ],
   "supporting_quote": "With the increased number of individuals certifying compliance with CIA provisions, the potential for false certifications and corresponding liability intensifies."
  },
  {
   "id": "kaal:claim:2317580-015",
   "url": "https://wulfkaal.github.io/claims/2317580-015",
   "claim": "CIAs often become the benchmark for expected conduct in a subsequent civil or criminal trial, which distinguishes them from ordinary contractual arrangements between companies and the government.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "litigation following execution of a CIA"
   ],
   "supporting_quote": "CIAs often become the standard for expected conduct in a civil or criminal trial."
  },
  {
   "id": "kaal:claim:2317580-016",
   "url": "https://wulfkaal.github.io/claims/2317580-016",
   "claim": "Once a CIA has been executed it is much easier for the government to reopen a case than to pursue a new one, and this ease of further prosecution, combined with increased OIG scrutiny and the threat of crippling penalties, substantially affects board knowledge, monitoring, and management.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "companies operating under an executed CIA"
   ],
   "supporting_quote": "Once a CIA has been executed, it is much easier for the government to reopen a case than to pursue a new one."
  },
  {
   "id": "kaal:claim:2317580-017",
   "url": "https://wulfkaal.github.io/claims/2317580-017",
   "claim": "A CIA raises the stakes for directors who would otherwise neglect their governance responsibilities, because the agreement puts the company effectively on parole and gives the government direct access that facilitates detection of compliance failures.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "companies operating under an executed CIA",
    "OIG inspection and site visit rights"
   ],
   "supporting_quote": "A CIA increases the stakes for directors choosing to eschew their governance responsibilities. A company operating under a CIA is essentially on parole.55 CIAs give the government direct access to a health care corporation, facilitating the detection of compliance issues."
  },
  {
   "id": "kaal:claim:2317580-018",
   "url": "https://wulfkaal.github.io/claims/2317580-018",
   "claim": "If the government finds problems on inspection it can escalate beyond the CIA's own substantive provisions to criminal prosecution, fines, additional CIAs, and exclusion from federally funded health care programs.",
   "type": "mechanism",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "government inspection of a company operating under a CIA"
   ],
   "supporting_quote": "These penalties include criminal prosecution, fines, additional CIAs, and exclusion from federally funded health care programs."
  },
  {
   "id": "kaal:claim:2317580-019",
   "url": "https://wulfkaal.github.io/claims/2317580-019",
   "claim": "CIAs reach into the day to day compliance operations of corporations by elevating the chief compliance officer, typically mandating the appointment of a CCO who reports directly to the CEO rather than to the general counsel or chief financial officer and who has direct access to the board.",
   "type": "design",
   "topics": [
    "compliance",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "regulated entities operating under a comprehensive CIA"
   ],
   "supporting_quote": "The CCO is responsible for implementing the CIA and must generally report directly to the Chief Executive Officer (CEO), not to the General Counsel or Chief Financial Officer (CFO)."
  },
  {
   "id": "kaal:claim:2317580-020",
   "url": "https://wulfkaal.github.io/claims/2317580-020",
   "claim": "By prescribing the number of board meetings devoted to compliance review and requiring specific board resolutions, CIA provisions let the government contractually determine how and when a board will interact.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "systemic-risk",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "CIAs containing board specific provisions, as in the Allergan, Pfizer, and AstraZeneca agreements"
   ],
   "supporting_quote": "In effect, these provisions allow the government to contractually determine how and when a board will interact."
  },
  {
   "id": "kaal:claim:2317580-021",
   "url": "https://wulfkaal.github.io/claims/2317580-021",
   "claim": "Certification requirements push directors to demand more detailed reports from corporate officers and to take a greater role in overseeing compliance with both the CIA and federal regulations.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "boards subject to CIA certification requirements"
   ],
   "supporting_quote": "The certification requirements can lead directors to require more detailed reports from the corporate officers and take a greater role in overseeing the company's compliance with both the CIA and federal regulations."
  },
  {
   "id": "kaal:claim:2317580-022",
   "url": "https://wulfkaal.github.io/claims/2317580-022",
   "claim": "Codes of conduct adopted under a CIA should encourage disclosure of compliance issues and protect whistle blowers from retaliation by maintaining the anonymity of disclosures.",
   "type": "normative",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "asserted",
   "scope_conditions": [
    "codes of conduct implemented under a CIA"
   ],
   "supporting_quote": "Codes of conduct should encourage disclosure of compliance issues and protect whistle blowers from retaliation by maintaining the anonymity of disclosures."
  },
  {
   "id": "kaal:claim:2317580-023",
   "url": "https://wulfkaal.github.io/claims/2317580-023",
   "claim": "The additional CIA requirements, and especially the self-reporting provisions, force companies to spend additional resources and at times to alter their day to day operations after signing.",
   "type": "empirical",
   "topics": [
    "disclosure",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "companies operating under a CIA"
   ],
   "supporting_quote": "All of these additional requirements, especially the self-reporting provisions, require companies to"
  },
  {
   "id": "kaal:claim:2317580-024",
   "url": "https://wulfkaal.github.io/claims/2317580-024",
   "claim": "Although CIAs are not laws, they go beyond aspirational governance standards because they set forth concrete governance rules that more clearly define the duties to be informed, to exercise oversight, and to maintain effective reporting systems, thereby requiring a higher standard of care.",
   "type": "design",
   "topics": [
    "governance-design",
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "directors of companies operating under a CIA"
   ],
   "supporting_quote": "Although CIAs are not laws, they do go beyond aspirational governance standards. CIAs set forth concrete governance rules that expand the fiduciary duties of directors."
  },
  {
   "id": "kaal:claim:2317580-025",
   "url": "https://wulfkaal.github.io/claims/2317580-025",
   "claim": "Unlike private contracts, CIAs are not the product of genuine bargaining choice: companies execute them to avoid further prosecution and exclusion from Medicaid and Medicare, so that once the government decides a CIA is warranted, a company that wishes to remain in its industry has its hands tied.",
   "type": "condition",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "health care companies dependent on federal health care program participation"
   ],
   "supporting_quote": "If the government decides a CIA is warranted, the company's hands are tied if it wants to continue to operate within its industry."
  },
  {
   "id": "kaal:claim:2317580-026",
   "url": "https://wulfkaal.github.io/claims/2317580-026",
   "claim": "Because CIAs combine contractual and public enforcement, with the OIG enforcing them and private rights of action also available, they are more than contractual arrangements, and a breach of a CIA may be treated like a breach of law for purposes of the duty of care.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "CIAs enforceable by the OIG and, under Delaware law, by courts via derivative suit"
   ],
   "supporting_quote": "Because of the combination of enforcement mechanisms, CIAs are more than contractual arrangements. A breach of a CIA may be treated like a breach of law for purposes of the duty of care."
  },
  {
   "id": "kaal:claim:2317580-027",
   "url": "https://wulfkaal.github.io/claims/2317580-027",
   "claim": "Boards are consistently held not liable for their companies' illegal marketing efforts even though federal law prohibits off-label marketing, but a board that certifies compliance with a CIA is certifying that the company properly monitors its sales teams' promotional activities, so CIAs contractually expand the applicable legal standard.",
   "type": "mechanism",
   "topics": [
    "economics",
    "corporate-governance",
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "off-label marketing cases",
    "boards subject to CIA certification requirements"
   ],
   "supporting_quote": "However, boards that certify compliance with a CIA are certifying that the company is properly monitoring the promotional activities of its sales teams. Through such certifications, CIAs contractually expand the applicable legal standards for boards."
  },
  {
   "id": "kaal:claim:2317580-028",
   "url": "https://wulfkaal.github.io/claims/2317580-028",
   "claim": "Because CIAs mandate a chief compliance officer and dictate how that officer interacts with the board, they increase the board's knowledge and monitoring of compliance, and a board possessing such knowledge should play a bigger role in ensuring that the company meets federal and state standards.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "corporate-governance",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "CIAs that mandate a CCO and prescribe CCO to board reporting"
   ],
   "supporting_quote": "More specifically, because CIAs often mandate a CCO and dictate how the CCO interacts with the board, CIAs can increase boards' knowledge and monitoring of the company's compliance."
  },
  {
   "id": "kaal:claim:2317580-029",
   "url": "https://wulfkaal.github.io/claims/2317580-029",
   "claim": "CIA provisions create economic incentives that affect directors' diligence, because stipulated daily noncompliance penalties stacked on top of monetary penalties under federal health laws expose companies that executed CIAs to significant financial ramifications.",
   "type": "mechanism",
   "topics": [
    "economics",
    "risk-and-incentives",
    "disclosure",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "companies with self-reporting obligations under a CIA",
    "exposure under the False Claims Act, Sunshine, Stark, AKS, and HIPAA"
   ],
   "supporting_quote": "Adding the stipulated penalties in CIAs to the monetary penalties under federal health laws, companies that executed CIAs face significant financial ramifications."
  },
  {
   "id": "kaal:claim:2317580-030",
   "url": "https://wulfkaal.github.io/claims/2317580-030",
   "claim": "Outside the CIA context, oversight claims are the most difficult theory in corporation law on which to win judgment, and courts dismiss duty of care cases routinely at the pleading stage.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "derivative suits alleging lack of oversight",
    "demand futility pleading requirements"
   ],
   "supporting_quote": "Courts dismiss duty of care cases routinely at the pleading stage."
  },
  {
   "id": "kaal:claim:2317580-031",
   "url": "https://wulfkaal.github.io/claims/2317580-031",
   "claim": "Courts treat companies that executed a CIA differently from other companies, and are increasingly recognizing the role of CIAs and their implications for directors' fiduciary duties.",
   "type": "empirical",
   "topics": [
    "compliance",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "derivative litigation involving companies operating under a CIA"
   ],
   "supporting_quote": "Courts, however, treat companies that executed a CIA differently. Courts are increasingly recognizing the role of CIAs and their implications for directors' fiduciary duties."
  },
  {
   "id": "kaal:claim:2317580-032",
   "url": "https://wulfkaal.github.io/claims/2317580-032",
   "claim": "When a company operates under a CIA, the judicial distinction between the law and aspirational corporate governance becomes less clear.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "companies operating under a CIA"
   ],
   "supporting_quote": "However, when a company is operating under a CIA, the distinction between the law and aspirational governance is less clear."
  },
  {
   "id": "kaal:claim:2317580-033",
   "url": "https://wulfkaal.github.io/claims/2317580-033",
   "claim": "In re Pfizer stipulates that for a company that executed a CIA the court will allow an assumption that the directors were fully informed and therefore willing participants in the corporate malfeasance, so that the CIAs themselves became the court's proof that the directors could have breached their fiduciary duties.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "corporate-governance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "In re Pfizer, 722 F. Supp. 2d 453 (S.D.N.Y. 2010)",
    "boards obligated by prior CIAs to monitor the very conduct alleged"
   ],
   "supporting_quote": "The court stipulates that in the case of a company that executed a CIA, it will allow an assumption that the directors were fully informed, and thus, willing participants in the corporate malfeasance."
  },
  {
   "id": "kaal:claim:2317580-034",
   "url": "https://wulfkaal.github.io/claims/2317580-034",
   "claim": "Abbott Labs set the stage for the Pfizer holding: although Abbott's Voluntary Compliance Plan was not a CIA, the Seventh Circuit used it as evidence that the directors knew of and should have stopped noncompliant activities.",
   "type": "empirical",
   "topics": [
    "compliance",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "evidenced",
   "scope_conditions": [
    "In re Abbott Laboratories Derivative Shareholders Litigation",
    "a six year history of documented FDA noncompliance"
   ],
   "supporting_quote": "Although the Voluntary Compliance Plan was not a CIA, the Seventh Circuit used it as evidence that the directors knew of and should have stopped noncompliant activities."
  },
  {
   "id": "kaal:claim:2317580-035",
   "url": "https://wulfkaal.github.io/claims/2317580-035",
   "claim": "Courts assume that the boards of companies that executed a CIA have more knowledge and can exercise more control, and therefore hold those directors to a heightened fiduciary duty, rejecting directors' claims of ignorance because executing a CIA or a CIA like agreement means directors do know or should know about the noncompliance.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "corporate-governance",
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "companies that executed a CIA or a comparable agreement such as a voluntary compliance plan"
   ],
   "supporting_quote": "To summarize, courts assume that the boards of companies that executed a CIA have more knowledge and can exercise more control and should thus act with a heightened fiduciary duty. Directors are held to a higher standard if the company executed a CIA."
  },
  {
   "id": "kaal:claim:2317580-036",
   "url": "https://wulfkaal.github.io/claims/2317580-036",
   "claim": "It is unclear whether corporations with CIAs will be uniformly affected, and future courts are likely to expand the basic legal duty of care only where the facts suggest that the CIA actually provided directors with more knowledge about compliance activities.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "speculative",
   "scope_conditions": [
    "future litigation following the Pfizer precedent",
    "facts showing the CIA increased director knowledge"
   ],
   "supporting_quote": "In light of the Pfizer precedent, future courts could hold directors of corporations that executed CIAs to a higher standard and thereby expand their basic legal duty of care if the facts suggest that CIAs provided directors with more knowledge about compliance activities."
  },
  {
   "id": "kaal:claim:2317580-037",
   "url": "https://wulfkaal.github.io/claims/2317580-037",
   "claim": "Because CIAs have so far been used predominantly in the health care industry, and because that industry has a public or quasi-public good character, the application of CIAs outside health care could be limited, and without broader application their impact on corporate law may be limited as well.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "CIAs concentrated in the health care sector",
    "industries lacking a public good character"
   ],
   "supporting_quote": "Given the public good or quasi-public good character of the health care industry, the application of CIAs in industries outside of health care could be limited. Without broader application in other industries, the impact of CIAs on corporate law may be limited."
  },
  {
   "id": "kaal:claim:2317580-038",
   "url": "https://wulfkaal.github.io/claims/2317580-038",
   "claim": "Governance of health care providers is distinctively complicated because directors must balance patients, physicians, taxpayers, the government, and shareholders, and substantial government involvement and liability through Medicare and Medicaid make the taxpaying public a stakeholder.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "directors of health care corporations",
    "Medicare and Medicaid participation"
   ],
   "supporting_quote": "Substantial government involvement and liability through Medicare and Medicaid further complicates governance of health care providers because the taxpaying public is a stakeholder."
  },
  {
   "id": "kaal:claim:2317580-039",
   "url": "https://wulfkaal.github.io/claims/2317580-039",
   "claim": "As a unique hybrid category, CIAs transcend both the law of fiduciary duties and aspirational corporate governance, and courts may come to interpret CIAs and other hybrid forms such as deferred prosecution agreements as expanding the basic legal duty of care.",
   "type": "predictive",
   "topics": [
    "compliance",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "argued",
   "scope_conditions": [
    "continued judicial recognition of CIAs and voluntary compliance plans"
   ],
   "supporting_quote": "Given the characteristics of CIAs and courts' increasing recognition of CIAs and VCPs, courts may interpret CIAs and other hybrid forms, such as deferred prosecution agreements, as expanding the basic legal duty of care."
  },
  {
   "id": "kaal:claim:2317580-040",
   "url": "https://wulfkaal.github.io/claims/2317580-040",
   "claim": "More research and empirical work is needed to determine how CIAs and other hybrid forms may change or expand directors' obligations.",
   "type": "normative",
   "topics": [
    "empirical-evidence",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Elizabeth R. Malay, The Role of Corporate Integrity Agreements in the Expansion of Fiduciary Duties (2013). SSRN: https://ssrn.com/abstract=2317580",
   "year": "2013",
   "source_sha256": "50973e1e820aef47a4e7ffdbdcb513d03f1845643fcf4fa5910e9528a0b7dac2",
   "confidence": "asserted",
   "supporting_quote": "More research and empirical work may be needed to explore how CIAs and other hybrid forms may change or expand directors' obligations."
  },
  {
   "id": "kaal:claim:2389416-001",
   "url": "https://wulfkaal.github.io/claims/2389416-001",
   "claim": "Title IV of the Dodd-Frank Act represents the most significant regulatory change in the history of the hedge fund industry, imposing mandatory adviser registration and disclosure for the first time since the industry's inception.",
   "type": "definitional",
   "topics": [
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "asserted",
   "supporting_quote": "Title IV of the Dodd-Frank Act introduced the most significant regulatory change in the history of the hedge fund industry."
  },
  {
   "id": "kaal:claim:2389416-002",
   "url": "https://wulfkaal.github.io/claims/2389416-002",
   "claim": "Contrary to the hedge fund industry's claim that increased supervision and disclosure would harm profitability, the authors find statistical evidence that the Dodd-Frank Act requirements had a positive effect on hedge fund performance.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "US hedge fund advisers subject to Title IV",
    "sample period January to October 2012"
   ],
   "supporting_quote": "Contrary to the hedge fund industry's claims that increased supervision and disclosure would affect their profitability, we find statistical evidence of a positive effect of the requirements introduced by the Dodd- Frank Act on hedge fund performance."
  },
  {
   "id": "kaal:claim:2389416-003",
   "url": "https://wulfkaal.github.io/claims/2389416-003",
   "claim": "The hedge fund adviser registration requirement under the Dodd-Frank Act creates a discontinuity in hedge fund returns at the registration effective date of March 30, 2012.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "securities-law",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "threshold of $150 million assets under management",
    "registration effective date March 30, 2012"
   ],
   "supporting_quote": "The registration requirement for hedge fund advisers under the Dodd-Frank Act creates a discontinuity in hedge fund returns at the registration effective date, March 30, 2012."
  },
  {
   "id": "kaal:claim:2389416-004",
   "url": "https://wulfkaal.github.io/claims/2389416-004",
   "claim": "Strategic behavior by fund advisers around the assets under management registration threshold produces a strong increase in the measured discontinuity at that threshold.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "regulatory-failure",
    "research-methods",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "advisers whose AUM floats above and below $150 million",
    "months May through August 2012"
   ],
   "supporting_quote": "Strategic actions by fund advisers lead to a strong increase in the discontinuity around the AUM registration threshold."
  },
  {
   "id": "kaal:claim:2389416-005",
   "url": "https://wulfkaal.github.io/claims/2389416-005",
   "claim": "Dodd-Frank Act compliance costs reduce the profitability of hedge fund advisers' investment management companies, but registration and disclosure requirements do not appear to reduce the returns of the hedge funds themselves.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "distinction between adviser management company profits and fund returns"
   ],
   "supporting_quote": "However, while Dodd-Frank Act compliance costs affect the profitability of hedge fund advisors' investment management companies, registration and disclosure requirements under the Dodd-Frank Act do not seem to affect the returns of hedge funds (Kaal 2013a)."
  },
  {
   "id": "kaal:claim:2389416-006",
   "url": "https://wulfkaal.github.io/claims/2389416-006",
   "claim": "Analyst estimates place the annual cost of Dodd-Frank Act registration and disclosure compliance for hedge fund advisers in a range from $50,000 to $400,000 per year.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "estimates by analysts, not measured by the authors"
   ],
   "supporting_quote": "Some analysts estimate that the cost will range from $50,000 to $400,000 per year (Kaal 2013a and 2013b)."
  },
  {
   "id": "kaal:claim:2389416-007",
   "url": "https://wulfkaal.github.io/claims/2389416-007",
   "claim": "Hedge fund adviser registration under the Dodd-Frank Act positively affects adviser returns in March 2012, but the effect does not persist in the months after the registration effective date.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "sample of 2145 US hedge fund advisers",
    "monthly data January to October 2012"
   ],
   "supporting_quote": "We find evidence that hedge fund adviser registration under the Dodd-Frank Act positively affects hedge fund adviser returns in March 2012, but this effect is not persistent in the subsequent months after the registration effective date for hedge fund advisers under the Dodd-Frank Act."
  },
  {
   "id": "kaal:claim:2389416-008",
   "url": "https://wulfkaal.github.io/claims/2389416-008",
   "claim": "The authors find no empirical evidence that hedge fund adviser registration under the Dodd-Frank Act negatively affects hedge fund performance, contradicting the industry's claims.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "US hedge fund advisers subject to Title IV",
    "January to October 2012 earnings data"
   ],
   "supporting_quote": "Contrary to the claims of the hedge fund industry, we find no empirical evidence that would suggest that hedge fund adviser registration under the Dodd-Frank Act negatively affects hedge fund performance."
  },
  {
   "id": "kaal:claim:2389416-009",
   "url": "https://wulfkaal.github.io/claims/2389416-009",
   "claim": "No prior study had analyzed the performance implications of hedge fund adviser regulation, making this the first estimate of the causal effect of the Dodd-Frank Act registration requirement on hedge fund returns.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "asserted",
   "scope_conditions": [
    "as of the paper's 2014 version"
   ],
   "supporting_quote": "To our knowledge, no other study has analyzed the implications of hedge fund adviser regulation."
  },
  {
   "id": "kaal:claim:2389416-010",
   "url": "https://wulfkaal.github.io/claims/2389416-010",
   "claim": "Because hedge funds developed under little or no regulatory supervision before the Dodd-Frank Act, the existing hedge fund performance literature largely fails to assess the implications of hedge fund regulation.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "argued",
   "scope_conditions": [
    "pre Dodd-Frank Act hedge fund performance literature"
   ],
   "supporting_quote": "Because hedge funds evolved in a regulatory environment with low or no regulatory supervision until the enactment of the Dodd-Frank Act, most prior studies on hedge fund performance do not assess the implications of hedge fund regulation."
  },
  {
   "id": "kaal:claim:2389416-011",
   "url": "https://wulfkaal.github.io/claims/2389416-011",
   "claim": "The quarterly Form PF reporting obligation imposed on hedge fund advisers with more than $1.5 billion in regulatory assets under management is designed to give the FSOC timely data for identifying systemic risk trends.",
   "type": "design",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "asserted",
   "scope_conditions": [
    "advisers with RAUM above $1.5 billion attributable to hedge funds"
   ],
   "supporting_quote": "The quarterly reporting requirement for large hedge fund advisers is intended to provide timely data that enables the FSOC to identify trends in systemic risk (IA Release 3308)."
  },
  {
   "id": "kaal:claim:2389416-012",
   "url": "https://wulfkaal.github.io/claims/2389416-012",
   "claim": "The working sample consists of 2,145 hedge funds drawn from Morningstar data on roughly 7,000 hedge funds and more than 3,700 advisers, retaining only funds reporting complete monthly earnings and AUM from January to October 2012.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "Morningstar Hedge Fund Database",
    "funds with complete monthly data"
   ],
   "supporting_quote": "Due to missing data and the presence of outliers, we extract a sample of 2,145 hedge funds that report all the monthly earnings data and monthly AUM in each period from January to October 2012."
  },
  {
   "id": "kaal:claim:2389416-013",
   "url": "https://wulfkaal.github.io/claims/2389416-013",
   "claim": "Only about a fifth of the sample funds exceed the $150 million AUM registration threshold: roughly 79 percent of the 2,145 funds are below it, 17 percent are consistently above it, and 4 percent float across it.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "sample period January to October 2012"
   ],
   "supporting_quote": "About 79% of the entire sample of 2145 hedge funds consists of funds with AUM smaller than $150 million. Only 17% represents the \"Large\" subsample and 4% the \"Strategic\" subsample."
  },
  {
   "id": "kaal:claim:2389416-014",
   "url": "https://wulfkaal.github.io/claims/2389416-014",
   "claim": "Most of the 87 strategic funds keep their AUM very close to the $150 million disclosure threshold, oscillating around it rather than moving decisively above or below it.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "strategic subsample of 87 funds",
    "January to October 2012"
   ],
   "supporting_quote": "We notice that only few hedge funds sensibly decrease or increase their AUM under or above the threshold and then keep such position. Most funds in the sample have AUM very close to the threshold, with oscillations around it."
  },
  {
   "id": "kaal:claim:2389416-015",
   "url": "https://wulfkaal.github.io/claims/2389416-015",
   "claim": "The largest number of strategic funds moving their AUM below $150 million occurs in the April to May 2012 window, which suggests a lagged response to the March 30, 2012 registration effective date.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "strategic subsample",
    "period April to May 2012"
   ],
   "supporting_quote": "The largest positive spike, which corresponds to the largest number of funds that decreased their AUM below $150 million is in the period April-May 2012, possibly suggesting some lagged effect of the registration effective date for hedge fund advisers under the Dodd-Frank Act."
  },
  {
   "id": "kaal:claim:2389416-016",
   "url": "https://wulfkaal.github.io/claims/2389416-016",
   "claim": "In simple linear regressions of monthly returns on log AUM across the full sample, the AUM coefficient is statistically significant at the 5 percent level only during March through August 2012.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "entire sample of 2145 funds",
    "no dummy variable specification"
   ],
   "supporting_quote": "When considering the entire sample and no dummy variable, the estimated beta for the logarithm of the AUM are statistically significant at 5% level only in the period March-August 2012."
  },
  {
   "id": "kaal:claim:2389416-017",
   "url": "https://wulfkaal.github.io/claims/2389416-017",
   "claim": "In the period close to and following the registration effective date, fund size has a positive relationship with fund performance, with positive beta coefficients in March through May and July 2012.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "research-methods",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "March to May 2012 and July 2012",
    "coefficients negative in June and August 2012"
   ],
   "supporting_quote": "In the period close to and following the registration effective date for hedge fund advisers under the Dodd-Frank Act, the size of funds seems to have a positive relationship with the fund performance."
  },
  {
   "id": "kaal:claim:2389416-018",
   "url": "https://wulfkaal.github.io/claims/2389416-018",
   "claim": "Adding a dummy for AUM above $150 million to the linear regressions leaves no variable significant at the 5 percent level in March 2012, and the dummy is significant only in April 2012.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "entire sample of 2145 funds",
    "linear model with AUM threshold dummy"
   ],
   "supporting_quote": "We notice that in March 2012, no variable is statistically significant at 5% significance level while in April 2012, the dummy variable is statistically significant."
  },
  {
   "id": "kaal:claim:2389416-019",
   "url": "https://wulfkaal.github.io/claims/2389416-019",
   "claim": "The linear regression models are jointly valid on the F-statistic but their explanatory power measured by R-squared remains very limited, with R-squared values of roughly 0.003 to 0.014.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "linear models with and without the AUM dummy"
   ],
   "supporting_quote": "The F-statistics support the validity of the models, while the explanatory power, measured by the R-squared is still very limited."
  },
  {
   "id": "kaal:claim:2389416-020",
   "url": "https://wulfkaal.github.io/claims/2389416-020",
   "claim": "Under the sharp regression discontinuity design, the estimated treatment coefficient exceeds one only in March 2012, at 1.104 with a p-value of 0.015, and is close to zero and insignificant in every other month.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "securities-law",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "sharp RD on the entire sample of 2145 funds",
    "optimal bandwidth selection",
    "January to October 2012"
   ],
   "supporting_quote": "Only in March 2012, i.e. the registration effective date for hedge fund advisers, the estimated coefficient has value larger than one, while it is always close to zero in the other periods."
  },
  {
   "id": "kaal:claim:2389416-021",
   "url": "https://wulfkaal.github.io/claims/2389416-021",
   "claim": "The March 2012 discontinuity coefficient is the only estimate with a p-value below 5 percent; all subsequent monthly estimates are statistically insignificant.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "sharp RD estimates April to October 2012"
   ],
   "supporting_quote": "Moreover, the coefficient in March 2012 is the only one with p-value smaller than 5%, while all the estimates in the following months are not significant."
  },
  {
   "id": "kaal:claim:2389416-022",
   "url": "https://wulfkaal.github.io/claims/2389416-022",
   "claim": "The discontinuity in hedge fund earnings at the registration effective date is positive, which is the opposite of what the hedge fund industry expected the Dodd-Frank Act to produce.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "March 30, 2012 registration effective date",
    "$150 million AUM threshold"
   ],
   "supporting_quote": "Figure 8 suggests that the requirements introduced by the Dodd-Frank Act create a positive effect on hedge fund performance. By contrast, the hedge fund industry expected the introduction of the Dodd-Frank Act to result in negative effects on hedge fund returns."
  },
  {
   "id": "kaal:claim:2389416-023",
   "url": "https://wulfkaal.github.io/claims/2389416-023",
   "claim": "The March 2012 discontinuity effect is not persistent and is completely absorbed in the months following the registration effective date for private fund advisers.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "securities-law",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "months after March 2012 in the sample window"
   ],
   "supporting_quote": "However, this discontinuity effect we observe in March 2012 is not persistent and is completely absorbed in the months following the registration effective date for private fund advisers under the Dodd-Frank Act."
  },
  {
   "id": "kaal:claim:2389416-024",
   "url": "https://wulfkaal.github.io/claims/2389416-024",
   "claim": "Because the compliance probability denominator is very close to one, fuzzy regression discontinuity estimates differ only trivially from the sharp design estimates on the entire sample.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "entire sample",
    "compliance with mandatory disclosure near certain above the threshold"
   ],
   "supporting_quote": "However, because the denominator is very close to 1 in our investigation, empirical results show that the differences between the SRD and the FRD approach are of minor importance."
  },
  {
   "id": "kaal:claim:2389416-025",
   "url": "https://wulfkaal.github.io/claims/2389416-025",
   "claim": "A McCrary density test of the assignment variable independently supports the presence of a discontinuity at the $150 million threshold in March 2012.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "March 2012",
    "$150 million AUM threshold"
   ],
   "supporting_quote": "The results reported in Figure 9 further support and underscore the presence of a discontinuity in March 2012 at the threshold of 150 million."
  },
  {
   "id": "kaal:claim:2389416-026",
   "url": "https://wulfkaal.github.io/claims/2389416-026",
   "claim": "The March 2012 discontinuity estimates remain statistically significant and stable at larger bandwidths, while very small bandwidths yield confidence intervals containing zero and would not detect any discontinuity.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "bandwidth robustness checks around the optimal bandwidth"
   ],
   "supporting_quote": "As Figure 10 shows, the estimates are statistically significant and rather stable also for larger bandwidths."
  },
  {
   "id": "kaal:claim:2389416-027",
   "url": "https://wulfkaal.github.io/claims/2389416-027",
   "claim": "Conventional, bias-corrected, and robust regression discontinuity estimators all produce coefficients of similar magnitude, between 1.13 and 1.33, each with a p-value below 5 percent, affirming the March 2012 discontinuity.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "Calonico, Cattaneo and Titiunik bias correction procedure",
    "March 30, 2012"
   ],
   "supporting_quote": "As Table 7 below shows, all the estimates are very close to each other in magnitude and all of them have a p-value smaller than 5%, affirming the presence of a discontinuity in March 2012."
  },
  {
   "id": "kaal:claim:2389416-028",
   "url": "https://wulfkaal.github.io/claims/2389416-028",
   "claim": "Hedge fund advisers with very small AUM likely did not respond to the Dodd-Frank Act registration requirement because they anticipated that disclosure would remain voluntary for them.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "argued",
   "scope_conditions": [
    "advisers well below the $150 million threshold"
   ],
   "supporting_quote": "Hedge fund advisers with a very small AUM would have probably been unresponsive to the regulation, anticipating that information disclosure would remain on a voluntary basis."
  },
  {
   "id": "kaal:claim:2389416-029",
   "url": "https://wulfkaal.github.io/claims/2389416-029",
   "claim": "The Dodd-Frank Act registration threshold creates incentives strong enough that some advisers opt out of registration and disclosure by strategically changing their AUM size to stay below $150 million.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "argued",
   "scope_conditions": [
    "advisers with AUM floating around the $150 million threshold"
   ],
   "supporting_quote": "It is possible that the enactment of the Dodd-Frank Act introduces incentives that are powerful enough to cause some hedge fund advisers to opt out of Dodd-Frank Act registration and disclosure through a strategic change of AUM size."
  },
  {
   "id": "kaal:claim:2389416-030",
   "url": "https://wulfkaal.github.io/claims/2389416-030",
   "claim": "Unlike the entire sample, whose discontinuity coefficient is near zero except in March 2012, the strategic subsample shows a discontinuity coefficient that is always above zero across the sample months.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "fuzzy RD on the 87 fund strategic subsample",
    "March to October 2012"
   ],
   "supporting_quote": "While the entire sample has a value always very close to zero, except for March 2012, the strategic subsample has a value always above zero."
  },
  {
   "id": "kaal:claim:2389416-031",
   "url": "https://wulfkaal.github.io/claims/2389416-031",
   "claim": "Some large advisers reduce their AUM in the months from May to August 2012, which strongly increases the discontinuity around the registration threshold and separates the two groups more sharply, though the effect vanishes late in the sample period.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "strategic subsample of 87 advisers",
    "May to August 2012"
   ],
   "supporting_quote": "In particular, some large advisers reduce their AUM. This leads to a strong increase in the discontinuity around the AUM registration threshold, suggesting a stronger separation between the two groups. The effect vanishes during the last months of our sample period."
  },
  {
   "id": "kaal:claim:2389416-032",
   "url": "https://wulfkaal.github.io/claims/2389416-032",
   "claim": "The study's most important limitation is data availability: the preliminary findings rest on only ten months of hedge fund adviser earnings data.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "asserted",
   "scope_conditions": [
    "earnings data from January 2012 to October 2012"
   ],
   "supporting_quote": "The most important limitation of our study is the availability of data. For the preliminary findings in this study, we worked with ten months of available hedge fund advisers earnings data."
  },
  {
   "id": "kaal:claim:2389416-033",
   "url": "https://wulfkaal.github.io/claims/2389416-033",
   "claim": "Difference-in-differences analysis confirms the regression discontinuity results, showing a positive and highly significant treatment coefficient for funds above the $150 million AUM threshold.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "4290 observations",
    "treatment defined as AUM above $150 million after March 2012"
   ],
   "supporting_quote": "Our DiD analysis confirms the results of our RD design. Table 9 shows the dummy variable that identifies the treatment with a positive coefficient that is highly significant."
  },
  {
   "id": "kaal:claim:2389416-034",
   "url": "https://wulfkaal.github.io/claims/2389416-034",
   "claim": "The difference-in-differences interaction term identifying treated funds in 2012 is positive and statistically significant in March, April, and May 2012.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "post reform dummy interacted with the AUM above $150 million dummy"
   ],
   "supporting_quote": "Table 9 also shows that the dummy variable that identifies the treatment group univocally (year 2012 and AUM>150M) is positive and statistically significant in March, April and May 2012."
  },
  {
   "id": "kaal:claim:2389416-035",
   "url": "https://wulfkaal.github.io/claims/2389416-035",
   "claim": "The difference-in-differences treatment effect is unstable over time: it loses significance in June and July 2012, then becomes significant again in August and September 2012 with negative coefficients and in October 2012 with a positive coefficient.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "monthly DiD regressions March to October 2012"
   ],
   "supporting_quote": "It loses significance in June and July, but it becomes significant again in August, September (with a negative coefficient) and October (with a positive coefficient)."
  },
  {
   "id": "kaal:claim:2389416-036",
   "url": "https://wulfkaal.github.io/claims/2389416-036",
   "claim": "The parallel trends assumption required for the difference-in-differences design is satisfied, because pre-treatment performance data show the same time trends for treatment and control groups.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "pre-treatment data from January 2011",
    "treatment and control defined by the $150 million AUM threshold"
   ],
   "supporting_quote": "Using additional pre-treatment performance data, Figure 13 suggests that the trends in our dataset are the same for the treatment and control group."
  },
  {
   "id": "kaal:claim:2389416-037",
   "url": "https://wulfkaal.github.io/claims/2389416-037",
   "claim": "Despite the great volatility of hedge fund adviser returns over the observation period, the empirical evidence for a discontinuity at the $150 million AUM threshold is robust, but the discontinuity does not persist beyond the registration effective date.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "January to October 2012 observation window"
   ],
   "supporting_quote": "Despite the great volatility of hedge fund adviser returns displayed over the period under examination, the empirical evidence is robust. The discontinuity is not persistent and dissipates in the subsequent months after the registration effective date for hedge fund advisers."
  },
  {
   "id": "kaal:claim:2389416-038",
   "url": "https://wulfkaal.github.io/claims/2389416-038",
   "claim": "The finding that Dodd-Frank Act registration does not depress hedge fund returns is consistent with prior evidence that higher administrative costs are only a second-order effect of the regulation.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "argued",
   "scope_conditions": [
    "evidence in the prior study described as non-robust"
   ],
   "supporting_quote": "Kaal (2013a) finds non-robust evidence that the higher administrative costs imposed by the Dodd-Frank Act are a second-order effect of the regulation, thereby not affecting the overall returns of hedge funds."
  },
  {
   "id": "kaal:claim:2389416-039",
   "url": "https://wulfkaal.github.io/claims/2389416-039",
   "claim": "The mandatory registration requirement of the Dodd-Frank Act affects the hedge fund industry asymmetrically, with advisers whose AUM floats around the $150 million threshold showing evidence of strategic AUM reduction.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "advisers with AUM near the $150 million threshold"
   ],
   "supporting_quote": "Our regression analysis also suggests that the mandatory registration requirement imposed by the Dodd-Frank Act affects the hedge fund industry asymmetrically."
  },
  {
   "id": "kaal:claim:2389416-040",
   "url": "https://wulfkaal.github.io/claims/2389416-040",
   "claim": "The SEC's collection of proprietary hedge fund data through Forms ADV and PF does not negatively affect the performance of the hedge fund industry as a whole, and appears to affect only a subset of the industry.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416",
   "year": "2014",
   "source_sha256": "0e1c4615b104821577498d9655de43b9c5c3e985bb0215f56c038b8232be65c3",
   "confidence": "evidenced",
   "scope_conditions": [
    "preliminary results based on ten months of data",
    "does not address administrative cost effects"
   ],
   "supporting_quote": "The preliminary results in this study suggest that the SEC's collection of proprietary hedge fund data via Forms ADV and PF does not negatively impact the hedge fund industry's performance as a whole. It seems to affect merely a subset of the hedge fund industry."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-001",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-001",
   "claim": "Dynamic regulation is a supplemental regulatory tool, not a replacement for existing rulemaking: it increases the availability of relevant, institution specific, and decentralized information for rulemaking through feedback effects.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation",
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "asserted",
   "supporting_quote": "The concept of dynamic regulation in this article describes a supplemental regulatory tool that increases the availability of relevant, institution-specific, and decentralized information for rulemaking through feedback effects"
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-002",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-002",
   "claim": "Anticipatory dynamic elements in regulation reduce the need for costly and suboptimal ex post trial and error experimentation with stable and presumptively optimal rules.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "dynamic elements are integrated into the existing rulemaking framework"
   ],
   "supporting_quote": "Anticipatory dynamic elements in regulation can help minimize costly and suboptimal ex-post trial-and-error experimentation with stable and presump- tively optimal rules."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-003",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-003",
   "claim": "Rulemaking in a dynamic framework postpones the enactment of rules until rulemakers hold sufficient relevant and institution specific information, instead of proceeding by trial and error under incomplete information and bounded rationality.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "rulemakers are able to defer action",
    "information can in fact be accumulated ex ante"
   ],
   "supporting_quote": "Rather than engaging in suboptimal trial-and-error rulemaking under conditions of incomplete information and bounded rationality, rulemaking in a dynamic framework postpones enacting rules until rulemakers have sufficient relevant and institution-specific information for rulemaking"
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-004",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-004",
   "claim": "Dynamic elements function as an economizing device: they address the scarcity of regulatory resources and lower the cost of rulemaking by curtailing the collective action problem in rulemaking, the resulting regulatory cycles, and trial and error rulemaking.",
   "type": "mechanism",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "supporting_quote": "Dynamic elements in the regula- tory infrastructure can be conceptualized as an economizing device that addresses the scarcity of regulatory resources and lowers the cost of rule- making by curtailing the effects of a classic collective action problem in rule- making, resulting regulatory cycles"
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-005",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-005",
   "claim": "Because transaction costs, imperfect information, and bounded rationality shape the rulemaking process, even solutions that are optimal at enactment become unstable and suboptimal over time.",
   "type": "failure",
   "topics": [
    "economics",
    "institutional-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "rules are enacted as stable and presumptively optimal"
   ],
   "supporting_quote": "NIE recognizes that transaction costs, imperfect infor- mation, and bounded rationality impact the rulemaking process, rendering even optimal solutions to regulatory problems unstable and suboptimal over time"
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-006",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-006",
   "claim": "Under incomplete contract theory the rulemaking process is itself a learning process, and incomplete contracts are the instrument that carries that learning.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "asserted",
   "supporting_quote": "According to incomplete con- tract theory, the rulemaking process is a learning process facilitated by in- complete contracts17."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-007",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-007",
   "claim": "A core tenet of incomplete contract theory, that rulemakers should act only when sufficient information becomes available, is often politically, economically, and practically undesirable or impossible.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "supporting_quote": "a core tenet of incomplete contract theory – rulemakers should act when sufficient information becomes available – is often political- ly, economically, and practically undesirable or impossible"
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-008",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-008",
   "claim": "Because rulemaking is subject to regulatory cycles and to a classic collective action problem, rules are generally not enacted at the moment appropriate information for rulemaking becomes available.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "supporting_quote": "Because rulemak- ing is subject to regulatory cycles22 and a classic collective action problem23, rules are generally not enacted when appropriate information for rulemaking becomes available."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-009",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-009",
   "claim": "Experimentation with different rules under the current framework of stable rulemaking carries substantial costs of rule revision and enactment, and there is evidence that this framework does not protect against systemic shocks and financial crises.",
   "type": "failure",
   "topics": [
    "economics",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "evidenced",
   "scope_conditions": [
    "current framework of stable and presumptively optimal rules"
   ],
   "supporting_quote": "The costs of rule revision, rule enactment, and exper- imentation in the current framework of stable rulemaking are substantial, especially because there is some evidence25 that the existing rulemaking framework does not protect against systemic shocks and financial crises."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-010",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-010",
   "claim": "In the current model of stable rulemaking, path dependencies lead rulemakers to act on a boundedly rational assumption that they already control sufficient information for rulemaking.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "asserted",
   "scope_conditions": [
    "stable rulemaking without feedback processes"
   ],
   "supporting_quote": "In the current model of stable rulemaking, path dependencies may lead rulemakers to act based on a bound- edly rational assumption of control over sufficient information for rulemak- ing."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-011",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-011",
   "claim": "Private rulemakers hold a comparative informational advantage over public rulemakers because they can produce and react to necessary, comparable, decentralized, and institution specific information that public rulemakers cannot readily obtain.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "supporting_quote": "Private rule- makers often have a comparative advantage over public rulemakers because, unlike their public counterparts, they often can produce necessary, compara- ble, decentralized, and institution-specific information for rulemaking."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-012",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-012",
   "claim": "Interaction and exchange of emerging information between public and private rulemakers creates a feedback process that increases the availability, timeliness, and quality of information available to the public rulemaker.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "public and private rulemakers actually exchange emerging information"
   ],
   "supporting_quote": "Interaction between public rulemakers and private rulemakers, including the exchange of emerging information, creates a feed- back process between them that increases the availability, timeliness, and quality of information available to the public rulemaker."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-013",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-013",
   "claim": "The existing framework of stable and presumptively optimal rules is self reinforcing: it perpetuates rulemaking processes that produce stable presumptively optimal rules and therefore keeps generating costly rule revision, updating, and revocation.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "supporting_quote": "The existing framework for stable and presumptively optimal rules reinforces rulemaking processes that perpet- uate stable and presumptively optimal rules, necessitating costly rule revision, updating, and revocation."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-014",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-014",
   "claim": "Feedback effects allow the necessary information to be acquired ex ante and necessary revisions to be anticipated before rules emerge as suboptimal, rather than ex post after failure has become apparent.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "feedback processes are operating before enactment"
   ],
   "supporting_quote": "Rather than acquiring the necessary information ex-post after rules have emerged as suboptimal, feedback effects help increase the availability of rele- vant information for rulemaking ex-ante and anticipate necessary revisions before rules emerge as suboptimal"
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-015",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-015",
   "claim": "The trial and error approach to rulemaking structurally prevents rulemakers from obtaining relevant information ex ante, before rules are enacted.",
   "type": "failure",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "supporting_quote": "The trial-and-error approach53 to rulemaking does not allow rulemakers to attain relevant information for rule- making ex-ante, before rules are enacted."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-016",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-016",
   "claim": "The shortcomings of the existing rulemaking framework cannot be adequately addressed from within that framework, because its structure rests on the assumption that rules ought to be stable and presumptively optimal.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "supporting_quote": "They are unlikely to be adequately addressed within the existing institutional infrastructure be- cause the structure of the existing regulatory framework is based on the as- sumption that rules ought to be stable and presumptively optimal to address a given regulatory problem."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-017",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-017",
   "claim": "The inadaptability of stable and presumptively optimal rules intensifies competition between well organized special interest groups and latent groups, because inadaptable outcomes raise the stakes for both.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "rules are assumed to be stable and not easily adaptable"
   ],
   "supporting_quote": "The inadaptability of rules and the stable and presumptively optimal rulemak- ing in the current regulatory framework may intensify the competition be- tween the two groups because it increases the stakes for both interest groups."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-018",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-018",
   "claim": "Costly regulatory cycles become less likely if the regulatory framework integrates dynamically adapting elements, because rule revisions, revocations, and reenactments become less necessary.",
   "type": "condition",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "dynamic adapting elements are integrated into rulemaking"
   ],
   "supporting_quote": "Costly regulatory cycles are less likely to exist if the existing regulatory framework integrates dynamically adapting elements in the rulemaking process because rule revisions, revoca- tions, and reenactments become less likely."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-019",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-019",
   "claim": "Trial and error rulemaking could become obsolete if dynamic elements in rulemaking processes systematically anticipated future contingencies and the corresponding regulatory needs.",
   "type": "predictive",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "dynamic elements systematically anticipate future contingencies"
   ],
   "supporting_quote": "Trial-and-error-rulemaking could become obsolete if dynamic ele- ments in rulemaking processes systematically anticipated future contingencies and corresponding regulatory needs."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-020",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-020",
   "claim": "Contrary to the dominant view of corporate governance as a forward looking endeavor, dynamic governance structures are properly categorized as backward looking ex ante forms of corporate governance.",
   "type": "definitional",
   "topics": [
    "governance-design",
    "corporate-governance",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "within the theoretical framework of dynamic regulation"
   ],
   "supporting_quote": "By contrast, in the theoretical framework of dynamic regulation, dynamic gov- ernance structures can be categorized as backward-looking ex-ante forms of corporate governance."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-021",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-021",
   "claim": "Traditional forward looking corporate governance systems adopt backward looking perspectives only after stable and optimal rules have emerged as suboptimal and require replacement or amendment.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "traditional stable and presumptively optimal rulemaking infrastructure"
   ],
   "supporting_quote": "Traditional forward-looking corporate governance systems may take backward-looking perspectives if and when stable and optimal rules emerge as suboptimal, requiring replacement and/or amendment of existing regulatory solutions."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-022",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-022",
   "claim": "Governmental contracts are contractual arrangements between the government and a corporate entity under which the government imposes sanctions and institutional changes in exchange for foregoing further investigation and corporate criminal indictment.",
   "type": "definitional",
   "topics": [
    "compliance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "asserted",
   "scope_conditions": [
    "most commonly identifiable in non prosecution and deferred prosecution agreements"
   ],
   "supporting_quote": "Governmental contracts are contractual arrangements executed between the government and a corporate entity that allow the government to impose sanc- tions against the respective entity and set up institutional changes in exchange for the government's agreement to forego further investigation"
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-023",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-023",
   "claim": "Targeted use of governmental contracts allows the government to successfully reform corporate governance not only in individual public corporations but across entire industries.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "evidenced",
   "supporting_quote": "Empirical evidence suggests that the targeted use of governmental con- tracts allows the government to successfully reform corporate governance in public corporations and entire industries70."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-024",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-024",
   "claim": "Over 97 percent of the non and deferred prosecution agreements executed in the United States between 1993 and 2013 contained governance changes, including required business changes in 30 percent and board and senior management changes in 38 percent.",
   "type": "empirical",
   "topics": [
    "compliance",
    "governance-design",
    "corporate-governance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States N/DPAs executed between 1993 and 2013"
   ],
   "supporting_quote": "Over 97% of the N/DPAs executed in the United States between 1993 and 2013 contained governance changes, including required business changes (30%), board and senior management changes (38%"
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-025",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-025",
   "claim": "The governance improvements documented in governmental contracts counteract or at least discount the standard criticisms of them, including unequal bargaining power, the government's lack of governance expertise, and the potential for prosecutorial abuse.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "supporting_quote": "Concerns that may be dis- counted include the unequal bargaining power between the contracting par- ties78, the government's lack of governance expertise and training79, the po- tential for prosecutorial abuse80"
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-026",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-026",
   "claim": "More than 60 percent of the non and deferred prosecution agreements executed between 1993 and 2013 were preceded by preemptive remedial measures instituted by the corporate wrongdoer.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "evidenced",
   "scope_conditions": [
    "N/DPAs executed between 1993 and 2013"
   ],
   "supporting_quote": "Over 60% of N/DPAs executed between 1993 and 2013 instituted preemptive remedial measures prior to the execution of the N/DPA82."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-027",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-027",
   "claim": "The effectiveness of existing preemptive remedial measures is in question, because the majority of governmental contracts are executed only after those measures have already proved unsuccessful.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "evidenced",
   "supporting_quote": "the majority of governmental contracts are executed after preemptive remedial measures have proved unsuccessful85, calling into question the effectiveness of existing preemptive remedial measures."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-028",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-028",
   "claim": "If governmental contracts increasingly mandate replacement of boards and senior management, boards will have stronger incentives to make preemptive remedial measures effective.",
   "type": "predictive",
   "topics": [
    "corporate-governance",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "future governmental contracts continue and expand board and management replacement terms"
   ],
   "supporting_quote": "Should future governmental contracts increasingly mandate re- placement of boards and senior management (38% of governmental contracts from 1993 to 2013 replaced boards and management)86, boards may be fur- ther incentivized to optimize the effectiveness of preemptive remedial measures."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-029",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-029",
   "claim": "Because a governmental contract is executed only after wrongdoing has been identified and assessed, the parties can contract for governance improvements with relative precision, which reduces the amount of institution specific experimentation required and its transaction costs.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "wrongdoing has been investigated and assessed before contracting"
   ],
   "supporting_quote": "The assessment of corporate wrongdoing enables the parties to contract for governance im- provements with relative precision, allowing for less overall institution- specific experimentation and lower associated transaction costs."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-030",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-030",
   "claim": "Entity specific rulemaking via governmental contracts rests on a higher overall level of relevant and decentralized information than ordinary rulemaking, because the regulatory action follows an entity specific investigation of wrongdoing.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "supporting_quote": "Because regulatory action associated with governmental contracts is based on an entity-specific investigation of wrongdoing, entity- specific rulemaking via governmental contracts is usually based on a higher overall level of relevant and decentralized information for rulemaking."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-031",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-031",
   "claim": "Feedback processes associated with governmental contracts lower contractual incompleteness, because they raise the availability, timeliness, and quality of information while lowering the cost of contracting.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "supporting_quote": "Feedback processes associated with governmental contracts can lower contractual incompleteness because the feedback processes increase the degree of availability, timeliness, and quality of information and lower the cost of contracting."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-032",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-032",
   "claim": "Governmental contracts generate multilevel feedback processes across a sequence of stages: corporate self investigation, self reporting, preemptive remedial measures, negotiation, continuing wrongdoing, and execution of the contract.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "supporting_quote": "Governmental contracts facilitate multi- level feedback processes by way of corporate self-investigation, self- reporting, preemptive remedial measures, negotiation of governmental con- tracts, continuing wrongdoing, and execution of governmental contracts"
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-033",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-033",
   "claim": "Self reporting supplies institution specific information from which the government can identify governance shortcomings in the reporting entity and draw conclusions about regulatory needs across the entity's industry.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "corporate wrongdoers self investigate and self report"
   ],
   "supporting_quote": "Based on the additional institution-specific information made available through self- reporting, the government can identify institution-specific governance short- comings and draw conclusions about regulatory needs in the respective indus- tries."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-034",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-034",
   "claim": "Preemptive remedial measures have a low success rate, as evidenced by the fact that more than 60 percent of deferred and non prosecution agreements executed between 1993 and 2013 refer to preemptive remedial measures that preceded them.",
   "type": "failure",
   "topics": [
    "empirical-evidence",
    "compliance",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "evidenced",
   "scope_conditions": [
    "D/NPAs executed between 1993 and 2013"
   ],
   "supporting_quote": "The low success rate of preemptive re- medial measures, evidenced by the fact that over 60% of D/NPA executed between 1993 and 2013 refer to preemptive remedial measures103"
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-035",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-035",
   "claim": "Negotiation of a governmental contract produces indirect information transfers, because the government can deduce from where the corporate wrongdoer places negotiating emphasis which governance shortcomings most need remedying.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "the parties negotiate contract terms rather than accept imposed terms"
   ],
   "supporting_quote": "Indirect information transfers and feedback effects may exist because the government may be able to deduce from the emphasis of the corporate wrongdoer's negotiations what particular governance shortcomings need par- ticular remedying."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-036",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-036",
   "claim": "Regulators can extract industry specific guidance for rulemaking from the quantity of governmental contracts executed in a given industry and from the frequency of particular industry specific terms in those contracts.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "multiple governmental contracts exist within the same industry"
   ],
   "supporting_quote": "Regulators may receive industry-specific guidance for rulemaking from the quantity of exe- cuted governmental contracts pertaining to a particular industry and the quan- tity of particular (industry-specific) terms in the governmental contracts per- taining to that industry."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-037",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-037",
   "claim": "Tailoring regulatory solutions to identified regulatory necessities through governmental contracts and then observing how those solutions perform over time lets rulemakers anticipate regulatory demands, which is institution specific ex ante experimentation.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "regulatory necessities can be ascertained from improved institution specific information"
   ],
   "supporting_quote": "Tailor- ing regulatory solutions to ascertainable regulatory necessities via govern- mental contracts and observing how these regulatory solutions function over time in governmental contracts allows rulemakers to anticipate regulatory demands"
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-038",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-038",
   "claim": "Three mutually reinforcing phases of governmental contracts, investigation and self reporting, negotiation of terms, and execution and enforcement, raise the quality and quantity of institution specific information and the extent to which insights transfer to other firms.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "supporting_quote": "Three mutually reinforcing core phases of governmental contracts increase the quality and quantity of institution-specific information and the corre- sponding extent of transferability of insights."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-039",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-039",
   "claim": "Investigation, self reporting, and preemptive remedial measures enable anticipation of future contingencies for rulemaking, because investigating additional institutions in the same industry lets the government pinpoint the exact need for regulation more precisely.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "scope_conditions": [
    "the government investigates multiple institutions within one industry"
   ],
   "supporting_quote": "Investigation, self- reporting, and preemptive remedial measures facilitate anticipation of future contingencies for rulemaking because the government by investigating addi- tional institutions in the same industry can pinpoint more precisely the exact need for regulation."
  },
  {
   "id": "kaal:claim:kaal-2014-dynamicregulationviagove-040",
   "url": "https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-040",
   "claim": "Dynamic governance structures involving governmental contracts are backward looking because the multilevel feedback effects they generate require an exchange of information about past events in order to anticipate future regulatory contingencies.",
   "type": "definitional",
   "topics": [
    "governance-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Governmental Contracts (2014)",
   "year": "2014",
   "source_sha256": "7320aec036ccf2f6739f0854ea8749903e8902e77c2ec39543b64b358459c408",
   "confidence": "argued",
   "supporting_quote": "Dynamic governance structures involving governmental contracts are back- ward-looking because multilevel feedback effects associated with govern- mental contracts necessitate an exchange of information pertaining to past events to anticipate future regulatory contingencies."
  },
  {
   "id": "kaal:claim:2447306-001",
   "url": "https://wulfkaal.github.io/claims/2447306-001",
   "claim": "Title IV of the Dodd-Frank Act and the SEC rules implementing it produced a paradigm shift in United States private fund regulation, raising regulatory oversight of an industry that had been largely exempt to unprecedented levels.",
   "type": "definitional",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "asserted",
   "scope_conditions": [
    "United States private funds after the 2010 enactment of Title IV"
   ],
   "supporting_quote": "Title IV and Securities and Exchange Commission (SEC) rules implementing the requirements under Title IV created a paradigm shift for the regulation of private funds in the United States, increasing the level of regulatory oversight to unprecedented levels."
  },
  {
   "id": "kaal:claim:2447306-002",
   "url": "https://wulfkaal.github.io/claims/2447306-002",
   "claim": "The Form PF filing obligation is triggered by a bright line asset threshold: every registered investment adviser with more than $150 million in assets under management attributable to private funds at the end of its most recently completed fiscal year must file.",
   "type": "definitional",
   "topics": [
    "private-funds",
    "disclosure",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "asserted",
   "scope_conditions": [
    "SEC-registered investment advisers",
    "assets under management attributable to private funds"
   ],
   "supporting_quote": "All registered investment advisers holding more than $150 million in assets under management (AUM) attributable to private funds at the end of their most recently completed fiscal year, are required to file Form PF with the SEC."
  },
  {
   "id": "kaal:claim:2447306-003",
   "url": "https://wulfkaal.github.io/claims/2447306-003",
   "claim": "Form PF's counterparty credit exposure requirement is difficult to satisfy at the source, because the exposure is highly sensitive information that individual fund managers often cannot readily determine.",
   "type": "failure",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "asserted",
   "scope_conditions": [
    "Form PF counterparty credit exposure disclosures"
   ],
   "supporting_quote": "For instance, the disclosure of counterparty credit exposure is sensitive information that can often not readily be determined by the individual fund managers."
  },
  {
   "id": "kaal:claim:2447306-004",
   "url": "https://wulfkaal.github.io/claims/2447306-004",
   "claim": "If advisers' allegations that Form PF disclosures cannot be answered other than by guessing are correct, then the SEC's capacity to evaluate the data is compromised, and regulation built on incomplete and misleading data will itself be questionable.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "argued",
   "scope_conditions": [
    "conditional on the accuracy of anecdotal reports from advisers"
   ],
   "supporting_quote": "If these allegations should be true, the SEC's ability to evaluate and assess the data could be compromised. The use of incomplete and misleading data could lead to the development of questionable policies and regulations applicable to the private fund industry."
  },
  {
   "id": "kaal:claim:2447306-005",
   "url": "https://wulfkaal.github.io/claims/2447306-005",
   "claim": "Prior scholarship, including the author's own earlier work, established that Form PF created core challenges for the private fund industry but did not clarify what impact the disclosure requirements actually have on managers; this study is designed to fill that gap.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "law-and-legal-systems",
    "empirical-evidence",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "argued",
   "scope_conditions": [
    "literature available before the first mandatory Form PF collection"
   ],
   "supporting_quote": "While prior studies have acknowledged that the SEC's mandated collection of private fund data via Form PF created several core challenges for the private fund industry, these studies do not sufficiently clarify the impact of Form PF disclosure requirements on managers."
  },
  {
   "id": "kaal:claim:2447306-006",
   "url": "https://wulfkaal.github.io/claims/2447306-006",
   "claim": "High quality private fund data is scarce because the industry's entrenched interest in confidentiality combined with decades of regulatory exemption from registration and transparency requirements left no reservoir of comparable disclosure to study.",
   "type": "mechanism",
   "topics": [
    "economics",
    "private-funds",
    "empirical-evidence",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "argued",
   "scope_conditions": [
    "empirical research on the private fund industry"
   ],
   "supporting_quote": "Because of the private fund industry's particular interest in confidentiality and privacy and decades-old regulations that allowed the industry to remain exempt from registration and transparency requirements, high quality private fund data are rather limited."
  },
  {
   "id": "kaal:claim:2447306-007",
   "url": "https://wulfkaal.github.io/claims/2447306-007",
   "claim": "Enlarging the sample does not cure selection bias in non-statistical sampling: a bigger sample neither compensates for the bias of non-statistical techniques nor guarantees that the sample is representative.",
   "type": "failure",
   "topics": [
    "empirical-evidence",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "non-statistical or haphazard sampling techniques"
   ],
   "supporting_quote": "Increasing the sample size does not necessarily compensate for the potential selection bias of non-statistical techniques or guarantee the representativeness of the sample."
  },
  {
   "id": "kaal:claim:2447306-008",
   "url": "https://wulfkaal.github.io/claims/2447306-008",
   "claim": "Further randomization of the sample was not available as a remedy, because respondents drawn from outside the private fund adviser population would never have been exposed to the new disclosure requirements and so could say nothing about them.",
   "type": "condition",
   "topics": [
    "empirical-evidence",
    "private-funds",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "argued",
   "scope_conditions": [
    "surveys measuring the experience of complying with a new disclosure regime"
   ],
   "supporting_quote": "It would not have been feasible to further randomize the sample by including respondents from outside of the private fund industry or respondents other than private fund advisers because those non-adviser respondents would not have been exposed to the new disclosure requirements."
  },
  {
   "id": "kaal:claim:2447306-009",
   "url": "https://wulfkaal.github.io/claims/2447306-009",
   "claim": "The near identity between respondents who reported completing Sections 2 through 5 of Form PF and respondents who reported quarterly filing shows the answers are internally consistent, which the author treats as evidence that the survey responses carry above average reliability.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems",
    "empirical-evidence",
    "private-funds",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "comparison of survey Questions 2 and 3",
    "n=52 respondents"
   ],
   "supporting_quote": "The comparison of Questions 2 and 3 thus illustrates that the responses to both questions are internally consistent. The internal consistency of these responses suggests that the survey responses have an above average reliability."
  },
  {
   "id": "kaal:claim:2447306-010",
   "url": "https://wulfkaal.github.io/claims/2447306-010",
   "claim": "Despite contacting the entire population of 3669 SEC-registered private fund advisers by fax and e-mail over more than five months, the study obtained only 52 respondents, a response rate of 0.014 percent.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey fielded after the first mandatory Form PF filing deadline"
   ],
   "supporting_quote": "After multiple attempts to reach the entire population in over five months, respondents ([n=52]) (0.014%) answered questions in several categories designed to identify the effectiveness of Form PF."
  },
  {
   "id": "kaal:claim:2447306-011",
   "url": "https://wulfkaal.github.io/claims/2447306-011",
   "claim": "Advisers themselves understand Form PF's purpose the way the statute frames it: most respondents identified assessing systemic risk and closing the historical information gap about private funds as the form's purpose.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey Question 10"
   ],
   "supporting_quote": "Most advisers assert that the purpose of Form PF is to assess systemic risk and address the lack of information regarding private funds."
  },
  {
   "id": "kaal:claim:2447306-012",
   "url": "https://wulfkaal.github.io/claims/2447306-012",
   "claim": "Initial Form PF compliance was inexpensive for most filers: 59.18 percent of respondents put the total cost of completing Form PF for the first time under $10,000.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "n=52 survey respondents",
    "first-time Form PF filing"
   ],
   "supporting_quote": "The majority of respondents (59.18%) indicated that the total estimated cost of first time Form PF completion was under $10,000.00."
  },
  {
   "id": "kaal:claim:2447306-013",
   "url": "https://wulfkaal.github.io/claims/2447306-013",
   "claim": "Form PF compliance cost is sharply size dependent: quarterly filing large funds spent on average $155,286 on the initial filing, roughly sixteen times the $9,520 average reported by annually filing smaller funds.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "initial Form PF filing",
    "small sample of large quarterly filers"
   ],
   "supporting_quote": "Quarterly filing large funds spent on average $155,286 for the initial filing of Form PF. By contrast, annually filing smaller funds only spend on average $9,520 for the first time filing of Form PF."
  },
  {
   "id": "kaal:claim:2447306-014",
   "url": "https://wulfkaal.github.io/claims/2447306-014",
   "claim": "Measured against this study's survey data, the SEC marginally overestimated the cost of the initial Form PF filing for both annually filing smaller advisers and quarterly filing larger advisers.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "private-funds",
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "comparison with SEC estimates in 76 Fed. Reg. 71128-01",
    "data for larger advisers rests on a small sample"
   ],
   "supporting_quote": "The cross-comparison suggests that the SEC may be marginally overestimating the cost of Form PF filings for both annually filing smaller private fund advisers and quarterly filing larger private fund advisers."
  },
  {
   "id": "kaal:claim:2447306-015",
   "url": "https://wulfkaal.github.io/claims/2447306-015",
   "claim": "Recurring Form PF cost is also size dependent: quarterly filing large fund advisers pay on average $72,143 for subsequent filings while smaller advisers spend on average $5,262.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "subsequent, post initial Form PF filings",
    "small sample of large quarterly filers"
   ],
   "supporting_quote": "Quarterly filing large fund advisers on average pay $72,143 for subsequent Form PF filings. Smaller private fund advertiser, on the other hand, spent only on average $5,262 for subsequent Form PF filings."
  },
  {
   "id": "kaal:claim:2447306-016",
   "url": "https://wulfkaal.github.io/claims/2447306-016",
   "claim": "For quarterly filing larger private fund advisers, the SEC substantially overestimated the cost of subsequent Form PF filings; the survey's estimate is roughly half of what the SEC projected.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "private-funds",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "subsequent Form PF filings by large advisers",
    "based on a small sample of larger advisers"
   ],
   "supporting_quote": "With regards to quarterly filing larger private fund advisers, however, the SEC appears to be substantially overestimating the cost of subsequent Form PF filings."
  },
  {
   "id": "kaal:claim:2447306-017",
   "url": "https://wulfkaal.github.io/claims/2447306-017",
   "claim": "The SEC's error runs in the opposite direction for small advisers on recurring filings: the agency marginally underestimated the cost of subsequent Form PF filings for annually filing smaller private fund advisers.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "subsequent Form PF filings by annually filing smaller advisers"
   ],
   "supporting_quote": "The cross-comparison suggests that the SEC may be marginally underestimating the cost of Form PF filings for annually filing smaller private fund advisers."
  },
  {
   "id": "kaal:claim:2447306-018",
   "url": "https://wulfkaal.github.io/claims/2447306-018",
   "claim": "The SEC's time burden estimates for Form PF are miscalibrated in the same direction as its cost estimates for large filers: the study's data suggest the agency overestimates the hours larger private fund advisers need.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "compliance",
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "relatively small sample of quarterly filing larger private fund advisers"
   ],
   "supporting_quote": "However, the relatively small sample of quarterly filing larger private fund advisers in this study suggest that the SEC may be overestimating the time requirements of Form PF filings for larger private fund advisers."
  },
  {
   "id": "kaal:claim:2447306-019",
   "url": "https://wulfkaal.github.io/claims/2447306-019",
   "claim": "Form PF compliance is not staff intensive for most filers: 67.35 percent of respondents used only one to three individuals and 69.39 percent reported the work took staff less than 50 hours.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "n=52 survey respondents",
    "first-time Form PF completion"
   ],
   "supporting_quote": "A majority of respondents (67.35%) used only one to three individuals to complete Form PF. Similarly, a majority of respondents (69.39%) indicated that it took staff less than 50 hours to complete Form PF."
  },
  {
   "id": "kaal:claim:2447306-020",
   "url": "https://wulfkaal.github.io/claims/2447306-020",
   "claim": "The Form PF burden is concentrated in a few identifiable items: respondents ranked Question 16 on types of investors as the most time consuming, followed by Question 17 on performance and Question 7 on related persons.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey Question 14a"
   ],
   "supporting_quote": "Among all Form PF questions that were identified as time-consuming, respondents indicated that Form PF Question 16 (types of investors) took the most time to answer, followed by Form PF Question 17 (performance), and Form PF Question 7 (related persons)."
  },
  {
   "id": "kaal:claim:2447306-021",
   "url": "https://wulfkaal.github.io/claims/2447306-021",
   "claim": "The dominant driver of Form PF time consumption is data gathering rather than form completion: 36 percent of respondents named data gathering as the task consuming most of their time, followed by delta options and ambiguous questions or unclear instructions.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "open-ended responses to survey Question 14b"
   ],
   "supporting_quote": "The majority of respondents (36%) identified \"Data Gathering\" as the task on which they spent the majority of their time, followed by references to \"Delta Options\" and \"Ambiguous questions / unclear instructions\"."
  },
  {
   "id": "kaal:claim:2447306-022",
   "url": "https://wulfkaal.github.io/claims/2447306-022",
   "claim": "Asked what the SEC should fix first, respondents named the burdensome nature and the ambiguity of Form PF as the most pressing issues, not the substance of what is disclosed.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "empirical-evidence",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey Question 9"
   ],
   "supporting_quote": "Respondents identified the burdensome nature and the ambiguity of Form PF as the most pressing issues with Form PF."
  },
  {
   "id": "kaal:claim:2447306-023",
   "url": "https://wulfkaal.github.io/claims/2447306-023",
   "claim": "Complaints about Form PF's ambiguity coexist with acceptance of its substance: the same majority that flagged ambiguity as the most pressing issue also considered their existing reporting systems adequate and agreed with the SEC's definitions and instructions.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "securities-law",
    "disclosure",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "n=52 survey respondents"
   ],
   "supporting_quote": "However, the majority of respondents also considered their existing reporting systems adequate for capturing the information required by the SEC and agreed with the SEC's definitions and instructions for Form PF."
  },
  {
   "id": "kaal:claim:2447306-024",
   "url": "https://wulfkaal.github.io/claims/2447306-024",
   "claim": "Form PF's definition of leverage is overinclusive: respondents reported that it is inappropriately constructed and sweeps in funds that use neither leverage nor derivative securities.",
   "type": "failure",
   "topics": [
    "private-funds",
    "empirical-evidence",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to follow-up survey Question 6b(ii)"
   ],
   "supporting_quote": "Several respondents suggested that the definition of leverage is inappropriately constructed and can include funds that don't use leverage or any derivative securities."
  },
  {
   "id": "kaal:claim:2447306-025",
   "url": "https://wulfkaal.github.io/claims/2447306-025",
   "claim": "Regulatory assets under management is an unstable reporting concept: commenters split evenly on whether Form PF's RAUM questions required them to interpret the term in order to answer.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey Question 19"
   ],
   "supporting_quote": "Commenters were equally split on whether Form PF questions pertaining to calculating RAUM required filers to interpret RAUM for purposes of completing Form PF."
  },
  {
   "id": "kaal:claim:2447306-026",
   "url": "https://wulfkaal.github.io/claims/2447306-026",
   "claim": "Contrary to the industry's public complaints about SEC support, a majority of respondents rated the best level of SEC staff guidance available for completing Form PF as sufficient or good.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey Question 13"
   ],
   "supporting_quote": "A majority of respondents assessed the best level of SEC guidance in the context of their Form PF completion as sufficient or good."
  },
  {
   "id": "kaal:claim:2447306-027",
   "url": "https://wulfkaal.github.io/claims/2447306-027",
   "claim": "Where SEC guidance failed, the failure was localized: respondents who found guidance inadequate pointed predominantly to Form PF Section 1c, Item B, which concerns information about the reporting fund.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "private-funds",
    "disclosure",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "respondents who rated SEC guidance inadequate",
    "responses to survey Question 13b"
   ],
   "supporting_quote": "The majority of the commenters who believed that SEC guidance was inadequate indicated that SEC guidance was particularly unclear with respect to Form PF Section 1c, Item B (regarding Reporting Funds)."
  },
  {
   "id": "kaal:claim:2447306-028",
   "url": "https://wulfkaal.github.io/claims/2447306-028",
   "claim": "SEC flexibility in answering Form PF questions is valued by filers: 72.92 percent of respondents said the flexibility the SEC provides is helpful.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "private-funds",
    "empirical-evidence",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey Question 7a"
   ],
   "supporting_quote": "Most respondents (72.92%) agreed that the SEC's flexibility in answering questions with respect to Form PF was helpful."
  },
  {
   "id": "kaal:claim:2447306-029",
   "url": "https://wulfkaal.github.io/claims/2447306-029",
   "claim": "SEC flexibility helps filers through a specific mechanism: it authorizes advisers to apply their own internal methodologies when interpreting and answering Form PF questions and to state their own assumptions, rather than forcing them onto an unfamiliar measurement basis.",
   "type": "mechanism",
   "topics": [
    "research-methods",
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to follow-up survey Question 7a(i)"
   ],
   "supporting_quote": "the most significant benefits of SEC flexibility were that respondents believed they were authorized to use their internal methodologies to interpret and respond to questions, and to articulate their assumptions"
  },
  {
   "id": "kaal:claim:2447306-030",
   "url": "https://wulfkaal.github.io/claims/2447306-030",
   "claim": "Regulatory flexibility can backfire: a category of respondents reported that the flexibility the SEC provides is not useful precisely because it is unclear and generates confusion.",
   "type": "failure",
   "topics": [
    "private-funds",
    "securities-law",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "minority of respondents to survey Question 7a(ii)",
    "low overall response rate to this question"
   ],
   "supporting_quote": "Another category of responses indicated that the flexibility provided by the SEC is not useful because it is not clear and creates confusion."
  },
  {
   "id": "kaal:claim:2447306-031",
   "url": "https://wulfkaal.github.io/claims/2447306-031",
   "claim": "Most private fund advisers did not need new infrastructure to comply: 65.22 percent reported that their existing internal reporting systems adequately capture the information Form PF requires.",
   "type": "empirical",
   "topics": [
    "disclosure",
    "private-funds",
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey Question 15"
   ],
   "supporting_quote": "A majority of respondents (65.22%) stated that their existing internal reporting systems adequately capture the information required by Form PF."
  },
  {
   "id": "kaal:claim:2447306-032",
   "url": "https://wulfkaal.github.io/claims/2447306-032",
   "claim": "For a substantial minority, existing systems fail Form PF for a specific reason: 34.78 percent of respondents said their internal reporting systems were insufficient because the required answers demand further analysis and calculation beyond what the systems already produce.",
   "type": "failure",
   "topics": [
    "disclosure",
    "private-funds",
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey Question 15 and follow-up 15b"
   ],
   "supporting_quote": "Several respondents (34.78%) opined that their existing internal reporting systems were insufficient to respond to questions on Form PF because they require further analysis and calculations."
  },
  {
   "id": "kaal:claim:2447306-033",
   "url": "https://wulfkaal.github.io/claims/2447306-033",
   "claim": "Form PF's counterparty disclosure proved far less burdensome in practice than anticipated: 93.75 percent of respondents encountered no difficulty identifying counterparties for the counterparty credit exposure questions.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "empirical-evidence",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey Question 16b",
    "predominantly smaller, annually filing advisers"
   ],
   "supporting_quote": "Figure 35 shows that the overwhelming majority of respondents (93.75%) did not encounter difficulties in identifying counterparties to answer Form PF questions about counterparty credit exposure."
  },
  {
   "id": "kaal:claim:2447306-034",
   "url": "https://wulfkaal.github.io/claims/2447306-034",
   "claim": "Because only 27.08 percent of respondents used a service provider to complete Form PF, the widespread concern that outside service providers would overinterpret required Form PF data on filers' behalf appears unjustified.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "argued",
   "scope_conditions": [
    "responses to survey Question 11"
   ],
   "supporting_quote": "This seems to suggest that concerns over service providers (over)interpreting required Form PF data on behalf of filers, among other concerns over service providers' completing Form PF, may not be justified."
  },
  {
   "id": "kaal:claim:2447306-035",
   "url": "https://wulfkaal.github.io/claims/2447306-035",
   "claim": "Working with a service provider imposes its own costs: filers reported that the arrangement requires investing time and money to develop interaction processes and bearing the burden of supplying the provider with the underlying information.",
   "type": "failure",
   "topics": [
    "private-funds",
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "respondents who used a service provider",
    "responses to survey Question 11b(ii)"
   ],
   "supporting_quote": "Commenters identified several challenges in working with a service-provider, including the investment of time and expenses to develop processes, and the burden of providing service-providers with the required information."
  },
  {
   "id": "kaal:claim:2447306-036",
   "url": "https://wulfkaal.github.io/claims/2447306-036",
   "claim": "Investor demand for Form PF filings is limited: 74.47 percent of respondents had never been asked by an investor for a copy of their Form PF filing.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey Question 17",
    "within the first year of Form PF filing"
   ],
   "supporting_quote": "Figure 38 shows that a majority of respondents (74.47%) in the sample have not been asked by their investors to provide a copy of their Form PF filing."
  },
  {
   "id": "kaal:claim:2447306-037",
   "url": "https://wulfkaal.github.io/claims/2447306-037",
   "claim": "Form PF fund performance metrics are not accurate or comparable across filers, because reporting entities employ different calculation methodologies to produce them.",
   "type": "failure",
   "topics": [
    "disclosure",
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "Form PF Item C, Question 17 on reporting fund performance"
   ],
   "supporting_quote": "Several respondents mentioned Form PF Item C., Question 17 (Reporting Fund Performance), suggesting that existing Form PF fund performance metrics are not accurate because the reporting entities employ different calculation methodologies."
  },
  {
   "id": "kaal:claim:2447306-038",
   "url": "https://wulfkaal.github.io/claims/2447306-038",
   "claim": "Respondents argued that the SEC's systemic risk objective would have been advanced more directly by asking a smaller set of targeted questions, emphasizing open derivatives positions, the entity's total market exposure, and its total underlying capital.",
   "type": "design",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "private-funds",
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "open-ended responses to survey Question 8b"
   ],
   "supporting_quote": "the SEC's objective of limiting systemic risk could have been better more strongly advanced by asking questions in Form PF with an emphasis on open derivatives positions,56 total market exposure of the entity, and total underlying capital."
  },
  {
   "id": "kaal:claim:2447306-039",
   "url": "https://wulfkaal.github.io/claims/2447306-039",
   "claim": "The measured effect of Form PF data reporting on the private fund industry is milder than the pre-adoption debate predicted.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "evidenced",
   "scope_conditions": [
    "first year of mandatory Form PF filing",
    "n=52 respondents"
   ],
   "supporting_quote": "The findings of this study suggest that the overall effect of Form PF data reporting requirements on the private fund industry may be less severe than widely expected."
  },
  {
   "id": "kaal:claim:2447306-040",
   "url": "https://wulfkaal.github.io/claims/2447306-040",
   "claim": "On the cost evidence collected here for both smaller and larger advisers, the industry's long standing objection that mandatory registration and disclosure would inappropriately burden investment advisers is mostly unfounded.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "argued",
   "scope_conditions": [
    "cost data from this survey",
    "short-run costs only"
   ],
   "supporting_quote": "the industry's concerns that mandatory private fund adviser registration and disclosure requirements could inappropriately burden investment advisers59 seem to be mostly unfounded."
  },
  {
   "id": "kaal:claim:2447306-041",
   "url": "https://wulfkaal.github.io/claims/2447306-041",
   "claim": "Most of the identified problems with Form PF are self correcting over time, as the SEC issues additional and improved guidance or revises the core questions and definitions that filers flagged as problematic.",
   "type": "predictive",
   "topics": [
    "securities-law",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "speculative",
   "scope_conditions": [
    "assumes the SEC continues to issue guidance and revise the form"
   ],
   "supporting_quote": "Most of the problems may be addressed over time as the SEC provides additional and improved guidance on Form PF or revises core questions and/or definitions pertaining to core questions that have been identified as problematic."
  },
  {
   "id": "kaal:claim:2447306-042",
   "url": "https://wulfkaal.github.io/claims/2447306-042",
   "claim": "Standardizing private fund adviser reporting obligations is the author's proposed remedy for the shortcomings advisers identified, because standardization attacks the ambiguity and inefficiency in the reporting requirements at their source and simplifies the disclosure regime.",
   "type": "design",
   "topics": [
    "private-funds",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "argued",
   "scope_conditions": [
    "private fund adviser reporting obligations under Form PF"
   ],
   "supporting_quote": "Standardization may help address the ambiguities and inefficiencies that currently exist in the reporting requirements and help simplify and streamline the disclosure requirements for the private fund industry."
  },
  {
   "id": "kaal:claim:2447306-043",
   "url": "https://wulfkaal.github.io/claims/2447306-043",
   "claim": "A single standardized reporting model will not suffice: because different types of private fund advisers have competing needs, policy makers should evaluate several different models for standardizing Form PF reporting.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "argued",
   "scope_conditions": [
    "heterogeneous private fund adviser population"
   ],
   "supporting_quote": "To adequately address the competing needs of different types of private fund advisers, policy-makers should consider different models for standardization of Form PF reporting requirements."
  },
  {
   "id": "kaal:claim:2447306-044",
   "url": "https://wulfkaal.github.io/claims/2447306-044",
   "claim": "The study's cost findings are bounded to the short run: the data cannot establish what it will cost the private fund industry to keep completing and filing Form PF annually or quarterly over time.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Disclosures Under the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2447306",
   "year": "2014",
   "source_sha256": "0c950d73240845e78faf1c3ca0ab820fcc50556faf7ff07f7f773d0876f0be8a",
   "confidence": "asserted",
   "scope_conditions": [
    "data collected during a six month period after the initial filing deadline"
   ],
   "supporting_quote": "The data does not identify the long-term costs for the private fund industry of having to complete and file Form PF on an annual or quarterly basis."
  },
  {
   "id": "kaal:claim:2486570-001",
   "url": "https://wulfkaal.github.io/claims/2486570-001",
   "claim": "The increasing use of non prosecution and deferred prosecution agreements has allowed federal prosecutors to expand their traditional role incrementally, marking a shift in prosecutorial culture away from an ex post focus on punishment toward an ex ante emphasis on compliance.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "has enabled federal prosecutors to incrementally expand their traditional role, exemplifying a shift in prosecutorial culture from an ex-post focus on punish- ment to an ex-ante emphasis on compliance."
  },
  {
   "id": "kaal:claim:2486570-002",
   "url": "https://wulfkaal.github.io/claims/2486570-002",
   "claim": "Prior scholarship on the corporate governance effects of non and deferred prosecution agreements rests largely on anecdotal evidence and individual case studies rather than on systematic evidence, which is why its conclusions about those effects are unreliable.",
   "type": "failure",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "compliance",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "The evaluation of issues pertaining to the effect of N/DPAs on corporate governance in prior studies is largely based on anecdotal evidence and valuable case studies."
  },
  {
   "id": "kaal:claim:2486570-003",
   "url": "https://wulfkaal.github.io/claims/2486570-003",
   "claim": "Because the population of executed non and deferred prosecution agreements is now large, their real trends and real governance impact are quantifiable and measurable, so policy makers can be given evidence based guidance rather than conjecture.",
   "type": "design",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "compliance",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "scope_conditions": [
    "requires access to publicly available executed N/DPAs in sufficient number"
   ],
   "supporting_quote": "given the large number of N/DPAs, the real trends and the real impact of N/DPAs are quantifiable and measurable, giving real guidance to policy makers."
  },
  {
   "id": "kaal:claim:2486570-004",
   "url": "https://wulfkaal.github.io/claims/2486570-004",
   "claim": "Once prosecutors have investigated and identified corporate wrongdoing, non and deferred prosecution agreements let them avoid an expensive trial against a sophisticated and well funded corporate defendant, which is one reason both sides have strong incentives to settle.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "compliance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "prosecutors have investigated and identified corporate wrongdoing, they can use N/DPAs to avoid an expensive trial against a sophisticated and well-funded cor- porate defendant."
  },
  {
   "id": "kaal:claim:2486570-005",
   "url": "https://wulfkaal.github.io/claims/2486570-005",
   "claim": "Prosecutors favor non and deferred prosecution agreements because those agreements avoid the uncertainty of potentially catastrophic collateral consequences for the company, unlike an indictment.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "Second, prosecutors favor N/DPAs because they do not entail the uncertainty of potentially catastrophic collateral consequences for the company."
  },
  {
   "id": "kaal:claim:2486570-006",
   "url": "https://wulfkaal.github.io/claims/2486570-006",
   "claim": "Existing corporate criminal liability combined with the absence of clear Department of Justice standards for charging businesses can push organizations to adopt unproven compliance programs and generate other inefficiencies.",
   "type": "failure",
   "topics": [
    "compliance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "scope_conditions": [
    "holds where DOJ charging standards remain vague"
   ],
   "supporting_quote": "The existing corporate criminal liability in combination with a lack of clear DOJ standards for charging businesses may also lead organizations to adopt unproven compliance programs and create other inefficiencies."
  },
  {
   "id": "kaal:claim:2486570-007",
   "url": "https://wulfkaal.github.io/claims/2486570-007",
   "claim": "The authors contest the conventional wisdom that a corporate criminal indictment amounts to a corporate death penalty, pointing to recent guilty pleas in which BNP Paribas paid a record fine and Credit Suisse kept its investment banking license.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "evidenced",
   "supporting_quote": "Several recent plea deals call into question the 'death penalty' the- ory."
  },
  {
   "id": "kaal:claim:2486570-008",
   "url": "https://wulfkaal.github.io/claims/2486570-008",
   "claim": "At the pre charging stage the government typically holds extraordinary bargaining power, which lets it extract fines and sanctions comparable to those following a criminal conviction while avoiding the risk and cost of trial.",
   "type": "mechanism",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "scope_conditions": [
    "applies at the pre charging stage"
   ],
   "supporting_quote": "The government typically has extraordinary bargaining power at the pre-charging stage, enabling it to extract fines and sanctions similar to those from a criminal conviction69 without the risk and cost of a trial."
  },
  {
   "id": "kaal:claim:2486570-009",
   "url": "https://wulfkaal.github.io/claims/2486570-009",
   "claim": "The McCallum Memorandum failed as a corrective because it only supplemented rather than replaced the Thompson Memorandum and did little if anything to curb the widespread use of attorney client and work product privilege waivers in deferred prosecution agreements.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "McCallum Memo did not replace the Thompson Memorandum; it only supple- mented it and did little, if anything, to quell the widespread use of attorney-client and work-product privilege waivers in DPAs."
  },
  {
   "id": "kaal:claim:2486570-010",
   "url": "https://wulfkaal.github.io/claims/2486570-010",
   "claim": "The McNulty Memorandum did not resolve the privilege waiver problem because it still left prosecutors ample opportunity to treat a corporate defendant's unwillingness to waive attorney client privilege as bearing on cooperation, and its attorney's fees provision had similar shortcomings.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "The McNulty Memoran- dum still provided ample opportunity for prosecutors to use the corporate de- fendant's lack of willingness to waive attorney-client privilege in the cooperation determination126"
  },
  {
   "id": "kaal:claim:2486570-011",
   "url": "https://wulfkaal.github.io/claims/2486570-011",
   "claim": "Coding of all publicly available non and deferred prosecution agreements executed between 1993 and 2013 shows that 97.41 percent of them, or 264 of 271 agreements, contained relevant corporate governance changes.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "governance-design",
    "corporate-governance",
    "compliance",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "evidenced",
   "scope_conditions": [
    "publicly available N/DPAs only",
    "sample period 1993 to 2013"
   ],
   "supporting_quote": "we show that 97.41 percent [N=264] of the public N/DPAs from 1993–2013 con- tained relevant corporate governance changes."
  },
  {
   "id": "kaal:claim:2486570-012",
   "url": "https://wulfkaal.github.io/claims/2486570-012",
   "claim": "The sharp proliferation of non and deferred prosecution agreements after 2002 is explained by a cluster of events: the collapse of Enron, the dismantling of Arthur Andersen, the creation of the Corporate Fraud Task Force, and the Thompson Memorandum.",
   "type": "mechanism",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "evidenced",
   "supporting_quote": "The proliferation of N/DPAs after 2002 can be explained by a num- ber of factors, including the collapse of Enron, the dismantling of Arthur Ander- sen, the establishment of the Corporate Fraud Task Force, and the Thompson Memorandum."
  },
  {
   "id": "kaal:claim:2486570-013",
   "url": "https://wulfkaal.github.io/claims/2486570-013",
   "claim": "In 63.47 percent of the coded non and deferred prosecution agreements the agreement itself referenced preemptive remedial measures the corporation had instituted before the agreement was executed.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "evidenced",
   "scope_conditions": [
    "counts only measures referenced within the text of an executed N/DPA"
   ],
   "supporting_quote": "We found that 63.47 percent of the N/DPAs in the sample contained references to preemptive remedial measures instituted before the execution of the N/DPA."
  },
  {
   "id": "kaal:claim:2486570-014",
   "url": "https://wulfkaal.github.io/claims/2486570-014",
   "claim": "Where coded categories such as cooperating, disclosure, and internal review fall well short of 100 percent of the sample, the shortfall may reflect a gap in what the agreements record rather than a real absence of those corporate actions, so the coded frequencies understate actual conduct.",
   "type": "failure",
   "topics": [
    "research-methods",
    "open-source-and-code",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to categories whose coded frequency is not near 100 percent"
   ],
   "supporting_quote": "there is a chance that we may be capturing a gap in what is recorded in the N/DPAs in the sample, rather than a real absence of these factors."
  },
  {
   "id": "kaal:claim:2486570-015",
   "url": "https://wulfkaal.github.io/claims/2486570-015",
   "claim": "Waiver of rights provisions are the most prevalent governance term in the sample, appearing in 96 percent of agreements, followed by cooperation with the government at 91 percent and improved compliance programs at 75 percent.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "evidenced",
   "scope_conditions": [
    "sample of 271 publicly available N/DPAs, 1993 to 2013"
   ],
   "supporting_quote": "Ninety-six percent of the sample con- tained waivers-of -rights provisions, 91 percent cooperation with the government provisions, and 75 percent improved compliance programs."
  },
  {
   "id": "kaal:claim:2486570-016",
   "url": "https://wulfkaal.github.io/claims/2486570-016",
   "claim": "The less prevalent categories of governance change mandated by non and deferred prosecution agreements are increased monitoring at 46 percent of the sample, board changes at 38 percent, business changes at 30 percent, and senior management changes at 30 percent.",
   "type": "empirical",
   "topics": [
    "corporate-governance",
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "evidenced",
   "scope_conditions": [
    "sample of 271 publicly available N/DPAs, 1993 to 2013"
   ],
   "supporting_quote": "include increased monitoring re- quirements (46 percent of the sample), N/DPA mandated board changes (38 per- cent of the sample), business changes (30 percent of the sample), and changes in senior management (30 percent of the sample)."
  },
  {
   "id": "kaal:claim:2486570-017",
   "url": "https://wulfkaal.github.io/claims/2486570-017",
   "claim": "Business change provisions in non and deferred prosecution agreements can go as far as requiring the entity to fundamentally change its business model or to shut down entire business units.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "evidenced",
   "supporting_quote": "N/DPA mandated business changes identified in this study could require the respective entity to fundamen- tally change its business model or shut down entire business units, among other possible business changes."
  },
  {
   "id": "kaal:claim:2486570-018",
   "url": "https://wulfkaal.github.io/claims/2486570-018",
   "claim": "Cooperation requirements appear in 91.10 percent of the sampled agreements, and within that category document production requirements, meaning the identification, assembly, organization, and production of relevant documentation for the Department of Justice, appear in 79.70 percent of agreements.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "evidenced",
   "supporting_quote": "We find that 91.10 percent of the N/DPAs in the sample contained provisions relating to cooperation requirements. Further, 79.70 percent of N/DPAs in our sample contained cooperation requirements pertaining to \"Documents.\""
  },
  {
   "id": "kaal:claim:2486570-019",
   "url": "https://wulfkaal.github.io/claims/2486570-019",
   "claim": "Although 45 percent of sampled agreements required improved communication and training, only 11 percent required the entity to create the position of chief compliance officer, so the most structural compliance remedy is the rarest.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "evidenced",
   "supporting_quote": "Only 11 percent of the N/DPAs in our sample required the creation of a chief compliance officer."
  },
  {
   "id": "kaal:claim:2486570-020",
   "url": "https://wulfkaal.github.io/claims/2486570-020",
   "claim": "The trend in attorney client privilege waivers reversed after 2008: agreements requiring no privilege waiver increased steadily from 2008, and provisions requiring an attorney client privilege waiver disappeared completely by 2009.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "evidenced",
   "supporting_quote": "While the number of N/DPAs that did not require an attorney-client privilege waiver increased steadily starting in 2008, N/DPA provisions that did require an attorney-client privilege waiver disappeared completely by 2009."
  },
  {
   "id": "kaal:claim:2486570-021",
   "url": "https://wulfkaal.github.io/claims/2486570-021",
   "claim": "The increasing execution of non and deferred prosecution agreements since 2002 has raised the overall regulatory burden borne by the corporate entities subject to them.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "corporate-governance",
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to entities that are subject to an N/DPA"
   ],
   "supporting_quote": "since 2002 the increasing execution of N/DPAs has heightened the overall regu- latory burden for corporate entities that are subject to N/DPAs."
  },
  {
   "id": "kaal:claim:2486570-022",
   "url": "https://wulfkaal.github.io/claims/2486570-022",
   "claim": "If leading corporations in an industry are bound by substantially similar agreements, the government's privileged access to information and its continuing oversight beyond the agreement term can make business and governance practices in that industry change lastingly.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "scope_conditions": [
    "requires the DOJ to target one industry with substantially similar or overlapping N/DPA terms"
   ],
   "supporting_quote": "Given the government's privileged access to information and continuing government oversight, even after the N/DPA term expires, business and governance practices in that industry could encounter lasting change."
  },
  {
   "id": "kaal:claim:2486570-023",
   "url": "https://wulfkaal.github.io/claims/2486570-023",
   "claim": "Because the board changes mandated by non and deferred prosecution agreements consist largely of additional reporting obligations and committee reform rather than removal of officers or directors, those reforms alone may not create sufficient incentives for boards and management to improve governance and avoid execution of an agreement.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "These reforms alone may not create sufficient incentives for boards and management to improve governance and avoid N/DPA execution."
  },
  {
   "id": "kaal:claim:2486570-024",
   "url": "https://wulfkaal.github.io/claims/2486570-024",
   "claim": "The threat of bad press, reputational harm, legal costs, stock price declines, and the cost of implementing mandated governance changes can partly substitute for the weak direct incentives, pushing boards and management to optimize governance and keep the entity out of an agreement.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "the cost of implementing N/DPA governance changes can help counteract lack- ing incentives for boards and management to optimize governance and protect the entity from entering into a N/DPA."
  },
  {
   "id": "kaal:claim:2486570-025",
   "url": "https://wulfkaal.github.io/claims/2486570-025",
   "claim": "Because 63.47 percent of the sampled agreements were executed even after the corporation had already instituted preemptive remedial measures, the current quantity, quality, comprehensiveness, and effectiveness of those preemptive measures may be insufficient to prevent an agreement.",
   "type": "failure",
   "topics": [
    "compliance",
    "governance-design",
    "corporate-governance",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "execution of N/DPAs after the institution of pre- emptive remedial measures (63.47 percent of the N/DPAs in the sample), the current quantity, quality, comprehensiveness, and effectiveness of preemptive remedial measures may be insufficient."
  },
  {
   "id": "kaal:claim:2486570-026",
   "url": "https://wulfkaal.github.io/claims/2486570-026",
   "claim": "High quality and effective preemptive remedial measures are themselves part of good corporate governance and can help a corporation avoid investigation, prosecution, and the execution of a non or deferred prosecution agreement.",
   "type": "design",
   "topics": [
    "governance-design",
    "corporate-governance",
    "compliance",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "High-quality effective preemptive reme- dial measures are part of good corporate governance and can help avoid inves- tigations and prosecutions and the associated execution of N/DPAs."
  },
  {
   "id": "kaal:claim:2486570-027",
   "url": "https://wulfkaal.github.io/claims/2486570-027",
   "claim": "Generic industry advice on building an effective compliance program cannot work in practice because it is written to apply to many firms at once while no two companies are sufficiently alike for general guidance to be effective.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "is necessarily mostly general because the advice is meant to apply to a multitude of companies. However, in practice, no two companies are sufficiently alike to effectively provide general guidance on compliance programs."
  },
  {
   "id": "kaal:claim:2486570-028",
   "url": "https://wulfkaal.github.io/claims/2486570-028",
   "claim": "Regulators can learn from the preemptive remedial measures corporate wrongdoers institute, because those measures reveal where governance concerns lie in a particular industry and where regulatory action is increasingly needed.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "from preemptive remedial measures instituted by corporate wrongdoers because such measures highlight possible areas of governance concern in a particular in- dustry and provide insights into increased needs for regulatory actions."
  },
  {
   "id": "kaal:claim:2486570-029",
   "url": "https://wulfkaal.github.io/claims/2486570-029",
   "claim": "Department of Justice investigations of particular corporate wrongdoers generate highly relevant, decentralized, and institution specific information that is usable for rulemaking.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "the information generated by the DOJ's investigations of particular corpo- rate wrongdoers generates highly relevant, decentralized, and institution-specific information for rulemaking."
  },
  {
   "id": "kaal:claim:2486570-030",
   "url": "https://wulfkaal.github.io/claims/2486570-030",
   "claim": "Governance reform delivered through non and deferred prosecution agreements is comparatively cheap for corporations because it adversely affects only a small number of board and management positions.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "N/DPA-related governance re- form is relatively \"cheap\" for corporations because comparatively few board and management positions are adversely affected."
  },
  {
   "id": "kaal:claim:2486570-031",
   "url": "https://wulfkaal.github.io/claims/2486570-031",
   "claim": "Corporate wrongdoers are unlikely to prefer regulation by prosecution over regulation by legislation because prosecution and execution of an agreement carry large reputational implications.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "reputation",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "Because of the large reputational implications of prosecution and N/DPA execution, corporate wrongdoers are unlikely to favor \"regulation by prosecution\" to regulation by legislation."
  },
  {
   "id": "kaal:claim:2486570-032",
   "url": "https://wulfkaal.github.io/claims/2486570-032",
   "claim": "Regulation by prosecution denies corporations the channels of influence available under legislative and administrative rulemaking, since it offers no comment process and no opportunity to lobby regulations in their favor.",
   "type": "condition",
   "topics": [
    "compliance",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "Regulation by prosecu- tion also does not allow corporations to influence regulations in their favor through the comment process and lobbying."
  },
  {
   "id": "kaal:claim:2486570-033",
   "url": "https://wulfkaal.github.io/claims/2486570-033",
   "claim": "In the long run, increased regulation by prosecution may be able to offset many of the shortcomings of legislative governance reform, even though it is less predictable than legislation.",
   "type": "predictive",
   "topics": [
    "compliance",
    "dynamic-regulation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "speculative",
   "supporting_quote": "In the long run, however, increased regulation by prosecution may be able to offset many of the shortcomings of leg- islative governance reforms."
  },
  {
   "id": "kaal:claim:2486570-034",
   "url": "https://wulfkaal.github.io/claims/2486570-034",
   "claim": "Because non and deferred prosecution agreements typically run for a limited term, it remains unclear whether the governance reforms they impose survive in the long term.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "scope_conditions": [
    "applies because N/DPAs have a limited duration"
   ],
   "supporting_quote": "Given that N/DPAs typically have a limited duration/term, it re- mains unclear if N/DPA-related governance reforms can be successful in the long- term, i.e., if they \"stick.\""
  },
  {
   "id": "kaal:claim:2486570-035",
   "url": "https://wulfkaal.github.io/claims/2486570-035",
   "claim": "If corporate wrongdoing is not in fact caused by deficient corporate governance, then the governance reform imposed through a non or deferred prosecution agreement is merely a method of settlement rather than a lasting reform effort.",
   "type": "failure",
   "topics": [
    "governance-design",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "scope_conditions": [
    "holds where the wrongdoing has no identifiable governance cause"
   ],
   "supporting_quote": "If corporate wrongdo- ing is not the result of lacking corporate governance, it seems possible that N/DPA related governance reform is just a method of settlement rather than a lasting re- form effort."
  },
  {
   "id": "kaal:claim:2486570-036",
   "url": "https://wulfkaal.github.io/claims/2486570-036",
   "claim": "The underlying corporate governance problems in United States corporations may be more severe than non and deferred prosecution agreements are capable of adequately addressing.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "The underlying corporate governance problems in U.S. corporations could be more severe than N/DPAs can adequately address."
  },
  {
   "id": "kaal:claim:2486570-037",
   "url": "https://wulfkaal.github.io/claims/2486570-037",
   "claim": "The governance trends reported in this study apply only to corporations that actually executed an agreement, so because a disproportionately large number of corporations self correct or self report instead, the findings may capture only the tip of the iceberg.",
   "type": "failure",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "scope_conditions": [
    "sample restricted to corporations that executed an N/DPA"
   ],
   "supporting_quote": "The corporate governance trends identified in this study only pertain to corporations that have executed N/DPAs."
  },
  {
   "id": "kaal:claim:2486570-038",
   "url": "https://wulfkaal.github.io/claims/2486570-038",
   "claim": "The cooperation requirements documented in this study are likely to produce an increasing need for corporations and their counsel to anticipate prosecutorial actions in advance.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "argued",
   "supporting_quote": "N/DPA-related cooperation requirements identified in this study may result in an increasing need to anticipate prosecutorial actions."
  },
  {
   "id": "kaal:claim:2486570-039",
   "url": "https://wulfkaal.github.io/claims/2486570-039",
   "claim": "The evidence assembled in this study supports the conclusion that non and deferred prosecution agreements can play a legitimate role in addressing corporate governance shortcomings, contrary to the broad legitimacy critique in the literature.",
   "type": "normative",
   "topics": [
    "governance-design",
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "evidenced",
   "supporting_quote": "The findings in this study suggest that N/DPAs can play a legitimate role in addressing corporate governance shortcomings."
  },
  {
   "id": "kaal:claim:2486570-040",
   "url": "https://wulfkaal.github.io/claims/2486570-040",
   "claim": "Corporate governance provisions in non and deferred prosecution agreements increased significantly over the decade to 2013, raising prosecutors' influence over corporate governance to unprecedented levels.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "corporate-governance",
    "empirical-evidence",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance Evidence from 1993-20 (2014). SSRN: https://ssrn.com/abstract=2486570",
   "year": "2014",
   "source_sha256": "8c3981c9a55d8a3fe59a01660584eebc3feb3fb9109ca65344095bebe4ae49a4",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on all publicly available N/DPAs from 1993 to 2013"
   ],
   "supporting_quote": "find that corporate governance provisions in N/DPAs significantly increased in the last decade, boosting prosecutors' influence over corporate governance to un- precedented levels."
  },
  {
   "id": "kaal:claim:2389423-001",
   "url": "https://wulfkaal.github.io/claims/2389423-001",
   "claim": "This study finds no evidence of an inverse relationship between the size of regulated hedge fund advisers and the per-unit cost of compliance, contrary to the common complaint that financial regulation brings increasing returns to scale.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey data collected after the March 2012 registration effective date for hedge fund advisers under Title IV",
    "hedge fund advisers, not banks"
   ],
   "supporting_quote": "The author finds no evidence of an inverse relationship between the size of regulated hedge fund advisers and the per-unit cost of compliance."
  },
  {
   "id": "kaal:claim:2389423-002",
   "url": "https://wulfkaal.github.io/claims/2389423-002",
   "claim": "The cost of Title IV compliance, and the other independent variables used as proxies for compliance cost, are associated with the size of hedge fund advisers as measured by assets under management.",
   "type": "empirical",
   "topics": [
    "compliance",
    "research-methods",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents registered before the SEC registration effective date of March 30, 2012"
   ],
   "supporting_quote": "The cost of Title IV compliance and other independent variables as proxies for cost are associated with the size of hedge fund advisers as measured by assets under management (AUM)."
  },
  {
   "id": "kaal:claim:2389423-003",
   "url": "https://wulfkaal.github.io/claims/2389423-003",
   "claim": "Anecdotal evidence suggests that Title IV of the Dodd-Frank Act more than doubled the market entry threshold requirements for smaller hedge fund advisers.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "private-funds",
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "asserted",
   "scope_conditions": [
    "market entry for new hedge fund advisers after the Dodd-Frank Act"
   ],
   "supporting_quote": "Anecdotal evidence suggests that Title IV more than doubled the market entry threshold requirements for smaller hedge fund advisers."
  },
  {
   "id": "kaal:claim:2389423-004",
   "url": "https://wulfkaal.github.io/claims/2389423-004",
   "claim": "Before Title IV, launching a hedge fund could be accomplished by raising roughly $25 to $50 million, whereas after the Dodd-Frank Act the required initial amount may have risen to around $100 million.",
   "type": "empirical",
   "topics": [
    "economics",
    "innovation",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "asserted",
   "scope_conditions": [
    "hedge fund startups",
    "comparison of pre and post Dodd-Frank Act market entry"
   ],
   "supporting_quote": "Setting up a hedge fund before the enactment of Title IV could be accomplished by raising around $25-50 million. After the enactment of the Dodd-Frank Act, this number may have increased to around $100 million."
  },
  {
   "id": "kaal:claim:2389423-005",
   "url": "https://wulfkaal.github.io/claims/2389423-005",
   "claim": "Below $100 million in initial assets under management, the administrative cost of running a hedge fund in a post Dodd-Frank environment could be prohibitive.",
   "type": "condition",
   "topics": [
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "asserted",
   "scope_conditions": [
    "hedge fund advisers with initial AUM below $100 million",
    "post Dodd-Frank regulatory environment"
   ],
   "supporting_quote": "Below $100 million in initial assets under management (AUM), the administrative cost of running a hedge fund in a post Dodd-Frank environment could be prohibitive (Kaal [2013])."
  },
  {
   "id": "kaal:claim:2389423-006",
   "url": "https://wulfkaal.github.io/claims/2389423-006",
   "claim": "If the administrative and compliance costs created by Title IV disproportionally affect smaller hedge fund advisers, then over time smaller fund advisers could be forced out of the market or pushed to merge with other funds.",
   "type": "predictive",
   "topics": [
    "compliance",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "conditional on the anecdotal evidence of a disproportionate effect being true"
   ],
   "supporting_quote": "If the administrative and compliance costs created by Title IV should disproportionally affect smaller hedge fund advisers, it is conceivable that over time smaller fund advisers could get forced out of the market or merge with other funds."
  },
  {
   "id": "kaal:claim:2389423-007",
   "url": "https://wulfkaal.github.io/claims/2389423-007",
   "claim": "A disproportionate effect of Title IV on startup hedge funds and smaller advisers could create barriers to market entry and precipitate a trend toward consolidation among smaller hedge fund advisers.",
   "type": "predictive",
   "topics": [
    "risk-and-incentives",
    "innovation",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "conditional on Title IV compliance cost falling disproportionately on smaller advisers"
   ],
   "supporting_quote": "A disproportionate effect of Title IV on startup hedge funds and smaller advisers could create barriers to market entry and precipitate a trend toward consolidation among smaller hedge fund advisers."
  },
  {
   "id": "kaal:claim:2389423-008",
   "url": "https://wulfkaal.github.io/claims/2389423-008",
   "claim": "A surplus of larger private fund advisers holding correspondingly larger amounts of assets under management could increase systemic risk, so a regulation that consolidates the industry may work against its own systemic risk objective.",
   "type": "predictive",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "if Title IV compliance cost drives consolidation toward larger advisers"
   ],
   "supporting_quote": "A surplus of larger private fund advisers with correspondingly larger amounts in AUM could increase systemic risk."
  },
  {
   "id": "kaal:claim:2389423-009",
   "url": "https://wulfkaal.github.io/claims/2389423-009",
   "claim": "The new regulatory framework for private funds in the United States requires hedge fund manager registration in combination with enhanced disclosure of sensitive proprietary information, a combination that marks a shift in how private funds are regulated.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "disclosure",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "United States private fund regulation after the Dodd-Frank Act"
   ],
   "supporting_quote": "The new regulatory framework for private funds in the United States requires hedge fund manager registration in combination with enhanced disclosure of sensitive proprietary information (Dodd–Frank §§ 401, 402)."
  },
  {
   "id": "kaal:claim:2389423-010",
   "url": "https://wulfkaal.github.io/claims/2389423-010",
   "claim": "Because there is no evidence of an inverse relationship between adviser size and per-unit compliance cost, industry concerns over the effect of Title IV compliance cost and possible barriers to entry for smaller funds and startups appear unjustified.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "hedge fund advisers in the 2012 survey sample"
   ],
   "supporting_quote": "Accordingly, industry concerns over the effect of Title IV compliance cost and possible barriers to entry for smaller funds and startups seem to be unjustified."
  },
  {
   "id": "kaal:claim:2389423-011",
   "url": "https://wulfkaal.github.io/claims/2389423-011",
   "claim": "Based on these findings, adviser size may not matter as much for policy adjustments and SEC rule making as the hedge fund industry and its representatives have claimed.",
   "type": "normative",
   "topics": [
    "dynamic-regulation",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "SEC rule making under Title IV",
    "policy adjustments keyed to adviser size"
   ],
   "supporting_quote": "Based on these findings, adviser size may not matter as much for policy adjustments and SEC rule making as the hedge fund industry and its representatives claimed."
  },
  {
   "id": "kaal:claim:2389423-012",
   "url": "https://wulfkaal.github.io/claims/2389423-012",
   "claim": "Title IV mandates hedge fund adviser registration in order to increase record keeping and disclosure, requiring advisers above the statutory AUM threshold to register as investment advisers and to disclose information about their trades and portfolios to the SEC.",
   "type": "definitional",
   "topics": [
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "asserted",
   "scope_conditions": [
    "hedge fund advisers above the Title IV registration threshold"
   ],
   "supporting_quote": "Title IV mandates hedge fund adviser registration to increase record-keeping and disclosure (Dodd-Frank § 408). Hedge fund advisers with more than $150 AUM are required to register as investment advisers and have to disclose information about their trades and portfolios to the SEC"
  },
  {
   "id": "kaal:claim:2389423-013",
   "url": "https://wulfkaal.github.io/claims/2389423-013",
   "claim": "Registered investment advisers must report systemic risk relevant information to the SEC, including trading practices, trading and investment positions, the amount of assets under management, valuation policies, and side letters.",
   "type": "definitional",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "disclosure",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "asserted",
   "scope_conditions": [
    "investment advisers registered under Title IV"
   ],
   "supporting_quote": "Investment advisers must provide reports with respect to certain information related to systemic risk (Dodd-Frank § 404(b)(3)), such as trading practices, trading and investment positions, the amount of AUM, valuation policies, side letters"
  },
  {
   "id": "kaal:claim:2389423-014",
   "url": "https://wulfkaal.github.io/claims/2389423-014",
   "claim": "The study's core hypothesis, drawn from the industry view and the anecdotal evidence, is that smaller hedge fund advisers pay more relative to their size than larger hedge fund advisers for Title IV compliance.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "hedge fund advisers across the AUM spectrum"
   ],
   "supporting_quote": "Hypothesis: Dodd-Frank Effect on Hedge Fund Category. Smaller hedge fund advisers pay more relative to their size than larger hedge fund advisers for Title IV Compliance."
  },
  {
   "id": "kaal:claim:2389423-015",
   "url": "https://wulfkaal.github.io/claims/2389423-015",
   "claim": "Prior work shows that registration and the increased compliance requirements under the Dodd-Frank Act only marginally increase the cost structure of hedge funds.",
   "type": "empirical",
   "topics": [
    "compliance",
    "securities-law",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "hedge funds subject to Dodd-Frank Act registration requirements"
   ],
   "supporting_quote": "requirements under the Dodd-Frank Act marginally increase the cost structure of hedge funds (Kaal [2013])."
  },
  {
   "id": "kaal:claim:2389423-016",
   "url": "https://wulfkaal.github.io/claims/2389423-016",
   "claim": "Linear, robust, and non-linear regression models all show positive and statistically significant coefficients, and compliance costs per unit of AUM do not diminish in the sample, so the hypothesis that smaller advisers pay relatively more is not supported.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "the 2012 survey sample of registered private fund advisers"
   ],
   "supporting_quote": "Figures X and Y show that linear, robust, and non-linear regression models show positive and statistically significant coefficients. Compliance costs per unit AUM do not diminish in the sample. There is thus no support for the hypothesis."
  },
  {
   "id": "kaal:claim:2389423-017",
   "url": "https://wulfkaal.github.io/claims/2389423-017",
   "claim": "Form PF is structured so that single strategy fund advisers collect and provide only a fraction of the information a multi strategy adviser must make available, which makes reporting burden a function of strategy count rather than of adviser size.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "disclosure",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "asserted",
   "scope_conditions": [
    "reporting under Form PF",
    "comparison of single strategy and multi strategy advisers"
   ],
   "supporting_quote": "Form PF is structured in a way that allows single strategy fund advisers to collect and provide a fraction of the information a multi strategy adviser would be required to make available under Form PF."
  },
  {
   "id": "kaal:claim:2389423-018",
   "url": "https://wulfkaal.github.io/claims/2389423-018",
   "claim": "Because Form PF requires less information from single strategy advisers, hedge fund advisers that apply only a single strategy to their portfolios may incur overall lower compliance cost.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "compliance",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "advisers using a single investment strategy",
    "Title IV and Form PF compliance"
   ],
   "supporting_quote": "Accordingly, hedge fund advisers that apply only a single strategy to their respective portfolios may incur overall lower compliance cost."
  },
  {
   "id": "kaal:claim:2389423-019",
   "url": "https://wulfkaal.github.io/claims/2389423-019",
   "claim": "Least squares linear regression is non-robust to outliers: in the presence of outliers its predictions can be dragged toward the outliers and the variance of the estimates can be artificially inflated.",
   "type": "failure",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "least squares linear regression applied to samples containing outliers"
   ],
   "supporting_quote": "In the presence of outliers, LSLR predictions can be dragged towards the outliers and the variance of the LSLR estimates can be artificially inflated."
  },
  {
   "id": "kaal:claim:2389423-020",
   "url": "https://wulfkaal.github.io/claims/2389423-020",
   "claim": "Because the distribution in this sample is heteroscedastic, treating each data point equally would allocate inappropriate weight to data points in the distribution, which is why the author used robust and weighted regression specifications.",
   "type": "design",
   "topics": [
    "research-methods",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "survey samples with heteroscedastic distributions",
    "small datasets with data points of varying importance"
   ],
   "supporting_quote": "The heteroscedasticity of the distribution in the sample of this study suggests that it would be unreasonable to assume that each data point should be treated equally. Treating each data point equally would allocate inappropriate weight to the data points in the distribution."
  },
  {
   "id": "kaal:claim:2389423-021",
   "url": "https://wulfkaal.github.io/claims/2389423-021",
   "claim": "Weighted least squares regression depends on estimated weights, and contrary to the theory behind the method the exact weights are almost never determinable in real applications such as this study.",
   "type": "failure",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "real world applications of weighted least squares regression"
   ],
   "supporting_quote": "A downside of weighted LSLR methodology is its dependence on estimated weights. Contrary to the theory behind weighted LSLR methodology, in real applications, such as the application in this study, the exact weights are almost never exactly determinable."
  },
  {
   "id": "kaal:claim:2389423-022",
   "url": "https://wulfkaal.github.io/claims/2389423-022",
   "claim": "Selection bias is a valid concern in this study because of the lower sample sizes available for Models 1 through 5.",
   "type": "failure",
   "topics": [
    "empirical-evidence",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "regression models 1 through 5 in this study",
    "survey based samples"
   ],
   "supporting_quote": "While selection bias is generic problem in social sciences, concerns over selection bias in this study due to the lower sample sizes for Model 1-5 is a valid concern"
  },
  {
   "id": "kaal:claim:2389423-023",
   "url": "https://wulfkaal.github.io/claims/2389423-023",
   "claim": "The analysis uses data from a 2012 survey study of a population of 1,264 private fund advisers registered before the SEC's registration effective date for private funds of March 30, 2012.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "private fund advisers registered before March 30, 2012"
   ],
   "supporting_quote": "The data used for the analysis in this article was collected in the context of a 2012 survey study (Kaal [2013]) with a population of 1,264 private fund advisers, registered before the SEC's registration effective date for private funds, March 30, 2012."
  },
  {
   "id": "kaal:claim:2389423-024",
   "url": "https://wulfkaal.github.io/claims/2389423-024",
   "claim": "In the open ended survey question on the effects of Title IV, 43.59 percent of respondents, the largest group, said the industry would be affected predominantly by increased costs.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to open ended survey question five"
   ],
   "supporting_quote": "Exhibit 1 illustrates that an overwhelming majority of respondents (43.59%) opined that the industry would be affected predominantly by increased costs."
  },
  {
   "id": "kaal:claim:2389423-025",
   "url": "https://wulfkaal.github.io/claims/2389423-025",
   "claim": "The majority of survey respondents believed that Title IV compliance costs $100,000.00 annually.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "frequency of survey responses on the annual cost of Title IV compliance"
   ],
   "supporting_quote": "The majority of respondents believed that Title IV compliance costs $100,000.00 annually."
  },
  {
   "id": "kaal:claim:2389423-026",
   "url": "https://wulfkaal.github.io/claims/2389423-026",
   "claim": "The most common fund adviser response, at 47.67 percent of the 86 respondents to the question, estimates the annual compliance cost of Title IV in the range of $50,000 to $100,000.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "86 respondents to survey question 6bi",
    "median cost measures for Title IV compliance"
   ],
   "supporting_quote": "The most common fund adviser response (47.67%) estimates the annual compliance cost of Title IV in the range of $50,000 - $100,000. The total number of respondents who answered Question 6bi was 86."
  },
  {
   "id": "kaal:claim:2389423-027",
   "url": "https://wulfkaal.github.io/claims/2389423-027",
   "claim": "On the median annual time measure for Title IV compliance, 46 percent of respondents estimated between 100 and 250 hours per year and 32 percent estimated between 250 and 500 hours per year.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey responses on annual time required for Title IV compliance"
   ],
   "supporting_quote": "46% of respondents opined that it would take them between 100 and 250 hours to comply with requirements in Title IV. 32% of respondents believed it would take them between 250 and 500 hours per year."
  },
  {
   "id": "kaal:claim:2389423-028",
   "url": "https://wulfkaal.github.io/claims/2389423-028",
   "claim": "The clear majority of respondents prefer an asset size above the $150 million AUM registration threshold after the enactment of Title IV, indicating that advisers respond to the threshold by growing past it rather than staying below it.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey responses on preferred asset size after Title IV enactment"
   ],
   "supporting_quote": "The clear majority of respondents prefer an assets size above the registration threshold of $150 million AUM."
  },
  {
   "id": "kaal:claim:2389423-029",
   "url": "https://wulfkaal.github.io/claims/2389423-029",
   "claim": "The compliance and administrative costs created by Title IV of the Dodd-Frank Act are associated with the size of hedge fund advisers' assets under management.",
   "type": "empirical",
   "topics": [
    "compliance",
    "research-methods",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "entire sample and the single and multi strategy subsamples"
   ],
   "supporting_quote": "Exhibits 11-13 show that the compliance and administrative costs created by Title IV of the Dodd-Frank Act are associated with the size of hedge fund advisers' AUM."
  },
  {
   "id": "kaal:claim:2389423-030",
   "url": "https://wulfkaal.github.io/claims/2389423-030",
   "claim": "All regression models show positive and predominantly statistically significant coefficients, with 18 out of 30 coefficients in the entire sample statistically significant.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "empirical-evidence",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "five regression specifications applied to the entire sample"
   ],
   "supporting_quote": "All regression models show positive and predominantly statistically significant coefficients. 18 out of 30 coefficients in the entire sample are statistically significant."
  },
  {
   "id": "kaal:claim:2389423-031",
   "url": "https://wulfkaal.github.io/claims/2389423-031",
   "claim": "Compliance costs per unit of AUM do not diminish in the entire sample or in the multi strategy subsample, so there is no support for the hypothesis that smaller advisers bear relatively higher Title IV compliance cost.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "entire sample and multi strategy subsample"
   ],
   "supporting_quote": "Compliance costs per unit AUM do not diminish in the entire sample and in the multi strategy subsample. There is thus no support for the hypothesis."
  },
  {
   "id": "kaal:claim:2389423-032",
   "url": "https://wulfkaal.github.io/claims/2389423-032",
   "claim": "The results contradict other studies finding an inverse relationship between the size of regulated firms and the per-unit cost of compliance, and suggest that financial regulation does not bring increasing returns to scale in the private fund industry.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "private fund industry",
    "Title IV compliance cost measured by survey data"
   ],
   "supporting_quote": "contradict other studies that find an inverse relationship between the size of regulated firms and the per-unit cost of compliance. The results suggest that financial regulation does not bring increasing returns to scale in the private fund industry."
  },
  {
   "id": "kaal:claim:2389423-033",
   "url": "https://wulfkaal.github.io/claims/2389423-033",
   "claim": "Financial regulation has disparate effects on private fund advisers in comparison with other financial services providers, so evidence of scale economies in compliance drawn from banking does not transfer to private funds.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of the private fund industry with banking and other financial services providers"
   ],
   "supporting_quote": "Financial regulation has disparate effects on private fund advisers in comparison with other financial services providers."
  },
  {
   "id": "kaal:claim:2389423-034",
   "url": "https://wulfkaal.github.io/claims/2389423-034",
   "claim": "The results suggest that the private fund industry may be more robust and less affected by financial regulation than other financial services providers.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "private fund advisers subject to Title IV"
   ],
   "supporting_quote": "The results suggest that the private fund industry may be more robust and less affected by financial regulation than other financial services providers."
  },
  {
   "id": "kaal:claim:2389423-035",
   "url": "https://wulfkaal.github.io/claims/2389423-035",
   "claim": "The findings of this study are based on limited data and a small sample size, so additional research is required to fully investigate the impact of Title IV on the private fund industry.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "survey sample of 94 respondents from a population of 1,264 advisers"
   ],
   "supporting_quote": "Several limitations in this study seem to suggest that additional research may be required to fully investigate the impact of Title IV on the private fund industry. The findings of this study are based on limited data and a small sample size."
  },
  {
   "id": "kaal:claim:2389423-036",
   "url": "https://wulfkaal.github.io/claims/2389423-036",
   "claim": "While all coefficients are positive in the entire sample and the multi strategy subsample, the negative coefficients in the single strategy subsample suggest that the strategy employed by a hedge fund adviser could change the assessment of the effect of compliance cost.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "single strategy subsample in Exhibit 12 compared with Exhibits 11 and 13"
   ],
   "supporting_quote": "the negative coefficients in the single strategy subsample in Exhibit 12 suggest that the strategy employed by hedge fund advisers could change the assessment of the effect of compliance cost on the hedge fund industry."
  },
  {
   "id": "kaal:claim:2389423-037",
   "url": "https://wulfkaal.github.io/claims/2389423-037",
   "claim": "Even in the single strategy subsample only 9 of 30 coefficients are negative, so the strategy based qualification to the main finding is limited.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "single strategy subsample in Exhibit 12"
   ],
   "supporting_quote": "It is noteworthy, however, that even in the single strategy subsample in Exhibit 12 only 9 of 30 coefficients are negative."
  },
  {
   "id": "kaal:claim:2389423-038",
   "url": "https://wulfkaal.github.io/claims/2389423-038",
   "claim": "There is no evidence that private fund adviser regulation in Title IV of the Dodd-Frank Act increases returns to scale, which counters the most damning putative concern raised about regulatory compliance costs.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "evidenced",
   "scope_conditions": [
    "private fund advisers subject to Title IV"
   ],
   "supporting_quote": "There is no evidence that private fund adviser regulation in Title IV of the Dodd-Frank Act increases returns to scale."
  },
  {
   "id": "kaal:claim:2389423-039",
   "url": "https://wulfkaal.github.io/claims/2389423-039",
   "claim": "Based on these findings, there appears to be no immediate need for policy makers to address concerns over a possible effect of Title IV on startup hedge funds and smaller hedge fund advisers.",
   "type": "normative",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "argued",
   "scope_conditions": [
    "current policy making on Title IV",
    "subject to the study's data limitations"
   ],
   "supporting_quote": "Based on these findings, there appears to be no immediate need for policy makers to address concerns over a possible effect of Title IV on startup hedge funds and smaller hedge fund advisers."
  },
  {
   "id": "kaal:claim:2389423-040",
   "url": "https://wulfkaal.github.io/claims/2389423-040",
   "claim": "A long-term study of the effects of Title IV compliance costs could change the assessment that no policy intervention is needed, so the finding is provisional on the short observation window.",
   "type": "predictive",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry (2014). SSRN: https://ssrn.com/abstract=2389423",
   "year": "2014",
   "source_sha256": "6b95323abbaffd00a012589531859f2938ab8b372d0243171059ff82e55a0838",
   "confidence": "speculative",
   "scope_conditions": [
    "longer time horizon than the period immediately after the March 2012 registration effective date"
   ],
   "supporting_quote": "A long-term study of the effects of Title IV compliance costs could change this assessment."
  },
  {
   "id": "kaal:claim:2470008-001",
   "url": "https://wulfkaal.github.io/claims/2470008-001",
   "claim": "The SEC data collected from private fund advisers feeds every stage of the FSOC's systemic risk assessment, and the FSOC leans most heavily on precisely those disclosure items that are the most problematic.",
   "type": "failure",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "private fund advisers reporting under SEC Form PF",
    "FSOC systemic risk assessment of nonbank financial companies"
   ],
   "supporting_quote": "The author shows that while the SEC's data plays a crucial role in all stages of FSOC's systemic risk assessment of private fund advisers, the FSOC relies most heavily on some of the most problematic disclosure items collected by the SEC."
  },
  {
   "id": "kaal:claim:2470008-002",
   "url": "https://wulfkaal.github.io/claims/2470008-002",
   "claim": "Accuracy and consistency problems in the SEC's private fund data collection can impair the FSOC's ability to evaluate the systemic risk posed by private fund advisers.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "private-funds",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "data collected through Form PF",
    "FSOC evaluation of nonbank systemic risk"
   ],
   "supporting_quote": "Evidence that the SEC's data collection encounters accuracy and consistency problems might hamper the FSOC's ability to evaluate the systemic risk of private fund advisers."
  },
  {
   "id": "kaal:claim:2470008-003",
   "url": "https://wulfkaal.github.io/claims/2470008-003",
   "claim": "Prior studies and anecdotal evidence indicate that the data collection mandated by Form PF could itself create problems for the FSOC when it evaluates hedge fund systemic risk.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "systemic-risk",
    "empirical-evidence",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "hedge fund systemic risk evaluation by FSOC"
   ],
   "supporting_quote": "Several observations from previous studies and anecdotal evidence suggest that the mandated data collection in Form PF could create issues for FSOC in evaluating the systemic risk of hedge funds."
  },
  {
   "id": "kaal:claim:2470008-004",
   "url": "https://wulfkaal.github.io/claims/2470008-004",
   "claim": "Even though the private fund industry broadly accepted Form PF, the form's core problems for the SEC are the ambiguity of several questions, advisers' disagreement with the definition of funds, and correspondingly insufficient SEC guidance.",
   "type": "failure",
   "topics": [
    "private-funds",
    "securities-law",
    "disclosure",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "Form PF as implemented by the SEC",
    "registered private fund advisers"
   ],
   "supporting_quote": "the core challenges for the SEC in Form PF include: the ambiguity of several questions on Form PF, private fund advisers' disagreement with the definition of funds in Form PF and corresponding insufficiency of SEC guidance"
  },
  {
   "id": "kaal:claim:2470008-005",
   "url": "https://wulfkaal.github.io/claims/2470008-005",
   "claim": "The systemic risk of hedge funds arises principally from the combination of aggressive investment strategies and high leverage with adverse price movements that can dry up credit and depress the market price of collateral.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "hedge funds employing leverage",
    "periods of adverse market price fluctuations"
   ],
   "supporting_quote": "Hedge funds' systemic risk is mainly the result of their pursuit of aggressive investment strategies and a significant level of leverage in combination with adverse fluctuations in market prices that can dry up credit and negatively affect the market price of collateral."
  },
  {
   "id": "kaal:claim:2470008-006",
   "url": "https://wulfkaal.github.io/claims/2470008-006",
   "claim": "Hedge funds threaten the financial system through two distinct channels: directly, by damaging systemically important financial institutions, and indirectly, by generating liquidity shocks and raising volatility in key markets.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "defi",
    "systemic-risk",
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "hedge funds active in key markets",
    "counterparty relationships with systemically important institutions"
   ],
   "supporting_quote": "In addition to posing a direct systemic risk by damaging systemically important financial institutions, hedge funds can also pose an indirect threat to the financial system by generating a liquidity shock and increasing market volatility in key markets."
  },
  {
   "id": "kaal:claim:2470008-007",
   "url": "https://wulfkaal.github.io/claims/2470008-007",
   "claim": "The 2008 to 2009 financial crisis altered market conditions and the factors driving private fund systemic risk, which triggered a second, distinct wave of scholarship on private funds' systemic implications.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "post crisis period after 2009"
   ],
   "supporting_quote": "The 2008-09 global financial crisis changed market conditions and several related factors that contribute to private funds advisers' posing a possible systemic risk, precipitating the second major wave of scholarship in the context of possible systemic implications of private funds."
  },
  {
   "id": "kaal:claim:2470008-008",
   "url": "https://wulfkaal.github.io/claims/2470008-008",
   "claim": "Some estimates place private funds ahead of banks in size and importance during and after the financial crisis.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "during and after the 2008 to 2009 financial crisis"
   ],
   "supporting_quote": "According to some estimates, private funds surpassed banks in size and importance during and after the financial crisis."
  },
  {
   "id": "kaal:claim:2470008-009",
   "url": "https://wulfkaal.github.io/claims/2470008-009",
   "claim": "The unprecedented growth of the private fund industry combined with the low interest rate environment created by post crisis quantitative easing drove private fund managers to reach for yield.",
   "type": "mechanism",
   "topics": [
    "defi",
    "tokenomics",
    "private-funds",
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "low interest rate environment following quantitative easing",
    "post 2009 private fund industry"
   ],
   "supporting_quote": "The unprecedented growth in the private fund industry in combination with the low interest rate environment following the Federal Reserve's quantitative easing after the financial crisis of 2008-09 resulted in private fund managers' increasingly \"reaching for yield\"."
  },
  {
   "id": "kaal:claim:2470008-010",
   "url": "https://wulfkaal.github.io/claims/2470008-010",
   "claim": "Because private fund advisers supply liquidity and perform liquidity transformation in the manner of banks, the vulnerabilities their bank like activities create can carry large consequences for financial stability.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "defi",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "private fund advisers engaging in bank like activities",
    "use of leverage, liquidity transformation, or funding mismatches"
   ],
   "supporting_quote": "Like banks, private fund advisers can provide liquidity to clients and to financial markets and engage in various forms of liquidity transformation. The vulnerabilities created by private fund advisers engaging in bank-like activities may have large implications for financial stability."
  },
  {
   "id": "kaal:claim:2470008-011",
   "url": "https://wulfkaal.github.io/claims/2470008-011",
   "claim": "International regulators agree on designation criteria but not on the unit of assessment: the FSB and IOSCO assess systemic importance at the fund level while the OFR would assess it at the asset manager level with all funds combined.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "designation of globally active investment funds as systemically important"
   ],
   "supporting_quote": "Although the proposed designation criteria are similar, the FSB and IOSCO emphasize the assessment of systemic importance at the fund-level, while the OFR suggests systemic assessment at the asset manager-level with all funds combined."
  },
  {
   "id": "kaal:claim:2470008-012",
   "url": "https://wulfkaal.github.io/claims/2470008-012",
   "claim": "National regulators reached opposite conclusions on the same question: unlike the OFR, FSB and IOSCO, the United Kingdom's Financial Services Authority concluded from its first comprehensive survey of London's hedge fund industry that the industry poses no systemic risk.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "London hedge fund industry as surveyed by the FSA",
    "conditions prevailing at the time of the survey"
   ],
   "supporting_quote": "In contrast with the OFR, FSB and IOSCO, the Financial Services Authority (FSA) in the United Kingdom concluded in its first comprehensive survey of London's hedge fund industry that the hedge fund industry poses no systemic risk to the financial system."
  },
  {
   "id": "kaal:claim:2470008-013",
   "url": "https://wulfkaal.github.io/claims/2470008-013",
   "claim": "The absence of financial market repercussions from the Amaranth failure suggests that indirect regulation of private funds, achieved by having regulators press banks to limit leverage extended to their fund clients, worked.",
   "type": "mechanism",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "post LTCM supervisory practice of monitoring fund clients through bank leverage limits",
    "the Amaranth failure in 2006"
   ],
   "supporting_quote": "The lack of financial market repercussion after the Amaranth failure seems to suggest that this approach was successful."
  },
  {
   "id": "kaal:claim:2470008-014",
   "url": "https://wulfkaal.github.io/claims/2470008-014",
   "claim": "Form PF data was tailored primarily for the FSOC rather than for the SEC's own purposes, a design choice that shaped the level of reporting required.",
   "type": "design",
   "topics": [
    "private-funds",
    "systemic-risk",
    "dynamic-regulation",
    "disclosure",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "Form PF as adopted by the SEC Division of Investment Management"
   ],
   "supporting_quote": "The data collected via Form PF has been tailored primarily for the use of the FSOC."
  },
  {
   "id": "kaal:claim:2470008-015",
   "url": "https://wulfkaal.github.io/claims/2470008-015",
   "claim": "The FSOC's powers over nonbank financial institutions are broad and without precedent in United States financial regulation.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "nonbank financial institutions subject to Dodd-Frank Title I"
   ],
   "supporting_quote": "The FSOC's powers over nonbank financial institutions are broad and unprecedented in U.S. financial regulation."
  },
  {
   "id": "kaal:claim:2470008-016",
   "url": "https://wulfkaal.github.io/claims/2470008-016",
   "claim": "The quantitative measures used in systemic risk assessment are not codified in statute, so the FSOC can alter its thresholds and its analysis through rulemaking.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "SIFI determinations under Dodd-Frank section 113"
   ],
   "supporting_quote": "the quantitative systemic risk assessment measures are not specifically codified and the FSOC can change thresholds and analysis via the rule making process"
  },
  {
   "id": "kaal:claim:2470008-017",
   "url": "https://wulfkaal.github.io/claims/2470008-017",
   "claim": "Commonly managed investment funds holding $50 billion or more in aggregate total consolidated assets can be designated systemically important, and following a similar investment strategy across those funds makes designation more likely.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "asserted",
   "scope_conditions": [
    "aggregate total consolidated assets at or above $50 billion",
    "funds under common management pursuing similar strategies"
   ],
   "supporting_quote": "Commonly managed investment funds that manage $50 billion or more in the aggregate of total consolidated assets could be designated a SIFI, particularly if such funds all follow a similar investment strategy."
  },
  {
   "id": "kaal:claim:2470008-018",
   "url": "https://wulfkaal.github.io/claims/2470008-018",
   "claim": "Stage one of the FSOC's designation process is a mechanical screen: six quantitative thresholds filter out nonbank financial institutions unlikely to pose significant systemic risk before any institution specific or qualitative analysis begins.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "asserted",
   "scope_conditions": [
    "FSOC three stage SIFI designation process"
   ],
   "supporting_quote": "In stage one, applying six quantitative thresholds, FSOC uses a mechanical screening process to eliminate those nonbank financial institutions from review that are unlikely to pose significant systemic risk and may not merit SIFI designation."
  },
  {
   "id": "kaal:claim:2470008-019",
   "url": "https://wulfkaal.github.io/claims/2470008-019",
   "claim": "SIFI designation changes the nature of regulation for a nonbank financial institution, subjecting it to substantial additional regulation and forcing it to change how it does business, which can in turn constrain its growth.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "compliance",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "nonbank financial institutions designated as systemically important"
   ],
   "supporting_quote": "Designation as a systemically important financial institution (SIFI) would change the nature of the regulation for the respective nonbank financial institution and subject such entity to substantial additional regulations,149 requiring the respective entity to change the way it does business."
  },
  {
   "id": "kaal:claim:2470008-020",
   "url": "https://wulfkaal.github.io/claims/2470008-020",
   "claim": "The FSOC's three stage SIFI review process depends heavily on information that private fund investment advisers supply through Form PF.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "SIFI review of private funds and their advisers"
   ],
   "supporting_quote": "FSOC's three-stage review process for SIFI designation153 depends heavily on the information provided by private fund investment advisers in Form PF."
  },
  {
   "id": "kaal:claim:2470008-021",
   "url": "https://wulfkaal.github.io/claims/2470008-021",
   "claim": "Form PF information addresses most of the FSOC's stage one thresholds either directly or indirectly, so the mechanical screen runs largely on adviser reported data.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "FSOC stage one threshold assessment",
    "except the threshold for credit default swaps written on the company"
   ],
   "supporting_quote": "The information in Form PF either directly or indirectly addresses most of FSOC's stage one thresholds."
  },
  {
   "id": "kaal:claim:2470008-022",
   "url": "https://wulfkaal.github.io/claims/2470008-022",
   "claim": "The SEC itself reports that the consistency of investment advisers' responses on Form PF is not ensured and may be questionable.",
   "type": "failure",
   "topics": [
    "private-funds",
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "Form PF filings as analyzed by SEC staff"
   ],
   "supporting_quote": "The analysis of the data collected in Form PF presents several key challenges. The SEC suggests that the consistency of investment adviser's responses on Form PF is not ensured and could be questionable."
  },
  {
   "id": "kaal:claim:2470008-023",
   "url": "https://wulfkaal.github.io/claims/2470008-023",
   "claim": "Advisers take different approaches and make different assumptions when completing Form PF, which the SEC identifies as a further challenge to the usability of the data.",
   "type": "failure",
   "topics": [
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "Form PF filings by registered private fund advisers"
   ],
   "supporting_quote": "Other challenges with Form PF identified by the SEC include the differences in approaches taken by investment advisers in completing Form PF and differences in assumptions made by investment advisers in completing Form PF."
  },
  {
   "id": "kaal:claim:2470008-024",
   "url": "https://wulfkaal.github.io/claims/2470008-024",
   "claim": "The SEC's initial analysis of Form PF data turned up anomalies attributed to filer error, which prompted SEC concern about the quality of the information private fund advisers report.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "early Form PF filing cycles"
   ],
   "supporting_quote": "Upon initial analysis of Form PF data, the SEC identified data anomalies deemed to be attributable to filer error165 which precipitated SEC concerns about the quality of the information provided by private fund advisers."
  },
  {
   "id": "kaal:claim:2470008-025",
   "url": "https://wulfkaal.github.io/claims/2470008-025",
   "claim": "Expanding the uses of Form PF data remains difficult so long as there is insufficient confidence in the accuracy of what advisers report, notwithstanding SEC efforts to improve quality through interpretive FAQs and curative amendments.",
   "type": "failure",
   "topics": [
    "private-funds",
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "current state of Form PF data accuracy",
    "SEC remedial measures limited to FAQs and curative amendments"
   ],
   "supporting_quote": "expanding the utility of Form PF data without sufficient confidence in the accuracy of the information provided by investment advisers on Form PF remains difficult"
  },
  {
   "id": "kaal:claim:2470008-026",
   "url": "https://wulfkaal.github.io/claims/2470008-026",
   "claim": "Form PF data quality and utility are likely to improve over time as filers grow familiar with the form's requirements and calculation methods, because the SEC's experience with the data is still early.",
   "type": "predictive",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "speculative",
   "scope_conditions": [
    "early stage of SEC experience with Form PF",
    "assumes filers become more familiar with requirements"
   ],
   "supporting_quote": "On the upside, the SEC's experience with Form PF data is in its early stages and the data quality and utility is likely to evolve over time as filers become more familiar with the requirements of Form PF and the methods of calculation."
  },
  {
   "id": "kaal:claim:2470008-027",
   "url": "https://wulfkaal.github.io/claims/2470008-027",
   "claim": "The FSOC itself conceded that available data was insufficient when it tried to identify the activities of the twenty largest United States fund managers as possible sources of systemic risk.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "FSOC 2013 annual report",
    "counterparty risk, leverage, repo, securities lending, and separate accounts"
   ],
   "supporting_quote": "Similarly, in its attempt to identify activities of twenty of the largest U.S. fund managers as possible sources of systemic risk,171 the FSOC acknowledged that the available data was insufficient"
  },
  {
   "id": "kaal:claim:2470008-028",
   "url": "https://wulfkaal.github.io/claims/2470008-028",
   "claim": "The substantive defects in Form PF data are the ambiguity of several key questions, inaccurate definitions paired with insufficient SEC guidance, and difficulty aggregating the required information.",
   "type": "failure",
   "topics": [
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "Form PF as filed by private fund advisers"
   ],
   "supporting_quote": "Core substantive issues with Form PF include: the ambiguity of several key questions on Form PF, the inaccuracy of Form PF definitions and corresponding insufficiency of SEC guidance for Form PF, and difficulties in aggregating the required Form PF information."
  },
  {
   "id": "kaal:claim:2470008-029",
   "url": "https://wulfkaal.github.io/claims/2470008-029",
   "claim": "More than forty percent of respondents in a prior study disagreed with the definitions or instructions in Form PF.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "empirical-evidence",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents in the author's prior private fund disclosure study"
   ],
   "supporting_quote": "Over forty percent of respondents in a prior study suggested that they disagreed with definitions or instructions in Form PF."
  },
  {
   "id": "kaal:claim:2470008-030",
   "url": "https://wulfkaal.github.io/claims/2470008-030",
   "claim": "The Form PF definition of Regulatory Assets under Management is the leading example of a definition that forced filers to interpret what they were required to report.",
   "type": "failure",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "RAUM reporting under Form PF"
   ],
   "supporting_quote": "Especially the definition of Regulatory Assets under Management (RAUM), as required by Form PF, required filers to interpret what they were required to report."
  },
  {
   "id": "kaal:claim:2470008-031",
   "url": "https://wulfkaal.github.io/claims/2470008-031",
   "claim": "The interpretation Form PF demands generated particular concern among filers about the definition of counterparties and about counterparty performance measures.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "evidenced",
   "scope_conditions": [
    "Form PF counterparty reporting items"
   ],
   "supporting_quote": "The level of interpretation required to answer Form PF precipitated particular concerns among filers pertaining to the definition of counterparties and performance measures for counterparties in Form PF."
  },
  {
   "id": "kaal:claim:2470008-032",
   "url": "https://wulfkaal.github.io/claims/2470008-032",
   "claim": "Form PF instructions need clarification and its definitions, including those for RAUM and AUM, need improvement, since there is evidence that questions and definitions had to be optimized.",
   "type": "design",
   "topics": [
    "private-funds",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "Form PF as currently drafted"
   ],
   "supporting_quote": "There is also evidence that Form PF questions and definitions had to be optimized, including performance information required by Form PF.177 Form PF instructions generally needs clarification and the definitions for RAUM/AUM in Form PF, among others, have to be improved."
  },
  {
   "id": "kaal:claim:2470008-033",
   "url": "https://wulfkaal.github.io/claims/2470008-033",
   "claim": "Because several core Form PF questions feeding the FSOC's stage one threshold screen are themselves defective, the FSOC's systemic risk assessment process could be compromised.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "private-funds",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "FSOC stage one threshold assessment",
    "reliance on Form PF questions with identified defects"
   ],
   "supporting_quote": "Given the identified shortcomings of Form PF data, the systemic risk assessment process employed by the FSOC could be compromised. Several core Form PF questions that provide specific information for FSOC's stage one threshold assessment encounter problems."
  },
  {
   "id": "kaal:claim:2470008-034",
   "url": "https://wulfkaal.github.io/claims/2470008-034",
   "claim": "Because the FSOC uses RAUM related valuations directly and indirectly to set stage one thresholds, and because RAUM requires substantial filer interpretation, it is questionable whether the FSOC can use that Form PF data effectively and sustainably for systemic risk evaluations and SIFI designations.",
   "type": "failure",
   "topics": [
    "private-funds",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "stage one thresholds computed from RAUM related asset valuations",
    "Form PF Questions 8, 9, 13, 44, 46, and 58"
   ],
   "supporting_quote": "it seems at least questionable if FSOC will be able to use the related Form PF data effectively and sustainably for its systemic risk evaluations and the designation of non-bank financial companies as systemically risky"
  },
  {
   "id": "kaal:claim:2470008-035",
   "url": "https://wulfkaal.github.io/claims/2470008-035",
   "claim": "The Form PF counterparty questions most affected by filer interpretation, Questions 22 and 23, are the very ones the FSOC uses in stage two to determine the interconnectedness of private funds.",
   "type": "failure",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "FSOC stage two analysis of interconnectedness"
   ],
   "supporting_quote": "Form PF questions 22 and 23 are directly used in FSOC's stage two analysis to determine the interconnectedness of private funds."
  },
  {
   "id": "kaal:claim:2470008-036",
   "url": "https://wulfkaal.github.io/claims/2470008-036",
   "claim": "Widespread filer disagreement with Form PF definitions implies that a large share of filers are uncertain how to answer, which raises the possibility that they complete the form with estimates and varied assumptions.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "filers who disagreed with Form PF definitions or instructions"
   ],
   "supporting_quote": "This suggests that a large proportion of filers are uncertain as to how Form PF questions are to be answered. This uncertainty at least raises the possibility that the filers are using estimates and a variety of assumptions to complete Form PF."
  },
  {
   "id": "kaal:claim:2470008-037",
   "url": "https://wulfkaal.github.io/claims/2470008-037",
   "claim": "If the FSOC relies on inaccurate Form PF data in its systemic risk assessment, its work on private funds may itself be erroneous.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "private-funds",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "FSOC reliance on Form PF data subject to inaccuracies"
   ],
   "supporting_quote": "If FSOC relies on Form PF data in its systemic risk assessment that is subject to inaccuracies, it appears possible that FSOC's work pertaining to private funds could in turn be subject to errors."
  },
  {
   "id": "kaal:claim:2470008-038",
   "url": "https://wulfkaal.github.io/claims/2470008-038",
   "claim": "Private fund advisers reporting under Form PF encountered issues that could affect the FSOC's systemic risk assessment, but the author does not claim that the FSOC is unable to fulfill its congressional mandate.",
   "type": "failure",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "scope limited to the effects of Form PF reporting issues"
   ],
   "supporting_quote": "The article suggests that private fund advisers who reported data as required by SEC Form PF encountered issues that could affect FSOC's systemic risk assessment of private funds. The author does not suggest that the FSOC is unable to fulfill Congress's mandate."
  },
  {
   "id": "kaal:claim:2470008-039",
   "url": "https://wulfkaal.github.io/claims/2470008-039",
   "claim": "Matching the identified Form PF defects against the FSOC's specific uses of that data suggests possible inaccuracies in the FSOC's systemic risk assessment process, although the author disclaims scientific or empirical precision for the analysis.",
   "type": "failure",
   "topics": [
    "research-methods",
    "private-funds",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "method of matching known data defects to documented FSOC uses",
    "no claim of empirical precision"
   ],
   "supporting_quote": "The matching of identified Form PF issues with FSOC's respective use of such suboptimal Form PF data suggests that possible inaccuracies may exist in FSOC's systemic risk assessment process. The author does not claim scientific and/or empirical precision in the analysis."
  },
  {
   "id": "kaal:claim:2470008-040",
   "url": "https://wulfkaal.github.io/claims/2470008-040",
   "claim": "Fixing the identified problems with Form PF data would help optimize the FSOC's systemic risk assessment of private funds.",
   "type": "normative",
   "topics": [
    "private-funds",
    "systemic-risk",
    "dynamic-regulation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008",
   "year": "2014",
   "source_sha256": "5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9",
   "confidence": "argued",
   "scope_conditions": [
    "Form PF data defects identified in this article"
   ],
   "supporting_quote": "Addressing the identified problems with Form PF data could help optimize FSOC's systemic risk assessment of private funds."
  },
  {
   "id": "kaal:claim:2629451-001",
   "url": "https://wulfkaal.github.io/claims/2629451-001",
   "claim": "Stock prices respond significantly and predictably in a positive direction to the DOJ press release announcing execution of a non- or deferred prosecution agreement and to the start of the N/DPA term.",
   "type": "empirical",
   "topics": [
    "economics",
    "research-methods",
    "governance-design",
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "publicly traded U.S. firms that executed N/DPAs between 1993 and 2015",
    "event windows measured around the DOJ press release date and the start date of the N/DPA term"
   ],
   "supporting_quote": "We document a significant and predictable positive stock price response to the DOJ press release and the start of the N/DPA term."
  },
  {
   "id": "kaal:claim:2629451-002",
   "url": "https://wulfkaal.github.io/claims/2629451-002",
   "claim": "The market does not price the three defining N/DPA events in isolation; it treats the announcement, the start of the term, and the end of the term as sequential and conditional events.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "sample of 94 publicly traded N/DPA firms, 1993 to 2015"
   ],
   "supporting_quote": "Our tests indicate that the market interprets the three events not in isolation but as sequential and conditional events."
  },
  {
   "id": "kaal:claim:2629451-003",
   "url": "https://wulfkaal.github.io/claims/2629451-003",
   "claim": "Investor response to N/DPAs is not uniform: it varies with the firm's industry, the severity of the financial fine, and the extent of the governance improvements the N/DPA mandates.",
   "type": "empirical",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "ten industry sub-clusters in the sample",
    "partitions relative to median fines and median governance intensity"
   ],
   "supporting_quote": "We also find that investor's response differs depending on the industry and severity of financial fines and N/DPA mandated governance improvements."
  },
  {
   "id": "kaal:claim:2629451-004",
   "url": "https://wulfkaal.github.io/claims/2629451-004",
   "claim": "There is no systematic price momentum beyond the three core N/DPA event dates, which the authors read as evidence that the market is reasonably efficient with respect to N/DPA information.",
   "type": "empirical",
   "topics": [
    "economics",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "information about N/DPAs specifically",
    "sample of publicly traded N/DPA firms, 1993 to 2015"
   ],
   "supporting_quote": "We observe no systematic price momentum beyond the three core dates identified in our study, implying that the market is reasonably efficient with respect to information about N/DPAs."
  },
  {
   "id": "kaal:claim:2629451-005",
   "url": "https://wulfkaal.github.io/claims/2629451-005",
   "claim": "Investors react negatively to impending N/DPA driven changes in the period before the agreement is executed, but once the N/DPA is executed they generally treat it as a positive event for the firm.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "pre-execution versus post-execution windows around the DOJ announcement"
   ],
   "supporting_quote": "Our results suggest that while investors consistently react negatively to impending N/DPA changes prior to N/DPA execution, post N/DPA execution, investors generally do perceive N/DPAs as a positive event for the respective entity."
  },
  {
   "id": "kaal:claim:2629451-006",
   "url": "https://wulfkaal.github.io/claims/2629451-006",
   "claim": "Investors treat the expiration of an N/DPA term as a negative event for the firm.",
   "type": "empirical",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "end of N/DPA term date, ENDPAT",
    "reduced sample of 59 firms where the end date fell on a trading day"
   ],
   "supporting_quote": "Inversely, our results suggest that investors see the expiry of applicable N/DPA terms as a negative event."
  },
  {
   "id": "kaal:claim:2629451-007",
   "url": "https://wulfkaal.github.io/claims/2629451-007",
   "claim": "The combination of a positive market reaction at the start of the N/DPA term and a negative reaction at its end is evidence that the governance changes N/DPAs mandate actually matter to firm value.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "corporate-governance",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "governance changes become mandatory at the start of the term and unenforceable at its end"
   ],
   "supporting_quote": "We interpret the positive market reaction at the beginning of the N/DPA term and investors' negative reaction at the end of the N/DPA term as evidence that governance changes mandated by N/DPAs matter."
  },
  {
   "id": "kaal:claim:2629451-008",
   "url": "https://wulfkaal.github.io/claims/2629451-008",
   "claim": "Because N/DPAs are contractual arrangements between corporations and the Department of Justice that remedy identified governance shortcomings, it is the DOJ, rather than Congress or the courts, that is changing U.S. corporate governance practice.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "United States, 1993 to 2015",
    "governance historically a matter of state law"
   ],
   "supporting_quote": "As contractual arrangements between a corporation and the Department of Justice (DOJ), intended to remedy identified governance shortcomings, the DOJ – not Congress or the Courts - is changing governance practices in the United States (Garrett 2014, Kaal and Lacine 2014)."
  },
  {
   "id": "kaal:claim:2629451-009",
   "url": "https://wulfkaal.github.io/claims/2629451-009",
   "claim": "The study's hand-selected dataset covers all institutions that executed N/DPAs from 1993 to 2015, a population of 330 agreements, of which 94 involved publicly traded firms usable for stock price tests.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "publicly available N/DPAs recorded in the University of Virginia Law Library database",
    "stock price data availability limits the tested sample to 94 firms"
   ],
   "supporting_quote": "Our hand-selected dataset comprises all institutions that executed N/DPAs from 1993 to 2015 (N=330) and are publicly traded (N=94)."
  },
  {
   "id": "kaal:claim:2629451-010",
   "url": "https://wulfkaal.github.io/claims/2629451-010",
   "claim": "The U.S. financial corporations subject to N/DPAs collectively exceed $690 billion in market capitalization and more than $20 trillion in assets under management, making N/DPA governance intervention economically consequential.",
   "type": "empirical",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "U.S. financial corporations subject to N/DPAs as of the Copland 2012 count"
   ],
   "supporting_quote": "The collective market capitalization of U.S. financial corporations that are subject to NDPAs exceeds $690 billion and exceeds over $20 trillion in assets under management (Copland 2012)."
  },
  {
   "id": "kaal:claim:2629451-011",
   "url": "https://wulfkaal.github.io/claims/2629451-011",
   "claim": "This is the first study to examine stock price reactions to non- and deferred prosecution agreements, using all publicly available N/DPAs across several industries from 1993 to 2015 (N=330).",
   "type": "empirical",
   "topics": [
    "research-methods",
    "law-and-legal-systems",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "asserted",
   "scope_conditions": [
    "publicly available N/DPAs across several industries"
   ],
   "supporting_quote": "This is the first study that examines stock price reactions to N/DPAs. Our hand- selected dataset contains all publicly available N/DPAs in several industries from 1993 to 2015 (N=330)."
  },
  {
   "id": "kaal:claim:2629451-012",
   "url": "https://wulfkaal.github.io/claims/2629451-012",
   "claim": "The event study design is appropriate for N/DPAs because the wrongdoing event is identifiable through the execution of a reasonably standardized agreement and because information about the firm's wrongdoing can change the distribution of stock returns.",
   "type": "design",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "N/DPA executions are reasonably similar in format",
    "events are evenly distributed and cross-sectionally independent"
   ],
   "supporting_quote": "(1) the event of corporate wrongdoing is identifiable through N/DPAs execution and N/DPA executions are reasonably similar in format, (2) the information pertaining to N/DPA firm wrongdoing has the potential to change the distribution of stock returns,"
  },
  {
   "id": "kaal:claim:2629451-013",
   "url": "https://wulfkaal.github.io/claims/2629451-013",
   "claim": "The date of the DOJ press release announcing execution is the only reliable announcement date for an N/DPA, so it is the defensible event date for measuring market reaction.",
   "type": "definitional",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "press release generally issued on the day the agreement is signed for NPAs or filed with the court for DPAs"
   ],
   "supporting_quote": "The only reliable N/DPA announcement date is the date of the DOJ press release pertaining to the execution of the respective NDPA - ANDPAE."
  },
  {
   "id": "kaal:claim:2629451-014",
   "url": "https://wulfkaal.github.io/claims/2629451-014",
   "claim": "The DOJ announcement is the only ascertainable point at which the market can assess the impact of the governance changes an N/DPA mandates, because the announcement typically accompanies release of the agreement document itself.",
   "type": "condition",
   "topics": [
    "disclosure",
    "governance-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "judicial approval may follow later without adding public information"
   ],
   "supporting_quote": "Hence, the ANDPAE is the only ascertainable way for the market to assess the impact of the governance changes mandated in the NDPA."
  },
  {
   "id": "kaal:claim:2629451-015",
   "url": "https://wulfkaal.github.io/claims/2629451-015",
   "claim": "Pre-announcement leaks about a pending N/DPA, including leaks by prosecutors, should not move markets significantly because leaked details carry no certainty or finality as to final terms or fine amount.",
   "type": "condition",
   "topics": [
    "economics",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "asserted",
   "scope_conditions": [
    "leaks of fine amounts or agreement form weeks or months before the announcement"
   ],
   "supporting_quote": "We assume that such leaks will not precipitate significant market movements as there is no certainty or finality as to the final terms of the NDPA and the amount of a fine."
  },
  {
   "id": "kaal:claim:2629451-016",
   "url": "https://wulfkaal.github.io/claims/2629451-016",
   "claim": "Unlike legislative mandates, N/DPA governance changes are preceded by no public debate or publicity, so their effect on firm value is not gradually incorporated into prices and is therefore testable by event study.",
   "type": "mechanism",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "contrast with congressional regulatory changes whose effects are anticipated gradually"
   ],
   "supporting_quote": "congressional mandates, prior to the ANDPAE there is no public debate or other publicity pertaining to the anticipated governance changes in the NDPA or possible fines. Accordingly, the effect of NDPA governance changes on firm value is not gradual and therefore testable."
  },
  {
   "id": "kaal:claim:2629451-017",
   "url": "https://wulfkaal.github.io/claims/2629451-017",
   "claim": "Around the DOJ announcement, N/DPA firms show a significant positive cumulative abnormal return trend before day minus five, a significant drop at day minus five, and negative CARs relative to matched competitors from day minus four to day minus one.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "94 N/DPA firms matched to 94 direct competitors by market capitalization",
    "window t=-25 to t=25 around ANDPAE"
   ],
   "supporting_quote": "the CARs for N/DPA firms show a significant positive trend before t=-5, followed by a significant drop at -5 before the event date t=0 ANDPAE and negative CARs in comparison with the competitors from t=-4 to t=-1."
  },
  {
   "id": "kaal:claim:2629451-018",
   "url": "https://wulfkaal.github.io/claims/2629451-018",
   "claim": "After the DOJ announcement, competitor firms' cumulative abnormal returns trend negative from day zero to day twenty five while N/DPA firms' CARs continue on a neutral to positive trend.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "matched competitor sample of 94 firms",
    "post-announcement window t=0 to t=25"
   ],
   "supporting_quote": "Figure 2a demonstrates that while the competitor CARs show a negative trend from t=0 to t=25, the neutral/positive trend in N/DPA firms' CARs continues from t=0 to t=25."
  },
  {
   "id": "kaal:claim:2629451-019",
   "url": "https://wulfkaal.github.io/claims/2629451-019",
   "claim": "The negative pricing of N/DPA firms immediately before the announcement reflects the market's negative assessment of the agreement and its associated fines, plausibly driven by uncertainty in the days before the announcement resolves it.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "days immediately preceding ANDPAE"
   ],
   "supporting_quote": "This data suggests that the market assesses the impact of the N/DPA and the often associated fines negatively immediately before the announcement of the N/DPA execution, which could be a function of market uncertainty before the N/DPA announcement."
  },
  {
   "id": "kaal:claim:2629451-020",
   "url": "https://wulfkaal.github.io/claims/2629451-020",
   "claim": "The positive post-announcement reaction is best read as the market rewarding both the end of a costly DOJ investigation and the governance terms the N/DPA is expected to impose.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "window t=0 to t=25 after the DOJ announcement"
   ],
   "supporting_quote": "the positive market reaction from t=0 to t=25 as a positive reaction to the end of the costly DOJ investigation and the anticipated governance terms imposed by the N/DPA."
  },
  {
   "id": "kaal:claim:2629451-021",
   "url": "https://wulfkaal.github.io/claims/2629451-021",
   "claim": "Immediately before the N/DPA term becomes effective, from day minus three to day minus one, the market prices the onset of the term as a negative event.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "window immediately preceding BNDPAT"
   ],
   "supporting_quote": "suggests that the market assesses the impact of the beginning of the N/DPA term as a negative event immediately before the N/DPAs become effective from t=-3 to t=-1."
  },
  {
   "id": "kaal:claim:2629451-022",
   "url": "https://wulfkaal.github.io/claims/2629451-022",
   "claim": "From the first day of the N/DPA term through day twenty five, the period in which mandated governance improvements are in force, the market prices the N/DPA as a positive event for the firm.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "window t=0 to t=25 after BNDPAT",
    "period during which N/DPA governance improvements are in effect"
   ],
   "supporting_quote": "BNDPAT t=0 and from t=0 to t=25, when N/DPA governance improvements are in effect, Figures 3 and 3a show that the market assesses such N/DPAs as a positive event for the respective entity."
  },
  {
   "id": "kaal:claim:2629451-023",
   "url": "https://wulfkaal.github.io/claims/2629451-023",
   "claim": "The sign of the market reaction reverses at the end of the N/DPA term: where the announcement and the start of the term produce positive CARs, the end of the term produces negative CARs at day zero and from day one through day fifteen.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "59 firm ENDPAT sample excluding terms ending on non-trading days",
    "1993 to 2015"
   ],
   "supporting_quote": "Unlike ANDPAE and BNDPAT that show positive CARs for N/DPA firms, at ENDPAT N/DPA firms show negative CARs at t=0 and from t=1 to t=15."
  },
  {
   "id": "kaal:claim:2629451-024",
   "url": "https://wulfkaal.github.io/claims/2629451-024",
   "claim": "Negative returns after the end of the N/DPA term are evidence that investors regard the expiration of the term, and the consequent unenforceability of the associated governance improvements, as bad news for the firm.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "days t=1 to t=15 after ENDPAT"
   ],
   "supporting_quote": "We interpret the negative N/DPA firms' CARs from t=1 to t=15 in Figures 4 and 4a as evidence that investors see the expiration of the N/DPA term and the expiration and following unenforceability of associated governance improvements as a negative event for the respective entity."
  },
  {
   "id": "kaal:claim:2629451-025",
   "url": "https://wulfkaal.github.io/claims/2629451-025",
   "claim": "The authors reject Hypothesis 1: they find no evidence that the market reacts negatively to the N/DPA announcement and the start of the term and positively to the end of the term, contrary to the cost-imposition view of N/DPAs.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "94 firm sample, three event dates"
   ],
   "supporting_quote": "There is no evidence to support Hypothesis 1: The market does not react negatively at ANDPAE (E1a) and BNDPAT (E1b) and positively at ENDPAT (E1c)."
  },
  {
   "id": "kaal:claim:2629451-026",
   "url": "https://wulfkaal.github.io/claims/2629451-026",
   "claim": "The data support Hypothesis 2: the market reacts positively at the DOJ announcement and at the start of the N/DPA term and negatively at the end of the term.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "evidence drawn from Figures 2 through 4a",
    "94 firm sample, 59 firms at ENDPAT"
   ],
   "supporting_quote": "Figures 2 to 4a support Hypothesis 2: The market reacts positively at ANDPAE (E1a) and BNDPAT (E1b) and negatively at ENDPAT (E1c)."
  },
  {
   "id": "kaal:claim:2629451-027",
   "url": "https://wulfkaal.github.io/claims/2629451-027",
   "claim": "The positive market reaction at announcement and at the start of the term is the market acknowledging that an N/DPA gives the firm an opportunity to be better managed, more compliant, and less exposed to penalties.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "post-announcement and post-start-of-term windows"
   ],
   "supporting_quote": "Consistent with Hypothesis 2, we interpret the positive market reaction at ANDPA and BNDPAT as the market's acknowledgement that the execution and effectiveness of an N/DPA is an opportunity for the entity to be better managed, more compliant, with fewer possibilities to incur penalties"
  },
  {
   "id": "kaal:claim:2629451-028",
   "url": "https://wulfkaal.github.io/claims/2629451-028",
   "claim": "The negative market reaction at the end of the N/DPA term is the market acknowledging that suboptimal governance practices are likely to resume once the term expires.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "post-expiration windows in Figures 4 and 4a"
   ],
   "supporting_quote": "In turn, we interpret the negative market reaction at ENDPAT in Figures 4 and 4a as the market's acknowledgment that post N/DPA term expiration suboptimal governance practices are likely to continue"
  },
  {
   "id": "kaal:claim:2629451-029",
   "url": "https://wulfkaal.github.io/claims/2629451-029",
   "claim": "The data support Hypothesis 3: the market reacts positively when N/DPA governance changes become mandatory at the start of the term and negatively when they cease to be mandatory at its end.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "evidence drawn from Figures 3, 3a, 4, and 4a"
   ],
   "supporting_quote": "Figures 3, 3a, 4, and 4a support Hypothesis 3: The market reacts positively at BNDPAT (E1b) and negatively at ENDPAT (E1c)."
  },
  {
   "id": "kaal:claim:2629451-030",
   "url": "https://wulfkaal.github.io/claims/2629451-030",
   "claim": "The paired positive reaction at the start and negative reaction at the end of the N/DPA term is direct evidence that N/DPA mandated governance changes matter to investors.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "governance changes are effective and mandatory only during the N/DPA term"
   ],
   "supporting_quote": "We interpret the positive market reaction at BNDPAT and its negative reaction at ENDPAT as evidence that governance changes mandated by N/DPAs matter."
  },
  {
   "id": "kaal:claim:2629451-031",
   "url": "https://wulfkaal.github.io/claims/2629451-031",
   "claim": "The market values N/DPA governance changes during the term because those changes effectively address the underlying corporate wrongdoing and its damage to goodwill and reputation while reducing the likelihood of continuing fines and litigation.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "law-and-legal-systems",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "during the term of the N/DPA"
   ],
   "supporting_quote": "The market assesses the governance changes during the term of the N/DPA as beneficial for market value because it effectively addresses corporate wrongdoing and the associated negative effects on goodwill and reputation while lowering the likelihood of continuing fines and litigation."
  },
  {
   "id": "kaal:claim:2629451-032",
   "url": "https://wulfkaal.github.io/claims/2629451-032",
   "claim": "Market reaction to N/DPAs is industry specific, supporting the hypothesis that investors in some industries are more sensitive to N/DPA effects than investors in others.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "asserted",
   "scope_conditions": [
    "ten industry sub-clusters identified via Morningstar categories and Russell 1000 industry indices"
   ],
   "supporting_quote": "We find industry-specific effects that support Hypothesis 4."
  },
  {
   "id": "kaal:claim:2629451-033",
   "url": "https://wulfkaal.github.io/claims/2629451-033",
   "claim": "Because the market reacts positively both to N/DPA announcements and to the governance improvements taking effect, the DOJ's escalation of N/DPA executions beginning in 2002 could be justified on market value grounds.",
   "type": "normative",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "holds to the extent market reaction is an acceptable measure of policy value"
   ],
   "supporting_quote": "The positive market reaction to announcements of N/DPAs and to N/DPA governance improvements at the beginning of the N/DPA term suggest that the DOJ's increase in N/DPA executions, starting in 2002, could be justified."
  },
  {
   "id": "kaal:claim:2629451-034",
   "url": "https://wulfkaal.github.io/claims/2629451-034",
   "claim": "The study's results may be biased toward low impact N/DPAs, because firms that were acquired, merged, or went bankrupt as a result of an N/DPA had to be dropped for lack of public trading data, and those are precisely the highest impact cases.",
   "type": "failure",
   "topics": [
    "empirical-evidence",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "applies to any stock price study of N/DPAs relying on continuous trading data"
   ],
   "supporting_quote": "It is possible that our results are skewed towards N/DPAs that had a relatively low impact on the respective entity. Because of lacking public trading data, we had to remove those firms subject to N/DPAs that were acquired, merged or went bankrupt as a result of the N/DPA execution."
  },
  {
   "id": "kaal:claim:2629451-035",
   "url": "https://wulfkaal.github.io/claims/2629451-035",
   "claim": "The findings rest on a small sample and limited data, so they should be treated as provisional pending replication on a larger set of publicly traded N/DPA firms.",
   "type": "failure",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "asserted",
   "scope_conditions": [
    "94 firm sample, 59 firms at the end of term event"
   ],
   "supporting_quote": "The findings of this study are based on a small sample size and limited data."
  },
  {
   "id": "kaal:claim:2629451-036",
   "url": "https://wulfkaal.github.io/claims/2629451-036",
   "claim": "Despite wide-ranging criticism of N/DPAs on authority, fairness, and expertise grounds, scholars agree that N/DPAs do influence corporate governance.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "asserted",
   "scope_conditions": [
    "scholarly literature on N/DPAs through 2015"
   ],
   "supporting_quote": "Despite the broad critique of N/DPAs, consensus exists among scholars that N/DPAs influence corporate governance (Cunningham 2014b, Kaal and Lacine 2014, Coffee 2005, Thompson 2003)."
  },
  {
   "id": "kaal:claim:2629451-037",
   "url": "https://wulfkaal.github.io/claims/2629451-037",
   "claim": "The existing literature has barely engaged the financial market implications of N/DPAs, which is the gap this study fills.",
   "type": "empirical",
   "topics": [
    "economics",
    "law-and-legal-systems",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "asserted",
   "scope_conditions": [
    "legal and governance literature on N/DPAs as of 2015"
   ],
   "supporting_quote": "The literature has only marginally recognized the implications of N/DPAs for financial markets."
  },
  {
   "id": "kaal:claim:2629451-038",
   "url": "https://wulfkaal.github.io/claims/2629451-038",
   "claim": "The observed growth in N/DPA execution, especially since 2002, indicates that N/DPAs will continue to shape major U.S. corporations across a range of industries.",
   "type": "predictive",
   "topics": [
    "governance-design",
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "argued",
   "scope_conditions": [
    "extrapolated from the 1993 to 2015 time series of 330 executed N/DPAs"
   ],
   "supporting_quote": "The trends observed suggest that N/DPAs will continue to play a role in major U.S. corporations in a variety of industries."
  },
  {
   "id": "kaal:claim:2629451-039",
   "url": "https://wulfkaal.github.io/claims/2629451-039",
   "claim": "Prior coding of all publicly available N/DPAs from 1993 to 2013 across more than 230 governance categories shows that N/DPAs have a substantial effect on corporate governance.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy Lacine, Stock Price Response to Non- and Deferred Prosecution Agreements (2015). SSRN: https://ssrn.com/abstract=2629451",
   "year": "2015",
   "source_sha256": "507404d641abb922ab6d8e3a0b032e35ead2befd7b88746d09d178a8fa816957",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=271 agreements, 1993 to 2013"
   ],
   "supporting_quote": "In the largest study to date, Kaal and Lacine (2014), using a hand-selected dataset comprising all publicly available N/DPAs from 1993-2013 (N=271) in over 230 governance categories, show a substantial effect of N/DPAs on corporate governance."
  },
  {
   "id": "kaal:claim:2715083-001",
   "url": "https://wulfkaal.github.io/claims/2715083-001",
   "claim": "Confluence between mutual and hedge funds runs in two directions at once: mutual funds are converging on hedge funds along the dimension of investment strategy, while hedge funds are converging on mutual funds along the dimension of regulation.",
   "type": "definitional",
   "topics": [
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "post financial crisis U.S. fund markets",
    "after the Dodd-Frank Act and the JOBS Act"
   ],
   "supporting_quote": "Mutual funds are becoming more like hedge funds as a matter of investment strategy while hedge funds are becoming more like mutual funds as a matter of the regulatory framework."
  },
  {
   "id": "kaal:claim:2715083-002",
   "url": "https://wulfkaal.github.io/claims/2715083-002",
   "claim": "Regulatory convergence is not driven only by tightened post crisis rules: the liberalization of advertising restrictions after the Dodd-Frank Act also pushes hedge funds toward mutual fund form, so deregulation and reregulation work in the same convergent direction.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. private fund regulation after Dodd-Frank and the JOBS Act"
   ],
   "supporting_quote": "This is not just a result of more stringent regulations enacted via the Dodd-Frank Act in the aftermath of the financial crisis; the liberalization of the advertising restrictions post Dodd-Frank Act also makes hedge funds more like mutual funds."
  },
  {
   "id": "kaal:claim:2715083-003",
   "url": "https://wulfkaal.github.io/claims/2715083-003",
   "claim": "Mandatory registration and increased disclosure for certain hedge fund advisers under the Dodd-Frank Act place hedge fund advisers under registration and reporting obligations similar to those long borne by mutual fund advisers.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "advisers meeting the Dodd-Frank registration thresholds"
   ],
   "supporting_quote": "The registration and increased disclosure requirements for certain hedge fund advisers under the Dodd-Frank Act subjects investment advisers to hedge funds to similar registration and reporting obligations as mutual fund advisers."
  },
  {
   "id": "kaal:claim:2715083-004",
   "url": "https://wulfkaal.github.io/claims/2715083-004",
   "claim": "Lifting the advertising ban for hedge fund advisers under the JOBS Act, combined with FSOC treating mutual and hedge funds alike for SIFI designation, effectively assimilated the advertising requirements applicable to the two asset classes.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "Rule 506(c) offerings after September 2013",
    "FSOC nonbank SIFI designation process"
   ],
   "supporting_quote": "Similarly, the removal of advertising restrictions for hedge fund advisers under the JOBS Act and the equal treatment of mutual and hedge funds for FSOC's SIFI designation in effect assimilated the advertising requirements of mutual and hedge funds."
  },
  {
   "id": "kaal:claim:2715083-005",
   "url": "https://wulfkaal.github.io/claims/2715083-005",
   "claim": "The private fund industry grew 26 percent between 2013 and 2015, rising from just over 2 trillion dollars of assets under management to 2.7 trillion dollars.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "evidenced",
   "scope_conditions": [
    "BarclayHedge industry data, 2013 to 2015"
   ],
   "supporting_quote": "Between 2013 and 2015, the private fund industry grew by 26%, increasing from just over 2 trillion dollars AUM in 2013 to 2.7 trillion dollars AUM through 2015"
  },
  {
   "id": "kaal:claim:2715083-006",
   "url": "https://wulfkaal.github.io/claims/2715083-006",
   "claim": "The author stipulates that retail alternative funds are funds regulated under the Investment Company Act that attempt to replicate private fund strategies, including leverage, derivatives, short selling, and nontraditional asset classes; this definition carries the chapter's confluence analysis.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "asserted",
   "scope_conditions": [
    "as used throughout this chapter",
    "covers liquid alternatives, unconstrained funds, alternative mutual funds, and synthetic hedge funds"
   ],
   "supporting_quote": "\"retail alternatives funds\" are defined as regulated funds under the investment company act that attempt to replicate the strategies of the private fund industry - including use of leverage, derivatives, short- selling and purchase of nontraditional asset classes."
  },
  {
   "id": "kaal:claim:2715083-007",
   "url": "https://wulfkaal.github.io/claims/2715083-007",
   "claim": "Net assets of mutual funds using alternative strategies quadrupled between 2007 and 2014, a 27 percent annualized growth rate, while the number of such funds rose from 181 to 402.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "evidenced",
   "scope_conditions": [
    "Investment Company Institute data, 2007 to 2014",
    "author's own analysis presented in Exhibit 1"
   ],
   "supporting_quote": "The author's analysis of ICI data in Exhibit 1 suggests that net assets of mutual funds employing alternative strategies have quadrupled since 2007 (a 27% annualized growth rate). The number of funds offering investors alternative strategies has grown from 181 in 2007 to 402 in 2014"
  },
  {
   "id": "kaal:claim:2715083-008",
   "url": "https://wulfkaal.github.io/claims/2715083-008",
   "claim": "Growth in retail alternatives is expected to continue rather than plateau, with projections that 15.8 percent of all mutual fund assets under management will sit in alternative mutual funds by 2022, making it a multi-trillion dollar industry.",
   "type": "predictive",
   "topics": [
    "private-funds",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "evidenced",
   "scope_conditions": [
    "JP Morgan and Strategic Insight projections",
    "horizon of 2022"
   ],
   "supporting_quote": "this growth is not expected to slow down, as JP Morgan/Strategic Insight estimate that by 2022, 15.8% of all mutual fund AUM will be tied up in alternative mutual funds, making it a multi-trillion dollar industry"
  },
  {
   "id": "kaal:claim:2715083-009",
   "url": "https://wulfkaal.github.io/claims/2715083-009",
   "claim": "Unconstrained mutual funds differ from traditional fixed income mutual funds not only in trading strategy, using futures, short sales, and derivatives, but also in turnover and fee structure, which more closely resemble those of hedge funds.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "evidenced",
   "scope_conditions": [
    "fixed income unconstrained mutual funds studied in Kaal and Anderson (2016)"
   ],
   "supporting_quote": "the author found not only significant growth in these funds by launches, but also provided evidence pertaining to the extent to which unconstrained mutual funds differ in trading strategy from traditional mutual funds – unconstrained mutual funds use futures, short sales, and derivatives."
  },
  {
   "id": "kaal:claim:2715083-010",
   "url": "https://wulfkaal.github.io/claims/2715083-010",
   "claim": "Operating a mutual fund is materially more capital intensive than operating a hedge fund: the mutual fund adviser's required investment in trading and operational technology and in specialized staffing substantially exceeds what a hedge fund manager must spend.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of registered mutual fund advisers with unregistered hedge fund managers"
   ],
   "supporting_quote": "the size of the investment in trading and operational technology and in experienced portfolio management, trading, reporting, operational, risk management, and other staffing incurred by a mutual fund adviser is materially larger than what a hedge fund manager must expend to operate its business."
  },
  {
   "id": "kaal:claim:2715083-011",
   "url": "https://wulfkaal.github.io/claims/2715083-011",
   "claim": "Private party litigation against hedge fund managers stays minimal because well counseled managers make extensive disclosures to investors who are presumed sophisticated, unlike mutual fund advisers who face ongoing high value investor suits.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives",
    "disclosure",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. hedge funds and offshore vehicles chartered in the Caymans or BVI",
    "assumes industry standard disclosure practice"
   ],
   "supporting_quote": "By contrast, private-party litigation involving hedge fund managers is minimal because of the extent and nature of the disclosures well-counseled hedge fund managers provide to their investors"
  },
  {
   "id": "kaal:claim:2715083-012",
   "url": "https://wulfkaal.github.io/claims/2715083-012",
   "claim": "Hedge fund investors have almost no statutory remedy: the regime establishing a hedge fund investor's rights is severely limited, nearly to the point of nonexistence, in the United States and in the offshore jurisdictions where many hedge funds are chartered.",
   "type": "failure",
   "topics": [
    "private-funds",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "United States, Cayman Islands, and British Virgin Islands"
   ],
   "supporting_quote": "because the statutory regime establishing a hedge fund investor's right is severely limited,23 almost to the point of non-existence"
  },
  {
   "id": "kaal:claim:2715083-013",
   "url": "https://wulfkaal.github.io/claims/2715083-013",
   "claim": "The author stipulates the term nominal confluence: legal requirements that are formally identical for mutual and hedge fund managers but that operate in materially different ways in practice, so formal legal convergence overstates actual convergence.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "applies where the same statute or rule governs both fund types"
   ],
   "supporting_quote": "The term \"nominal confluence\" as used herein describes otherwise identical legal requirements for mutual and hedge fund managers that can be materially different in practice."
  },
  {
   "id": "kaal:claim:2715083-014",
   "url": "https://wulfkaal.github.io/claims/2715083-014",
   "claim": "Identical rules diverge in practice because the two vehicle types are structured, operated, and run as businesses differently; the Investment Advisers Act applies to both, yet its obligations are far more onerous for mutual fund managers.",
   "type": "failure",
   "topics": [
    "private-funds",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "Investment Advisers Act obligations",
    "registered mutual fund advisers compared with hedge fund advisers"
   ],
   "supporting_quote": "While the applicable statutes and regulations may appear to apply nominally to both mutual and hedge fund managers, the nature of how the investment vehicles are structured, operated, and how they conduct business can make their application materially different in practice"
  },
  {
   "id": "kaal:claim:2715083-015",
   "url": "https://wulfkaal.github.io/claims/2715083-015",
   "claim": "Best execution is a leading instance of nominal confluence: the obligation is nominally the same, but it is far more complicated and burdensome for the mutual fund manager than for the hedge fund adviser.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "best execution obligations for trades directed to brokers"
   ],
   "supporting_quote": "Best execution obligations are similar but practically different for private and mutual fund advisers. In practice, best execution requirements are far more complicated and burdensome for the mutual fund manager than for the hedge fund adviser."
  },
  {
   "id": "kaal:claim:2715083-016",
   "url": "https://wulfkaal.github.io/claims/2715083-016",
   "claim": "Freedom from significant regulatory oversight is what historically enabled hedge funds to run more exotic, more leveraged strategies aimed at absolute returns.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "hedge funds operating under securities law safe harbors before the Dodd-Frank Act"
   ],
   "supporting_quote": "Without significant regulatory oversight, hedge funds were able to employ more exotic investment strategies involving more leverage to generate absolute returns for their investors."
  },
  {
   "id": "kaal:claim:2715083-017",
   "url": "https://wulfkaal.github.io/claims/2715083-017",
   "claim": "Alternative mutual funds generally cannot deliver the same absolute returns as hedge funds, a shortfall some attribute to the lighter touch regulation and better incentives available to hedge funds.",
   "type": "failure",
   "topics": [
    "private-funds",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "evidenced",
   "scope_conditions": [
    "comparison of registered alternative funds with unregistered hedge funds"
   ],
   "supporting_quote": "Alternative funds generally cannot generate the same absolute returns as hedge funds (Hasanhodzic & Lo (2007) and McCarthy (2015)), which is attributed by some to the lighter touch regulation and better incentives applicable to hedge funds."
  },
  {
   "id": "kaal:claim:2715083-018",
   "url": "https://wulfkaal.github.io/claims/2715083-018",
   "claim": "Alternative funds gave retail investors access to hedge fund strategies and higher returns than traditional mutual funds while charging mutual fund fees, and that combination is what increased retail demand.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "retail investor segment in the early 2010s"
   ],
   "supporting_quote": "Alternative funds offered retail investors access to hedge fund strategies and higher returns than mutual funds while paying mutual fund fees, thus increasing demand by retail investors."
  },
  {
   "id": "kaal:claim:2715083-019",
   "url": "https://wulfkaal.github.io/claims/2715083-019",
   "claim": "The traditional mutual fund governance model, in which one board serves multiple discrete funds within a sponsor's group, is subject to significant oversight challenges.",
   "type": "failure",
   "topics": [
    "governance-design",
    "private-funds",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "traditional single board mutual fund complexes"
   ],
   "supporting_quote": "serving as a single board for multiple discrete funds (Morley & Curtis 2010)). The traditional governance model is, thus, subject to significant oversight challenges (Krug (2016))."
  },
  {
   "id": "kaal:claim:2715083-020",
   "url": "https://wulfkaal.github.io/claims/2715083-020",
   "claim": "In a multimanager series trust the board is largely independent of any adviser in the fund group, because the structure is centered on an unaffiliated administrator rather than on the sponsoring investment adviser.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "corporate-governance",
    "governance-design",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "multimanager series trust arrangements"
   ],
   "supporting_quote": "Unlike the board in a traditional mutual fund governance setting, the board in a multimanager series trust arrangement is largely independent of any advisers within the fund group."
  },
  {
   "id": "kaal:claim:2715083-021",
   "url": "https://wulfkaal.github.io/claims/2715083-021",
   "claim": "Despite open issues and possible shortcomings, the multimanager series trust structure appears to offer lasting substantive governance improvements for mutual funds.",
   "type": "design",
   "topics": [
    "reputation",
    "governance-design",
    "private-funds",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "multimanager series trust governance model"
   ],
   "supporting_quote": "Despite the open issues and possible shortcomings of the multimanager series trust model, the trust model governance structure for mutual funds appears to offer lasting substantive governance improvements for mutual funds (Krug (2016))."
  },
  {
   "id": "kaal:claim:2715083-022",
   "url": "https://wulfkaal.github.io/claims/2715083-022",
   "claim": "The cost savings of the multimanager series trust model are a confluence mechanism: they let a growing number of smaller hedge fund advisers reach retail investors by launching a mutual fund.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "smaller investment advisers by assets under management",
    "advisers seeking retail distribution"
   ],
   "supporting_quote": "The cost savings associated with the multimanager series trust governance model allow the increasing number of smaller hedge fund investment advisers to attract retail investors by setting up a mutual fund."
  },
  {
   "id": "kaal:claim:2715083-023",
   "url": "https://wulfkaal.github.io/claims/2715083-023",
   "claim": "The inherent conflict of interest facing an adviser who simultaneously runs a mutual fund and a hedge fund is an important limiting factor on the continued rise of side-by-side management.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "side-by-side management of a mutual fund and a hedge fund by the same adviser"
   ],
   "supporting_quote": "An important limiting factor in the steady rise of side-by-side management is the inherent conflict of interest for the investment manager (SEC (2003), Chen & Chen (2009) and Cici et al. (2010))."
  },
  {
   "id": "kaal:claim:2715083-024",
   "url": "https://wulfkaal.github.io/claims/2715083-024",
   "claim": "The subadvisory route leaves a regulatory gap: none of the mutual fund manager's obligations, such as daily valuation, public and SEC reporting, or independent boards, reach the private fund adviser serving as subadviser.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "asserted",
   "scope_conditions": [
    "private fund managers subadvising a mutual fund, subfund, or account"
   ],
   "supporting_quote": "none of the mutual fund manager's regulatory obligations (such as daily valuation, public/SEC reporting, independent boards, etc.) apply to the private fund subadviser."
  },
  {
   "id": "kaal:claim:2715083-025",
   "url": "https://wulfkaal.github.io/claims/2715083-025",
   "claim": "For the first time in the industry's history, the Dodd-Frank Act required most hedge fund advisers to register with the SEC, mandating disclosure of information previously treated as proprietary and private.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "disclosure",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "evidenced",
   "scope_conditions": [
    "investment advisers with more than 150 million dollars of assets under management"
   ],
   "supporting_quote": "For the first time in the history of the hedge fund industry, the Dodd-Frank Act required most advisers to hedge funds to register with the SEC."
  },
  {
   "id": "kaal:claim:2715083-026",
   "url": "https://wulfkaal.github.io/claims/2715083-026",
   "claim": "FSOC's SIFI designation framework does not distinguish between mutual and hedge funds, even though evidence indicates designation would have disparate effects on the two asset classes.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "FSOC three stage nonbank SIFI designation process",
    "12 C.F.R. 1310 app. A"
   ],
   "supporting_quote": "While evidence exists that SIFI designation could have disparate affects on mutual and hedge funds (Stevens Letter (2015), the applicable regulatory framework does not distinguish between the two asset classes.44"
  },
  {
   "id": "kaal:claim:2715083-027",
   "url": "https://wulfkaal.github.io/claims/2715083-027",
   "claim": "The confluence trends identified are correlational, not causal: the author expressly disclaims any claim of cause and effect and presents the peripheral effects as long term possibilities warranting monitoring.",
   "type": "definitional",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "asserted",
   "scope_conditions": [
    "scope limitation stated by the author for the entire implications analysis"
   ],
   "supporting_quote": "The emerging process of confluence of mutual and hedge funds can have unexpected peripheral effects that may themselves reinforce confluence of the two asset classes. I do not claim cause and effect in this context."
  },
  {
   "id": "kaal:claim:2715083-028",
   "url": "https://wulfkaal.github.io/claims/2715083-028",
   "claim": "Confluence factors help move the hedge fund industry from the fringes of finance into recognition as part of mainstream finance, aided by increased oversight under Title IV of the Dodd-Frank Act and the JOBS Act.",
   "type": "mechanism",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. hedge fund industry after 2010"
   ],
   "supporting_quote": "Factors associated with confluence of mutual and hedge funds help the hedge fund industry transition from an industry operating at the fringes of finance to be recognized as part of mainstream finance (Baghai et al. (2015) and Muhtaeb (2012))."
  },
  {
   "id": "kaal:claim:2715083-029",
   "url": "https://wulfkaal.github.io/claims/2715083-029",
   "claim": "Merging the regulatory requirements of mutual funds with the formerly distinct rules for hedge funds creates incentives for private investment managers to launch retail alternative funds, which raises supply, then demand, and so feeds back into further confluence.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "post Dodd-Frank regulatory environment for private fund advisers"
   ],
   "supporting_quote": "Merging the regulatory requirements applicable to mutual funds with the formerly more distinct rules applicable to hedge funds creates incentives for private investment managers to set up retail alternative funds."
  },
  {
   "id": "kaal:claim:2715083-030",
   "url": "https://wulfkaal.github.io/claims/2715083-030",
   "claim": "Once a hedge fund adviser is already required to register with the SEC, the marginal regulatory burden of also running a mutual fund or retail alternative fund is small, which gives registered advisers an incentive to enter the registered fund space.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "hedge fund advisers already subject to mandatory SEC registration"
   ],
   "supporting_quote": "Hedge fund advisers who are required to register with the SEC have incentives to also manage mutual funds or set up retail alternative funds because the regulatory burden is minimally higher in comparison with preregistration legal requirements."
  },
  {
   "id": "kaal:claim:2715083-031",
   "url": "https://wulfkaal.github.io/claims/2715083-031",
   "claim": "By tightening the accredited investor net worth standard, the Dodd-Frank Act pushes investors who lose eligibility for hedge fund investments toward hybrid and retail alternative funds, even if the number of affected investors is small.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "individuals near the accredited investor net worth threshold after Dodd-Frank section 413"
   ],
   "supporting_quote": "While the number of such investors may be negligible, investors who no longer qualify for retail alternative fund investments under Dodd-Frank qualified investor standards are likely to seek out hybrid funds."
  },
  {
   "id": "kaal:claim:2715083-032",
   "url": "https://wulfkaal.github.io/claims/2715083-032",
   "claim": "The Volcker Rule cuts banks off from direct hedge fund investment and thereby pushes them toward accessing hedge fund strategies through retail alternative funds, a shift that could be substantial given banks' prior role as major hedge fund investors.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "bank holding companies after July 21, 2015",
    "Dodd-Frank section 619 and related derivatives limits"
   ],
   "supporting_quote": "By limiting banks' investments in derivatives and the hedge funds they sponsor,57 the Dodd-Frank Act limits access to hedge fund investments but incentivizes banks to access hedge fund strategies using a retail alternative fund."
  },
  {
   "id": "kaal:claim:2715083-033",
   "url": "https://wulfkaal.github.io/claims/2715083-033",
   "claim": "The JOBS Act reform underdelivers on its own terms: because investor verification under Rule 506(c) is legally uncertain, hedge fund advisers have better incentives to launch retail alternative funds than to use their new freedom to advertise.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "Rule 506(c) offerings after the general solicitation ban was lifted",
    "also driven by path dependencies and peer pressure"
   ],
   "supporting_quote": "Investment advisers to hedge funds have better incentives to set up retail alternative funds that allow them to offer features that are attractive to retail investors rather than to advertise under the uncertain new regime (Rule 506(c))"
  },
  {
   "id": "kaal:claim:2715083-034",
   "url": "https://wulfkaal.github.io/claims/2715083-034",
   "claim": "Confluence is not one directional: the SEC may counteract some confluence drivers, for instance by curtailing derivative trading and short selling used by retail alternative mutual funds to mimic hedge funds.",
   "type": "predictive",
   "topics": [
    "dynamic-regulation",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "SEC rulemaking and enforcement posture as of 2016"
   ],
   "supporting_quote": "Despite the regulatory trends and investor preference trends favoring increasing confluence of mutual and hedge funds, the SEC might counteract some of the confluence drivers."
  },
  {
   "id": "kaal:claim:2715083-035",
   "url": "https://wulfkaal.github.io/claims/2715083-035",
   "claim": "Amendments to Regulation SHO may deny mutual fund advisers certain hedging techniques, making it less likely that mutual funds can attract retail investors who are looking for alternative investment exposure.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "stocks subject to significant downward price pressure under amended Regulation SHO"
   ],
   "supporting_quote": "Investment advisers to mutual funds may not be able to use certain hedging techniques after the amendment of Regulation SHO, making it less likely for investment advisers running mutual funds to attract retail investors who are seeking alternative investment opportunities."
  },
  {
   "id": "kaal:claim:2715083-036",
   "url": "https://wulfkaal.github.io/claims/2715083-036",
   "claim": "Confluence of mutual and hedge funds contributes to the gradual erosion of the public/private distinction that structures federal securities regulation.",
   "type": "mechanism",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. federal securities regulation after the JOBS Act"
   ],
   "supporting_quote": "Mutual and hedge fund confluence contributes to the gradual erosion of the public/private distinction in federal securities regulation."
  },
  {
   "id": "kaal:claim:2715083-037",
   "url": "https://wulfkaal.github.io/claims/2715083-037",
   "claim": "The evidence assembled here suggests the traditional public/private distinction between mutual and hedge funds is eroding faster than previously anticipated.",
   "type": "empirical",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "based on the growth data and regulatory changes surveyed in this chapter"
   ],
   "supporting_quote": "The evidence listed herein suggests that the traditional public/private distinctions between mutual and hedge funds is eroding at a higher than previously anticipated rate."
  },
  {
   "id": "kaal:claim:2715083-038",
   "url": "https://wulfkaal.github.io/claims/2715083-038",
   "claim": "Rising demand for alternative strategies creates incentives for mutual fund managers to find ways to simulate leverage, in an industry that historically used little leverage and presented little risk.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "mutual fund industry facing sustained retail demand for alternative strategies"
   ],
   "supporting_quote": "while mutual funds have historically used little leverage (or leverage-creating derivatives) and presented little risk, the increasing demand for alternative strategies (Kaal & Anderson 2016) creates incentives for mutual fund managers to seek ways to simulate leverage."
  },
  {
   "id": "kaal:claim:2715083-039",
   "url": "https://wulfkaal.github.io/claims/2715083-039",
   "claim": "The mutual fund industry of the future could carry more risk than its historical averages suggest, a possibility with systemic implications given the comparative size of the mutual fund market.",
   "type": "predictive",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "speculative",
   "scope_conditions": [
    "if the trend toward simulated leverage in mutual funds continues"
   ],
   "supporting_quote": "Given this trend, it seems at least possible that the mutual fund industry of the future could be subjected to more risk than the historical averages suggested in the past."
  },
  {
   "id": "kaal:claim:2715083-040",
   "url": "https://wulfkaal.github.io/claims/2715083-040",
   "claim": "Proposed SEC Rule 18f-4 is a potential threat to the alternative mutual fund business model, because its risk based portfolio limit could undermine managers' ability to implement their investment strategies using derivatives.",
   "type": "predictive",
   "topics": [
    "private-funds",
    "dynamic-regulation",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "year": "2016",
   "source_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "confidence": "argued",
   "scope_conditions": [
    "if proposed Rule 18f-4 is adopted as proposed",
    "alternative mutual funds relying on derivatives"
   ],
   "supporting_quote": "Proposed SEC Rule 18f-461 constitutes a potential threat for the business model of the alternative mutual fund industry."
  },
  {
   "id": "kaal:claim:2816408-001",
   "url": "https://wulfkaal.github.io/claims/2816408-001",
   "claim": "Title IV of the Dodd-Frank Act of 2010 is the most significant regulatory change in the history of the private fund industry, ending decades in which the industry operated with little regulatory supervision.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "asserted",
   "scope_conditions": [
    "United States private fund industry",
    "post 2010"
   ],
   "supporting_quote": "Title IV of the Dodd-Frank Act of 2010 introduced the most significant regulatory change in the history of the private fund industry."
  },
  {
   "id": "kaal:claim:2816408-002",
   "url": "https://wulfkaal.github.io/claims/2816408-002",
   "claim": "Attempts to rescind Title IV through the Investment Advisers Modernization Act of 2016 demonstrate that private fund registration and disclosure obligations under the Dodd-Frank Act are highly politically sensitive.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "asserted",
   "scope_conditions": [
    "United States",
    "2016 legislative context"
   ],
   "supporting_quote": "Politician's attempts to rescind Title IV via the Investment Advisers Modernization Act of 2016 (IAMA 2016) illustrate the highly politically sensitive nature of Dodd-Frank Act registration and disclosure obligations for the private fund industry."
  },
  {
   "id": "kaal:claim:2816408-003",
   "url": "https://wulfkaal.github.io/claims/2816408-003",
   "claim": "Using self-reported Morningstar earnings data for 3,424 US private fund advisers covering 2010 to 2015 in multiple regression discontinuity designs with robustness checks, private fund adviser registration and disclosure under the Dodd-Frank Act had no significant effect on private fund adviser returns.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "research-methods",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "US based private fund advisers subject to Title IV",
    "2010 to 2015 monthly earnings data",
    "registration effective date March 30, 2012 as the discontinuity"
   ],
   "supporting_quote": "Based on the evidence in multiple RD designs including robustness checks, we conclude that private fund adviser registration and disclosure under the Dodd-Frank Act had no significant effect on private fund adviser returns."
  },
  {
   "id": "kaal:claim:2816408-004",
   "url": "https://wulfkaal.github.io/claims/2816408-004",
   "claim": "The evidence contradicts the private fund industry's claim that private fund adviser registration under the Dodd-Frank Act negatively affects private fund performance.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "US private fund advisers",
    "2010 to 2015"
   ],
   "supporting_quote": "This evidence contradicts claims of the private fund industry that private fund adviser registration under the Dodd-Frank Act negatively affects private fund performance."
  },
  {
   "id": "kaal:claim:2816408-005",
   "url": "https://wulfkaal.github.io/claims/2816408-005",
   "claim": "Regulation could depress reported private fund performance through a compliance cost channel: because monthly performance is reported net of fees, a significant increase in compliance costs would show up immediately in monthly performance figures.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "argued",
   "scope_conditions": [
    "performance reported net of fees",
    "compliance costs borne at the fund level"
   ],
   "supporting_quote": "First, regulation could decrease performance by increasing compliance costs. Because private fund advisers' monthly performance is reported net of fees, a significant increase in compliance costs could have an immediate effect on monthly performance."
  },
  {
   "id": "kaal:claim:2816408-006",
   "url": "https://wulfkaal.github.io/claims/2816408-006",
   "claim": "Dodd-Frank Act compliance costs fall most heavily on advisers managing the largest number of reporting funds, because private fund advisers incur roughly $10,000 in compliance cost per reporting fund.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "advisers with multiple reporting funds",
    "per fund cost estimate from Kaal 2013a"
   ],
   "supporting_quote": "Because private fund advisers incur about $10,000 compliance cost per reporting fund (Kaal 2013a), Dodd-Frank Act compliance costs are highest for those advisers in our dataset with the highest number of reporting funds under management."
  },
  {
   "id": "kaal:claim:2816408-007",
   "url": "https://wulfkaal.github.io/claims/2816408-007",
   "claim": "A second channel by which Title IV could lower performance is risk reduction: private fund advisers have expressed concern that regulation will force them to take on less risk and therefore earn lower returns.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "argued",
   "scope_conditions": [
    "advisers subject to registration and disclosure"
   ],
   "supporting_quote": "Second, some private fund advisers have expressed concern that regulation will force them to take on less risk (Kaal 2013a), therefore lowering performance."
  },
  {
   "id": "kaal:claim:2816408-008",
   "url": "https://wulfkaal.github.io/claims/2816408-008",
   "claim": "A third channel is measurement rather than economics: if regulation curbs misreporting, private fund advisers' performance would appear to decrease simply because managers are less able to inflate their monthly returns.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "argued",
   "scope_conditions": [
    "if misreporting was upward biased before regulation",
    "inferred by analogy to findings at public companies and hedge funds"
   ],
   "supporting_quote": "It is possible that similar results apply to private fund advisers, e.g. private fund advisers' performance appeared to decrease because managers were less able to inflate their monthly returns."
  },
  {
   "id": "kaal:claim:2816408-009",
   "url": "https://wulfkaal.github.io/claims/2816408-009",
   "claim": "Surveys of private fund managers conducted in 2012 and 2015 show that a clear majority of managers believed increased compliance costs negatively affect the industry.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents among private fund managers",
    "2012 and 2015 surveys"
   ],
   "supporting_quote": "Kaal (2013a, 2016b) demonstrated in surveys of private fund managers conducted in 2012 and 2015 that a clear majority of private fund managers believed that increased compliance costs negatively affect the industry."
  },
  {
   "id": "kaal:claim:2816408-010",
   "url": "https://wulfkaal.github.io/claims/2816408-010",
   "claim": "Private fund managers themselves distinguish costs from returns: a majority of surveyed managers opined that Dodd-Frank Act registration and disclosure requirements do not affect the returns of the private fund industry, even though compliance costs affect the profitability of their management companies.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "private-funds",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents among private fund managers",
    "2012 and 2015 surveys"
   ],
   "supporting_quote": "the majority of private fund manager respondents opined that registration and disclosure requirements under the Dodd-Frank Act do not affect the returns of the private fund industry (Kaal 2013a, 2016b)."
  },
  {
   "id": "kaal:claim:2816408-011",
   "url": "https://wulfkaal.github.io/claims/2816408-011",
   "claim": "Estimates of annual Dodd-Frank Act compliance cost for private fund advisers range from $50,000 to $400,000 per year.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "registered private fund advisers",
    "estimates drawn from prior work"
   ],
   "supporting_quote": "Some estimates suggest that compliance cost will range from $50,000 to $400,000 per year (Kaal 2013a and 2015b)."
  },
  {
   "id": "kaal:claim:2816408-012",
   "url": "https://wulfkaal.github.io/claims/2816408-012",
   "claim": "Title IV exempts private fund advisers with less than $150 million assets under management from registration, and requires the SEC to weigh investment strategy, size, and governance in determining the systemic risk of private funds.",
   "type": "definitional",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "asserted",
   "scope_conditions": [
    "United States",
    "Dodd-Frank Act section 408"
   ],
   "supporting_quote": "Title IV of the Dodd-Frank Act exempts private fund advisers with less than $150 million AUM from registration (Dodd-Frank Act § 408) and requires the SEC to examine factors including the investment strategy, size, and governance of an investment adviser"
  },
  {
   "id": "kaal:claim:2816408-013",
   "url": "https://wulfkaal.github.io/claims/2816408-013",
   "claim": "The quarterly Form PF reporting obligation imposed on advisers with more than $1.5 billion in regulatory assets under management attributable to private funds exists to give the FSOC timely data for identifying trends in systemic risk.",
   "type": "design",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "asserted",
   "scope_conditions": [
    "advisers with RAUM above $1.5 billion attributable to private funds"
   ],
   "supporting_quote": "The quarterly reporting requirement for large private fund advisers is intended to provide timely data that enables the FSOC to identify trends in systemic risk (IA Release 3308)."
  },
  {
   "id": "kaal:claim:2816408-014",
   "url": "https://wulfkaal.github.io/claims/2816408-014",
   "claim": "Because private funds evolved under low or no regulatory supervision until Dodd-Frank, the large prior literature on private fund performance largely does not assess the implications of private fund regulation, leaving a gap this study fills.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "argued",
   "scope_conditions": [
    "private fund performance literature before Dodd-Frank"
   ],
   "supporting_quote": "Because private funds evolved in a regulatory environment with low or no regulatory supervision until the enactment of the Dodd-Frank Act, most prior studies on private fund performance do not assess the implications of private fund regulation."
  },
  {
   "id": "kaal:claim:2816408-015",
   "url": "https://wulfkaal.github.io/claims/2816408-015",
   "claim": "Beyond the authors' own prior work, there is no other empirical evidence on the effects of the Dodd-Frank Act on the private fund industry.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "asserted",
   "scope_conditions": [
    "as of the paper's writing in 2016"
   ],
   "supporting_quote": "We are not aware of any other empirical evidence on the effects of the Dodd-Frank Act on the private fund industry."
  },
  {
   "id": "kaal:claim:2816408-016",
   "url": "https://wulfkaal.github.io/claims/2816408-016",
   "claim": "The study identifies the causal effect of Title IV by treating the March 30, 2012 registration effective date combined with the $150 million AUM threshold as an exogenous regulatory shock, so that any discontinuity in returns at the cutoff is evidence of a causal treatment effect.",
   "type": "design",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "argued",
   "scope_conditions": [
    "sharp regression discontinuity design",
    "forcing variable is log AUM with threshold at $150 million",
    "treatment date March 30, 2012"
   ],
   "supporting_quote": "The basic idea behind the RD design is that any discontinuity in the conditional distribution of Yi as a function of Xi at the cutoff value c is interpreted as evidence of a causal effect of the treatment."
  },
  {
   "id": "kaal:claim:2816408-017",
   "url": "https://wulfkaal.github.io/claims/2816408-017",
   "claim": "A fuzzy regression discontinuity design was run to test whether the discontinuity occurred at a date other than March 30, 2012, on the theory that advisers may have anticipated compliance costs in the preceding months.",
   "type": "design",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "argued",
   "scope_conditions": [
    "entire sample",
    "anticipation of compliance costs before the effective date"
   ],
   "supporting_quote": "The reason for implementing FRD is that hedge fund advisers may have anticipated the costs of compliance with mandatory disclosure in the months preceding the enactment of the Dodd Frank Act."
  },
  {
   "id": "kaal:claim:2816408-018",
   "url": "https://wulfkaal.github.io/claims/2816408-018",
   "claim": "The sharp and fuzzy regression discontinuity approaches yield results of only minor difference in this setting because the denominator of the fuzzy estimator is very close to one, meaning treatment take up at the threshold is nearly deterministic.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "this sample and threshold",
    "denominator close to 1"
   ],
   "supporting_quote": "However, because the denominator is very close to 1 in our investigation, empirical results show that the differences between the SRD and the FRD approach are of minor importance."
  },
  {
   "id": "kaal:claim:2816408-019",
   "url": "https://wulfkaal.github.io/claims/2816408-019",
   "claim": "Across an array of robustness tests, the requirements introduced by the Dodd-Frank Act create no significant effect on private fund performance, with all reported RD p-values above the 5% level.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "RD results reported in Table 6",
    "entire sample and March 2012 estimates"
   ],
   "supporting_quote": "Using an array of robustness tests validating our RD results, Figures 3-7 suggest that the requirements introduced by the Dodd-Frank Act create no significant effect on private fund performance. The P-values for all RD results in Table 6 are above the 5% level and confirm our finding of no effect."
  },
  {
   "id": "kaal:claim:2816408-020",
   "url": "https://wulfkaal.github.io/claims/2816408-020",
   "claim": "The absence of any statistically significant effect of mandatory disclosure on hedge fund returns suggests that the transparency costs associated with disclosure do not significantly affect the profitability of hedge fund advisers.",
   "type": "empirical",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "argued",
   "scope_conditions": [
    "conditional on the null RD result",
    "US hedge fund advisers around the $150 million threshold"
   ],
   "supporting_quote": "The absence of any statistical significant effect of mandatory disclosure on hedge fund returns may suggest that the transparency costs associated with disclosure do not significantly affect the profitability of hedge fund advisers."
  },
  {
   "id": "kaal:claim:2816408-021",
   "url": "https://wulfkaal.github.io/claims/2816408-021",
   "claim": "In simple linear regressions of monthly returns on log AUM across December 2011 to December 2012, fund size does not appear to matter for fund returns because only a few coefficients are statistically significant and those remain close to zero.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "entire sample of 3,424 funds",
    "monthly cross sections December 2011 to December 2012"
   ],
   "supporting_quote": "We conclude that size of the funds in our sample does not appear to matter for fund returns as only a few coefficients are statistically significant but are still close to zero."
  },
  {
   "id": "kaal:claim:2816408-022",
   "url": "https://wulfkaal.github.io/claims/2816408-022",
   "claim": "Fund size shows a negative relationship with performance in the months before the March 2012 registration effective date and a positive relationship afterward, with beta coefficients negative in January to March 2012 and July 2012 and positive in April and May 2012.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "monthly linear regressions, December 2011 to December 2012",
    "entire sample"
   ],
   "supporting_quote": "Examining the beta coefficients, we notice that in the period January - March 2012 and July 2012, beta coefficients are negative, while immediately after the registration effective date, e.g. April-May 2012 the beta coefficient is positive."
  },
  {
   "id": "kaal:claim:2816408-023",
   "url": "https://wulfkaal.github.io/claims/2816408-023",
   "claim": "In regressions including a dummy for AUM above $150 million, the dummy is statistically significant and positive only in April and September 2012, and the explanatory power of the models measured by R-squared remains very limited.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "linear models with dummy, December 2011 to December 2012",
    "Table 5 results"
   ],
   "supporting_quote": "The dummy variables are statistically significant and positive in April and September 2012. The F-statistics support the validity of the models, while the explanatory power, measured by the R- squared is still very limited."
  },
  {
   "id": "kaal:claim:2816408-024",
   "url": "https://wulfkaal.github.io/claims/2816408-024",
   "claim": "Around the registration effective date, whether a fund's AUM sits above or below the $150 million regulatory threshold does not play a significant role in explaining hedge fund returns for the entire sample.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "entire sample of 3,424 funds",
    "months surrounding March 30, 2012"
   ],
   "supporting_quote": "close to the registration effective date for hedge fund advisers under the Dodd-Frank Act, the size of AUM, above or below the regulatory threshold of $150 million, does not play a significant role in explaining hedge fund returns of the entire sample."
  },
  {
   "id": "kaal:claim:2816408-025",
   "url": "https://wulfkaal.github.io/claims/2816408-025",
   "claim": "About 73% of the sample of 3,424 hedge funds consists of funds with AUM larger than $150 million, and only 26% falls into the smaller subsample.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "Morningstar sample, January to December 2012"
   ],
   "supporting_quote": "About 73% of the entire sample of 3,424 hedge funds consists of funds with AUM larger than $150 million. Only 26% represents the smaller subsample."
  },
  {
   "id": "kaal:claim:2816408-026",
   "url": "https://wulfkaal.github.io/claims/2816408-026",
   "claim": "Smaller funds outperform larger funds in eight of twelve months in 2012, but performance varies strongly across the subsamples with no clearly dominant group on average.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "2012 monthly mean returns",
    "subsamples split at $150 million AUM"
   ],
   "supporting_quote": "Figure 1 shows that smaller funds outperform larger funds in the sample in eight of twelve months in 2012. There is a strong variability in the performance of the subsamples, with on average no clear dominant group."
  },
  {
   "id": "kaal:claim:2816408-027",
   "url": "https://wulfkaal.github.io/claims/2816408-027",
   "claim": "A single point in time RD design anchored to March 30, 2012 is inadequate on its own because advisers could and did register before the deadline, funds near the $150 million threshold could choose between registered adviser and exempt reporting adviser status, and self-reported Morningstar AUM is not calculated the same way as the SEC's RAUM.",
   "type": "failure",
   "topics": [
    "research-methods",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "argued",
   "scope_conditions": [
    "broad RD design in Part IV",
    "Morningstar self-reported AUM"
   ],
   "supporting_quote": "Fourth, the self-reported assets under management numbers in Morningstar are not calculated the same way as the RAUM calculation required by the SEC."
  },
  {
   "id": "kaal:claim:2816408-028",
   "url": "https://wulfkaal.github.io/claims/2816408-028",
   "claim": "To sharpen assignment to treatment and control, actual registration histories were pulled from the SEC's IAPD website and historical Form ADV data and combined with Morningstar variables to build two additional control groups: firms already registered with no status change, and foreign firms completely unaffected by the US legal regime.",
   "type": "design",
   "topics": [
    "disclosure",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "argued",
   "scope_conditions": [
    "tighter RD designs",
    "US versus non-US adviser eligibility rules differ"
   ],
   "supporting_quote": "create two additional control groups of exempt reporting advisers (ERAs): (1) only firms that were already registered and had no change in status, and (2) foreign firms that are completely unaffected by the US legal regime."
  },
  {
   "id": "kaal:claim:2816408-029",
   "url": "https://wulfkaal.github.io/claims/2816408-029",
   "claim": "Tighter RD designs using varying window lengths and hand selected control groups confirm the finding of no effect obtained in the broader design.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "varying pre and post windows",
    "hand selected control groups reported in Appendix A"
   ],
   "supporting_quote": "Appendix A contains the descriptive statistics and RD results of our tighter RD designs analysis. The tighter RD designs analysis confirm our finding of no effect in the broader design in Part IV above."
  },
  {
   "id": "kaal:claim:2816408-030",
   "url": "https://wulfkaal.github.io/claims/2816408-030",
   "claim": "The discontinuity in the data is evident regardless of the number of bins chosen, even though increasing the number of bins smooths the estimated regression function.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "optimal bin choice increased by factors of 20 and 100",
    "Calonico et al. 2013 evenly spaced bin procedure"
   ],
   "supporting_quote": "However, the presence of discontinuity is evident, no matter what number of bins we consider."
  },
  {
   "id": "kaal:claim:2816408-031",
   "url": "https://wulfkaal.github.io/claims/2816408-031",
   "claim": "Prior work by Kaal shows that Dodd-Frank Act registration and increased compliance requirements only marginally increase the cost structure of private funds, and finds non-robust evidence that higher administrative costs are a second-order effect that does not affect overall private fund returns.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "prior survey and cost data in Kaal 2013a, 2015b, 2015c, 2016",
    "evidence described as non-robust"
   ],
   "supporting_quote": "Kaal (2013a, 2015c) finds non-robust evidence that the higher administrative costs imposed by the Dodd-Frank Act are a second-order effect of the regulation, thereby not affecting the overall returns of private funds."
  },
  {
   "id": "kaal:claim:2816408-032",
   "url": "https://wulfkaal.github.io/claims/2816408-032",
   "claim": "For much of its history the private fund industry has treated adviser registration and disclosure of proprietary information as a threat to its profitability, a view this study's evidence does not support.",
   "type": "empirical",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "argued",
   "scope_conditions": [
    "private fund industry over its history"
   ],
   "supporting_quote": "For much of its history, the private fund industry has viewed private fund adviser registration and the disclosure of proprietary information as a threat to its profitability."
  },
  {
   "id": "kaal:claim:2816408-033",
   "url": "https://wulfkaal.github.io/claims/2816408-033",
   "claim": "Relative to existing work, this study uses a much larger dataset and a more sophisticated empirical approach, regression discontinuity, and finds no statistical evidence for an effect of Dodd-Frank Act requirements on private fund advisers' performance.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Private Fund Performance  – Evidence from 2010 – 2015 (2016). SSRN: https://ssrn.com/abstract=2816408",
   "year": "2016",
   "source_sha256": "dc3b2f9e60e42ea1b42c2e0062d65569675b014c05fcd30b15ad44d2410b2ce7",
   "confidence": "evidenced",
   "scope_conditions": [
    "comparison to prior studies of Dodd-Frank effects on private funds"
   ],
   "supporting_quote": "Compared with the existing prior work, in this study, we use a much larger dataset and a more sophisticated empirical approach such as regression discontinuity. We find no statistical evidence for an effect of the requirements introduced by the Dodd-Frank Act on private fund advisers' performance."
  },
  {
   "id": "kaal:claim:2831040-001",
   "url": "https://wulfkaal.github.io/claims/2831040-001",
   "claim": "The pacing problem arises from a two sided divergence: innovation driven by science and technology is accelerating at the same time that federal and state agencies' regulatory processes have slowed down and continue to slow down.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "supporting_quote": "Innovation driven by science and technology is accelerating, yet simultaneously, federal and state agencies' regulatory processes have slowed down"
  },
  {
   "id": "kaal:claim:2831040-002",
   "url": "https://wulfkaal.github.io/claims/2831040-002",
   "claim": "Although the extent and causes of rulemaking ossification remain empirically uncertain, increased legal and evidentiary burdens on regulatory authorities are the consensus explanation for the slowdown in agency rulemaking.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States federal and state agency rulemaking"
   ],
   "supporting_quote": "some consensus exists that the legal and evidentiary burdens placed on regulatory authorities have increased substantially over time, precipitating the remarkable slowdown in rulemaking by regulatory agencies"
  },
  {
   "id": "kaal:claim:2831040-003",
   "url": "https://wulfkaal.github.io/claims/2831040-003",
   "claim": "Regulators face a two ended timing trap: at the early stage of an innovation they lack information about its possible impact, and at the later stage the innovation is entrenched, so regulatory change becomes far more costly for innovating corporations.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "disruptive innovation across a product cycle"
   ],
   "supporting_quote": "Entrenched innovation during a later stage of a product cycle also creates issues for regulation because it becomes much more costly to implement regulatory changes for innovating corporations"
  },
  {
   "id": "kaal:claim:2831040-004",
   "url": "https://wulfkaal.github.io/claims/2831040-004",
   "claim": "Systemic factors widen the divergence between regulation and innovation, including the political and ideological structures of the rulemaking process and the political gridlock of a two party system that impedes the passing of legislation.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "two party legislative systems"
   ],
   "supporting_quote": "Such factors include the political and ideological structures in the rulemaking process, the political gridlock in a two-party system that impedes the passing of legislation"
  },
  {
   "id": "kaal:claim:2831040-005",
   "url": "https://wulfkaal.github.io/claims/2831040-005",
   "claim": "The most widely recognized drawbacks of traditional rulemaking under the Administrative Procedure Act are its lack of speed, its cumbersomeness, and the volume of litigation generated by its notice and comment procedures.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "United States APA notice and comment rulemaking"
   ],
   "supporting_quote": "The most traditional and widely recognized drawbacks of the traditional rulemaking system under the Administrative Procedure Act (APA) include its lacking speed, cumbersomeness, and the quantity of litigation it generates via its notice and comment procedures"
  },
  {
   "id": "kaal:claim:2831040-006",
   "url": "https://wulfkaal.github.io/claims/2831040-006",
   "claim": "The pacing problem is partly a byproduct of the goal of legal certainty: because regulation is designed to be a durable source of predictability, rulemaking driven by legal certainty cannot keep pace as innovation accelerates.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "accelerating innovation"
   ],
   "supporting_quote": "regulation is commonly perceived as a source of predictability and is meant to last; as innovation accelerates, rulemaking driven by legal certainty cannot keep pace"
  },
  {
   "id": "kaal:claim:2831040-007",
   "url": "https://wulfkaal.github.io/claims/2831040-007",
   "claim": "Facts based, ex post, trial and error rulemaking cannot anticipate the regulatory issues created by innovation, so rulemakers may never recognize, or may recognize only much too late, which new regulatory demands apply to a given innovation.",
   "type": "failure",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "ex post trial and error rulemaking in the existing regulatory framework"
   ],
   "supporting_quote": "Because facts-based, ex-post, trial-and-error-rulemaking cannot anticipate regulatory issues created by innovation, rulemakers may not at all–or"
  },
  {
   "id": "kaal:claim:2831040-008",
   "url": "https://wulfkaal.github.io/claims/2831040-008",
   "claim": "Rulemakers rely almost exclusively on stable and presumptively optimal rules meant to be permanent solutions, and that reliance ignores the ever changing rule environment driven by exponential growth in technology and innovation.",
   "type": "failure",
   "topics": [
    "innovation",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "supporting_quote": "created to attain permanent solutions for perceived regulatory issues (Kaal 2014b) ignores the ever-changing environment for rules driven by the exponential growth of technology and the associated exponential growth of innovation"
  },
  {
   "id": "kaal:claim:2831040-009",
   "url": "https://wulfkaal.github.io/claims/2831040-009",
   "claim": "Formal rulemaking in the existing regulatory infrastructure is almost always too time consuming, because product innovation moves fast enough that regulations covering an innovative product are obsolete before they are finalized.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "formal rulemaking directed at fast moving innovative products"
   ],
   "supporting_quote": "Formal rulemaking in the existing regulatory infrastructure is almost always too time-consuming (Sunstein 1999, McGarity 1992) because the speed of product innovation often makes regulations pertaining to an innovative product obsolete before such regulations are finalized"
  },
  {
   "id": "kaal:claim:2831040-010",
   "url": "https://wulfkaal.github.io/claims/2831040-010",
   "claim": "An existing regulatory infrastructure built on stable and presumptively optimal rules is largely incapable of addressing the ever increasing unknown future contingencies associated with disruptive innovation.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "disruptive innovation"
   ],
   "supporting_quote": "the existing regulatory infrastructure with stable and presumptively optimal rules is largely incapable of addressing the ever-increasing unknown future contingencies associated with disruptive innovation"
  },
  {
   "id": "kaal:claim:2831040-011",
   "url": "https://wulfkaal.github.io/claims/2831040-011",
   "claim": "Introducing a regulatory update where genuine regulatory reform is needed can deteriorate the relationship between regulation and innovation, because innovation driven by changing values and societal norms calls for reform rather than incremental updating.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "innovation driven by shifting values and societal norms"
   ],
   "supporting_quote": "If changing values and societal norms are driving innovation, calling for a regulatory reform, introducing a regulatory update where regulatory reform is needed can deteriorate the relationship between regulation and innovation"
  },
  {
   "id": "kaal:claim:2831040-012",
   "url": "https://wulfkaal.github.io/claims/2831040-012",
   "claim": "The existing regulatory framework is sub optimally equipped to remedy both existing and future regulatory challenges associated with exponential innovation, which is the first premise for integrating dynamic elements into the regulation of innovation.",
   "type": "condition",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "exponential innovation"
   ],
   "supporting_quote": "the existing regulatory framework is sub- optimally equipped for remedying the existing and future regulatory challenges associated with exponential innovation"
  },
  {
   "id": "kaal:claim:2831040-013",
   "url": "https://wulfkaal.github.io/claims/2831040-013",
   "claim": "The faster the cycle of disruptive innovation, the shorter the timeline for society to adapt and respond with a familiar pattern of laws, regulation, and frameworks, which gives disruptive exponential innovation a potentially destabilizing effect on society.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "accelerating cycles of disruptive innovation"
   ],
   "supporting_quote": "The faster the cycle of disruptive innovation, the shorter the timeline for society to adapt and respond to such innovation with a familiar pattern of laws, regulation and frameworks."
  },
  {
   "id": "kaal:claim:2831040-014",
   "url": "https://wulfkaal.github.io/claims/2831040-014",
   "claim": "Dynamic elements in the regulation of innovation are a supplement to the existing regulatory framework rather than a replacement for it, and their intent is to optimize that framework.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "asserted",
   "supporting_quote": "The author sees dynamic elements in the regulation of innovation as a supplement to the existing regulatory framework. The intent here is to help optimize that framework."
  },
  {
   "id": "kaal:claim:2831040-015",
   "url": "https://wulfkaal.github.io/claims/2831040-015",
   "claim": "The three core law and technology proposals for the pacing problem, regulation via the judiciary, early stage regulation of innovation, and principles based regulation, all have practical limitations and none of them uses dynamic regulatory elements.",
   "type": "failure",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "supporting_quote": "None of these proposals uses dynamic regulatory elements. By contrast, dynamic regulation emphasizes dynamic elements in regulating innovation."
  },
  {
   "id": "kaal:claim:2831040-016",
   "url": "https://wulfkaal.github.io/claims/2831040-016",
   "claim": "Addressing the regulatory issues created by innovation outpacing law through the judiciary is insufficient in the face of exponential innovation, because increasing evidence shows courts cannot sufficiently counterbalance the shortcomings of the legislative system.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "exponential innovation"
   ],
   "supporting_quote": "Addressing the regulatory issues associated with innovation outpacing law via the judiciary is insufficient in the face of exponential innovation."
  },
  {
   "id": "kaal:claim:2831040-017",
   "url": "https://wulfkaal.github.io/claims/2831040-017",
   "claim": "The doctrine of stare decisis and judicial adherence to precedent decided decades or centuries earlier mean the court system is structurally a suspension system for rapid change, built to supply stability and predictability rather than speed.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "common law court systems bound by precedent"
   ],
   "supporting_quote": "The doctrine of stare decisis and the courts' adherence to and application of precedent decided decades or centuries earlier illustrate that the court system is actually structured as a suspension system for rapid change in order to provide stability and predictability."
  },
  {
   "id": "kaal:claim:2831040-018",
   "url": "https://wulfkaal.github.io/claims/2831040-018",
   "claim": "Litigation in the court system can take years, which increases the likelihood that courts will not react in a timely manner, much less in real time, to exponential innovation.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "exponential innovation"
   ],
   "supporting_quote": "Litigation in the court system can take years, which increases the likelihood that the court system will not react in a timely manner, much less in real-time, to exponential innovation."
  },
  {
   "id": "kaal:claim:2831040-019",
   "url": "https://wulfkaal.github.io/claims/2831040-019",
   "claim": "Dynamic regulatory mechanisms are already replacing litigation and will continue to replace it.",
   "type": "predictive",
   "topics": [
    "dynamic-regulation",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "asserted",
   "supporting_quote": "Dynamic regulatory mechanisms are already replacing and will continue to replace litigation."
  },
  {
   "id": "kaal:claim:2831040-020",
   "url": "https://wulfkaal.github.io/claims/2831040-020",
   "claim": "Deferred prosecution agreements produce relevant, real time, decentralized, high quality information for regulation in most industries and are used as a preferred alternative to litigation by both prosecutors and corporations.",
   "type": "empirical",
   "topics": [
    "compliance",
    "decentralization",
    "law-and-legal-systems",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "evidenced",
   "scope_conditions": [
    "most industries where DPAs are available"
   ],
   "supporting_quote": "Dynamic regulatory mechanisms such as deferred prosecution agreements (DPAs) produce relevant, real-time, decentralized, high quality information for regulation in most industries and are used as a preferred alternative to litigation by both prosecutors and corporations"
  },
  {
   "id": "kaal:claim:2831040-021",
   "url": "https://wulfkaal.github.io/claims/2831040-021",
   "claim": "Deferred prosecution agreements produce superior feedback effects for regulation because the prosecutor's investigation and the negotiation and execution of the agreement signal regulatory needs in real time.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "supporting_quote": "DPAs produce superior feedback effects for regulation as the prosecutor's investigation and DPA negotiations and executions signal regulatory needs real-time."
  },
  {
   "id": "kaal:claim:2831040-022",
   "url": "https://wulfkaal.github.io/claims/2831040-022",
   "claim": "Despite the consensus favoring it, early regulatory intervention in innovation is rare in practice, and regulation mostly fails to keep pace as the innovation evolves and as understanding and use of the technology spreads.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "supporting_quote": "In practice, however, early regulatory intervention in innovation is rare. Regulation mostly does not keep pace as the innovation evolves and as the understanding and use of innovative technology spreads"
  },
  {
   "id": "kaal:claim:2831040-023",
   "url": "https://wulfkaal.github.io/claims/2831040-023",
   "claim": "Early regulatory intervention is subject to massive information asymmetries and associated regulatory uncertainty because the early stage of an innovation often provides insufficient information about its possible risks and benefits.",
   "type": "failure",
   "topics": [
    "disclosure",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "early stage innovation"
   ],
   "supporting_quote": "early regulatory intervention in evolving innovative products/services etc. is subject to massive information asymmetries and associated regulatory uncertainty. The early stage of innovation often provides insufficient information on possible risks and benefits of the innovation."
  },
  {
   "id": "kaal:claim:2831040-024",
   "url": "https://wulfkaal.github.io/claims/2831040-024",
   "claim": "In the later stages of more matured innovation it is often not possible to alter the regulatory status quo, which closes the window that early intervention proposals depend on.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "matured innovation"
   ],
   "supporting_quote": "In the later stages of more matured innovation, it is often not possible to alter the status quo of regulation."
  },
  {
   "id": "kaal:claim:2831040-025",
   "url": "https://wulfkaal.github.io/claims/2831040-025",
   "claim": "Early regulatory intervention becomes unnecessary in a dynamic regulatory framework, because the regulatory challenges associated with innovation would become transparent in real time through improved, decentralized information and feedback effects.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "disclosure",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "a functioning dynamic regulatory framework"
   ],
   "supporting_quote": "Because in a dynamic regulatory framework, the regulatory challenges associated with innovation would become transparent in real- time, early regulatory intervention would not be necessary."
  },
  {
   "id": "kaal:claim:2831040-026",
   "url": "https://wulfkaal.github.io/claims/2831040-026",
   "claim": "In the dynamic regulatory framework, feedback effects and real time information permit regulatory intervention if and only when it is needed, which avoids stunting innovation through negative early signals, the inability to keep pace with later stage innovation, and information asymmetries.",
   "type": "design",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "theoretical dynamic regulatory framework"
   ],
   "supporting_quote": "In the theoretical dynamic regulatory framework, feedback effects and real-time information on regulatory challenges associated with innovation allow regulatory intervention if and only when needed."
  },
  {
   "id": "kaal:claim:2831040-027",
   "url": "https://wulfkaal.github.io/claims/2831040-027",
   "claim": "The downsides of principles based regulation are a costly and time consuming transition from rules based regulation, uncertainty, and compliance problems that follow from that uncertainty.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "a shift from rules based to principles based regulation"
   ],
   "supporting_quote": "The downsides of principles-based regulation include a costly and time consuming change from rules-based regulations to principles-based regulation, uncertainty, and compliance problems because of uncertainty"
  },
  {
   "id": "kaal:claim:2831040-028",
   "url": "https://wulfkaal.github.io/claims/2831040-028",
   "claim": "Because dynamic regulation operates as a supplement inside the existing rulemaking framework, it does not require the costly implementation that a shift to principles based regulation would require.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "supporting_quote": "regulatory supplement in the existing rulemaking framework, costly implementation would not be necessary, unlike in the case of principles-based regulation."
  },
  {
   "id": "kaal:claim:2831040-029",
   "url": "https://wulfkaal.github.io/claims/2831040-029",
   "claim": "Dynamic regulatory mechanisms avoid legal uncertainty better than principles based regulation because in the dynamic framework rulemaking follows feedback processes that are transparent to both the affected industries and the regulators.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "supporting_quote": "Dynamic regulatory mechanisms also avoid legal uncertainty more than principles-based regulation because in the dynamic framework rulemaking can happen after feedback processes that are transparent to both the affected industries and the regulators."
  },
  {
   "id": "kaal:claim:2831040-030",
   "url": "https://wulfkaal.github.io/claims/2831040-030",
   "claim": "The pace of innovation is incompatible with existing regulatory approaches that demand comprehensive knowledge as a precondition for regulatory action, because innovation is too decentralized, too fast, and too pervasive.",
   "type": "failure",
   "topics": [
    "governance-design",
    "citation-and-knowledge",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "regulatory approaches conditioned on comprehensive prior knowledge"
   ],
   "supporting_quote": "the pace of innovation is incompatible with existing regulatory approaches that demand comprehensive knowledge as a basis for taking regulatory action because innovation is too decentralized, too fast, and too pervasive"
  },
  {
   "id": "kaal:claim:2831040-031",
   "url": "https://wulfkaal.github.io/claims/2831040-031",
   "claim": "The United States lacks an anticipatory system at the national level because no mechanism exists for bringing foresight and policymaking into an effective relationship.",
   "type": "failure",
   "topics": [
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "United States national government"
   ],
   "supporting_quote": "the United States lacks an anticipatory system at the national level because no mechanism exists for bringing foresight and policymaking into an effective relationship"
  },
  {
   "id": "kaal:claim:2831040-032",
   "url": "https://wulfkaal.github.io/claims/2831040-032",
   "claim": "Anticipatory rulemaking in the dynamic framework is accomplished by combining institution specific, decentralized, and timely information with feedback effects, which can occur between public and private rulemakers, between outcomes and institutions, across jurisdictions, and between rules and rulemaking processes.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "supporting_quote": "It relies on the use of institution-specific, decentralized, and timely information5 in combination with feedback effects (Kaal 2014b). Feedback effects can occur in several settings including feedback processes between different public and private rulemakers"
  },
  {
   "id": "kaal:claim:2831040-033",
   "url": "https://wulfkaal.github.io/claims/2831040-033",
   "claim": "Deferred prosecution agreements and venture capital investment decisions increase the availability of relevant, decentralized, and timely information for rulemaking and give at least some estimate of where innovative trends exist and what regulatory challenges may accompany them.",
   "type": "mechanism",
   "topics": [
    "innovation",
    "compliance",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "supporting_quote": "DPAs and venture capital investment decisions increase the availability of relevant, decentralized, and timely information for rulemaking"
  },
  {
   "id": "kaal:claim:2831040-034",
   "url": "https://wulfkaal.github.io/claims/2831040-034",
   "claim": "Dynamic regulatory tools lower unforeseen contingencies in innovation related rulemaking because their feedback effects supply relevant, timely, decentralized, and institution specific information ex ante, which also helps maintain certainty in the rulemaking process.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "supporting_quote": "By increasing the availability of information ex-ante, dynamic regulatory tools help lower unforeseen contingencies in the rulemaking process pertaining to innovation. Improved information for rulemaking also helps maintaining certainty in the rulemaking process."
  },
  {
   "id": "kaal:claim:2831040-035",
   "url": "https://wulfkaal.github.io/claims/2831040-035",
   "claim": "Private rulemakers hold a comparative advantage over public rulemakers because they often can produce and access necessary, comparable, decentralized, and institution specific information for rulemaking and can react more readily to emerging information.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "supporting_quote": "Private rulemakers can have a comparative advantage over public rulemakers because, unlike their public counterparts, they often can produce necessary, comparable, decentralized, and institution-specific information for rulemaking."
  },
  {
   "id": "kaal:claim:2831040-036",
   "url": "https://wulfkaal.github.io/claims/2831040-036",
   "claim": "Rules operate as a feedback effect on the rulemaking process itself: rules with suboptimal characteristics result from institutional arrangements and then reinforce those suboptimal arrangements, and stable presumptively optimal rules reinforce an institutional structure that perpetuates stability in rules.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "supporting_quote": "Existing rules create a feedback effect for the rulemaking process itself. Rules with suboptimal characteristics are the results of institutional arrangements and reinforce suboptimal institutional arrangements and rulemaking processes."
  },
  {
   "id": "kaal:claim:2831040-037",
   "url": "https://wulfkaal.github.io/claims/2831040-037",
   "claim": "Consumer choice adds a dynamic element to rulemaking because once consumers opt out of a suboptimal regulatory regime, public rulemakers in that jurisdiction can adjust their rulemaking in response, creating a feedback effect for the public rulemaker.",
   "type": "mechanism",
   "topics": [
    "economics",
    "institutional-design",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions where consumers can opt out of a regulatory regime"
   ],
   "supporting_quote": "Consumer choice can add a dynamic element to the rulemaking process because public rulemakers in a given jurisdiction can adjust rulemaking to consumer choice once consumers have opted out of a suboptimal regulatory regime in that jurisdiction."
  },
  {
   "id": "kaal:claim:2831040-038",
   "url": "https://wulfkaal.github.io/claims/2831040-038",
   "claim": "Dynamic regulation optimizes anticipatory governance for innovation by emphasizing adaptation to and anticipation of the unforeseen contingencies associated with innovation.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "supporting_quote": "Dynamic regulation can help optimize anticipatory governance for innovation by emphasizing the adaptation to and anticipation of unforeseen contingencies associated with innovation."
  },
  {
   "id": "kaal:claim:2831040-039",
   "url": "https://wulfkaal.github.io/claims/2831040-039",
   "claim": "Rulemaking in the dynamic framework is an integral part of innovation that both supports innovation and curtails it, for innovation's own sake and for the maximization of societal welfare.",
   "type": "normative",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "asserted",
   "supporting_quote": "Rulemaking in the dynamic framework is seen as an integral part of innovation that supports the innovation but also curtails it for its own sake and maximization of societal welfare."
  },
  {
   "id": "kaal:claim:2831040-040",
   "url": "https://wulfkaal.github.io/claims/2831040-040",
   "claim": "Regulation of innovation in a dynamic framework is triggered only as a supplement to the existing rulemaking framework, and only if and when feedback effects anticipate otherwise unforeseen contingencies and regulatory needs associated with innovation.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Dynamic Regulation for Innovation (2016). SSRN: https://ssrn.com/abstract=2831040",
   "year": "2016",
   "source_sha256": "de5156f14f44a5753cab55b6c4b03049eda58a143b99e08ef427aee1d261e1bf",
   "confidence": "argued",
   "scope_conditions": [
    "existing rulemaking framework remains in place"
   ],
   "supporting_quote": "Regulation of innovation in a dynamic framework is only triggered as a supplement to the existing rulemaking framework if and when feedback effects anticipate otherwise unforeseen contingencies and regulatory needs associated with innovation."
  },
  {
   "id": "kaal:claim:2748096-001",
   "url": "https://wulfkaal.github.io/claims/2748096-001",
   "claim": "Government assessments of hedge fund systemic risk conflict directly: the OFR, FSB, and IOSCO treat private fund activities as important threats to the financial system, while the UK Financial Services Authority concluded from its first comprehensive survey of London's private fund industry that hedge funds pose no systemic risk.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "comparison of post-crisis U.S. and UK regulator reports"
   ],
   "supporting_quote": "By contrast, the Financial Services Authority (FSA) (2010) in the United Kingdom concluded in its first comprehensive survey of London's private fund industry that the hedge fund industry poses no systemic risk to the financial system."
  },
  {
   "id": "kaal:claim:2748096-002",
   "url": "https://wulfkaal.github.io/claims/2748096-002",
   "claim": "Despite conflicting government reports, the weight of post-crisis evidence from leading financial economists supports the conclusion that hedge funds introduce at least some systemic risk into the financial system.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives",
    "empirical-evidence",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "post-crisis academic literature",
    "claim is qualified: some, not dominant, systemic risk"
   ],
   "supporting_quote": "Despite the mixed evidence produced by government reports on hedge funds' systemic risk, the majority of post-crisis evidence provided by leading financial economists suggests that hedge funds may play a role in introducing at least some systemic risk into the financial system."
  },
  {
   "id": "kaal:claim:2748096-003",
   "url": "https://wulfkaal.github.io/claims/2748096-003",
   "claim": "Public perception, rather than measured risk, is the principal driver of the hedge fund systemic risk debate and of the policy responses to it, and that perception is shaped chiefly by industry growth and by the collapse of prominent funds.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "asserted",
   "supporting_quote": "largely drives the debate on hedge funds' systemic risk and policy responses. Several core factors drive this perception, including, most prominently, the growth of the hedge fund industry and the collapse of prominent hedge funds."
  },
  {
   "id": "kaal:claim:2748096-004",
   "url": "https://wulfkaal.github.io/claims/2748096-004",
   "claim": "Hedge fund assets under management grew from $118 billion at the end of 1997 to more than $2.7 trillion by the end of 2014, a compound annual growth rate of 19 percent.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "global hedge fund industry, 1997 to 2014",
    "BarclayHedge data"
   ],
   "supporting_quote": "assets under management (AUM) at hedge funds grew from $118 billion at the end of 1997 to more than $2.7 trillion by the end of 2014 (BarclayHedge 2016). This change represents a compound annual growth of 19 percent."
  },
  {
   "id": "kaal:claim:2748096-005",
   "url": "https://wulfkaal.github.io/claims/2748096-005",
   "claim": "The combination of unprecedented private fund industry growth and the low interest rate environment produced by post-crisis quantitative easing pushed private fund managers into reaching for yield, and the leverage and complex derivative transactions used to boost that yield further increased private funds' systemic risk.",
   "type": "mechanism",
   "topics": [
    "defi",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "post-2008 low interest rate environment",
    "quantitative easing by the Federal Reserve"
   ],
   "supporting_quote": "The unprecedented growth in the private fund industry combined with the low interest rate environment following the Federal Reserve's quantitative easing after the financial crisis resulted in private fund managers' increasingly \"reaching for yield.\""
  },
  {
   "id": "kaal:claim:2748096-006",
   "url": "https://wulfkaal.github.io/claims/2748096-006",
   "claim": "Because hedge fund losses are absorbed directly by a large and dispersed body of investors and their equity capital, private fund advisers are unlikely to trigger a systemic event, and their activity may even reduce market volatility.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to funds financed by investor equity rather than short term debt"
   ],
   "supporting_quote": "But some research suggests that private fund advisers are unlikely to trigger a systemic event because losses in hedge funds are directly absorbed by the multitude of investors and their equity capital and may actually reduce market volatility"
  },
  {
   "id": "kaal:claim:2748096-007",
   "url": "https://wulfkaal.github.io/claims/2748096-007",
   "claim": "Post-LTCM counterparty credit risk management, in which regulators pressed banks to monitor and limit the leverage of their hedge fund clients, appears to have worked: the Amaranth failure produced no financial market repercussions.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "systemic-risk",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "post-1998 regulatory environment",
    "inference drawn from a single episode, the Amaranth failure"
   ],
   "supporting_quote": "The lack of financial market repercussions after the Amaranth failure seems to suggest that this approach has been successful."
  },
  {
   "id": "kaal:claim:2748096-008",
   "url": "https://wulfkaal.github.io/claims/2748096-008",
   "claim": "Market events like the LTCM failure can escalate into global financial crises when many highly leveraged hedge funds holding illiquid portfolios are obligors of a small number of major financial institutions, because adverse price movements dry up credit and depress collateral values.",
   "type": "condition",
   "topics": [
    "defi",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "high leverage",
    "illiquid fund portfolios",
    "concentration of lending among few major financial institutions",
    "adverse fluctuations in market prices"
   ],
   "supporting_quote": "A large part of the literature recognizes that market events such as the LTCM failure may lead to global financial crises if many highly leveraged hedge funds with illiquid portfolios are obligors of a small number of major financial institutions"
  },
  {
   "id": "kaal:claim:2748096-009",
   "url": "https://wulfkaal.github.io/claims/2748096-009",
   "claim": "Private fund advisers in the shadow banking system perform bank-like functions, providing liquidity to clients and to financial markets and engaging in various forms of liquidity transformation, and the vulnerabilities this creates may have large implications for financial stability.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "defi",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to private fund advisers engaged in liquidity provision and liquidity transformation"
   ],
   "supporting_quote": "Like banks, private fund advisers can provide liquidity to clients and to financial markets and engage in various forms of liquidity transformation. The vulnerabilities created by private fund advisers engaging in bank-like activities may have large implications for financial stability."
  },
  {
   "id": "kaal:claim:2748096-010",
   "url": "https://wulfkaal.github.io/claims/2748096-010",
   "claim": "Any conclusion that hedge funds contributed to the financial crisis of 2007-2008 is circumstantial or anecdotal, because the data needed to test it, on leverage, counterparty relations, AUM, and portfolio holdings, were not collected for any substantial period before the crisis.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "research-methods",
    "risk-and-incentives",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "applies to retrospective assessment of the 2007-2008 crisis",
    "SEC systemic risk data collection began only after Title IV of the Dodd-Frank Act"
   ],
   "supporting_quote": "Without such data for a substantial time period before the financial crisis, concluding that hedge funds may have had a role in the financial crisis is circumstantial or anecdotal."
  },
  {
   "id": "kaal:claim:2748096-011",
   "url": "https://wulfkaal.github.io/claims/2748096-011",
   "claim": "The opacity of the hedge fund shadow banking system blocks direct measurement of hedge funds' role in the crisis, leaving researchers with indirect measures extracted from existing data rather than primary pre-crisis sources.",
   "type": "failure",
   "topics": [
    "disclosure",
    "systemic-risk",
    "research-methods",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "absence of access to primary pre-crisis hedge fund data"
   ],
   "supporting_quote": "the shadow banking system of hedge funds and the lack of sufficient transparency create substantial obstacles to implementing direct measures, especially without the access to primary sources of data regarding hedge funds before the crisis."
  },
  {
   "id": "kaal:claim:2748096-012",
   "url": "https://wulfkaal.github.io/claims/2748096-012",
   "claim": "The contagion story, in which hedge fund losses spread to other financial institutions and undermine systemic stability, is counterbalanced in practice because hedge fund collapses are rarely sudden and almost always unfold in incremental steps over a long period.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "describes observed hedge fund collapse dynamics rather than theoretical models"
   ],
   "supporting_quote": "First, hedge fund collapses are rarely sudden but in practice almost always occur in incremental steps over a long time period."
  },
  {
   "id": "kaal:claim:2748096-013",
   "url": "https://wulfkaal.github.io/claims/2748096-013",
   "claim": "Hedge funds' risk management practices are typically evolved enough to constitute a major barrier to systemic shocks, and their trading counterparties and lenders further help prevent losses large enough to disrupt the financial system.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "compliance",
    "systemic-risk",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "asserted",
   "scope_conditions": [
    "assumes counterparties and lenders actively monitor fund exposures"
   ],
   "supporting_quote": "Hedge funds' risk management practices are typically so evolved that they constitute a major barrier to systemic shocks. Hedge funds' counterparties in trades and lenders to hedge funds can also help prevent large losses that could disrupt the financial system."
  },
  {
   "id": "kaal:claim:2748096-014",
   "url": "https://wulfkaal.github.io/claims/2748096-014",
   "claim": "Hedge fund losses large enough to affect the overall economy did not appear until after the crisis and recession had already been triggered by the mortgage market collapse and sustained stock market losses, which places hedge funds downstream of the crisis rather than at its origin.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "financial crisis of 2007-2008"
   ],
   "supporting_quote": "evidence also exists that hedge fund losses that could have affected the overall economy did not occur until the financial crisis and the recession had been triggered by the mortgage market collapse and sustained stock market losses"
  },
  {
   "id": "kaal:claim:2748096-015",
   "url": "https://wulfkaal.github.io/claims/2748096-015",
   "claim": "Pre-crisis regulatory attention was misallocated: although Bernanke identified failure to manage counterparty risk as the primary cause for concern, the SEC and the Senate Banking Committee concentrated on hedge fund transparency instead.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. regulatory response between the 1998 LTCM failure and the 2007-2008 crisis"
   ],
   "supporting_quote": "The focus of both of these entities, however, centers more on the issue of hedge fund transparency than on counterparty risk."
  },
  {
   "id": "kaal:claim:2748096-016",
   "url": "https://wulfkaal.github.io/claims/2748096-016",
   "claim": "Even if the risks hedge funds pose to financial institutions are often overstated, liquidity risk remains a serious issue because of the critical linkages created by over-the-counter credit risk relations.",
   "type": "mechanism",
   "topics": [
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "applies where hedge fund exposures run through over-the-counter credit relationships"
   ],
   "supporting_quote": "While the risks to financial institutions are often overstated, liquidity risk remains a serious issue due to the critical linkages created by over-the-counter credit risk relations."
  },
  {
   "id": "kaal:claim:2748096-017",
   "url": "https://wulfkaal.github.io/claims/2748096-017",
   "claim": "The performance pressure on hedge fund managers incentivizes them to take disproportionately high risks in order to deliver sufficient client returns, and those disproportionate risks translate into proportional systemic risks.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "systemic-risk",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "holds where managers must generate returns sufficient to retain clients"
   ],
   "supporting_quote": "Arguably, in order to obtain sufficient returns for their clients, hedge fund managers are incentivized to take disproportionately high risks in their management strategies, which can translate into proportional systemic risks."
  },
  {
   "id": "kaal:claim:2748096-018",
   "url": "https://wulfkaal.github.io/claims/2748096-018",
   "claim": "Market-neutral arbitrage strategies implicitly minimize systemic risk, because funds using them construct returns that do not depend on the direction of the market.",
   "type": "mechanism",
   "topics": [
    "economics",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "asserted",
   "scope_conditions": [
    "applies only to funds running some form of market-neutral arbitrage"
   ],
   "supporting_quote": "However, because many hedge funds engage in some form of market-neutral arbitrage to ensure that returns do not depend on the direction of the market, they may implicitly minimize systemic risk."
  },
  {
   "id": "kaal:claim:2748096-019",
   "url": "https://wulfkaal.github.io/claims/2748096-019",
   "claim": "Redemption driven selling during the financial crisis of 2007-2008 was industry wide in scale: the hedge fund industry liquidated about 30 percent of its stock holdings.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "financial crisis of 2007-2008",
    "driven by investor and lender redemptions and the need to liquidate positions"
   ],
   "supporting_quote": "the hedge fund industry liquidated about 30 percent of its stock holdings (Ben-David et. al. 2012)."
  },
  {
   "id": "kaal:claim:2748096-020",
   "url": "https://wulfkaal.github.io/claims/2748096-020",
   "claim": "The systemic risk of hedge fund leverage comes from its capacity to amplify liquidity losses and to contribute to asset overvaluation during bull markets, not from leverage as such.",
   "type": "mechanism",
   "topics": [
    "defi",
    "economics",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "supporting_quote": "Systemic risks associated with hedge funds' use of leverage stems from its ability to amplify liquidity losses and contribute to the overvaluation of assets during bull markets."
  },
  {
   "id": "kaal:claim:2748096-021",
   "url": "https://wulfkaal.github.io/claims/2748096-021",
   "claim": "When hedge funds simultaneously liquidate positions and reduce leverage, leverage generates a fire-sale externality that raises systemic risk, arising when a fund must sell assets it regards as drastically undervalued in order to meet margin calls or redemption requests.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "simultaneous deleveraging across funds",
    "binding margin calls or redemption requests"
   ],
   "supporting_quote": "If hedge funds simultaneously liquidate positions and reduce leverage, leverage can also increase the risk of a fire-sale externality that increases systemic risk."
  },
  {
   "id": "kaal:claim:2748096-022",
   "url": "https://wulfkaal.github.io/claims/2748096-022",
   "claim": "Concern about hedge fund leverage is empirically overstated: since the collapse of LTCM in 1998 the industry's exposure to leverage has been relatively modest, especially compared with the mean leverage of investment banks and broker/dealers.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "post-1998 period",
    "comparison benchmark is investment banks and broker/dealers"
   ],
   "supporting_quote": "evidence exists that the hedge fund industry's exposure to leverage has been relatively modest since the collapse of LTCM in 1998, especially compared with the mean leverage of investment banks and broker/dealers (Ang, Gorovyy, and Van Inwegen 2011)."
  },
  {
   "id": "kaal:claim:2748096-023",
   "url": "https://wulfkaal.github.io/claims/2748096-023",
   "claim": "Strategy diversification does not insulate the hedge fund industry from systemic risk: returns across different hedge fund strategies were more correlated during the financial crisis of 2007-2008 than before it, so the industry can pose systemic risk despite investing across a broad spectrum of assets and strategies.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "periods of market stress",
    "evidence drawn from the 2007-2008 crisis"
   ],
   "supporting_quote": "hedge fund returns should not affect their systemic risk. However, evidence exists that the returns of different hedge fund strategies were more correlated during the financial crisis of 2007-2008 than before the crisis"
  },
  {
   "id": "kaal:claim:2748096-024",
   "url": "https://wulfkaal.github.io/claims/2748096-024",
   "claim": "Hedge fund contagion is defined as correlation over and above what one would expect from economic fundamentals, and clusters of suboptimal returns across investment styles count as contagion precisely because known risk factors for hedge fund performance cannot explain them.",
   "type": "definitional",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "definition adopted from Bekaert, Harvey, and Ng (2005)"
   ],
   "supporting_quote": "Because risk factors associated with hedge fund performance cannot explain such clusters, they can reflect contagion (Boyson et. al. 2010)."
  },
  {
   "id": "kaal:claim:2748096-025",
   "url": "https://wulfkaal.github.io/claims/2748096-025",
   "claim": "The growth of hedge fund replication strategies packaged in exchange traded funds may further increase the systemic risks associated with certain hedge fund strategies.",
   "type": "predictive",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "speculative",
   "scope_conditions": [
    "applies to ETF based replication of hedge fund strategies"
   ],
   "supporting_quote": "The growth of hedge fund replication strategies in exchange-traded funds (ETFs) may further increase hedge funds' systemic risks associated with certain strategies (Ramaswamy 2011)."
  },
  {
   "id": "kaal:claim:2748096-026",
   "url": "https://wulfkaal.github.io/claims/2748096-026",
   "claim": "Title IV of the Dodd-Frank Act addresses alleged hedge fund systemic risk through an information strategy rather than a substantive one: it authorized the SEC to require registration and enhanced disclosure from private fund advisers and to facilitate data collection for assessing systemic risk.",
   "type": "design",
   "topics": [
    "securities-law",
    "disclosure",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "asserted",
   "scope_conditions": [
    "U.S. private fund advisers with more than $150 million AUM"
   ],
   "supporting_quote": "The Dodd-Frank Act authorized the SEC to promulgate rules requiring registration and enhanced disclosure for private funds advisers, and facilitating data collection to assess hedge funds' systemic risk."
  },
  {
   "id": "kaal:claim:2748096-027",
   "url": "https://wulfkaal.github.io/claims/2748096-027",
   "claim": "The FSOC's powers over hedge funds and other nonbank financial institutions are broad and unprecedented in U.S. financial regulation, including the power to subject hedge funds to extensive Federal Reserve supervision and to designate a fund systemically important on its own initiative by a two-thirds vote.",
   "type": "empirical",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "asserted",
   "scope_conditions": [
    "post-Dodd-Frank U.S. regulatory structure"
   ],
   "supporting_quote": "The FSOC's powers over hedge funds and other nonbank financial institutions are broad and unprecedented in U.S. financial regulation. The FSOC has the power to subject hedge funds to extensive supervision by the Federal Reserve."
  },
  {
   "id": "kaal:claim:2748096-028",
   "url": "https://wulfkaal.github.io/claims/2748096-028",
   "claim": "The SIFI designation regime does not reach hedge funds in practice: because the asset threshold is set high, at $50 billion or more in aggregate total consolidated assets, hedge funds are unlikely to be designated as systemically important financial institutions.",
   "type": "failure",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. SIFI designation under the Dodd-Frank Act",
    "$50 billion aggregate total consolidated asset threshold"
   ],
   "supporting_quote": "However, hedge funds are unlikely to be designated as SIFIs because of the high threshold on AUM."
  },
  {
   "id": "kaal:claim:2748096-029",
   "url": "https://wulfkaal.github.io/claims/2748096-029",
   "claim": "About 18 percent of hedge funds ceased operations in 2008, yet little evidence exists that these failures generated losses at prime brokers or other financial institutions, which weakens the direct transmission account of hedge fund systemic risk.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "hedge fund closures during 2008",
    "RAND Corporation study"
   ],
   "supporting_quote": "According to the report, about 18 percent of hedge funds ceased operations in 2008, although little evidence exists that these fund failures contributed to losses at prime brokers or other financial institutions."
  },
  {
   "id": "kaal:claim:2748096-030",
   "url": "https://wulfkaal.github.io/claims/2748096-030",
   "claim": "The theoretical link between hedge funds and systemic risk rests on limits to arbitrage: speculators' capital is finite, their capacity to supply liquidity depends on funding, and that funding can dry up abruptly in periods of financial distress, producing liquidity spirals amplified by rising return correlations, higher volatility, and flight to quality.",
   "type": "mechanism",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "periods of financial distress",
    "speculators dependent on external funding"
   ],
   "supporting_quote": "These models rely on the concept that speculators' capital is not unlimited, but rather that their ability to provide liquidity is dependent on funding, and that this funding can suddenly dry up in periods of financial distress and lead to liquidity spirals."
  },
  {
   "id": "kaal:claim:2748096-031",
   "url": "https://wulfkaal.github.io/claims/2748096-031",
   "claim": "Hedge fund redemptions and margin calls, both liquidity reducing events, were the primary drivers of asset selloffs during the financial crisis of 2007-2008, and hedge fund investors are three times more likely than mutual fund investors to withdraw capital during market downturns.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "financial crisis of 2007-2008",
    "comparison group is mutual fund investors"
   ],
   "supporting_quote": "hedge fund redemptions and margin calls, which are liquidity reducing events, were the primary drivers of selloffs during the financial crisis of 2007-2008. They demonstrate that hedge fund investors are three times more likely to withdraw capital during market downturns"
  },
  {
   "id": "kaal:claim:2748096-032",
   "url": "https://wulfkaal.github.io/claims/2748096-032",
   "claim": "Although hedge fund return volatility is less sensitive to financial system risks than that of brokers, banks, and insurance companies, nonlinear Granger causality tests show that between 2001 and 2008 volatility was transmitted across all parts of the system, including from hedge funds to brokers and banks.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "2001 to 2008 sample",
    "result depends on nonlinear Granger causality tests rather than principal components analysis"
   ],
   "supporting_quote": "they find that volatility between 2001 and 2008 is transmitted across all parts of the system, including from hedge funds to brokers and banks."
  },
  {
   "id": "kaal:claim:2748096-033",
   "url": "https://wulfkaal.github.io/claims/2748096-033",
   "claim": "Hedge fund redemption policies are not irrelevant to risk: the rewards to liquidity risk are positive in part because redemption gates allow hedge funds to avoid asset fire sales.",
   "type": "mechanism",
   "topics": [
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "funds with redemption restrictions such as gates"
   ],
   "supporting_quote": "In contrast, Teo finds that the rewards to liquidity risk are positive in part because redemption gates help hedge funds avoid asset fire sales."
  },
  {
   "id": "kaal:claim:2748096-034",
   "url": "https://wulfkaal.github.io/claims/2748096-034",
   "claim": "Traditional risk-adjusted alphas underestimate hedge fund risk: once correlation risk is controlled for, previously observed significant hedge fund alphas disappear, which makes correlation risk a systematic risk factor for hedge fund returns.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "cross-sectional analysis of individual hedge fund returns"
   ],
   "supporting_quote": "This finding is important because traditional risk-adjusted alphas may underestimate hedge fund risk."
  },
  {
   "id": "kaal:claim:2748096-035",
   "url": "https://wulfkaal.github.io/claims/2748096-035",
   "claim": "Once liquidity risk is incorporated into the analysis, the superior performance previously attributed to predictability in managerial skills disappears in hedge fund portfolios.",
   "type": "failure",
   "topics": [
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "hedge fund portfolios formed on predictability in managerial skill"
   ],
   "supporting_quote": "They find that the outperformance previously attributed to predictability in managerial skills disappears in hedge fund portfolios when accounting for liquidity risk."
  },
  {
   "id": "kaal:claim:2748096-036",
   "url": "https://wulfkaal.github.io/claims/2748096-036",
   "claim": "Risk measures that are not adjusted for serial correlation in hedge fund returns can considerably underestimate the true extent of both individual and systemic hedge fund risk, so empirical work in this area must account for autocorrelation.",
   "type": "failure",
   "topics": [
    "research-methods",
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to empirical studies of hedge fund returns"
   ],
   "supporting_quote": "unadjusted risk measures can considerably underestimate the true extent of individual and systemic risks for hedge funds."
  },
  {
   "id": "kaal:claim:2748096-037",
   "url": "https://wulfkaal.github.io/claims/2748096-037",
   "claim": "Systemic risk rankings that place a loosely defined other financial services sector above banking and insurance are of limited use, because the analysis does not clearly identify the firms included in that category even though a substantial portion of them may be hedge funds.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "research-methods",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "applies to CoVaR based sector rankings of systemic risk contribution"
   ],
   "supporting_quote": "Their analysis, however, does not clearly identify firms included in this \"other\" financial services sector even though a substantial portion of these entities may be hedge funds."
  },
  {
   "id": "kaal:claim:2748096-038",
   "url": "https://wulfkaal.github.io/claims/2748096-038",
   "claim": "Hedge funds now supply funding to the banking system that may be rapidly withdrawn during a liquidity crisis and supply a substantial share of the sellers' side of the credit default swap market, thereby assuming risks traditionally held by investment banks and insurance companies.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "applies to hedge funds operating within the shadow banking system"
   ],
   "supporting_quote": "He highlights the risk that hedge funds are providing funding to the banking system, which may be rapidly withdrawn during a liquidity crisis."
  },
  {
   "id": "kaal:claim:2748096-039",
   "url": "https://wulfkaal.github.io/claims/2748096-039",
   "claim": "Hedge funds have the potential both to amplify and to mitigate systemic risk, and which effect dominates turns on their particular risk management incentives, leverage, and investment strategies, which is why the academic evidence remains mixed.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "conclusion drawn from the mixed post-crisis literature"
   ],
   "supporting_quote": "Hedge funds may have the potential to amplify and/or mitigate systemic risks due to their particular risk management incentives, leverage, and investment strategies."
  },
  {
   "id": "kaal:claim:2748096-040",
   "url": "https://wulfkaal.github.io/claims/2748096-040",
   "claim": "The most useful product of the post-crisis empirical literature for regulators is a set of methodologies for evaluating hedge fund systemic risk and prescribing remedies, especially methodologies addressing the counterparty credit measures of hedge funds and their prime brokers.",
   "type": "design",
   "topics": [
    "research-methods",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "year": "2016",
   "source_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "confidence": "argued",
   "scope_conditions": [
    "directed at regulators evaluating hedge fund systemic risk"
   ],
   "supporting_quote": "The extensive results of the post-crisis empirical studies provide regulators with an abundance of methodologies to evaluate the extent of these risks and to prescribe potential remedies, especially regarding the counterparty credit measures of hedge funds and their prime brokers."
  },
  {
   "id": "kaal:claim:2808132-001",
   "url": "https://wulfkaal.github.io/claims/2808132-001",
   "claim": "Regulation is usually reactive because it responds to facts, but the current environment is one of data rather than settled facts; regulation must therefore become proactive and dynamically responsive to data and trends.",
   "type": "normative",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "environments of exponential disruptive innovation",
    "where data on emerging trends precedes settled facts"
   ],
   "supporting_quote": "Disruptive innovation creates increasing regulatory challenges. The reason for this is simple: Regulation is usually reactive, responding to facts. However, we currently live in a world of data, not facts. Regulation must therefore be proactive and dynamically"
  },
  {
   "id": "kaal:claim:2808132-002",
   "url": "https://wulfkaal.github.io/claims/2808132-002",
   "claim": "Ex post facts-based, trial-and-error rulemaking combined with stable and presumptively optimal rules often produces suboptimal regulatory outcomes, and those outcomes are no longer sustainable in an environment of exponential disruptive innovation.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "regulatory-failure",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "existing regulatory framework relying on stable and presumptively optimal rules",
    "environment of exponential disruptive innovation"
   ],
   "supporting_quote": "of these. The ex-post facts-based and trial-and-error-rulemaking with stable and presumptively optimal rules7 in the existing regulatory framework8 often produces suboptimal regulatory outcomes that are no longer sustainable in an environment of"
  },
  {
   "id": "kaal:claim:2808132-003",
   "url": "https://wulfkaal.github.io/claims/2808132-003",
   "claim": "In an environment of exponential disruptive innovation, the information rulemakers need is less likely to materialize soon enough for traditional rulemaking to be effective, regulatory issues become more complex, and unknown future contingencies increase substantially.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "innovation",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "exponential rather than incremental innovation",
    "traditional information-dependent rulemaking processes"
   ],
   "supporting_quote": "environment of exponential disruptive innovation, relevant information for rulemaking is less likely to materialize soon enough for traditional rulemaking to be effective, regulatory issues become increasingly complex, and unknown future contingencies"
  },
  {
   "id": "kaal:claim:2808132-004",
   "url": "https://wulfkaal.github.io/claims/2808132-004",
   "claim": "Exponential disruptive innovation has the potential to overwhelm the existing regulatory process entirely, not merely to strain it.",
   "type": "failure",
   "topics": [
    "innovation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "exponential rates of innovation",
    "existing institutional rulemaking infrastructure"
   ],
   "supporting_quote": "increase substantially in the rulemaking process.12 In short, exponential disruptive innovation has the potential to overwhelm the existing regulatory process.13"
  },
  {
   "id": "kaal:claim:2808132-005",
   "url": "https://wulfkaal.github.io/claims/2808132-005",
   "claim": "Dynamic regulation is defined as conceptualizing regulatory phenomena in relation to both preceding and succeeding events, using institution-specific and decentralized information to generate feedback effects that support anticipatory rulemaking.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation",
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "asserted",
   "supporting_quote": "The theory of dynamic regulation conceptualizes the study of regulatory phenomena in relation to preceding and succeeding events, using institution-specific and decentralized information to facilitate feedback effects for anticipatory rulemaking.105"
  },
  {
   "id": "kaal:claim:2808132-006",
   "url": "https://wulfkaal.github.io/claims/2808132-006",
   "claim": "Data derived from venture capital investments can function as a dynamic regulatory supplement for disruptive innovation, because venture capital's financial allocations to innovative projects supply feedback for dynamic regulation.",
   "type": "design",
   "topics": [
    "innovation",
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "evidenced",
   "scope_conditions": [
    "where venture capital investment allocation data is available to regulators",
    "United States venture capital market, 2005 to 2015"
   ],
   "supporting_quote": "We show that data derived from venture capital investments can function as a dynamic regulatory supplement for disruptive innovation. Venture capital's financial allocations to innovative projects can provide feedback for dynamic regulation of"
  },
  {
   "id": "kaal:claim:2808132-007",
   "url": "https://wulfkaal.github.io/claims/2808132-007",
   "claim": "A market leader's failure to invest in disruptive technologies often results in an abrupt loss of market dominance and frequently in total replacement in that market.",
   "type": "failure",
   "topics": [
    "innovation",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "evidenced",
   "scope_conditions": [
    "incumbent firms facing disruptive rather than sustaining technologies"
   ],
   "supporting_quote": "technology. 36 A market leader's lack of investment in disruptive technologies often results in the abrupt loss of market dominance and often even total replacement in such markets.37 Market leaders often shortsightedly refuse to cannibalize their market dominance"
  },
  {
   "id": "kaal:claim:2808132-008",
   "url": "https://wulfkaal.github.io/claims/2808132-008",
   "claim": "Market leaders, successful institutions, and managers fail specifically when they do not distinguish sustaining technologies from disruptive technologies.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "established firms with existing customer bases and mainstream market orientation"
   ],
   "supporting_quote": "markets.38 Market leaders, successful institutions, and managers fail when they do not distinguish sustaining technologies from disruptive technologies.39"
  },
  {
   "id": "kaal:claim:2808132-009",
   "url": "https://wulfkaal.github.io/claims/2808132-009",
   "claim": "Because artificial intelligence is not recognized as a subject of law in national or international law, it has no legal personality and therefore cannot be personally liable for damages it causes.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "current national and international legal frameworks",
    "autonomous AI acting without supervision"
   ],
   "supporting_quote": "provisions in the existing regulatory framework. However, national and international law do not (currently) recognize AI as a subject of law. Without legal personality, AI cannot be personally liable for damages.63 With autonomous AI playing an expanding role in"
  },
  {
   "id": "kaal:claim:2808132-010",
   "url": "https://wulfkaal.github.io/claims/2808132-010",
   "claim": "When disruptive firms do not comply with existing rules or effectively create their own exemptions because the existing framework does not reach them, public policy goals can be undermined and incumbent firms that remain subject to the rules suffer severe competitive disadvantages.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "economics",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "disruptive products or services outside existing regulatory categories",
    "no appropriate replacement rules available"
   ],
   "supporting_quote": "regulatory framework does not apply and appropriate rules are not available, public policy goals can be undermined and incumbent firms that continue to be subject to existing rules encounter often severe competitive disadvantages.70 To counteract such"
  },
  {
   "id": "kaal:claim:2808132-011",
   "url": "https://wulfkaal.github.io/claims/2808132-011",
   "claim": "Incumbent firms facing a perceived threat from disruptive innovation may respond by using the existing regulatory process itself to create obstacles that prevent disruptive firms from competing.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "incumbents already burdened by existing rules",
    "disruptive entrants operating outside or partly outside those rules"
   ],
   "supporting_quote": "disadvantages, incumbent firms that are exposed to a perceived threat of disruptive innovation from disruptive firms may attempt to use the existing regulatory process to create obstacles for disruptive firms to compete."
  },
  {
   "id": "kaal:claim:2808132-012",
   "url": "https://wulfkaal.github.io/claims/2808132-012",
   "claim": "The political system is less likely to be able to resolve the challenges of disruptive innovation because the increasing complexity of innovation-driven regulatory issues causes confusion among political and policy makers about rapidly emerging change.",
   "type": "mechanism",
   "topics": [
    "economics",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "rapidly emerging and technically complex disruptive change"
   ],
   "supporting_quote": "political system is, however, less likely to be able to deal with the challenges of disruptive innovation because the increasing complexity of innovation-driven regulatory issues causes political and policy makers' confusion over rapidly-emerging disruptive"
  },
  {
   "id": "kaal:claim:2808132-013",
   "url": "https://wulfkaal.github.io/claims/2808132-013",
   "claim": "The existing regulatory infrastructure cannot sufficiently distinguish beneficial innovation from harmful innovation and therefore cannot harness the beneficial kind.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "asserted",
   "scope_conditions": [
    "existing regulatory infrastructure without dynamic or anticipatory elements"
   ],
   "supporting_quote": "The existing regulatory infrastructure cannot sufficiently distinguish and harness beneficial innovation. Rulemakers' inability to address regulatory issues associated with"
  },
  {
   "id": "kaal:claim:2808132-014",
   "url": "https://wulfkaal.github.io/claims/2808132-014",
   "claim": "Rulemakers' inability to address disruptive innovation will generate high levels of legal uncertainty and inconsistency that inhibit innovation during technological transition, and technological transition is likely to become a permanent state, so the inhibiting effect becomes permanent too.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "age of continuous disruptive innovation",
    "fragmented multi-agency regulatory structures"
   ],
   "supporting_quote": "disruptive innovation will likely generate high levels of legal uncertainty and inconsistency74 that inhibit innovation during technological transition periods; and technological transition is likely going to be a permanent state in the age of disruptive"
  },
  {
   "id": "kaal:claim:2808132-015",
   "url": "https://wulfkaal.github.io/claims/2808132-015",
   "claim": "The current regulatory framework lacks any mechanism that anticipatorily informs rulemakers of beneficial innovative ideas, and because the rulemaking process prohibits ex parte communications and integrates cross-industry brainstorming poorly, the process may actually undermine innovation.",
   "type": "failure",
   "topics": [
    "innovation",
    "dynamic-regulation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "notice and comment rulemaking under the existing administrative framework"
   ],
   "supporting_quote": "informs rulemakers of beneficial innovative ideas. In fact, the existing rulemaking process prohibits ex parte communications and insufficiently integrates brainstorming and ideas across industries, and therefore may actually undermine innovation."
  },
  {
   "id": "kaal:claim:2808132-016",
   "url": "https://wulfkaal.github.io/claims/2808132-016",
   "claim": "The ex post facts-based approach to rulemaking worked historically because the optimal requirements for rules only become clear once stable and presumptively optimal rules have already emerged as suboptimal; the availability of that information is therefore a prerequisite for rulemaking.",
   "type": "condition",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "historically stable economic and market environments",
    "rulemaking dependent on realized facts"
   ],
   "supporting_quote": "change. The ex-post facts-based approach to rulemaking has functioned in the existing regulatory framework because optimal requirements for rules do become clear when stable and presumptively optimal rules emerge as suboptimal. A prerequisite for"
  },
  {
   "id": "kaal:claim:2808132-017",
   "url": "https://wulfkaal.github.io/claims/2808132-017",
   "claim": "Because facts-based rulemaking does not anticipate the regulatory issues created by innovation, rulemakers may realize far too late, or never, what new regulatory demands a given innovation generates.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "age of exponential innovation",
    "purely reactive facts-based rulemaking"
   ],
   "supporting_quote": "facts-based rulemaking did not anticipate regulatory issues created by innovation, rulemakers may not at all or much too late realize what new regulatory demands apply to a given innovation and associated regulatory issue."
  },
  {
   "id": "kaal:claim:2808132-018",
   "url": "https://wulfkaal.github.io/claims/2808132-018",
   "claim": "Stable and presumptively optimal rules are created to address regulatory issues that lawmakers perceive through centralized information under then-existing economic and market conditions, and are drafted as permanent solutions to those perceived issues.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "asserted",
   "scope_conditions": [
    "Congress, regulatory agencies, self-regulatory bodies, and the regulation literature"
   ],
   "supporting_quote": "presumptively optimal rules.76 Such stable and presumptively optimal rules are created to address perceived regulatory issues identified by lawmakers through centralized information in the then-existing economic and market conditions. Stable and"
  },
  {
   "id": "kaal:claim:2808132-019",
   "url": "https://wulfkaal.github.io/claims/2808132-019",
   "claim": "Because rulemakers are increasingly unlikely to be able to protect the public through stable and presumptively optimal rules alone, regulatory supplements that enable anticipatory rulemaking become justified.",
   "type": "condition",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "exponential growth of technology and associated complexity of regulatory issues",
    "rulemakers unable to adequately protect constituents"
   ],
   "supporting_quote": "rulemakers will be able to effectively protect the public via stable and presumptively optimal rules. If rulemakers cannot adequately protect their constituents, regulatory supplements facilitating anticipatory rulemaking may be justified."
  },
  {
   "id": "kaal:claim:2808132-020",
   "url": "https://wulfkaal.github.io/claims/2808132-020",
   "claim": "The historically evolved rulemaking infrastructure could cope with its own collective action problems, regulatory cycles, and trial-and-error rulemaking without major disruption because the scope of regulatory issues was limited and institutional designs were consensus driven.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "small, stable, less interconnected societies with limited upward mobility",
    "limited and readily identifiable sets of regulatory issues"
   ],
   "supporting_quote": "issues.80 Because of the limited scope of regulatory issues and the need for consensus- driven institutional designs, the historically evolved infrastructure for rulemaking could cope with its inherent collective action problems,81 regulatory cycles,82 and trial-and-error"
  },
  {
   "id": "kaal:claim:2808132-021",
   "url": "https://wulfkaal.github.io/claims/2808132-021",
   "claim": "Regulatory timing under disruptive innovation is a two-sided failure: regulating too early risks inhibiting innovation, while withholding regulation too long risks harm to consumers and markets once regulatory inertia sets in around the disruptive product or service.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "disruptive products or services not yet settled in the market"
   ],
   "supporting_quote": "The timing of regulation in an environment of disruptive innovation should be a primary concern for policy makers. If policy makers regulate too early, they risk inhibiting innovation; if they withhold regulation too long, they may harm consumers and"
  },
  {
   "id": "kaal:claim:2808132-022",
   "url": "https://wulfkaal.github.io/claims/2808132-022",
   "claim": "Formal rulemaking is simply too time-consuming for an environment of disruptive innovation; the speed of product innovation alone makes formal rulemaking in the existing infrastructure unworkable.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "systemic-risk",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "evidenced",
   "scope_conditions": [
    "formal and notice and comment rulemaking in the existing regulatory infrastructure",
    "rapid product innovation cycles"
   ],
   "supporting_quote": "speed of product innovation alone makes formal rulemaking in the existing regulatory infrastructure challenging. Formal rulemaking is simply too time-consuming.89 The speed of product innovation makes it possible to bring a new product to market while formal"
  },
  {
   "id": "kaal:claim:2808132-023",
   "url": "https://wulfkaal.github.io/claims/2808132-023",
   "claim": "Because formal rulemaking takes months and often years, regulators are still processing the previous product launch while new products reach the market, and new regulations pertaining to an innovative product can be obsolete before they are finalized.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "multi-month or multi-year regulatory procedures",
    "fast product launch cycles"
   ],
   "supporting_quote": "rulemaking in the existing regulatory infrastructure, taking months and often years of regulatory procedure, is still dealing with the last product launch. New regulations pertaining to an innovative product could be obsolete before they are finalized.90"
  },
  {
   "id": "kaal:claim:2808132-024",
   "url": "https://wulfkaal.github.io/claims/2808132-024",
   "claim": "Because it lacks anticipatory capabilities, the existing regulatory system only addresses regulatory issues ex post, and then only if core constituents are burdened enough to generate sufficient political pressure for lawmakers to act.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "existing regulatory infrastructure built on stable and presumptively optimal rules"
   ],
   "supporting_quote": "associated with disruptive innovation. Because it lacks anticipatory rulemaking capabilities, the existing regulatory system addresses regulatory issues only ex-post, if and when they materialize and if core constituents are sufficiently burdened to precipitate"
  },
  {
   "id": "kaal:claim:2808132-025",
   "url": "https://wulfkaal.github.io/claims/2808132-025",
   "claim": "Evidence exists that the suboptimal ex post timing of rulemaking in the existing regulatory infrastructure regularly forces expedited rulemaking, which in turn produces suboptimal regulatory outcomes.",
   "type": "empirical",
   "topics": [
    "dynamic-regulation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "evidenced",
   "scope_conditions": [
    "crisis-driven and post-crisis legislative episodes",
    "existing regulatory infrastructure"
   ],
   "supporting_quote": "enough political pressure for lawmakers to act.91 Evidence exists that the suboptimal ex- post timing of rulemaking in the existing regulatory infrastructure regularly requires expedited rulemaking that results in suboptimal regulatory outcomes.92 Rulemakers often"
  },
  {
   "id": "kaal:claim:2808132-026",
   "url": "https://wulfkaal.github.io/claims/2808132-026",
   "claim": "Despite their insufficient anticipatory capabilities and known downsides, stable and presumptively optimal rules remain the uniform response to perceived regulatory issues.",
   "type": "failure",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "asserted",
   "scope_conditions": [
    "existing regulatory framework"
   ],
   "supporting_quote": "amendments, and repeals to address such shortcomings. Despite its insufficient anticipatory capabilities and all the downsides that are associated with it, stable and presumptively optimal rules remain the uniform response to perceived regulatory issues.94"
  },
  {
   "id": "kaal:claim:2808132-027",
   "url": "https://wulfkaal.github.io/claims/2808132-027",
   "claim": "The current process of rule revisions, amendments, and repeals used to correct the inevitable shortcomings of stable rules is costly and time-consuming, and in the authors' estimation it cannot keep track of future innovations and their corresponding regulatory needs.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "existing regulatory framework relying on ex post rule revision",
    "accelerating pace of innovation"
   ],
   "supporting_quote": "important for rulemaking. The current process of rule revisions, amendments, and repeals to address inevitable shortcomings of stable rules is costly, time-consuming, and cannot, in our estimation, keep track of future innovations and corresponding regulatory needs."
  },
  {
   "id": "kaal:claim:2808132-028",
   "url": "https://wulfkaal.github.io/claims/2808132-028",
   "claim": "The collective action problem of rulemaking, the problems of trial-and-error rulemaking, and the problems of regulatory cycles derive largely from the nature of stable and presumptively optimal rules themselves, not from unrelated institutional defects.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "regulatory regimes whose outcomes are stable rather than adaptive"
   ],
   "supporting_quote": "problems associated with trial-and-error rulemaking, and problems associated with regulatory cycles derive largely from the nature of stable and presumptively optimal rules.108 Rulemaking with dynamic elements increases the use of institution-specific,"
  },
  {
   "id": "kaal:claim:2808132-029",
   "url": "https://wulfkaal.github.io/claims/2808132-029",
   "claim": "Adaptive rulemaking helps overcome the collective action problem of rulemaking because when there are fewer stable rules, latent majority groups and dominant minority groups have fewer opportunities to influence a continuously and timely adapting process.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "rulemaking processes that incorporate dynamic and adaptive elements",
    "presence of organized interest groups competing for influence"
   ],
   "supporting_quote": "rulemaking helps overcome the collective action problem of rulemaking because with fewer stable rules latent majority groups and dominant minority groups have fewer opportunities to influence the continuously and timely adapting rulemaking process."
  },
  {
   "id": "kaal:claim:2808132-030",
   "url": "https://wulfkaal.github.io/claims/2808132-030",
   "claim": "Regulatory cycles and trial-and-error rulemaking become less prevalent under adaptive rulemaking because adaptive capabilities supplement stable rules, making rule revisions less frequent.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "rulemaking processes supplemented with adaptive capabilities"
   ],
   "supporting_quote": "Similarly, regulatory cycles and trial-and-error rulemaking become less prevalent because adaptive rulemaking processes supplement stable rules with adaptive capabilities that make rule revisions less prevalent and minimize trial-and error rulemaking."
  },
  {
   "id": "kaal:claim:2808132-031",
   "url": "https://wulfkaal.github.io/claims/2808132-031",
   "claim": "Unrestricted exchange of information between public and private rulemakers creates regulatory synergies that increase the availability of relevant, decentralized, and timely information for rulemaking and thereby generate feedback effects.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "decentralization",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "settings permitting open information exchange between public and private rulemakers"
   ],
   "supporting_quote": "feedback processes.115 The unrestricted exchange of information between public- and private rulemakers can create regulatory synergies that increase the availability of relevant, decentralized, and timely information for rulemaking116 and facilitate feedback"
  },
  {
   "id": "kaal:claim:2808132-032",
   "url": "https://wulfkaal.github.io/claims/2808132-032",
   "claim": "Through feedback effects, rulemakers in a dynamic regulatory framework can adopt rules that are adaptable to future states of the world rather than fixed to current conditions.",
   "type": "design",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "rulemaking institutions that integrate feedback processes"
   ],
   "supporting_quote": "effects.117 Existing rules can provide feedback effects for the rulemaking process itself. Through feedback effects, rulemakers in a dynamic regulatory framework can adopt rules that are adaptable to future states of the world."
  },
  {
   "id": "kaal:claim:2808132-033",
   "url": "https://wulfkaal.github.io/claims/2808132-033",
   "claim": "Dynamic regulatory tools lower unforeseen contingencies in rulemaking because the feedback effect supplies relevant, timely, decentralized, and institution-specific information ex ante, allowing rulemakers to adapt to contingencies as they arise.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "rulemaking supplemented by dynamic regulatory tools generating feedback"
   ],
   "supporting_quote": "because a feedback effect provides relevant, timely, decentralized, and institution-specific information ex-ante. By increasing the availability of information ex-ante, dynamic regulatory tools help lower unforeseen contingencies in the rulemaking process."
  },
  {
   "id": "kaal:claim:2808132-034",
   "url": "https://wulfkaal.github.io/claims/2808132-034",
   "claim": "A core problem for most regulation is its inaccurate and delayed timing, which follows from the collective action problem of regulation, path dependencies, and political inertia rather than from any single institutional defect.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "most regulation in the existing framework",
    "regulation that follows business cycles rather than preceding crises"
   ],
   "supporting_quote": "Dynamic elements in rulemaking can help optimize the timing of rule enactment. A core problem for most regulation is its inaccurate and delayed timing. Because of the collective action problem of regulation, path dependencies, and political inertia, among"
  },
  {
   "id": "kaal:claim:2808132-035",
   "url": "https://wulfkaal.github.io/claims/2808132-035",
   "claim": "By identifying possible contingencies and necessary rule revisions with optimized ex ante information, dynamic regulatory supplements make adaptive rulemaking rather than stable rulemaking the focal point of the regulatory process.",
   "type": "design",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "regulatory processes that incorporate dynamic supplements and feedback effects"
   ],
   "supporting_quote": "revisions before rules emerge as suboptimal.119 By identifying possible contingencies and necessary rule revisions with optimized information ex-ante, dynamic regulatory supplements make adaptive rulemaking the focal point for rulemaking in a dynamic framework.120"
  },
  {
   "id": "kaal:claim:2808132-036",
   "url": "https://wulfkaal.github.io/claims/2808132-036",
   "claim": "Dynamic regulatory supplements would not violate the procedural mandates of the Administrative Procedure Act, because the full lawmaking process still applies; dynamic regulation supplements rather than replaces the existing rulemaking process.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "United States administrative law under the Administrative Procedure Act"
   ],
   "supporting_quote": "Dynamic regulatory supplements would not violate mandated regulatory procedures in the APA126 as the full lawmaking process still applies.127 Dynamic regulation functions as a regulatory supplement to help optimize the existing rulemaking process."
  },
  {
   "id": "kaal:claim:2808132-037",
   "url": "https://wulfkaal.github.io/claims/2808132-037",
   "claim": "Venture capital deal flow, meaning the totality of potential deals and business plans screened by venture capitalists, would provide the optimal assessment of innovation trends, but that data is not available, so realized investment allocations must be used as a second-best proxy.",
   "type": "condition",
   "topics": [
    "innovation",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "asserted",
   "scope_conditions": [
    "current data availability from commercial venture capital databases"
   ],
   "supporting_quote": "innovation trends. While deal flow, that is, the totality of potential deals and business plans screened by venture capitalists, would provide an optimal assessment of innovation trends, deal flow data is not available. We therefore use venture capital investment"
  },
  {
   "id": "kaal:claim:2808132-038",
   "url": "https://wulfkaal.github.io/claims/2808132-038",
   "claim": "The study's evidence base is a PitchBook dataset of 77,508 United States venture capital deals involving 37,298 companies from 2005 through 2015, covering all venture capital deals and all venture capital stages.",
   "type": "empirical",
   "topics": [
    "innovation",
    "empirical-evidence",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States venture capital deals, 2005 through 2015"
   ],
   "supporting_quote": "innovation trends, we use a PitchBook Data, Inc. dataset on venture capital deals in the United States. The dataset comprises 77,508 deals involving 37,298 companies from 2005 through 2015. It includes all VC deals and all VC stages."
  },
  {
   "id": "kaal:claim:2808132-039",
   "url": "https://wulfkaal.github.io/claims/2808132-039",
   "claim": "A more granular assessment of venture capital investments in Big Data and software as a service can provide regulators with much needed feedback on the regulatory needs associated with those areas.",
   "type": "design",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "evidenced",
   "scope_conditions": [
    "industries disproportionately represented in later venture capital series",
    "regulators willing to conduct granular data analysis"
   ],
   "supporting_quote": "8-11 below. A more granular assessment of the VC investments in Big Data and SaaS can provide much needed feedback for regulators on associated regulatory needs."
  },
  {
   "id": "kaal:claim:2808132-040",
   "url": "https://wulfkaal.github.io/claims/2808132-040",
   "claim": "Although aggregate venture capital sector data arguably only confirms what media reporting already showed for 2005 to 2015, the venture capital data, especially examined granularly, may provide earlier signals for regulators to identify areas of prospective regulatory need.",
   "type": "predictive",
   "topics": [
    "innovation",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "granular rather than aggregate examination of the venture capital data",
    "areas of increasingly disruptive innovation"
   ],
   "supporting_quote": "only confirms media reporting on innovation trends between 2005 and 2015, the VC data used herein may provide earlier signals for regulators to identify possible areas of regulatory need in the face of increasingly disruptive innovation."
  },
  {
   "id": "kaal:claim:2808132-041",
   "url": "https://wulfkaal.github.io/claims/2808132-041",
   "claim": "The dominance of later stage venture capital investments could be read as risk-averse follow-on behavior, but venture capital funds are unlikely to make later stage investments unless portfolio companies substantially fulfilled their contractual performance obligations, which preserves the signal value of the data.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "later stage venture capital investments following earlier seed investments in the same company"
   ],
   "supporting_quote": "At the same time, however, VC funds are not likely to continue with later stage investments if contractual performance obligations/thresholds of their portfolio companies were not fulfilled to a substantial degree."
  },
  {
   "id": "kaal:claim:2808132-042",
   "url": "https://wulfkaal.github.io/claims/2808132-042",
   "claim": "Venture capitalists' finance allocation and their implicit assessment of innovative products, businesses, and initiatives generate highly relevant institution-specific and industry-specific decentralized information on innovation trends.",
   "type": "empirical",
   "topics": [
    "innovation",
    "decentralization",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States venture capital investments, 2005 through 2015"
   ],
   "supporting_quote": "finance allocation and the implicit assessment of innovative products, businesses, and initiatives generates highly relevant institution- and industry-specific decentralized information on innovation trends. As such, venture capitalists' innovation-driven finance"
  },
  {
   "id": "kaal:claim:2808132-043",
   "url": "https://wulfkaal.github.io/claims/2808132-043",
   "claim": "Regulation is mostly reactive and follows business cycles rather than being proactive; data on venture capital investments lets regulators see where innovation trends are heading and what risks they entail before the disruptive innovation actually materializes.",
   "type": "mechanism",
   "topics": [
    "innovation",
    "dynamic-regulation",
    "research-methods",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "regulators with access to venture capital investment data",
    "innovation still at the investment rather than deployment stage"
   ],
   "supporting_quote": "Regulation is mostly reactive, following business cycles, rather than proactive. Data on VC investments allows regulators to see where innovation trends are going and the possible risks they entail before disruptive innovation materializes. Should regulators"
  },
  {
   "id": "kaal:claim:2808132-044",
   "url": "https://wulfkaal.github.io/claims/2808132-044",
   "claim": "Feedback effects from venture capitalists' finance allocations toward innovative products give rulemakers timely, decentralized, industry-specific and entity-specific information that allows them to adapt rules in anticipation of regulatory issues.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "institutional-design",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "industries associated with the highest levels of disruptive innovation",
    "regulators able to access and analyze venture capital investment data"
   ],
   "supporting_quote": "anticipatory rulemaking. Through the feedback effects that are facilitated by venture capitalists' finance allocations towards innovative products, rulemakers can obtain timely and decentralized industry- and entity-specific information that allows them to adapt"
  },
  {
   "id": "kaal:claim:2808132-045",
   "url": "https://wulfkaal.github.io/claims/2808132-045",
   "claim": "The decline in later stage robotics and drone investment rounds in the United States does not indicate stalled technological development; companies relocate later stage development to other countries because of the regulatory disconnect that exists in the United States.",
   "type": "mechanism",
   "topics": [
    "innovation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "robotics and drones industry",
    "United States regulatory environment after 2011"
   ],
   "supporting_quote": "indicates that the technological development in this area is stalling. However, a closer look at the industry shows that companies relocate the later stage development to other countries due to the regulatory disconnect that exists in the United States."
  },
  {
   "id": "kaal:claim:2808132-046",
   "url": "https://wulfkaal.github.io/claims/2808132-046",
   "claim": "The authors concede that the trend for venture-capital-financed technology companies to stay private and the market undervaluation of formerly venture-capital-financed companies mean the innovation potential identified by venture capital finance allocation may not always be shared by the market at large.",
   "type": "failure",
   "topics": [
    "economics",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "long-term market valuation of venture-capital-financed innovation",
    "companies remaining private rather than listing"
   ],
   "supporting_quote": "technology companies, among others, to stay private129 and market undervaluation of formerly venture-capital-financed companies130 suggest that the innovation potential identified by venture-capital-finance allocation may not always be shared by the market"
  },
  {
   "id": "kaal:claim:2808132-047",
   "url": "https://wulfkaal.github.io/claims/2808132-047",
   "claim": "Even if regulators could obtain the depth of information needed for anticipatory rulemaking, acting on venture capital signals risks wasting scarce regulatory resources, because venture capital funds make many investments that do not succeed and companies still incubating may raise no clear regulatory issues.",
   "type": "failure",
   "topics": [
    "innovation",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "anticipatory regulatory action based on venture capital data alone",
    "portfolio companies still in incubation"
   ],
   "supporting_quote": "anticipatory rulemaking, there may be risk of waste of scarce regulatory resources because VC funds make many investments, not all of which turn out to be successful. Moreover, if companies that received VC financing are still incubating, it may be largely"
  },
  {
   "id": "kaal:claim:2808132-048",
   "url": "https://wulfkaal.github.io/claims/2808132-048",
   "claim": "Regulators should take anticipatory measures only after cross-validation and triangulation, that is, when multiple independent data analyses point unanimously toward a specific demand for regulatory action.",
   "type": "design",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "multiple high-quality decentralized real-time data sources available to regulators",
    "unanimous convergence of those analyses"
   ],
   "supporting_quote": "high-quality, decentralized, and real-time information for rulemaking. If and when multiple data analyses together point unanimously in the direction of a certain demand for regulatory action, regulators should take anticipatory measures after cross-validation"
  },
  {
   "id": "kaal:claim:2808132-049",
   "url": "https://wulfkaal.github.io/claims/2808132-049",
   "claim": "No regulatory processes or data evaluation capabilities currently exist that could carry out the cross-validated analyses and support the anticipatory regulatory action the authors propose.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "asserted",
   "scope_conditions": [
    "as of 2016 in the United States regulatory system"
   ],
   "supporting_quote": "and triangulation. Currently no regulatory processes and data evaluation exist that could facilitate such analyses and anticipatory regulatory action."
  },
  {
   "id": "kaal:claim:2808132-050",
   "url": "https://wulfkaal.github.io/claims/2808132-050",
   "claim": "Companies that received venture capital investments have outrun and continue to outrun regulation and regulatory efforts, and they drive innovation trends in the United States and abroad.",
   "type": "empirical",
   "topics": [
    "innovation",
    "dynamic-regulation",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "evidenced",
   "scope_conditions": [
    "venture-capital-backed companies in the United States and abroad, 2005 through 2015"
   ],
   "supporting_quote": "This paper adds to increasing evidence that companies that received VC investments have─and continue to─outrun regulation and regulatory efforts. Companies that received VC investments drive innovation trends in the United States and abroad."
  },
  {
   "id": "kaal:claim:2808132-051",
   "url": "https://wulfkaal.github.io/claims/2808132-051",
   "claim": "Existing regulatory processes are suboptimally equipped to address the challenges of exponential disruptive innovation, and the notice and comment procedures of the Administrative Procedure Act and the SEC illustrate the resulting suboptimal regulatory response rates.",
   "type": "failure",
   "topics": [
    "empirical-evidence",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "notice and comment rulemaking under the APA and at the SEC",
    "regulatory challenges presented by venture-capital-backed companies"
   ],
   "supporting_quote": "This paper also shows that the existing regulatory processes are suboptimally equipped to address the challenges of exponential disruptive innovation. The notice and comment procedures of the APA131 and the SEC are only some of the examples illustrating the"
  },
  {
   "id": "kaal:claim:2808132-052",
   "url": "https://wulfkaal.github.io/claims/2808132-052",
   "claim": "Venture capital investment allocation data can help facilitate anticipatory regulation of disruptive innovation, but it is only one of several emerging data sources usable for signaling in regulatory process optimization.",
   "type": "design",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, How to Regulate Disruptive Innovation - From Facts to Data (2016). SSRN: https://ssrn.com/abstract=2808132",
   "year": "2016",
   "source_sha256": "3515f2317ed9c1d33ae55d70467cdf1f6c4e350065ea6a887d5d7619599ad7d2",
   "confidence": "argued",
   "scope_conditions": [
    "availability of additional and emerging data sources beyond venture capital"
   ],
   "supporting_quote": "facilitate anticipatory regulation associated with disruptive innovation, but it emphasizes that VC investment allocation data is only one form of the emerging data sources that can be used as signaling for regulatory process optimization. Other data sources are and may"
  },
  {
   "id": "kaal:claim:2811718-001",
   "url": "https://wulfkaal.github.io/claims/2811718-001",
   "claim": "The study rests on two datasets: SEC Form ADV Part II filings by private investment fund advisers from 2007 to 2014 (N=100392) and the publicly available litigation record on private fund investor due diligence from 1995 to 2015 (N=572).",
   "type": "empirical",
   "topics": [
    "private-funds",
    "law-and-legal-systems",
    "empirical-evidence",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States private investment funds",
    "1995 to 2015"
   ],
   "supporting_quote": "the author examines two datasets: (1) private investment fund advisers' SEC Form ADV II filings from 2007 to 2014 (N=100392), and (2) the publicly available litigation record pertaining to private fund investor due diligence from 1995 to 2015 (N=572)."
  },
  {
   "id": "kaal:claim:2811718-002",
   "url": "https://wulfkaal.github.io/claims/2811718-002",
   "claim": "The private fund industry grew by 26 percent between 2013 and 2015, rising from just above 2 trillion dollars in assets under management to 2.7 trillion dollars.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "2013 to 2015",
    "hedge fund industry assets under management as reported by BarclayHedge"
   ],
   "supporting_quote": "Between 2013 and 2015, the private fund industry grew by 26%, increasing from just above $2 trillion AUM in 2013 to $2.7 trillion AUM through 2015."
  },
  {
   "id": "kaal:claim:2811718-003",
   "url": "https://wulfkaal.github.io/claims/2811718-003",
   "claim": "Before the financial crisis of 2008 to 2009, the standard AIMA and MFA due diligence questionnaire templates were often deployed defensively: managers used the old versions to steer investors away from questions that would have exposed weaknesses in the managers' controls.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "pre financial crisis practice",
    "template based questionnaires edited by the manager"
   ],
   "supporting_quote": "The old versions of those questionnaires were often used in an attempt to avoid investors' questions challenging the manager on possible weaknesses in their controls."
  },
  {
   "id": "kaal:claim:2811718-004",
   "url": "https://wulfkaal.github.io/claims/2811718-004",
   "claim": "After the financial crisis of 2008 to 2009 and the Madoff scandal, relatively sophisticated investors stopped accepting the slanted phrasing of due diligence questionnaires and their answers, and the questionnaires became more rigorous as a result.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "relatively sophisticated investors",
    "post crisis period"
   ],
   "supporting_quote": "including the Madoff scandal, investors, at least relatively sophisticated investors, no longer accepted the slanted phrasing of the due diligence questionnaires and their answers.13 As a result, the questionnaires became more rigorous."
  },
  {
   "id": "kaal:claim:2811718-005",
   "url": "https://wulfkaal.github.io/claims/2811718-005",
   "claim": "Almost no guidance exists on the standards applicable to private fund investor due diligence, so despite the growing importance of due diligence in capital formation and in litigation the industry is left mostly to its own devices to ensure adequate standards.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "United States private fund industry",
    "as of 2016"
   ],
   "supporting_quote": "Little to no guidance exists on applicable standards for IDD.18 Despite the increasing relevance of IDD in the capital formation and allocation process, and IDD litigation, the industry is mostly left to its own devices to ensure adequate due diligence standards apply."
  },
  {
   "id": "kaal:claim:2811718-006",
   "url": "https://wulfkaal.github.io/claims/2811718-006",
   "claim": "The existing resources fail on both sides: industry materials describe best practices without setting out the legal requirements for private fund due diligence, and the available case law provides only marginal guidance.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "United States",
    "resources available as of 2016"
   ],
   "supporting_quote": "Available resources describe best practices but do not sufficiently outline the legal requirements pertaining to private investment fund due diligence.19 The available case law only marginally provides relevant guidance on private fund IDD."
  },
  {
   "id": "kaal:claim:2811718-007",
   "url": "https://wulfkaal.github.io/claims/2811718-007",
   "claim": "Because a material omission or misstatement in Form ADV Part 2A can support a serious securities law charge, private fund managers have an incentive to keep the narrative language of that required disclosure as high level, summary, and non committal as possible.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "disclosure",
    "risk-and-incentives",
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "Form ADV Part 2A narrative brochure",
    "private fund managers"
   ],
   "supporting_quote": "the imperative for a private fund manager is to keep the narrative language as high-level, summary, and as non-committal as possible, because a material omission and/or misstatement in that section could lead to a serious charge of violating the securities laws."
  },
  {
   "id": "kaal:claim:2811718-008",
   "url": "https://wulfkaal.github.io/claims/2811718-008",
   "claim": "From 2007 to 2014 an increasing number of Form ADV Part II filers deemed investor due diligence worth mentioning, and an increasing number of filers qualitatively increased their due diligence disclosures in the brochure filings.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC Form ADV Part II brochure filings",
    "2007 to 2014",
    "N=100392"
   ],
   "supporting_quote": "In sum, Figure 2 demonstrates that from 2007 to 2014 an increasing number of ADV II filers deem IDD worth mentioning, and an increasing number of ADV II filers qualitatively increased their due diligence disclosures in Form ADV II brochure filings."
  },
  {
   "id": "kaal:claim:2811718-009",
   "url": "https://wulfkaal.github.io/claims/2811718-009",
   "claim": "Since 2010 an increasing number of SEC Form ADV Part II brochure filers included investor due diligence disclosures, but the number of filers including such disclosures remained relatively even between 2012 and 2014.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC Form ADV Part II brochure filings",
    "2010 to 2014"
   ],
   "supporting_quote": "an increasing number of SEC Form ADV II brochure filers included IDD disclosures and the number of filers who include those disclosures has remained relatively even between 2012 and 2014."
  },
  {
   "id": "kaal:claim:2811718-010",
   "url": "https://wulfkaal.github.io/claims/2811718-010",
   "claim": "The intensity of due diligence mentioning relative to total Form ADV Part II brochure filings increased substantially, and the due diligence count exceeded the total number of ADV II filings for the first time in 2014.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC Form ADV Part II brochure filings",
    "2007 to 2014"
   ],
   "supporting_quote": "The intensity of IDD mentioning relative to total SEC Form ADV II brochure filings has increased substantially; the due diligence count exceeded the total ADV II filings for the first time in 2014."
  },
  {
   "id": "kaal:claim:2811718-011",
   "url": "https://wulfkaal.github.io/claims/2811718-011",
   "claim": "Form ADV Part II filings jumped from 3,024 in 2010 to 21,685 in 2011, and that jump was accompanied by a corresponding increase both in the number of filings mentioning investor due diligence and in the due diligence counts within those filings.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure",
    "securities-law",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC Form ADV Part II brochure filings",
    "2010 to 2011",
    "registration changes after 2010"
   ],
   "supporting_quote": "After 2010, a noticeable increase in filings—from 3,024 filings in 2010 to 21,685 filings in 2011—is accompanied by a corresponding increase in filings mentioning IDD and an increase in the due diligence counts in such filings."
  },
  {
   "id": "kaal:claim:2811718-012",
   "url": "https://wulfkaal.github.io/claims/2811718-012",
   "claim": "Although overall Form ADV Part II filings fell between 2012 and 2013, due diligence counts fell only marginally, from 20,828 to 20,031, and filings mentioning due diligence fell from 7,862 to 7,198, less than proportionally to the drop in total filings.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC Form ADV Part II brochure filings",
    "2012 to 2013"
   ],
   "supporting_quote": "While the overall filings between 2012 and 2013 depreciated, the ratio of due diligence counts is only marginally affected (depreciating from 20,828 to 20,031) and filings that mention due diligence decreased (depreciating from 7,862 to 7,198) in relation to the overall filing depreciation."
  },
  {
   "id": "kaal:claim:2811718-013",
   "url": "https://wulfkaal.github.io/claims/2811718-013",
   "claim": "The Form ADV analysis is limited because the term due diligence carries multiple possible meanings, so counts of the term cannot by themselves distinguish among those meanings.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "keyword based counting of the phrase due diligence in Form ADV II filings"
   ],
   "supporting_quote": "The data analysis in Figures 1 and 2 is limited by multiple possible meanings of the term due diligence."
  },
  {
   "id": "kaal:claim:2811718-014",
   "url": "https://wulfkaal.github.io/claims/2811718-014",
   "claim": "Litigation research on private fund due diligence requires in depth evaluation of case dockets rather than only published judicial decisions, because opinions are snapshots that do not tell the whole story of a case.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "empirical-evidence",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "empirical legal research on litigation records"
   ],
   "supporting_quote": "Litigation research requires an in-depth evaluation of case dockets rather than published judicial decisions."
  },
  {
   "id": "kaal:claim:2811718-015",
   "url": "https://wulfkaal.github.io/claims/2811718-015",
   "claim": "Legal decisions involving private fund due diligence increased substantially after 2005 and especially after 2008, and the broad, narrow, and hand selected case categories all increased consistently with a slight lapse in 2014.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "Westlaw case law searches",
    "1995 to 2015"
   ],
   "supporting_quote": "Figure 3 shows that the legal decisions involving private fund due diligence have substantially increased since 2005, but especially since 2008. Cases involving IDD in the broad, narrow, and selected case categories all consistently increased overall, with a slight lapse in 2014."
  },
  {
   "id": "kaal:claim:2811718-016",
   "url": "https://wulfkaal.github.io/claims/2811718-016",
   "claim": "In the hand selected sample of cases, the ranking of causes of action differs from the full search results: fiduciary duty leads, followed by negligent misrepresentation and breach of contract.",
   "type": "empirical",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "hand selected subsample of 32 cases",
    "1995 to 2015"
   ],
   "supporting_quote": "Unlike Figure 4, in the hand-selected sample of cases in Figure 5, the leading causes of action were by order of preference: (1) fiduciary duty, (2) negligent misrepresentation, (3) breach of contract."
  },
  {
   "id": "kaal:claim:2811718-017",
   "url": "https://wulfkaal.github.io/claims/2811718-017",
   "claim": "While some courts found that a complete lack of investor due diligence can amount to securities fraud or breach of contract, and that lacking due diligence can breach fiduciary duties, the majority of courts evaluate private fund due diligence issues in the context of misrepresentation.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems",
    "securities-law",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States courts",
    "2005 to 2015 litigation record"
   ],
   "supporting_quote": "IDD can be a breach of fiduciary duties,84 the majority of courts evaluate issues pertaining to private fund IDD in the context of misrepresentation."
  },
  {
   "id": "kaal:claim:2811718-018",
   "url": "https://wulfkaal.github.io/claims/2811718-018",
   "claim": "Successful claims based on lacking investor due diligence typically require a complete failure to perform due diligence despite explicit promises to perform it; promising due diligence and then conducting none except in isolated incidents is actionable misrepresentation.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "private fund due diligence litigation",
    "explicit promise to perform due diligence"
   ],
   "supporting_quote": "Successful lawsuits in the context of lacking IDD typically require a complete lack of due diligence despite explicit promises to perform such due diligence.90 Promising to conduct due diligence and then failing to conduct any (except in isolated incidents), is actionable misrepresentation."
  },
  {
   "id": "kaal:claim:2811718-019",
   "url": "https://wulfkaal.github.io/claims/2811718-019",
   "claim": "Relying solely on a representation by the investment or the fund, without actually performing due diligence, is sufficient to present a fact issue on fraud to a jury.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "fraud claims against private fund advisers"
   ],
   "supporting_quote": "Relying solely on an investment or fund representation and not actually performing due diligence is sufficient to present an issue of fact to a jury for fraud."
  },
  {
   "id": "kaal:claim:2811718-020",
   "url": "https://wulfkaal.github.io/claims/2811718-020",
   "claim": "Deficient due diligence does not create securities fraud liability unless it is intentional or highly reckless; conduct that is merely negligent or professionally incompetent falls short of the scienter requirement.",
   "type": "failure",
   "topics": [
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "securities fraud claims under section 10(b) and Rule 10b-5",
    "PSLRA pleading standard"
   ],
   "supporting_quote": "Courts hold that the lack of due diligence, beyond merely being negligent or just professionally incompetent, must be intentional or highly reckless."
  },
  {
   "id": "kaal:claim:2811718-021",
   "url": "https://wulfkaal.github.io/claims/2811718-021",
   "claim": "Failing to check publicly available documentation on an investment is irresponsible but insufficient to plead fraudulent intent, and failing to perform due diligence commensurate with industry standards is inadequate to plead scienter.",
   "type": "failure",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "securities fraud pleading",
    "Matana v. Merkin and In re Bayou Hedge Fund Litigation"
   ],
   "supporting_quote": "While irresponsible, the lack of checking public documentation on an investment is insufficient to plead fraudulent intent,102 and \"[failing] to perform due diligence commensurate with industry standards is inadequate to plead scienter."
  },
  {
   "id": "kaal:claim:2811718-022",
   "url": "https://wulfkaal.github.io/claims/2811718-022",
   "claim": "Defendants owe a duty to use reasonable care in conducting financial due diligence consistent with the standards of care in the profession.",
   "type": "condition",
   "topics": [
    "corporate-governance",
    "education-and-practice",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "negligence claims",
    "Baker v. Goldman Sachs"
   ],
   "supporting_quote": "Defendants have \"a duty to use reasonable care in conducting financial due diligence consistent with standards of care in the profession."
  },
  {
   "id": "kaal:claim:2811718-023",
   "url": "https://wulfkaal.github.io/claims/2811718-023",
   "claim": "As a contractual matter, due diligence promises made in a brochure, on a website, or in a contract with investors must be in writing to be enforceable.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "contract claims",
    "Statute of Frauds as applied in South Cherry Street"
   ],
   "supporting_quote": "Finally, as a contractual matter, due diligence promises (in a brochure, website, contract with investors, etc.) must be in writing in order for them to be enforceable."
  },
  {
   "id": "kaal:claim:2811718-024",
   "url": "https://wulfkaal.github.io/claims/2811718-024",
   "claim": "Failure to supervise and direct investment of assets in accordance with an investment plan's policy, together with offering memoranda or quarterly letters that misrepresent due diligence processes, can show a failure to exercise reasonable care sufficient to plead breach of fiduciary duty.",
   "type": "condition",
   "topics": [
    "corporate-governance",
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "fiduciary duty claims against private fund advisers"
   ],
   "supporting_quote": "assets in accordance with an investment plan's investment policy, and offering memoranda or quarterly letters with misrepresentations of due diligence processes can demonstrate a failure to exercise reasonable care and sufficient to plead breach of fiduciary duty."
  },
  {
   "id": "kaal:claim:2811718-025",
   "url": "https://wulfkaal.github.io/claims/2811718-025",
   "claim": "Fund managers were incentivized to route capital to Madoff because he charged notoriously low fees for the hedge fund business, taking only transaction fees rather than fees based on assets under management.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "Madoff feeder funds and funds of funds before December 2008"
   ],
   "supporting_quote": "Fund managers were incentivized to invest in this manner because Madoff charged notoriously low fees for the hedge fund business (charging only transaction fees rather than fees based on AUM)"
  },
  {
   "id": "kaal:claim:2811718-026",
   "url": "https://wulfkaal.github.io/claims/2811718-026",
   "claim": "Funds of funds claimed to select the best managers through skilled due diligence and charged standard 2 and 20 fee structures for that service, while in reality depositing the vast majority of their capital into Madoff's opaque fund.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "Madoff feeder funds and funds of funds before December 2008"
   ],
   "supporting_quote": "and investment analysis practices and then in return charged their investors standard private fund fee structures (2/20).139 In reality, most of these funds were depositing the vast majority of their capital into Madoff's black box of a fund."
  },
  {
   "id": "kaal:claim:2811718-027",
   "url": "https://wulfkaal.github.io/claims/2811718-027",
   "claim": "Madoff's reliance on large feeder funds created a massive industry of investor due diligence lawsuits, because those funds collected high advisory fees as due diligence experts yet caused large numbers of investors to lose their investments.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "post 2008 Madoff related litigation"
   ],
   "supporting_quote": "created a massive industry for IDD lawsuits.148 The feeder funds had collected high advisory fees as due diligence experts, but caused large numbers of investors to lose their investments as a result of the Madoff fraud."
  },
  {
   "id": "kaal:claim:2811718-028",
   "url": "https://wulfkaal.github.io/claims/2811718-028",
   "claim": "Because Madoff overtly disallowed scrutiny of his secretive and unconventional practices, it was impossible for feeder funds such as Rye to perform the due diligence they had represented to investors.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "Madoff feeder funds",
    "In re Tremont"
   ],
   "supporting_quote": "Again, it was impossible for a fund like Rye to perform due diligence as Madoff overtly disallowed such due diligence of his extremely secretive and unconventional practices."
  },
  {
   "id": "kaal:claim:2811718-029",
   "url": "https://wulfkaal.github.io/claims/2811718-029",
   "claim": "Claims in which investors use hindsight to second guess due diligence practices often fail, even when the manager was clearly incompetent.",
   "type": "failure",
   "topics": [
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "securities fraud claims",
    "South Cherry Street"
   ],
   "supporting_quote": "Claims that involve investors using hindsight to second guess the due diligence practice often fail (even in the face of clearly incompetent management), as seen in South Cherry Street,"
  },
  {
   "id": "kaal:claim:2811718-030",
   "url": "https://wulfkaal.github.io/claims/2811718-030",
   "claim": "Funds that promise due diligence with no intention of actually carrying it out violate federal securities laws rather than merely breaching a contract.",
   "type": "condition",
   "topics": [
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "In re J.P. Jeanneret Associates",
    "promises made without intent to perform"
   ],
   "supporting_quote": "but it has been held that funds that promise due diligence and yet have no intention of actually carrying it out are violating federal securities laws rather than breaching basic contracts."
  },
  {
   "id": "kaal:claim:2811718-031",
   "url": "https://wulfkaal.github.io/claims/2811718-031",
   "claim": "Advertising an elaborate multi limb due diligence process is no evidence that it was applied: Madoff's asset management advisers FIM Limited and FIM Advisers touted what sounded like above industry standards yet applied none of them to Madoff's firm and admitted as much.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "In re Bernard L. Madoff Investment Securities LLC",
    "Kingate feeder funds"
   ],
   "supporting_quote": "Despite its touting of what sound like above industry standards, Madoff's asset management advisors, FIM Limited and FIM Advisers (FIM), applied none of these standards to BLMIS and admitted as much."
  },
  {
   "id": "kaal:claim:2811718-032",
   "url": "https://wulfkaal.github.io/claims/2811718-032",
   "claim": "Expert testimony identifies recurring failures in private fund due diligence, including the absence of any written policy or process to ensure compliance and reliance on individuals with little or no experience, particularly with the particulars of hedge funds.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "expert reports in the surveyed litigation record"
   ],
   "supporting_quote": "Major failures or red flags in private fund IDD among private fund advisers include: (1) a lack of written policy or processes in place to ensure compliance;236 (2) the individual conducting the due diligence having little to no experience (especially on the particulars of hedge funds);"
  },
  {
   "id": "kaal:claim:2811718-033",
   "url": "https://wulfkaal.github.io/claims/2811718-033",
   "claim": "Expert consensus in the examined litigation record converges on a set of standard due diligence practices, beginning with qualitative review of firm marketing materials, offering documents, subscription documents, and manager track records, and onsite manager meetings.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "expert reports surveyed through Westlaw Expert Materials"
   ],
   "supporting_quote": "applicable standard private fund IDD industry practices, as stipulated in the examined litigation record, include: qualitative review of firm \"marketing materials, offering documents, subscription documents, manager track record[s]\"243; onsite manager meetings;"
  },
  {
   "id": "kaal:claim:2811718-034",
   "url": "https://wulfkaal.github.io/claims/2811718-034",
   "claim": "The legal standards applicable to private fund investor due diligence are somewhat inconsistent and suboptimal and merit clarification.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States case law from 1995 to 2015"
   ],
   "supporting_quote": "This study has demonstrated that the legal standards applicable to private fund IDD are somewhat inconsistent and suboptimal, and merit clarification."
  },
  {
   "id": "kaal:claim:2811718-035",
   "url": "https://wulfkaal.github.io/claims/2811718-035",
   "claim": "The data suggest that since 2010 private fund advisers increasingly engage in investor due diligence in order to protect themselves from investor criticism and lawsuits.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "law-and-legal-systems",
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "private fund advisers",
    "since 2010"
   ],
   "supporting_quote": "The data provided in this study seems to suggest that private fund advisers since 2010 increasingly engage in private fund IDD to protect themselves from investor criticism and lawsuits."
  },
  {
   "id": "kaal:claim:2811718-036",
   "url": "https://wulfkaal.github.io/claims/2811718-036",
   "claim": "Madoff related cases following the discovery of the Ponzi scheme in 2008 only partially explain the significant increase in the prevalence and importance of private fund investor due diligence after 2009.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems",
    "citation-and-knowledge",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "post 2009 litigation and disclosure record"
   ],
   "supporting_quote": "Madoff-related cases in the aftermath of the discovery of the Madoff Ponzi scheme in 2008 only partially explain the significant increase in the prevalence and importance of private fund IDD after 2009."
  },
  {
   "id": "kaal:claim:2811718-037",
   "url": "https://wulfkaal.github.io/claims/2811718-037",
   "claim": "Lacking standards for private fund investor due diligence can partly be attributed to private funds' unique market position: unlike mutual funds, private funds evolved as unregistered entities free from most regulatory oversight, so their due diligence evolved without regulatory oversight as well.",
   "type": "mechanism",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "United States private funds compared to registered mutual funds"
   ],
   "supporting_quote": "Lacking standards for private fund IDD can partially be attributed to private funds' unique position in markets. Unlike mutual funds, private funds evolved as unregistered entities, free from most regulatory oversight. Accordingly, the private fund IDD evolved without regulatory oversight."
  },
  {
   "id": "kaal:claim:2811718-038",
   "url": "https://wulfkaal.github.io/claims/2811718-038",
   "claim": "Private fund investor due diligence may follow the evolutionary path of bank risk evaluation, which fifteen years ago operated without uniformity or applicable standards and is today heavily regulated and has evolved into a science.",
   "type": "predictive",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "speculative",
   "scope_conditions": [
    "by analogy to bank risk evaluation",
    "if standardization pressure continues"
   ],
   "supporting_quote": "In analogy to banks' risk evaluation, fifteen years ago banks operated with general risk evaluation strategies but no uniformity and no applicable standards, whereas today banks' risk evaluation is heavily regulated and has evolved into a science. Private fund IDD may follow the same evolution."
  },
  {
   "id": "kaal:claim:2811718-039",
   "url": "https://wulfkaal.github.io/claims/2811718-039",
   "claim": "Investment due diligence may start from the same basic questions as operational due diligence but is almost always idiosyncratic, because it targets the subject manager's investment process, which is typically unique to that manager.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "argued",
   "scope_conditions": [
    "investment due diligence as distinguished from operational due diligence"
   ],
   "supporting_quote": "In contrast, while investment due diligence may start with the same set of basic questions, it is almost always an idiosyncratic process, because it is focused on the subject manager's investment process, which typically is unique to that manager."
  },
  {
   "id": "kaal:claim:2811718-040",
   "url": "https://wulfkaal.github.io/claims/2811718-040",
   "claim": "Despite bringing enforcement actions over misrepresentations about due diligence, the SEC has not taken a rigid enforcement position on whether particular due diligence industry practices are effective, and has merely acknowledged that practices became more robust after the financial crisis.",
   "type": "failure",
   "topics": [
    "securities-law",
    "compliance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718",
   "year": "2016",
   "source_sha256": "b52152af561288173840a1cabbcf8f4b337e73507c856ee01600799073f4156f",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC enforcement posture as of 2016"
   ],
   "supporting_quote": "Despite a number of enforcement actions that deal with misrepresentation in relation to due diligence,46 the SEC has not taken a rigid enforcement position on the effectiveness or ineffectiveness of due diligence industry practices."
  },
  {
   "id": "kaal:claim:2714974-001",
   "url": "https://wulfkaal.github.io/claims/2714974-001",
   "claim": "The originators of the earliest U.S. hedge funds deliberately structured the funds to maximize trading freedom by minimizing exposure to federal regulation, so the industry's private, unregistered form was a design choice rather than an accident of history.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to the founding period of the U.S. hedge fund industry in the early 1950s"
   ],
   "supporting_quote": "The originators of the early funds designed the funds to maximize their freedom to employ complex trading strategies by minimizing their exposure to regulation under various federal statutes."
  },
  {
   "id": "kaal:claim:2714974-002",
   "url": "https://wulfkaal.github.io/claims/2714974-002",
   "claim": "Qualifying for one of the Investment Company Act statutory exclusions, fewer than 100 investors or exclusively qualified purchasers, is what permits a hedge fund to use investment techniques such as shorting that are forbidden to registered investment companies.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "asserted",
   "scope_conditions": [
    "requires fewer than 100 investors or only qualified purchasers",
    "applies under the Investment Company Act of 1940"
   ],
   "supporting_quote": "A hedge fund that qualifies for one of these statutory exclusions may use investment techniques that are forbidden to the registered investment companies."
  },
  {
   "id": "kaal:claim:2714974-003",
   "url": "https://wulfkaal.github.io/claims/2714974-003",
   "claim": "The SEC's 1985 safe harbor in Rule 203(b)(3) allowed a limited partnership itself, rather than each of its limited partners, to be counted as a single client of the general partner acting as adviser, which is what kept hedge fund advisers below the registration threshold.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to exemption from registration under the Investment Advisers Act of 1940"
   ],
   "supporting_quote": "the safe harbor provision allowed a limited partnership, rather than each of its limited partners, to be counted as a \"client\" of a general partner acting as investment adviser to the partnership"
  },
  {
   "id": "kaal:claim:2714974-004",
   "url": "https://wulfkaal.github.io/claims/2714974-004",
   "claim": "Expanding the client counting safe harbor in 1997 to cover legal entities generally allowed investment advisers to manage large amounts of securities indirectly for several hundred investors across multiple hedge funds without registering.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "asserted",
   "scope_conditions": [
    "requires that advice be based on the objectives of the legal organization rather than of its individual owners"
   ],
   "supporting_quote": "This safe harbor allowed investment advisers to manage large amounts of securities indirectly for several hundreds of investors in several hedge funds."
  },
  {
   "id": "kaal:claim:2714974-005",
   "url": "https://wulfkaal.github.io/claims/2714974-005",
   "claim": "The collapse of Long Term Capital Management in 1998 and its Federal Reserve orchestrated bailout made hedge fund risk to international markets apparent, and concerns over excessive leverage combined with a lack of transparency drove the demand for new regulation.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the post 1998 policy debate"
   ],
   "supporting_quote": "Concerns over excessive leverage by hedge funds and a lack of transparency led to increasing demands for new regulation."
  },
  {
   "id": "kaal:claim:2714974-006",
   "url": "https://wulfkaal.github.io/claims/2714974-006",
   "claim": "The SEC's 2004 hedge fund adviser registration rule failed in court because the agency lacked authority to define the term client, which the Investment Advisers Act had not otherwise defined, and the D.C. Circuit in Goldstein vacated the rule as arbitrary rulemaking.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to rulemaking under the Investment Advisers Act of 1940"
   ],
   "supporting_quote": "Because the term \"client\" had not otherwise been defined in the Investment Advisers Act, the SEC had no authority to determine the meaning of the term."
  },
  {
   "id": "kaal:claim:2714974-007",
   "url": "https://wulfkaal.github.io/claims/2714974-007",
   "claim": "Under Title IV of the Dodd-Frank Act, hedge funds with more than $150 million in assets under management must register as investment advisers and disclose information about their trades and portfolios to the SEC.",
   "type": "definitional",
   "topics": [
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to advisers above the $150 million AUM threshold"
   ],
   "supporting_quote": "Under PFIARA, hedge funds with more than $150 million AUM must register as investment advisers and disclose information about their trades and portfolios to the SEC."
  },
  {
   "id": "kaal:claim:2714974-008",
   "url": "https://wulfkaal.github.io/claims/2714974-008",
   "claim": "Some of the most sensitive Form PF disclosures are not readily obtainable by the funds themselves: counterparty credit exposure often cannot be determined by individual fund managers, which makes the reporting requirement burdensome in practice.",
   "type": "failure",
   "topics": [
    "private-funds",
    "disclosure",
    "risk-and-incentives",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to Form PF counterparty credit exposure reporting"
   ],
   "supporting_quote": "For example, the disclosure of counterparty credit exposure is sensitive information that often cannot readily be determined by the individual fund managers."
  },
  {
   "id": "kaal:claim:2714974-009",
   "url": "https://wulfkaal.github.io/claims/2714974-009",
   "claim": "Contrary to the hedge fund industry's own predictions, the industry has absorbed Form PF quickly and the impact of the Dodd-Frank registration and disclosure rules has proven much less intense than the industry initially anticipated.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on the author's survey data from 2012 and 2015"
   ],
   "supporting_quote": "The hedge fund industry seems to be adjusting well to the registration and disclosure requirements under the Dodd-Frank Act, and the impact of the registration and disclosure rules appears to be much less intense than the hedge fund industry initially anticipated."
  },
  {
   "id": "kaal:claim:2714974-010",
   "url": "https://wulfkaal.github.io/claims/2714974-010",
   "claim": "The majority of hedge fund advisers spent less than $10,000 preparing their initial Form PF data reporting to the SEC, and subsequent annual filings cost about half of that initial amount.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to advisers filing annually rather than quarterly"
   ],
   "supporting_quote": "The majority of hedge fund advisers incurred less than $10,000 to prepare their initial data reporting to the SEC, with the cost of subsequent annual Form PF filings at about half the initial cost (Kaal 2014)."
  },
  {
   "id": "kaal:claim:2714974-011",
   "url": "https://wulfkaal.github.io/claims/2714974-011",
   "claim": "Larger hedge fund advisers, which must file Form PF quarterly rather than annually, faced substantially higher compliance costs for both initial and subsequent reporting than smaller advisers did.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "compliance",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to advisers subject to quarterly Form PF filing"
   ],
   "supporting_quote": "faced substantially higher compliance costs, both for their initial data reporting and for subsequent quarterly filings."
  },
  {
   "id": "kaal:claim:2714974-012",
   "url": "https://wulfkaal.github.io/claims/2714974-012",
   "claim": "The most pressing problem with Form PF identified by the majority of SEC registered hedge fund advisers is not the volume of data but the ambiguity of the data reporting requirements themselves.",
   "type": "failure",
   "topics": [
    "private-funds",
    "disclosure",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on survey responses from SEC registered hedge fund advisers"
   ],
   "supporting_quote": "The majority of SEC-registered hedge fund advisers identified the ambiguity of Form PF data reporting requirements as the most pressing issue (Kaal 2016b)."
  },
  {
   "id": "kaal:claim:2714974-013",
   "url": "https://wulfkaal.github.io/claims/2714974-013",
   "claim": "The cost of hedge fund manager registration under the Dodd-Frank Act brings increasing returns to scale for the industry, meaning compliance burdens fall disproportionately on smaller advisers.",
   "type": "empirical",
   "topics": [
    "compliance",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "evidenced",
   "supporting_quote": "Kaal shows that the cost of hedge fund manager registration under the Dodd-Frank Act brings increasing returns to scale for the industry (Kaal 2016a)."
  },
  {
   "id": "kaal:claim:2714974-014",
   "url": "https://wulfkaal.github.io/claims/2714974-014",
   "claim": "Adopting a generic compliance program is not sufficient under Rule 206(4)-7: advisers that fail to specifically tailor their compliance program to their own business have incurred large penalties in SEC enforcement.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to funds subject to Rule 206(4)-7"
   ],
   "supporting_quote": "Failure on the part of advisers to specifically tailor a compliance program for their business has led to large penalties."
  },
  {
   "id": "kaal:claim:2714974-015",
   "url": "https://wulfkaal.github.io/claims/2714974-015",
   "claim": "Co-investment arrangements become problematic when a fund grants a co-investment opportunity in exchange for a future or increased fund commitment and the practice is not adequately disclosed, especially where the fund's governing documents would prohibit the allocation.",
   "type": "condition",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies where limited partners are also co-investors",
    "turns on adequacy of disclosure and the fund's governing documents"
   ],
   "supporting_quote": "If such private fund advisers' practices are not adequately disclosed, co-investments can often be problematic."
  },
  {
   "id": "kaal:claim:2714974-016",
   "url": "https://wulfkaal.github.io/claims/2714974-016",
   "claim": "The long term capital gains treatment of carried interest matters more to private equity, venture capital, and real estate fund advisers than to hedge fund advisers, because those funds hold portfolio company stock longer on average.",
   "type": "mechanism",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to profits on securities held more than one year"
   ],
   "supporting_quote": "The LTCG tax benefits are crucial to the returns of private equity, venture capital, and real estate investment funds advisers whose funds hold portfolio company stock longer on average than do hedge funds."
  },
  {
   "id": "kaal:claim:2714974-017",
   "url": "https://wulfkaal.github.io/claims/2714974-017",
   "claim": "If Congress changes the tax treatment of carried interest, returns to hedge fund advisers and their investors are likely to fall markedly and the popularity of hedge funds will be severely tested.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "conditional on congressional elimination of the carried interest loophole"
   ],
   "supporting_quote": "Should Congress change the tax treatment of hedge fund managers, the returns to hedge fund advisers and their investors are likely to fall markedly."
  },
  {
   "id": "kaal:claim:2714974-018",
   "url": "https://wulfkaal.github.io/claims/2714974-018",
   "claim": "New Rule 506(c) creates uncertainty for hedge fund advisers considering general solicitation and general advertising, because the SEC required reasonable steps to verify accreditation without supplying a bright line rule for the content of such solicitation.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to Regulation D offerings under Rule 506(c) after September 23, 2013"
   ],
   "supporting_quote": "New Rule 506(c) creates uncertainty for hedge fund advisers considering GSGA."
  },
  {
   "id": "kaal:claim:2714974-019",
   "url": "https://wulfkaal.github.io/claims/2714974-019",
   "claim": "Although the JOBS Act rules freed hedge fund managers to advertise, talk to reporters, and speak at conferences from September 23, 2013, very few managers actually engage in these less restrictive communications with potential investors.",
   "type": "empirical",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to the period after Rule 506(c) took effect"
   ],
   "supporting_quote": "Yet, very few hedge fund managers are actually engaging in less restrictive communications with potential investors."
  },
  {
   "id": "kaal:claim:2714974-020",
   "url": "https://wulfkaal.github.io/claims/2714974-020",
   "claim": "The investor verification requirement defeats the purpose of the Rule 506(c) liberalization: fearing liability for investor misrepresentations of personal wealth, most hedge funds raising money from individuals continue to use old Rule 506 rather than Rule 506(c).",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to funds raising capital from individual investors"
   ],
   "supporting_quote": "Fearing possible liability for investor misrepresentations of their personal wealth, most hedge funds that raise money from individuals continue to use the old Rule 506 rather than Rule 506(c)."
  },
  {
   "id": "kaal:claim:2714974-021",
   "url": "https://wulfkaal.github.io/claims/2714974-021",
   "claim": "Until the SEC finalizes verification rules and gives a clear, comprehensive definition of the reasonable steps an issuer must take, issuers cannot determine at the time of sale whether their verification attempts made general solicitation permissible.",
   "type": "condition",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "conditional on the absence of finalized SEC verification guidance"
   ],
   "supporting_quote": "Without appropriate SEC guidance, issuers will have difficulty ascertaining if their verification attempts at the time of the sale of securities made GSGA permissible."
  },
  {
   "id": "kaal:claim:2714974-022",
   "url": "https://wulfkaal.github.io/claims/2714974-022",
   "claim": "Neither obvious remedy for the increased sales pressure created by the Rule 506 amendment works well: added disclosure obligations such as filing all Rule 506 sales documents with FINRA or the SEC may burden issuers inappropriately, while litigation based enforcement may not reach all offenders equally or appropriately.",
   "type": "failure",
   "topics": [
    "compliance",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to private placements where commissions exceed those on other investments"
   ],
   "supporting_quote": "Litigation-based enforcement, on the other hand, may not encapsulate all offenders equally and/or appropriately."
  },
  {
   "id": "kaal:claim:2714974-023",
   "url": "https://wulfkaal.github.io/claims/2714974-023",
   "claim": "Hedge funds retain a structural short selling advantage because they are unaffected by the restrictions imposed on mutual funds, can use derivatives to avoid margin requirements, and have pioneered procedures that lower the direct costs of shorting.",
   "type": "mechanism",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "supporting_quote": "Hedge funds are unaffected by the restrictions on mutual funds, can use derivatives to avoid the margin requirements, and pioneered procedures that reduce the direct costs of shorting."
  },
  {
   "id": "kaal:claim:2714974-024",
   "url": "https://wulfkaal.github.io/claims/2714974-024",
   "claim": "The emergence of hedge funds as short sellers should be viewed as a positive development because it eliminates some of the market overpricing that the high costs of short selling would otherwise sustain.",
   "type": "normative",
   "topics": [
    "economics",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "supporting_quote": "Hedge funds' emergence as short sellers can be viewed as positive, eliminating some of the market overpricing due to the high costs of short selling."
  },
  {
   "id": "kaal:claim:2714974-025",
   "url": "https://wulfkaal.github.io/claims/2714974-025",
   "claim": "There are no legal limits on hedge fund leverage; the only constraint comes from market discipline supplied by creditors and counterparties through interest rates, credit availability, credit limits, initial margin, and credit spreads.",
   "type": "condition",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "asserted",
   "scope_conditions": [
    "contrasts with registered investment companies, which face direct statutory limits"
   ],
   "supporting_quote": "Any limits on a hedge fund's use of leverage come from the market discipline provided by creditors and counterparties."
  },
  {
   "id": "kaal:claim:2714974-026",
   "url": "https://wulfkaal.github.io/claims/2714974-026",
   "claim": "Direct regulation of hedge fund leverage collapses on the details because balance sheet leverage is not an adequate measure of risk and would push funds into off-balance sheet avoidance strategies.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "research-methods",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to proposals for direct leverage regulation"
   ],
   "supporting_quote": "Balance sheet leverage is not an adequate measure of risk and would encourage avoidance behavior with off-balance sheet strategies."
  },
  {
   "id": "kaal:claim:2714974-027",
   "url": "https://wulfkaal.github.io/claims/2714974-027",
   "claim": "Alternative risk measures such as value at risk have severe measurement problems, so any direct regulation of leverage would be set conservatively and would substantially limit hedge funds' ability to provide market liquidity.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "defi",
    "economics",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to direct regulation of hedge fund leverage"
   ],
   "supporting_quote": "Any attempt to directly regulate leverage would likely be conservative, due to measurement problems, and put major limits on hedge funds' ability to provide market liquidity."
  },
  {
   "id": "kaal:claim:2714974-028",
   "url": "https://wulfkaal.github.io/claims/2714974-028",
   "claim": "Direct regulation of hedge fund leverage increases moral hazard costs, because lenders and counterparties relax their own vigilance once they rely on government rules to constrain fund risk taking.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "economics",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies where government rules substitute for private monitoring"
   ],
   "supporting_quote": "Direct regulation could also increase moral hazard costs as lenders and counterparties may relax their vigilance in reliance on the government rules."
  },
  {
   "id": "kaal:claim:2714974-029",
   "url": "https://wulfkaal.github.io/claims/2714974-029",
   "claim": "Any prescriptive regulatory regime for hedge funds risks leaving the financial system less stable rather than more stable, because counterparties relax vigilance when they believe authorities are monitoring and constraining fund risk taking.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to prescriptive position reporting and monitoring regimes"
   ],
   "supporting_quote": "A risk of any prescriptive regulatory regime is that, by creating moral hazard in the marketplace, it leaves the system less rather than more stable."
  },
  {
   "id": "kaal:claim:2714974-030",
   "url": "https://wulfkaal.github.io/claims/2714974-030",
   "claim": "Proposals for indirect regulation of hedge funds through the regulation of the financial institutions that interact with them are unlikely to become legally binding.",
   "type": "predictive",
   "topics": [
    "systemic-risk",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "asserted",
   "supporting_quote": "Such proposals are unlikely to become legally binding."
  },
  {
   "id": "kaal:claim:2714974-031",
   "url": "https://wulfkaal.github.io/claims/2714974-031",
   "claim": "Banks are uniquely positioned to discipline hedge fund behavior because their role as lenders, market makers, and product creators lets them use the threat of cutting off future lending as leverage over a fund.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "defi",
    "economics",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "depends on banks' ongoing lending and counterparty relationships with the fund"
   ],
   "supporting_quote": "Because of their interaction with hedge funds, banks are uniquely positioned to use the threat of cutting off future lending to improve a hedge fund's behavior."
  },
  {
   "id": "kaal:claim:2714974-032",
   "url": "https://wulfkaal.github.io/claims/2714974-032",
   "claim": "Indirect regulation through bank capital adequacy standards can reach systemic risk because those standards alter not only banks' credit standards but also counterparty credit risk and therefore hedge funds' level of leverage.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to banks and counterparties subject to capital adequacy standards"
   ],
   "supporting_quote": "Indirect regulation through capital adequacy standards could also address issues of systemic risk because capital adequacy standards will not only regulate and alter credit standards of banks, but also counterparty credit risk and, thus, hedge funds' level of leverage."
  },
  {
   "id": "kaal:claim:2714974-033",
   "url": "https://wulfkaal.github.io/claims/2714974-033",
   "claim": "A system in which hedge funds submit position information to an authority that aggregates and publishes it cannot address liquidity risk, because protecting proprietary information requires so much aggregation that the resulting information loses value to market participants.",
   "type": "failure",
   "topics": [
    "disclosure",
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to position reporting regimes that publish aggregated data"
   ],
   "supporting_quote": "Protection of proprietary information would require so much aggregation that the value of the information to market participants would be substantially reduced."
  },
  {
   "id": "kaal:claim:2714974-034",
   "url": "https://wulfkaal.github.io/claims/2714974-034",
   "claim": "A public database of nonproprietary hedge fund information might demystify the industry, but it would not address the central policy concern that opacity creates liquidity risk.",
   "type": "failure",
   "topics": [
    "disclosure",
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to public databases limited to nonproprietary information"
   ],
   "supporting_quote": "Such a public database might demystify hedge funds, but it would not address the central policy concern that opacity creates liquidity risk."
  },
  {
   "id": "kaal:claim:2714974-035",
   "url": "https://wulfkaal.github.io/claims/2714974-035",
   "claim": "SEC rules should be amended to require public companies, particularly financial institutions, to disclose their material exposure to hedge funds and other highly leveraged institutions in the MD&A or Description of Business sections, which would be consistent with existing SEC disclosure philosophy.",
   "type": "design",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to publicly traded lenders and counterparties of hedge funds"
   ],
   "supporting_quote": "SEC rules could provide for such disclosures in the Management Discussion and Analysis (MD&A) or Description of Business segments of the periodic financial statements."
  },
  {
   "id": "kaal:claim:2714974-036",
   "url": "https://wulfkaal.github.io/claims/2714974-036",
   "claim": "The combined restrictions on registered investment company short selling, leverage, and organizational structure create a substantial disincentive for such companies to pursue absolute return strategies that are independent of the aggregate value of the market.",
   "type": "mechanism",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to registered investment companies under the Investment Company Act"
   ],
   "supporting_quote": "The restrictions on investment company short selling, leverage, and organizational structure create a substantial disincentive for such companies to engage in so-called absolute return investment strategies, which are strategies that are independent of the aggregate value of the market."
  },
  {
   "id": "kaal:claim:2714974-037",
   "url": "https://wulfkaal.github.io/claims/2714974-037",
   "claim": "The prohibition on performance fees for investment companies is the most important structural difference from hedge funds, which rely heavily on performance fees of up to 20 percent of capital gains and appreciation to give advisers incentives to produce absolute returns.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to advisers to registered investment companies"
   ],
   "supporting_quote": "Most importantly, investment advisers to investment companies may not charge an investment company a performance fee."
  },
  {
   "id": "kaal:claim:2714974-038",
   "url": "https://wulfkaal.github.io/claims/2714974-038",
   "claim": "Hedge fund and private equity IPOs indicate that the historic contours of the industry as privately held, unregistered, and exempt funds are slowly changing as the industry becomes a more mainstream part of finance.",
   "type": "predictive",
   "topics": [
    "institutional-design",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "based on listings since the mid 2000s, which remain rare among hedge funds"
   ],
   "supporting_quote": "IPOs of hedge and private equity funds suggest that the historic contours of the hedge fund industry as privately-held and managed investment funds, unregistered and exempt from federal securities regulation are slowly changing as the industry becomes a more mainstream part of finance."
  },
  {
   "id": "kaal:claim:2714974-039",
   "url": "https://wulfkaal.github.io/claims/2714974-039",
   "claim": "The overall effects of enhanced hedge fund regulation are not as immense as industry representatives predicted, but there is evidence that the enhanced Dodd-Frank Act rules do increase compliance costs for the industry.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "evidenced",
   "supporting_quote": "While the overall effects of enhanced hedge fund regulation are not as immense as hedge fund industry representatives had predicted, some evidence exists that enhanced rules under the Dodd-Frank Act increase the cost of compliance for the industry."
  },
  {
   "id": "kaal:claim:2714974-040",
   "url": "https://wulfkaal.github.io/claims/2714974-040",
   "claim": "Higher compliance costs from hedge fund regulation can create barriers to entry for new market entrants and can accelerate consolidation of the hedge fund industry.",
   "type": "predictive",
   "topics": [
    "risk-and-incentives",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "year": "2016",
   "source_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "confidence": "argued",
   "scope_conditions": [
    "follows from increased compliance costs under the Dodd-Frank Act"
   ],
   "supporting_quote": "costs can lead to barriers to entry for new market entrants and can also accelerate the consolidation of the industry."
  },
  {
   "id": "kaal:claim:2739479-001",
   "url": "https://wulfkaal.github.io/claims/2739479-001",
   "claim": "Title IV of the Dodd-Frank Act ended more than fifty years during which the hedge fund industry operated under low-level regulatory oversight, constituting a tectonic shift in the regulatory framework for private funds.",
   "type": "definitional",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "asserted",
   "scope_conditions": [
    "United States private fund industry",
    "period following the 2010 enactment of Title IV"
   ],
   "supporting_quote": "Over fifty years of low-level regulatory oversight for the hedge fund in- dustry ended with Title IV."
  },
  {
   "id": "kaal:claim:2739479-002",
   "url": "https://wulfkaal.github.io/claims/2739479-002",
   "claim": "The SEC's 2004 attempt to require hedge fund adviser registration failed: after the D.C. Circuit vacated the rule in Goldstein v. SEC, the overwhelming majority of private fund advisers that had registered under the 2004 requirements deregistered.",
   "type": "failure",
   "topics": [
    "securities-law",
    "dynamic-regulation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC rulemaking under the Investment Advisers Act before Dodd-Frank",
    "after the 2006 Goldstein decision"
   ],
   "supporting_quote": "High- lighting the significant opposition of the private fund industry to the rule, the over- whelming majority of private fund advisers that had registered under the SEC's 2004 registration requirements deregistered after Goldstein."
  },
  {
   "id": "kaal:claim:2739479-003",
   "url": "https://wulfkaal.github.io/claims/2739479-003",
   "claim": "The reporting obligations imposed on private fund advisers by Form PF raised regulatory oversight of private funds to unprecedented levels.",
   "type": "definitional",
   "topics": [
    "private-funds",
    "disclosure",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "asserted",
   "scope_conditions": [
    "SEC-registered private fund advisers",
    "after Form PF became operative in 2012"
   ],
   "supporting_quote": "Reporting obligations on Form PF72 increase the regulatory oversight of pri- vate funds to unprecedented levels."
  },
  {
   "id": "kaal:claim:2739479-004",
   "url": "https://wulfkaal.github.io/claims/2739479-004",
   "claim": "Prior survey evidence indicates that the hedge fund industry adjusted well to the Dodd-Frank registration and disclosure requirements, and that the actual impact of those rules was much less significant than the private fund industry had feared.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "short-term period immediately following the 2012 effective date",
    "based on survey responses from registered private fund advisers"
   ],
   "supporting_quote": "In summary, prior surveys suggest that the hedge fund industry seems to be adjusting well to the registration and disclosure requirements of Dodd- Frank. The impact of the registration and disclosure rules appears to be much less significant than feared by the private fund industry."
  },
  {
   "id": "kaal:claim:2739479-005",
   "url": "https://wulfkaal.github.io/claims/2739479-005",
   "claim": "Growth in the private fund industry has been concentrated among the largest advisers: assets managed by advisers with more than $5 billion in AUM grew 141 percent, compared with 53 percent for firms below $5 billion.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "private fund advisers",
    "growth measured through 2015"
   ],
   "supporting_quote": "The larger private fund advisers have generated most of the private fund industry's growth. Assets managed by private fund ad- visers with more than $5 billion AUM have grown 141%, compared to 53% for firms with less than $5 billion."
  },
  {
   "id": "kaal:claim:2739479-006",
   "url": "https://wulfkaal.github.io/claims/2739479-006",
   "claim": "Private fund underperformance may be a product of institutionalization: pension funds have increased their private fund holdings and institutions now make up over two thirds of the private fund investor base, up from 20 percent a decade earlier.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "hedge fund investor base as of 2015",
    "explanation offered as possible, not established"
   ],
   "supporting_quote": "The underperformance may result from the institutionalization of private funds, because pension funds increase private fund holdings, and, furthermore, institutions represent over two-thirds of the private fund base—up from 20% a decade ago."
  },
  {
   "id": "kaal:claim:2739479-007",
   "url": "https://wulfkaal.github.io/claims/2739479-007",
   "claim": "As the private fund investor profile shifts toward institutional investors, fees fall; institutional investors made up 65 percent of hedge fund AUM in 2015 compared with roughly 20 percent a decade earlier.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "private-funds",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "hedge fund fee levels",
    "2005 to 2015"
   ],
   "supporting_quote": "As the investor profile for private funds shifts toward institutional investors, fees fall. Institutional investors constituted 65% of hedge fund AUM in 2015, compared to just 20% a decade ago."
  },
  {
   "id": "kaal:claim:2739479-008",
   "url": "https://wulfkaal.github.io/claims/2739479-008",
   "claim": "Underperformance combined with the influx of institutional money means that pension funds, endowments and other institutions, which now outnumber wealthy individuals as private fund investors, hold more bargaining power over fees.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "private fund fee negotiation",
    "as of 2015"
   ],
   "supporting_quote": "of underperformance in the private fund industry, combined with the rush of new investors into alternative investments—pension funds, endowments, and other institutions now outnumber rich individuals as private fund investors— means that those investors have more bargaining power regarding fees."
  },
  {
   "id": "kaal:claim:2739479-009",
   "url": "https://wulfkaal.github.io/claims/2739479-009",
   "claim": "Smaller private funds spend more on compliance than larger ones, both as a share of AUM and relative to operating costs, which means increasing regulatory scrutiny falls disproportionately on smaller funds.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "private fund advisers subject to Dodd-Frank compliance obligations",
    "compliance measured as share of AUM and of operating costs"
   ],
   "supporting_quote": "Smaller private funds spend more on compliance costs than their larger counterparts—both as a percentage of AUM and in relation to oper- ating costs; this suggests that increasing regulatory scrutiny disproportionately impacts smaller funds."
  },
  {
   "id": "kaal:claim:2739479-010",
   "url": "https://wulfkaal.github.io/claims/2739479-010",
   "claim": "The private fund industry generated a disproportionate share of asset management profits: it produced 34 percent of the industry's 2013 profits, $31.2 billion of $93.0 billion, while controlling only 4 percent of total AUM.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "global asset management industry",
    "2013 profit figures"
   ],
   "supporting_quote": "Although it manages only 4% of the global asset management indus- try's total AUM ($2.8 trillion out of $68.7 trillion),121 the private fund industry represented 34% of profits generated by that industry in 2013 ($31.2 billion out of $93.0 billion)."
  },
  {
   "id": "kaal:claim:2739479-011",
   "url": "https://wulfkaal.github.io/claims/2739479-011",
   "claim": "Because the Dodd-Frank Act discouraged banks from growing too large and made bank lending harder, private funds and other alternative lenders filled the resulting void by financing small and medium sized businesses that traditional banks no longer served.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "private-funds",
    "defi",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "United States lending markets after Dodd-Frank",
    "small and medium sized business borrowers"
   ],
   "supporting_quote": "In essence, because the Dodd-Frank Act discouraged banks from getting too big, private funds and other alternative lenders filled the void, providing fi- nancing to the small- and medium-size businesses that traditional banks were no longer equipped to serve."
  },
  {
   "id": "kaal:claim:2739479-012",
   "url": "https://wulfkaal.github.io/claims/2739479-012",
   "claim": "The stronger performance of activist strategies lets activist private fund managers keep charging the higher 2 and 20 fee structure that other fund managers can no longer demand.",
   "type": "mechanism",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "activist private funds",
    "as of 2015"
   ],
   "supporting_quote": "The higher performance of this investment strategy allows activist pri- vate fund managers to use the higher 2/20 fee structures, which other fund man- agers can no longer demand."
  },
  {
   "id": "kaal:claim:2739479-013",
   "url": "https://wulfkaal.github.io/claims/2739479-013",
   "claim": "Firms that outsource the chief compliance officer role to third parties face heightened SEC scrutiny and examination risk, and the SEC has signaled that CCO liability arises where CCOs mislead regulators, engage in affirmative misconduct, or fail to carry out assigned compliance responsibilities.",
   "type": "condition",
   "topics": [
    "compliance",
    "law-and-legal-systems",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC-registered advisers and funds",
    "since 2015"
   ],
   "supporting_quote": "Firms that outsource their chief compliance roles to third parties face increased scru- tiny and threat of examination.131 The SEC warns that CCO liability could be- come an issue if CCOs mislead regulators, engage in affirmative misconduct, or fail to carry out compliance responsibilities."
  },
  {
   "id": "kaal:claim:2739479-014",
   "url": "https://wulfkaal.github.io/claims/2739479-014",
   "claim": "Lifting the ban on general solicitation and general advertising was a significant formal change for private funds, but the new advertising opportunities are being taken up only reluctantly, and uncertainty about investor verification rules together with specific restrictions makes advertising by private fund advisers unlikely for the foreseeable future.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "Rule 506(c) offerings after the September 2013 effective date",
    "private fund and private equity advisers"
   ],
   "supporting_quote": "While lifting the ban on GSGA for private fund advisers represented a signif- icant change for the private fund industry, the new advertising opportunities are only reluctantly being accepted;"
  },
  {
   "id": "kaal:claim:2739479-015",
   "url": "https://wulfkaal.github.io/claims/2739479-015",
   "claim": "Registered investment advisers should expect a more demanding regulatory environment ahead, including new or proposed regulations, more SEC enforcement actions against private fund managers, and longer and more intrusive examinations.",
   "type": "predictive",
   "topics": [
    "securities-law",
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "SEC-registered private fund advisers",
    "years following 2015"
   ],
   "supporting_quote": "Given the trends discussed above and the SEC guidance provided in public statements, it is likely that the private fund industry will encounter new or proposed regulations; increased SEC enforcement actions against private fund managers; lengthier, more intrusive SEC examinations;"
  },
  {
   "id": "kaal:claim:2739479-016",
   "url": "https://wulfkaal.github.io/claims/2739479-016",
   "claim": "The traditional distinction between mutual funds and private funds is dissipating: mutual funds are becoming more like hedge funds in investment strategy, while hedge funds are becoming more like mutual funds in regulatory framework.",
   "type": "mechanism",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "United States asset management industry after the 2008 to 2009 credit crisis"
   ],
   "supporting_quote": "Several factors suggest that mutual funds are becoming more like hedge funds as a matter of investment strategy, while hedge funds are becoming more like mutual funds as a matter of regulatory framework."
  },
  {
   "id": "kaal:claim:2739479-017",
   "url": "https://wulfkaal.github.io/claims/2739479-017",
   "claim": "Survey research on private fund advisers is structurally constrained because these advisers traditionally oppose publicity and hold a strong preference for confidentiality and privacy, which makes a substantial effective sample size difficult to obtain.",
   "type": "failure",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "private-funds",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "survey research on registered private fund advisers"
   ],
   "supporting_quote": "The 2012 and 2015 surveys were subject to sampling constraints. Private fund advisers traditionally oppose publicity and have a strong preference for confi- dentiality and privacy."
  },
  {
   "id": "kaal:claim:2739479-018",
   "url": "https://wulfkaal.github.io/claims/2739479-018",
   "claim": "Neither the 2012 nor the 2015 sample is biased, and the comparison across the two populations is consistent because respondents in both surveys were equally subject to Title IV compliance obligations.",
   "type": "condition",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "law-and-legal-systems",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of the 2012 and 2015 survey samples",
    "both drawn from the same 1267 adviser population"
   ],
   "supporting_quote": "Neither the population sample for the 2012 survey188 nor the 2015 follow-up study189 sample are biased. The comparison of the two populations is consistent and unbiased because respondents in both surveys are equally required to com- ply with Title IV."
  },
  {
   "id": "kaal:claim:2739479-019",
   "url": "https://wulfkaal.github.io/claims/2739479-019",
   "claim": "The decline in survey response rate between 2012 and 2015 is itself evidence of the private fund industry's relatively rapid adaptation to the new statutory and regulatory regime.",
   "type": "mechanism",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of 2012 and 2015 responses from the same adviser population"
   ],
   "supporting_quote": "The decline in response rate may itself be suggestive of the relatively rapid adaptation to changes brought about by the new statutory and regulatory regime."
  },
  {
   "id": "kaal:claim:2739479-020",
   "url": "https://wulfkaal.github.io/claims/2739479-020",
   "claim": "A majority of private fund adviser respondents in both surveys, 72 percent in 2012 and 75 percent in 2015, did not plan any strategic response, meaning any action to avoid or limit the impact of Title IV.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents in 2012 (N = 94) and 2015 (N = 69)"
   ],
   "supporting_quote": "Figure 2 indicates that in both 2012 and 2015 a majority (72% and 75%) of private fund adviser respondents did not plan a strategic response to Title IV of the Dodd-Frank Act. \"Strategic responses\" in both surveys describe actions taken to avoid or limit the impact of Title IV."
  },
  {
   "id": "kaal:claim:2739479-021",
   "url": "https://wulfkaal.github.io/claims/2739479-021",
   "claim": "The share of advisers reporting that they changed their communications with investors nearly doubled from 25 percent in 2012 to 47 percent in 2015, a shift the author attributes to advisers increasing investor communications on advice of counsel.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents in 2012 and 2015"
   ],
   "supporting_quote": "a substantially higher rate of responses (47% in 2015 versus 25% in 2012) suggests that respondents changed their communications with investors. Since 2012, many private fund advisers have changed and increased their communications with in- vestors, often based on advice from counsel."
  },
  {
   "id": "kaal:claim:2739479-022",
   "url": "https://wulfkaal.github.io/claims/2739479-022",
   "claim": "Although rare in absolute terms, structural responses grew: at least part of the industry is increasingly changing the legal structure of its funds and closing funds to new investors in response to the post-2012 regulatory changes.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "least common actions reported in the 2012 and 2015 surveys",
    "rates doubled or tripled between the two surveys from a low base"
   ],
   "supporting_quote": "Most notably, the comparative data in Figure 4 suggest that at least a part of the industry is increasingly changing the legal structure of their fund(s) and closing funds to new investors in response to the regulatory changes"
  },
  {
   "id": "kaal:claim:2739479-023",
   "url": "https://wulfkaal.github.io/claims/2739479-023",
   "claim": "Rather than outsourcing required compliance work, the industry is on some metrics increasingly performing that work in-house, a shift consistent with the SEC's emphasis on compliance officer liability and post-2012 enforcement actions aimed at compliance departments.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "law-and-legal-systems",
    "securities-law",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of 2012 and 2015 survey responses",
    "holds under some metrics only"
   ],
   "supporting_quote": "The compar- ative data also suggest that—at least under some metrics—rather than outsourcing required compliance work, the industry is increasingly doing such work in-house."
  },
  {
   "id": "kaal:claim:2739479-024",
   "url": "https://wulfkaal.github.io/claims/2739479-024",
   "claim": "Between 2012 and 2015 the annual cost of Dodd-Frank compliance doubled for many survey respondents, moving from the $50,000 to $100,000 range into the $100,000 to $200,000 range.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "respondents to the 2012 and 2015 surveys",
    "self-reported total compliance costs"
   ],
   "supporting_quote": "In fact, the data suggest that the annual cost of compliance doubled for many survey respon- dents, moving from the $50,000 to $100,000 range to the $100,000 to $200,000 range."
  },
  {
   "id": "kaal:claim:2739479-025",
   "url": "https://wulfkaal.github.io/claims/2739479-025",
   "claim": "The shift of reported compliance hours out of the 251 to 500 hour band and into the 100 to 250 hour band suggests the industry became more effective at satisfying Dodd-Frank reporting obligations between 2012 and 2015.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "hours reported for Dodd-Frank Act compliance specifically, not all federal regulation"
   ],
   "supporting_quote": "One possible explanation is that the industry became more effective in satisfying the reporting obligations of Dodd-Frank in the interim between 2012 and 2015."
  },
  {
   "id": "kaal:claim:2739479-026",
   "url": "https://wulfkaal.github.io/claims/2739479-026",
   "claim": "If compliance hour requirements are treated as a proxy for compliance cost, the survey data indicate that the cost of complying with all federal regulation, not just Dodd-Frank, increased between 2012 and 2015.",
   "type": "condition",
   "topics": [
    "compliance",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "conditional on hours being a valid proxy for cost",
    "all federal regulation applicable to private fund advisers"
   ],
   "supporting_quote": "Assuming that compliance hour re- quirements are proxies for compliance costs, the comparative data in Figure 9, like that in Figure 7, suggest that the cost structure for all federal regulation increased between 2012 and 2015."
  },
  {
   "id": "kaal:claim:2739479-027",
   "url": "https://wulfkaal.github.io/claims/2739479-027",
   "claim": "Private fund advisers increasingly factor the regulatory structure into decisions about the size of their assets under management, a shift partly explained by the higher post-Dodd-Frank cost structure, since higher AUM and the corresponding fee revenue can offset higher compliance costs.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "comparison of 2012 and 2015 survey respondents",
    "AUM sizing decisions"
   ],
   "supporting_quote": "Private fund advisers are increasingly taking the regulatory structure into account in determining their AUM. This can par- tially be explained with the higher overall post-Dodd-Frank-Act cost structure for the industry, which is shown in Figures 6, 8, and 9."
  },
  {
   "id": "kaal:claim:2739479-028",
   "url": "https://wulfkaal.github.io/claims/2739479-028",
   "claim": "The finding that advisers size AUM around regulatory cost is in tension with anecdotal evidence, since only a minority of private investment funds pay expenses out of the management fee at all.",
   "type": "failure",
   "topics": [
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "private fund expense allocation practice",
    "survey inference about the AUM decision"
   ],
   "supporting_quote": "However, this finding is inconsistent with anecdotal evidence sug- gesting that only in a minority of private investment funds would expenses be paid using either all or a portion of the management fee."
  },
  {
   "id": "kaal:claim:2739479-029",
   "url": "https://wulfkaal.github.io/claims/2739479-029",
   "claim": "Advisers typically try to allocate as many operating expenses as possible to the fund so that as much of the net management fee as possible becomes manager compensation, a practice that private fund investors heavily criticize.",
   "type": "mechanism",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "asserted",
   "scope_conditions": [
    "standard private fund adviser compensation practice"
   ],
   "supporting_quote": "To ensure that as much as possible of the net management fee becomes compensation for the managers, investment advisers typically try to allocate as many operating expenses to the fund as possible."
  },
  {
   "id": "kaal:claim:2739479-030",
   "url": "https://wulfkaal.github.io/claims/2739479-030",
   "claim": "Sensitivity to the Form PF quarterly reporting threshold rose sharply: only 19 percent of 2012 respondents took the $1.5 billion threshold into account, compared with 33 percent in 2015.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents in 2012 and 2015",
    "the $1.5 billion Form PF quarterly reporting threshold"
   ],
   "supporting_quote": "In 2012, only 19% of respondents took the Form PF quar- terly threshold into account, whereas 33% of respondents in 2015 found the threshold relevant."
  },
  {
   "id": "kaal:claim:2739479-031",
   "url": "https://wulfkaal.github.io/claims/2739479-031",
   "claim": "Because quarterly Form PF filing costs roughly $10,000 per reporting fund, the $1.5 billion threshold that triggers quarterly filing gives advisers a direct cost reason to factor that threshold into the AUM decision.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "disclosure",
    "compliance",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "advisers approaching $1.5 billion in AUM",
    "per reporting fund cost basis"
   ],
   "supporting_quote": "At an average quarterly cost of around $10,000 for each reporting fund, the Form PF190 costs may make participants more likely to consider the Form PF reporting threshold in the AUM decision."
  },
  {
   "id": "kaal:claim:2739479-032",
   "url": "https://wulfkaal.github.io/claims/2739479-032",
   "claim": "A majority of respondents in both surveys, 76.1 percent in 2012 and 65 percent in 2015, believed the Dodd-Frank Act did not affect their reporting funds' earnings.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents in 2012 and 2015",
    "perceived effect on fund earnings, not measured returns"
   ],
   "supporting_quote": "Figure 16 illustrates that the majority of survey respondents in both the 2012 survey (76.1%) and 2015 survey (65%) believed that the Dodd-Frank Act did not affect reporting funds' earnings."
  },
  {
   "id": "kaal:claim:2739479-033",
   "url": "https://wulfkaal.github.io/claims/2739479-033",
   "claim": "Although Dodd-Frank compliance costs fall primarily on the investment adviser rather than the fund, advisers have increasingly built fund structures that pass most of those compliance expenses through to their reporting funds.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "adviser and private fund contractual structures",
    "between 2012 and 2015"
   ],
   "supporting_quote": "Although Dodd-Frank Act compliance costs predominantly affect the investment advisers of private funds rather than the funds themselves, investment advisers have increasingly created fund struc- tures that allow them to pass most of their compliance expenses through to their reporting funds."
  },
  {
   "id": "kaal:claim:2739479-034",
   "url": "https://wulfkaal.github.io/claims/2739479-034",
   "claim": "Passing compliance costs through to reporting funds applies those costs against the funds' trading revenues, which produces an overall adverse impact on fund earnings and so shifts the burden of regulation onto investors.",
   "type": "failure",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "funds subject to adviser expense pass-through terms"
   ],
   "supporting_quote": "These pass-through costs are applied to the funds' trading rev- enues, which results in an overall adverse impact on the funds' earnings."
  },
  {
   "id": "kaal:claim:2739479-035",
   "url": "https://wulfkaal.github.io/claims/2739479-035",
   "claim": "Among advisers who saw an earnings effect, the attributed cause shifted from direct expense to opportunity cost between 2012 and 2015, with opportunity cost references rising from 9 percent to 32 percent while increased expense references fell from 53 percent to 36 percent.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "only respondents who reported an effect on fund earnings",
    "2012 and 2015 surveys"
   ],
   "supporting_quote": "and 2015, investment advisers saw the costs on fund earnings increasingly asso- ciated with opportunity costs (rates rose from 9% in 2012 to 32% in 2015) and not with increased expenses (rates fell from 53% in 2012 to 36% in 2015)."
  },
  {
   "id": "kaal:claim:2739479-036",
   "url": "https://wulfkaal.github.io/claims/2739479-036",
   "claim": "By 2015 a clear majority of respondents, 93 percent, attributed effects on their investment management company's profits to additional expenses associated with the Dodd-Frank Act, and no respondent reported no additional expenses, compared with 19 percent in 2012.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey respondents reporting on management company profits",
    "2012 and 2015 surveys"
   ],
   "supporting_quote": "Figure 19 illustrates that a clear majority of respondents in 2015 (93%) be- lieved that the profits of their investment management company were affected by additional expenses associated with the Dodd Frank Act."
  },
  {
   "id": "kaal:claim:2739479-037",
   "url": "https://wulfkaal.github.io/claims/2739479-037",
   "claim": "Even though the Dodd-Frank Act's overall regulatory impact on the private fund industry was low, the compliance costs generated by the evolving regulatory environment carry many unexpected consequences with the potential to further reshape industry practices.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "argued",
   "scope_conditions": [
    "private fund advisers",
    "period from 2012 to 2015"
   ],
   "supporting_quote": "Despite the low regulatory impact of the Dodd-Frank Act overall, this article indicates that compliance costs associated with the evolving regulatory environment for private fund advisers have many unexpected consequences that could have the potential to further shape industry practices."
  },
  {
   "id": "kaal:claim:2739479-038",
   "url": "https://wulfkaal.github.io/claims/2739479-038",
   "claim": "Changing AUM preferences driven by compliance costs could eventually produce industry consolidation aimed at cost savings, or drive a shift toward family offices that manage no third-party assets and therefore escape the regime.",
   "type": "predictive",
   "topics": [
    "compliance",
    "regulatory-failure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "speculative",
   "scope_conditions": [
    "long-run private fund industry structure",
    "author marks it as unclear whether AUM preference changes become permanent"
   ],
   "supporting_quote": "from a policy perspective, changing AUM preferences associated with compliance costs could eventually result in consolidations that facilitate cost savings or precip- itate a trend towards family offices that do not manage third-party assets."
  },
  {
   "id": "kaal:claim:2739479-039",
   "url": "https://wulfkaal.github.io/claims/2739479-039",
   "claim": "The comparative evidence suggests the long-term effects of the evolving post-Dodd-Frank regulatory environment may be more substantial than either the industry or regulators initially anticipated.",
   "type": "predictive",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "private fund advisers and their reporting funds",
    "based on 2015 responses citing lower returns and plans to consolidate or close funds"
   ],
   "supporting_quote": "The comparative evidence in this study suggests that long-term ef- fects of the evolving post-Dodd-Frank-Act regulatory environment might be more substantial than the industry and regulators initially anticipated."
  },
  {
   "id": "kaal:claim:2739479-040",
   "url": "https://wulfkaal.github.io/claims/2739479-040",
   "claim": "Barriers to entry for small firms are becoming an increasing problem in the private fund industry under the evolving post-Dodd-Frank legal environment, with references to such barriers rising from 24 percent of respondents in 2012 to 33 percent in 2015.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "compliance",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "year": "2016",
   "source_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "confidence": "evidenced",
   "scope_conditions": [
    "small private fund market entrants",
    "2012 and 2015 survey responses about the next five years"
   ],
   "supporting_quote": "The 2015 survey responses suggest that barriers to entry for small firms are becoming increasingly a problem for the private fund industry in the continuously evolving post-Dodd-Frank-Act legal environment."
  },
  {
   "id": "kaal:claim:2732915-001",
   "url": "https://wulfkaal.github.io/claims/2732915-001",
   "claim": "Five years after the Dodd-Frank Act, the private fund industry is most affected by the uncertainty and the higher costs the Act generates, yet on multiple metrics the industry is coping well with the evolving post Dodd-Frank regulatory landscape.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "empirical-evidence",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "survey of a population of 1267 registered investment advisers, N=69 respondents",
    "United States, post Title IV registration"
   ],
   "supporting_quote": "The findings in this study suggest that the industry is mostly affected by the uncertainty and higher costs associated with the Act, but under multiple metrics the industry appears to be coping well overall with the evolving post Dodd- Frank Act regulatory landscape."
  },
  {
   "id": "kaal:claim:2732915-002",
   "url": "https://wulfkaal.github.io/claims/2732915-002",
   "claim": "The private fund industry is adjusting well to the evolving post Dodd-Frank regulatory landscape, and the long-term impact of that landscape is much less intense than the industry itself initially anticipated.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "registered U.S. private fund advisers five years after enactment"
   ],
   "supporting_quote": "This Article demonstrates that the private fund industry is adjusting well to the evolving regulatory landscape pertaining to it. The long-term impact of the evolving post Dodd-Frank Act regulatory landscape appears to be much less intense than the industry initially anticipated."
  },
  {
   "id": "kaal:claim:2732915-003",
   "url": "https://wulfkaal.github.io/claims/2732915-003",
   "claim": "The long-term cost implications of Title IV registration and reporting obligations are absorbed relatively quickly after registration, so that Dodd-Frank compliance costs are largely manageable depending on the size of the investment adviser.",
   "type": "empirical",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "cost absorption measured after the initial registration period",
    "manageability varies with adviser size"
   ],
   "supporting_quote": "The long-term cost implications of registration and reporting obligations as reported in this study appear to be absorbed relatively quickly after registration. The costs of compliance associated with the Dodd-Frank Act are, depending on size of the investment adviser, largely manageable."
  },
  {
   "id": "kaal:claim:2732915-004",
   "url": "https://wulfkaal.github.io/claims/2732915-004",
   "claim": "Although the industry adapted well to the post Dodd-Frank environment, the Act has already produced some negative effects on the private fund industry and may produce further negative long-term effects.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on survey responses about the next five years"
   ],
   "supporting_quote": "Nevertheless, the findings of this study show that the Act has already had some negative effects on the industry and that it may have some negative long-term effects."
  },
  {
   "id": "kaal:claim:2732915-005",
   "url": "https://wulfkaal.github.io/claims/2732915-005",
   "claim": "The survey achieved a response rate of 5.44 percent from a population of 1267 registered private fund advisers.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "private-funds",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "e-mail survey of advisers registered before the March 30, 2012 effective date"
   ],
   "supporting_quote": "The response rate for this survey was 5.44% of a population of 1267."
  },
  {
   "id": "kaal:claim:2732915-006",
   "url": "https://wulfkaal.github.io/claims/2732915-006",
   "claim": "Because private fund advisers prefer confidentiality and generally oppose publicity, most do not respond to survey questions, which makes obtaining a substantial effective sample size for survey studies of this industry difficult.",
   "type": "mechanism",
   "topics": [
    "empirical-evidence",
    "research-methods",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "argued",
   "scope_conditions": [
    "survey research targeting private fund advisers"
   ],
   "supporting_quote": "Most private fund advisers do not respond to survey questions so obtaining a substantial effective sample size for survey studies with private fund advisers is difficult."
  },
  {
   "id": "kaal:claim:2732915-007",
   "url": "https://wulfkaal.github.io/claims/2732915-007",
   "claim": "Guaranteeing complete anonymity is essential to obtaining a sufficient response rate from private fund advisers, but that guarantee prevents a broader descriptive statistical analysis of the sample.",
   "type": "condition",
   "topics": [
    "empirical-evidence",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "argued",
   "scope_conditions": [
    "survey studies of private fund advisers who fear identification"
   ],
   "supporting_quote": "The anonymity of survey responses did not allow a broader descriptive statistical analysis of the sample. The author guaranteed complete anonymity to all survey respondents, which is an essential element in obtaining a sufficient response rate."
  },
  {
   "id": "kaal:claim:2732915-008",
   "url": "https://wulfkaal.github.io/claims/2732915-008",
   "claim": "After the D.C. Circuit vacated the SEC's 2004 hedge fund adviser registration rule in Goldstein v. SEC, the overwhelming majority of private fund advisers who had registered under that rule deregistered.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "private fund advisers registered under the SEC 2004 rule",
    "after the 2006 Goldstein decision"
   ],
   "supporting_quote": "The overwhelming majority of private fund advisers that had registered under the SEC's 2004 registration requirements deregistered after the Goldstein decision."
  },
  {
   "id": "kaal:claim:2732915-009",
   "url": "https://wulfkaal.github.io/claims/2732915-009",
   "claim": "Title IV requires private fund advisers with more than $150 million in assets under management to register with the SEC as investment advisers.",
   "type": "definitional",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "asserted",
   "scope_conditions": [
    "advisers acting solely as advisers to private funds",
    "assets under management in the United States"
   ],
   "supporting_quote": "Title IV requires private fund advisers with more than $150 million assets under management (AUM) to register with the SEC as investment advisers."
  },
  {
   "id": "kaal:claim:2732915-010",
   "url": "https://wulfkaal.github.io/claims/2732915-010",
   "claim": "Form PF raised regulatory oversight of private funds to unprecedented levels by requiring managers to disclose, for the first time, information about themselves, their funds, their investors, performance, financing, risk metrics, strategies, and credit exposure.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure",
    "systemic-risk",
    "risk-and-incentives",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "argued",
   "scope_conditions": [
    "registered investment managers subject to periodic Form PF reporting"
   ],
   "supporting_quote": "increased the level of regulatory oversight of private funds to unprecedented levels."
  },
  {
   "id": "kaal:claim:2732915-011",
   "url": "https://wulfkaal.github.io/claims/2732915-011",
   "claim": "Prior studies acknowledge that the SEC's mandated collection of private fund data through Form PF created several core challenges for the industry, but they do not sufficiently clarify the long-term impact of the Form PF disclosure requirements.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "argued",
   "scope_conditions": [
    "literature on Form PF available as of 2016"
   ],
   "supporting_quote": "Although prior studies have acknowledged that the SEC's mandated collection of private fund data via Form PF created several core challenges for the private fund industry, these studies do not sufficiently clarify the long-term impact of the Form PF disclosure requirements."
  },
  {
   "id": "kaal:claim:2732915-012",
   "url": "https://wulfkaal.github.io/claims/2732915-012",
   "claim": "Form PF required disclosures of counterparty credit exposure constitute sensitive information that individual fund managers often cannot readily determine, which makes that reporting requirement hard to satisfy.",
   "type": "failure",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "argued",
   "scope_conditions": [
    "Form PF counterparty credit exposure items"
   ],
   "supporting_quote": "For instance, Form PF required disclosures of counterparty credit exposure constitute sensitive information that often cannot be readily determined by the individual fund managers."
  },
  {
   "id": "kaal:claim:2732915-013",
   "url": "https://wulfkaal.github.io/claims/2732915-013",
   "claim": "The SEC estimates that 230 U.S. hedge fund advisers with at least $1.5 billion in RAUM attributable to hedge funds at the end of any month in the prior fiscal quarter will file Form PF.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC estimate in the Form PF adopting release"
   ],
   "supporting_quote": "The SEC estimates that 230 U.S. hedge fund advisers with at least $1.5 billion in RAUM attributable to hedge funds at the end of any month in the prior fiscal quarter will file Form PF."
  },
  {
   "id": "kaal:claim:2732915-014",
   "url": "https://wulfkaal.github.io/claims/2732915-014",
   "claim": "Approximately 155 investment advisers managing over $2 billion in private equity fund assets may represent roughly 75 percent of the U.S. private equity fund industry, so a small number of filers covers most industry assets.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC and Preqin estimates cited in the Form PF release"
   ],
   "supporting_quote": "Similarly, the approximately 155 investment advisers managing over $2 billion in private equity fund assets may represent roughly 75% of the U.S. private equity fund industry."
  },
  {
   "id": "kaal:claim:2732915-015",
   "url": "https://wulfkaal.github.io/claims/2732915-015",
   "claim": "Form PF data from the SEC Risk and Examinations Office for the fourth quarter of 2014 show net asset value of about $3,399 billion for hedge funds, $2,672 billion for Qualifying Hedge Funds, and $1,744 billion for private equity.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "fourth calendar quarter 2014 Private Funds Statistics"
   ],
   "supporting_quote": "Form PF data provided by the SEC's Risk and Examinations Office for the fourth quarter of 2104 show that the net asset value is around $3,399 billion for hedge funds, $2,672 billion for Qualifying Hedge Funds and $1,744 billion for Private Equity."
  },
  {
   "id": "kaal:claim:2732915-016",
   "url": "https://wulfkaal.github.io/claims/2732915-016",
   "claim": "A 2013 survey found that Form PF compliance costs for first time filers were under $10,000 for 59.18 percent of respondents, while subsequent annual Form PF filings cost no more than $5,000 for 57.14 percent of respondents.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "compliance",
    "empirical-evidence",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "2013 survey of private fund advisers",
    "larger quarterly filers incurred substantially higher costs"
   ],
   "supporting_quote": "While Form PF compliance costs for first time filers were under $10,000 (59.18% of respondents), the cost of subsequent annual Form PF filings amounted to no more than $5,000 (57.14% of respondents),"
  },
  {
   "id": "kaal:claim:2732915-017",
   "url": "https://wulfkaal.github.io/claims/2732915-017",
   "claim": "Industry concerns about the burdensome nature of Title IV's mandatory private fund adviser registration and disclosure requirements appear mostly unfounded, although data inconsistencies remain a concern.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "measured through adviser reported cost and time of Form PF compliance"
   ],
   "supporting_quote": "While data inconsistencies appear to be remain as a concerns,63 concerns over the burdensome nature of Title IV's mandatory private fund adviser registration and disclosure requirements64 seem to be mostly unfounded."
  },
  {
   "id": "kaal:claim:2732915-018",
   "url": "https://wulfkaal.github.io/claims/2732915-018",
   "claim": "A majority of private fund adviser respondents, 74.5 percent, do not plan any strategic response to Title IV of the Dodd-Frank Act.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=69 survey respondents",
    "strategic response understood as action to avoid or limit the impact of Title IV"
   ],
   "supporting_quote": "majority (74.5%) of private fund adviser respondents do not plan a strategic response to Title IV of the Dodd-Frank Act."
  },
  {
   "id": "kaal:claim:2732915-019",
   "url": "https://wulfkaal.github.io/claims/2732915-019",
   "claim": "The most common adviser responses to Title IV are outsourcing compliance work, hiring additional counsel, instituting new record keeping policies, hiring additional staff, changing marketing materials, and changing communications with investors, all compliance updates rather than fundamental legal or strategic change.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=69 survey respondents"
   ],
   "supporting_quote": "The most common actions taken include: (1) outsourcing compliance work, (2) hiring additional counsel, (3) instituting new record-keeping policies, (4) hiring additional staff, (5) changing marketing materials, and (6) changing communications with investors."
  },
  {
   "id": "kaal:claim:2732915-020",
   "url": "https://wulfkaal.github.io/claims/2732915-020",
   "claim": "Private fund advisers in the sample did not terminate existing employment relationships, and only few severed advising relationships, changed fund legal structure, liquidated positions, changed investment styles or portfolio structure, or closed funds to new investors.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=69 survey respondents"
   ],
   "supporting_quote": "Private fund advisers in the sample did not terminate existing employment relationships. Few respondents severed an advising relationship, changed funds' (legal) structure, liquidated positions, changed investment styles, changed portfolio structure, or closed funds to new investors."
  },
  {
   "id": "kaal:claim:2732915-021",
   "url": "https://wulfkaal.github.io/claims/2732915-021",
   "claim": "Among respondents answering the open ended question on other actions taken, 30.8 percent hired a compliance firm, 15.4 percent said they otherwise wasted time and money reacting to Dodd-Frank requirements, and 15.4 percent implemented new policies and programs.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "open ended survey question 3b, coded into response clusters"
   ],
   "supporting_quote": "30.8% of respondents who answered this question hired a compliance firm, 15.4% suggested they otherwise wasted time and money in reacting to Dodd-Frank requirements, and 15.4 % suggested they implemented new policies and programs in response to the Dodd-Frank Act."
  },
  {
   "id": "kaal:claim:2732915-022",
   "url": "https://wulfkaal.github.io/claims/2732915-022",
   "claim": "Compliance cost is a significant issue for the private fund industry: a majority of respondents put Dodd-Frank compliance costs between $50,000 and $200,000, while a significant minority estimates total compliance cost between $200,000 and over $400,000.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=69 survey respondents",
    "cost defined as actual expenses incurred"
   ],
   "supporting_quote": "Compliance costs are a significant issue for the private fund industry. A majority of respondents found Dodd-Frank compliance costs to range from $50,000 to $200,000. However, a significant minority estimates the total compliance cost will range from $200,000 to over $400,000."
  },
  {
   "id": "kaal:claim:2732915-023",
   "url": "https://wulfkaal.github.io/claims/2732915-023",
   "claim": "Up to $100,000 in additional Dodd-Frank compliance cost is a significant imposition on a smaller private fund adviser, whereas larger and mid sized advisers can absorb it relatively easily or pass it on to clients, so the burden of Title IV is size dependent.",
   "type": "condition",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "argued",
   "scope_conditions": [
    "anecdotal evidence supplementing the survey results",
    "distinguishes smaller advisers from larger and mid sized advisers"
   ],
   "supporting_quote": "$100,000 in additional compliance costs imposed by the Dodd- Frank Act can be a significant imposition on a smaller private fund adviser, for the majority of larger or mid-sized investment advisers those compliance costs can be relatively easily absorbed and/or passed on to their clients."
  },
  {
   "id": "kaal:claim:2732915-024",
   "url": "https://wulfkaal.github.io/claims/2732915-024",
   "claim": "The largest group of respondents, 26.5 percent, estimated annual compliance cost for all federal regulations at between $100,000 and $200,000, while a smaller group of 14.3 percent estimated it at more than $400,000 a year.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "all federal regulations pertaining to private fund advisers, not only Dodd-Frank"
   ],
   "supporting_quote": "The largest number of respondents (26.5%), however, estimated the annual compliance cost for all federal regulations at between $100,000 and $200,000. A smaller group (14.3%) estimated the cost of compliance as more than $400,000 a year."
  },
  {
   "id": "kaal:claim:2732915-025",
   "url": "https://wulfkaal.github.io/claims/2732915-025",
   "claim": "Reported compliance time tracks reported compliance cost: a clear majority of adviser respondents spent fewer than 500 hours complying with Title IV, while a noticeable minority of 11.5 percent estimated more than 1000 hours.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=69 survey respondents",
    "time treated as a proxy for cost"
   ],
   "supporting_quote": "estimates pertaining to compliance time are consistent with their estimates pertaining to compliance cost. Although a clear majority of adviser respondents spent fewer than 500 hours to comply with Title IV, a noticeable minority (11.5%) estimated compliance time at more than 1000 hours."
  },
  {
   "id": "kaal:claim:2732915-026",
   "url": "https://wulfkaal.github.io/claims/2732915-026",
   "claim": "For all federal regulations, 65.1 percent of respondents estimate total compliance time at between 100 and 500 hours, while a noticeable minority of 20.9 percent estimate it above 1000 hours.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "all federal rules and procedures including Treasury, SEC, and CFTC"
   ],
   "supporting_quote": "65.1% of respondents estimate the total time required to comply with all federal regulations at between 100 and 500 hours. However, a noticeable minority (20.9%) estimate it above 1000 hours."
  },
  {
   "id": "kaal:claim:2732915-027",
   "url": "https://wulfkaal.github.io/claims/2732915-027",
   "claim": "Of the advisers who responded, 70.60 percent would not take the current regulatory regime into account in determining the assets under management size of their funds.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey question 7"
   ],
   "supporting_quote": "Of those who responded, 70.60% would not take the current regulatory regime into account in determining the AUM size of their funds."
  },
  {
   "id": "kaal:claim:2732915-028",
   "url": "https://wulfkaal.github.io/claims/2732915-028",
   "claim": "The majority of private fund advisers in the United States are not considering changing their assets under management in order to lower Dodd-Frank compliance costs, notwithstanding the $150 million registration threshold and the $1.5 billion Form PF quarterly reporting threshold.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "argued",
   "scope_conditions": [
    "inference from responses to survey question 7",
    "$150 million registration threshold and $1.5 billion Form PF threshold in force"
   ],
   "supporting_quote": "the majority response to Survey Question 7 implies that the majority of private fund advisers in the United States are not considering changing their AUM in order to lower their Dodd-Frank Act compliance costs."
  },
  {
   "id": "kaal:claim:2732915-029",
   "url": "https://wulfkaal.github.io/claims/2732915-029",
   "claim": "Among advisers who factor the regulatory regime into fund sizing, the direction of adjustment is split: 18.2 percent would lower assets under management to avoid the regulatory hassle, while 27.3 percent would still increase AUM and another 27.3 percent seek the right size to cover expenses.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "respondents who answered yes to survey question 7"
   ],
   "supporting_quote": "While 18.2% would lower their AUM to avoid the regulatory hassle, 27.3% would actually still want to increase their AUM. Another 27.3% indicated a desire to attain the right size to cover expenses."
  },
  {
   "id": "kaal:claim:2732915-030",
   "url": "https://wulfkaal.github.io/claims/2732915-030",
   "claim": "A majority of respondents already took the regulatory regime into account in sizing assets under management before the Dodd-Frank Act was enacted, which implies that Dodd-Frank did not make much difference in how they run their business.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "argued",
   "scope_conditions": [
    "responses to survey question 7.b.ii",
    "a significant minority of 47.1 percent did not consider the regime before enactment"
   ],
   "supporting_quote": "It shows that a majority of respondents did in fact take the regulatory regime into account before Dodd- Frank, implying that Dodd-Frank did not make much difference in the way respondents run their business."
  },
  {
   "id": "kaal:claim:2732915-031",
   "url": "https://wulfkaal.github.io/claims/2732915-031",
   "claim": "The largest group of respondents prefers an assets under management size between $500 million and $1 billion, and no clear majority preference emerges around the $1.5 billion Form PF quarterly reporting threshold.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey question 8 on desired AUM after Dodd-Frank"
   ],
   "supporting_quote": "Figure 13 illustrates that the largest number of respondents (33.3%) prefer an AUM size of between $500 million and $1 billion. No clear majority emerges as to the preference pertaining to the $1.5 billion Form PF quarterly reporting threshold for larger funds."
  },
  {
   "id": "kaal:claim:2732915-032",
   "url": "https://wulfkaal.github.io/claims/2732915-032",
   "claim": "A majority of adviser respondents, 66.7 percent, did not take the $1.5 billion Form PF quarterly reporting threshold into account when determining the appropriate assets under management for the funds they manage.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey question 10"
   ],
   "supporting_quote": "Figure 15 illustrates that the majority of adviser respondents (66.7%) did not take the $1.5 billion AUM threshold under Form PF for quarterly reporting into account in determining the appropriate size of AUM for the fund(s) they manage."
  },
  {
   "id": "kaal:claim:2732915-033",
   "url": "https://wulfkaal.github.io/claims/2732915-033",
   "claim": "Sixty five percent of adviser survey respondents believed that their fund earnings were not affected by the Dodd-Frank Act.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey question 11 on fund earnings and net rate of return to investors"
   ],
   "supporting_quote": "Figure 16 shows that 65% of adviser survey respondents believed that fund earnings were not affected by the Dodd-Frank Act."
  },
  {
   "id": "kaal:claim:2732915-034",
   "url": "https://wulfkaal.github.io/claims/2732915-034",
   "claim": "Among the minority of respondents who believed Dodd-Frank affected fund earnings, the majority attributed that effect to additional compliance costs rather than to lower returns.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "respondents who answered yes to survey question 11"
   ],
   "supporting_quote": "Figure 17 illustrates that the majority of those respondents who believed that Dodd-Frank affected their fund(s) earnings blamed additional compliance costs associated with Dodd-Frank."
  },
  {
   "id": "kaal:claim:2732915-035",
   "url": "https://wulfkaal.github.io/claims/2732915-035",
   "claim": "Of those who responded, 75.4 percent indicated that the profits of their investment management company were affected by the new registration and disclosure requirements, consistent with the management company, rather than the fund, bearing most of those costs.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to survey question 12",
    "supported by anecdotal evidence on cost allocation"
   ],
   "supporting_quote": "75.4% indicated that the profits of their investment management company were affected. This is consistent with anecdotal evidence suggesting that it is the investment management company that bears the majority of costs associated with the registration and disclosure requirements."
  },
  {
   "id": "kaal:claim:2732915-036",
   "url": "https://wulfkaal.github.io/claims/2732915-036",
   "claim": "Half of the respondents indicated that the Dodd-Frank registration and disclosure rules create higher costs that will affect their funds over the next five years, while 17.4 percent expected no effect and 6.5 percent expected lower returns.",
   "type": "predictive",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "respondents forecasting the next five years"
   ],
   "supporting_quote": "while 17.4% believed there was no effect and 6.5% suggest the effect is lower returns, 50% indicated that the Dodd- Frank registration and disclosure rules create higher costs that affect their funds."
  },
  {
   "id": "kaal:claim:2732915-037",
   "url": "https://wulfkaal.github.io/claims/2732915-037",
   "claim": "Asked how Title IV will affect the private fund industry over the next five years, the largest groups of respondents identified additional expenses, at 34.9 percent, and barriers to entry for private fund market entrants, at 32.6 percent.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "responses to the survey question on industry effects over five years"
   ],
   "supporting_quote": "The largest numbers of respondents identified additional expenses (34.9%) and barriers to entry (32.6%) for private fund market entrants as likely effects."
  },
  {
   "id": "kaal:claim:2732915-038",
   "url": "https://wulfkaal.github.io/claims/2732915-038",
   "claim": "The long-term effect of the Dodd-Frank Act on the private investment fund industry is likely to be characterized by increasing additional expenses and associated barriers to entry for new market entrants.",
   "type": "predictive",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "argued",
   "scope_conditions": [
    "inference from respondent forecasts for the next five years"
   ],
   "supporting_quote": "Given these survey results, it seems possible that the long- term effect of the Dodd-Frank Act on the private investment fund industry is characterized by increasing additional expenses and associated levels of barriers to entry for market entrants."
  },
  {
   "id": "kaal:claim:2732915-039",
   "url": "https://wulfkaal.github.io/claims/2732915-039",
   "claim": "The SEC's clarifying and optimizing of the legal framework after the Dodd-Frank Act effectively supports the private fund industry in its efforts to comply with the revised standards.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC rule amendments, guidance, and frequently asked questions issued after 2012"
   ],
   "supporting_quote": "Based on the findings in this study, it appears that the SEC's clarifying and optimizing of the legal framework post Dodd-Frank Act effectively supports the industry in its efforts to comply with the revised standards."
  },
  {
   "id": "kaal:claim:2732915-040",
   "url": "https://wulfkaal.github.io/claims/2732915-040",
   "claim": "The same SEC implementation and clarification of Dodd-Frank registration and reporting requirements that helps the industry comply also creates uncertainty and higher costs for it, so continuing rule development cuts both ways.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "securities-law",
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Private Fund Industry Five Years after the Dodd-Frank Act – A Survey Study (2016). SSRN: https://ssrn.com/abstract=2732915",
   "year": "2016",
   "source_sha256": "643658c02f6625bca35595696116d0ad74d681ed8579c644832ae4a88b2a8c14",
   "confidence": "evidenced",
   "scope_conditions": [
    "continuing SEC amendment of rules and reporting forms after Title IV"
   ],
   "supporting_quote": "At the same time, there is sufficient evidence in the findings that the SEC's implementation and clarification of Dodd-Frank Act registration and reporting requirements for private funds also creates uncertainty and higher costs for the industry."
  },
  {
   "id": "kaal:claim:2811729-001",
   "url": "https://wulfkaal.github.io/claims/2811729-001",
   "claim": "The proliferation of unconstrained mutual funds calls into question whether the retail investor protections built into the Investment Company Act of 1940 remain effective.",
   "type": "failure",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. registered open-end investment companies",
    "unconstrained credit strategies sold to retail investors"
   ],
   "supporting_quote": "The proliferation of unconstrained mutual funds calls into question the effectiveness of retail investor protections under the Investment Company Act of 1940."
  },
  {
   "id": "kaal:claim:2811729-002",
   "url": "https://wulfkaal.github.io/claims/2811729-002",
   "claim": "Unconstrained mutual funds share multiple investment strategy and risk attributes with fixed income hedge funds, a finding the authors ground in trading data and prospectuses of all such funds launched from 2010 through 2015.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "risk-and-incentives",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "evidenced",
   "scope_conditions": [
    "hand-selected sample of unconstrained mutual funds launched 2010 through 2015"
   ],
   "supporting_quote": "article demonstrates that unconstrained mutual funds share multiple investment strategy and risk attributes with fixed income hedge funds."
  },
  {
   "id": "kaal:claim:2811729-003",
   "url": "https://wulfkaal.github.io/claims/2811729-003",
   "claim": "The authors stipulate that an unconstrained mutual fund strategy is generally not tethered to any benchmark and instead gives the manager operational freedom to pursue risk-adjusted returns using any debt instruments or securities, regardless of issuer, sector, jurisdiction, liquidity, or quality.",
   "type": "definitional",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "asserted",
   "scope_conditions": [
    "registered open-end investment management companies pursuing credit strategies"
   ],
   "supporting_quote": "strategy that generally is not tethered to any benchmark. Instead, the strategy provides the manager with the operational freedom to pursue risk- adjusted returns using any debt instruments or securities, regardless of issuer, sector, jurisdiction, liquidity or quality."
  },
  {
   "id": "kaal:claim:2811729-004",
   "url": "https://wulfkaal.github.io/claims/2811729-004",
   "claim": "Unconstrained mutual funds combine the regulatory structure of a mutual fund with the investment strategy of a private fund implementing a credit strategy and principally trading fixed income instruments, which lets them transcend traditional investment and legal distinctions.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "credit-focused unconstrained funds registered under the Company Act"
   ],
   "supporting_quote": "by combining the regulatory structure of a mutual fund with the investment strategy of a private fund implementing a credit strategy and principally trading fixed income instruments."
  },
  {
   "id": "kaal:claim:2811729-005",
   "url": "https://wulfkaal.github.io/claims/2811729-005",
   "claim": "The investor eligibility line has become arbitrary in the credit space: private funds implementing substantially the same investment strategy as a fixed income unconstrained mutual fund, and carrying substantially the same risks, may be sold only to high net worth and sophisticated investors through private placements.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "fixed income focused unconstrained mutual funds compared with credit private funds"
   ],
   "supporting_quote": "purchased by high net worth and sophisticated investors through private placements, although the private funds implement substantially the same investment strategy as a fixed income-focused UMF, and are subject to substantially the same types of strategic and other investment risks as a UMF."
  },
  {
   "id": "kaal:claim:2811729-006",
   "url": "https://wulfkaal.github.io/claims/2811729-006",
   "claim": "The emergence of unconstrained mutual funds is driven by market forces: post-crisis structural and regulatory changes to the capital markets, a low interest rate environment, and the growth of private funds together created and then increased retail demand for alternative mutual funds.",
   "type": "mechanism",
   "topics": [
    "defi",
    "private-funds",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "United States capital markets after the 2007 to 2008 financial crisis",
    "sustained low interest rate conditions"
   ],
   "supporting_quote": "Structural and regulatory changes to the capital markets precipitated by the financial crisis of 2007–2008 and a low interest-rate environment, in combination with the enormous growth of private funds, created, and over time increased, the demand17 for retail \"alternative\" mutual funds."
  },
  {
   "id": "kaal:claim:2811729-007",
   "url": "https://wulfkaal.github.io/claims/2811729-007",
   "claim": "Post-crisis legislation accelerated the convergence of mutual funds and private funds, because the registration and increased disclosure requirements the Dodd-Frank Act imposed on certain private fund advisers subject them to substantively the same obligations that apply to advisers of mutual funds.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "private fund advisers required to register under the Dodd-Frank Act"
   ],
   "supporting_quote": "The registration and increased disclosure requirements for certain private fund advisers under the Dodd-Frank Act subject those managers to substantively the same registration and reporting obligations as those that apply to advisers to mutual funds."
  },
  {
   "id": "kaal:claim:2811729-008",
   "url": "https://wulfkaal.github.io/claims/2811729-008",
   "claim": "Unconstrained mutual funds have not delivered superior performance: Morningstar data for funds with three years of investing history offer no evidence that they outperform mutual funds in comparable asset classifications.",
   "type": "failure",
   "topics": [
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "evidenced",
   "scope_conditions": [
    "unconstrained mutual funds with at least three years of investing history"
   ],
   "supporting_quote": "The Morningstar data available for UMFs with three years of investing history offer no evidence that UMFs have a superior performance to mutual funds in comparable asset classifications."
  },
  {
   "id": "kaal:claim:2811729-009",
   "url": "https://wulfkaal.github.io/claims/2811729-009",
   "claim": "Average unconstrained mutual fund performance over the three years preceding the study was lower than the return on the ten-year Treasury, and poor performance was often accompanied by high fees and increased credit risk.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "evidenced",
   "scope_conditions": [
    "three-year period preceding the study"
   ],
   "supporting_quote": "On average, UMF performance has disappointed over the last three years, with returns lower than the return on the ten-year Treasury.43 Often, poor UMF performance has been accompanied by high fees and increased credit risk."
  },
  {
   "id": "kaal:claim:2811729-010",
   "url": "https://wulfkaal.github.io/claims/2811729-010",
   "claim": "The complexity of unconstrained mutual fund trading has grown to the point that even leading professional analysts struggle to assess these funds' portfolios and their performance.",
   "type": "failure",
   "topics": [
    "disclosure",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "evidenced",
   "scope_conditions": [
    "professional fund research analysts evaluating unconstrained funds"
   ],
   "supporting_quote": "Moreover, the complexity of UMF trading has increased so much that leading analysts struggle to assess UMF portfolios and their performance."
  },
  {
   "id": "kaal:claim:2811729-011",
   "url": "https://wulfkaal.github.io/claims/2811729-011",
   "claim": "The go anywhere features of unconstrained mutual funds impede a retail investor's ability to ascertain and understand what the fund is invested in and what risks those investments carry.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "retail investors relying on fund disclosures"
   ],
   "supporting_quote": "However, these \"go anywhere\" features may impede a retail investor's ability to ascertain and understand the UMF's investments, and the risks associated with those investments."
  },
  {
   "id": "kaal:claim:2811729-012",
   "url": "https://wulfkaal.github.io/claims/2811729-012",
   "claim": "Three features make it uniquely challenging for retail investors to evaluate the risks of unconstrained mutual funds: the lack of standard benchmarks, the recent emergence of the fund type, and the diversity and complexity of the strategies and risk exposures involved.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "retail investors evaluating unconstrained mutual fund securities"
   ],
   "supporting_quote": "the lack of standard benchmarks for UMFs, the recent emergence of UMFs as an investment asset type, and the diversity among and complexity of UMFs' strategies and risk exposures make it uniquely challenging for retail investors to evaluate the risks of investing in UMF securities."
  },
  {
   "id": "kaal:claim:2811729-013",
   "url": "https://wulfkaal.github.io/claims/2811729-013",
   "claim": "Because unconstrained mutual funds comply with the Company Act, they may be marketed and sold to all classes of retail investors, including those with limited or even no experience investing in securities.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "funds registered and compliant under the Investment Company Act"
   ],
   "supporting_quote": "Compliance with the Company Act means that UMFs may be marketed and sold to all classes of retail investors, including retail investors who have limited, or even no, experience investing in securities."
  },
  {
   "id": "kaal:claim:2811729-014",
   "url": "https://wulfkaal.github.io/claims/2811729-014",
   "claim": "The SEC's interpretation of Section 18 leaves a mutual fund subject to no statutory limitation or cap on its ability to borrow through the use of derivative instruments, provided the fund adheres to its asset segregation obligations.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "mutual funds using derivatives under SEC Section 18 guidance as of 2016"
   ],
   "supporting_quote": "In sum, the SEC's position has meant that a mutual fund is not subject to a statutory limitation or cap on its ability to borrow through the use of derivative instruments, if the fund adheres to its asset segregation obligations."
  },
  {
   "id": "kaal:claim:2811729-015",
   "url": "https://wulfkaal.github.io/claims/2811729-015",
   "claim": "Proposed Rule 18f-4 would be highly limited in mitigating liquidity and other risks in an unconstrained mutual fund portfolio, because material leverage, counterparty, and liquidity risks in such a fund can arise from investments in a range of non-derivative instruments that the rule does not reach.",
   "type": "failure",
   "topics": [
    "defi",
    "risk-and-incentives",
    "dynamic-regulation",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "proposed Company Act Rule 18f-4 as proposed in December 2015",
    "unconstrained mutual funds with broad investment authority"
   ],
   "supporting_quote": "in mitigating significant liquidity or other risks in a UMF portfolio is therefore potentially (highly) limited, as material leverage, counter-party, liquidity, and other risks to a particular UMF could arise from the fund's investments in a range of non-derivative instruments,"
  },
  {
   "id": "kaal:claim:2811729-016",
   "url": "https://wulfkaal.github.io/claims/2811729-016",
   "claim": "If a private fund's offering process successfully limits its investors to accredited investors or qualified purchasers, the retail investor protection principles of the Company Act do not apply to the fund's trading, operation, and governance.",
   "type": "condition",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "private funds relying on Sections 3(c)(1) or 3(c)(7)"
   ],
   "supporting_quote": "Accordingly, if a private fund's offering process successfully limits its investors to either \"accredited investors\" or \"qualified purchasers,\" the retail investor protection principles of the Company Act will not apply to the private fund's trading, operation, and governance."
  },
  {
   "id": "kaal:claim:2811729-017",
   "url": "https://wulfkaal.github.io/claims/2811729-017",
   "claim": "The authors operationalize unconstrained status by binary coding eleven prospectus characteristics and treating a score of nine or better as unconstrained, producing a final study sample of 84 funds out of 114 funds identified in the Morningstar Nontraditional Bond index.",
   "type": "definitional",
   "topics": [
    "research-methods",
    "open-source-and-code",
    "securities-law",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "evidenced",
   "scope_conditions": [
    "Morningstar Nontraditional Bond index constituents",
    "most recent fund-level prospectuses as of the study"
   ],
   "supporting_quote": "of purely unconstrained mutual funds (i.e., those which were the focus of this study) (N=84) included only those UMFs that scored a \"9\" or better out of a total of 114 funds identified in the Morningstar Nontraditional Bond index."
  },
  {
   "id": "kaal:claim:2811729-018",
   "url": "https://wulfkaal.github.io/claims/2811729-018",
   "claim": "Unconstrained mutual funds are predominantly credit-oriented funds intended to be sold on a retail basis that nonetheless authorize the investment manager, similar to a private fund manager, to trade any type of credit security or derivative.",
   "type": "empirical",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "evidenced",
   "scope_conditions": [
    "the authors' sample of 84 unconstrained mutual funds"
   ],
   "supporting_quote": "that UMFs are predominantly credit-oriented funds intended to be sold on a retail basis, but which nonetheless authorize the investment manager, similar to a private fund manager, to trade any type of credit security or derivative"
  },
  {
   "id": "kaal:claim:2811729-019",
   "url": "https://wulfkaal.github.io/claims/2811729-019",
   "claim": "Unconstrained mutual funds are proliferating at a significant rate, growing steadily since 2007, with the overall trend between 2010 and 2015 showing a steady increase in launches.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "evidenced",
   "scope_conditions": [
    "fund inception data for the sample of 84 unconstrained mutual funds"
   ],
   "supporting_quote": "UMFs are proliferating at a significant rate. Figure 2 demonstrates that since 2007 the number of UMFs has grown at a steady pace. Although 2012 was a weaker year for UMF formation, the overall trend between 2010 and 2015 shows a steady increase in the launch of UMFs."
  },
  {
   "id": "kaal:claim:2811729-020",
   "url": "https://wulfkaal.github.io/claims/2811729-020",
   "claim": "In the unprecedented low interest rate environment prevailing since 2005, investment managers responded to retail investors reaching for yield by offering unconstrained mutual funds, a product that authorizes absolute return strategies in the fixed income world.",
   "type": "mechanism",
   "topics": [
    "defi",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "United States fixed income markets since 2005"
   ],
   "supporting_quote": "First, in the unprecedented low interest rate environment that has prevailed since 2005, investment managers have responded to retail investors \"reaching for yield\" by offering a product (UMFs) that authorizes absolute return strategies in the fixed income world."
  },
  {
   "id": "kaal:claim:2811729-021",
   "url": "https://wulfkaal.github.io/claims/2811729-021",
   "claim": "Among the factors driving unconstrained mutual fund growth, the Dodd-Frank Act decreased the number of eligible private fund investors by raising the minimum net worth requirement for individuals to qualify as accredited investors.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "individuals near the accredited investor net worth threshold after Dodd-Frank"
   ],
   "supporting_quote": "Second, the Dodd-Frank Act decreased the number of eligible private fund investors by raising the minimum net-worth requirement for individuals to qualify as \"accredited investors,\""
  },
  {
   "id": "kaal:claim:2811729-022",
   "url": "https://wulfkaal.github.io/claims/2811729-022",
   "claim": "Unconstrained mutual funds exceed typical mutual fund trading engagements in almost all quantifiable categories, often by double or quadruple the average engagements for mutual funds as a group.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "evidenced",
   "scope_conditions": [
    "N-SAR Question 70 filings, March 2016 for the 84 fund sample, compared with December 2015 SEC report data"
   ],
   "supporting_quote": "Figure 3 demonstrates that UMFs exceed the typical mutual fund engagements in almost all quantifiable categories. UMF trading of the referenced security and contract types clearly exceeds— indeed, is often double or quadruple the number of—the average engagements for mutual funds as a group."
  },
  {
   "id": "kaal:claim:2811729-023",
   "url": "https://wulfkaal.github.io/claims/2811729-023",
   "claim": "Average unconstrained mutual fund portfolio turnover exceeds the turnover of other fixed income mutual funds by over 150 percent.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "evidenced",
   "scope_conditions": [
    "Morningstar turnover data as of March 2016",
    "comparison against all taxable bond funds, N equals 5543"
   ],
   "supporting_quote": "In particular, UMF turnover on average exceeds the turnover for other fixed income mutual funds by over 150 percent."
  },
  {
   "id": "kaal:claim:2811729-024",
   "url": "https://wulfkaal.github.io/claims/2811729-024",
   "claim": "The high turnover rate of unconstrained mutual funds distinguishes them from other mutual funds and makes them directly comparable to private funds, which typically trade at high levels.",
   "type": "mechanism",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of unconstrained mutual funds with private funds on trading intensity"
   ],
   "supporting_quote": "The high UMF turnover rate is a characteristic that distinguishes these funds from other mutual funds, and makes them directly comparable to private funds, which typically engage in high trading levels"
  },
  {
   "id": "kaal:claim:2811729-025",
   "url": "https://wulfkaal.github.io/claims/2811729-025",
   "claim": "Unconstrained mutual funds engaged in almost 50 percent more futures contract transactions than other mutual funds, and the overall scope and nature of their derivative use is consistent with what the authors would expect of a private fund.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "evidenced",
   "scope_conditions": [
    "schedule of investments from the sample funds' latest N-CSR filings, April 2016"
   ],
   "supporting_quote": "most importantly, futures contracts, where UMFs engaged in almost 50 percent more transactions than other mutual funds. These statistics reflect the scope and nature of derivative use by UMFs, and are consistent with what the authors would expect of derivative use by a private fund."
  },
  {
   "id": "kaal:claim:2811729-026",
   "url": "https://wulfkaal.github.io/claims/2811729-026",
   "claim": "Because unconstrained mutual funds share investment strategy and risk attributes with private funds, the average unconstrained fund's risk profile is substantially more complex and generally involves more risk than the average mutual fund, and is closer to that of a private fund.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of the sample funds against average mutual funds and private funds"
   ],
   "supporting_quote": "Because of these shared investment strategy and risk attributes, the average UMF's risk profile is substantially more complex, and generally involves more risks, than the average mutual fund, and is rather more similar to that of a private fund."
  },
  {
   "id": "kaal:claim:2811729-027",
   "url": "https://wulfkaal.github.io/claims/2811729-027",
   "claim": "Unconstrained mutual funds take on private fund-like risk without a corresponding return advantage: private funds' incentives and investment flexibility help explain their performance advantage over mutual funds, but the performance record of unconstrained mutual funds is less clearly distinguished from that of other mutual funds.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of unconstrained mutual funds with private funds and conventional mutual funds"
   ],
   "supporting_quote": "can help explain their performance advantage over mutual funds,180 the performance record for UMFs is less clearly distinguished from that of other mutual funds."
  },
  {
   "id": "kaal:claim:2811729-028",
   "url": "https://wulfkaal.github.io/claims/2811729-028",
   "claim": "Existing evidence about risk-shifting by the average derivative-using mutual fund is less relevant to unconstrained mutual funds, because their derivative use is closer to that of a typical private fund.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "unconstrained mutual funds whose derivative use resembles private fund practice"
   ],
   "supporting_quote": "show that derivative use by UMFs is closer to that of a typical private fund, which may mean that the absence of evidence on risk-shifting by the average mutual fund that engages in derivatives transactions is less relevant."
  },
  {
   "id": "kaal:claim:2811729-029",
   "url": "https://wulfkaal.github.io/claims/2811729-029",
   "claim": "Reliance on prospectuses and other disclosures by an unconstrained mutual fund that in all material respects complies with the Company Act may be insufficient to protect retail investors.",
   "type": "failure",
   "topics": [
    "disclosure",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "unconstrained mutual funds in full compliance with the Company Act",
    "retail investors relying on prospectus disclosure"
   ],
   "supporting_quote": "a reliance on prospectuses and other disclosures by a UMF that in all material respects complies with the Company Act may be insufficient to protect retail investors."
  },
  {
   "id": "kaal:claim:2811729-030",
   "url": "https://wulfkaal.github.io/claims/2811729-030",
   "claim": "It is questionable whether retail investors typically have the experience or training to fully appreciate the risks disclosed in unconstrained mutual fund prospectuses.",
   "type": "failure",
   "topics": [
    "disclosure",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "average retail investors reading unconstrained fund prospectuses"
   ],
   "supporting_quote": "First, it is questionable whether retail investors typically have the experience or training to fully appreciate the risks disclosed in UMF prospectuses."
  },
  {
   "id": "kaal:claim:2811729-031",
   "url": "https://wulfkaal.github.io/claims/2811729-031",
   "claim": "The broad investment authority of unconstrained mutual fund managers exposes retail investors to fluid trading and investing patterns that the average retail investor is unlikely to sufficiently appreciate, regardless of the nature and quantum of disclosure, so additional disclosure cannot close the gap.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "retail investors in funds whose managers hold broad go anywhere authority"
   ],
   "supporting_quote": "This broad investment authority exposes retail UMF investors to fluid trading and investing patterns and behaviors that the \"average\" retail investor is unlikely to sufficiently appreciate, regardless of the nature and quantum of disclosure to the investor regarding the fund's trading and holdings."
  },
  {
   "id": "kaal:claim:2811729-032",
   "url": "https://wulfkaal.github.io/claims/2811729-032",
   "claim": "Because an unconstrained mutual fund's performance is typically not assessed against any established benchmark, the retail investor must evaluate the fund without the contextual information routinely available for mutual funds pursuing more traditional credit strategies.",
   "type": "failure",
   "topics": [
    "economics",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "unconstrained funds that decline to adopt a benchmark"
   ],
   "supporting_quote": "Therefore, it is left to the retail UMF investor to assess the fund's performance without the type of contextual information routinely available in relation to other mutual funds pursuing more \"traditional\" credit strategies."
  },
  {
   "id": "kaal:claim:2811729-033",
   "url": "https://wulfkaal.github.io/claims/2811729-033",
   "claim": "Retail investors may be led to believe that unconstrained mutual funds are safe relative to other fixed income mutual funds precisely because they are marketed, offered, and regulated as mutual funds, a risk that is unique to retail investors in these funds.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "retail investors purchasing unconstrained funds through mutual fund channels"
   ],
   "supporting_quote": "Retail investors may also be led to believe that UMFs are \"safe\" products relative to other fixed income mutual funds, because they are marketed, offered, and regulated as mutual funds. This is a risk that is unique to retail investors in UMFs."
  },
  {
   "id": "kaal:claim:2811729-034",
   "url": "https://wulfkaal.github.io/claims/2811729-034",
   "claim": "A retail investor's experience investing in traditional mutual funds is likely to be a poor indicator of whether that investor will understand the risks of investing in an unconstrained mutual fund.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "evidenced",
   "scope_conditions": [
    "retail investors extrapolating from prior traditional mutual fund experience"
   ],
   "supporting_quote": "Accordingly, retail investors' experience investing in \"traditional\" mutual funds is likely to be a poor indicator of whether a retail investor will understand the risks associated with investing in a UMF."
  },
  {
   "id": "kaal:claim:2811729-035",
   "url": "https://wulfkaal.github.io/claims/2811729-035",
   "claim": "The proliferation of unconstrained mutual funds has contributed to the confluence of mutual and private funds and weakened the traditional public/private distinction in federal securities regulation.",
   "type": "mechanism",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "United States federal securities regulation of pooled investment vehicles"
   ],
   "supporting_quote": "The proliferation of UMFs has contributed to the confluence of mutual and private funds, and weakened the traditional public/private distinction in federal securities regulation."
  },
  {
   "id": "kaal:claim:2811729-036",
   "url": "https://wulfkaal.github.io/claims/2811729-036",
   "claim": "The Company Act's retail investor protection policies do not take sufficiently into account the investment strategy and risk attributes that unconstrained mutual funds share with private funds.",
   "type": "failure",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "Investment Company Act protections as applied to unconstrained mutual funds"
   ],
   "supporting_quote": "Company Act's retail investor protection policies do not take these risks sufficiently into account."
  },
  {
   "id": "kaal:claim:2811729-037",
   "url": "https://wulfkaal.github.io/claims/2811729-037",
   "claim": "Given the risks to retail investors of investing in complex unconstrained mutual funds and the SEC's own concern about the retailization of private funds, it is unclear why the SEC has not acted to enhance protections for retail purchasers of unconstrained mutual fund shares.",
   "type": "failure",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "SEC regulatory posture as of 2016"
   ],
   "supporting_quote": "Given the risks to retail investors of investing in relatively complex UMFs, and the SEC's overall concern about the \"retailization\" of private funds, it is unclear why the SEC has not taken action to enhance protections for retail investors seeking to purchase shares of a UMF."
  },
  {
   "id": "kaal:claim:2811729-038",
   "url": "https://wulfkaal.github.io/claims/2811729-038",
   "claim": "The SEC should re-evaluate its reliance on the Company Act's disclosure regime in its current form as the best means of protecting retail investors from the risks of investing in unconstrained mutual funds.",
   "type": "normative",
   "topics": [
    "disclosure",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "SEC policy toward unconstrained mutual funds"
   ],
   "supporting_quote": "Regardless of the SEC's reason for inaction, the authors believe that the SEC should re-evaluate its reliance on the Company Act's disclosure regime in its current form as the best means of protecting retail investors in relation to the risks posed by investing in UMFs."
  },
  {
   "id": "kaal:claim:2811729-039",
   "url": "https://wulfkaal.github.io/claims/2811729-039",
   "claim": "The SEC continues to rely on disclosure as the means of mitigating investor risk from unconstrained and other mutual funds irrespective of the complexity of those funds' portfolios and strategies.",
   "type": "failure",
   "topics": [
    "disclosure",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "SEC disclosure policy for mutual funds as of 2016"
   ],
   "supporting_quote": "seems to reflect the SEC's continued reliance on disclosure as a means of mitigating the risks to investors from investing in UMFs and other mutual funds irrespective of the complexity of their portfolios and strategies,"
  },
  {
   "id": "kaal:claim:2811729-040",
   "url": "https://wulfkaal.github.io/claims/2811729-040",
   "claim": "The absence of any current requirement to present unconstrained portfolio risks in detail raises the question whether unconstrained mutual fund prospectuses provide the adequate, accurate, and explicit information required by Section 1(b)(1) of the Company Act.",
   "type": "failure",
   "topics": [
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "year": "2016",
   "source_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "confidence": "argued",
   "scope_conditions": [
    "unconstrained mutual fund prospectuses under existing disclosure requirements"
   ],
   "supporting_quote": "seems to raise the question of whether UMF prospectuses at present provide \"adequate, accurate, and explicit information, fairly presented, concerning the character of [mutual fund] securities,\" as required by Section 1(b)(1) of the Company Act."
  },
  {
   "id": "kaal:claim:2740477-001",
   "url": "https://wulfkaal.github.io/claims/2740477-001",
   "claim": "Ex post trial and error rulemaking built on stable and presumptively optimal rules produces suboptimal regulatory outcomes that are no longer sustainable once disruptive innovation grows exponentially.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "innovation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "environment of exponential disruptive innovation",
    "existing regulatory framework of stable rules"
   ],
   "supporting_quote": "The ex-post trial-and-error-rulemaking with stable and presumptively optimal rules7 in the existing regulatory framework8 often produces suboptimal regulatory outcomes that are no longer sustainable in an environment of exponential disruptive innovation."
  },
  {
   "id": "kaal:claim:2740477-002",
   "url": "https://wulfkaal.github.io/claims/2740477-002",
   "claim": "Under exponential disruptive innovation the information rulemakers need arrives too late for trial and error rulemaking to be effective, regulatory issues grow more complex, and unknown future contingencies in the rulemaking process increase substantially.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "exponential rates of disruptive innovation"
   ],
   "supporting_quote": "relevant information for rulemaking is less likely to materialize soon enough for traditional trial-and-error rulemaking to be effective, regulatory issues become increasingly complex, and unknown future contingencies increase substantially in the rulemaking process."
  },
  {
   "id": "kaal:claim:2740477-003",
   "url": "https://wulfkaal.github.io/claims/2740477-003",
   "claim": "Exponential disruptive innovation has the potential to overwhelm the existing regulatory process outright, not merely to strain it.",
   "type": "failure",
   "topics": [
    "innovation",
    "regulatory-failure",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "asserted",
   "supporting_quote": "In short, exponential disruptive innovation has the potential to overwhelm the existing regulatory process."
  },
  {
   "id": "kaal:claim:2740477-004",
   "url": "https://wulfkaal.github.io/claims/2740477-004",
   "claim": "Dynamic regulation is defined as the study of regulatory phenomena in relation to both preceding and succeeding events, using institution specific and decentralized information to generate feedback effects that support anticipatory rulemaking.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation",
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "asserted",
   "supporting_quote": "The theory of dynamic regulation conceptualizes the study of regulatory phenomena in relation to preceding and succeeding events, using institution-specific and decentralized information to facilitate feedback effects for anticipatory rulemaking."
  },
  {
   "id": "kaal:claim:2740477-005",
   "url": "https://wulfkaal.github.io/claims/2740477-005",
   "claim": "Venture capital can function as a dynamic regulatory supplement for disruptive innovation because venture capitalists' financial allocations to innovative projects generate feedback that regulators can use.",
   "type": "design",
   "topics": [
    "innovation",
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "supporting_quote": "We show that venture capital can function as a dynamic regulatory supplement for disruptive innovation. Venture capital's financial allocations to innovative projects can provide feedback for dynamic regulation of disruptive innovation."
  },
  {
   "id": "kaal:claim:2740477-006",
   "url": "https://wulfkaal.github.io/claims/2740477-006",
   "claim": "The empirical base for the argument is a PitchBook dataset covering 77,508 completed United States venture capital deals involving 37,298 companies across all venture capital stages from 2005 to 2015.",
   "type": "empirical",
   "topics": [
    "innovation",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States headquartered companies",
    "completed deals, all venture capital stages, 2005 to 2015"
   ],
   "supporting_quote": "To illustrate venture capital's ability to identify innovation trends, we use a PitchBook Data, Inc. dataset on venture capital deals in the United States with 77,508 deals involving 37,298 companies from 2005 to 2015."
  },
  {
   "id": "kaal:claim:2740477-007",
   "url": "https://wulfkaal.github.io/claims/2740477-007",
   "claim": "Artificial intelligence cannot be held personally liable for damage it causes because national and international law do not currently recognize it as a subject of law, so compensation must be forced through existing provisions never designed for it.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "current state of national and international law",
    "damage caused by autonomous AI"
   ],
   "supporting_quote": "However, national and international law do not (currently) recognize AI as a subject of law. Without legal personality, AI cannot be personally liable for damages."
  },
  {
   "id": "kaal:claim:2740477-008",
   "url": "https://wulfkaal.github.io/claims/2740477-008",
   "claim": "Disruptive innovative technology frequently does not fit the legal categories created by recalcitrant regulatory structures, so the classification problem itself is a source of regulatory failure.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "innovation",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "supporting_quote": "Disruptive innovative technology often does not fit into existing legal categories created by recalcitrant regulatory structures."
  },
  {
   "id": "kaal:claim:2740477-009",
   "url": "https://wulfkaal.github.io/claims/2740477-009",
   "claim": "When disruptive firms do not comply with existing rules or write their own exemptions because no appropriate rules exist, consumer protection and public safety goals are undermined and incumbent firms still bound by the rules suffer severe competitive disadvantages.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "disruptive products or services that fall outside or evade the existing regulatory framework"
   ],
   "supporting_quote": "public policy goals including consumer protection and public safety can be undermined and incumbent firms that continue to be subject to existing rules encounter often severe competitive disadvantages"
  },
  {
   "id": "kaal:claim:2740477-010",
   "url": "https://wulfkaal.github.io/claims/2740477-010",
   "claim": "Incumbent firms facing the competitive disadvantage created by disruptive entrants respond by using the existing regulatory process itself to build obstacles to competition, which converts rulemaking into an instrument of incumbent protection.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "incumbents perceive a threat from disruptive firms",
    "incumbents remain subject to rules the entrants avoid"
   ],
   "supporting_quote": "To counteract such disadvantages, incumbent firms that are exposed to a perceived threat of disruptive innovation from disruptive firms may attempt to use the existing regulatory process to create obstacles for disruptive firms to compete."
  },
  {
   "id": "kaal:claim:2740477-011",
   "url": "https://wulfkaal.github.io/claims/2740477-011",
   "claim": "The rising complexity of innovation driven regulatory issues confuses political and policy makers about rapidly emerging disruptive change, which makes a coherent political and policy solution to those challenges less likely.",
   "type": "failure",
   "topics": [
    "economics",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "rapidly emerging and complex disruptive change"
   ],
   "supporting_quote": "the increasing complexity of innovation-driven regulatory issues causes political and policy makers' confusion over rapidly-emerging disruptive change, making a coherent political and policy solution to these challenges less likely."
  },
  {
   "id": "kaal:claim:2740477-012",
   "url": "https://wulfkaal.github.io/claims/2740477-012",
   "claim": "Rulemakers' inability to address the regulatory issues raised by disruptive innovation will generate high levels of legal uncertainty and inconsistency, and that uncertainty inhibits innovation during technological transition periods.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "innovation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "technological transition periods"
   ],
   "supporting_quote": "Rulemakers' inability to address regulatory issues associated with disruptive innovation will likely generate high levels of legal uncertainty and inconsistency82 that inhibit innovation during technological transition periods"
  },
  {
   "id": "kaal:claim:2740477-013",
   "url": "https://wulfkaal.github.io/claims/2740477-013",
   "claim": "Technological transition will be a permanent state in the age of disruptive innovation, so the uncertainty and inconsistency caused by rulemakers' inability to react in time is a standing condition rather than a transitional cost.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "innovation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "supporting_quote": "technological transition is likely going to be a permanent state in the age of disruptive innovation, which exacerbates the uncertainty and inconsistency created by rulemakers' inability to react timely and adequately to disruptive innovation."
  },
  {
   "id": "kaal:claim:2740477-014",
   "url": "https://wulfkaal.github.io/claims/2740477-014",
   "claim": "The current regulatory framework contains no mechanism that succinctly and anticipatorily informs rulemakers of beneficial innovative ideas, which is the specific informational gap the article proposes to fill.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "notice and comment rulemaking under the existing framework"
   ],
   "supporting_quote": "The current regulatory framework lacks a mechanism that succinctly and anticipatorily informs rulemakers of beneficial innovative ideas."
  },
  {
   "id": "kaal:claim:2740477-015",
   "url": "https://wulfkaal.github.io/claims/2740477-015",
   "claim": "The existing rulemaking process prohibits ex parte communications and insufficiently integrates brainstorming and ideas across industries, and therefore may actually undermine innovation rather than merely lag behind it.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "innovation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "formal notice and comment rulemaking"
   ],
   "supporting_quote": "the existing rulemaking process prohibits ex parte communications and insufficiently integrates brainstorming and ideas across industries, and therefore may actually undermine innovation."
  },
  {
   "id": "kaal:claim:2740477-016",
   "url": "https://wulfkaal.github.io/claims/2740477-016",
   "claim": "Ex post trial and error rulemaking requires as a precondition that information about optimized rule requirements becomes available, and in an age of exponential innovation that information may never materialize or may arrive too late for the method to work.",
   "type": "condition",
   "topics": [
    "dynamic-regulation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "exponential rates of innovation"
   ],
   "supporting_quote": "A prerequisite for ex-post trial-and- error rulemaking is thus the availability of the information on optimized rule requirements. In an age of exponential innovation, that information may not materialize at all or may not materialize in time for the trial-and-error rulemaking to be effective."
  },
  {
   "id": "kaal:claim:2740477-017",
   "url": "https://wulfkaal.github.io/claims/2740477-017",
   "claim": "The existing regulatory infrastructure, including Congress, agencies, self regulatory bodies, and the regulation literature itself, relies almost exclusively on stable and presumptively optimal rules.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "asserted",
   "supporting_quote": "The existing regulatory infrastructure, including Congress, regulatory agencies, self- regulatory bodies, and the literature on regulation, relies almost exclusively on stable and presumptively optimal rules.84"
  },
  {
   "id": "kaal:claim:2740477-018",
   "url": "https://wulfkaal.github.io/claims/2740477-018",
   "claim": "If rulemakers cannot adequately protect their constituents through stable and presumptively optimal rules, then regulatory supplements that facilitate anticipatory rulemaking are justified.",
   "type": "condition",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "exponential growth of technology and innovation",
    "rulemakers unable to protect constituents with stable rules"
   ],
   "supporting_quote": "making it increasingly less likely that rulemakers will be able to effectively protect the public via stable and presumptively optimal rules. If rulemakers cannot adequately protect their constituents, regulatory supplements facilitating anticipatory rulemaking may be justified."
  },
  {
   "id": "kaal:claim:2740477-019",
   "url": "https://wulfkaal.github.io/claims/2740477-019",
   "claim": "Regulatory timing under disruptive innovation is a two sided risk: regulate too early and innovation is inhibited, withhold regulation too long and consumers and markets are harmed once regulatory inertia has formed around the disruptive product or service.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "regulation of a disruptive product or service"
   ],
   "supporting_quote": "If policy makers regulate too early, they risk inhibiting innovation; if they withhold regulation too long, they may harm consumers and markets if regulatory inertia has set in around the disruptive product or service."
  },
  {
   "id": "kaal:claim:2740477-020",
   "url": "https://wulfkaal.github.io/claims/2740477-020",
   "claim": "Formal rulemaking is simply too time consuming for disruptive innovation: the speed of product innovation lets a new product reach the market while a rulemaking that takes months or years is still processing the previous product launch.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "formal rulemaking in the existing regulatory infrastructure",
    "high speed of product innovation"
   ],
   "supporting_quote": "The speed of product innovation makes it possible to bring a new product to market while formal rulemaking in the existing regulatory infrastructure, taking months and often years of regulatory procedure, is still dealing with the last product launch."
  },
  {
   "id": "kaal:claim:2740477-021",
   "url": "https://wulfkaal.github.io/claims/2740477-021",
   "claim": "New regulations aimed at an innovative product can be obsolete before they are finalized.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "asserted",
   "scope_conditions": [
    "formal rulemaking timelines of months to years"
   ],
   "supporting_quote": "New regulations pertaining to an innovative product could be obsolete before they are finalized."
  },
  {
   "id": "kaal:claim:2740477-022",
   "url": "https://wulfkaal.github.io/claims/2740477-022",
   "claim": "Because it lacks anticipatory rulemaking capability, the existing regulatory system addresses issues only ex post, and only once they have materialized and burdened core constituents enough to generate political pressure on lawmakers.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "issues must materialize and burden core constituents before action"
   ],
   "supporting_quote": "Because it lacks anticipatory rulemaking capabilities, the existing regulatory system addresses regulatory issues only ex-post, if and when they materialize and if core constituents are sufficiently burdened to precipitate enough political pressure for lawmakers to act."
  },
  {
   "id": "kaal:claim:2740477-023",
   "url": "https://wulfkaal.github.io/claims/2740477-023",
   "claim": "Evidence shows that the suboptimal ex post timing of rulemaking regularly forces expedited rulemaking, and expedited rulemaking itself produces suboptimal regulatory outcomes.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "evidenced",
   "supporting_quote": "Evidence exists that the suboptimal ex- post timing of rulemaking in the existing regulatory infrastructure regularly requires expedited rulemaking that results in suboptimal regulatory outcomes."
  },
  {
   "id": "kaal:claim:2740477-024",
   "url": "https://wulfkaal.github.io/claims/2740477-024",
   "claim": "Accepting suboptimal rules temporarily buys rule certainty and predictability but guarantees a later cycle of revision, amendment, and repeal, so rulemakers trade short term certainty for a costly correction process.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "rulemakers knowingly accept suboptimalities tied to unknown future contingencies"
   ],
   "supporting_quote": "Temporary acceptance of suboptimal rules increases temporary rule certainty and predictability, but it also precipitates the inevitable need for rule revision, amendments, and repeals"
  },
  {
   "id": "kaal:claim:2740477-025",
   "url": "https://wulfkaal.github.io/claims/2740477-025",
   "claim": "The current process of rule revisions, amendments, and repeals used to fix the inevitable shortcomings of stable rules is costly, time consuming, and in the authors' estimation cannot keep track of future innovations and the regulatory needs they create.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "supporting_quote": "The current process of rule revisions, amendments, and repeals to address inevitable shortcomings of stable rules is costly, time-consuming, and cannot in our estimation keep track of future innovations and corresponding regulatory needs."
  },
  {
   "id": "kaal:claim:2740477-026",
   "url": "https://wulfkaal.github.io/claims/2740477-026",
   "claim": "Exponential innovation will intensify the frequency of the regulatory sine curve, because rulemakers are still trying to comprehend the regulatory demands of the last wave of innovation while the next wave is already in full force.",
   "type": "predictive",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "exponential rates of innovation"
   ],
   "supporting_quote": "In effect, exponential innovation is likely to intensify the frequencies of the regulatory sine curve that is recognized by the literature."
  },
  {
   "id": "kaal:claim:2740477-027",
   "url": "https://wulfkaal.github.io/claims/2740477-027",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "supporting_quote": "The collective action problem of rulemaking, problems associated with trial-and-error rulemaking, and problems associated with regulatory cycles derive largely from the nature of stable and presumptively optimal rules."
  },
  {
   "id": "kaal:claim:2740477-028",
   "url": "https://wulfkaal.github.io/claims/2740477-028",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "institutional-design",
    "regulatory-failure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "rulemaking uses institution specific, decentralized, and timely information",
    "fewer stable rules"
   ],
   "supporting_quote": "Adaptive rulemaking helps overcome the collective action problem of rulemaking because with fewer stable rules latent majority groups and dominant minority groups have fewer opportunities to influence the continuously and timely adapting rulemaking process."
  },
  {
   "id": "kaal:claim:2740477-029",
   "url": "https://wulfkaal.github.io/claims/2740477-029",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "feedback processes are in place within the regulatory framework"
   ],
   "supporting_quote": "Dynamic regulatory tools as a regulatory supplement enable rulemakers to adapt to regulatory contingencies if and when they arise because feedback effect provides relevant, timely, decentralized, and institution-specific information ex-ante."
  },
  {
   "id": "kaal:claim:2740477-030",
   "url": "https://wulfkaal.github.io/claims/2740477-030",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "supporting_quote": "Because of the collective action problem of regulation, path dependencies, and political inertia, among many other reasons, regulation is mostly reactive, following business cycles and not preemptive, e.g. enacted before crises when governance improvements are most needed."
  },
  {
   "id": "kaal:claim:2740477-031",
   "url": "https://wulfkaal.github.io/claims/2740477-031",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "supporting_quote": "Private rulemakers can have a comparative advantage over public rulemakers because, unlike their public counterparts, they often can produce necessary, comparable, decentralized, and institution-specific information for rulemaking."
  },
  {
   "id": "kaal:claim:2740477-032",
   "url": "https://wulfkaal.github.io/claims/2740477-032",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "supporting_quote": "The existing regulatory framework for optimal rules reinforces rulemaking processes that perpetuate optimal rules, necessitating costly rule revision, updating, and revocation."
  },
  {
   "id": "kaal:claim:2740477-033",
   "url": "https://wulfkaal.github.io/claims/2740477-033",
   "claim": "Dynamic regulatory supplements do not violate the procedural protections mandated by the Administrative Procedure Act, because the full lawmaking process still applies and dynamic regulation only supplements and optimizes the existing rulemaking process.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "United States administrative law under the APA"
   ],
   "supporting_quote": "Dynamic regulatory supplements would not violate mandated regulatory procedures in the APA135 as the full lawmaking process still applies.136 Dynamic regulation functions as a regulatory supplement to help optimize the existing rulemaking process."
  },
  {
   "id": "kaal:claim:2740477-034",
   "url": "https://wulfkaal.github.io/claims/2740477-034",
   "claim": "The data analysis shows that venture capitalists' finance allocation, and the implicit assessment of innovative products and businesses it embodies, generates highly relevant institution specific and industry specific decentralized information on innovation trends.",
   "type": "empirical",
   "topics": [
    "innovation",
    "decentralization",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States venture capital data 2005 to 2015"
   ],
   "supporting_quote": "The data analysis shows that venture capitalists' finance allocation and the implicit assessment of innovative products, businesses, and initiatives generates highly relevant institution- and industry-specific decentralized information on innovation trends."
  },
  {
   "id": "kaal:claim:2740477-035",
   "url": "https://wulfkaal.github.io/claims/2740477-035",
   "claim": "Data on venture capital investments lets regulators see where innovation trends are forming and what risks they entail before the disruptive innovation materializes, which is the specific remedy for regulation's reactive timing.",
   "type": "mechanism",
   "topics": [
    "innovation",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "regulators have access to and integrate venture capital investment data"
   ],
   "supporting_quote": "Data on VC investments allows regulators to see where innovation trends exist and what possible risks are entailed before disruptive innovation materializes."
  },
  {
   "id": "kaal:claim:2740477-036",
   "url": "https://wulfkaal.github.io/claims/2740477-036",
   "claim": "Industry specific venture capital investment data allows regulators to anticipate regulatory needs in the industries carrying the highest levels of disruptive innovation, and the level of disruptive innovation can be quantified by the venture capital dollars flowing into those industries.",
   "type": "design",
   "topics": [
    "innovation",
    "research-methods",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "industry level venture capital investment data is available"
   ],
   "supporting_quote": "For instance, information on industry-specific VC investments allows regulators to anticipate regulatory needs in certain industries that are associated with the highest levels of disruptive innovation. Disruptive innovation may here be quantified with the VC dollar investment in such industries."
  },
  {
   "id": "kaal:claim:2740477-037",
   "url": "https://wulfkaal.github.io/claims/2740477-037",
   "claim": "By identifying possible contingencies and necessary rule revisions from venture capital investment data ex ante, before disruptive innovation creates problems, regulators could anticipate regulatory needs instead of reacting to them.",
   "type": "design",
   "topics": [
    "innovation",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "regulators integrate venture capital data into rulemaking processes or legislative proposals"
   ],
   "supporting_quote": "By identifying possible contingencies and necessary rule revisions with optimized information from VC investments ex-ante, before disruptive innovation creates problems, regulators could anticipate regulatory needs."
  },
  {
   "id": "kaal:claim:2740477-038",
   "url": "https://wulfkaal.github.io/claims/2740477-038",
   "claim": "The authors concede a limitation of their own proposal: the innovation potential identified by venture capital finance allocation may not always be shared by the market at large.",
   "type": "failure",
   "topics": [
    "innovation",
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "argued",
   "scope_conditions": [
    "technology companies increasingly staying private",
    "market undervaluation of formerly venture capital financed companies"
   ],
   "supporting_quote": "the innovation potential identified by venture capital finance allocation may not always be shared by the market at large."
  },
  {
   "id": "kaal:claim:2740477-039",
   "url": "https://wulfkaal.github.io/claims/2740477-039",
   "claim": "Venture capital has outrun regulation and regulation is now too slow to react, and that lag itself damages the process.",
   "type": "failure",
   "topics": [
    "innovation",
    "dynamic-regulation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "asserted",
   "supporting_quote": "VC has outrun regulation and regulation is too slow to react, hurting the process."
  },
  {
   "id": "kaal:claim:2740477-040",
   "url": "https://wulfkaal.github.io/claims/2740477-040",
   "claim": "The notice and comment procedures of the SEC are too slow, and the SEC's outdated micromanagement of markets is itself slowing down venture capital.",
   "type": "failure",
   "topics": [
    "securities-law",
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477",
   "year": "2016",
   "source_sha256": "c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726",
   "confidence": "asserted",
   "scope_conditions": [
    "United States securities regulation"
   ],
   "supporting_quote": "SEC are too slow; moreover the micromanagement of the markets is overdone by the SEC and, being outdated, is slowing down vc."
  },
  {
   "id": "kaal:claim:2959730-001",
   "url": "https://wulfkaal.github.io/claims/2959730-001",
   "claim": "Private fund advisers' increasing use of blockchain technology, artificial intelligence, and big data is a distinct source of downward pressure on the traditional 2/20 fee structure that commentators have not examined.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "private-funds",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "private investment fund industry",
    "period of roughly 2007 to 2017"
   ],
   "supporting_quote": "A factor contributing to the market pressure on the fee structure that has not been examined by commentators pertains to the increasing use of use of blockchain technology, artificial intelligence, and big data by private fund advisers."
  },
  {
   "id": "kaal:claim:2959730-002",
   "url": "https://wulfkaal.github.io/claims/2959730-002",
   "claim": "The majority of private fund advisers that deploy blockchain technology, artificial intelligence, and big data in their operations or strategy charge their investors lower fees, even though not all blockchain enabled funds charge per transaction fees.",
   "type": "empirical",
   "topics": [
    "blockchain",
    "ai-and-agents",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "evidenced",
   "scope_conditions": [
    "advisers using the technologies in operations or strategy"
   ],
   "supporting_quote": "While not all blockchain-enabled private investment funds charge per-transaction fees, the majority of private fund advisers that use blockchain technology, artificial intelligence, and big data in different aspects of their operations or strategy charge their investors lower fees."
  },
  {
   "id": "kaal:claim:2959730-003",
   "url": "https://wulfkaal.github.io/claims/2959730-003",
   "claim": "Using a hand coded dataset of 98 private investment fund advisers that use blockchain technology in their strategy or internal operations, the article shows that advisers using the new technology are able to charge overall lower fees.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "blockchain",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "evidenced",
   "scope_conditions": [
    "sample of 98 blockchain using private fund advisers",
    "hand coded by the author and two research assistants"
   ],
   "supporting_quote": "Using a dataset of private investment fund advisers that utilize blockchain technology in their investment strategy or internal operations (N=[98]), this article shows that the fund advisers who use the new technology are able to charge overall lower fees."
  },
  {
   "id": "kaal:claim:2959730-004",
   "url": "https://wulfkaal.github.io/claims/2959730-004",
   "claim": "As the use of blockchain technology grows in the private investment fund industry, pressure on the traditional fee structure is likely to continue to grow, even though the proportion of fund strategies applying such technologies remains small.",
   "type": "predictive",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "current adoption of modern technologies is still a small proportion of fund strategies"
   ],
   "supporting_quote": "While the overall proportion of strategies of private investment funds that apply modern technologies, including blockchain technology, is still small, as the use of blockchain technology grows in the private investment fund industry, the pressure on the fee structure is likely to continue to grow."
  },
  {
   "id": "kaal:claim:2959730-005",
   "url": "https://wulfkaal.github.io/claims/2959730-005",
   "claim": "The historical private fund management fee of 2% has shifted in recent years to roughly 1.0% for new managers and 1.5 to 1.8% for established managers with an adequate track record.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "evidenced",
   "scope_conditions": [
    "private equity and hedge fund managers",
    "established managers require an adequate track record"
   ],
   "supporting_quote": "However, the historical fee of 2% of commitments through the reinvestment period, then 2% on the cost basis for the investments/value of fund has shifted in recent years closer to 1.0% for new managers and 1.5-1.8% for established managers with an adequate track record."
  },
  {
   "id": "kaal:claim:2959730-006",
   "url": "https://wulfkaal.github.io/claims/2959730-006",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "asserted",
   "scope_conditions": [
    "first time or new fund managers",
    "fund formation and seed investment negotiations"
   ],
   "supporting_quote": "First-time or new managers are particularly affected by the new fee structure. Unlike in the recent past, first-time managers are now often forced to share the business budget (rent, employee salaries, etc.) to justify the 1.5% management fee."
  },
  {
   "id": "kaal:claim:2959730-007",
   "url": "https://wulfkaal.github.io/claims/2959730-007",
   "claim": "New managers increasingly face contested track records, meaning the new firm cannot get a consensus from the manager's old employer about the manager's track record with that employer.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "asserted",
   "scope_conditions": [
    "first time managers spinning out of a prior employer"
   ],
   "supporting_quote": "Moreover, the industry is increasingly seeing contested track records for new managers, i.e., the new firm cannot get a consensus from the new manager's old employer about the manager's track record with that employer."
  },
  {
   "id": "kaal:claim:2959730-008",
   "url": "https://wulfkaal.github.io/claims/2959730-008",
   "claim": "Early limited partnership investors increasingly use their leverage to negotiate tough fee terms with first time managers.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "asserted",
   "scope_conditions": [
    "first time managers raising an initial fund"
   ],
   "supporting_quote": "Another phenomenon that affects first-time managers pertains to early limited partnership investors who increasingly throw their weight around to negotiate tough terms on fees."
  },
  {
   "id": "kaal:claim:2959730-009",
   "url": "https://wulfkaal.github.io/claims/2959730-009",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "evidenced",
   "scope_conditions": [
    "calendar year 2016 compared with 2008 and 2009"
   ],
   "supporting_quote": "Private fund investors withdrew $70.1 billion from the private investment fund industry in 2016.24 In 2016 a total of 1,057 private investment funds closed down, exceeding the 1,023 liquidations of private investment funds in 2009, and falling just shy of the record 1,471 closures in 2008."
  },
  {
   "id": "kaal:claim:2959730-010",
   "url": "https://wulfkaal.github.io/claims/2959730-010",
   "claim": "Market oversaturation increases pressure on private investment fund managers' performance and produces compromise fee arrangements such as charging fees on invested capital only.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "oversaturated and highly competitive fundraising market"
   ],
   "supporting_quote": "According to some observers the market is oversaturated which increases pressure on private investment fund managers' performance26 and results in compromise fee arrangements, such as paying fees on invested capital only."
  },
  {
   "id": "kaal:claim:2959730-011",
   "url": "https://wulfkaal.github.io/claims/2959730-011",
   "claim": "In the Buffett and Seides wager on net of fee returns, the passive S&P 500 index position produced a 7.1% compounded annual return after nine years against 2.2% for the five hedge funds of funds, evidence that industry performance does not justify the 2/20 fee structure.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "evidenced",
   "scope_conditions": [
    "nine years into the ten year 2008 to 2017 wager",
    "returns measured net of fees"
   ],
   "supporting_quote": "A year before the end of the wager, Buffet's nine-year result is a 7.1 % compounded annual return compared to Seides's 2.2%."
  },
  {
   "id": "kaal:claim:2959730-012",
   "url": "https://wulfkaal.github.io/claims/2959730-012",
   "claim": "Private investment fund management fees deviate from the market rate of 1.5% to 2% of the fund's capital commitments because affiliates and other employees of the investment manager who invest in the fund are not charged management fees.",
   "type": "mechanism",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "funds with affiliate or employee investors"
   ],
   "supporting_quote": "In recent years, private investment fund management fees can deviate from the market rate of 1.5%–2% of the fund's capital commitments because affiliates or other employees of the investment manager who invest in the fund are not charged management fees"
  },
  {
   "id": "kaal:claim:2959730-013",
   "url": "https://wulfkaal.github.io/claims/2959730-013",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "funds using side by side or co investment vehicles",
    "funds seeking large anchor investors"
   ],
   "supporting_quote": "The new fee structure is also the result of fund managers foregoing market rate management fees, larger investors requiring reduced management fees to induce investment, side-by-side vehicles attracting investors in the co-investment entities by charging less than 2% management fees"
  },
  {
   "id": "kaal:claim:2959730-014",
   "url": "https://wulfkaal.github.io/claims/2959730-014",
   "claim": "Pressure on the incentive fee side operates through blackened carried interest, under which a manager cannot collect carry until all limited partners have had their capital returned within the lifetime of the private equity model.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "asserted",
   "scope_conditions": [
    "private equity funds and, similarly, hedge funds",
    "carry measured over the lifetime of the fund model"
   ],
   "supporting_quote": "Some industry observers are now talking about a movement towards blackened carried interest, meaning a private investment fund manager cannot collect carry until all limited partner investors have had their capital returned within the lifetime of the private equity model."
  },
  {
   "id": "kaal:claim:2959730-015",
   "url": "https://wulfkaal.github.io/claims/2959730-015",
   "claim": "Shifting inflation indexed hurdle rates from quarterly to monthly calculation lowers manager compensation: for managers with pension plan limited partners this often means receiving 5% plus inflation instead of an 8% hurdle rate.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "asserted",
   "scope_conditions": [
    "managers with pension plan limited partners",
    "inflation indexed hurdle rates"
   ],
   "supporting_quote": "Inflation-indexed hurdle rates are now calculated on a monthly not a quarterly basis. For managers with pension plan limited partners that often means instead of an 8% hurdle rate the manager gets 5% plus inflation."
  },
  {
   "id": "kaal:claim:2959730-016",
   "url": "https://wulfkaal.github.io/claims/2959730-016",
   "claim": "The author stipulates that a blockchain is a shared digital ledger or database that maintains a continuously growing list of transactions among participating parties regarding digital assets, described as blocks.",
   "type": "definitional",
   "topics": [
    "blockchain",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "asserted",
   "scope_conditions": [
    "used as the operative definition for the remainder of the article"
   ],
   "supporting_quote": "As such, a blockchain is a shared digital ledger or database that maintains a continuously growing list of transactions among participating parties regarding digital assets –"
  },
  {
   "id": "kaal:claim:2959730-017",
   "url": "https://wulfkaal.github.io/claims/2959730-017",
   "claim": "Blockchain removes fraudulent transactions primarily through completely decentralized network connectivity via the Internet, rather than through digital signatures alone, which only establish the identity and authenticity of the parties.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized peer to peer networks with Internet connectivity"
   ],
   "supporting_quote": "While blockchain's use of digital signatures helps establish the identity and authenticity of the parties involved in the transaction, it is the completely decentralized network connectivity via the Internet that allows the most protection against fraud."
  },
  {
   "id": "kaal:claim:2959730-018",
   "url": "https://wulfkaal.github.io/claims/2959730-018",
   "claim": "The decentralized, fully distributed nature of the blockchain makes it practically impossible to reverse, alter, or erase information recorded in it.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "asserted",
   "scope_conditions": [
    "fully distributed networks where multiple copies are held by all participants"
   ],
   "supporting_quote": "The decentralized, fully-distributed nature of the blockchain makes it practically impossible to reverse, alter, or erase information in the blockchain."
  },
  {
   "id": "kaal:claim:2959730-019",
   "url": "https://wulfkaal.github.io/claims/2959730-019",
   "claim": "Blockchain's distributed consensus model, in which network nodes verify and validate chain transactions before execution, makes it extremely rare for a fraudulent transaction to be recorded in the blockchain.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "distributed consensus models with node verification prior to execution"
   ],
   "supporting_quote": "Blockchain's distributed consensus model, e.g., the network \"nodes\" verify and validate chain transactions before execution of the transactions, makes it extremely rare for a fraudulent transaction to be recorded in the blockchain."
  },
  {
   "id": "kaal:claim:2959730-020",
   "url": "https://wulfkaal.github.io/claims/2959730-020",
   "claim": "Cryptographic hashing makes blockchain manipulation immediately detectable because the hash incorporates all previous transactions, so that even a single digit change produces a different hash value.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "chained hashing that incorporates all prior transactions"
   ],
   "supporting_quote": "The smallest change to the blockchain, even a single digit/value, results in a different hash value. A different hash value makes any form of manipulation immediately detectable."
  },
  {
   "id": "kaal:claim:2959730-021",
   "url": "https://wulfkaal.github.io/claims/2959730-021",
   "claim": "Complex smart contract arrangements involving several parties require a verifiable and unhackable system, which blockchain technology supplies.",
   "type": "condition",
   "topics": [
    "smart-contracts",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "asserted",
   "scope_conditions": [
    "multi party smart contract arrangements"
   ],
   "supporting_quote": "More complex smart contract arrangements in which several parties are involved require a verifiable and unhackable system provided by blockchain technology."
  },
  {
   "id": "kaal:claim:2959730-022",
   "url": "https://wulfkaal.github.io/claims/2959730-022",
   "claim": "Smart contracting on the blockchain often makes legal contracting unnecessary because smart contracts emulate the logic of legal contract clauses.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "contract terms whose logic can be expressed in computer code"
   ],
   "supporting_quote": "Through blockchain technology, smart contracting often makes legal contracting unnecessary as smart contracts often emulate the logic of legal contract clauses."
  },
  {
   "id": "kaal:claim:2959730-023",
   "url": "https://wulfkaal.github.io/claims/2959730-023",
   "claim": "The current legal and administrative processes that support private equity are time consuming, expensive, lack transparency, and involve lengthy, duplicative, and fragmented investment and administrative processes.",
   "type": "failure",
   "topics": [
    "private-funds",
    "economics",
    "disclosure",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "private equity deal administration prior to blockchain adoption"
   ],
   "supporting_quote": "While the current legal and administrative processes that support private equity are time- consuming, expensive, lack transparency, and involve lengthy, duplicative, and fragmented investment and administrative processes"
  },
  {
   "id": "kaal:claim:2959730-024",
   "url": "https://wulfkaal.github.io/claims/2959730-024",
   "claim": "A blockchain program for private equity administration allows all involved parties in an equity deal to look at a single compiled version of the transaction and all other data relating to the deal, replacing the reconciliation of multiple document copies.",
   "type": "design",
   "topics": [
    "private-funds",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "private equity transactions administered on a shared ledger"
   ],
   "supporting_quote": "the blockchain program announced by Northern Trust and IBM allows all involved parties in an equity deal to look at a single compiled version of the transaction and all other data relating to the deal."
  },
  {
   "id": "kaal:claim:2959730-025",
   "url": "https://wulfkaal.github.io/claims/2959730-025",
   "claim": "In the Numerai model, the use of artificial intelligence achieves efficiency and optimum capital allocation by reducing overhead costs, because there is no cost of human capital.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "crowdsourced data scientist models synthesized into a meta model",
    "cryptocurrency incentivized contribution"
   ],
   "supporting_quote": "In the Numerai model, the use of artificial intelligence ultimately helps achieve the goal of efficiency and optimum capital allocation by reducing overhead costs because there is no cost of human capital."
  },
  {
   "id": "kaal:claim:2959730-026",
   "url": "https://wulfkaal.github.io/claims/2959730-026",
   "claim": "Blockchain based fund reporting substitutes verifiable transparency for hedge fund secrecy: the LendingRobot ledger shows detailed holdings and supplies a hash code signature as evidence that the data is tamper proof.",
   "type": "design",
   "topics": [
    "disclosure",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "evidenced",
   "scope_conditions": [
    "funds recording trades to a public blockchain ledger",
    "weekly trade recording in the LendingRobot Series"
   ],
   "supporting_quote": "Unlike traditional hedge funds that are rather secretive, the LendingRobot ledger shows detailed holdings and provides a \"hash code\" signature as evidence that the data is tamper-proof in the blockchain."
  },
  {
   "id": "kaal:claim:2959730-027",
   "url": "https://wulfkaal.github.io/claims/2959730-027",
   "claim": "The threshold for change for bigger fund managers is dictated by the implementation cost of the new technologies.",
   "type": "condition",
   "topics": [
    "innovation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "large private equity and hedge fund advisers",
    "adoption follows once long term benefits exceed implementation cost"
   ],
   "supporting_quote": "The threshold for change for bigger managers may be dictated by the implementation cost of such new technologies."
  },
  {
   "id": "kaal:claim:2959730-028",
   "url": "https://wulfkaal.github.io/claims/2959730-028",
   "claim": "Larger managers will be incentivized to begin the innovation process if and when they realize that smaller competitors using these technologies gain substantial operational efficiencies and cost savings.",
   "type": "predictive",
   "topics": [
    "innovation",
    "economics",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "competitive pressure from smaller technology adopting managers"
   ],
   "supporting_quote": "This, however, may change in the foreseeable future if and when larger managers realize that their smaller competitors who utilize these technologies gain substantial operational efficiencies and cost savings"
  },
  {
   "id": "kaal:claim:2959730-029",
   "url": "https://wulfkaal.github.io/claims/2959730-029",
   "claim": "Blockchain technology enables managers to charge per transaction fees, which undermines the existing 2/20 fee model, because it facilitates seamless and efficient calculation of management fees per transaction.",
   "type": "mechanism",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "managers operating fee calculation and settlement on a blockchain"
   ],
   "supporting_quote": "Blockchain technology enables managers to charge per- transaction fees which undermines the existing 2/20 fee model. Blockchain technology facilitates a seamless and efficient calculation of management fees per transaction."
  },
  {
   "id": "kaal:claim:2959730-030",
   "url": "https://wulfkaal.github.io/claims/2959730-030",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "fee models requiring manual reconciliation and settlement"
   ],
   "supporting_quote": "In contrast to the traditional settlement and calculation of fees in a per-transaction model that created a prohibitive amount of work making such operations very difficult to execute, blockchain technology overcomes all of these restrictions."
  },
  {
   "id": "kaal:claim:2959730-031",
   "url": "https://wulfkaal.github.io/claims/2959730-031",
   "claim": "Manual per transaction fee calculation and settlement is prone to human error, and these errors are removed through the use of blockchain technology.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "fee calculation and settlement performed manually"
   ],
   "supporting_quote": "While normally the use of this type of fee is prone to human errors that occur during manual calculation or settlement, these errors are removed through the use of blockchain technology"
  },
  {
   "id": "kaal:claim:2959730-032",
   "url": "https://wulfkaal.github.io/claims/2959730-032",
   "claim": "Making the blockchain enabled per transaction fee publicly available lets a private fund adviser set the applicable fee against a competitive market, so that investors in transaction heavy strategies agree upfront to higher fees.",
   "type": "design",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "per transaction fee is published or agreed with clients upfront",
    "fee varies with strategy transaction intensity"
   ],
   "supporting_quote": "It also can be publicly available which allows the private fund adviser to determine the applicable fee in a competitive market.65 Accordingly, clients who invest in a more transaction-prone strategy will be able to agree upfront to higher fees"
  },
  {
   "id": "kaal:claim:2959730-033",
   "url": "https://wulfkaal.github.io/claims/2959730-033",
   "claim": "LendingRobot can charge only a 1% management fee and a maximum 0.59% annual fund expense fee because its blockchain secured business model removes the investment adviser, overhead costs, and the legal fees associated with each investor agreement.",
   "type": "mechanism",
   "topics": [
    "defi",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "evidenced",
   "scope_conditions": [
    "fully automated hedge fund secured by blockchain technology",
    "weekly withdrawals at no additional cost to the investor"
   ],
   "supporting_quote": "Because LendingRobots' business model removes the investment adviser, overhead costs, and legal fees associated with each investor agreement, LendingRobot is able to charge a mere 1% management fee and a maximum 0.59% fund expense fee per year."
  },
  {
   "id": "kaal:claim:2959730-034",
   "url": "https://wulfkaal.github.io/claims/2959730-034",
   "claim": "Increased transparency from blockchain recordkeeping lowers fees by allowing a fund to expend fewer resources on auditing itself.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "funds whose holdings are recorded on a verifiable public ledger"
   ],
   "supporting_quote": "Other factors that help keep the fee low include the increased transparency that allows LendingRobot to expense fewer resources on auditing the fund."
  },
  {
   "id": "kaal:claim:2959730-035",
   "url": "https://wulfkaal.github.io/claims/2959730-035",
   "claim": "A blockchain enabled fund delivers performance competitive with traditional funds: LendingRobot claims average performance of 6.86% to 9.66% depending on strategy, against an average 8.89% annualized return for a broad range of traditional hedge funds as of March 2017.",
   "type": "empirical",
   "topics": [
    "defi",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "evidenced",
   "scope_conditions": [
    "LendingRobot self reported performance",
    "Eurekahedge Hedge Fund Index as of March 2017"
   ],
   "supporting_quote": "LendingRobot claims an average performance of from 6.86% to 9.66% depending on the investment strategy selected by the clients.68 As of March 2017 an analysis of a broad range of traditional hedge funds shows an average of 8.89% annualized return."
  },
  {
   "id": "kaal:claim:2959730-036",
   "url": "https://wulfkaal.github.io/claims/2959730-036",
   "claim": "The combination of increased transparency, reduced costs, and competitive performance enabled by blockchain use may confer a competitive advantage that continues to exert pressure on fees charged by competitor funds.",
   "type": "predictive",
   "topics": [
    "blockchain",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain enabled funds competing against traditional funds"
   ],
   "supporting_quote": "The increased transparency, reduced costs, and competitive performance enabled by LendingRobot's use of blockchain technology may give it a competitive advantage in the private fund industry that could continue to exert pressure on fees charged by competitor funds."
  },
  {
   "id": "kaal:claim:2959730-037",
   "url": "https://wulfkaal.github.io/claims/2959730-037",
   "claim": "Blockchain enabled platforms for setting up private investment funds exert significant pressure on the existing fee structure because they generate competitive gains through fewer cost and time barriers to setting up and running a fund.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "platform models such as Melonport or Drago",
    "fund formation and ongoing portfolio operation"
   ],
   "supporting_quote": "Blockchain-enabled platforms for setting up a private investment fund cause significant pressure on the existing fee structure of the private investment fund industry."
  },
  {
   "id": "kaal:claim:2959730-038",
   "url": "https://wulfkaal.github.io/claims/2959730-038",
   "claim": "Lower operating costs enabled by blockchain platform models will especially enable new and future managers to enter the market because start up and compliance costs can be significantly reduced.",
   "type": "predictive",
   "topics": [
    "economics",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "new and prospective fund managers",
    "platform models with low set up requirements and low running costs"
   ],
   "supporting_quote": "the lower operating costs enabled by the platform models will especially enable new and future managers to enter the market because the start-up costs and compliance costs can be significantly reduced."
  },
  {
   "id": "kaal:claim:2959730-039",
   "url": "https://wulfkaal.github.io/claims/2959730-039",
   "claim": "By enabling low set up requirements and low costs of running a portfolio, blockchain platform models may create an unprecedented competitive environment for asset management strategies.",
   "type": "predictive",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "speculative",
   "scope_conditions": [
    "platform based fund formation and portfolio operation"
   ],
   "supporting_quote": "By enabling low set-up requirements and low costs of running a portfolio, platform models may be able to create an unprecedented competitive environment for asset management strategies."
  },
  {
   "id": "kaal:claim:2959730-040",
   "url": "https://wulfkaal.github.io/claims/2959730-040",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "evidenced",
   "scope_conditions": [
    "portfolios operated on the Melon protocol on Ethereum"
   ],
   "supporting_quote": "The usage fees are determined by the protocol, and the modular fees are set by the module developers and are a fraction of a cent or a fraction of the trade volume for each usage."
  },
  {
   "id": "kaal:claim:2959730-041",
   "url": "https://wulfkaal.github.io/claims/2959730-041",
   "claim": "Survey responses from blockchain using private investment fund advisers show that their fee structure deviates from the traditional 2/20 model, with responding managers reporting alternative fee structures that benefited their clients.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "evidenced",
   "scope_conditions": [
    "n=59 survey responses drawn from the dataset",
    "the author could not obtain responses from all managers in the dataset"
   ],
   "supporting_quote": "The graph illustrates that the fee structure of those private investment fund advisers that use blockchain technology (and responded to the survey) deviates from the traditional 2/20 model."
  },
  {
   "id": "kaal:claim:2959730-042",
   "url": "https://wulfkaal.github.io/claims/2959730-042",
   "claim": "The rise of blockchain applications in private investment funds can exacerbate the industry's already changing fee structure.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "ai-and-agents",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730",
   "year": "2017",
   "source_sha256": "ebd86972d8817b0c1c80326ae5564476983cedba3f258ff3b2610f156b93fb50",
   "confidence": "argued",
   "scope_conditions": [
    "private investment fund industry as of 2017"
   ],
   "supporting_quote": "The paper has illustrated that the rise of blockchain applications in private investment funds can exacerbate the already changing fee structure of the industry."
  },
  {
   "id": "kaal:claim:2998033-001",
   "url": "https://wulfkaal.github.io/claims/2998033-001",
   "claim": "Blockchain technology lowers transaction costs by eliminating intermediaries, and it substitutes immutability and cryptography for the trust that intermediaries previously supplied.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "economics",
    "reputation",
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "asserted",
   "supporting_quote": "Blockchain technology's elimination of intermediaries removes transaction costs and creates a platform for trust through truth and transparency for parties through its immutability and use of cryptography."
  },
  {
   "id": "kaal:claim:2998033-002",
   "url": "https://wulfkaal.github.io/claims/2998033-002",
   "claim": "Smart contracting on blockchain platforms often makes legal contracting unnecessary, because smart contracts emulate the logic of legal contract clauses.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to transactions whose terms can be expressed as executable code"
   ],
   "supporting_quote": "Through blockchain technology, smart contracting often makes legal contracting unnecessary as smart contracts often emulate the logic of legal contract clauses."
  },
  {
   "id": "kaal:claim:2998033-003",
   "url": "https://wulfkaal.github.io/claims/2998033-003",
   "claim": "Business, administrative and legal services that consist of keeping ledgers, such as notary and registry services, legal motions practice, and title companies, are likely to be among the first services eliminated by blockchain adoption.",
   "type": "predictive",
   "topics": [
    "decentralization",
    "law-and-legal-systems",
    "blockchain",
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "applies to processes whose core function is ledger keeping and that rely on legal intermediaries"
   ],
   "supporting_quote": "Forms of keeping business and legal ledgers such as notary and registry services, legal motions practice in court, legal title companies, among several others, may be among the first services to disappear in the not too distant future."
  },
  {
   "id": "kaal:claim:2998033-004",
   "url": "https://wulfkaal.github.io/claims/2998033-004",
   "claim": "Smart contracts face a legal enforceability risk: they may be attacked as void and unenforceable, because contract law rules on formation, interpretation, conditions and remedies were not written for coded agreements and require substantive adjustment.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "applies under contract law regimes that have not been amended to recognize smart contracts"
   ],
   "supporting_quote": "lawyers may argue that \"smart contracts\" are void and unenforceable under the law. Contractual legal rules regarding formation, interpretation, conditions and remedies require substantive adjustments for smart contracts in contract law."
  },
  {
   "id": "kaal:claim:2998033-005",
   "url": "https://wulfkaal.github.io/claims/2998033-005",
   "claim": "Blockchain creates a data protection paradox: the technology itself offers strong privacy protection, yet storing blockchain data across a global network of nodes will often violate specific consumer protection rules and directives in individual jurisdictions.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "applies where consumer protection or data protection rules impose jurisdiction specific storage requirements"
   ],
   "supporting_quote": "While blockchain technology itself offers unprecedented genuine data and privacy protection, the storage of blockchain data across a global network of nodes often will not comply with specific consumer protection rules, directives, and guidelines around the world."
  },
  {
   "id": "kaal:claim:2998033-006",
   "url": "https://wulfkaal.github.io/claims/2998033-006",
   "claim": "Blockchain enabled services should expect the same incumbent resistance that sharing platforms encountered, so technical viability will not by itself produce rapid market acceptance.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "applies where incumbents are challenged by a new way of delivering an existing service or product"
   ],
   "supporting_quote": "future blockchain-enabled sharing services may not be accepted quickly and without resistance on the part of incumbents challenged by new ways of delivering a service or product."
  },
  {
   "id": "kaal:claim:2998033-007",
   "url": "https://wulfkaal.github.io/claims/2998033-007",
   "claim": "The DAO failed because of fundamental flaws in its own code, which allowed hackers to move one third of its funds to a subsidiary account, showing that governance built entirely on smart contracts inherits the defects of its code.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to organizations whose governance and asset control rest entirely on open source smart contract code"
   ],
   "supporting_quote": "Alas, things went terribly wrong with the DAO. Fundamental flaws in the DAO code enabled hackers to transfer one third of the total funds to a subsidiary account."
  },
  {
   "id": "kaal:claim:2998033-008",
   "url": "https://wulfkaal.github.io/claims/2998033-008",
   "claim": "The absence of regulatory recognition of blockchain technology is itself a source of harm: it creates significant uncertainty, hinders cross industry implementation, and undermines infrastructure conversion via blockchain.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "describes the state of US regulation as of 2017"
   ],
   "supporting_quote": "The lack of regulatory recognition of Blockchain technology creates significant uncertainty for the blockchain community. The lacking recognition hinders the implementation of the technology across industries and undermines the infrastructure conversion via blockchain technology."
  },
  {
   "id": "kaal:claim:2998033-009",
   "url": "https://wulfkaal.github.io/claims/2998033-009",
   "claim": "As of the publication of this article, a review of published court opinions showed that no court had reviewed, assessed, or scrutinized the uses and applications of blockchain technology.",
   "type": "empirical",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on a Westlaw search of federal and state cases as of 2017"
   ],
   "supporting_quote": "However, a review of published court opinions suggests that no court at the time of publication of this article had to review, assess, or scrutinize the uses and applications of blockchain technology."
  },
  {
   "id": "kaal:claim:2998033-010",
   "url": "https://wulfkaal.github.io/claims/2998033-010",
   "claim": "Fears that technologically untrained judges will misunderstand blockchain are overstated, because blockchain is no different from other software that courts have already evaluated, and courts assisted by well trained attorneys should be able to appreciate its significance.",
   "type": "mechanism",
   "topics": [
    "empirical-evidence",
    "open-source-and-code",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "supporting_quote": "While some judges, untrained in technology and technology novices on the bench, could misunderstand and misinterpret the new technology, the technology is no different from other software that courts have evaluated."
  },
  {
   "id": "kaal:claim:2998033-011",
   "url": "https://wulfkaal.github.io/claims/2998033-011",
   "claim": "Managers of funds that exist only as smart contracts in cyberspace, with no foreign or domestic domicile, cannot assume they are judgment proof; the more likely outcome is that they must comply with more regulations, not fewer, because every node location can trigger a jurisdiction.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "applies to funds constituted entirely through smart contracts on a public blockchain such as Ethereum"
   ],
   "supporting_quote": "However, managers cannot assume that they are judgment-proof. Instead, fund managers may be required to comply with more regulations not fewer."
  },
  {
   "id": "kaal:claim:2998033-012",
   "url": "https://wulfkaal.github.io/claims/2998033-012",
   "claim": "The SEC's denial of the Winklevoss Bitcoin exchange traded fund on grounds of susceptibility to fraud reflects the agency's distrust of the crypto asset class as a whole, and especially of funds that trade digital currencies.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "tokenomics",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "supporting_quote": "The SEC's decision regarding the Bitcoin ETF reflects its distrust towards the crypto asset class as a whole, especially funds attempting to trade digital currencies."
  },
  {
   "id": "kaal:claim:2998033-013",
   "url": "https://wulfkaal.github.io/claims/2998033-013",
   "claim": "The SEC's reasoning against the Bitcoin exchange traded fund does not transfer to blockchain based private investment funds, because such funds trade a diverse array of cryptocurrencies rather than Bitcoin alone and reach a much narrower investor audience, which curtails investor risk.",
   "type": "condition",
   "topics": [
    "securities-law",
    "private-funds",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "applies to private funds created through Ethereum smart contracting on platforms such as Melonport"
   ],
   "supporting_quote": "Most importantly, private investment funds on Melonport would be actively trading a more diverse array of cryto- currencies, not just Bitcoin. Moreover, the audience of a Melonport-type fund is much more limited and curtails the risk to investors."
  },
  {
   "id": "kaal:claim:2998033-014",
   "url": "https://wulfkaal.github.io/claims/2998033-014",
   "claim": "Private investment funds operating solely on the Melon protocol are less likely to be required to register as a commodity pool operator or commodity trading advisor, because the CFTC has not labelled digital assets a currency under its guidelines.",
   "type": "condition",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "as of 2017 CFTC guidance"
   ],
   "supporting_quote": "Because the CFTC has not labelled digital assets a currency under CFTC guidelines, private investment funds operating solely on the Melon protocol will be less likely to be required to register as a CPO or CTA."
  },
  {
   "id": "kaal:claim:2998033-015",
   "url": "https://wulfkaal.github.io/claims/2998033-015",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "turns on uniformity across producers as the dispositive characteristic of a commodity"
   ],
   "supporting_quote": "Thus, because of a lack of uniformity, it may be possible that digital ownership interests in private investment funds cannot be classified as commodities."
  },
  {
   "id": "kaal:claim:2998033-016",
   "url": "https://wulfkaal.github.io/claims/2998033-016",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on IRS Notice 2014-21"
   ],
   "supporting_quote": "However, the IRS was very specific about limiting its current position to transactions involving \"convertible virtual currency,\" leaving the tax treatment of crypto-limited partnership interests unaddressed."
  },
  {
   "id": "kaal:claim:2998033-017",
   "url": "https://wulfkaal.github.io/claims/2998033-017",
   "claim": "Cryptocurrency gains are massively underreported to the IRS: despite Bitcoin rising from under twenty dollars in 2013 to over twelve hundred dollars in 2017, the IRS received only around 900 Form 8949 filings indicating crypto gain or loss over four years.",
   "type": "empirical",
   "topics": [
    "disclosure",
    "tokenomics",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "supporting_quote": "While the value of Bitcoin in 2013 under $20 and its value appreciated to over $1200 in 2017, in the past four years, the IRS has only received around 900 Form 8949 that would indicate some gain or loss from cryptocurrencies."
  },
  {
   "id": "kaal:claim:2998033-018",
   "url": "https://wulfkaal.github.io/claims/2998033-018",
   "claim": "Under FinCEN guidance a mere user of virtual currency is not a money services business and faces no registration duty, while a user deemed an administrator or exchanger must comply with reporting and recordkeeping regulations.",
   "type": "condition",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "scope_conditions": [
    "under FinCEN guidance issued in March 2013 extending the Bank Secrecy Act to virtual currencies"
   ],
   "supporting_quote": "While a user of a virtual currency is not a MSB and not subject to any registration requirements, a user of virtual currencies who is deemed to be an administrator or exchanger will be required to comply with its reporting and recordkeeping regulations."
  },
  {
   "id": "kaal:claim:2998033-019",
   "url": "https://wulfkaal.github.io/claims/2998033-019",
   "claim": "Recording all fund transactions in the public blockchain lets an adviser demonstrate compliance with its best execution obligations and locate and audit past trades, converting a compliance burden into an automatic byproduct of trading.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "scope_conditions": [
    "illustrated by LendingRobot's blockchain secured automated hedge fund"
   ],
   "supporting_quote": "Moreover, by recording all transactions in the public blockchain, LendingRobot is able to comply with its best execution obligations as well as locate and audit past trades."
  },
  {
   "id": "kaal:claim:2998033-020",
   "url": "https://wulfkaal.github.io/claims/2998033-020",
   "claim": "Blockchain removes the reconciliation problem in private equity administration by letting every party to a deal view a single compiled version of the transaction and its associated data, instead of reconciling multiple copies of deal documents.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "reputation",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "scope_conditions": [
    "illustrated by the February 2017 Northern Trust and IBM private equity administration partnership"
   ],
   "supporting_quote": "the blockchain program announced by Northern Trust and IBM allows all involved parties in an equity deal to look at a single compiled version of the transaction and all other data relating to the deal."
  },
  {
   "id": "kaal:claim:2998033-021",
   "url": "https://wulfkaal.github.io/claims/2998033-021",
   "claim": "Repeated use of the same dataset by data scientists creates an overfitting risk: the training model fits the test set so closely that its performance on a different dataset degrades.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "applies to adaptive data analysis where the same data set is used repetitively"
   ],
   "supporting_quote": "When data scientists use the same data set repetitively a risk exists that the training model will overfit the test set of data which can limit the performance of the applied model on a different dataset."
  },
  {
   "id": "kaal:claim:2998033-022",
   "url": "https://wulfkaal.github.io/claims/2998033-022",
   "claim": "Requiring data scientists to stake a cryptocurrency on their own predictions converts private confidence into a public signal, which enables the fund to select the optimal model and improve fund performance.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "describes Numerai's use of the Numeraire token as a staking mechanism"
   ],
   "supporting_quote": "The staking process, in turn, enables Numerai to choose the optimal model and in the process improve the performance of its hedge fund."
  },
  {
   "id": "kaal:claim:2998033-023",
   "url": "https://wulfkaal.github.io/claims/2998033-023",
   "claim": "Because blockchain is transparent, verifiable, self authenticating and self enforcing, financial transactions can be executed instantaneously at near zero transaction cost, which raises efficiency for businesses and individuals exponentially.",
   "type": "mechanism",
   "topics": [
    "economics",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "asserted",
   "supporting_quote": "Because blockchain technology is transparent, verifiable, self- authenticating, and self-enforcing, financial transactions can be executed instantaneously at near zero transaction costs, increasing the efficiency for business and individuals exponentially."
  },
  {
   "id": "kaal:claim:2998033-024",
   "url": "https://wulfkaal.github.io/claims/2998033-024",
   "claim": "Even though crypto investments can be as volatile as or more volatile than traditional investments, digital currencies may still serve as a hedge against traditional investments because they are not tied to equity market movements.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "holds to the extent crypto returns are uncorrelated with traditional stock and equity markets"
   ],
   "supporting_quote": "Although crypto investments can to be just as and more volatile than traditional investments, digital currencies might be used to hedge against traditional investments."
  },
  {
   "id": "kaal:claim:2998033-025",
   "url": "https://wulfkaal.github.io/claims/2998033-025",
   "claim": "Blockchain increases competitive pressure in the private investment fund industry because its decentralized model for financial transactions disintermediates and disrupts the existing financial infrastructure.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "supporting_quote": "the structural characteristic of blockchain as a decentralized model for financial transactions disintermediates and disrupts the existing financial infrastructure."
  },
  {
   "id": "kaal:claim:2998033-026",
   "url": "https://wulfkaal.github.io/claims/2998033-026",
   "claim": "Large managers will begin adopting blockchain and related technologies only once the long term benefits exceed implementation cost, and because implementation cost is much higher for large managers than for the small managers now experimenting, adoption is delayed at the top of the industry.",
   "type": "condition",
   "topics": [
    "innovation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "assumes implementation cost scales with manager size"
   ],
   "supporting_quote": "If and when the long-term benefits of using the technologies exceed the implementation cost, which are much larger for larger managers than for the smaller managers who are currently experimenting with such technologies, larger managers are incentivized to start the innovation process as well."
  },
  {
   "id": "kaal:claim:2998033-027",
   "url": "https://wulfkaal.github.io/claims/2998033-027",
   "claim": "Private fund management fees have compressed materially: the historical two percent of commitments has shifted in recent years to roughly 1.0 percent for new managers and 1.5 to 1.8 percent for established managers with an adequate track record.",
   "type": "empirical",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "scope_conditions": [
    "describes private equity and hedge fund fee practice as of 2016 and 2017"
   ],
   "supporting_quote": "However, the historical fee of 2% of commitments through the reinvestment period, then 2% on the cost basis for the investments/value of fund has shifted in recent years closer to 1.0% for new managers and 1.5-1.8% for established managers with an adequate track record."
  },
  {
   "id": "kaal:claim:2998033-028",
   "url": "https://wulfkaal.github.io/claims/2998033-028",
   "claim": "The private fund industry contracted sharply in 2016: a total of 1,057 private investment funds closed down, exceeding the 1,023 liquidations of 2009 and falling just short of the record 1,471 closures in 2008.",
   "type": "empirical",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "supporting_quote": "In 2016 a total of 1,057 private investment funds closed down, exceeding the 1,023 liquidations of private investment funds in 2009, and falling just shy of the record 1,471 closures in 2008."
  },
  {
   "id": "kaal:claim:2998033-029",
   "url": "https://wulfkaal.github.io/claims/2998033-029",
   "claim": "Blockchain platforms for fund formation lower start up and compliance costs, which especially enables new and future managers to enter the market rather than merely benefiting existing managers.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "applies to platform models such as Melonport and Drago"
   ],
   "supporting_quote": "the lower operating costs enabled by the platform models will especially enable new and future managers to enter the market because the start-up costs and compliance costs can be significantly reduced."
  },
  {
   "id": "kaal:claim:2998033-030",
   "url": "https://wulfkaal.github.io/claims/2998033-030",
   "claim": "Anecdotal evidence suggests that the majority of private fund advisers who use blockchain, artificial intelligence, and big data in their operations or strategy charge substantially lower fees than advisers who do not use these technologies.",
   "type": "empirical",
   "topics": [
    "blockchain",
    "ai-and-agents",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "asserted",
   "scope_conditions": [
    "characterized by the author as anecdotal rather than sample based evidence"
   ],
   "supporting_quote": "Anecdotal evidence suggests that the majority of private fund advisers that use blockchain technology, artificial intelligence, and big data in different aspects of their operations or strategy have a substantially lower fee structure than those who do not use them."
  },
  {
   "id": "kaal:claim:2998033-031",
   "url": "https://wulfkaal.github.io/claims/2998033-031",
   "claim": "LendingRobot can charge only a one percent management fee and a maximum 0.59 percent fund expense fee because its business model removes the investment adviser, overhead costs, and the legal fees attached to each individual investor agreement.",
   "type": "mechanism",
   "topics": [
    "defi",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "scope_conditions": [
    "describes LendingRobot's blockchain secured automated hedge fund"
   ],
   "supporting_quote": "Because LendingRobots' business model removes the investment adviser, overhead costs, and legal fees associated with each investor agreement, LendingRobot is able to charge a mere 1% management fee and a maximum 0.59% fund expense fee per year."
  },
  {
   "id": "kaal:claim:2998033-032",
   "url": "https://wulfkaal.github.io/claims/2998033-032",
   "claim": "Blockchain enables managers to charge per transaction fees, and that capability undermines the existing two and twenty fee model.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "supporting_quote": "Blockchain technology enables managers to charge per- transaction fees which undermines the existing 2/20 fee model."
  },
  {
   "id": "kaal:claim:2998033-033",
   "url": "https://wulfkaal.github.io/claims/2998033-033",
   "claim": "Per transaction fee models were previously impractical because settlement and calculation created a prohibitive amount of manual work; blockchain removes that barrier by automatically allocating the correct fee to the correct executed trade and client account without manual reconciliation.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "supporting_quote": "It enables the fully automated allocation of the appropriate fee to the correct executed trade and associated client account without any manual reconciliation or settlement."
  },
  {
   "id": "kaal:claim:2998033-034",
   "url": "https://wulfkaal.github.io/claims/2998033-034",
   "claim": "Blockchain enabled per transaction fees align fees with strategy turnover: clients in transaction intensive strategies agree upfront to higher fees while clients in less transaction rich strategies pay lower overall fees.",
   "type": "design",
   "topics": [
    "ai-and-agents",
    "disclosure",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "assumes the per transaction fee is predetermined with clients and can be made publicly available"
   ],
   "supporting_quote": "Accordingly, clients who invest in a more transaction-prone strategy will be able to agree upfront to higher fees whereas clients who invest in a less transaction-rich strategy will pay overall lower fees."
  },
  {
   "id": "kaal:claim:2998033-035",
   "url": "https://wulfkaal.github.io/claims/2998033-035",
   "claim": "The study rests on a hand coded dataset of 120 private investment funds that use blockchain technology in either their strategy or their operations, compiled by the author and research assistants from web searches and multiple databases.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "empirical-evidence",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "supporting_quote": "The dataset comprises a representative sample of private investment funds that utilize blockchain technology in either their strategy or operations (N=120). The author and a team of two research assistants hand-coded individual use of blockchain technology for each fund in the dataset."
  },
  {
   "id": "kaal:claim:2998033-036",
   "url": "https://wulfkaal.github.io/claims/2998033-036",
   "claim": "Private fund adoption of blockchain began in 2012, coinciding with the broader public debate over blockchain solutions, and took the form of managers setting up separate new fund entities that used the technology.",
   "type": "empirical",
   "topics": [
    "blockchain",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on the study's time series of fund inception versus blockchain use inception dates"
   ],
   "supporting_quote": "In 2012, coinciding with the more public debate of blockchain based solutions, private investment fund managers started to get involved in the technology by setting up separate and new fund entities that utilized the technology in various forms."
  },
  {
   "id": "kaal:claim:2998033-037",
   "url": "https://wulfkaal.github.io/claims/2998033-037",
   "claim": "In the study's dataset the clear majority of private investment funds using blockchain technology are engaged in venture capital rather than hedge fund or private equity strategies.",
   "type": "empirical",
   "topics": [
    "innovation",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on the type of fund coding for n=105 funds"
   ],
   "supporting_quote": "Figure 3 shows that the clear majority of private investment funds in the dataset is engaged in venture capital."
  },
  {
   "id": "kaal:claim:2998033-038",
   "url": "https://wulfkaal.github.io/claims/2998033-038",
   "claim": "The predominant uses of blockchain technology in the private investment fund industry originate in holding crypto assets of various kinds, which indicates that the technology plays its primary role in front office and investment functions rather than in back office administration.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on word cluster coding of fund marketing materials for n=74 funds"
   ],
   "supporting_quote": "Figures 7 and 8 suggest that the private investment funds industry's predominant uses of blockchain technology originate in holding crypto assets of different kinds. This would suggest that blockchain technology plays a primary role in front office and investment functions."
  },
  {
   "id": "kaal:claim:2998033-039",
   "url": "https://wulfkaal.github.io/claims/2998033-039",
   "claim": "The third most important use of blockchain by private investment funds is support for fund growth, which is consistent with anecdotal evidence that returns attainable through crypto investments have no match in traditional finance.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "argued",
   "scope_conditions": [
    "based on word cluster coding of fund marketing materials; the return comparison is characterized as anecdotal"
   ],
   "supporting_quote": "The third most important category of private investment fund use of blockchain technology pertains to its support for the growth of the fund. This is consistent with anecdotal evidence suggesting that the crypto returns attainable through crypto investments have no match in traditional finance."
  },
  {
   "id": "kaal:claim:2998033-040",
   "url": "https://wulfkaal.github.io/claims/2998033-040",
   "claim": "Regulatory guidance is essential to the continuing evolution and blockchain integration of the private investment fund industry, so the constraint on further adoption is regulatory rather than technological.",
   "type": "normative",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033",
   "year": "2017",
   "source_sha256": "aafb1be3c25cd33da477d759df9ca2f856f0a8fe133d6396da2e75d0af573dbd",
   "confidence": "asserted",
   "supporting_quote": "Regulatory guidance will be essential to ensuring the continuing evolution and blockchain integration for the private investment fund industry."
  },
  {
   "id": "kaal:claim:3002908-001",
   "url": "https://wulfkaal.github.io/claims/3002908-001",
   "claim": "The absence of regulatory recognition of blockchain technology is itself a source of harm: it creates significant uncertainty for the blockchain community and undermines the evolution of the crypto economy.",
   "type": "failure",
   "topics": [
    "blockchain",
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the period before any dedicated blockchain legislation or case law existed in the US and the EU"
   ],
   "supporting_quote": "The lack of regulatory recognition of Blockchain technology creates significant uncertainty for the blockchain community and undermines the evolution of the crypto economy."
  },
  {
   "id": "kaal:claim:3002908-002",
   "url": "https://wulfkaal.github.io/claims/3002908-002",
   "claim": "Regulatory uncertainty around blockchain has three specific sources: insufficient or non existent regulatory guidance, the absence of court decisions, and uncertainty over which jurisdiction applies.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "asserted",
   "supporting_quote": "The regulatory uncertainty derives from insufficient or non- existent regulatory guidance, lacking court decisions, and uncertainty over applicable jurisdiction."
  },
  {
   "id": "kaal:claim:3002908-003",
   "url": "https://wulfkaal.github.io/claims/3002908-003",
   "claim": "Regulatory uncertainty in this transitional era actively frustrates blockchain innovation rather than supplying the secure framework in which blockchain applications could flourish.",
   "type": "failure",
   "topics": [
    "innovation",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "holds during the transitional period in which a new foundational technology is spreading and its outcomes remain uncertain"
   ],
   "supporting_quote": "This uncertainty frustrates blockchain innovation instead of providing a secured framework where revolutionary blockchain applications can flourish."
  },
  {
   "id": "kaal:claim:3002908-004",
   "url": "https://wulfkaal.github.io/claims/3002908-004",
   "claim": "Regulators cannot draft specific blockchain regulation because the risks, opportunities, and concrete outcomes of blockchain in reshaping financial markets are unpredictable.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "economics",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "applies to attempts at drafting new technology specific regulation while the technology is still evolving"
   ],
   "supporting_quote": "The unpredictability of the risks and the opportunities as well as the concrete outcomes of blockchain in reshaping financial markets are clear obstacles for regulators' attempts at drafting new specific regulation."
  },
  {
   "id": "kaal:claim:3002908-005",
   "url": "https://wulfkaal.github.io/claims/3002908-005",
   "claim": "Jurisdiction over the public blockchain does not exist within the present doctrinal infrastructure for jurisdiction, and in practice the blockchain cannot be regulated or governed because it is decentralized and autonomous.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "blockchain",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "applies to public, permissionless blockchains rather than private or consortium ledgers with an identifiable operator"
   ],
   "supporting_quote": "More specifically, jurisdiction over the public blockchain does not exist within the present doctrinal infrastructure for jurisdiction. In practice, the blockchain itself cannot be regulated or governed because it is decentralized and autonomous."
  },
  {
   "id": "kaal:claim:3002908-006",
   "url": "https://wulfkaal.github.io/claims/3002908-006",
   "claim": "Traditional jurisdictional tests fail for blockchain because the concepts of location and presence do not apply: the blockchain has no location, physical or electronic, and no single node holds the entire chain.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "supporting_quote": "The concept of location or presence in jurisdictional means does not apply to the blockchain. A location for the blockchain does not exist - not physically or even electronically."
  },
  {
   "id": "kaal:claim:3002908-007",
   "url": "https://wulfkaal.github.io/claims/3002908-007",
   "claim": "Enforcement against the blockchain is unlikely to work because it is maintained and owned by a distributed group of anonymous users worldwide who would not likely recognize or comply with any legal authority.",
   "type": "failure",
   "topics": [
    "compliance",
    "decentralization",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "supporting_quote": "The blockchain is entirely maintained and owned by a distributed group of anonymous users located throughout the planet who would not likely recognize or comply with any legal authority."
  },
  {
   "id": "kaal:claim:3002908-008",
   "url": "https://wulfkaal.github.io/claims/3002908-008",
   "claim": "As of publication, no American or European court had recognized blockchain technology or scrutinized its applications, leaving it unclear how courts will treat the technology.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "evidenced",
   "scope_conditions": [
    "as of the article's publication in 2017",
    "based on searches of US federal and state case law and of Italian, French, Dutch, UK, German, and EU court databases"
   ],
   "supporting_quote": "American and European courts have not yet recognized blockchain technology or addressed its applications.. A review of published court opinions suggests that no court at the time of publication of this article had to review, assess, or scrutinize the uses and applications of blockchain technology."
  },
  {
   "id": "kaal:claim:3002908-009",
   "url": "https://wulfkaal.github.io/claims/3002908-009",
   "claim": "The immutability and permanent recording built into blockchain technology may be the root of legal difficulties in European countries that recognize a right to be forgotten or comparable privacy rights.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "applies in jurisdictions recognizing a right to erasure, notably the EU under the General Data Protection Regulation"
   ],
   "supporting_quote": "The immutability and eternal recording of blockchain technology may be the root of legal difficulties in European countries that recognize the \"right to be forgotten\" or certain other privacy rights."
  },
  {
   "id": "kaal:claim:3002908-010",
   "url": "https://wulfkaal.github.io/claims/3002908-010",
   "claim": "ESMA judged a regulatory response to blockchain premature because technological innovation was still evolving and blockchain's practical applications were still rather limited.",
   "type": "empirical",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "evidenced",
   "scope_conditions": [
    "ESMA position as of the debate launched in June 2016"
   ],
   "supporting_quote": "Because of the on- going evolution of technological innovation and blockchain's still rather limited practical applications, ESMA considered a regulatory response to the evolving technology premature."
  },
  {
   "id": "kaal:claim:3002908-011",
   "url": "https://wulfkaal.github.io/claims/3002908-011",
   "claim": "Despite early cautioning and a call for action from its own commissioners, the SEC has not addressed core issues pertaining to the recognition of blockchain technology applications in finance.",
   "type": "failure",
   "topics": [
    "securities-law",
    "tokenomics",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "as of publication in 2017"
   ],
   "supporting_quote": "Despite this early cautioning and call for action, the SEC has not yet addressed core issues pertaining to the recognition of blockchain technology applications in finance."
  },
  {
   "id": "kaal:claim:3002908-012",
   "url": "https://wulfkaal.github.io/claims/3002908-012",
   "claim": "The SEC rejected the Winklevoss Bitcoin ETF application on the ground that the unregulated nature of Bitcoin made the proposed fund susceptible to fraud.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC Release No. 34-80206, March 10, 2017"
   ],
   "supporting_quote": "In rejecting the application, the SEC reasoned that, because of the unregulated nature of Bitcoin, the proposed fund was susceptible to fraud."
  },
  {
   "id": "kaal:claim:3002908-013",
   "url": "https://wulfkaal.github.io/claims/3002908-013",
   "claim": "The IRS confined its virtual currency position to transactions in convertible virtual currency, which leaves the tax treatment of crypto limited partnership interests unaddressed.",
   "type": "failure",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "under IRS Notice 2014-21"
   ],
   "supporting_quote": "However, the IRS was very specific about limiting its current position to transactions involving \"convertible virtual currency,\" leaving the tax treatment of crypto-limited partnership interests unaddressed."
  },
  {
   "id": "kaal:claim:3002908-014",
   "url": "https://wulfkaal.github.io/claims/3002908-014",
   "claim": "Crypto gains are being massively underreported: despite Bitcoin rising from under twenty dollars in 2013 to over twelve hundred dollars in 2017, the IRS received only about 900 Forms 8949 indicating crypto gain or loss over four years.",
   "type": "empirical",
   "topics": [
    "compliance",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "evidenced",
   "scope_conditions": [
    "US federal tax reporting, four year window ending 2017"
   ],
   "supporting_quote": "While the value of Bitcoin in 2013 under $20 and its value appreciated to over $1200 in 2017, in the past four years, the IRS has only received around 900 Form 8949 that would indicate some gain or loss from cryptocurrencies."
  },
  {
   "id": "kaal:claim:3002908-015",
   "url": "https://wulfkaal.github.io/claims/3002908-015",
   "claim": "Distributed networks disintermediate: because validation is distributed, a centralized validating entity such as a central bank or clearing house is not necessary to record and validate transactions.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "applies to decentralized distributed ledger designs"
   ],
   "supporting_quote": "Distributed networks disintermediate. The intermediation of a centralized validation entity (a central bank or a clearing-house) in charge of recording and validating the transactions is not necessary in a decentralized network."
  },
  {
   "id": "kaal:claim:3002908-016",
   "url": "https://wulfkaal.github.io/claims/3002908-016",
   "claim": "In the decentralized DLT model, distributed consensus replaces the trusted central validation system, substituting cryptographic solutions and economic incentives for a central validator.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "supporting_quote": "In the decentralized DLT model, \"distributed consensus\" replaces the trusted central validation system."
  },
  {
   "id": "kaal:claim:3002908-017",
   "url": "https://wulfkaal.github.io/claims/3002908-017",
   "claim": "Complex smart contracts involving several parties can only work if they rest on a verifiable and unhackable system, which is what blockchain technology supplies.",
   "type": "condition",
   "topics": [
    "smart-contracts",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to multiparty smart contracts of higher complexity, such as derivative contracts"
   ],
   "supporting_quote": "Complex smart contracts involving several parties need to rely on a verifiable and unhackable system provided by blockchain technology."
  },
  {
   "id": "kaal:claim:3002908-018",
   "url": "https://wulfkaal.github.io/claims/3002908-018",
   "claim": "Smart contracting often makes legal contracting unnecessary, because smart contracts frequently emulate the logic of legal contract clauses.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "asserted",
   "supporting_quote": "smart contracting often makes legal contracting unnecessary as smart contracts often emulate the logic of legal contract clauses."
  },
  {
   "id": "kaal:claim:3002908-019",
   "url": "https://wulfkaal.github.io/claims/3002908-019",
   "claim": "Private investment funds entered the blockchain sector earlier than other financial players, yet because of legacy systems in private fund infrastructure the proportion of funds investing in blockchain is still small.",
   "type": "mechanism",
   "topics": [
    "innovation",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "as of 2017"
   ],
   "supporting_quote": "Private investment funds have invested earlier in the blockchain sector than other financial players. Because of legacy systems in the private investment fund infrastructure, the proportion of private investment funds that invest in blockchain technology is still small"
  },
  {
   "id": "kaal:claim:3002908-020",
   "url": "https://wulfkaal.github.io/claims/3002908-020",
   "claim": "By optimizing internal processes through blockchain technology, smaller investment fund managers gain unprecedented opportunities to compete with more established managers in markets previously dominated by larger players.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "requires the smaller manager to actually implement blockchain based process optimization"
   ],
   "supporting_quote": "By optimizing their internal processes via blockchain technology, smaller investment fund managers gain unprecedented opportunities to compete with more established fund managers in markets that were previously dominated by larger players."
  },
  {
   "id": "kaal:claim:3002908-021",
   "url": "https://wulfkaal.github.io/claims/3002908-021",
   "claim": "Consistent with market fragmentation and disintermediation, smaller private investment fund managers have begun to erode the power of established market institutions such as banks and insurance companies.",
   "type": "empirical",
   "topics": [
    "decentralization",
    "economics",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "asserted",
   "supporting_quote": "Moreover, consistenly with the general trends of market fragmentation and disintermediation, smaller private investment fund managers started to erode the power of established market institutions such as banks and insurance companies."
  },
  {
   "id": "kaal:claim:3002908-022",
   "url": "https://wulfkaal.github.io/claims/3002908-022",
   "claim": "Post crisis regulation that restrained bank lending, particularly to SMEs, opened a new market that private investment funds moved into, accelerating their involvement in banking functions.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "systemic-risk",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "after the financial crisis of 2008"
   ],
   "supporting_quote": "After the crisis, newly issued regulation restrained banks from lending, in particular to SMEs. This opened up a new market for private investment funds that stepped into the void left by the new regulatory regime."
  },
  {
   "id": "kaal:claim:3002908-023",
   "url": "https://wulfkaal.github.io/claims/3002908-023",
   "claim": "Private investment funds that are first movers in implementing blockchain infrastructure in finance directly contribute to disintermediation and accelerate the evolution of blockchain infrastructure in finance.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "supporting_quote": "Private investment funds that are first movers in the implementation of the blockchain infrastructure systems in finance directly contribute to that disintermediation and facilitate the accelerating evolution of the blockchain infrastructure in finance."
  },
  {
   "id": "kaal:claim:3002908-024",
   "url": "https://wulfkaal.github.io/claims/3002908-024",
   "claim": "Larger fund managers will adopt blockchain only once the long term benefits exceed implementation cost, and because that cost is much larger for them than for the smaller managers now experimenting, the threshold is higher for larger managers.",
   "type": "condition",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "assumes larger managers observe smaller competitors gaining operational efficiencies, cost savings, and portfolio diversification"
   ],
   "supporting_quote": "If and when the long-term benefits of using the technologies exceed the implementation cost, which are much larger for larger managers than for the smaller managers who are currently experimenting with such technologies, larger managers are incentivized to start the innovation process as well."
  },
  {
   "id": "kaal:claim:3002908-025",
   "url": "https://wulfkaal.github.io/claims/3002908-025",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on the article's hand coded dataset of 120 private investment fund advisers using blockchain technology"
   ],
   "supporting_quote": "The data analysis in this article suggests that the market for private investment funds who invest in- and utilize blockchain technology appears to be near equally divided between the US and the EU with Russia and China playing a significant role."
  },
  {
   "id": "kaal:claim:3002908-026",
   "url": "https://wulfkaal.github.io/claims/3002908-026",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "evidenced",
   "scope_conditions": [
    "AUM data available for 59 of the sampled funds"
   ],
   "supporting_quote": "majority of the private funds have AUM varying in a range comprised between $1 to #50 million AUM with only 2 funds whose AUM are between $101-150 AUM and above to $ 200 million AUM, in Europe the situation is rather different: private funds with an AUM higher than $200 million are the majority"
  },
  {
   "id": "kaal:claim:3002908-027",
   "url": "https://wulfkaal.github.io/claims/3002908-027",
   "claim": "The authors interpret the AUM difference as suggesting that larger European advisers are more willing to fund blockchain infrastructure, while in the United States legacy systems used by larger advisers create a barrier to entry.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "an interpretation of the AUM distribution, not a tested result"
   ],
   "supporting_quote": "This could suggest that in Europe larger private investment fund advisers are more willing to make the required investments into a blockchain infrastructure whereas in the US the legacy systems utilized by larger private investment fund advisers creates a barrier to entry"
  },
  {
   "id": "kaal:claim:3002908-028",
   "url": "https://wulfkaal.github.io/claims/3002908-028",
   "claim": "The authors undercut their own legacy systems explanation: legacy systems in the EU should theoretically create the same barriers, and there is no reason to believe US legacy systems are more of an obstacle than European ones.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "supporting_quote": "Theoretically, however, legacy systems in the EU should create the same barriers for larger private investment fund advisers. There is no reason to believe that legacy systems in the United States would constitute more of an obstacle than legacy systems in the EU."
  },
  {
   "id": "kaal:claim:3002908-029",
   "url": "https://wulfkaal.github.io/claims/3002908-029",
   "claim": "A competing explanation for the transatlantic size gap is compositional: American blockchain funds are mostly newly created ad hoc vehicles focused exclusively on blockchain, while European ones are more established and older financial institutions.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "supporting_quote": "American private investment funds investing in blockchain are mostly newly and ad hoc created investment vehicles, focused exclusively on blockchain. Whereas the vast majority of European private funds are more established and older financial"
  },
  {
   "id": "kaal:claim:3002908-030",
   "url": "https://wulfkaal.github.io/claims/3002908-030",
   "claim": "Larger European private fund advisers implement more conservative investment strategies, using blockchain technology predominantly to invest in and secure crypto assets.",
   "type": "empirical",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on the nine term cluster coding of fund marketing language, n equals 74 strategies"
   ],
   "supporting_quote": "The data seems to suggest that the larger European private fund advisers implement more conservative investment strategies and use the technology predominantly to invest in- and secure crypto assets."
  },
  {
   "id": "kaal:claim:3002908-031",
   "url": "https://wulfkaal.github.io/claims/3002908-031",
   "claim": "Because American funds lean on smart contracting, they have a better opportunity to launch disruptive blockchain implementations, but they may also experience a higher rate of failure from greater exposure to technological risk.",
   "type": "predictive",
   "topics": [
    "risk-and-incentives",
    "smart-contracts",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "speculative",
   "scope_conditions": [
    "conditional on American funds continuing to emphasize smart contracting over conservative crypto asset strategies"
   ],
   "supporting_quote": "This may imply that American private investment funds will have a better opportunity to launch future disruptive implementations of blockchain technology, while at the same time they may experience a higher rate of failure, due to a greater exposure to technological risks."
  },
  {
   "id": "kaal:claim:3002908-032",
   "url": "https://wulfkaal.github.io/claims/3002908-032",
   "claim": "Raw country level counts overstate American leadership: normalizing by population shows roughly 7.5 million people per blockchain fund in the United States against roughly 2.8 million in the United Kingdom, so the distribution across countries is more even than the map suggests.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "evidenced",
   "scope_conditions": [
    "43 US funds against a population of roughly 321 million; 23 UK funds against roughly 65 million"
   ],
   "supporting_quote": "Although the map suggests that the United States is heavily invested in blockchain, in comparison with other countries we see a more even distribution between countries than the map would suggest."
  },
  {
   "id": "kaal:claim:3002908-033",
   "url": "https://wulfkaal.github.io/claims/3002908-033",
   "claim": "The absence of Luxembourg funds from the dataset is most likely an artifact of unavailable public information rather than evidence that Luxembourg funds do not invest in blockchain.",
   "type": "failure",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the article's own dataset construction from public and contacted sources"
   ],
   "supporting_quote": "This is likely due to the unavailability of public information connected to Luxembourgian funds investing in blockchain rather than to a lack of Luxembourgian funds, in principle to be excluded."
  },
  {
   "id": "kaal:claim:3002908-034",
   "url": "https://wulfkaal.github.io/claims/3002908-034",
   "claim": "The dataset is incomplete by construction: the 120 fund advisers sampled did not answer all questions and the authors were often unable to obtain information on all questions.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to the article's hand coded sample of 120 private investment fund advisers"
   ],
   "supporting_quote": "The 120 fund advisers in our sample did not answer all questions and often we were unable to obtain available information on all questions."
  },
  {
   "id": "kaal:claim:3002908-035",
   "url": "https://wulfkaal.github.io/claims/3002908-035",
   "claim": "Fund type composition diverges across regions: in the United States hedge funds dominate the blockchain using sample, while in Europe venture capital funds clearly predominate.",
   "type": "empirical",
   "topics": [
    "innovation",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "evidenced",
   "scope_conditions": [
    "n equals 105 funds classified by type"
   ],
   "supporting_quote": "the majority of private funds are hedge funds (10), tech funds (7), private equity (5), venture capitals (4) and others (2). In Europe, the distribution among the types of investors is different: the majority of the private funds identified are venture capitals (22)"
  },
  {
   "id": "kaal:claim:3002908-036",
   "url": "https://wulfkaal.github.io/claims/3002908-036",
   "claim": "Whether private investment funds succeed in disintermediating banks through blockchain implementation depends on their ability to find scale opportunities.",
   "type": "condition",
   "topics": [
    "decentralization",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "argued",
   "supporting_quote": "Private investment funds' bank disintermediation through the implementation of blockchain technology will depend on their ability to find scale opportunities."
  },
  {
   "id": "kaal:claim:3002908-037",
   "url": "https://wulfkaal.github.io/claims/3002908-037",
   "claim": "The Northern Trust and IBM blockchain program removes the need for parties to reconcile multiple copies of deal documents by letting every party to a private equity deal look at a single compiled version of the transaction.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "evidenced",
   "scope_conditions": [
    "private equity deal administration, partnership announced February 2017"
   ],
   "supporting_quote": "which requires parties to reconcile multiples copies of the documents that form the deals to understand the greater picture, the blockchain program announced by Northern Trust and IBM allows all involved parties in an equity deal to look at a single compiled version"
  },
  {
   "id": "kaal:claim:3002908-038",
   "url": "https://wulfkaal.github.io/claims/3002908-038",
   "claim": "The Numerai model reduces overhead costs because there is no cost of human capital, and it eliminates barriers to entry because participating users need neither capital nor any special finance or data knowledge.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to the Numerai crowdsourced data science model running on the Ethereum blockchain"
   ],
   "supporting_quote": "reducing overhead costs because there is no cost of human capital.135 In addition, Numerai eliminates barriers to entry because users do not need capital or any special finance or data knowledge."
  },
  {
   "id": "kaal:claim:3002908-039",
   "url": "https://wulfkaal.github.io/claims/3002908-039",
   "claim": "Initial coin offerings have overtaken venture capital as a funding channel for blockchain start ups, raising 331 million dollars in twelve months, and may become an alternative funding method for traditional companies as well.",
   "type": "predictive",
   "topics": [
    "securities-law",
    "tokenomics",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "evidenced",
   "scope_conditions": [
    "twelve month window reported as of mid 2017"
   ],
   "supporting_quote": "Started as a phenomenon that is revolutionizing the way start-up companies investing in blockchain raise capital (in the last 12 months ICOs have raised $331 million, overtaking venture capitalists' investments),157 it may become an alternative method for many traditional companies."
  },
  {
   "id": "kaal:claim:3002908-040",
   "url": "https://wulfkaal.github.io/claims/3002908-040",
   "claim": "American fund advisers use the smart contracting features of blockchain more frequently than European advisers, in order to build more advanced and innovative crypto businesses and business structures.",
   "type": "empirical",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and (2017). SSRN: https://ssrn.com/abstract=3002908",
   "year": "2017",
   "source_sha256": "06a7b61e75f905ee07e422e875d83a65c5033a248a6e05a213523b034e5db534",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on the nine term cluster coding of fund marketing language, n equals 74 strategies"
   ],
   "supporting_quote": "Whereas American fund advisers appear to more frequently use the smart contracting features of the technology to build more advanced and innovative crypto businesses and business structures via blockchain technology."
  },
  {
   "id": "kaal:claim:3071378-001",
   "url": "https://wulfkaal.github.io/claims/3071378-001",
   "claim": "Blockchain technology delivers anonymous and secure transactional guarantees through democratized trust and disintermediation, and its anti-discrimination features allow minorities and disenfranchised communities to benefit from the technology.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "asserted",
   "scope_conditions": [
    "public, permissionless blockchain networks"
   ],
   "supporting_quote": "Blockchain technology provides anonymous and secure transactional guarantees through democratized trust and disintermediation. Minorities and disenfranchised communities can benefit from the evolving technology and its anti-discrimination features."
  },
  {
   "id": "kaal:claim:3071378-002",
   "url": "https://wulfkaal.github.io/claims/3071378-002",
   "claim": "In the Fortune 1000 sample, minorities hold about 15 percent of employee positions but only 6 percent of management positions and 3 percent of executive level management positions, so representation falls as seniority rises.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "evidenced",
   "scope_conditions": [
    "Fortune 1000 sample dataset cited in the text"
   ],
   "supporting_quote": "In the sample dataset of Fortune 1000 companies, 37% of employees are women and about 15% are minorities.16 Management positions are held only at 17% by women and 6% by minorities.17 Executive level management positions are only at 6% women and 3% minorities.18"
  },
  {
   "id": "kaal:claim:3071378-003",
   "url": "https://wulfkaal.github.io/claims/3071378-003",
   "claim": "Because the public blockchain is public and immutable, the technology increases transparency while significantly reducing transaction costs, and intermediaries including lawyers are replaced by code, connectivity, crowd, and collaboration.",
   "type": "mechanism",
   "topics": [
    "economics",
    "decentralization",
    "law-and-legal-systems",
    "education-and-practice",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "public blockchains rather than private ones"
   ],
   "supporting_quote": "Because the blockchain (at the least the public blockchain) is in fact public and immutable, the technology increases transparency, while at the same time significantly reducing transaction costs. Intermediaries, including lawyers, are replaced by code, connectivity, crowd, and collaboration.24"
  },
  {
   "id": "kaal:claim:3071378-004",
   "url": "https://wulfkaal.github.io/claims/3071378-004",
   "claim": "Because network nodes verify and validate chain transactions before execution under a distributed consensus model, recording a fraudulent transaction on the blockchain is extremely rare.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "distributed consensus with node verification before execution"
   ],
   "supporting_quote": "Blockchain's distributed consensus model, e.g., the network \"nodes\" verify and validate chain transactions before execution of the transactions, makes it extremely rare for a fraudulent transaction to be recorded in the blockchain.34"
  },
  {
   "id": "kaal:claim:3071378-005",
   "url": "https://wulfkaal.github.io/claims/3071378-005",
   "claim": "Because each new block's hash value is generated from all previous transactions, the smallest change to the blockchain produces a different hash value, which makes any form of manipulation immediately detectable.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "chained cryptographic hashing of prior transactions"
   ],
   "supporting_quote": "smallest change to the blockchain, even a single digit/value, results in a different hash value. A different hash value makes any form of manipulation immediately detectable.37"
  },
  {
   "id": "kaal:claim:3071378-006",
   "url": "https://wulfkaal.github.io/claims/3071378-006",
   "claim": "Smart contracting often makes legal contracting unnecessary because smart contracts emulate the logic of legal contract clauses.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "transactions whose logic can be expressed in code"
   ],
   "supporting_quote": "smart contracting often makes legal contracting unnecessary as smart contracts often emulate the logic of legal contract clauses.43"
  },
  {
   "id": "kaal:claim:3071378-007",
   "url": "https://wulfkaal.github.io/claims/3071378-007",
   "claim": "Ledger-keeping legal services such as notary and registry services, legal motions practice in court, and legal title companies are likely to be among the first services to disappear.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "speculative",
   "scope_conditions": [
    "services whose core function is keeping a legal ledger"
   ],
   "supporting_quote": "Forms of keeping legal ledgers such as notary and registry services, legal motions practice in court, legal title companies, among several others, may be among the first services to disappear in the not too distant future."
  },
  {
   "id": "kaal:claim:3071378-008",
   "url": "https://wulfkaal.github.io/claims/3071378-008",
   "claim": "The lack of maturity of blockchain technology has slowed its integration into the corporate world, and the absence of a legal framework leaves the whole industry operating in a grey area of the law, which introduces uncertainty and a new level of volatility.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "before Congress adopts a policy on the treatment of blockchain services"
   ],
   "supporting_quote": "The lack of maturity has slowed the progression of integration into the corporate world. There is still a lack of legal framework for the industry to work with, which causes uncertainty. Without knowing which laws apply, the whole industry is operating in a grey area of the law."
  },
  {
   "id": "kaal:claim:3071378-009",
   "url": "https://wulfkaal.github.io/claims/3071378-009",
   "claim": "Even where a smart contract reflects the underlying bargain between the parties, lawyers may argue that smart contracts are void and unenforceable under the law.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "existing contract law doctrine applied to code-based agreements"
   ],
   "supporting_quote": "While smart contracts may reflect the underlying contract between parties, lawyers may argue that \"smart contracts\" are void and unenforceable under the law."
  },
  {
   "id": "kaal:claim:3071378-010",
   "url": "https://wulfkaal.github.io/claims/3071378-010",
   "claim": "Although blockchain technology itself offers genuine data and privacy protection, storing blockchain data across a global network of nodes often will not comply with specific consumer protection rules, directives, and guidelines.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "global node distribution under jurisdiction-specific consumer protection regimes"
   ],
   "supporting_quote": "While blockchain technology itself offers unprecedented genuine data and privacy protection, the storage of blockchain data across a global network of nodes often will not comply with specific consumer protection rules, directives, and guidelines around the"
  },
  {
   "id": "kaal:claim:3071378-011",
   "url": "https://wulfkaal.github.io/claims/3071378-011",
   "claim": "Judging by the legal issues that arose around sharing platforms, blockchain-enabled sharing services will likely not be accepted quickly or without resistance from incumbents challenged by new ways of delivering a service or product.",
   "type": "predictive",
   "topics": [
    "economics",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "services that displace incumbent delivery models"
   ],
   "supporting_quote": "The existing legal issues arising in the context of sharing platforms,55 demonstrate that future blockchain-enabled sharing services may not be accepted quickly and without resistance on the part of incumbents challenged by new ways of delivering a service or product."
  },
  {
   "id": "kaal:claim:3071378-012",
   "url": "https://wulfkaal.github.io/claims/3071378-012",
   "claim": "The DAO failed because its code had not yet been perfected: hackers took a third of the DAO tokens and transferred them to another account, and that hack together with other technological limitations led to the demise of the DAO.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "evidenced",
   "scope_conditions": [
    "The DAO, launched May 2016 on Ethereum"
   ],
   "supporting_quote": "Unfortunately, the code had not yet been perfected and hackers were able to take a third of the DAO tokens and transfer them into another account. This hack and other technological limitations, led to the demise of the DAO.58"
  },
  {
   "id": "kaal:claim:3071378-013",
   "url": "https://wulfkaal.github.io/claims/3071378-013",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "corporate environments where promotion depends on political navigation"
   ],
   "supporting_quote": "societal perceptions of minorities,59 minority groups face an uphill battle in navigating the political environment in corporate America, which in turn can significantly affect their positioning and success in corporate America."
  },
  {
   "id": "kaal:claim:3071378-014",
   "url": "https://wulfkaal.github.io/claims/3071378-014",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "evidenced",
   "scope_conditions": [
    "where superiors perceive the minority employee as value enhancing"
   ],
   "supporting_quote": "However, some evidence exists that minorities can overcome the promotion gap in corporate America if they are seen as value enhancers by their superiors."
  },
  {
   "id": "kaal:claim:3071378-015",
   "url": "https://wulfkaal.github.io/claims/3071378-015",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "high level executive promotions assessed on subjective criteria"
   ],
   "supporting_quote": "executive positions often involves skillsets that are assessed subjectively, such as leadership skills, personality, judgment, attitude, initiative etc.61 Such criteria allow supervisors and managers to apply criteria that facially seems objective, but can be distorted with relative ease."
  },
  {
   "id": "kaal:claim:3071378-016",
   "url": "https://wulfkaal.github.io/claims/3071378-016",
   "claim": "Promoted minorities do not necessarily use their new position to promote other minorities; in the existing American corporate structure they often have incentives to race to the top while lifting the ladder behind them.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "existing individualistic and aggressive American corporate culture"
   ],
   "supporting_quote": "Moreover, if minorities are promoted, they don't necessarily use their new position to promote other minorities. In other words, in the existing corporate structure in American, minorities often have incentives to race to the top lifting the ladder behind them.62"
  },
  {
   "id": "kaal:claim:3071378-017",
   "url": "https://wulfkaal.github.io/claims/3071378-017",
   "claim": "Top management retains support only so long as others in the corporate structure keep them in power, which gives incumbents an incentive to keep upper management composition unchanged.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "hierarchical corporate structures where incumbency depends on internal support"
   ],
   "supporting_quote": "Second, top management are supported so long as others in the corporate structure continue to hold them in power.64 This gives them an incentive to keep the upper management the same."
  },
  {
   "id": "kaal:claim:3071378-018",
   "url": "https://wulfkaal.github.io/claims/3071378-018",
   "claim": "Diversity training, diversity performance evaluations, and grievance procedures did not change workforce composition.",
   "type": "failure",
   "topics": [
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "evidenced",
   "scope_conditions": [
    "corporate diversity programs studied in the cited research"
   ],
   "supporting_quote": "Programs that did not support changing the workforce composition included diversity training, diversity performance evaluations, and grievance procedures.66"
  },
  {
   "id": "kaal:claim:3071378-019",
   "url": "https://wulfkaal.github.io/claims/3071378-019",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "evidenced",
   "scope_conditions": [
    "corporate diversity programs studied in the cited research"
   ],
   "supporting_quote": "In programs that did not work, managers were often defined as the source of the problem.67 Some of the more successful programs involved task forces and targeted recruiting efforts which engaged the managers in finding solutions.68"
  },
  {
   "id": "kaal:claim:3071378-020",
   "url": "https://wulfkaal.github.io/claims/3071378-020",
   "claim": "Companies should focus more on mentoring programs and less on formal evaluations, because mentorship with a superior manager helped minorities succeed.",
   "type": "design",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "corporate diversity and advancement programs"
   ],
   "supporting_quote": "Mentorship with a superior manager helped minorities to be successful.69 Such success stories seem to suggest companies should focus more on mentoring programs and less on the formal evaluations."
  },
  {
   "id": "kaal:claim:3071378-021",
   "url": "https://wulfkaal.github.io/claims/3071378-021",
   "claim": "As minority attainment of bachelors and graduate degrees rises and labor markets tighten, a business imperative for hiring minorities will emerge because firms that expand their labor pool gain an advantage over firms with limited access to diverse workers.",
   "type": "predictive",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "continued growth in minority degree attainment",
    "overall tightening of labor markets"
   ],
   "supporting_quote": "This data suggests that a business imperative for hiring minorities will be created because corporations expanded their labor pool to include minorities, given the overall tightening in the labor markets, will create an advantage for themselves"
  },
  {
   "id": "kaal:claim:3071378-022",
   "url": "https://wulfkaal.github.io/claims/3071378-022",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "hiring into roles predominantly held by white men"
   ],
   "supporting_quote": "The clone syndrome,75 e.g. companies desire to hire people that are similar to the existing work- force, can lead to minority underrepresentation in corporations.76 The clone syndrome makes it difficult for a minority and women to break into a job predominantly held by white men."
  },
  {
   "id": "kaal:claim:3071378-023",
   "url": "https://wulfkaal.github.io/claims/3071378-023",
   "claim": "A corporation that lacks diversity and allows group thinking will struggle to identify issues because it needs a fresh perspective, which harms the corporation long term by reducing its ability to identify its own strengths and weaknesses.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "boards and corporations without diverse membership"
   ],
   "supporting_quote": "Similarly, if a corporation lacks diversity and allows group thinking, the board will likely struggle to identify issues because the corporation needs a fresh perspective.77 This can harm the corporation in the long term as it is less able to identify strengths and weaknesses."
  },
  {
   "id": "kaal:claim:3071378-024",
   "url": "https://wulfkaal.github.io/claims/3071378-024",
   "claim": "The discriminatory effect of existing corporate hierarchies may originate in the education system, because children in struggling school systems lack access to the resources available in better functioning districts.",
   "type": "mechanism",
   "topics": [
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "unequal resourcing across school districts"
   ],
   "supporting_quote": "The discriminatory effect of existing corporate hierarchies may have their origin in the education system.80 Children in struggling school systems lack access to resources that better functioning school system in other districts can make available."
  },
  {
   "id": "kaal:claim:3071378-025",
   "url": "https://wulfkaal.github.io/claims/3071378-025",
   "claim": "By some estimates the lack of inclusion of minorities in corporate America costs the U.S. economy one trillion dollars per year once the pay gap between whites and minorities is taken into account.",
   "type": "empirical",
   "topics": [
    "economics",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "evidenced",
   "scope_conditions": [
    "estimates accounting for the white-minority pay gap"
   ],
   "supporting_quote": "According to some estimates, the lack of inclusion of minorities in corporate America costs the U.S. economy $1 trillion per year, taking into account the pay gap between whites and minorities. 85"
  },
  {
   "id": "kaal:claim:3071378-026",
   "url": "https://wulfkaal.github.io/claims/3071378-026",
   "claim": "Allowing minorities onto the board increases creativity through the different perspectives they represent, which acts as a defense against groupthink.",
   "type": "mechanism",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "corporate boards"
   ],
   "supporting_quote": "Board diversity benefits corporations. By allowing minorities on the board, creativity increases with the different perspectives represented by minorities which acts as a defense against groupthink.87"
  },
  {
   "id": "kaal:claim:3071378-027",
   "url": "https://wulfkaal.github.io/claims/3071378-027",
   "claim": "Because directors must act in good faith and in the best interests of the corporation, and a diverse board helps protect against group thinking, fiduciary obligations supply a business reason for board diversity.",
   "type": "normative",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "boards subject to fiduciary duties of care and good faith"
   ],
   "supporting_quote": "Arguably, a diverse board helps protect against group thinking which is in the best interest of the corporation."
  },
  {
   "id": "kaal:claim:3071378-028",
   "url": "https://wulfkaal.github.io/claims/3071378-028",
   "claim": "Minority board members are expected to bring in minority clientele, so where the corporation's product is not used by minorities the minority director is perceived as a failure, which stigmatizes minority board members and damages their careers.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "corporations whose products are not used by minority consumers"
   ],
   "supporting_quote": "However, if the product the respective corporation produces is not used by minorities, the minority board member will be perceived as a failure for not bringing in minority clients.94 This may stigmatize minority board members and impact their careers."
  },
  {
   "id": "kaal:claim:3071378-029",
   "url": "https://wulfkaal.github.io/claims/3071378-029",
   "claim": "Because a small group of minorities serves on a large number of boards, corporations in fact lose the diversity of viewpoints they were seeking when appointing a minority board member.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "overextended minority directors sitting on many boards"
   ],
   "supporting_quote": "By having a small group of minorities who serve on a large number of boards, corporations are in fact losing the diversity of viewpoints they were initially looking for in a minority board member."
  },
  {
   "id": "kaal:claim:3071378-030",
   "url": "https://wulfkaal.github.io/claims/3071378-030",
   "claim": "By establishing a network of transacting parties that trust each other despite anonymity, blockchain technology enables unbiased transactions and eliminates prejudices against minorities.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous or pseudonymous transacting parties on a blockchain network"
   ],
   "supporting_quote": "By establishing a network of transacting parties that trust each other despite anonymity, the technology enables unbiased transactions and eliminates prejudices against minorities."
  },
  {
   "id": "kaal:claim:3071378-031",
   "url": "https://wulfkaal.github.io/claims/3071378-031",
   "claim": "Because transacting parties judge transaction parameters and products on quality perceptions rather than on less rational and biased factors, quality becomes the true deciding factor in the marketplace, which eliminates prejudices.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain-enabled marketplaces where counterparty identity is not salient"
   ],
   "supporting_quote": "transaction parameters or products are judged by the transacting parties based on quality perceptions not based-on other less rational and biased factors. This allows quality of the transaction and/or final product to be the true deciding factor in the market place, eliminating prejudices."
  },
  {
   "id": "kaal:claim:3071378-032",
   "url": "https://wulfkaal.github.io/claims/3071378-032",
   "claim": "Eliminating bias-driven inefficiencies removes the associated diseconomies of scale and waste, estimated at around one trillion dollars annually in the existing centralized business infrastructure.",
   "type": "empirical",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "existing centralized business infrastructure"
   ],
   "supporting_quote": "eliminates bias-driven inefficiencies in the market economy and the associated diseconomies of scale and waste, which have been estimated at around $1 trillion dollars annually in the existing centralized business infrastructure.103"
  },
  {
   "id": "kaal:claim:3071378-033",
   "url": "https://wulfkaal.github.io/claims/3071378-033",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "dao",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "DAO structures with no directors, managers, or employees"
   ],
   "supporting_quote": "People who work for a DAO are free from existing corporate hierarchies and their possible discriminatory effects. People who work for a DAO would not be subject to a supervisor, boss, or CEO."
  },
  {
   "id": "kaal:claim:3071378-034",
   "url": "https://wulfkaal.github.io/claims/3071378-034",
   "claim": "Disenfranchised communities will increasingly be able to afford the buy-in to a DAO, and increasing access to DAOs eradicates a possible income based or wealth based bias, since participation requires purchasing a coin or token.",
   "type": "predictive",
   "topics": [
    "dao",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "asserted",
   "scope_conditions": [
    "DAO membership conditioned on acquiring a token"
   ],
   "supporting_quote": "Disenfranchised communities will increasingly be able to afford the buy-in into a DAO. The increasing access to DAOs eradicates a possible income based or wealth based bias because participants in the DAO are required to buy into the DAO."
  },
  {
   "id": "kaal:claim:3071378-035",
   "url": "https://wulfkaal.github.io/claims/3071378-035",
   "claim": "Because the total supply of DAO tokens is pre-determined in code, dilution by central administrators such as government officials or self-interested or biased executives is impossible.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs with a fixed token supply fixed in open source code"
   ],
   "supporting_quote": "because the total supply of tokens is pre-determined in the DAO code, dilution by central administrators such as government officials or self- interested or biased executives/supervisors/CEOs is impossible, which further illustrates the power of blockchain structures such as the DAO."
  },
  {
   "id": "kaal:claim:3071378-036",
   "url": "https://wulfkaal.github.io/claims/3071378-036",
   "claim": "In a DAO, disenfranchised community members cannot be judged by race or cultural biases because performance in an anonymized proposal voting scheme is the only basis for assessment and payment.",
   "type": "mechanism",
   "topics": [
    "dao",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "anonymized proposal voting and token-based remuneration"
   ],
   "supporting_quote": "this means they will not and cannot be judged by race or cultural biases. Instead, their performance in an anonymized proposal voting scheme is the only basis for assessment and payment."
  },
  {
   "id": "kaal:claim:3071378-037",
   "url": "https://wulfkaal.github.io/claims/3071378-037",
   "claim": "Reputational penalties for non-performance in a DAO are entirely free from racial implications because token holders are unlikely to even know each other.",
   "type": "mechanism",
   "topics": [
    "dao",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "pseudonymous token holder communities"
   ],
   "supporting_quote": "Crucially, non- performance reputational penalties are entirely free from racial implications as the token holders are unlikely to even know each other."
  },
  {
   "id": "kaal:claim:3071378-038",
   "url": "https://wulfkaal.github.io/claims/3071378-038",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "dao",
    "economics",
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "self-governing DAO structures without supervisors"
   ],
   "supporting_quote": "Unlike in traditional hierarchical organization where face-time and unproductive meetings are the norm, the self-governing DAO token optimizer avoids any such corporate hierarchy inefficiencies and frees herself from top-down inefficiencies and bad outcomes."
  },
  {
   "id": "kaal:claim:3071378-039",
   "url": "https://wulfkaal.github.io/claims/3071378-039",
   "claim": "The value to effort focus of DAO work flows makes racial and cultural biases much less pronounced and protects disenfranchised communities.",
   "type": "mechanism",
   "topics": [
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "DAO work flows organized around value contribution"
   ],
   "supporting_quote": "At the same time, the value to effort focus of work flows makes racial and cultural biases much less pronounced and protects disenfranchised communities."
  },
  {
   "id": "kaal:claim:3071378-040",
   "url": "https://wulfkaal.github.io/claims/3071378-040",
   "claim": "Equality is a natural byproduct of the blockchain-driven evolution of the crypto economy, because the trust enhancing consensus model, smart contracting in anonymous networks, and DAOs together allow a more equal society to evolve.",
   "type": "predictive",
   "topics": [
    "economics",
    "consensus-and-security",
    "dao",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378",
   "year": "2017",
   "source_sha256": "125f01674d13b6bb0310c4be7a20ff538dccbc36ecf352770b3c580028387edd",
   "confidence": "argued",
   "scope_conditions": [
    "continued evolution of the crypto economy"
   ],
   "supporting_quote": "Equality is a natural byproduct of the blockchain-driven evolution of the crypto economy. Blockchain's trust enhancing consensus model, smart contracting in anonymous networks, and DAOs allow for the evolution of a more equal society."
  },
  {
   "id": "kaal:claim:2992962-001",
   "url": "https://wulfkaal.github.io/claims/2992962-001",
   "claim": "The existing legal infrastructure cannot address the legal challenges presented by crypto transaction disputes, because it is impossible to consistently identify the parties to a dispute arising from crypto transactions on the blockchain.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "public blockchains where parties transact anonymously"
   ],
   "supporting_quote": "The existing legal infrastructure cannot address legal challenges presented by crypto transaction disputes. For instance, it is impossible to consistently identify the parties to a dispute in the context of crypto transactions on the blockchain."
  },
  {
   "id": "kaal:claim:2992962-002",
   "url": "https://wulfkaal.github.io/claims/2992962-002",
   "claim": "The authors stipulate distributed jurisdiction as a regulatory alternative in which conflict resolution for blockchain transactions is supplied by governance solutions inherent in the blockchain technology itself rather than by external legal authorities.",
   "type": "definitional",
   "topics": [
    "law-and-legal-systems",
    "governance-design",
    "blockchain",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "asserted",
   "supporting_quote": "We suggest a regulatory alternative for blockchain-based conflict resolution by way of governance solutions inherent in the blockchain technology itself. We call this alternative \"distributed jurisdiction\"."
  },
  {
   "id": "kaal:claim:2992962-003",
   "url": "https://wulfkaal.github.io/claims/2992962-003",
   "claim": "If the jurisdictional means necessary for conflict resolution mechanisms covering Ethereum blockchain based smart contracting are absent, consumers will mistrust the new technology, and that mistrust can undermine the evolution of the blockchain based crypto economy.",
   "type": "predictive",
   "topics": [
    "reputation",
    "law-and-legal-systems",
    "economics",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "Ethereum blockchain based smart contracting"
   ],
   "supporting_quote": "Not having the required jurisdictional means necessary for conflict resolution mechanisms for Ethereum blockchain-based smart contracting, may invoke consumer mistrust in the new technology. This can then undermine the evolution of the blockchain-based crypto economy."
  },
  {
   "id": "kaal:claim:2992962-004",
   "url": "https://wulfkaal.github.io/claims/2992962-004",
   "claim": "Personal jurisdiction technically still applies to parties transacting in encrypted distributed smart contracts, but the practicability of enforcement is impossible because physical identifiers are separated from the encrypted distributed contracts.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "parties anonymized through public-key encryption and virtual private networks"
   ],
   "supporting_quote": "While technically personal jurisdiction would still apply to parties transacting in encrypted distributed smart contracts, the practicability of enforcement is impossible given the separation of physical identifiers and encrypted distributed smart contracts."
  },
  {
   "id": "kaal:claim:2992962-005",
   "url": "https://wulfkaal.github.io/claims/2992962-005",
   "claim": "Even if every user and supporter of the blockchain and their locations were known, it would still not be possible to exercise jurisdiction in the traditional meaning of the word, because the system operates largely autonomously.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "law-and-legal-systems",
    "compliance",
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "autonomously run public blockchains"
   ],
   "supporting_quote": "Because the system operates largely autonomously, even if every user and supporter of the blockchain and their location were known, it would still not be possible to exercise jurisdiction in the traditional meaning of the word."
  },
  {
   "id": "kaal:claim:2992962-006",
   "url": "https://wulfkaal.github.io/claims/2992962-006",
   "claim": "Because the challenges crypto transactions pose to the existing legal and jurisdictional infrastructure are severe, including good governance in crypto transactions requires instituting governance solutions inherent in the blockchain technology itself.",
   "type": "normative",
   "topics": [
    "governance-design",
    "law-and-legal-systems",
    "dynamic-regulation",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "supporting_quote": "Because of the severity of these challenges for the existing legal and jurisdictional infrastructure, we conclude that the sensible approach for including good governance in crypto transactions necessitates instituting governance solutions inherent in the blockchain technology itself."
  },
  {
   "id": "kaal:claim:2992962-007",
   "url": "https://wulfkaal.github.io/claims/2992962-007",
   "claim": "Proof of work mining carries significant externalities: the authors estimate that the total energy cost of running the global network of computers solving proof of work puzzles was around 700 million US dollars per year before publication.",
   "type": "empirical",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "evidenced",
   "scope_conditions": [
    "proof of work consensus, before publication of the article in 2017"
   ],
   "supporting_quote": "One problem with proof-of-work mining is that there are significant externalities. Before the publication of this article, the total energy costs for running the global network of computers devoted to solving the proof-of-work puzzles was estimated at around $700 million USD per year."
  },
  {
   "id": "kaal:claim:2992962-008",
   "url": "https://wulfkaal.github.io/claims/2992962-008",
   "claim": "Anonymity survives the blockchain's permanent public record because a new private key can be created for each transaction, so although public key addresses are stored eternally, each transaction allows an entirely new cryptographically secured private identity.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "public-key cryptography as implemented in bitcoin and Ethereum"
   ],
   "supporting_quote": "So, while we can track the public key of the addresses of each transaction, and that information is stored eternally in the blockchain, each transaction allows for an entirely new private identity which is cryptographically secured."
  },
  {
   "id": "kaal:claim:2992962-009",
   "url": "https://wulfkaal.github.io/claims/2992962-009",
   "claim": "A government cannot control a blockchain by pressuring individuals within its territory; it would need complete control of 51 percent of the anonymous global users before it could change any part of the code.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "consensus-and-security",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized public blockchains"
   ],
   "supporting_quote": "If the U.S. government attempted to exert power over the system by influencing any number of individuals within their jurisdiction, they would need complete control of 51% of the anonymous global users before they could change any part of the code."
  },
  {
   "id": "kaal:claim:2992962-010",
   "url": "https://wulfkaal.github.io/claims/2992962-010",
   "claim": "The authors treat the near absence of decided case law on crypto smart contracting disputes as evidence that the existing legal infrastructure is too far removed from crypto dispute resolution, or incapable of adequately addressing the disputes crypto transactions generate.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "evidenced",
   "scope_conditions": [
    "US federal and state case law searched before publication in 2017"
   ],
   "supporting_quote": "We see this lack of existing case law in the context of crypto smart contracting disputes as evidence that the existing legal infrastructure may be too far removed from crypto dispute resolution or incapable of adequately addressing the types of disputes generated by crypto transactions."
  },
  {
   "id": "kaal:claim:2992962-011",
   "url": "https://wulfkaal.github.io/claims/2992962-011",
   "claim": "Uniform Law Commission style registration of virtual currency businesses may give courts more information about registered businesses, but jurisdiction over the parties to a smart contract remains largely elusive because smart contracting is distributed and global.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "the draft Uniform Regulation of Virtual Currency Business Act as released in July 2017"
   ],
   "supporting_quote": "Courts may be able to obtain more information about registered businesses under the uniform laws but jurisdiction over the parties to a smart contract will still largely be elusive given the distributed and global nature of smart contracting."
  },
  {
   "id": "kaal:claim:2992962-012",
   "url": "https://wulfkaal.github.io/claims/2992962-012",
   "claim": "Regulating blockchain through the non anonymous application of the technology creates large inefficiencies that will be bypassed by the more efficient anonymous applications, and it is for those more advanced applications that a system of distributed jurisdiction will be needed.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "regulatory-failure",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "uniform application of Bank Secrecy Act and anti money laundering compliance to virtual currency businesses"
   ],
   "supporting_quote": "However, that application of the technology creates large inefficiencies that will be bypassed by the more efficient applications of the technology in an anonymous setting. It is for this more advanced application of blockchain technology that a system of distributed jurisdiction will be needed."
  },
  {
   "id": "kaal:claim:2992962-013",
   "url": "https://wulfkaal.github.io/claims/2992962-013",
   "claim": "Proving personal jurisdiction over smart contracting parties by physical presence, domicile or place of business, consent, or minimum contacts becomes impossible, because none of these elements are known of the parties to a smart contract.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "smart contracts where parties are anonymized by public-key encryption and VPNs"
   ],
   "supporting_quote": "To illustrate this point, proving personal jurisdiction by means of 1. Physical Presence, 2. Domicile/Place of Business, 3. Consent, and 4. Minimum Contacts becomes impossible as none of these elements are known of the parties in a smart contract."
  },
  {
   "id": "kaal:claim:2992962-014",
   "url": "https://wulfkaal.github.io/claims/2992962-014",
   "claim": "Even if a state or the federal government passed a law granting a court authority over blockchain smart contract disputes, it is hard to see how the court could in fact exercise that authority short of limiting access to the internet itself.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous parties transacting on public blockchains"
   ],
   "supporting_quote": "But even if a given State or even the Federal Government were to pass a law that would grant such authority to a court, it is hard to see how the court would in fact exercise such authority, short of limiting access to the internet itself."
  },
  {
   "id": "kaal:claim:2992962-015",
   "url": "https://wulfkaal.github.io/claims/2992962-015",
   "claim": "Not all smart contracts are fully anonymous and untouchable by traditional jurisdictional means, because contracts with a physical performance element, such as peer to peer transportation, do not automatically anonymize the parties.",
   "type": "condition",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "consumer smart contracts with a physical performance element"
   ],
   "supporting_quote": "Not all smart contracts are fully anonymous and untouchable by traditional jurisdictional means. Some smart contracts will not automatically anonymize the parties because there is a physical element to such a consumer contract."
  },
  {
   "id": "kaal:claim:2992962-016",
   "url": "https://wulfkaal.github.io/claims/2992962-016",
   "claim": "Breach of a smart contract is arguably not even possible, because the contract simply will not execute if a parameter is not fulfilled.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "fully self executing smart contracts on Ethereum"
   ],
   "supporting_quote": "Arguably, breach of a smart contract is not even possible, the contract simply will not execute if a parameter is not fulfilled."
  },
  {
   "id": "kaal:claim:2992962-017",
   "url": "https://wulfkaal.github.io/claims/2992962-017",
   "claim": "Because smart contracts are coded for computer programming rather than for a human observer, courts may not be able to hypothesize a reasonable human's interpretation of a given smart contract.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "contract interpretation disputes over coded smart contracts"
   ],
   "supporting_quote": "Because of the emphasis on code for computer programming (and artificial intelligence), courts may not be able to hypothesize a reasonable human's interpretation of a given smart contract."
  },
  {
   "id": "kaal:claim:2992962-018",
   "url": "https://wulfkaal.github.io/claims/2992962-018",
   "claim": "To institute traditional remedies where a smart contract transaction disadvantages one of the parties, courts would have to change the blockchain, and that is computationally and practically impossible.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "transactions already executed and added to an immutable blockchain"
   ],
   "supporting_quote": "courts would have to change the blockchain in order to institute remedies in the traditional sense that could pertain to the smart contract in question. However, that scenario is computationally and practically impossible."
  },
  {
   "id": "kaal:claim:2992962-019",
   "url": "https://wulfkaal.github.io/claims/2992962-019",
   "claim": "Real world court decisions on smart contract disputes, even where attainable, may not carry the same legitimacy and authority for the parties as intra-blockchain dispute resolution mechanisms.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "blockchain",
    "governance-design",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "supporting_quote": "In other words, real world court decisions even if attainable may not have the same legitimacy and authority as other intra-blockchain dispute resolution mechanism may have."
  },
  {
   "id": "kaal:claim:2992962-020",
   "url": "https://wulfkaal.github.io/claims/2992962-020",
   "claim": "Even if courts were given authority to order changes to smart contract code, a programmer coerced by a court could not override the will of the majority of anonymous international blockchain users to make an effective change.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized blockchains maintained by an anonymous global user majority"
   ],
   "supporting_quote": "Even if courts were given such authority, no programmer so coerced by the court would be able to override the will of the majority of anonymous international blockchain users to make an effective change."
  },
  {
   "id": "kaal:claim:2992962-021",
   "url": "https://wulfkaal.github.io/claims/2992962-021",
   "claim": "Because courts cannot effectuate resolutions to disputes arising from blockchain based smart contracts, blockchain based resolution mechanisms are the only possible recourse for smart contract disputes.",
   "type": "normative",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "fully decentralized and autonomous blockchains"
   ],
   "supporting_quote": "Therefore, blockchain-based resolution mechanisms are the only possible recourse for smart contract disputes."
  },
  {
   "id": "kaal:claim:2992962-022",
   "url": "https://wulfkaal.github.io/claims/2992962-022",
   "claim": "Hybrid approaches and meta structures that connect the existing legal and regulatory infrastructure with blockchain based smart contracting will accelerate rather than slow the bifurcation of the jurisdictional infrastructure into traditional and crypto prongs.",
   "type": "predictive",
   "topics": [
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "transition phase of the crypto economy"
   ],
   "supporting_quote": "Hybrid approaches and meta-structures that attempt to connect the existing legal and regulatory infrastructure with the blockchain-based world of smart contracting may ultimately accelerate the bifurcation of the jurisdictional infrastructure into traditional and crypto prongs"
  },
  {
   "id": "kaal:claim:2992962-023",
   "url": "https://wulfkaal.github.io/claims/2992962-023",
   "claim": "The legacy infrastructure bridge between fiat and crypto currencies accelerates the growth of the blockchain based economy and infrastructure, but it cannot curtail the anonymous nature of that economy.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "fiat to crypto currency conversion channels"
   ],
   "supporting_quote": "The legacy infrastructure bridge (fiat to crypto currencies) accelerates the growth of the blockchain-based economy and infrastructure but cannot curtail its anonymous nature."
  },
  {
   "id": "kaal:claim:2992962-024",
   "url": "https://wulfkaal.github.io/claims/2992962-024",
   "claim": "Governing the creation and use of a blockchain may be the only practical way of exercising any form of traditional jurisdiction over blockchain technology.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "blockchain",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "blockchains whose creators live in identifiable geographic locations"
   ],
   "supporting_quote": "In fact, governing the creation and use of a blockchain may be the only practical way of exercising any form of traditional jurisdiction over blockchain."
  },
  {
   "id": "kaal:claim:2992962-025",
   "url": "https://wulfkaal.github.io/claims/2992962-025",
   "claim": "Coding regulatory conditions into smart contracts lowers regulators' cost of supervision and enforcement while substantially increasing their oversight, because a smart contract cannot execute unless all regulatory conditions and parameters are fully complied with.",
   "type": "design",
   "topics": [
    "compliance",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "hybrid approach where existing legal rules are coded as smart contract parameters"
   ],
   "supporting_quote": "Second, because smart contracts cannot execute unless all regulatory conditions and parameters are fully complied with, regulators lower their cost of supervision and enforcement while substantially increasing their oversight"
  },
  {
   "id": "kaal:claim:2992962-026",
   "url": "https://wulfkaal.github.io/claims/2992962-026",
   "claim": "The benefits of coding existing law into smart contracts are only temporary, because as smart contracting evolves over time fewer smart contracting solutions will have a real world equivalent.",
   "type": "predictive",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "over the course of smart contracting's evolution"
   ],
   "supporting_quote": "The benefits of this hybrid approach are only temporary. As smart contracting evolves over time, fewer smart contracting solutions will have a real-world equivalent."
  },
  {
   "id": "kaal:claim:2992962-027",
   "url": "https://wulfkaal.github.io/claims/2992962-027",
   "claim": "Without strong external pressure from existing regulatory structures and a distributed jurisdiction responsive to that pressure, the anonymity of smart contracting will ultimately undermine the coding of existing legal rules into smart contracts.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous parties transacting through Ethereum and virtual private networks"
   ],
   "supporting_quote": "Without strong external pressures from existing regulatory structures and a distributed jurisdiction for crypto transactions that is responsive to such pressure, the anonymity of smart contracting will ultimately undermine the coding of existing legal rules into smart contracts."
  },
  {
   "id": "kaal:claim:2992962-028",
   "url": "https://wulfkaal.github.io/claims/2992962-028",
   "claim": "The first of the two core requirements the authors set for distributed jurisdiction is that the anonymity of blockchain based smart contracting be maintained as the technology evolves.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "asserted",
   "supporting_quote": "Our proposal in this paper for a distributed jurisdiction over blockchains has to fulfill two core requirements: 1. The anonymity of blockchain-based smart contracting has to be maintained as the technology evolves."
  },
  {
   "id": "kaal:claim:2992962-029",
   "url": "https://wulfkaal.github.io/claims/2992962-029",
   "claim": "The second core requirement of distributed jurisdiction is governance from within the blockchain technology itself, which is what allows the problems inherent in blockchain based smart contracts to be effectively addressed.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "blockchain",
    "governance-design",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "supporting_quote": "Distributed Jurisdictional means necessitate governance from within the blockchain technology itself to effectively address the problems inherent in blockchain-based smart contracts."
  },
  {
   "id": "kaal:claim:2992962-030",
   "url": "https://wulfkaal.github.io/claims/2992962-030",
   "claim": "Problems with smart contracts are inevitable because of subjectivity in human relationships, bounded rationality of coders and contracting parties, incomplete foresight, incomplete information, and opportunistic behavior.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "commercial smart contracting between human parties"
   ],
   "supporting_quote": "Problems with smart contracts are inevitable because of the subjectivity in human relationship, bounded rationality of coders and contracting parties, incomplete foresight, incomplete information, and opportunistic behavior."
  },
  {
   "id": "kaal:claim:2992962-031",
   "url": "https://wulfkaal.github.io/claims/2992962-031",
   "claim": "As blockchain use grows, node operation will eventually require special equipment affordable only by large corporations in the existing legal infrastructure, creating the possibility of dangerous centralization and a threat to anonymity.",
   "type": "predictive",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "blockchains with eternal storage and rapidly growing size"
   ],
   "supporting_quote": "which will eventually require special equipment that can only be afforded by large corporations in the existing legal infrastructure. With such power for large corporations comes the possibility of dangerous centralization and a threat to undermining anonymity."
  },
  {
   "id": "kaal:claim:2992962-032",
   "url": "https://wulfkaal.github.io/claims/2992962-032",
   "claim": "Giving disputants the power to select between notary pools, as OpenBazaar does, is a clear improvement over Aragon's method of completely random selection of judges from the entire group of users posting bonds.",
   "type": "design",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "distributed anonymous trading platforms with arbiter pools"
   ],
   "supporting_quote": "However, OpenBazaar's more complex structure giving disputants the power of selecting between notary pools is a clear improvement over Aragon's method of completely random selection from the entire group of users posting judge bonds."
  },
  {
   "id": "kaal:claim:2992962-033",
   "url": "https://wulfkaal.github.io/claims/2992962-033",
   "claim": "Aragon appears not to post even a summary of its arbiters' reasoning, which may cause the losing party to second guess the legitimacy of the entire Aragon dispute resolution mechanism.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "the Aragon Network dispute resolution design as described in its whitepaper"
   ],
   "supporting_quote": "In fact, Aragon appears to not even post a summary of their arbiters' reasoning which may cause the losing party to second guess the legitimacy of the entire dispute resolution mechanism in Aragon."
  },
  {
   "id": "kaal:claim:2992962-034",
   "url": "https://wulfkaal.github.io/claims/2992962-034",
   "claim": "Without judge expertise in the subject matter of a smart contract dispute, user confidence in effective and fair conflict resolution is undermined, which reduces confidence in crypto transactions as a whole and can undermine the evolution of the crypto economy.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "dispute resolution systems that select judges at random from all users, such as Aragon"
   ],
   "supporting_quote": "Without judge's expertise in a given smart contract subject matter of a dispute user confidence in effective and fair conflict resolution is undermined which leads to overall less confidence in crypto transactions as a whole and can undermine the evolution of the crypto economy."
  },
  {
   "id": "kaal:claim:2992962-035",
   "url": "https://wulfkaal.github.io/claims/2992962-035",
   "claim": "The economic incentive for Aragon judges to follow the more popular vote, since judges keep their bond only if they voted with the majority, calls into question whether the mechanism delivers effective, non arbitrary, and fair dispute resolution.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "governance-design",
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "the Aragon bond and majority reward mechanism, despite anonymous voting"
   ],
   "supporting_quote": "the economic incentives for judges to follow a more popular vote (in the Aragon system judges keep their bond if they voted with the majority), despite the overall anonymity of the voting, may call required notions of effective, non- arbitrary, and fair dispute resolution mechanisms into question."
  },
  {
   "id": "kaal:claim:2992962-036",
   "url": "https://wulfkaal.github.io/claims/2992962-036",
   "claim": "Because of the fees attached to its extra verification layer, the OpenBazaar dispute resolution mechanism creates substantial transaction costs that pure Ethereum based self executing smart contracts avoid.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "Ricardian contracts that attach a notary to every contract"
   ],
   "supporting_quote": "Because of these fees, the OpeanBazaar dispute resolution mechanism creates substantial transaction costs that can be avoided by pure Ethereum-based self-executing smart contracts."
  },
  {
   "id": "kaal:claim:2992962-037",
   "url": "https://wulfkaal.github.io/claims/2992962-037",
   "claim": "In contrast with OpenBazaar, the authors' proposed open source ecosystem allows dispute resolution only if and when a smart contract has actually resulted in a dispute, which keeps smart contracting transaction costs near zero.",
   "type": "design",
   "topics": [
    "economics",
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "supporting_quote": "In contrast with the OpenBazaar solutions, our proposed open source ecosystem allows dispute resolution only if and when a smart contract has resulted in a dispute."
  },
  {
   "id": "kaal:claim:2992962-038",
   "url": "https://wulfkaal.github.io/claims/2992962-038",
   "claim": "Dual integration, as the authors define it, is the use of legacy legal infrastructure in smart contracting dispute resolution, such as Ricardian contracts, in combination with intra-blockchain systems for resolving smart contract disputes.",
   "type": "definitional",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "asserted",
   "scope_conditions": [
    "the implementation and transition phase of the crypto economy"
   ],
   "supporting_quote": "Dual integration refers to the use of legacy legal infrastructure in smart contracting dispute resolution, such as via the Ricardian contracts, among other measures, in combination with intra-blockchain systems for the resolution of smart contract disputes."
  },
  {
   "id": "kaal:claim:2992962-039",
   "url": "https://wulfkaal.github.io/claims/2992962-039",
   "claim": "Because no conceivable way exists to permanently hide an arbiter's reputation from the arbiter in an open system, the corruption risk created by high reputation arbiters becoming valued counselors for disputants is an insoluble problem with the authors' own proposal.",
   "type": "failure",
   "topics": [
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "open reputation systems for anonymous arbiters"
   ],
   "supporting_quote": "Because no conceivable way exists to permanently hide an arbiter's reputation from the arbiter in an open system, this is an insoluble problem with the proposal."
  },
  {
   "id": "kaal:claim:2992962-040",
   "url": "https://wulfkaal.github.io/claims/2992962-040",
   "claim": "For crypto economy participants who wish to minimize the transaction costs of dual integration and retain anonymity, the authors' proposed open source platform ecosystem is more likely than all other available solutions to provide legal equivalence of dispute resolution mechanisms.",
   "type": "normative",
   "topics": [
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Craig Calcaterra, Crypto Transaction Dispute Resolution (2017). SSRN: https://ssrn.com/abstract=2992962",
   "year": "2017",
   "source_sha256": "80b92e67594394e38af41b769327936833de8e25d6cf3def966a6ba13bc83d17",
   "confidence": "argued",
   "scope_conditions": [
    "participants who want both low transaction costs and continuing anonymity"
   ],
   "supporting_quote": "For participants in the crypto economy who wish to minimize the transaction costs of dual integration and retain anonymity, our proposed open source platform ecosystem is more likely than all other available solutions to provide legal equivalence of dispute resolution mechanisms."
  },
  {
   "id": "kaal:claim:2957645-001",
   "url": "https://wulfkaal.github.io/claims/2957645-001",
   "claim": "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.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "asserted",
   "supporting_quote": "Contingent capital securities are a largely overlooked dynamic regulatory mechanism."
  },
  {
   "id": "kaal:claim:2957645-002",
   "url": "https://wulfkaal.github.io/claims/2957645-002",
   "claim": "Facts-based, ex-post, trial-and-error rulemaking cannot anticipate the regulatory issues created by innovation, so rulemakers may not realize, or may realize far too late, what new regulatory demands a given innovation generates.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "regulation of innovative products and markets",
    "existing regulatory framework built on stable rules"
   ],
   "supporting_quote": "First, because facts-based, ex-post, trial-and-error rulemaking cannot anticipate regulatory issues created by innovation, rulemakers may not realize—or may realize much too late—what new regulatory demands apply to a given innovation and its associated regulatory issue."
  },
  {
   "id": "kaal:claim:2957645-003",
   "url": "https://wulfkaal.github.io/claims/2957645-003",
   "claim": "Formal rulemaking in the existing regulatory infrastructure is too time consuming, and the speed of product innovation frequently renders regulations pertaining to an innovative product obsolete before those regulations are even finalized.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "environments of exponential or rapid product innovation",
    "formal notice and comment style rulemaking"
   ],
   "supporting_quote": "Formal rulemaking in the existing regulatory infrastructure is overly time-consuming7 and the speed of product innovation often makes regulations pertaining to an innovative product obsolete before such regulations are finalized.8"
  },
  {
   "id": "kaal:claim:2957645-004",
   "url": "https://wulfkaal.github.io/claims/2957645-004",
   "claim": "The existing regulatory infrastructure, resting on stable and presumptively optimal rules, is largely incapable of addressing the unknown future contingencies associated with disruptive innovation.",
   "type": "failure",
   "topics": [
    "innovation",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "regulation confronting disruptive innovation",
    "reliance on stable and presumptively optimal rules"
   ],
   "supporting_quote": "Finally, the existing regulatory infrastructure, with stable and presumptively optimal rules, is largely incapable of addressing the unknown future contingencies associated with disruptive innovation."
  },
  {
   "id": "kaal:claim:2957645-005",
   "url": "https://wulfkaal.github.io/claims/2957645-005",
   "claim": "Because the pace of innovation continues to accelerate, future contingencies in rulemaking are likely to grow substantially, which makes the dynamic anticipation of those contingencies increasingly important for rulemaking.",
   "type": "predictive",
   "topics": [
    "innovation",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "continued exponential growth of technology and innovation"
   ],
   "supporting_quote": "Given the pace of innovation,9 future contingencies in rulemaking are likely to grow substantially, making the dynamic anticipation of future contingencies increasingly important for rulemaking."
  },
  {
   "id": "kaal:claim:2957645-006",
   "url": "https://wulfkaal.github.io/claims/2957645-006",
   "claim": "The issuance of contingent capital securities is a promising dynamic regulatory mechanism that can help address the suboptimal regulatory outcomes associated with disruptive innovation.",
   "type": "design",
   "topics": [
    "contingent-capital",
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "financial institutions capable of issuing contingent capital securities"
   ],
   "supporting_quote": "The issuance of contingent capital securities (CCS) is a promising dynamic regulatory mechanism that can help address the aforementioned suboptimal regulatory outcomes associated with disruptive innovation."
  },
  {
   "id": "kaal:claim:2957645-007",
   "url": "https://wulfkaal.github.io/claims/2957645-007",
   "claim": "By internalizing the costs of bank failure, contingent capital may be able to minimize moral hazard, avoid financial contagion, and limit systemic risk.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "systemic-risk",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "bank failure costs are actually borne by the institution's own capital structure"
   ],
   "supporting_quote": "By internalizing bank failure costs, contingent capital may be able to minimize moral hazard,14 avoid financial contagion,15 and limit systemic risk.16"
  },
  {
   "id": "kaal:claim:2957645-008",
   "url": "https://wulfkaal.github.io/claims/2957645-008",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "dynamic elements are used as a supplement rather than a replacement for existing rulemaking"
   ],
   "supporting_quote": "supplementing the regulatory infrastructure with dynamic elements can reduce suboptimal regulatory outcomes.17 Dynamic regulation as a regulatory supplement can help address the shortcomings of the existing rulemaking framework and curtail increased demands on the institutional infrastructure."
  },
  {
   "id": "kaal:claim:2957645-009",
   "url": "https://wulfkaal.github.io/claims/2957645-009",
   "claim": "Increased availability of relevant, decentralized, and timely information for rulemaking is what makes anticipatory action possible, because such information facilitates rulemakers' predictions and anticipation of otherwise unforeseeable contingencies.",
   "type": "condition",
   "topics": [
    "dynamic-regulation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "a dynamic regulatory framework in which such information flows exist"
   ],
   "supporting_quote": "The increased availability of relevant, decentralized, and timely information for rulemaking in a dynamic framework can help facilitate rulemakers' predictions and anticipation of otherwise unforeseeable contingencies, making anticipatory action by rulemakers possible.19"
  },
  {
   "id": "kaal:claim:2957645-010",
   "url": "https://wulfkaal.github.io/claims/2957645-010",
   "claim": "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.",
   "type": "definitional",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "asserted",
   "supporting_quote": "Feedback effects occur when an informational exchange process exists between public and private rulemakers, outcomes and institutions, rules and rulemaking processes, and jurisdictions.20"
  },
  {
   "id": "kaal:claim:2957645-011",
   "url": "https://wulfkaal.github.io/claims/2957645-011",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "an informational exchange process between regulated entities and rulemakers is in place"
   ],
   "supporting_quote": "Rather than acquiring necessary information after rules have emerged as suboptimal, feedback effects help increase the availability of relevant information for rulemaking ex ante and anticipate necessary revisions"
  },
  {
   "id": "kaal:claim:2957645-012",
   "url": "https://wulfkaal.github.io/claims/2957645-012",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "institution-specific and timely information is actually available to rulemakers"
   ],
   "supporting_quote": "Anticipatory regulation uses institution-specific, timely information and feedback effects to create new rules.24 Anticipatory dynamic regulation can help minimize costly and suboptimal ex-post, trial-and-error experimentation with stable and presumptively optimal rules.25"
  },
  {
   "id": "kaal:claim:2957645-013",
   "url": "https://wulfkaal.github.io/claims/2957645-013",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "innovation",
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "regulators can observe the content of DPAs and venture capital investment trends"
   ],
   "supporting_quote": "DPAs and venture capital investment decisions increase the availability of relevant, decentralized, and timely information for rulemaking and facilitate feedback effects."
  },
  {
   "id": "kaal:claim:2957645-014",
   "url": "https://wulfkaal.github.io/claims/2957645-014",
   "claim": "Section 165(b) of the Dodd-Frank Act already authorizes the Board of Governors of the Federal Reserve to utilize contingent capital, so the mechanism has a statutory foundation in United States law.",
   "type": "empirical",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States law after the Dodd-Frank Act"
   ],
   "supporting_quote": "Section 165(b) of the Dodd-Frank Act authorizes the Board of Governors of the Federal Reserve to utilize contingent capital.28"
  },
  {
   "id": "kaal:claim:2957645-015",
   "url": "https://wulfkaal.github.io/claims/2957645-015",
   "claim": "Contingent capital is an automatic mechanism for increasing capital while reducing debt, and its long term benefit is lowering leverage.",
   "type": "definitional",
   "topics": [
    "contingent-capital",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "asserted",
   "supporting_quote": "Contingent capital is an automatic mechanism for increasing capital while reducing debt with the long-term benefit of lowering leverage."
  },
  {
   "id": "kaal:claim:2957645-016",
   "url": "https://wulfkaal.github.io/claims/2957645-016",
   "claim": "For purposes of this article, contingent capital is stipulated to mean the predefined conversion of a certain percentage of a financial institution's debt securities into equity securities.",
   "type": "definitional",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "asserted",
   "scope_conditions": [
    "the definition is stipulated for this article and other labels exist for the same concept"
   ],
   "supporting_quote": "For purposes of this article, contingent capital is the predefined conversion of a certain percentage of financial institutions' debt securities into equity securities."
  },
  {
   "id": "kaal:claim:2957645-017",
   "url": "https://wulfkaal.github.io/claims/2957645-017",
   "claim": "Strained financial institutions may find the automatic conversion of debt into equity through contingent capital securities an attractive alternative to being forced into restructuring or liquidation.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "the institution is already financially strained",
    "restructuring or liquidation is the realistic alternative"
   ],
   "supporting_quote": "Strained financial institutions may find the automatic conversion of debt into equity via contingent capital securities an attractive alternative to being forced into restructuring or liquidation.31"
  },
  {
   "id": "kaal:claim:2957645-018",
   "url": "https://wulfkaal.github.io/claims/2957645-018",
   "claim": "The conversion feature of contingent capital securities has the potential to change the control dynamic, the distribution of power, and the dependencies within systemically important financial institutions.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "systemic-risk",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "systemically important financial institutions with outstanding contingent capital securities",
    "conversion is actually triggered"
   ],
   "supporting_quote": "The conversion feature of CCS has the potential to change the control dynamic, power, and dependencies within systemically important financial institutions (SIFIs)."
  },
  {
   "id": "kaal:claim:2957645-019",
   "url": "https://wulfkaal.github.io/claims/2957645-019",
   "claim": "Regulators are often unable to supervise financial institutions effectively because of insufficient public funding, and contingent capital securities could help fill the void that this supervisory incapacity leaves.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "asserted",
   "scope_conditions": [
    "supervisory agencies operating under funding constraints"
   ],
   "supporting_quote": "Given this potential, CCSs could help fill a void left by regulators' inability to supervise financial institutions effectively, often the result of insufficient public funding."
  },
  {
   "id": "kaal:claim:2957645-020",
   "url": "https://wulfkaal.github.io/claims/2957645-020",
   "claim": "Contingent capital may be more efficient than simply raising capital requirements, because the capital injection is available only when it is needed and, when triggered, only as much of the contingent capital converts as is necessary to recapitalize the firm.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "the trigger design causes conversion only in the amount necessary for recapitalization"
   ],
   "supporting_quote": "Further, contingent capital may be more efficient than raising capital requirements, because the capital injection is available only when it is needed45 and, when triggered, only enough CCS converts as is necessary to recapitalize the firm.46"
  },
  {
   "id": "kaal:claim:2957645-021",
   "url": "https://wulfkaal.github.io/claims/2957645-021",
   "claim": "Appropriate use of contingent capital triggers can further lower the default risk of the contingent capital securities themselves, on top of the moral hazard reduction that comes from internalizing bank failure costs.",
   "type": "condition",
   "topics": [
    "contingent-capital",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "triggers are designed and evaluated appropriately"
   ],
   "supporting_quote": "contingent capital can minimize moral hazard,43 and appropriate use of contingent capital triggers can further lower default risk of CCS.44"
  },
  {
   "id": "kaal:claim:2957645-022",
   "url": "https://wulfkaal.github.io/claims/2957645-022",
   "claim": "The threat of dilution of stock holdings, combined with the threat of loss upon conversion, could help reduce the pressure shareholders place on management of systemically important financial institutions to take increasing risks.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "risk-and-incentives",
    "systemic-risk",
    "contingent-capital",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "conversion dilutes existing common shareholders",
    "shareholders anticipate the dilution ex ante"
   ],
   "supporting_quote": "The threat of dilution of stock holdings, in combination with a threat of loss due to conversion could help reduce shareholder pressure on SIFI management to take increasing risks.48"
  },
  {
   "id": "kaal:claim:2957645-023",
   "url": "https://wulfkaal.github.io/claims/2957645-023",
   "claim": "Where conversion has a negative effect on stock price, management is further incentivized to maintain and manage risk in order to avoid reputational loss and the income reduction caused by losses in stock options.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "risk-and-incentives",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "conversion depresses the issuer's stock price",
    "management compensation includes stock options"
   ],
   "supporting_quote": "In situations where conversion had a negative effect on stock price,49 management could be incentivized further to maintain and manage risk to avoid reputational loss and income reduction due to losses in stock"
  },
  {
   "id": "kaal:claim:2957645-024",
   "url": "https://wulfkaal.github.io/claims/2957645-024",
   "claim": "Contingent capital could create a regime for providing countercyclical regulatory capital that further enhances the regulatory capital requirements of the Federal Reserve and those under Basel III.",
   "type": "design",
   "topics": [
    "systemic-risk",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "contingent capital is used alongside, not instead of, existing minimum capital requirements"
   ],
   "supporting_quote": "Accordingly, contingent capital could create a regime for providing countercyclical regulatory capital51 that further enhances regulatory capital requirements of the Federal Reserve52 and under Basel III.53"
  },
  {
   "id": "kaal:claim:2957645-025",
   "url": "https://wulfkaal.github.io/claims/2957645-025",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "contingent capital securities are outstanding and their conversion is observable by regulators"
   ],
   "supporting_quote": "Contingent capital is a dynamic regulatory mechanism because (1) capital injection is available only if and when needed; (2) signaling to regulators of impending regulatory issues via conversion of CCS to near worthless equity creates feedback effects;"
  },
  {
   "id": "kaal:claim:2957645-026",
   "url": "https://wulfkaal.github.io/claims/2957645-026",
   "claim": "Contingent capital securities optimize information for rulemaking because, when issued and triggered, they produce highly valuable, real time, decentralized information on the financial wellbeing of a given regulated entity.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "contingent-capital",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "the securities have been issued and the trigger has occurred"
   ],
   "supporting_quote": "First, contingent capital has the potential to optimize information for rulemaking.55 CCS, when issued and triggered, produce highly valuable, real time, decentralized information on the financial wellbeing of a given regulated entity.56"
  },
  {
   "id": "kaal:claim:2957645-027",
   "url": "https://wulfkaal.github.io/claims/2957645-027",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "regulators observe conversion events"
   ],
   "supporting_quote": "Second, contingent capital creates feedback effects because the conversion of debt to equity signals to regulators that the respective entity's management that was unable to avoid the trigger from debt to equity, which calls for increased regulatory scrutiny.57"
  },
  {
   "id": "kaal:claim:2957645-028",
   "url": "https://wulfkaal.github.io/claims/2957645-028",
   "claim": "The occurrence of the debt to equity trigger creates real time regulatory information that a centralized system would require months or years to generate, and it enables regulators to open a regulatory investigation if and when one is needed.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "dynamic-regulation",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "comparison is to centralized information gathering by regulators"
   ],
   "supporting_quote": "In essence, the occurrence of the trigger from debt to equity creates real-time regulatory information that would require months or years to generate in centralized system, and enables regulators to start a regulatory investigation if and when it is needed.58"
  },
  {
   "id": "kaal:claim:2957645-029",
   "url": "https://wulfkaal.github.io/claims/2957645-029",
   "claim": "Contingent capital enables anticipatory regulation because regulators may observe and react in real time to triggering events, before the regulated entities encounter financial calamity.",
   "type": "mechanism",
   "topics": [
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "triggering events occur before, not after, financial distress becomes terminal"
   ],
   "supporting_quote": "Finally, contingent capital enables anticipatory regulation because regulators may observe and react in real time to triggering events, before entities encounter financial calamity."
  },
  {
   "id": "kaal:claim:2957645-030",
   "url": "https://wulfkaal.github.io/claims/2957645-030",
   "claim": "Information generated by contingent capital securities may allow regulators to adjust their regulatory requirements and the intensity of regulatory investigations anticipatorily rather than after the fact.",
   "type": "predictive",
   "topics": [
    "disclosure",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "argued",
   "scope_conditions": [
    "depends on the disclosure regime applicable to the respective contingent capital securities"
   ],
   "supporting_quote": "Such information may allow regulators to anticipatorily adjust their regulatory requirements and the intensity of regulatory investigations.60"
  },
  {
   "id": "kaal:claim:2957645-031",
   "url": "https://wulfkaal.github.io/claims/2957645-031",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645",
   "year": "2017",
   "source_sha256": "250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2",
   "confidence": "asserted",
   "scope_conditions": [
    "state of contingent capital design as of the time of writing"
   ],
   "supporting_quote": "While most of the design features of CCS and their triggering events are underdeveloped, despite these shortcomings, CCS could help allows regulators to anticipate regulatory needs in real-time, supported by feedback effects and improved information for regulation."
  },
  {
   "id": "kaal:claim:3067615-001",
   "url": "https://wulfkaal.github.io/claims/3067615-001",
   "claim": "Initial Coin Offerings are the most efficient means of financing entrepreneurial initiatives in the history of capital formation, because they minimize transaction cost and democratize finance while dis-intermediating banks.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "tokenomics",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "ICO market as of November 2017"
   ],
   "supporting_quote": "Initial Coin Offerings (ICOs) are the most efficient means of financing entrepreneurial initiatives in the history of capital formation. ICOs minimize transaction cost and democratize finance while dis-intermediating banks."
  },
  {
   "id": "kaal:claim:3067615-002",
   "url": "https://wulfkaal.github.io/claims/3067615-002",
   "claim": "Tokens sold in an ICO are structurally different from equity: they do not generally confer ownership rights, no right to dividends, and no claim on company assets in bankruptcy, so the risk and reward profile of a token is not that of a share.",
   "type": "definitional",
   "topics": [
    "tokenomics",
    "systemic-risk",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of ICOs to initial public offerings"
   ],
   "supporting_quote": "Risks and rewards of tokens differ from those of equity. Unlike token ownership, equity typically conveys a right to dividends. In the case of bankruptcy, equity owners have some claims on the assets of the company."
  },
  {
   "id": "kaal:claim:3067615-003",
   "url": "https://wulfkaal.github.io/claims/3067615-003",
   "claim": "ICOs cannot be qualified as donations and are therefore distinguishable from crowdfunding, because ICO participants acquire a financial stake in the company and, as the case may be, a right to vote on future decisions.",
   "type": "definitional",
   "topics": [
    "tokenomics",
    "systemic-risk",
    "law-and-legal-systems",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of ICOs to crowdfunding platforms such as Kickstarter"
   ],
   "supporting_quote": "Unlike crowdfunding, ICOs involve a financial stake in the company including, as the case may be, the right to vote on future decisions. Therefore, ICOs cannot be qualified as a donation."
  },
  {
   "id": "kaal:claim:3067615-004",
   "url": "https://wulfkaal.github.io/claims/3067615-004",
   "claim": "Because Ethereum's decentralized platform incorporating smart contracts lets developers build applications directly on its blockchain, the majority of developers chose to write smart contracts on the Ethereum Virtual Machine rather than create their own blockchain technology, giving ICOs a uniform protocol.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "evidenced",
   "scope_conditions": [
    "ICO market through 2017"
   ],
   "supporting_quote": "Given these advantages, the majority of developers opted for writing smart contracts on the Ethereum Virtual Machine rather than creating their own blockchain"
  },
  {
   "id": "kaal:claim:3067615-005",
   "url": "https://wulfkaal.github.io/claims/3067615-005",
   "claim": "Because whitepapers are not audited by any authority, the preliminary steps of the ICO roadmap, project announcement, executive summary, and investor comments, carry the burden of building market credibility and investor trust in the soundness of the project.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "reputation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "standard ICO roadmap practice as of 2017"
   ],
   "supporting_quote": "Whitepapers are not audited by any authority. Therefore these preliminary steps are crucial in order to build a general market credibility and investors' trust in the soundness of the project"
  },
  {
   "id": "kaal:claim:3067615-006",
   "url": "https://wulfkaal.github.io/claims/3067615-006",
   "claim": "The pre-ICO price of a cryptocurrency is set arbitrarily by the start-up team that structured the offering, while post-ICO price dynamics are left to supply and demand determined by the network of participants rather than any central authority.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "standard ICO pricing practice as of 2017"
   ],
   "supporting_quote": "A cryptocurrencies' *\"pre-ICO price\" is arbitrarily determined by the start-up team that structured the ICO, 24 whereas the post-ICO price dynamics are determined by supply and demand."
  },
  {
   "id": "kaal:claim:3067615-007",
   "url": "https://wulfkaal.github.io/claims/3067615-007",
   "claim": "The rapid evolution of ICOs was enabled in part by the negative factors that had depressed start-up fundraising, namely post crisis banking regulation and a shadow banking sector that only marginally supports new ventures and highly innovative start-ups.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "systemic-risk",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "start-up fundraising conditions before and during the emergence of the ICO market"
   ],
   "supporting_quote": "ICOs' rapid evolution was enabled in part by these negative factors that affected start-up fundraising."
  },
  {
   "id": "kaal:claim:3067615-008",
   "url": "https://wulfkaal.github.io/claims/3067615-008",
   "claim": "ICOs filled the void left by constrained bank and non-bank start-up financing and enabled a democratization and inclusion process that facilitated banking disintermediation.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "systemic-risk",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "start-up fundraising environment at the inception of the ICO market"
   ],
   "supporting_quote": "ICOs filled a void and enabled a democratization and inclusion process that facilitated banking disintermediation."
  },
  {
   "id": "kaal:claim:3067615-009",
   "url": "https://wulfkaal.github.io/claims/3067615-009",
   "claim": "An issuer can pre-define monetary policy in crypto economics by fixing the number of tokens created and issued, and a maximum token issuance combined with controlled token supply releases can make small increases in demand drive token prices higher.",
   "type": "mechanism",
   "topics": [
    "economics",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "token issuances with a predetermined maximum supply"
   ],
   "supporting_quote": "A maximum token issuance in combination with controlled token supply releases can result in small increases in demand driving token prices higher."
  },
  {
   "id": "kaal:claim:3067615-010",
   "url": "https://wulfkaal.github.io/claims/3067615-010",
   "claim": "To avoid a token price crash, token escrow accounts should provide usage and access controls that assure investors escrowed tokens will not be issued at a discount, and lockups or phased releases of escrowed tokens further minimize crash risk.",
   "type": "design",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "issuers holding unissued tokens in escrow for future funding"
   ],
   "supporting_quote": "To avoid a token price crash, token escrow accounts should provide usage and access controls that assure investors that escrowed tokens will not be issued at a discount."
  },
  {
   "id": "kaal:claim:3067615-011",
   "url": "https://wulfkaal.github.io/claims/3067615-011",
   "claim": "Adjusting the commercial benefits attached to a token operates as a quasi fiscal policy tool: increasing those benefits raises aggregate demand for a given token supply and can offset the depreciating effect of a large supply in circulation.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "tokens carrying discounts or other usage-linked commercial benefits"
   ],
   "supporting_quote": "First, the increase in commercial benefits associated with a token heightens the aggregate demand of the given token supply. Second, commercial benefits associated with a token issuance can help offset depreciated supply scarcity"
  },
  {
   "id": "kaal:claim:3067615-012",
   "url": "https://wulfkaal.github.io/claims/3067615-012",
   "claim": "Adjusting commercial benefits associated with a token issuance is preferable to blunt monetary intervention, because it avoids more drastic measures such as emergency sales, building token reserves, or changing the token supply in circulation.",
   "type": "design",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "issuer management of an outstanding token issuance"
   ],
   "supporting_quote": "Fourth, adjusting the commercial benefits associated with a given token issuance avoids more drastic monetary policy intervention by way of emergency sales or building token reserves or a decrease or increase of token supply in circulation."
  },
  {
   "id": "kaal:claim:3067615-013",
   "url": "https://wulfkaal.github.io/claims/3067615-013",
   "claim": "The disruption of venture capital by ICOs is in part self-inflicted: venture capital funds continuously invested in innovation while insufficiently innovating their own business model, leaving them exposed to a more efficient financing tool.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "venture capital industry financing highly innovative start-ups"
   ],
   "supporting_quote": "The disruptive effect of ICOs on the venture capital industry is in part the result of the venture capital fund lacking innovation. Paradoxically, venture capital funds continuously invested in innovation, while insufficiently innovating themselves.33"
  },
  {
   "id": "kaal:claim:3067615-014",
   "url": "https://wulfkaal.github.io/claims/3067615-014",
   "claim": "In the second quarter of 2017 ICO issuances exceeded venture capital financing of start-ups for the first time, with $210 million invested in ICOs versus $180 million invested into start-ups via traditional venture capital funds.",
   "type": "empirical",
   "topics": [
    "innovation",
    "securities-law",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "evidenced",
   "scope_conditions": [
    "second quarter of 2017",
    "crypto and blockchain start-up financing"
   ],
   "supporting_quote": "In the second quarter of 2017, ICO issuances exceeded venture capital financing of start-ups for the first time,34 with $210 million invested in ICOs versus $180 million invested into start-ups via traditional venture capital funds."
  },
  {
   "id": "kaal:claim:3067615-015",
   "url": "https://wulfkaal.github.io/claims/3067615-015",
   "claim": "The trend of ICO issuance exceeding venture capital financing can be expected to continue, because ICOs allocate capital more efficiently and at lower cost.",
   "type": "predictive",
   "topics": [
    "innovation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "crypto start-up financing after the second quarter of 2017"
   ],
   "supporting_quote": "This trend can be expected to continue given the superior allocation of capital at lower cost via ICOs.35"
  },
  {
   "id": "kaal:claim:3067615-016",
   "url": "https://wulfkaal.github.io/claims/3067615-016",
   "claim": "ICOs are preferable to venture capital funding for many start-ups first and foremost because ICO promoters and their developers are not forced to sacrifice equity in the project in exchange for the funds they raise.",
   "type": "mechanism",
   "topics": [
    "innovation",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "start-ups choosing between ICO and venture capital financing"
   ],
   "supporting_quote": "First and foremost, ICO promoters and their developers are not forced to sacrifice their equity in the project in exchange for the funds they raised.36"
  },
  {
   "id": "kaal:claim:3067615-017",
   "url": "https://wulfkaal.github.io/claims/3067615-017",
   "claim": "Given the advantages of ICOs, traditional regulated IPOs and venture capital funds increasingly fail to adequately capitalize crypto and legacy ventures driven by new economic paradigms.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "ventures driven by new economic paradigms, including crypto ventures"
   ],
   "supporting_quote": "Given these ICO advantages, traditional regulated IPOs and venture capital funds increasingly fail to adequately capitalize crypto and legacy ventures driven by new economic paradigms."
  },
  {
   "id": "kaal:claim:3067615-018",
   "url": "https://wulfkaal.github.io/claims/3067615-018",
   "claim": "The 2012 to 2017 ICO model allowed cryptocurrencies to be raised through a token sale without any conditions, landmark requirements, or security measures to protect investors, so that in essence promoters could use ICO proceeds as they pleased.",
   "type": "failure",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "ICO models prevailing between 2012 and 2017"
   ],
   "supporting_quote": "First and foremost, the 2012-2017 ICO models allowed cryptocurrencies to be raised via a token sale without any conditions, landmark requirements, or security measures to protect investors."
  },
  {
   "id": "kaal:claim:3067615-019",
   "url": "https://wulfkaal.github.io/claims/3067615-019",
   "claim": "Token holders, unlike shareholders in the traditional corporate infrastructure, cannot vote for or against directors or nominate directors, so ordinary ICO investors have no governance channel and simply must trust the promoters and their business intent.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "typical ICO token structures",
    "ordinary investors as distinct from institutional pre-sale investors"
   ],
   "supporting_quote": "Further limitations for token holders that amount to significant risk factors include token holders' inability, unlike shareholders in the traditional infrastructure, to vote for or against directors or to nominate directors."
  },
  {
   "id": "kaal:claim:3067615-020",
   "url": "https://wulfkaal.github.io/claims/3067615-020",
   "claim": "The only real control power available to token holders is the decision to hold or sell their tokens, and even that exit right may be unavailable until the token is fully listed on an exchange.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "typical ICO token structures",
    "period before full exchange listing"
   ],
   "supporting_quote": "The only real control power for token holders is their decision to hold or sell their tokens and even that may be limited until the token is fully listed on an exchange."
  },
  {
   "id": "kaal:claim:3067615-021",
   "url": "https://wulfkaal.github.io/claims/3067615-021",
   "claim": "Crypto platforms typically launch an ICO when they have only an intangible product based on a basic crypto idea, so token holders invest in the future promise of an idea, and while that works for core infrastructure products such as Ethereum, most other platforms struggle to fulfill that promise.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "crypto platforms other than core infrastructure products"
   ],
   "supporting_quote": "Accordingly, token holders typically invest in the future promise of the idea associated with the platform. While that works well with core infrastructure products such as Ethereum, most other platforms struggle to fulfill that promise."
  },
  {
   "id": "kaal:claim:3067615-022",
   "url": "https://wulfkaal.github.io/claims/3067615-022",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "crypto platforms organized as foundations"
   ],
   "supporting_quote": "Associated with the lack of an existing product is the inability of most crypto platforms to generate revenue to offset costs like traditional businesses."
  },
  {
   "id": "kaal:claim:3067615-023",
   "url": "https://wulfkaal.github.io/claims/3067615-023",
   "claim": "Because the token supply is controlled by ICO promoters who must reserve tokens for future funding needs, token holders can be diluted by later issuance of reserve tokens and their token value can be diminished without any ability to protect themselves against such events.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "platforms that reserve tokens for future funding needs"
   ],
   "supporting_quote": "Because the token supply is controlled by the ICO promoters, the token holders may be diluted in the future if the platform decides to issue more reserve tokens to additional investors."
  },
  {
   "id": "kaal:claim:3067615-024",
   "url": "https://wulfkaal.github.io/claims/3067615-024",
   "claim": "Hardcoded lockup periods can protect token holders against supply side induced devaluation, but they also decrease the token economic flexibility the promoter team needs to raise additional funds, so the remedy trades investor protection against issuer financing capacity.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "tokens subject to hardcoded lockup periods"
   ],
   "supporting_quote": "However, while such lockup periods may protect token holders against dilution, it also decreases much needed token economic flexibility for the promoter team to raise additional funds when needed."
  },
  {
   "id": "kaal:claim:3067615-025",
   "url": "https://wulfkaal.github.io/claims/3067615-025",
   "claim": "ICOs provide the highest possible liquidity for investors at the very beginning of a platform's lifecycle, before the reporting, accounting, and legal infrastructure that gives the investing public assurance of underlying business success, so investors trade on very limited information and volatility of the tokens and the whole cryptocurrency market increases.",
   "type": "failure",
   "topics": [
    "defi",
    "disclosure",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "ICOs occurring at the beginning of a crypto business lifecycle"
   ],
   "supporting_quote": "Because ICOs typically take place at the beginning of the lifecycle of a crypto business/platform, ICO investors typically invest - and the token exchange - on very limited information which increases volatility of the tokens and the entire cryptocurrency market."
  },
  {
   "id": "kaal:claim:3067615-026",
   "url": "https://wulfkaal.github.io/claims/3067615-026",
   "claim": "Because token offerings are built on open source code, the utility of an issued token can at any time be recreated in another token with essentially identical features at marginal cost, so investors cannot rely on the implicit promise that promoters and developers will increase the value of the acquired token rather than launch a duplicate.",
   "type": "failure",
   "topics": [
    "open-source-and-code",
    "tokenomics",
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "token offerings based on open source software"
   ],
   "supporting_quote": "Investors cannot rely on the implicit promise that the token promoters and their developers will increase the value of the acquired token and not create another token with identical features."
  },
  {
   "id": "kaal:claim:3067615-027",
   "url": "https://wulfkaal.github.io/claims/3067615-027",
   "claim": "Legacy businesses own their code and can sue competitors who copy it, whereas open source crypto start-ups rely only on licenses, and this weaker incentive structure makes ICO investments riskier.",
   "type": "failure",
   "topics": [
    "open-source-and-code",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "open source crypto start-ups compared to legacy code-owning businesses"
   ],
   "supporting_quote": "While open-source crypto start-ups have licenses that help protect them from competitor companies who may be using their code for profit, legacy businesses that own their code and can sue competitors who copy such code which provides a different incentive structure and makes ICO investments riskier."
  },
  {
   "id": "kaal:claim:3067615-028",
   "url": "https://wulfkaal.github.io/claims/3067615-028",
   "claim": "On bankruptcy or termination of the platform, token holders typically have no liquidity preference and no recourse at all once debt holders and outside creditors are satisfied, so unlike a venture capital seed investor with at least a simple liquidity preference, they typically lose everything they invested.",
   "type": "failure",
   "topics": [
    "defi",
    "systemic-risk",
    "innovation",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "bankruptcy or termination of the promoter's business or platform"
   ],
   "supporting_quote": "Again, by contrast, token holders typically lose everything they invested as they have no liquidity preference at all."
  },
  {
   "id": "kaal:claim:3067615-029",
   "url": "https://wulfkaal.github.io/claims/3067615-029",
   "claim": "The lack of a regulatory framework creates significant legal uncertainty in the ICO market, and because cryptocurrencies are censorship-resistant and arguably regulation-resistant by design, that uncertainty may sooner or later lead the Securities and Exchange Commission to declare ICOs illegal.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "ICO market as of November 2017",
    "United States securities regulation"
   ],
   "supporting_quote": "The lack of a regulatory framework creates significant legal uncertainty in the ICO market. Moreover, cryptocurrencies are censorship-resistant and arguably regulation-resistant by design,56"
  },
  {
   "id": "kaal:claim:3067615-030",
   "url": "https://wulfkaal.github.io/claims/3067615-030",
   "claim": "ICOs are not subject to predefined regulatory procedures: whitepapers do not follow prospectus disclosure guidelines, are not reviewed or audited by any authority, and are not subject to any form of rating of the new entrepreneurial initiative.",
   "type": "failure",
   "topics": [
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "ICO market as of November 2017"
   ],
   "supporting_quote": "ICOs are not subject to predefined regulatory procedures. Whitepapers do not follow prospectus disclosure guidelines, are not reviewed or unaudited by any authorities and are not subject to any forms of rating of the new entrepreneurial initiatives."
  },
  {
   "id": "kaal:claim:3067615-031",
   "url": "https://wulfkaal.github.io/claims/3067615-031",
   "claim": "Private initiatives are emerging to fill the ICO disclosure and rating gap, including a joint venture between Ambisafe and the rating agency ICOrating created to ensure high quality standards and support investor due diligence.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "evidenced",
   "scope_conditions": [
    "ICO market as of November 2017"
   ],
   "supporting_quote": "To combat these shortcomings, a private initiative, a joint-venture between Ambisafe Inc.59 and the Russian-based rating agency ICOrating,60 has been created to ensure high-quality standards, supporting investors in their due-diligence"
  },
  {
   "id": "kaal:claim:3067615-032",
   "url": "https://wulfkaal.github.io/claims/3067615-032",
   "claim": "Identifying legitimate projects and distinguishing them from scams is a necessary condition both for investor protection and for creating the conditions in which ICOs can proliferate.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "asserted",
   "scope_conditions": [
    "ICO market as of November 2017"
   ],
   "supporting_quote": "Identifying legitimate projects, distinguishing them from scams, is vital to pursue investors' protection while creating the conditions for ICOs to proliferate."
  },
  {
   "id": "kaal:claim:3067615-033",
   "url": "https://wulfkaal.github.io/claims/3067615-033",
   "claim": "Zombie ICOs, which have little chance of creating a successful market for their tokens, became increasingly common in 2017 and are identifiable by their inability to answer core questions about the problem solved, the allocation of proceeds, the viability of the product, and the team's business experience.",
   "type": "failure",
   "topics": [
    "securities-law",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "ICO market in 2017"
   ],
   "supporting_quote": "\"Zombie ICOs\" are ICOs that really have little chance of creating a successful market for their tokens. Such ICOs have become increasingly common in 2017. Zombie ICOs often cannot succinctly answer core questions in their whitepaper or in response to questions by possible investors."
  },
  {
   "id": "kaal:claim:3067615-034",
   "url": "https://wulfkaal.github.io/claims/3067615-034",
   "claim": "An ICO that proposes an uncapped raise without an underlying product is a very serious red flag, because uncapped raises are perceived by the crypto community as greedy and raise investor uncertainty about the valuation of the platform or product being bought.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "ICOs without an underlying product"
   ],
   "supporting_quote": "First, ICOs that propose uncapped raises without an underlying product constitute a very serious red flag for any investor."
  },
  {
   "id": "kaal:claim:3067615-035",
   "url": "https://wulfkaal.github.io/claims/3067615-035",
   "claim": "Capped token issuances became the dominant structure between 2016 and 2017 because a cap increases the likelihood that the ICO will be oversubscribed, which creates a significant incentive for investors to attempt to get in first.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "argued",
   "scope_conditions": [
    "ICO structures between 2016 and 2017"
   ],
   "supporting_quote": "Because of such concerns, capped token issuances became the dominant structure between 2016 and 2017. Capped sales increase the likelihood for the ICO promoters that the ICO will be oversubscribed, creating a significant incentive for investors to attempt to get in first."
  },
  {
   "id": "kaal:claim:3067615-036",
   "url": "https://wulfkaal.github.io/claims/3067615-036",
   "claim": "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.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "evidenced",
   "scope_conditions": [
    "capped token sales exposed to first mover rush dynamics"
   ],
   "supporting_quote": "To mitigate the inefficiencies and the risks of a capped sale, the Gnosis ICO was structured as a reverse dutch auction"
  },
  {
   "id": "kaal:claim:3067615-037",
   "url": "https://wulfkaal.github.io/claims/3067615-037",
   "claim": "ICO promoters should not allow tokens to be traded before the underlying protocol network or application is live, and should not use a landing page that focuses almost exclusively on the ICO while providing less content on the product, project, technology, and team.",
   "type": "design",
   "topics": [
    "tokenomics",
    "disclosure",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "asserted",
   "scope_conditions": [
    "emerging bad ICO practices identified in 2017"
   ],
   "supporting_quote": "Such practices include allowing tokens to be traded before underlying protocol network or application is live, using a landing page that focuses almost exclusively on the ICO with project timeline etc. but provides less content on product, project, technology, and team."
  },
  {
   "id": "kaal:claim:3067615-038",
   "url": "https://wulfkaal.github.io/claims/3067615-038",
   "claim": "ICO promoters should make significant and ongoing disclosures on vesting and lockup periods and should never manipulate the smart contract to change ICO sales rules mid-course during the offering.",
   "type": "design",
   "topics": [
    "smart-contracts",
    "governance-design",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "asserted",
   "scope_conditions": [
    "ongoing ICO sales governed by smart contracts"
   ],
   "supporting_quote": "Moreover, ICO promoters should include significant and ongoing disclosures on vesting and lockup periods, should never manipulate the smart contract to change ICO sales rules mid-course during the ICO."
  },
  {
   "id": "kaal:claim:3067615-039",
   "url": "https://wulfkaal.github.io/claims/3067615-039",
   "claim": "ICO disclosures should be as clear as possible: promoters should avoid an unclear or uncertain use of proceeds pie chart and should be very clear on plans for converting cryptocurrency into actual company reserves.",
   "type": "design",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "asserted",
   "scope_conditions": [
    "ICO issuers seeking to meet emerging good practice standards"
   ],
   "supporting_quote": "Moreover, the ICO disclosures have to be as clear as possible and should avoid an unclear or uncertain use of proceeds pie chart and should be very clear on cryptocurrency conversion plans into actual company reserves."
  },
  {
   "id": "kaal:claim:3067615-040",
   "url": "https://wulfkaal.github.io/claims/3067615-040",
   "claim": "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.",
   "type": "predictive",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "year": "2017",
   "source_sha256": "164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38",
   "confidence": "speculative",
   "scope_conditions": [
    "continued voluntary or mandated improvement of ICO industry practice"
   ],
   "supporting_quote": "Through ICOs' evolution and continuous practice improvements, the ICO industry and underlying crypto businesses can become the foundation of the emerging crypto economy."
  },
  {
   "id": "kaal:claim:2939127-001",
   "url": "https://wulfkaal.github.io/claims/2939127-001",
   "claim": "The core lawyer characteristics and skillsets produced by the existing legal education and regulatory framework are incompatible with what the practice of law in the 21st century demands.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "existing law school curricula and bar regulatory frameworks",
    "21st century practice conditions shaped by disruptive technology"
   ],
   "supporting_quote": "Key lawyer characteristics and lawyers' core skillsets in the existing legal education and regulatory framework are incompatible with the demands on lawyers of the 21st century."
  },
  {
   "id": "kaal:claim:2939127-002",
   "url": "https://wulfkaal.github.io/claims/2939127-002",
   "claim": "Disruptive innovation in law renders obsolete many and probably most of the traditional legal skills and characteristics that law schools currently cultivate.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "areas of practice exposed to disruptive innovation in law"
   ],
   "supporting_quote": "Yet, disruptive innovation in law9 obviates many if not most of the traditional legal skills and characteristics of traditional lawyers."
  },
  {
   "id": "kaal:claim:2939127-003",
   "url": "https://wulfkaal.github.io/claims/2939127-003",
   "claim": "Even the law firms that are best at finding innovative solutions for clients remain reluctant to fully adopt Legal Tech innovations, so quality of client service does not predict willingness to adopt.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "innovation",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "law firms and in-house legal departments as of 2017"
   ],
   "supporting_quote": "While the better firms often find innovative solutions to their clients' problems, even those firms are reluctant to fully embrace Legal Tech innovations."
  },
  {
   "id": "kaal:claim:2939127-004",
   "url": "https://wulfkaal.github.io/claims/2939127-004",
   "claim": "Law schools that invest early in artificial intelligence, machine learning, and blockchain will gain a comparative advantage over peer schools irrespective of ranking, because demand for lawyers trained in those technologies is likely to spike once law firm adoption crosses a threshold.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "innovation",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "speculative",
   "scope_conditions": [
    "first mover law schools that make the financial investment",
    "a threshold point of law firm adoption is reached"
   ],
   "supporting_quote": "comparative advantage vis-à-vis their peers, regardless of the ranking of such school, because the demand for lawyers adequately trained in artfical intelligence, machine learning, and blockchain is likely to increase sharply at a threshold point of law firm adoption."
  },
  {
   "id": "kaal:claim:2939127-005",
   "url": "https://wulfkaal.github.io/claims/2939127-005",
   "claim": "The curriculum of American law schools has changed only marginally over the past thirty plus years, even as the practice environment has been transformed.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "evidenced",
   "scope_conditions": [
    "American law schools",
    "period of roughly 1985 to 2017"
   ],
   "supporting_quote": "The curriculum of American law schools has only marginally changed over the last 30 plus years."
  },
  {
   "id": "kaal:claim:2939127-006",
   "url": "https://wulfkaal.github.io/claims/2939127-006",
   "claim": "The challenges created by Legal Tech, the new economy, and platform technologies justify a fundamentally more creative and innovative approach to legal education in the 21st century.",
   "type": "normative",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "supporting_quote": "The challenges presented by Legal Tech, the new economy, and platform technologies justify a more creative and innovative approach for legal education in the 21st century."
  },
  {
   "id": "kaal:claim:2939127-007",
   "url": "https://wulfkaal.github.io/claims/2939127-007",
   "claim": "The first generations of Legal Tech did not reduce demand for lawyers; by making far greater volumes of legal material available faster, they created a need for additional lawyers to evaluate that material.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "Legal Tech from the 1970s legal databases through early practice management software"
   ],
   "supporting_quote": "in fact, created the need for additional lawyers to evaluate the new and increasing numbers of legal materials made available faster and more easily accessible by technology."
  },
  {
   "id": "kaal:claim:2939127-008",
   "url": "https://wulfkaal.github.io/claims/2939127-008",
   "claim": "The decentralization of law pursued by Legal Tech startups has broad repercussions for the legal profession, the first of which is that existing legal services are rendered increasingly irrelevant or are replaced outright by Legal Tech.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "legal services amenable to online delivery, matching, AI review, or blockchain settlement"
   ],
   "supporting_quote": "The decentralization of law that is a central part of the startup companies' purpose and that disrupts existing legal practices has broad repercussions for the legal profession. First, existing legal services are rendered increasingly irrelevant or are replaced by Legal Tech."
  },
  {
   "id": "kaal:claim:2939127-009",
   "url": "https://wulfkaal.github.io/claims/2939127-009",
   "claim": "Legal Tech applications will soon perform most of the work junior lawyers do, and will do so without the human elements that produce imprecision, flaws, inaccuracies, potential lawsuits, and delay; junior legal professionals and support staff are therefore the first casualties.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "high volume, standardizable junior lawyer tasks",
    "near future relative to 2017"
   ],
   "supporting_quote": "Legal Tech applications will be able to perform most of junior lawyers' work in the near future without the human elements that create imprecision, flaws, inaccuracies, possible lawsuits, and delay."
  },
  {
   "id": "kaal:claim:2939127-010",
   "url": "https://wulfkaal.github.io/claims/2939127-010",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "innovation",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "incumbent legal organizations with traditional hierarchical structures"
   ],
   "supporting_quote": "the legal profession will be forced by such startup companies to innovate in perpetuity, a task that is not easily accomplished by overextended and — often — cumbersome legal organizations that have lost the capacity for agile re-invention."
  },
  {
   "id": "kaal:claim:2939127-011",
   "url": "https://wulfkaal.github.io/claims/2939127-011",
   "claim": "Legal Tech's disruptive innovation combined with the principles of the sharing economy requires lawyers and lawmakers to reevaluate their understanding of many areas of law.",
   "type": "condition",
   "topics": [
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "areas of law touched by sharing and decentralized peer to peer platforms"
   ],
   "supporting_quote": "Legal Tech's disruptive innovation in combination with the principles established by the sharing economy require lawyers and lawmakers to reevaluate their understanding of many areas of the law."
  },
  {
   "id": "kaal:claim:2939127-012",
   "url": "https://wulfkaal.github.io/claims/2939127-012",
   "claim": "Redesigning legal doctrine around sharing and decentralized peer to peer platforms demands out of the box thinking from a profession whose members were trained, both in law school and across their careers, to think inside the box.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "lawyers trained in conventional law school and practice environments"
   ],
   "supporting_quote": "Such an undertaking requires out-of-the-box thinking for lawyers who were trained during law school and during their entire careers to think inside the box."
  },
  {
   "id": "kaal:claim:2939127-013",
   "url": "https://wulfkaal.github.io/claims/2939127-013",
   "claim": "The counseling, deal making, matchmaking, gatekeeping, and enforcement roles historically performed by lawyers are increasingly performed by technology, and blockchain technology and smart contracting will accelerate that substitution.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "decentralization",
    "smart-contracts",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "transactional legal roles that can be encoded",
    "near future relative to 2017"
   ],
   "supporting_quote": "However, the counseling, deal-making, matchmaking, gatekeeping, and enforcing roles are increasingly performed by technology.43 This trend is likely to accelerate in the near future, enabled by blockchain technology and smart contracting."
  },
  {
   "id": "kaal:claim:2939127-014",
   "url": "https://wulfkaal.github.io/claims/2939127-014",
   "claim": "Because a public blockchain is genuinely public and immutable, it increases transparency while simultaneously and significantly reducing transaction costs.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "disclosure",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "public blockchains rather than consortium or fully private blockchains"
   ],
   "supporting_quote": "Because the blockchain (at the least the public blockchain) is in fact public and immutable, the technology increases transparency, while at the same time significantly reducing transaction costs."
  },
  {
   "id": "kaal:claim:2939127-015",
   "url": "https://wulfkaal.github.io/claims/2939127-015",
   "claim": "Intermediaries, lawyers among them, are replaced by code, connectivity, crowd, and collaboration.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "decentralization",
    "law-and-legal-systems",
    "education-and-practice",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "asserted",
   "scope_conditions": [
    "transactions capable of being executed on blockchain infrastructure"
   ],
   "supporting_quote": "Intermediaries, including lawyers, are replaced by code, connectivity, crowd, and collaboration."
  },
  {
   "id": "kaal:claim:2939127-016",
   "url": "https://wulfkaal.github.io/claims/2939127-016",
   "claim": "It is the completely decentralized network connectivity of the blockchain via the Internet, more than the use of digital signatures to establish party identity and authenticity, that provides the strongest protection against fraud.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "fully decentralized, internet connected blockchain networks"
   ],
   "supporting_quote": "While blockchain's use of digital signatures helps establish the identity and authenticity of the parties involved in the transaction, it is the completely decentralized network connectivity via the Internet that allows the most protection against fraud."
  },
  {
   "id": "kaal:claim:2939127-017",
   "url": "https://wulfkaal.github.io/claims/2939127-017",
   "claim": "Blockchain's distributed consensus model permits node verification of transactions without compromising the privacy of the parties, which makes it arguably safer than a traditional model requiring third party intermediary validation.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "blockchains using node based distributed consensus"
   ],
   "supporting_quote": "That model also allows node verification of transactions without compromising the privacy of the parties and is therefore arguably safer than a traditional model that requires third-party intermediary validation of transactions."
  },
  {
   "id": "kaal:claim:2939127-018",
   "url": "https://wulfkaal.github.io/claims/2939127-018",
   "claim": "Smart contract arrangements involving several parties and greater complexity require the verifiable and unhackable system that blockchain technology supplies.",
   "type": "condition",
   "topics": [
    "smart-contracts",
    "blockchain",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "multiparty and complex smart contract arrangements"
   ],
   "supporting_quote": "More complex smart contract arrangements in which several parties are involved require a verifiable and unhackable system provided by blockchain technology."
  },
  {
   "id": "kaal:claim:2939127-019",
   "url": "https://wulfkaal.github.io/claims/2939127-019",
   "claim": "Smart contracting on a blockchain often makes conventional legal contracting unnecessary, because smart contracts emulate the logic of legal contract clauses.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "blockchain",
    "law-and-legal-systems",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "transactions whose terms can be expressed in code"
   ],
   "supporting_quote": "Through blockchain technology, smart contracting often makes contractual legal contracting unnecessary as smart contracts often emulate the logic of legal contract clauses."
  },
  {
   "id": "kaal:claim:2939127-020",
   "url": "https://wulfkaal.github.io/claims/2939127-020",
   "claim": "Increased connectivity enabled by blockchain technology, combined with increased decentralization, allows the removal of intermediaries including lawyers, financial intermediaries, and platform companies.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "environments where blockchain enabled connectivity and decentralization advance together"
   ],
   "supporting_quote": "Increased connectivity enabled by blockchain technology in combination with increased decentralization allows for the removal of intermediaries, including lawyers, financial intermediaries, and platform companies."
  },
  {
   "id": "kaal:claim:2939127-021",
   "url": "https://wulfkaal.github.io/claims/2939127-021",
   "claim": "Venture capital investment in blockchain startups has grown exponentially since 2012, which the authors read as an indicator of the technology's commercial maturity.",
   "type": "empirical",
   "topics": [
    "blockchain",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "evidenced",
   "scope_conditions": [
    "VC investment in blockchain startups, 2007 to 2016"
   ],
   "supporting_quote": "Figure 2 shows that venture capital (VC) investment in startup companies that utilize blockchain technology has increased exponentially since 2012."
  },
  {
   "id": "kaal:claim:2939127-022",
   "url": "https://wulfkaal.github.io/claims/2939127-022",
   "claim": "Once blockchain technology gains wider acceptance and its applications reach consumers, existing legal processes and structures will likely be among the first processes to become redundant.",
   "type": "condition",
   "topics": [
    "blockchain",
    "law-and-legal-systems",
    "decentralization",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "wider acceptance of blockchain technology",
    "spread of blockchain applications into consumer markets"
   ],
   "supporting_quote": "When blockchain technology becomes more widely accepted and applications spread into consumer territory, existing legal processes and structures will likely be among the first processes to become redundant."
  },
  {
   "id": "kaal:claim:2939127-023",
   "url": "https://wulfkaal.github.io/claims/2939127-023",
   "claim": "Leveraging the big data collected through Legal Tech solutions and blockchain applications in combination with machine learning produces more creative and faster tools, which in turn generates a surge of innovative platforms that disrupt the legal industry.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "blockchain",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "settings where Legal Tech and blockchain generate usable data at scale"
   ],
   "supporting_quote": "Leveraging the big data that is collected by using Legal Tech solutions and blockchain applications in combination with machine learning creates more creative and faster tools."
  },
  {
   "id": "kaal:claim:2939127-024",
   "url": "https://wulfkaal.github.io/claims/2939127-024",
   "claim": "The world of blockchain and smart contracting has clearly not reached maturity, which is the first of several technological and legal limitations facing blockchain and smart contracts.",
   "type": "failure",
   "topics": [
    "blockchain",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "state of the technology as of 2017"
   ],
   "supporting_quote": "First, the world of blockchain and smart contracting has clearly not reached maturity yet."
  },
  {
   "id": "kaal:claim:2939127-025",
   "url": "https://wulfkaal.github.io/claims/2939127-025",
   "claim": "Contrary to the widespread belief among legal professionals that code can only handle very simple transactions, blockchain enabled smart contracts generally do not require legal involvement across the spectrum of transactions.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems",
    "education-and-practice",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "transactions capable of being coded",
    "contested against the prevailing view in the legal community"
   ],
   "supporting_quote": "While blockchain-enabled smart contracts generally do not require legal involvement across the spectrum of transactions, legal professionals often still believe that \"code\" in smart contracts can only deal with very simple transactions"
  },
  {
   "id": "kaal:claim:2939127-026",
   "url": "https://wulfkaal.github.io/claims/2939127-026",
   "claim": "Because the legal origin of smart contracting is unsettled, lawyers may argue that smart contracts are void and unenforceable under the law even where the smart contract accurately reflects the parties' underlying agreement.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "smart contracts assessed under existing contract law doctrine"
   ],
   "supporting_quote": "While smart contracts may reflect the underlying contract between parties, lawyers may argue that \"smart contracts\" are void and unenforceable under the law."
  },
  {
   "id": "kaal:claim:2939127-027",
   "url": "https://wulfkaal.github.io/claims/2939127-027",
   "claim": "Contract law rules on formation, interpretation, conditions, and remedies require substantive adjustment before smart contracts can be accommodated.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "existing contract law doctrine applied to blockchain smart contracts"
   ],
   "supporting_quote": "Contractual legal rules regarding formation, interpretation, conditions, and remedies require substantive adjustments of smart contracts in contract law."
  },
  {
   "id": "kaal:claim:2939127-028",
   "url": "https://wulfkaal.github.io/claims/2939127-028",
   "claim": "Although blockchain technology itself offers unprecedented data and privacy protection, storing blockchain data across a global network of nodes often will not comply with the consumer protection rules, directives, and guidelines of particular jurisdictions.",
   "type": "failure",
   "topics": [
    "blockchain",
    "consensus-and-security",
    "compliance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "global node distribution of blockchain data",
    "jurisdiction specific consumer protection and data rules"
   ],
   "supporting_quote": "While blockchain technology itself offers unprecedented genuine data and privacy protection, the storage of blockchain data across a global network of nodes often will not comply with specific consumer protection rules, directives, and guidelines around the world."
  },
  {
   "id": "kaal:claim:2939127-029",
   "url": "https://wulfkaal.github.io/claims/2939127-029",
   "claim": "The legal disputes already generated by sharing platforms indicate that future blockchain enabled sharing services will not be accepted quickly or without resistance from incumbents whose service or product delivery is challenged.",
   "type": "predictive",
   "topics": [
    "blockchain",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain enabled sharing services entering markets with entrenched incumbents"
   ],
   "supporting_quote": "The existing legal issues arising in the context of sharing platforms,83 demonstrate that future blockchain- enabled sharing services may not be accepted quickly and without resistance on the part of incumbents challenged by new ways of delivering a service or product."
  },
  {
   "id": "kaal:claim:2939127-030",
   "url": "https://wulfkaal.github.io/claims/2939127-030",
   "claim": "Fundamental flaws in the DAO's code let hackers move one third of its total funds to a subsidiary account, and that hack together with further technological limitations destroyed the DAO initiative.",
   "type": "failure",
   "topics": [
    "dao",
    "smart-contracts",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "evidenced",
   "scope_conditions": [
    "the DAO as launched in May 2016 on Ethereum"
   ],
   "supporting_quote": "Alas, things went terribly wrong with the DAO. Fundamental flaws in the DAO code enabled hackers to transfer one-third of the total funds to a subsidiary account.92 This hack in combination with additional technological limitations brought down the DAO initiative."
  },
  {
   "id": "kaal:claim:2939127-031",
   "url": "https://wulfkaal.github.io/claims/2939127-031",
   "claim": "Because a series of smart contracts granted DAO token holders voting rights, the blockchain based smart contracts performed the function of articles of association or corporate bylaws, in an organization that had no directors, managers, or employees.",
   "type": "mechanism",
   "topics": [
    "dao",
    "governance-design",
    "corporate-governance",
    "smart-contracts",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized autonomous organizations structured like the DAO"
   ],
   "supporting_quote": "Because a series of smart contracts granted DAO token holders voting rights, the blockchain-based smart contracts imitated the role of articles of association or bylaws."
  },
  {
   "id": "kaal:claim:2939127-032",
   "url": "https://wulfkaal.github.io/claims/2939127-032",
   "claim": "Open legal questions about the DAO, including which regime governs token issuance, minority token holder protection, taxation, the binding force of DAO smart contracts, ownership of intellectual property, and conflict resolution, must be answered before future DAO structures can operate seamlessly.",
   "type": "condition",
   "topics": [
    "dao",
    "law-and-legal-systems",
    "securities-law",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "future decentralized autonomous organization setups"
   ],
   "supporting_quote": "Open legal issues pertaining to the DAO need to be addressed before future DAO setups can operate seamlessly."
  },
  {
   "id": "kaal:claim:2939127-033",
   "url": "https://wulfkaal.github.io/claims/2939127-033",
   "claim": "Exponentially increasing disruptive innovation will lead clients to routinely bring legal professionals problems that those lawyers cannot fully understand, inside a legal framework that does not always supply clear or helpful answers.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "worldwide acceleration of disruptive innovation"
   ],
   "supporting_quote": "The exponentially increasing disruptive innovation worldwide will cause clients to frequently ask legal professionals to deal with issues lawyers cannot fully understand, within a legal framework that does not always offer clear or helpful answers."
  },
  {
   "id": "kaal:claim:2939127-034",
   "url": "https://wulfkaal.github.io/claims/2939127-034",
   "claim": "Law schools should educate lawyers who add value by helping clients and society adjust to the technological environment rather than lawyers who impose unnecessary or unwise restrictions on it, since such restrictions will not stop technological development anyway.",
   "type": "normative",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "supporting_quote": "Law schools need to find ways to educate lawyers who can add value in helping clients and society adjust to our increasing technological environment rather than who will create unnecessary or unwise restrictions on it."
  },
  {
   "id": "kaal:claim:2939127-035",
   "url": "https://wulfkaal.github.io/claims/2939127-035",
   "claim": "The traditional legal tool kit worked adequately when innovation cycles were long, but where innovation is exponential it is regularly out of touch with the radically different needs of a decentralized world and often produces disastrous outcomes.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "decentralization",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "exponential rather than long innovation cycles",
    "decentralized technological environments"
   ],
   "supporting_quote": "This approach might have worked adequately when innovation cycles were longer, but in a world where innovations occur exponentially, the traditional legal tool kit is regularly out of touch with the radically different needs of a decentralized world."
  },
  {
   "id": "kaal:claim:2939127-036",
   "url": "https://wulfkaal.github.io/claims/2939127-036",
   "claim": "Most lawyers and law industry representatives underestimate the implications of emerging Legal Tech.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "law firm and corporate lawyers in Asia, Europe, and the United States"
   ],
   "supporting_quote": "Most lawyers and law industry representatives underestimate the implications of the emerging Legal Tech."
  },
  {
   "id": "kaal:claim:2939127-037",
   "url": "https://wulfkaal.github.io/claims/2939127-037",
   "claim": "Advising on blockchain contracts requires that law students and lawyers become familiar with the technology and learn at least basic coding as it pertains to Ethereum smart contracts.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "open-source-and-code",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "lawyers who intend to advise on blockchain based contracts"
   ],
   "supporting_quote": "In order to advise on blockchain contracts, law students and lawyers have to become familiar with the technology and learn at least basic coding as it pertains to Ethereum smart contracts."
  },
  {
   "id": "kaal:claim:2939127-038",
   "url": "https://wulfkaal.github.io/claims/2939127-038",
   "claim": "Law schools must enable students to work in interdisciplinary teams with software engineers, and a greater appreciation of how code can be used and integrated in legal contexts is essential to that capability.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "law school curricular design for 21st century practice"
   ],
   "supporting_quote": "law schools need to enable their students to work in interdisciplinary teams with software engineers. A greater appreciation of the means by which code can be utilized and integrated in legal contexts is essential."
  },
  {
   "id": "kaal:claim:2939127-039",
   "url": "https://wulfkaal.github.io/claims/2939127-039",
   "claim": "Future lawyers will have to distinguish blockchain based contracting from traditional legal contracting and advise clients on the optimal allocation between the two.",
   "type": "predictive",
   "topics": [
    "smart-contracts",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "argued",
   "scope_conditions": [
    "dealmaking that mixes blockchainable and non blockchainable elements"
   ],
   "supporting_quote": "For instance, future lawyers will have to be able to distinguish blockchain-based contracting from traditional legal contracting and advise clients on optimal blockchain and non-blockchain contracting allocations."
  },
  {
   "id": "kaal:claim:2939127-040",
   "url": "https://wulfkaal.github.io/claims/2939127-040",
   "claim": "For the parts of dealmaking and other legal tasks that cannot be placed on a blockchain, the role of non blockchainable agents of trust may expand, and blockchain driven disintermediation of law may itself create additional legal tasks requiring human lawyers.",
   "type": "predictive",
   "topics": [
    "decentralization",
    "reputation",
    "blockchain",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Legal Education in the Blockchain Revolution (2017). SSRN: https://ssrn.com/abstract=2939127",
   "year": "2017",
   "source_sha256": "abcef529c7200261c59eec43018375b3b26e3186239fb9d002bacc298dba26ff",
   "confidence": "speculative",
   "scope_conditions": [
    "legal tasks that require the ambiguity and flexibility of law"
   ],
   "supporting_quote": "For the parts of dealmaking and the other legal tasks that are non-blockchainable, the role for other, non-blockchainable agents of trust may expand. It seems possible that the blockchain-driven disintermediation of law itself creates additional legal tasks that require human lawyer input."
  },
  {
   "id": "kaal:claim:2998097-001",
   "url": "https://wulfkaal.github.io/claims/2998097-001",
   "claim": "The Investment Advisers Act safe harbor let an adviser count an entire legal organization as one client, provided the advice followed the organization's objectives rather than those of its individual owners, which is what allowed advisers to manage money for hundreds of underlying investors while staying exempt.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "United States",
    "before the Dodd-Frank Act of 2010"
   ],
   "supporting_quote": "investment advisers to private investment funds were able to count a legal organization as a single client provided the investment advice was based on the objectives of the legal organization rather than the individual investment objectives of any owners of the legal organization."
  },
  {
   "id": "kaal:claim:2998097-002",
   "url": "https://wulfkaal.github.io/claims/2998097-002",
   "claim": "The 2004 registration rule failed in court because the term client was not defined in the Investment Advisers Act, leaving the SEC without authority to fix its meaning, and the D.C. Circuit vacated the rule in Goldstein as arbitrary rulemaking.",
   "type": "failure",
   "topics": [
    "securities-law",
    "private-funds",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "United States",
    "Goldstein v. SEC, July 2006"
   ],
   "supporting_quote": "Because the term \"client\" had not otherwise been defined in the Investment Advisers Act, the SEC had no authority to determine the meaning of the term."
  },
  {
   "id": "kaal:claim:2998097-003",
   "url": "https://wulfkaal.github.io/claims/2998097-003",
   "claim": "Because banks and brokers had let LTCM borrow the full value of its collateral, LTCM's 4.8 billion dollars in capital dissipated quickly once banks began making margin calls.",
   "type": "mechanism",
   "topics": [
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "LTCM, 1998",
    "100 percent collateral lending by banks and brokers"
   ],
   "supporting_quote": "Because banks and brokers had allowed LTCM to borrow 100 percent of the value of its collateral prior to the worsening of LTCM's financial condition in 1998, LTCM's $4.8 billion in capital dissipated quickly when the banks began to make margin calls."
  },
  {
   "id": "kaal:claim:2998097-004",
   "url": "https://wulfkaal.github.io/claims/2998097-004",
   "claim": "Banks overexposed themselves to private investment fund lending, which allowed LTCM and similar funds to grow significantly and led banks as counterparties to put their own existence at risk.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "banks lending to private investment funds",
    "pre 1998 lending practices"
   ],
   "supporting_quote": "However, banks overexposed themselves to private investment fund lending, allowing LTCM and other private investment funds to grow significantly. As counterparties to private investment funds, such as LTCM, banks put their own existence at risk with their lending practices."
  },
  {
   "id": "kaal:claim:2998097-005",
   "url": "https://wulfkaal.github.io/claims/2998097-005",
   "claim": "Post LTCM proposals for clearer credit risk strategies and credit risk management policies at financial intermediaries were inappropriately applied across the whole range of business models and lacked concrete implementation elements.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "post LTCM regulatory proposals",
    "author's critique beginning in 2005"
   ],
   "supporting_quote": "He found that proposals involving clearer credit risk strategies and credit risk management policies and processes for financial intermediaries were inappropriately applied across the range of business models and lacked concrete implementation elements."
  },
  {
   "id": "kaal:claim:2998097-006",
   "url": "https://wulfkaal.github.io/claims/2998097-006",
   "claim": "Stress tests, Value at Risk, and Monte Carlo scenarios imposed on financial intermediaries that lend to private investment funds necessarily rely on historical data, so they are of limited value as indicators of high risk sensitivity to future events.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "risk models used by intermediaries exposed to private funds"
   ],
   "supporting_quote": "Increased stress tests, Value at Risk, and Monte Carlo scenarios for financial intermediaries to private investments funds necessarily use historical data and are less valuable as an indicator of high risk sensitivity for future events.39"
  },
  {
   "id": "kaal:claim:2998097-007",
   "url": "https://wulfkaal.github.io/claims/2998097-007",
   "claim": "Proposals to improve close-out netting agreements and to harmonize standard documentation across jurisdictions are likely to run into jurisdictional arbitrage and national protectionism.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "cross border regulatory harmonization proposals after LTCM"
   ],
   "supporting_quote": "Proposals calling for improvements in close-out netting agreements for financial contracts and calls for harmonized standard documentation across jurisdictions may encounter jurisdictional arbitrage and national protectionism.41"
  },
  {
   "id": "kaal:claim:2998097-008",
   "url": "https://wulfkaal.github.io/claims/2998097-008",
   "claim": "Fund managers are unlikely to escape bank based indirect supervision by terminating a lending relationship, because their dynamic trading strategies depend on the immediate availability of capital and lending relationships now face increased scrutiny.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "defi",
    "regulatory-failure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "contemporary banking environment with heightened lending scrutiny",
    "funds running dynamic trading strategies"
   ],
   "supporting_quote": "However, because private investment funds' dynamic trading strategies often depend on the immediate availability of capital, and given today's banking environment with increased scrutiny over lending and lending relationships, managers are unlikely to terminate a lending relationship.45"
  },
  {
   "id": "kaal:claim:2998097-009",
   "url": "https://wulfkaal.github.io/claims/2998097-009",
   "claim": "Data on the credit derivatives market show that since 2000 private investment funds steadily increased their share of that market while banks' role declined, which supports shifting regulatory emphasis onto banks' lending exposure to those funds.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "evidenced",
   "scope_conditions": [
    "credit derivatives market since 2000"
   ],
   "supporting_quote": "The data suggest that since 2000 private investment funds have steadily increased their share in the credit derivatives market while banks' role in the market for credit derivatives has declined.49 The increasing role of private"
  },
  {
   "id": "kaal:claim:2998097-010",
   "url": "https://wulfkaal.github.io/claims/2998097-010",
   "claim": "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.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "private investment fund investor eligibility",
    "proposed in 2009, before Title IV"
   ],
   "supporting_quote": "Such proposed investor suitability standards would require independent verification of investors' ability to evaluate highly complex financial products and investment risk, rendering wealth as a proxy for sophistication redundant for investor eligibility.54"
  },
  {
   "id": "kaal:claim:2998097-011",
   "url": "https://wulfkaal.github.io/claims/2998097-011",
   "claim": "Under PFIARA, private investment fund advisers with more than 150 million dollars of assets under management must register as investment advisers and disclose information about their trades and portfolios to the SEC.",
   "type": "definitional",
   "topics": [
    "securities-law",
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "asserted",
   "scope_conditions": [
    "United States",
    "Title IV of the Dodd-Frank Act"
   ],
   "supporting_quote": "PFIARA mandates private investment fund adviser registration to increase record keeping and disclosure. Under PFIARA, private investment fund advisers with more than $150 million AUM must register as investment advisers and disclose information about their trades and portfolios to the SEC.58"
  },
  {
   "id": "kaal:claim:2998097-012",
   "url": "https://wulfkaal.github.io/claims/2998097-012",
   "claim": "The private fund industry's central fear about Form PF was not the filing itself but eventual publicity: if the disclosures ever became public, competitors could reverse engineer fund strategies and largely eliminate managers' ability to generate absolute returns.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "Form PF disclosures held confidentially by the SEC"
   ],
   "supporting_quote": "the industry feared that such information could at some point in the future be made public which would largely eliminate private investment fund managers' ability to make absolute returns for their clients as competitors would be able to reverse engineer their strategies. Apart"
  },
  {
   "id": "kaal:claim:2998097-013",
   "url": "https://wulfkaal.github.io/claims/2998097-013",
   "claim": "Some Form PF disclosure requirements are not answerable as designed, because counterparty credit exposure is sensitive information that individual private fund managers often cannot readily determine.",
   "type": "failure",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "Form PF counterparty credit exposure items"
   ],
   "supporting_quote": "For instance, the disclosure of counterparty credit exposure is sensitive information that often cannot readily be determined by the individual private investment fund managers."
  },
  {
   "id": "kaal:claim:2998097-014",
   "url": "https://wulfkaal.github.io/claims/2998097-014",
   "claim": "Because advisers and third party service providers can flatten out and sanitize the information disclosed in Forms ADV and PF, the resulting disclosures may be less useful to the FSOC and the SEC in determining the systemic risk posed by private funds.",
   "type": "failure",
   "topics": [
    "disclosure",
    "private-funds",
    "systemic-risk",
    "research-methods",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "Forms ADV and PF disclosures",
    "level of sanitizing could not be verified in the study"
   ],
   "supporting_quote": "Although the level of sanitizing of disclosures could not be verified, sanitized disclosures could be less useful for Financial Stability Oversight Council (FSOC) and SEC evaluation and their determination of the systemic risk posed by private funds.84"
  },
  {
   "id": "kaal:claim:2998097-015",
   "url": "https://wulfkaal.github.io/claims/2998097-015",
   "claim": "The second survey found long-term negative effects of Title IV: 34.9 percent of respondents expected it to affect the industry over the next five years through additional expenses, and 32.6 percent expected it to create barriers to entry for new private fund market entrants.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "evidenced",
   "scope_conditions": [
    "2015 survey of registered investment advisers",
    "N=69"
   ],
   "supporting_quote": "More than a third of respondents (34.9%) opined that Title IV will affect the private fund industry in the next five years because of additional expenses, and nearly a third (32.6%) opined that it will create barriers to entry to private fund market entrants. 50% of"
  },
  {
   "id": "kaal:claim:2998097-016",
   "url": "https://wulfkaal.github.io/claims/2998097-016",
   "claim": "The SEC's efforts to clarify and optimize the post Dodd-Frank framework cut both ways: they supported industry compliance with the revised standards while simultaneously creating uncertainty and higher costs for the industry.",
   "type": "failure",
   "topics": [
    "securities-law",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC implementation and clarification of Title IV registration and reporting rules"
   ],
   "supporting_quote": "At the same time, there is sufficient evidence in the findings of this study suggesting that the SEC's implementation and clarification of Dodd-Frank Act registration and reporting requirements for private funds also created uncertainty and higher costs for the industry."
  },
  {
   "id": "kaal:claim:2998097-017",
   "url": "https://wulfkaal.github.io/claims/2998097-017",
   "claim": "The industry largely absorbed the increased expenses of the Dodd-Frank Act by increasing the use of pass-through expense terms in adviser and fund arrangements, which is why advisers increasingly attributed earnings effects to opportunity costs rather than to expenses between 2012 and 2015.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "2012 to 2015",
    "investment adviser and private fund contractual relationships"
   ],
   "supporting_quote": "This was consistent with anecdotal evidence suggesting that the industry largely absorbed the increased expenses associated with the Dodd-Frank Act through the increasing use of pass-through expense terms when structuring investment adviser and private fund relationships between 2012 and 2015.128"
  },
  {
   "id": "kaal:claim:2998097-018",
   "url": "https://wulfkaal.github.io/claims/2998097-018",
   "claim": "Because Title IV compliance costs bring increasing returns to scale and therefore favor larger firms, Title IV may create barriers to entry for smaller private fund advisers, forcing them out of the market or into consolidation with other advisers.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "smaller private fund advisers",
    "if Title IV compliance costs bring increasing returns to scale"
   ],
   "supporting_quote": "In other words, if Title IV compliance costs bring increasing returns to scale because the costs of Title IV compliance favor larger firms, Title IV requirements may contribute to the creation of barriers to entry for smaller private fund advisers.135 This author demonstrated"
  },
  {
   "id": "kaal:claim:2998097-019",
   "url": "https://wulfkaal.github.io/claims/2998097-019",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "dynamic regulation of the private investment fund industry"
   ],
   "supporting_quote": "Rules can become adaptable if institutions and rulemaking processes integrate feedback effects, including feedback effects between the industry and regulators, that produce timely, relevant, and decentralized information for rulemaking ex- ante before rulemakers finalize rules.137 By increasing the"
  },
  {
   "id": "kaal:claim:2998097-020",
   "url": "https://wulfkaal.github.io/claims/2998097-020",
   "claim": "Using a regression discontinuity design around the 150 million dollar registration threshold with five years of performance data on more than 3500 reporting private funds, the study finds no significant effect of Dodd-Frank requirements on private fund performance, with all p-values above the 5 percent level.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "evidenced",
   "scope_conditions": [
    "private funds reporting performance data, 2010 to 2015",
    "regression discontinuity around the $150 million AUM registration threshold"
   ],
   "supporting_quote": "Using an array of robustness tests validating the RD results, the paper shows that the requirements introduced by the Dodd-Frank Act create no significant effect on private fund performance. The P-values for all RD results are above the 5% level and confirm the finding of no affect."
  },
  {
   "id": "kaal:claim:2998097-021",
   "url": "https://wulfkaal.github.io/claims/2998097-021",
   "claim": "The SEC's private fund data collection encountered accuracy and consistency problems that hampered the FSOC's ability to evaluate the systemic risk of private funds.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC data collection under Title IV",
    "FSOC systemic risk assessment"
   ],
   "supporting_quote": "The paper created and evaluated data evidence that demonstrated that the SEC's data collection encountered accuracy and consistency problems that hampered the FSOC's ability to evaluate the systemic risk of private funds.141 The author"
  },
  {
   "id": "kaal:claim:2998097-022",
   "url": "https://wulfkaal.github.io/claims/2998097-022",
   "claim": "The FSOC relied most heavily on some of the most problematic disclosure items the SEC collects, even though SEC data played a crucial role at every stage of its systemic risk assessment of private funds.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "private-funds",
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "evidenced",
   "scope_conditions": [
    "FSOC systemic risk assessment of private funds",
    "post Dodd-Frank Form PF data"
   ],
   "supporting_quote": "The author showed that while the SEC's data played a crucial role in all stages of FSOC's systemic risk assessment of private funds, the FSOC relied most heavily on some of the most problematic disclosure items collected by the SEC."
  },
  {
   "id": "kaal:claim:2998097-023",
   "url": "https://wulfkaal.github.io/claims/2998097-023",
   "claim": "Form PF data suffer from core shortcomings: ambiguity in several key questions, inaccurate definitions with correspondingly insufficient SEC guidance, and difficulty aggregating the required information.",
   "type": "failure",
   "topics": [
    "private-funds",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "evidenced",
   "scope_conditions": [
    "Form PF as implemented after the Dodd-Frank Act"
   ],
   "supporting_quote": "These included: the ambiguity of several key questions on Form PF, the inaccuracy of Form PF definitions and the corresponding insufficiency of SEC guidance for Form PF, and difficulties in aggregating the required Form PF information."
  },
  {
   "id": "kaal:claim:2998097-024",
   "url": "https://wulfkaal.github.io/claims/2998097-024",
   "claim": "Several core Form PF questions that feed the FSOC's stage one threshold assessment are defective, most importantly because the definition of RAUM required substantive interpretation by the filers themselves.",
   "type": "failure",
   "topics": [
    "private-funds",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "FSOC stage one threshold assessment",
    "Form PF valuation questions tied to RAUM"
   ],
   "supporting_quote": "Several core Form PF questions that provide specific information for FSOC's stage one threshold assessment encounter problems. More specifically, the definition of RAUM required substantive interpretation by filers."
  },
  {
   "id": "kaal:claim:2998097-025",
   "url": "https://wulfkaal.github.io/claims/2998097-025",
   "claim": "If the FSOC relies on Form PF data that is subject to inaccuracies, because uncertain filers complete the form using estimates and assumptions, then the FSOC's own work on private funds may in turn be subject to errors.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "private-funds",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "over 40 percent of surveyed filers disagreed with Form PF definitions or instructions"
   ],
   "supporting_quote": "If FSOC relied on Form PF data in its systemic risk assessment that is subject to inaccuracies, the paper suggested that it appeared possible that FSOC's work pertaining to private funds could in turn be subject to errors.149"
  },
  {
   "id": "kaal:claim:2998097-026",
   "url": "https://wulfkaal.github.io/claims/2998097-026",
   "claim": "The mere threat that hedge funds' Form PF systemic risk filings could become public, or be shared between the SEC and the federal bankruptcy bench, could impose some discipline on distressed debt investors' conduct in the bankruptcy process.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "disclosure",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "distressed debt investing by hedge funds",
    "overlap between Title IV disclosures and Revised Bankruptcy Rule 2019"
   ],
   "supporting_quote": "The mere threat of public access or sharing of hedge funds' systemic risk data filings in Form PF filings between the SEC and the federal bankruptcy bench could help facilitate some level of discipline for distressed debt investors' engagements in the bankruptcy process."
  },
  {
   "id": "kaal:claim:2998097-027",
   "url": "https://wulfkaal.github.io/claims/2998097-027",
   "claim": "The threat of public disclosure of systemic risk filings through the bankruptcy process only marginally affected hedge funds' tactics and their role in distressed investing, because disclosure obligations under the Dodd-Frank Act remained generic and unstandardized.",
   "type": "failure",
   "topics": [
    "disclosure",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "at the time of the study",
    "before the SEC standardized systemic risk disclosure requirements"
   ],
   "supporting_quote": "The paper highlighted that the threat of public disclosure of systemic risk filings by hedge funds via the bankruptcy process only marginally affected hedge funds' tactics and their role in distressed investing.154 Hedge funds' disclosure obligations under"
  },
  {
   "id": "kaal:claim:2998097-028",
   "url": "https://wulfkaal.github.io/claims/2998097-028",
   "claim": "Despite the rising relevance of investment due diligence and increasing due diligence litigation, the private fund industry is largely left to its own devices to ensure adequate due diligence standards.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "private fund investor due diligence",
    "United States, since the 2008 to 2009 financial crisis"
   ],
   "supporting_quote": "Despite the increasing relevance of investment due diligence in the capital formation and allocation process and despite increasing litigation in the context of investment due diligence, the industry is mostly left to its own devices to ensure adequate due diligence standards apply."
  },
  {
   "id": "kaal:claim:2998097-029",
   "url": "https://wulfkaal.github.io/claims/2998097-029",
   "claim": "Since 2010 private fund advisers increasingly engaged in investor due diligence partly to protect themselves from investor criticism and lawsuits, rather than in response to regulatory mandate.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC Form ADV Part II filings 2007 to 2014, N=100392",
    "due diligence litigation record 1995 to 2015, N=572"
   ],
   "supporting_quote": "the data provided in the author's study suggested that since 2010 private fund advisers increasingly engaged in private fund investor due diligence, partially in an effort to protect themselves from investor criticism and lawsuits.163 Since"
  },
  {
   "id": "kaal:claim:2998097-030",
   "url": "https://wulfkaal.github.io/claims/2998097-030",
   "claim": "The legal standards applicable to private fund investor due diligence are somewhat inconsistent and suboptimal and merit clarification.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "evidenced",
   "scope_conditions": [
    "private fund investor due diligence litigation record, 1995 to 2015"
   ],
   "supporting_quote": "The study demonstrated that the legal standards applicable to private fund investor due diligence were somewhat inconsistent and suboptimal and merited clarification."
  },
  {
   "id": "kaal:claim:2998097-031",
   "url": "https://wulfkaal.github.io/claims/2998097-031",
   "claim": "The absence of due diligence standards traces to private funds' unique market position: unlike mutual funds, private funds evolved as unregistered entities free from most regulatory oversight, so their investor due diligence also evolved without oversight.",
   "type": "mechanism",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "private funds compared with mutual funds",
    "United States"
   ],
   "supporting_quote": "Lack of standards for private fund investor due diligence could partially be attributed to private funds' unique position in markets—unlike mutual funds, private funds evolved as unregistered entities, free from most regulatory oversight. Accordingly, private fund investor due diligence evolved"
  },
  {
   "id": "kaal:claim:2998097-032",
   "url": "https://wulfkaal.github.io/claims/2998097-032",
   "claim": "Private investment fund due diligence may follow the same trajectory as banks' risk evaluation, which moved from unstandardized general strategies in the early 2000s to a heavily regulated and scientific practice today.",
   "type": "predictive",
   "topics": [
    "systemic-risk",
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "speculative",
   "scope_conditions": [
    "analogy to the evolution of bank risk evaluation"
   ],
   "supporting_quote": "investment fund due diligence may follow the same evolution as banks' risk evaluation. Whereas in the early 2000s banks operated with general risk evaluation strategies but no uniformity and no applicable standards, today banks' risk evaluation is heavily regulated and turned into a science."
  },
  {
   "id": "kaal:claim:2998097-033",
   "url": "https://wulfkaal.github.io/claims/2998097-033",
   "claim": "Confluence runs in both directions: mutual funds are becoming more like hedge funds as a matter of investment strategy, while hedge funds are becoming more like mutual funds as a matter of regulatory framework.",
   "type": "mechanism",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "United States asset management industry after the 2008 to 2009 crisis"
   ],
   "supporting_quote": "Several factors suggest that mutual funds are becoming more like hedge funds as a matter of investment strategy, while hedge funds are becoming more like mutual funds as a matter of the regulatory framework.169 The factors that perhaps best illustrate the"
  },
  {
   "id": "kaal:claim:2998097-034",
   "url": "https://wulfkaal.github.io/claims/2998097-034",
   "claim": "Unconstrained mutual funds carry private fund style investment strategies inside the regulatory framework of a traditional mutual fund, and they are widely offered to retail investors who would otherwise be excluded from private fund investments.",
   "type": "definitional",
   "topics": [
    "private-funds",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "unconstrained mutual funds launched from 2010 through 2015"
   ],
   "supporting_quote": "UMFs are subject to the same regulatory framework as traditional mutual funds, and they are widely offered and available to retail investors who would otherwise be excluded from investments in private investment funds."
  },
  {
   "id": "kaal:claim:2998097-035",
   "url": "https://wulfkaal.github.io/claims/2998097-035",
   "claim": "Merging the regulatory requirements applicable to mutual funds with the formerly distinct rules applicable to private investment funds creates incentives for private investment managers to set up retail alternative funds.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "provisions of the Dodd-Frank Act that assimilated mutual and hedge fund legal requirements"
   ],
   "supporting_quote": "Merging the regulatory requirements applicable to mutual funds with the formerly more distinct rules applicable to private investment funds creates incentives for private investment managers to set up retail alternative funds.188 A higher supply of retail alternative funds, in"
  },
  {
   "id": "kaal:claim:2998097-036",
   "url": "https://wulfkaal.github.io/claims/2998097-036",
   "claim": "Hedge fund advisers already required to register with the SEC have an incentive to also manage mutual funds or set up retail alternative funds, because the incremental regulatory burden of doing so is only minimally higher than their post registration requirements.",
   "type": "mechanism",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "advisers with more than $150 million AUM required to register under the Dodd-Frank Act"
   ],
   "supporting_quote": "Hedge fund advisers who are required to register with the SEC have incentives to also manage mutual funds or set up retail alternative funds because the regulatory burden is minimally higher in comparison with preregistration legal requirements.191 Some registered hedge fund advisers may choose"
  },
  {
   "id": "kaal:claim:2998097-037",
   "url": "https://wulfkaal.github.io/claims/2998097-037",
   "claim": "The confluence of mutual and private investment funds contributes to the gradual erosion of the public/private distinction in federal securities regulation.",
   "type": "mechanism",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "United States federal securities regulation"
   ],
   "supporting_quote": "Mutual and private investment fund confluence contributes to the gradual erosion of the public/private distinction in federal securities regulation. Beyond the retail investor-"
  },
  {
   "id": "kaal:claim:2998097-038",
   "url": "https://wulfkaal.github.io/claims/2998097-038",
   "claim": "The proliferation of unconstrained mutual funds calls into question the effectiveness of retail investor protections under the Investment Companies Act of 1940, because shares in funds that carry private fund strategies and risks may be bought by retail investors with limited or no investment experience.",
   "type": "failure",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "unconstrained mutual funds sold to retail investors",
    "United States"
   ],
   "supporting_quote": "However, unlike private funds, which are generally limited to investors who satisfy particular investment sophistication and net worth requirements, shares of UMFs may be purchased by retail investors, including those with quite limited or even no investment experience."
  },
  {
   "id": "kaal:claim:2998097-039",
   "url": "https://wulfkaal.github.io/claims/2998097-039",
   "claim": "Blockchain's structural characteristic as a decentralized model for financial transactions disintermediates and disrupts the existing financial infrastructure, so private funds that adopt it first directly accelerate that disintermediation.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "private investment funds adopting blockchain infrastructure"
   ],
   "supporting_quote": "First and foremost, the structural characteristic of blockchain as a decentralized model for financial transactions disintermediates and disrupts the existing financial infrastructure. Private investment"
  },
  {
   "id": "kaal:claim:2998097-040",
   "url": "https://wulfkaal.github.io/claims/2998097-040",
   "claim": "Blockchain technology enables managers to charge per-transaction fees, which undermines the existing 2 and 20 fee model, because it allows fully automated allocation of the correct fee to each executed trade without manual reconciliation or settlement.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "year": "2017",
   "source_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain enabled private investment funds"
   ],
   "supporting_quote": "Blockchain technology enables managers to charge per- transaction fees which undermines the existing 2/20 fee model."
  },
  {
   "id": "kaal:claim:2834531-001",
   "url": "https://wulfkaal.github.io/claims/2834531-001",
   "claim": "The obstacles preventing consumers and entrepreneurs from accessing a workable new technology are frequently not technological limits but human choices embodied in law: legal and regulatory rules prohibit or limit commercial exploitation of, and public access to, new technology.",
   "type": "mechanism",
   "topics": [
    "innovation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "once the main technical problems of a technology have been solved"
   ],
   "supporting_quote": "These obstacles are not the result of technological limitations, but human choice. The law — and other regulations — can often prohibit, or otherwise limit, commercial exploitation of, and public access to, new technology."
  },
  {
   "id": "kaal:claim:2834531-002",
   "url": "https://wulfkaal.github.io/claims/2834531-002",
   "claim": "Because neither national nor international law recognizes artificial intelligence as a subject of law, AI has no legal personality and therefore cannot itself be held liable for the damages it causes.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "asserted",
   "scope_conditions": [
    "under the legal frameworks in force as of 2017"
   ],
   "supporting_quote": "Because national and international law do not currently recognize AI as a subject of law, AI has no legal personality and as such cannot be held personally liable for damages."
  },
  {
   "id": "kaal:claim:2834531-003",
   "url": "https://wulfkaal.github.io/claims/2834531-003",
   "claim": "Increasing the quantity of data does not dissolve the foundational methodological problems of data: construct validity, measurement, reliability, and data dependencies remain the same regardless of how much data is collected.",
   "type": "failure",
   "topics": [
    "research-methods",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "where big data is used as a basis for analysis or inference"
   ],
   "supporting_quote": "Foundational data issues of construct validity, measurement, reliability, and data dependencies are the same regardless of data quantities."
  },
  {
   "id": "kaal:claim:2834531-004",
   "url": "https://wulfkaal.github.io/claims/2834531-004",
   "claim": "Regulation is never grounded in the full set of facts about a technology; it is always premised on a prior selection of the facts that regulators themselves treat as relevant when deciding what, when, and how to intervene.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "supporting_quote": "In this respect, regulation is always premised on a selection of relevant facts about a particular technology."
  },
  {
   "id": "kaal:claim:2834531-005",
   "url": "https://wulfkaal.github.io/claims/2834531-005",
   "claim": "The time frame for rulemaking in the existing regulatory infrastructure is largely inadequate to address the regulatory challenges created by disruptive innovation.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "notice and comment rulemaking in the existing regulatory infrastructure",
    "technologies developing at exponential rates"
   ],
   "supporting_quote": "The time frame for rulemaking in the existing regulatory infrastructure is largely inadequate to address regulatory challenges associated with disruptive innovation."
  },
  {
   "id": "kaal:claim:2834531-006",
   "url": "https://wulfkaal.github.io/claims/2834531-006",
   "claim": "The speed of product innovation allows a new product to reach the market while formal rulemaking, which takes months and often years of procedure, is still occupied with the previous product launch.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "formal rulemaking in the existing regulatory infrastructure"
   ],
   "supporting_quote": "The speed of product innovation makes it possible to bring a new product to market while formal rulemaking in the existing regulatory infrastructure, taking months and often years of regulatory procedure, is still dealing with the last product launch."
  },
  {
   "id": "kaal:claim:2834531-007",
   "url": "https://wulfkaal.github.io/claims/2834531-007",
   "claim": "New regulations addressed to an innovative product can be obsolete before they are even finalized.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "asserted",
   "scope_conditions": [
    "rules aimed at products subject to rapid innovation cycles"
   ],
   "supporting_quote": "New regulations pertaining to an innovative product could be obsolete before they are finalized."
  },
  {
   "id": "kaal:claim:2834531-008",
   "url": "https://wulfkaal.github.io/claims/2834531-008",
   "claim": "The existing regulatory infrastructure cannot sufficiently distinguish beneficial innovation from other innovation, and therefore cannot harness it.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "innovation",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "asserted",
   "supporting_quote": "The existing regulatory infrastructure cannot sufficiently distinguish and harness beneficial innovation."
  },
  {
   "id": "kaal:claim:2834531-009",
   "url": "https://wulfkaal.github.io/claims/2834531-009",
   "claim": "Because technological transition is becoming a permanent state rather than an episode, rulemakers' inability to address the regulatory issues created by disruptive innovation will generate high levels of legal uncertainty and inconsistency.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "innovation",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "age of continuous disruptive innovation",
    "existing rulemaking framework"
   ],
   "supporting_quote": "technological transition is going to be a permanent state in the age of disruptive innovation, rulemakers' inability to address regulatory issues associated with disruptive innovation will likely generate high levels of legal uncertainty and inconsistency"
  },
  {
   "id": "kaal:claim:2834531-010",
   "url": "https://wulfkaal.github.io/claims/2834531-010",
   "claim": "The current regulatory framework contains no mechanism that informs rulemakers of beneficial innovative ideas succinctly and in advance, so regulators learn about innovation only after the fact.",
   "type": "failure",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "asserted",
   "supporting_quote": "The current regulatory framework lacks a mechanism that succinctly and anticipatorily informs rulemakers of beneficial innovative ideas."
  },
  {
   "id": "kaal:claim:2834531-011",
   "url": "https://wulfkaal.github.io/claims/2834531-011",
   "claim": "Establishing the facts about a new technology is often impossible in practice because there is no adequate sample or other reliable data on the effects of that technology yet.",
   "type": "failure",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "early stage or emerging technologies"
   ],
   "supporting_quote": "The task of establishing facts about new technology may be made difficult by the lack of an adequate sample or other reliable data on the effects of new technology."
  },
  {
   "id": "kaal:claim:2834531-012",
   "url": "https://wulfkaal.github.io/claims/2834531-012",
   "claim": "The identification of which facts count as relevant or irrelevant can be distorted by the concerns of entrenched interests that find the new technology commercially threatening.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "where incumbents face competitive displacement by the technology"
   ],
   "supporting_quote": "Identification of relevant or irrelevant facts may also be distorted or otherwise influenced by the concerns of entrenched interests about new (and commercially threatening) technologies."
  },
  {
   "id": "kaal:claim:2834531-013",
   "url": "https://wulfkaal.github.io/claims/2834531-013",
   "claim": "The relevant facts on which regulation rests are never going to be obvious or settled, so the regulation of any disruptive new technology will always be reactive and built on an uncertain and politicized factual basis.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "disruptive new technologies"
   ],
   "supporting_quote": "In this respect, the \"relevant facts\" that form the basis of regulation are never going to be obvious or settled. The regulation of any disruptive new technology is always going to be reactive and based on an uncertain and politicized factual basis."
  },
  {
   "id": "kaal:claim:2834531-014",
   "url": "https://wulfkaal.github.io/claims/2834531-014",
   "claim": "Regulators too often define success negatively, as the avoidance of catastrophe, which makes regulatory experimentation unattractive to them.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "where regulators are exposed to criticism for adverse outcomes"
   ],
   "supporting_quote": "Too often, regulators define \"success\" in negative terms, as in the avoidance of catastrophe."
  },
  {
   "id": "kaal:claim:2834531-015",
   "url": "https://wulfkaal.github.io/claims/2834531-015",
   "claim": "Because regulators seek to avoid grounds for criticism, they inevitably adopt an overly cautious posture, which is what the precautionary principle amounts to in practice.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "supporting_quote": "Avoiding grounds for criticism inevitably results in an overly cautious approach, called the \"precautionary principle.\""
  },
  {
   "id": "kaal:claim:2834531-016",
   "url": "https://wulfkaal.github.io/claims/2834531-016",
   "claim": "Regulatory caution produces a systematic disconnect between the regulation of an innovation and the commercial and consumer ability to access it.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "from the perspective of entrepreneurs and consumers"
   ],
   "supporting_quote": "The result is that, all too often, there is a disconnect between regulation and commercial and consumer access to that innovation."
  },
  {
   "id": "kaal:claim:2834531-017",
   "url": "https://wulfkaal.github.io/claims/2834531-017",
   "claim": "Faced with disruptive innovation, regulators believe their only options are reckless action, meaning regulation without sufficient facts, or paralysis, meaning doing nothing; in that bind caution beats risk and the precautionary principle becomes the default.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "constant, complex and disruptive technological innovation"
   ],
   "supporting_quote": "Regulators can find themselves in a situation where they believe they must opt for either reckless action (regulation without sufficient facts) or paralysis (doing nothing). Inevitably in such a case, caution tends to trump risk. The precautionary principle becomes the default position."
  },
  {
   "id": "kaal:claim:2834531-018",
   "url": "https://wulfkaal.github.io/claims/2834531-018",
   "claim": "Regulatory caution is not neutral: it functions to reinforce the status quo, with the result that new technologies struggle to reach the market in a timely or efficient manner.",
   "type": "failure",
   "topics": [
    "economics",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "supporting_quote": "But such caution merely functions to reinforce the status quo and the result is that new technologies struggle to reach the market in a timely or efficient manner."
  },
  {
   "id": "kaal:claim:2834531-019",
   "url": "https://wulfkaal.github.io/claims/2834531-019",
   "claim": "A fact based approach to regulation worked relatively well only under a specific historical condition: innovation cycles were long and disruption unfolded over decades, giving regulators time to get their facts in order before intervening.",
   "type": "condition",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "past eras of slow technological disruption"
   ],
   "supporting_quote": "In spite of these problems, a fact–based approach to regulation may have worked relatively well in the past when innovation cycles were longer and the pace of disruptive innovation occurred over decades."
  },
  {
   "id": "kaal:claim:2834531-020",
   "url": "https://wulfkaal.github.io/claims/2834531-020",
   "claim": "The automobile illustrates how long the old disruption lag was: Benz's engine did not displace the horse and carriage industry, and mainstream adoption came only in 1908 when Ford began mass producing the Model T, decades after the 1879 patent.",
   "type": "empirical",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "evidenced",
   "scope_conditions": [
    "the origins of the modern automobile industry"
   ],
   "supporting_quote": "However, Benz's engine did not disrupt the horse and carriage industry or bring the automobile into the mainstream of everyday life. This only occurred much later, in 1908, when Henry Ford started to mass produce the Model T."
  },
  {
   "id": "kaal:claim:2834531-021",
   "url": "https://wulfkaal.github.io/claims/2834531-021",
   "claim": "The delegation of technology policy to politicians advised by experts rested on public trust that has since eroded: consistent empirical evidence shows that trust in both government and experts has declined in recent years.",
   "type": "empirical",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "evidenced",
   "scope_conditions": [
    "recent decades, drawing on Pew survey evidence"
   ],
   "supporting_quote": "Although the public once had a relatively high degree of trust in both the political process and the scientific/expert method, consistent empirical evidence demonstrates that both trust in government and experts has declined in recent years."
  },
  {
   "id": "kaal:claim:2834531-022",
   "url": "https://wulfkaal.github.io/claims/2834531-022",
   "claim": "Time pressure produces two distinct fact failures: the facts about a new technology may simply not exist yet, or regulators may select the wrong, contested, or irrelevant facts as the basis of regulation.",
   "type": "failure",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "conditions of incessant and accelerating technological change"
   ],
   "supporting_quote": "The pressure of time means that the facts surrounding a piece of new technology or other innovation may not be there, or the regulators may simply select the \"wrong\" — or at least contested or otherwise irrelevant — facts as the basis of regulation."
  },
  {
   "id": "kaal:claim:2834531-023",
   "url": "https://wulfkaal.github.io/claims/2834531-023",
   "claim": "In the Airbnb case, the selection of the relevant facts and the residency rule that followed from it benefit vested interests, most obviously the hotel industry that stands to lose from Airbnb's competition.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "short term rental rules requiring hosts to reside in the property"
   ],
   "supporting_quote": "Of course, the selection of the \"relevant facts\" in this case and the resulting rule benefits certain vested interests, most obviously the hotel industry who stand to lose out from the new competition from Airbnb."
  },
  {
   "id": "kaal:claim:2834531-024",
   "url": "https://wulfkaal.github.io/claims/2834531-024",
   "claim": "The premises on which regulation of a new technology is built may not be facts at all, or at least not the most relevant facts about that innovation, as the assumption that Airbnb hosts are simply chasing easy money illustrates.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "regulation of platform based innovations such as Airbnb"
   ],
   "supporting_quote": "The selected facts may not even be facts, or at least, the most relevant facts about a particular innovation."
  },
  {
   "id": "kaal:claim:2834531-025",
   "url": "https://wulfkaal.github.io/claims/2834531-025",
   "claim": "Contesting the safety rationale offered for restricting Uber, the authors argue that the two way rating system and the algorithmic matching of drivers and customers already provide an effective means of policing drivers and ensuring a safe ride.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "ride hailing platforms with reciprocal ratings and algorithmic matching"
   ],
   "supporting_quote": "The two–way rating system (drivers rate customers and customers rate drivers) and an algorithm–based system for matching up drivers and customers appear to offer an effective means of policing Uber drivers and ensuring a safe ride for customers."
  },
  {
   "id": "kaal:claim:2834531-026",
   "url": "https://wulfkaal.github.io/claims/2834531-026",
   "claim": "There is a systematic disconnect between the facts regulators identify as important and the actual experience and wishes of most consumers.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "regulatory debates over platform services such as Uber"
   ],
   "supporting_quote": "There is a disconnect between the facts that regulators identify as important and the experience and wishes of most consumers."
  },
  {
   "id": "kaal:claim:2834531-027",
   "url": "https://wulfkaal.github.io/claims/2834531-027",
   "claim": "The problem is not regulator bad faith: the acceleration of innovation cycles means that selecting the relevant facts is difficult even under the best conditions and with the best intentions, while simply waiting is likely to bring further complications and criticism.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "accelerating innovation cycles",
    "independent of agency capture"
   ],
   "supporting_quote": "the acceleration in innovation cycles means that even in the best conditions and with the best of intentions, selecting relevant facts is a difficult task. And the option of simply waiting seems likely to result in further complications and criticism."
  },
  {
   "id": "kaal:claim:2834531-028",
   "url": "https://wulfkaal.github.io/claims/2834531-028",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "if the skeptical post fact account of regulation is accepted"
   ],
   "supporting_quote": "If we live in a post–truth world then we don't have any objective basis on which to act, leading to inertia or the reproduction of the status quo."
  },
  {
   "id": "kaal:claim:2834531-029",
   "url": "https://wulfkaal.github.io/claims/2834531-029",
   "claim": "The response to contested facts should not be to abandon facts, but to identify alternative grounds for regulation that would make the regulation of innovative products and services more effective and more legitimate.",
   "type": "normative",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "supporting_quote": "And yet, rather than abandoning facts, we should be thinking about some alternative grounds for regulation that would allow the regulation of innovative products and services to be more effective and legitimate."
  },
  {
   "id": "kaal:claim:2834531-030",
   "url": "https://wulfkaal.github.io/claims/2834531-030",
   "claim": "In a world where regulatory competition is the new normal, regulators can pay a heavy economic price for being overly cautious or for abandoning the attempt to establish a meaningful basis for regulation, because first mover markets capture the benefits.",
   "type": "mechanism",
   "topics": [
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "global markets with mobile investment and jurisdictional competition"
   ],
   "supporting_quote": "regulators can pay a heavy economic price for being overly cautious or abandoning the project of trying to establish a meaningful basis for regulation."
  },
  {
   "id": "kaal:claim:2834531-031",
   "url": "https://wulfkaal.github.io/claims/2834531-031",
   "claim": "Lawmaking and regulatory design need to become more proactive, dynamic, and responsive.",
   "type": "normative",
   "topics": [
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "asserted",
   "supporting_quote": "Lawmaking and regulatory design needs to become more proactive, dynamic and responsive."
  },
  {
   "id": "kaal:claim:2834531-032",
   "url": "https://wulfkaal.github.io/claims/2834531-032",
   "claim": "Data on investment in new technology can be used as an index or proxy for the necessity of regulation, supplying the signal that fact based regulation cannot generate in time.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "contingent-capital"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "where venture and investment data on the technology are available"
   ],
   "supporting_quote": "Of particular importance in this context, is data relating to investment in new technology and innovation.90 Such data can be used as an index or proxy of the necessity of regulation."
  },
  {
   "id": "kaal:claim:2834531-033",
   "url": "https://wulfkaal.github.io/claims/2834531-033",
   "claim": "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.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "supporting_quote": "This might then allow regulators to be more pro–active and avoid wasting resources on technologies that are unlikely to make it to market. It would also allow regulators to more accurately define the scope of a technology by focusing on the type of firm that is attracting attention."
  },
  {
   "id": "kaal:claim:2834531-034",
   "url": "https://wulfkaal.github.io/claims/2834531-034",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "when early stage investments peak and later stage investments take off"
   ],
   "supporting_quote": "Data on the timing of investment appears to provide a reliable indicator of the commercial maturity of a technology, in the sense that high levels of investor activity indicate that a particular technology is about to be ready for commercial exploitation."
  },
  {
   "id": "kaal:claim:2834531-035",
   "url": "https://wulfkaal.github.io/claims/2834531-035",
   "claim": "Regulation should be demand driven, meaning its substantive direction should follow the interests of consumers, and where there is genuine demand for a product or technology it should in principle be permitted.",
   "type": "normative",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "where genuine consumer demand for the technology can be shown"
   ],
   "supporting_quote": "If there is a genuine demand for certain products or technologies, then such technologies should, in principle, be permitted."
  },
  {
   "id": "kaal:claim:2834531-036",
   "url": "https://wulfkaal.github.io/claims/2834531-036",
   "claim": "A demand driven approach does not require ignoring the risks and negative side effects of new technology; what it requires is that entrenched interests with a clear stake in obstructing a disruptive product or service not be allowed to dominate the debate.",
   "type": "design",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "supporting_quote": "What it does mean, however, is that entrenched interests with a clear interest in obstructing a disruptive product or service should not be allowed to dominate the debate."
  },
  {
   "id": "kaal:claim:2834531-037",
   "url": "https://wulfkaal.github.io/claims/2834531-037",
   "claim": "Regulatory experimentation matters within a single jurisdiction and not only across jurisdictions, because it gives regulators data on the real world effects of a particular regulatory scheme in a comparable setting.",
   "type": "design",
   "topics": [
    "economics",
    "empirical-evidence",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "comparable settings within one jurisdiction"
   ],
   "supporting_quote": "But such experimentation is also important within a particular jurisdiction as it provides regulators with data on the real–world effects of a particular regulatory scheme in a comparable setting."
  },
  {
   "id": "kaal:claim:2834531-038",
   "url": "https://wulfkaal.github.io/claims/2834531-038",
   "claim": "Regulators must abandon their fixation on finality and legal certainty and instead treat regulatory decisions as contingent and open ended stages in a longer process.",
   "type": "normative",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "regulation of fast moving technologies"
   ],
   "supporting_quote": "Regulators need to abandon a fixation on finality and legal certainty and embrace contingency, flexibility and an openness to new ideas."
  },
  {
   "id": "kaal:claim:2834531-039",
   "url": "https://wulfkaal.github.io/claims/2834531-039",
   "claim": "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.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "regulation of disruptive technologies"
   ],
   "supporting_quote": "a principle–based approach facilitates a greater degree of openness and flexibility on the part of regulators, and prevents innovative technologies (and the companies that have developed them) from becoming bogged down in the regulatory thicket that often results from a rule–focused approach."
  },
  {
   "id": "kaal:claim:2834531-040",
   "url": "https://wulfkaal.github.io/claims/2834531-040",
   "claim": "The principle based approach has a shortcoming the authors concede: it is usually impossible to comply with principles that could change after the fact, and the approach may let regulators promulgate fact based laws and rules through the backdoor.",
   "type": "failure",
   "topics": [
    "compliance",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "from the perspective of regulated companies operating under principles"
   ],
   "supporting_quote": "The argument is that it is usually impossible to comply with principles that could change \"after the fact.\"107 That is to say, a principle–based approach may facilitate policy makers, lawmakers, and regulators in promulgating facts–based laws and rules through the backdoor."
  },
  {
   "id": "kaal:claim:2834531-041",
   "url": "https://wulfkaal.github.io/claims/2834531-041",
   "claim": "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.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "asserted",
   "scope_conditions": [
    "the FCA sandbox announced in April 2016 for Fintech firms"
   ],
   "supporting_quote": "The idea behind the sandbox is to provide a safe space for testing innovative products and services without being forced to comply with the applicable set of rules and regulations."
  },
  {
   "id": "kaal:claim:2834531-042",
   "url": "https://wulfkaal.github.io/claims/2834531-042",
   "claim": "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.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "evidenced",
   "scope_conditions": [
    "default duration of three to six months",
    "customer numbers sufficient for statistically relevant data",
    "pre agreed safeguards and disclosure to customers"
   ],
   "supporting_quote": "What is perhaps most interesting about the sandbox is that new ideas, product, and services can be tested in a \"live\" environment.112 In order to create this environment, the FCA defined a set of default parameters that can be altered on a case–by–case basis."
  },
  {
   "id": "kaal:claim:2834531-043",
   "url": "https://wulfkaal.github.io/claims/2834531-043",
   "claim": "The sandbox generates legitimacy as well as information: because the tested technology remains open to discussion and democratic supervision, public entitlement to participate in regulatory debates creates a renewed sense of legitimacy that justifies the regulation.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "where the technology has consequences that flow into everyday lives"
   ],
   "supporting_quote": "In this way, public entitlement to participate in regulatory debates can help to create a renewed sense of legitimacy that justifies the regulation."
  },
  {
   "id": "kaal:claim:2834531-044",
   "url": "https://wulfkaal.github.io/claims/2834531-044",
   "claim": "A data based regulatory environment requires measures built on flexible and inclusive processes that involve startups and established companies, regulators, experts, and the public.",
   "type": "condition",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "argued",
   "scope_conditions": [
    "data based regulatory environments"
   ],
   "supporting_quote": "In a data–based regulatory environment there is a clear need for measures that are built on flexible and inclusive processes that involve startups and established companies, regulators, experts and the public."
  },
  {
   "id": "kaal:claim:2834531-045",
   "url": "https://wulfkaal.github.io/claims/2834531-045",
   "claim": "The flexible, data based, sandbox style regulatory approach already adopted in the financial industry is expected to expand into other areas of innovation and technology.",
   "type": "predictive",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, Regulation Tomorrow What Happens When Technology Is Faster Than the Law (2017). SSRN: https://ssrn.com/abstract=2834531",
   "year": "2017",
   "source_sha256": "9cd875ebdb0266febbdcdabfca5b9b9f0de1b7ad9e3d5a8a5971bdbe469323b7",
   "confidence": "speculative",
   "scope_conditions": [
    "starting from financial regulation"
   ],
   "supporting_quote": "This regulatory approach is already adopted in the financial industry. It is only to be expected that this trend will expand to other areas"
  },
  {
   "id": "kaal:claim:3017612-001",
   "url": "https://wulfkaal.github.io/claims/3017612-001",
   "claim": "The 1991 passage of Section 7.32 of the Model Business Corporation Act triggered a wave of state authorization of shareholder control agreements, adopted specifically to secure the validity of such agreements rather than leaving validity to uncertain judicial development.",
   "type": "mechanism",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States state corporate law",
    "post 1991"
   ],
   "supporting_quote": "Since Section 7.32 of the Model Business Corporation Act (MBCA) was passed in 1991, most US states have authorized shareholder control agreements in an effort to support the validity of such agreements."
  },
  {
   "id": "kaal:claim:3017612-002",
   "url": "https://wulfkaal.github.io/claims/3017612-002",
   "claim": "US corporate codes function as enabling statutes that give enterprises wide flexibility, but that flexibility stops at mandatory provisions, which the parties cannot contract around.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "asserted",
   "scope_conditions": [
    "United States corporate codes"
   ],
   "supporting_quote": "While corporate codes are viewed as \"enabling\" statutes—providing flexibility for different enterprises—mandatory provisions cannot be changed."
  },
  {
   "id": "kaal:claim:3017612-003",
   "url": "https://wulfkaal.github.io/claims/3017612-003",
   "claim": "Although shareholder agreements are authorized and shaped by corporation code provisions, their construction is governed by ordinary contract interpretation rules, so statutory authorization does not displace contract doctrine.",
   "type": "mechanism",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States, Delaware law illustrated by Salamone v. Gorman"
   ],
   "supporting_quote": "While the agreements are governed by legislation, general rules applicable to contract interpretation govern the construction of shareholder agreements."
  },
  {
   "id": "kaal:claim:3017612-004",
   "url": "https://wulfkaal.github.io/claims/3017612-004",
   "claim": "Shareholder agreement terms that limit board authority are vulnerable to invalidation, and the dominant judicial rationale is that such agreements tie the hands of directors and make it impossible for them to exercise discretion over the matters the agreement settles.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "argued",
   "scope_conditions": [
    "provisions that encroach on the directors' statutory authority to manage the business and affairs of the corporation"
   ],
   "supporting_quote": "Courts offer varying rationales for nullifying terms of shareholder agreements that limit the board's authority, but most often, courts worry the agreements \"tie the hands of the directors,\" making it impossible for them to exercise their discretion concerning matters decided in the agreement."
  },
  {
   "id": "kaal:claim:3017612-005",
   "url": "https://wulfkaal.github.io/claims/3017612-005",
   "claim": "Under MBCA Section 7.32 the ten year duration limit is only a default rule, unlike the corresponding limit for voting trusts, so parties who specify a longer term are permitted to have it.",
   "type": "definitional",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "agreements formed under MBCA Section 7.32"
   ],
   "supporting_quote": "The section specifies a 10 year limit, a similar period to voting trusts, but unlike voting trusts, this period is just a default rule, so that if the parties specify a longer period it is permitted."
  },
  {
   "id": "kaal:claim:3017612-006",
   "url": "https://wulfkaal.github.io/claims/3017612-006",
   "claim": "Duration ceilings contained in voting trust statutes do not carry over to other types of shareholder agreements, and courts have repeatedly sustained shareholder agreements intended to run indefinitely.",
   "type": "condition",
   "topics": [
    "reputation",
    "governance-design",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "agreements other than voting trusts"
   ],
   "supporting_quote": "Duration limitations in the voting trust statutes do not apply to other types of shareholders' agreements.15 Numerous decisions have sustained shareholders' agreements which were to remain in effect indefinitely."
  },
  {
   "id": "kaal:claim:3017612-007",
   "url": "https://wulfkaal.github.io/claims/3017612-007",
   "claim": "Because public and close corporation shareholders differ materially in bargaining power, close corporation shareholders should be granted greater flexibility to order their affairs by agreement.",
   "type": "normative",
   "topics": [
    "risk-and-incentives",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "argued",
   "scope_conditions": [
    "closely held corporations"
   ],
   "supporting_quote": "Courts and academics have acknowledged there is a significant difference between shareholders of public and close corporations, specifically in regards to bargaining power, such that close corporation shareholders should have greater flexibility to align their affairs as they see fit."
  },
  {
   "id": "kaal:claim:3017612-008",
   "url": "https://wulfkaal.github.io/claims/3017612-008",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "MBCA jurisdictions",
    "corporation becomes publicly traded"
   ],
   "supporting_quote": "agreement ceases to be effective when the stock of the corporation is listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association."
  },
  {
   "id": "kaal:claim:3017612-009",
   "url": "https://wulfkaal.github.io/claims/3017612-009",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "agreements seeking MBCA Section 7.32 protection"
   ],
   "supporting_quote": "Most importantly the agreement must be unanimous, so that agreements that do not involve all shareholders, such as agreements designed to keep control within a block, must look elsewhere for their authorization."
  },
  {
   "id": "kaal:claim:3017612-010",
   "url": "https://wulfkaal.github.io/claims/3017612-010",
   "claim": "MBCA Section 7.32 requires a writing but, departing from earlier statutes, does not require the agreement to sit in the articles or bylaws, so stand alone written shareholder agreements are expressly valid.",
   "type": "definitional",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "MBCA Section 7.32 agreements"
   ],
   "supporting_quote": "The agreement must be in writing, but unlike some earlier statutes, the written agreement does not have to be in the articles or bylaws—stand-alone written agreements are specifically allowed."
  },
  {
   "id": "kaal:claim:3017612-011",
   "url": "https://wulfkaal.github.io/claims/3017612-011",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "MBCA Section 7.32 agreements"
   ],
   "supporting_quote": "Finally, the Model Act language requires that a legend appear on the stock certificates flagging the agreement for purchasers who buy shares covered by such an agreement."
  },
  {
   "id": "kaal:claim:3017612-012",
   "url": "https://wulfkaal.github.io/claims/3017612-012",
   "claim": "Shareholder agreements matter more in closely held corporations because minority holders have sunk substantial time or capital into the enterprise yet cannot exit through sale, since their shares lack a ready market.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "argued",
   "scope_conditions": [
    "closely held corporations",
    "dissatisfied minority shareholders"
   ],
   "supporting_quote": "Minority shareholders in a closely held corporation are likely to have invested substantial time or capital in the enterprise, but those dissatisfied with the corporation's operation cannot sell their shares easily because the shares are not readily marketable."
  },
  {
   "id": "kaal:claim:3017612-013",
   "url": "https://wulfkaal.github.io/claims/3017612-013",
   "claim": "Voting arrangements are not self executing: their existence does not relieve the corporation of observing the legal formalities of director and shareholder action.",
   "type": "failure",
   "topics": [
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "asserted",
   "scope_conditions": [
    "voting trusts, pooling agreements, and irrevocable proxies"
   ],
   "supporting_quote": "Voting arrangements are not self-executing, and the mere existence of a voting arrangement does not mean that the corporation should dispense with the legal formalities of director and shareholder actions."
  },
  {
   "id": "kaal:claim:3017612-014",
   "url": "https://wulfkaal.github.io/claims/3017612-014",
   "claim": "Courts are split on whether a corporation is bound by a shareholder agreement it did not sign: some hold the corporation bound where all shareholders are parties to a valid agreement, while others refuse to bind it.",
   "type": "empirical",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "all shareholders are parties to the agreement",
    "corporation is not formally a party"
   ],
   "supporting_quote": "Additionally, if all shareholders of a corporation are parties to a valid agreement, courts have held the corporation bound by the agreement even if it is not formally a party to it.46 Other courts have not found the corporation to be bound."
  },
  {
   "id": "kaal:claim:3017612-015",
   "url": "https://wulfkaal.github.io/claims/3017612-015",
   "claim": "Corporate claims frequently go unpursued because the decision to sue rests with directors who are often the wrongdoers themselves, which is why shareholders resort to derivative actions.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "injury is to the corporation rather than to shareholders individually"
   ],
   "supporting_quote": "When the corporation is harmed, it is the corporation that has the claim, but directors are often unwilling to pursue claims, especially when they are the wrongdoers."
  },
  {
   "id": "kaal:claim:3017612-016",
   "url": "https://wulfkaal.github.io/claims/3017612-016",
   "claim": "A shareholder suing derivatively sues on the corporation's behalf and cannot convert the action into a personal one, even where the corporate injury has impaired the value of that shareholder's own stock.",
   "type": "condition",
   "topics": [
    "reputation",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "injury runs to the corporation"
   ],
   "supporting_quote": "The shareholders are simply suing on the corporation's behalf and cannot maintain actions on their own behalf to redress an injury to the corporation even if the value of their stock is impaired as a result of the injury."
  },
  {
   "id": "kaal:claim:3017612-017",
   "url": "https://wulfkaal.github.io/claims/3017612-017",
   "claim": "To escape the procedural hurdles of derivative litigation and recover directly, a shareholder must persuade the court that those abusing control of the corporation harmed the shareholder directly rather than the entity.",
   "type": "condition",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "direct as opposed to derivative suits",
    "Delaware courts ask who suffered the harm and who would receive the recovery"
   ],
   "supporting_quote": "To avoid some of the procedural hurdles of derivative litigation and enable direct recovery, shareholders must convince the court that individuals abusing control of the corporation were directly harming the shareholders."
  },
  {
   "id": "kaal:claim:3017612-018",
   "url": "https://wulfkaal.github.io/claims/3017612-018",
   "claim": "Under the MBCA a purchaser of shares who bought without knowledge of an existing shareholder control agreement may obtain rescission of the purchase.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "purchaser lacked knowledge of the agreement at the time of purchase"
   ],
   "supporting_quote": "Under the MBCA, rescission may also be available to a purchaser of shares who did not have knowledge of the existence of a shareholder control agreement at the time of purchase."
  },
  {
   "id": "kaal:claim:3017612-019",
   "url": "https://wulfkaal.github.io/claims/3017612-019",
   "claim": "Veto rights are the price minority shareholders extract for capital: minority holders may withhold capital contributions unless they receive veto powers over major corporate decisions.",
   "type": "mechanism",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "asserted",
   "scope_conditions": [
    "closely held corporations seeking minority capital"
   ],
   "supporting_quote": "For example, minority shareholders may refuse to provide capital contributions unless they are granted veto powers over major corporate decisions such as asset sales,"
  },
  {
   "id": "kaal:claim:3017612-020",
   "url": "https://wulfkaal.github.io/claims/3017612-020",
   "claim": "Courts have recognized an enhanced fiduciary duty among participants in closely held corporations, holding that majority shareholders owe fiduciary duties not only to the corporation but to minority shareholders as a class.",
   "type": "empirical",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "closely held corporations",
    "majority or controlling shareholders"
   ],
   "supporting_quote": "The distinct needs of close corporations is also shown as courts have recognized an enhanced fiduciary duty among participants in closely held corporations.64 Courts have held that majority shareholders have a fiduciary duty not only to the corporation but also to minority shareholders as a class"
  },
  {
   "id": "kaal:claim:3017612-021",
   "url": "https://wulfkaal.github.io/claims/3017612-021",
   "claim": "Fiduciary responsibility follows actual control rather than formal office: a shareholder exercising absolute de facto control over a corporation owes fiduciary duties regardless of whether that shareholder holds de jure title.",
   "type": "mechanism",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "shareholder exercises absolute de facto control or dominance"
   ],
   "supporting_quote": "If a shareholder \"exercises absolute de facto control over a corporation, such actual dominion carries with it fiduciary responsibility regardless of the presence or absence of de jure titles."
  },
  {
   "id": "kaal:claim:3017612-022",
   "url": "https://wulfkaal.github.io/claims/3017612-022",
   "claim": "Contractual consent to a cash out does not extinguish fiduciary claims: a minority shareholder who agreed to receive cash for shares may still challenge the merger as a breach of fiduciary duty.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "close corporations",
    "merger structured to eliminate a minority shareholder",
    "Third Circuit in Coleman v. Taub"
   ],
   "supporting_quote": "The merger agreement allowed the company to give the minority shareholder cash in exchange for shares, but the Third Circuit determined that even if a minority shareholder agrees to a cash out, he may still object to the merger on grounds of a breach of fiduciary duty."
  },
  {
   "id": "kaal:claim:3017612-023",
   "url": "https://wulfkaal.github.io/claims/3017612-023",
   "claim": "US law gives corporate participants wide latitude to restrict share transfers, and such restrictions are usually upheld unless their terms are unreasonable in the circumstances.",
   "type": "condition",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "restrictions imposed by articles, bylaws, or shareholder agreement"
   ],
   "supporting_quote": "US law gives considerable latitude to corporate participants when imposing share transfer restrictions, as restrictions will usually be sustained unless the terms are unreasonable under the circumstances."
  },
  {
   "id": "kaal:claim:3017612-024",
   "url": "https://wulfkaal.github.io/claims/3017612-024",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "Delaware and states following the same rule",
    "previously issued shares"
   ],
   "supporting_quote": "Likewise, Delaware does not allow transfer restrictions \"unless the holders of the securities are parties to an agreement or voted in favor of the restriction.\"78 Courts have also refused to allow transfer restrictions to be applied retroactively to nonconsenting shares."
  },
  {
   "id": "kaal:claim:3017612-025",
   "url": "https://wulfkaal.github.io/claims/3017612-025",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "argued",
   "scope_conditions": [
    "sale of a majority stake in a closely held corporation"
   ],
   "supporting_quote": "Drag-along rights allow majority shareholders to maximize the chance of receiving full value for their shares because the prospect of having to work with the remaining minority shareholders may lead an interested party to offer a discounted price for the majority stake."
  },
  {
   "id": "kaal:claim:3017612-026",
   "url": "https://wulfkaal.github.io/claims/3017612-026",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "argued",
   "scope_conditions": [
    "Delaware corporations",
    "no fraud or duress"
   ],
   "supporting_quote": "Absent issues of fraud or duress, it seems likely drag-along rights will be enforced for Delaware corporations.84 Because Delaware does not follow the practical merger doctrine, statutory formalities such as appraisal rights are not implicated."
  },
  {
   "id": "kaal:claim:3017612-027",
   "url": "https://wulfkaal.github.io/claims/3017612-027",
   "claim": "A buy-sell agreement survives bankruptcy more reliably when it is not merely executory: because bankruptcy trustees may void executory agreements, an agreement that obliges both the shareholders and the entity to buy and sell is more likely to be enforced.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "argued",
   "scope_conditions": [
    "shareholder becomes insolvent or enters bankruptcy"
   ],
   "supporting_quote": "Under US Law, bankruptcy trustees may void any agreement that is \"executory,\" so to the extent a buy-sell agreement requires shareholders and the entity to buy and sell, it is more likely to survive bankruptcy."
  },
  {
   "id": "kaal:claim:3017612-028",
   "url": "https://wulfkaal.github.io/claims/3017612-028",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "argued",
   "scope_conditions": [
    "standstill agreements binding only some shareholders",
    "applying the Schreiber v. Carney definition of fraud"
   ],
   "supporting_quote": "standstill agreements defraud shareholders not privy to the agreement in two ways: (1) by violating a shareholder's right to the best available merger or transaction, and (2) by discouraging unsolicited tender offers where a significant control premium can be realized."
  },
  {
   "id": "kaal:claim:3017612-029",
   "url": "https://wulfkaal.github.io/claims/3017612-029",
   "claim": "Standstill agreements entrench management and can lead a company into stagnation, so they may operate prejudicially on shareholders' property rights.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "argued",
   "scope_conditions": [
    "standstill agreements restricting voting"
   ],
   "supporting_quote": "These agreements tend to entrench management and can lead to stagnation for the company, so they sometimes \"operate prejudicially upon\" shareholders' property rights."
  },
  {
   "id": "kaal:claim:3017612-030",
   "url": "https://wulfkaal.github.io/claims/3017612-030",
   "claim": "The articles function as the corporation's constitution and are deliberately hard to change, requiring action by both directors and shareholders unlike most corporate decisions.",
   "type": "definitional",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "asserted",
   "scope_conditions": [
    "United States corporations"
   ],
   "supporting_quote": "Changing the articles is intentionally made difficult and amendments generally require actions by both the directors and shareholders, unlike most other corporate decisions."
  },
  {
   "id": "kaal:claim:3017612-031",
   "url": "https://wulfkaal.github.io/claims/3017612-031",
   "claim": "Where a shareholder agreement is folded into the charter or bylaws, it thereby becomes subject to whatever amendment procedure those documents or the statute provide, so charter integration exposes the arrangement to later modification.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "asserted",
   "scope_conditions": [
    "agreement incorporated into charter or bylaws rather than free standing"
   ],
   "supporting_quote": "Because shareholder agreements are often designed to avoid corporate formalities such as majority rule, \"it is not unreasonable to require that the degree of deviation intended be explicitly set out."
  },
  {
   "id": "kaal:claim:3017612-032",
   "url": "https://wulfkaal.github.io/claims/3017612-032",
   "claim": "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.",
   "type": "normative",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "argued",
   "scope_conditions": [
    "agreements that deviate from default corporate norms"
   ],
   "supporting_quote": "When a shareholder agreement is included in the corporate charter or bylaws, it becomes subject to amendment as provided therein or by statute."
  },
  {
   "id": "kaal:claim:3017612-033",
   "url": "https://wulfkaal.github.io/claims/3017612-033",
   "claim": "Shareholders frequently fail to place their agreements in the charter or bylaws, sometimes through ignorance or inadvertence and sometimes deliberately, because charters are public records and the parties prefer not to expose their arrangement to outsiders.",
   "type": "empirical",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "argued",
   "scope_conditions": [
    "closely held corporations"
   ],
   "supporting_quote": "Still, shareholders often fail to include their shareholder agreements in the charter or bylaws—whether by ignorance or inadvertence.124 Sometimes this is intentional because charters are public records, and shareholders may not want their agreements open to outsiders."
  },
  {
   "id": "kaal:claim:3017612-034",
   "url": "https://wulfkaal.github.io/claims/3017612-034",
   "claim": "Absent explicit statutory authorization, many courts have refused to enforce veto provisions contained in shareholder agreements, which is why such provisions should be implemented through charter or bylaw amendment.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "evidenced",
   "scope_conditions": [
    "states without statutes specifically authorizing shareholder control agreements",
    "veto or supermajority provisions"
   ],
   "supporting_quote": "explicit statutory authorization, many courts have refused to enforce veto provisions in shareholders' agreements."
  },
  {
   "id": "kaal:claim:3017612-035",
   "url": "https://wulfkaal.github.io/claims/3017612-035",
   "claim": "States lacking specific authorization for shareholder control agreements generally still permit departure from the default rule of director control if the departure is set forth in the corporation's charter or bylaws.",
   "type": "condition",
   "topics": [
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "asserted",
   "scope_conditions": [
    "states without shareholder control agreement statutes"
   ],
   "supporting_quote": "States that do not specifically authorize shareholder control agreements usually contain a statute allowing parties to make exceptions from the default rule of director control by making providing for it in the corporation's charter or bylaws."
  },
  {
   "id": "kaal:claim:3017612-036",
   "url": "https://wulfkaal.github.io/claims/3017612-036",
   "claim": "Even though New York decisions such as Adler v. Svingos suggest veto arrangements outside the charter will be specifically enforced, the better practice remains to amend the charter to insert them.",
   "type": "normative",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "argued",
   "scope_conditions": [
    "New York close corporations",
    "high voting or unanimity requirements"
   ],
   "supporting_quote": "While shareholders of New York close corporations may be able to set up veto provisions without amending the corporation's charter, the better practice is to amend the charter to insert such arrangements."
  },
  {
   "id": "kaal:claim:3017612-037",
   "url": "https://wulfkaal.github.io/claims/3017612-037",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "argued",
   "scope_conditions": [
    "breach of a valid shareholder agreement"
   ],
   "supporting_quote": "Damages for breaches of provisions of valid shareholder agreements are often too speculative to provide and adequate remedy, even though the individual has a direct cause of action."
  },
  {
   "id": "kaal:claim:3017612-038",
   "url": "https://wulfkaal.github.io/claims/3017612-038",
   "claim": "Because damages rarely provide an adequate remedy for breach of a shareholder agreement, refusing specific enforcement amounts in substance to declaring the agreement invalid.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612",
   "year": "2017",
   "source_sha256": "33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac",
   "confidence": "argued",
   "scope_conditions": [
    "suits to enforce shareholder voting agreements"
   ],
   "supporting_quote": "Most often a suit for damages does not provide an adequate remedy for a breach of a shareholder agreement, so the denial of specific enforcement essentially declares the agreement invalid."
  },
  {
   "id": "kaal:claim:2922176-001",
   "url": "https://wulfkaal.github.io/claims/2922176-001",
   "claim": "The extent to which a company uses data and algorithms will separate the winning companies of the future from the rest, because algorithmically driven firms gather consumer behavior data and instantaneously feed it back into an improved consumer experience.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "applies to companies competing on consumer relevance in digitized, networked markets"
   ],
   "supporting_quote": "The use of data and algorithms will distinguish the successful companies of the future. Algorithmically-driven companies use new and emerging technologies to gather data from their consumers about their behavior and then instantaneously utilize this information to improve the consumer experience."
  },
  {
   "id": "kaal:claim:2922176-002",
   "url": "https://wulfkaal.github.io/claims/2922176-002",
   "claim": "Algorithms substitute for human middlemen inside firms, and this substitution is what produces flatter, unmediated organizations in which the best idea, rather than hierarchical position, prevails.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "asserted",
   "supporting_quote": "Indeed, algorithms replace middlemen, leading to flatter, unmediated organizations in which a best-idea-wins culture prevails."
  },
  {
   "id": "kaal:claim:2922176-003",
   "url": "https://wulfkaal.github.io/claims/2922176-003",
   "claim": "Platform disruptors such as Uber and Airbnb did not decentralize their industries by eliminating intermediaries; they decentralized by replacing incumbent intermediaries with algorithmic ones.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "transportation and hospitality industries as the worked examples"
   ],
   "supporting_quote": "industries respectively not by eliminating intermediaries but by replacing them."
  },
  {
   "id": "kaal:claim:2922176-004",
   "url": "https://wulfkaal.github.io/claims/2922176-004",
   "claim": "A focus on quarterly earnings and short-term stock price performance distracts an organization from identifying the strategies that would keep the firm relevant, which is why financially successful companies can still lose their market.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "listed companies are particularly prone to overweighting financial metrics"
   ],
   "supporting_quote": "can easily distract an organization from the important business task of identifying strategies that can help a firm remain relevant in the future."
  },
  {
   "id": "kaal:claim:2922176-005",
   "url": "https://wulfkaal.github.io/claims/2922176-005",
   "claim": "In companies that concentrate on established products, the executives who understand innovation and consumer experience, the very people responsible for the firm's initial success, are pushed to the margins of core decision making.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "companies built around existing and successful products or services"
   ],
   "supporting_quote": "innovation and consumer experience — i.e., those individuals responsible for the initial success of a company and best placed to deliver relevancy — often find themselves marginalized from core decision-making processes in companies that focus on established products."
  },
  {
   "id": "kaal:claim:2922176-006",
   "url": "https://wulfkaal.github.io/claims/2922176-006",
   "claim": "Microsoft lost relevance under Steve Ballmer because it optimized for short-term financial metrics instead of designing products for the next generation of consumers, even while sales tripled and profits doubled.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "evidenced",
   "scope_conditions": [
    "Ballmer era, 2000 to 2015"
   ],
   "supporting_quote": "Microsoft missed these developments because it focused on short-term financial metrics, rather than on designing products relevant for the next generation of consumers."
  },
  {
   "id": "kaal:claim:2922176-007",
   "url": "https://wulfkaal.github.io/claims/2922176-007",
   "claim": "Reforms that increase executive accountability to shareholders and increase shareholder control over executives do not solve the problem of corporate short-term focus.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "post-2000 shareholder-empowerment reforms"
   ],
   "supporting_quote": "Increasing the accountability of corporate executives to shareholders and increasing shareholder control over executives does not address the problem of short-term focus."
  },
  {
   "id": "kaal:claim:2922176-008",
   "url": "https://wulfkaal.github.io/claims/2922176-008",
   "claim": "Increasing shareholder control over executives can be actively counterproductive: it further incentivizes the damaging emphasis on quarterly financial reporting that reform was meant to cure.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "disclosure",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "supporting_quote": "In fact, it may actually have the counterproductive and unintended effect of further incentivizing a damaging emphasis on quarterly financial reporting."
  },
  {
   "id": "kaal:claim:2922176-009",
   "url": "https://wulfkaal.github.io/claims/2922176-009",
   "claim": "Top-down corporate governance reform measures rarely, if ever, produce genuine change in the governance or culture of firms, and are commonly met with indifference, skepticism, or hostility from management.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "listed companies and their governance experts"
   ],
   "supporting_quote": "In practice, top- down corporate governance reform measures rarely, if ever, result in a genuine change in the governance and culture of firms."
  },
  {
   "id": "kaal:claim:2922176-010",
   "url": "https://wulfkaal.github.io/claims/2922176-010",
   "claim": "Much corporate governance reform consists of repackaging old content under new or revised labels rather than introducing new governance.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "illustrated by the 2016 Commonsense Principles of Corporate Governance"
   ],
   "supporting_quote": "Corporate governance reform often takes place by repackaging old content with new or revised labels."
  },
  {
   "id": "kaal:claim:2922176-011",
   "url": "https://wulfkaal.github.io/claims/2922176-011",
   "claim": "Corporate governance intermediaries such as lawyers, accountants, auditors and consultants respond to governance requirements with minimum compliance, applying minimal effort for maximum compliance.",
   "type": "failure",
   "topics": [
    "compliance",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "intermediaries advising listed companies"
   ],
   "supporting_quote": "Corporate governance intermediaries often satisfy corporate governance requirements through minimum compliance with the rules and regulations."
  },
  {
   "id": "kaal:claim:2922176-012",
   "url": "https://wulfkaal.github.io/claims/2922176-012",
   "claim": "Corporate governance initiatives designed to encourage long-term thinking rarely work as policymakers expect them to.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "stewardship codes and comparable long-termism initiatives"
   ],
   "supporting_quote": "Corporate governance initiatives that encourage long-term thinking rarely work as expected by policymakers."
  },
  {
   "id": "kaal:claim:2922176-013",
   "url": "https://wulfkaal.github.io/claims/2922176-013",
   "claim": "Mobilizing investors as stewards leads managers to ask the wrong questions about sustainable success: rather than pushing firms toward innovation and relevancy, such measures simply reinforce the centralized shareholder primacy view they were meant to soften.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions that have adopted stewardship codes"
   ],
   "supporting_quote": "In fact, mobilizing investors may actually lead managers to ask the wrong kind of questions about what needs to be done to ensure sustainable success. Rather than incentivizing a focus on innovation and relevancy, such measures merely reinforce the centralized shareholder primacy view."
  },
  {
   "id": "kaal:claim:2922176-014",
   "url": "https://wulfkaal.github.io/claims/2922176-014",
   "claim": "Stewardship pressures push companies toward an unhealthy focus on short-term dividends and share buybacks designed to please the stock market, the opposite of the long-term orientation the codes intend.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "companies subject to institutional investor stewardship pressure"
   ],
   "supporting_quote": "Indeed, stewardship pressures often expose companies to an unhealthy focus on short-term dividends and share buybacks designed to please the stock market."
  },
  {
   "id": "kaal:claim:2922176-015",
   "url": "https://wulfkaal.github.io/claims/2922176-015",
   "claim": "A focus on dividends and share buybacks makes it extremely difficult for a company to fund the innovation investment on which long-term relevancy depends.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "evidenced",
   "scope_conditions": [
    "S&P 500 companies, 2012 to 2016 revenue growth data"
   ],
   "supporting_quote": "Figure 2 illustrates that a focus on dividends and share buybacks makes it extremely difficult for a company to invest in innovations that are critical to maintaining relevancy"
  },
  {
   "id": "kaal:claim:2922176-016",
   "url": "https://wulfkaal.github.io/claims/2922176-016",
   "claim": "Ten of the thirteen S&P 500 companies with above-average revenue growth over the 2012 to 2016 period had never paid a dividend and had never engaged in share buybacks.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "evidenced",
   "scope_conditions": [
    "thirteen S&P 500 companies with above-average revenue growth, 2012 to 2016"
   ],
   "supporting_quote": "Figure 2 shows that ten out of the thirteen S&P 500 with an above-average revenue growth have never paid any dividends to their shareholders and were never engaged in share buyback activities."
  },
  {
   "id": "kaal:claim:2922176-017",
   "url": "https://wulfkaal.github.io/claims/2922176-017",
   "claim": "Code guidance assigning the board responsibility for long-term value creation, as in the 2016 Dutch Corporate Governance Code, is difficult to implement because neither long-term value nor the intended beneficiary of that value is defined.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "Dutch Corporate Governance Code, December 2016"
   ],
   "supporting_quote": "Implementation of such code guidance is rather difficult in practice as definitions of long-term value, and the beneficiary of the value creation, are unclear."
  },
  {
   "id": "kaal:claim:2922176-018",
   "url": "https://wulfkaal.github.io/claims/2922176-018",
   "claim": "Society is moving from a centralized infrastructure to a decentralized, unmediated, and interconnected one, and from vertical hierarchies to horizontal, open, and autonomous networks; this transition, not the short-term versus long-term debate, is the relevant frame for corporate governance.",
   "type": "empirical",
   "topics": [
    "decentralization",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "driven and accelerated by rapid technological change"
   ],
   "supporting_quote": "Society is transitioning from a centralized infrastructure to a decentralized, unmediated, and interconnected infrastructure, from a world of vertical hierarchies to a world of horizontal, open, and autonomous networks."
  },
  {
   "id": "kaal:claim:2922176-019",
   "url": "https://wulfkaal.github.io/claims/2922176-019",
   "claim": "Platform companies embrace an unmediated, flat, and inclusive culture in which trust and value are generated through the platform itself rather than through the management of workers and physical assets.",
   "type": "definitional",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "platform companies built on peer-to-peer transactions, such as Airbnb and Uber"
   ],
   "supporting_quote": "Most importantly, platform companies embrace an unmediated, flat, and inclusive culture.72 Trust and value are created through platforms, instead of the management of workers and physical assets."
  },
  {
   "id": "kaal:claim:2922176-020",
   "url": "https://wulfkaal.github.io/claims/2922176-020",
   "claim": "Blockchain-based smart contracts in digital marketplaces are the technology most likely to extend and lead the decentralization of the relationship between businesses and their counterparties.",
   "type": "predictive",
   "topics": [
    "blockchain",
    "smart-contracts",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "asserted",
   "scope_conditions": [
    "further accelerated by the sharing economy, the Internet of Things, and artificial intelligence"
   ],
   "supporting_quote": "In particular, blockchain-based smart contracts in digital marketplaces are predisposed to extend and lead these decentralization changes."
  },
  {
   "id": "kaal:claim:2922176-021",
   "url": "https://wulfkaal.github.io/claims/2922176-021",
   "claim": "Despite the obvious benefits of technology applications in corporate governance, the technological revolution has not yet produced wide acceptance of unmediated or decentralized corporate governance structures and practices.",
   "type": "empirical",
   "topics": [
    "innovation",
    "governance-design",
    "corporate-governance",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "as of 2017"
   ],
   "supporting_quote": "the technological revolution has not yet precipitated a wide acceptance of more unmediated/decentralized corporate governance structures and practices."
  },
  {
   "id": "kaal:claim:2922176-022",
   "url": "https://wulfkaal.github.io/claims/2922176-022",
   "claim": "Only seven percent of the 250 leading companies on the Forbes Global 2000 list have a CEO who is personally active and connected on Twitter.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "evidenced",
   "scope_conditions": [
    "250 leading companies on the Forbes Global 2000 list, data as of 2017"
   ],
   "supporting_quote": "Global 2000 list79 shows that only seven percent have a CEO who is personally active and connected on Twitter."
  },
  {
   "id": "kaal:claim:2922176-023",
   "url": "https://wulfkaal.github.io/claims/2922176-023",
   "claim": "Traditional coordination through hierarchy, command, and control is suboptimal for generating the innovation a firm needs to survive.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "firms competing in fast-moving, technology-driven markets"
   ],
   "supporting_quote": "Traditional forms of coordination, with a focus on hierarchy, command, and control, are suboptimal for generating then innovation that allows firms to survive."
  },
  {
   "id": "kaal:claim:2922176-024",
   "url": "https://wulfkaal.github.io/claims/2922176-024",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "reputation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "supporting_quote": "Compared to the more control-oriented, centralized, and vertical organizational forms, inclusive and unmediated relationships among firms' stakeholders require a high degree of cooperation, loyalty, and mutual trust."
  },
  {
   "id": "kaal:claim:2922176-025",
   "url": "https://wulfkaal.github.io/claims/2922176-025",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "governance-design",
    "corporate-governance",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the reform wave through 2017"
   ],
   "supporting_quote": "The corporate governance framework is still framed in terms of hierarchy, even after recent reforms."
  },
  {
   "id": "kaal:claim:2922176-026",
   "url": "https://wulfkaal.github.io/claims/2922176-026",
   "claim": "The use of legalese and substantial involvement of the legal department in corporate communications substantially damages the originality and authenticity of those communications, making them mediated and less effective.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "asserted",
   "scope_conditions": [
    "corporate communications intended to build trust and dialogue with stakeholders"
   ],
   "supporting_quote": "The use of legalese and any substantial involvement of the legal department in corporate communications can have a substantial detrimental effect on the originality and authenticity of corporate communications, making them mediated and less effective."
  },
  {
   "id": "kaal:claim:2922176-027",
   "url": "https://wulfkaal.github.io/claims/2922176-027",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "heavily mediated and redacted corporate environments; illustrated by Nokia, Volkswagen and Samsung"
   ],
   "supporting_quote": "Honesty is often not valued in a centralized, hierarchical environment. In the heavily mediated and redacted corporate world, the focus is on \"good news only.\" Nobody wants to be the messenger delivering bad news. This attitude often results in the late detection of issues and implications."
  },
  {
   "id": "kaal:claim:2922176-028",
   "url": "https://wulfkaal.github.io/claims/2922176-028",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "supporting_quote": "Unmediated corporate communications create real-time feedback for corporate executives. Social media platforms enable instant feedback from the crowd, often in the form of comments, likes, and shares."
  },
  {
   "id": "kaal:claim:2922176-029",
   "url": "https://wulfkaal.github.io/claims/2922176-029",
   "claim": "Corporate lawyers and governance experts still discourage executives from communicating in a personalized, speech-like way, particularly on social media, out of fear of market misunderstanding and subsequent liability.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "asserted",
   "scope_conditions": [
    "current advisory practice as of 2017"
   ],
   "supporting_quote": "Corporate lawyers and corporate governance experts currently still discourage a more personalized and speech-like way of communicating for corporate executives."
  },
  {
   "id": "kaal:claim:2922176-030",
   "url": "https://wulfkaal.github.io/claims/2922176-030",
   "claim": "The monitoring and advising roles of the board are no longer sufficient, and a board confined to those roles is a missed opportunity to obtain unmediated and relevant market feedback on company initiatives.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "compliance",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "successful companies already operating beyond the academic monitoring debate"
   ],
   "supporting_quote": "Successful companies recognize that the monitoring and advising role of the board is no longer sufficient and that the board of directors in many ways may constitute a missed opportunity for receiving feedback on company initiatives, e.g., unmediated and relevant input from the market."
  },
  {
   "id": "kaal:claim:2922176-031",
   "url": "https://wulfkaal.github.io/claims/2922176-031",
   "claim": "The authors stipulate a category of director, the feedback provider, defined as a director appointed to supply management with unmediated and relevant input from the market, which is what a firm needs in order to plan for continued relevancy.",
   "type": "definitional",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "directors with technologist, entrepreneurial, or academic backgrounds"
   ],
   "supporting_quote": "Successful companies have included a diverse range of individuals who are expected to assist management by providing unmediated and relevant input from the market. Such market feedback is highly necessary to identify a plan to remain relevant in the future."
  },
  {
   "id": "kaal:claim:2922176-032",
   "url": "https://wulfkaal.github.io/claims/2922176-032",
   "claim": "Forty-five percent of directors at the thirteen S&P 500 companies with above-average revenue growth over the last five years are feedback providers who make board decisions more data-driven.",
   "type": "empirical",
   "topics": [
    "corporate-governance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "evidenced",
   "scope_conditions": [
    "thirteen S&P 500 companies with above-average five-year revenue growth"
   ],
   "supporting_quote": "Almost half of the board of directors (45%) in the thirteen S&P 500 companies that showed an above average revenue growth over the last five years are \"feedback providers\" who make board decisions more data-driven."
  },
  {
   "id": "kaal:claim:2922176-033",
   "url": "https://wulfkaal.github.io/claims/2922176-033",
   "claim": "It is feasible that in the not too distant future an artificial intelligence will hold an independent board seat with voting authority and be trusted to make smarter, data-driven choices than human directors.",
   "type": "predictive",
   "topics": [
    "ai-and-agents",
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "speculative",
   "scope_conditions": [
    "extrapolated from the appointment of the algorithm Vital at Deep Knowledge Ventures and Alicia T at Tieto"
   ],
   "supporting_quote": "In the not too distant future it seems feasible that artificial intelligence will have an independent board seat and may be trusted to make smarter – data-driven – choices than humans."
  },
  {
   "id": "kaal:claim:2922176-034",
   "url": "https://wulfkaal.github.io/claims/2922176-034",
   "claim": "Critics who dismiss artificial intelligence on boards as science fiction not worth engaging are wrong: AI on boards is a real prospect, and technologies such as blockchain-based smart contracts will both disrupt corporate governance and supply solutions to it.",
   "type": "predictive",
   "topics": [
    "ai-and-agents",
    "blockchain",
    "governance-design",
    "corporate-governance",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "supporting_quote": "Critics who argue that it is pointless to concern oneself with future science-fiction-type prospects are wrong."
  },
  {
   "id": "kaal:claim:2922176-035",
   "url": "https://wulfkaal.github.io/claims/2922176-035",
   "claim": "Fundamental flaws in the DAO's code allowed hackers to move one third of contributed funds to a subsidiary account, ending that initiative, but the flaws were in the implementation and do not defeat the DAO vision, which developers continue to rebuild.",
   "type": "failure",
   "topics": [
    "dao",
    "blockchain",
    "smart-contracts",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "evidenced",
   "scope_conditions": [
    "the original DAO, launched May 2016 on Ethereum"
   ],
   "supporting_quote": "The initial DAO did not end well, but DAO enthusiasts and coders are developing new structures to address the flaws of the existing DAO infrastructure. Fundamental flaws in the DAO code made it possible for hackers to transfer one third of the total contributed funds to a subsidiary account."
  },
  {
   "id": "kaal:claim:2922176-036",
   "url": "https://wulfkaal.github.io/claims/2922176-036",
   "claim": "In a decentralized autonomous organization a series of smart contracts grants token holders voting rights, so the blockchain-based smart contract performs the function that articles of incorporation or bylaws perform in a conventional company.",
   "type": "definitional",
   "topics": [
    "dao",
    "smart-contracts",
    "governance-design",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "the original DAO structure, running on the Ethereum public blockchain"
   ],
   "supporting_quote": "A series of smart contracts granted token holders voting rights. In this respect, the blockchain-based smart contract mimics the role of articles of incorporation or bylaws."
  },
  {
   "id": "kaal:claim:2922176-037",
   "url": "https://wulfkaal.github.io/claims/2922176-037",
   "claim": "Contemporary corporate governance reforms are unlikely to work as policymakers and regulators intend, because experts agree improvement is needed but disagree widely on what good corporate governance is or how to achieve it.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "supporting_quote": "Contemporary corporate governance reforms are unlikely to work as intended by policymakers and regulators."
  },
  {
   "id": "kaal:claim:2922176-038",
   "url": "https://wulfkaal.github.io/claims/2922176-038",
   "claim": "The corporate governance frameworks developed in the 2000s had little or no impact on the performance of listed companies during the financial crisis, and the number, scale, and effects of corporate scandals are not diminishing.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "asserted",
   "scope_conditions": [
    "listed companies during the 2008 financial crisis"
   ],
   "supporting_quote": "Contemporary corporate governance frameworks developed in the 2000s had little or no impact on the performance of listed companies during the last financial crisis. Moreover, the number, scale, and effects of corporate scandals and economic failures do not appear to be diminishing."
  },
  {
   "id": "kaal:claim:2922176-039",
   "url": "https://wulfkaal.github.io/claims/2922176-039",
   "claim": "Regulators should nudge companies and their stakeholders toward recognizing the strategic and financial benefits of an unmediated and technology-based approach to corporate governance, rather than mandating further top-down reform.",
   "type": "normative",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "supporting_quote": "Regulators should nudge both companies and their stakeholders into recognizing the benefits, both strategic and financial, of adopting an unmediated and technology-based approach to corporate governance."
  },
  {
   "id": "kaal:claim:2922176-040",
   "url": "https://wulfkaal.github.io/claims/2922176-040",
   "claim": "Companies that adopt unmediated and technology-driven governance gain a competitive advantage in attracting talent, raising capital, finding partners, and above all in remaining relevant in hyper-competitive global markets.",
   "type": "predictive",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176",
   "year": "2017",
   "source_sha256": "fa4e986917d437cb1504281e7b986be2698e9507d8feaf426c9d7d1754ca882c",
   "confidence": "argued",
   "scope_conditions": [
    "hyper-competitive global markets shaped by social media, blockchain, DAOs and artificial intelligence"
   ],
   "supporting_quote": "Today's successful companies embrace these insights and therefore have a competitive advantage in attracting talent, raising capital, finding suitable partners, and, perhaps most importantly, in remaining relevant in hyper-competitive global markets."
  },
  {
   "id": "kaal:claim:3125822-001",
   "url": "https://wulfkaal.github.io/claims/3125822-001",
   "claim": "The crypto economy can continue to develop without falling back on centralized regulating authorities only if two things exist: a system for evaluating reputation and trust, and a fair dispute resolution system that guarantees certainty of outcomes.",
   "type": "condition",
   "topics": [
    "reputation",
    "systemic-risk",
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "applies to transaction systems between anonymous parties",
    "assumes centralized regulators are to be avoided"
   ],
   "supporting_quote": "two requirements in order for the crypto economy to continue to develop while avoiding the inefficiencies of centralized regulating authorities: 1) a system for evaluating reputation/trust; 2) a fair dispute resolution system which guarantees certainty of outcomes."
  },
  {
   "id": "kaal:claim:3125822-002",
   "url": "https://wulfkaal.github.io/claims/3125822-002",
   "claim": "Reputation value in any decentralized reputational system can be corrupted through three channels: direct purchase of reputation, automated worthless work, and degeneration of the system into a majority of inexpert opinions.",
   "type": "failure",
   "topics": [
    "reputation",
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized reputation systems",
    "anonymous participants"
   ],
   "supporting_quote": "In any such decentralized reputational system there is always the potential to corrupt the value of reputation by purchasing it directly, or through automated worthless work, or through the degeneration of a majority of inexpert opinions."
  },
  {
   "id": "kaal:claim:3125822-003",
   "url": "https://wulfkaal.github.io/claims/3125822-003",
   "claim": "The problems of corruption, Sybil attacks, and tyranny of the majority have plagued every previous autonomous decentralized reputation platform, so they are the design constraints any new architecture must meet.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "prior autonomous decentralized reputation platforms"
   ],
   "supporting_quote": "These are the respective problems of corruption, Sybil attacks, and tyranny of the majority that have plagued all previous autonomous, decentralized reputation platforms."
  },
  {
   "id": "kaal:claim:3125822-004",
   "url": "https://wulfkaal.github.io/claims/3125822-004",
   "claim": "The novel element of the architecture is a dynamical evolutionary feedback system that ties an expert's reputation to their proof of ability and productive contributions, verified by validation pools that are generated by public fees sent to the system.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "reputation is only created by fee bearing validation requests"
   ],
   "supporting_quote": "properly incentivizes productive cooperation by tying an expert's reputation to their proof of ability and productive contributions as verified by validation pools generated by public fees sent to the system."
  },
  {
   "id": "kaal:claim:3125822-005",
   "url": "https://wulfkaal.github.io/claims/3125822-005",
   "claim": "When a fee bearing evidence of work post enters the platform, half the newly minted sem tokens are staked in the poster's name as an upvote bet and the other half are staked against the post and left unassigned, so the poster's only direct reward for off-platform work is a contested stake.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "post must be linked to a previous post in the forum",
    "minting is proportional to the fee at a preset conversion ratio"
   ],
   "supporting_quote": "Half the new sem tokens are staked in the poster's name as a bet that the work done is accurate and improves the expertise (this stake is their only direct reward for the off-platform work). The other half of the newly minted sem tokens are staked against the post, and left unassigned."
  },
  {
   "id": "kaal:claim:3125822-006",
   "url": "https://wulfkaal.github.io/claims/3125822-006",
   "claim": "Every validation request opens a betting pool in which experts stake expertise specific sem tokens for or against the post, the winning side splits the losing side's stakes, and upvotes win ties.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "staking is limited to the expertise specific token"
   ],
   "supporting_quote": "Every validation request creates a validation pool, where experts stake expertise-specific sem tokens to approve or disapprove the post. The winners split the losers' stakes. (Figure 4.) Upvotes win ties."
  },
  {
   "id": "kaal:claim:3125822-007",
   "url": "https://wulfkaal.github.io/claims/3125822-007",
   "claim": "The hidden voting scheme depends on the choice of symmetric encryption protocol: a poorly chosen protocol exposes the platform to a birthday problem attack in which malicious voters submit an encrypted key that can be decrypted in two different ways, letting them retroactively choose their vote.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to the hidden vote reveal step of a validation pool"
   ],
   "supporting_quote": "This symmetric encryption protocol must be chosen carefully to avoid the birthday problem attack, where malicious voters could send an encrypted key that could be decrypted in two different ways."
  },
  {
   "id": "kaal:claim:3125822-008",
   "url": "https://wulfkaal.github.io/claims/3125822-008",
   "claim": "A newcomer cannot buy reputation with money because the 50/50 staking of newly minted tokens leaves incumbent experts with complete power to decide whether the newcomer's contribution was positive; a losing applicant forfeits all reputation in the expertise.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "applies at entry into an existing expertise tag",
    "assumes incumbent experts vote in their own interest"
   ],
   "supporting_quote": "The 50/50 stake guarantees a new expert cannot simply buy expertise, as the previous experts have complete power to decide whether the new expert has contributed positively to the platform."
  },
  {
   "id": "kaal:claim:3125822-009",
   "url": "https://wulfkaal.github.io/claims/3125822-009",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "core imposes no smart contracting language",
    "depends on expert policing of non compliant contracts"
   ],
   "supporting_quote": "However, the platform was designed to thrive in an environment with anonymous, potentially hostile users, if the following choices are chosen to be included in all smart contracts which use experts for off-platform work:"
  },
  {
   "id": "kaal:claim:3125822-010",
   "url": "https://wulfkaal.github.io/claims/3125822-010",
   "claim": "The chosen expert is deliberately not paid directly out of the fee but only indirectly in newly minted tokens, because the architecture secures itself by making reputation more valuable than any one time payment.",
   "type": "design",
   "topics": [
    "reputation",
    "risk-and-incentives",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "applies to off-platform work engaged through the platform"
   ],
   "supporting_quote": "One counterintuitive element is that the chosen expert is not paid directly in fees, only indirectly in newly minted tokens. The platform was designed to ensure security, and encourage maximal productive cooperation, by valuing reputation over all else."
  },
  {
   "id": "kaal:claim:3125822-011",
   "url": "https://wulfkaal.github.io/claims/3125822-011",
   "claim": "Enforcing a protocol in which all work fees are shared with the expertise produces a positive feedback loop: more fees raise the worth of reputation, which makes sem tokens more desirable than one time fees, which makes vested experts police the system carefully, which makes the system more secure.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "requires that the expertise tag enforces full fee payment to the platform"
   ],
   "supporting_quote": "The more fees are sent to the platform, the more the reputation is worth; which means the sem tokens will be more desirable to experts than one-time fees; which means the system will be carefully policed by vested experts; this makes the system more secure"
  },
  {
   "id": "kaal:claim:3125822-012",
   "url": "https://wulfkaal.github.io/claims/3125822-012",
   "claim": "The platform is Sybil attack resistant because all power is weighted by reputation rather than by account: an owner of a single account holding 1000 tokens has the same or more power than an owner of 1000 accounts holding one token each.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "assumes every power in the system is reputation weighted"
   ],
   "supporting_quote": "The platform is Sybil attack resistant because all power in the platform is weighted by reputation. An owner of a single account with 1000 tokens has the same or more power than an owner of 1000 accounts with one token."
  },
  {
   "id": "kaal:claim:3125822-013",
   "url": "https://wulfkaal.github.io/claims/3125822-013",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "systems without well designed incentive structures",
    "pseudonymous participation"
   ],
   "supporting_quote": "Similarly, the tragedy of the commons occurs in any system which does not have well designed incentive structure. This is called the \"nothing at stake\" problem in blockchain proof of stake design, where unregulated systems lead pseudonymous users to abuse the system."
  },
  {
   "id": "kaal:claim:3125822-014",
   "url": "https://wulfkaal.github.io/claims/3125822-014",
   "claim": "Reddit's upvote system imposes insignificant punishment for voting randomly, and this lack of cost compromises the informational value of an upvote, which is the failure mode a staked validation pool is designed to avoid.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "risk-and-incentives",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to unstaked voting systems"
   ],
   "supporting_quote": "As a second example, Reddit's upvote system currently has insignificant punishment for voting randomly, which compromises the value of the meaning of an upvote"
  },
  {
   "id": "kaal:claim:3125822-015",
   "url": "https://wulfkaal.github.io/claims/3125822-015",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "requires that votes stay hidden until the pool closes"
   ],
   "supporting_quote": "The second mechanism that counters the tyranny of the majority is the time-delay in announcing the results of upvotes, so experts cannot plainly see the majority position before posting their stake."
  },
  {
   "id": "kaal:claim:3125822-016",
   "url": "https://wulfkaal.github.io/claims/3125822-016",
   "claim": "A 51 percent collusion that votes against common sense is visible in an open system, which erodes trust, reduces use and fees, and lowers the value of the attackers' own reputational salary, so the tactic can destroy an expertise tag but cannot enrich the attackers.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "requires an open and observable system",
    "assumes attacker value is held in the attacked tag"
   ],
   "supporting_quote": "This would erode trust in the platform, and therefore use and fees would diminish, making the 51% holding of reputational salary less valuable. Therefore this tactic generally has the potential to destroy the expertise tag, but not enrich the attackers."
  },
  {
   "id": "kaal:claim:3125822-017",
   "url": "https://wulfkaal.github.io/claims/3125822-017",
   "claim": "The author concedes an arbitrage attack is feasible when experts fail to police their expertise and a significant share of the technically fungible tokens is offered on an exchange, since a malicious actor can then buy 51 percent of the tokens, vote against common sense, and sell before the tokens lose value.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "requires expert policing to be absent",
    "requires a liquid exchange holding a large share of tokens"
   ],
   "supporting_quote": "However, it is feasible that an arbitrage opportunity could evolve if the experts do not police their expertise. If a significant percentage of the (technically fungible) tokens were put on sale in a token exchange, a malicious actor would have the opportunity to 1) buy 51% of tokens"
  },
  {
   "id": "kaal:claim:3125822-018",
   "url": "https://wulfkaal.github.io/claims/3125822-018",
   "claim": "Healthy expertise tags are secure not because attack is impossible but because it is easier to profit from them by improving them than by harming them.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "economics",
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "applies to healthy expertise tags, defined as those generating fees"
   ],
   "supporting_quote": "Healthy expertises are secure because it is easier to profit from them by improving them than by harming them."
  },
  {
   "id": "kaal:claim:3125822-019",
   "url": "https://wulfkaal.github.io/claims/3125822-019",
   "claim": "In the absolute worst case, with no safeguards at all, the price of corrupting the platform from within is a minimum of twice the total historical fees added to the system, and instituting any obvious protection raises that price steeply.",
   "type": "empirical",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "worst case assumes any fee is accepted automatically and resolved instantly",
    "assumes no other users are adding fees"
   ],
   "supporting_quote": "in the absolute worst- case scenario, the price to corrupt the system from within is a minimum of twice the total historical fees added to the system. If any obvious protections are instituted, the price to corrupt grows steeply."
  },
  {
   "id": "kaal:claim:3125822-020",
   "url": "https://wulfkaal.github.io/claims/3125822-020",
   "claim": "Even a successful takeover yields the attacker only a fraction of one transaction's fee before the expertise tag topples, so as long as any single fee is smaller than the total reputation there is no incentive to game the system for fees.",
   "type": "condition",
   "topics": [
    "consensus-and-security",
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "holds while single fees remain small relative to total reputation"
   ],
   "supporting_quote": "The malicious group would merely gain the (fraction) of the fee from one transaction. As long as any single fee is smaller than the total reputation, there is no incentive to game the system for fees."
  },
  {
   "id": "kaal:claim:3125822-021",
   "url": "https://wulfkaal.github.io/claims/3125822-021",
   "claim": "Acquiring 51 percent of the tokens by paying fees and winning betting pools costs roughly six times the value of the entire quantity of sem tokens in a healthy expertise, even when the bench makes no effort at all to police the incoming fees.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "expertise is healthy, meaning it is earning fees",
    "assumes no policing by the bench"
   ],
   "supporting_quote": "a reasonable estimate for the price of this attack (even when the bench makes absolutely no effort to police this action) is 6 times the value of the entire quantity of sem tokens in existence in the expertise, when the expertise is healthy, i.e., earning fees."
  },
  {
   "id": "kaal:claim:3125822-022",
   "url": "https://wulfkaal.github.io/claims/3125822-022",
   "claim": "If good faith experts counter invest at least as fast as the malicious group, that is at a constant fraction c greater than or equal to one of the malicious investment, the malicious group can never gain more than 50 percent of the power.",
   "type": "condition",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "requires that good faith experts respond to incoming malicious fees",
    "requires a time delay in resolving betting pools"
   ],
   "supporting_quote": "assume the good-faith experts invest some constant fraction c of the malicious groups' investment ∆x at each time. If c ≥ 1then the malicious group will never gain more than 50% power."
  },
  {
   "id": "kaal:claim:3125822-023",
   "url": "https://wulfkaal.github.io/claims/3125822-023",
   "claim": "The platform's feedback loop is closed in the sense that there are no rent seeking owners: the system is entirely supported by its users and the users reap the entire profit.",
   "type": "design",
   "topics": [
    "ai-and-agents",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "all fees are disbursed to expert users",
    "no outside owner holds a claim on fees"
   ],
   "supporting_quote": "Therefore the feedback loop of the platform is closed, in the sense that there are no rent-seeking6 owners: The system is entirely supported by users, and the users reap the entire profit."
  },
  {
   "id": "kaal:claim:3125822-024",
   "url": "https://wulfkaal.github.io/claims/3125822-024",
   "claim": "The platform becomes fully autonomous almost immediately after deployment, because once the Ethereum DApp is posted its authors have no more control over the evolution of the expertise tags than any other Ethereum user.",
   "type": "design",
   "topics": [
    "ai-and-agents",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "after the DApp is deployed to the blockchain"
   ],
   "supporting_quote": "The platform achieves full autonomy almost immediately. Once the Ethereum DApp is posted to the blockchain, its authors have no more control over the evolution of the expertise tags in its forum than any other Ethereum user."
  },
  {
   "id": "kaal:claim:3125822-025",
   "url": "https://wulfkaal.github.io/claims/3125822-025",
   "claim": "A healthy expertise tag requires that fees from new commenters buying in remain smaller in the long term than fees from outside business; otherwise the expertise tag is simply a pyramid scheme.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "long term steady state of a mature expertise tag"
   ],
   "supporting_quote": "New commenter fees are expected to be smaller than outside business fees in the long term for healthy expertise tags; otherwise the expertise tag is simply a pyramid scheme."
  },
  {
   "id": "kaal:claim:3125822-026",
   "url": "https://wulfkaal.github.io/claims/3125822-026",
   "claim": "The token economy is inflationary at equilibrium, and this inflation is a feature rather than a defect because it improves security and discourages rent seeking holding of reputation.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "assumes fees keep entering the system and new tokens are minted with each fee"
   ],
   "supporting_quote": "The conclusion is that the economy is inflationary at equilibrium, which improves its security and discourages rent-seeking."
  },
  {
   "id": "kaal:claim:3125822-027",
   "url": "https://wulfkaal.github.io/claims/3125822-027",
   "claim": "Because earlier minted tokens pay out more than later ones at a steady fee rate, later experts have less motivation to join, and the remedy available to the bench is to change the exchange rate between fees and sem tokens to attract new recruits.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "tokenomics",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "assumes a steady state rate of incoming fees",
    "tokens are never destroyed"
   ],
   "supporting_quote": "This may mean later experts have less motivation to join if fees paid into the system are at a steady state. To combat this, the bench may choose to change the exchange rate between fees and sem tokens to encourage new recruits."
  },
  {
   "id": "kaal:claim:3125822-028",
   "url": "https://wulfkaal.github.io/claims/3125822-028",
   "claim": "For decentralized dispute resolution to deliver certainty of outcomes, the arbiter's power to disburse the assets of a contract, once triggered, must be preeminent over the parties.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "applies to smart contracts with a break clause and a third party arbiter"
   ],
   "supporting_quote": "s power to disburse the assets of the contract between the other parties, once triggered, must be preeminent in order to ensure certainty of outcomes."
  },
  {
   "id": "kaal:claim:3125822-029",
   "url": "https://wulfkaal.github.io/claims/3125822-029",
   "claim": "Arbitration on the platform fails at either end of the fee range: if the parties set fees too low the selected arbiter refuses the work and the arbitration fails, and if arbiters demand fees higher than the public will pay they fail to attract cases.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "economics",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "fees are set by the contracting parties, not by the platform"
   ],
   "supporting_quote": "If the fees chosen by the contracting parties are insufficient, the arbitration will fail as the arbiter selected will refuse to do the work. If the arbiters require fees higher than the public is willing to pay, they will fail to attract cases."
  },
  {
   "id": "kaal:claim:3125822-030",
   "url": "https://wulfkaal.github.io/claims/3125822-030",
   "claim": "When the bench of arbiters is small, a powerful private user can capture it in advance by spending heavily to engage the bench through separate contracts, mirroring the way powerful firms pay retainers to judges in the United States legal system.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "applies when the bench of an expertise tag is small",
    "applies when pseudonymous identity is revealed or anonymity is neglected"
   ],
   "supporting_quote": "when the bench is small, a powerful private user could spend a great deal of money engaging the bench with separate contracts beforehand, as happens today in the U.S. when traditional judges are given regular consulting fees by powerful firms to ensure preferential treatment in the future."
  },
  {
   "id": "kaal:claim:3125822-031",
   "url": "https://wulfkaal.github.io/claims/3125822-031",
   "claim": "Smart contracts give insurance against an unfair settlement only under stated conditions, among them that anonymous arbiters are chosen randomly with weight given by their availability stakes and that arbiters must post evidence of work for evaluation by the forum.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "requires random weighted selection of anonymous arbiters",
    "requires mandatory evidence of work posts",
    "further requires claimant comment space and an appeals system"
   ],
   "supporting_quote": "Further, smart contracts written as suggested above give insurance an unfair settlement will never occur if 1) anonymous arbiters are randomly chosen according to the weight of their availability stakes, 2) arbiters are required to post evidence-of-work posts for evaluation by the forum"
  },
  {
   "id": "kaal:claim:3125822-032",
   "url": "https://wulfkaal.github.io/claims/3125822-032",
   "claim": "Parties to a smart contract must avoid asymmetric encumbrance of assets, because in an anonymous blockchain environment where assets cannot be recovered from parties further down the transaction tree, an asymmetrically bound party can unfairly exert power by triggering a dispute.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous or pseudonymous counterparties",
    "assets must be bound in the smart contract"
   ],
   "supporting_quote": "Therefore, it is incumbent upon the parties not to enter into an asymmetric contract of bound assets, lest one party may unfairly exert power over the other by encumbering assets in a dispute."
  },
  {
   "id": "kaal:claim:3125822-033",
   "url": "https://wulfkaal.github.io/claims/3125822-033",
   "claim": "In the proof of stake application, a block is accepted by the network only if it carries proof of success in a betting pool, and that stamp constitutes the entire cryptographic security of the chain at far lower energy cost than proof of work mining.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the proof of stake use case built on the platform"
   ],
   "supporting_quote": "Blocks will only be accepted by the network if they have proof of success in a betting pool. This stamp is the entire cryptographic security, which costs far less energy to achieve than proof-of- work token mining."
  },
  {
   "id": "kaal:claim:3125822-034",
   "url": "https://wulfkaal.github.io/claims/3125822-034",
   "claim": "A proof of stake lottery on this architecture is vulnerable because the seed of the pseudorandom generator that names the next block author is partly controlled by the current block author, which lets an attacker capture all block creation by routing authorship to their own Sybil accounts; the proposed remedy is to derive the seed from a hash of the previous block's validation information.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the proof of stake block author lottery"
   ],
   "supporting_quote": "The seed for the generator that determines the next block author is partially controlled by the current block author, which opens the possibility of gaming the system by controlling all block creation by sending authorship to your own Sybil accounts."
  },
  {
   "id": "kaal:claim:3125822-035",
   "url": "https://wulfkaal.github.io/claims/3125822-035",
   "claim": "The author contests Houy's claim that killing a proof of stake currency costs nothing: on this platform the token's value is calculably predictable rather than merely a function of public opinion, and signaling an intention to buy tokens usually raises the price rather than triggering a race to the bottom.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "applies where token value is computable from observable fee flows"
   ],
   "supporting_quote": "However, in the current example, the value of the token is not merely tied to public opinion. The value of the token is calculably predictable. And when someone signals their intention to buy tokens—for whatever reason—the price usually goes up, not down."
  },
  {
   "id": "kaal:claim:3125822-036",
   "url": "https://wulfkaal.github.io/claims/3125822-036",
   "claim": "Under certain restrictive assumptions it has been proven that no protocol can guarantee fair exchange with decentralized arbiters, so no design on this architecture can promise absolute certainty of fair machine arbitration.",
   "type": "failure",
   "topics": [
    "defi",
    "decentralization",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "evidenced",
   "scope_conditions": [
    "holds under the restrictive assumptions of the cited impossibility result"
   ],
   "supporting_quote": "Under certain restrictive assumptions, it has been proven that no protocol can be created which will guarantee fair exchange with decentralized arbiters"
  },
  {
   "id": "kaal:claim:3125822-037",
   "url": "https://wulfkaal.github.io/claims/3125822-037",
   "claim": "Because absolute certainty is unavailable, the architecture substitutes a calculable probability of confidence built on verified reputation, which is enough for business to proceed even though no provably certain algorithm exists.",
   "type": "design",
   "topics": [
    "reputation",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "applies where an impossibility result rules out guaranteed fair exchange"
   ],
   "supporting_quote": "the architecture provides a means for developing a platform which can give users confidence that business can proceed through a system of verified reputation. This gives a calculable probability of confidence, even if no provably certain algorithm exists."
  },
  {
   "id": "kaal:claim:3125822-038",
   "url": "https://wulfkaal.github.io/claims/3125822-038",
   "claim": "There is no absolute certainty that using an expertise tag yields a fair resolution, because malicious experts can always choose an unfair algorithm to distribute the disputed assets.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to machine arbitration expertise tags"
   ],
   "supporting_quote": "There is no absolute certainty using the expertise tag will result in a fair resolution. Malicious experts can always choose to use an unfair algorithm to distribute the assets."
  },
  {
   "id": "kaal:claim:3125822-039",
   "url": "https://wulfkaal.github.io/claims/3125822-039",
   "claim": "The authors state plainly that in an open, decentralized and anonymous environment they provide no mechanism to stop the formation of sham expertise tags that copy a successful tag's record under a new name.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "open anonymous environment",
    "expertise tags are cheap to create"
   ],
   "supporting_quote": "In the open, decentralized, anonymous environment of the platoform, we provide no mechanism to stop the formation of such sham expertise tags."
  },
  {
   "id": "kaal:claim:3125822-040",
   "url": "https://wulfkaal.github.io/claims/3125822-040",
   "claim": "Faking a reputable expertise tag is nearly costless: a successful tag's open record can be copied and reposted under a new name for the price of the anti denial of service fees, and the capital used to mimic fees paid into the sham tag is mostly recovered by the sham owners through the salaries they control.",
   "type": "failure",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "sham owners hold the majority of the sham tag's tokens"
   ],
   "supporting_quote": "easily be copied and reposted under a new tag name for the low cost of the anti-DoS fees. The capital used to mimic fees paid to the sham expertise tag is mostly recovered by the sham owners through the salaries they control."
  },
  {
   "id": "kaal:claim:3125822-041",
   "url": "https://wulfkaal.github.io/claims/3125822-041",
   "claim": "If 51 percent of users collude to enrich themselves maliciously, nothing in the design can prevent them; the only check is the openness of the system, which would quickly detect such an attack.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "requires a colluding majority of reputation weighted users"
   ],
   "supporting_quote": "If 51% of users collude to maliciously enrich themselves, nothing can prevent them, except the open system itself, which would quickly detect such an attack."
  },
  {
   "id": "kaal:claim:3125822-042",
   "url": "https://wulfkaal.github.io/claims/3125822-042",
   "claim": "Reputation on the platform is not truly non transferable: accumulated sem tokens can be sold along with the anonymous identities that hold them, and the only check on this is the continued existence of a good faith majority that votes fairly in validation pools.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous accounts can be transferred wholesale",
    "check depends on 51 percent of users acting in good faith"
   ],
   "supporting_quote": "The inevitable accumulation of sem tokens by anonymous users is another potential source of corruption. Reputational power can be sold via the sale of anonymous identities. Such corruption is checked by the existence of 51% good-faith users, who will vote fairly in the validation pools."
  },
  {
   "id": "kaal:claim:3125822-043",
   "url": "https://wulfkaal.github.io/claims/3125822-043",
   "claim": "As the system matures the power of experienced experts far outstrips that of new experts, which creates an entry problem in a platform where adjudicating disputes requires staking reputation one does not yet have.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "mature expertise tags",
    "systems that require staking reputation to participate"
   ],
   "supporting_quote": "Secondly, as the system reaches a semblance of maturity, the power of experienced experts will far outstrip that of new experts."
  },
  {
   "id": "kaal:claim:3125822-044",
   "url": "https://wulfkaal.github.io/claims/3125822-044",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the unweighted version of the forum"
   ],
   "supporting_quote": "If the tokens that are minted for each post have equal weight, then comments which are not controversial are not rewarded."
  },
  {
   "id": "kaal:claim:3125822-045",
   "url": "https://wulfkaal.github.io/claims/3125822-045",
   "claim": "Under equal token weighting a successful poster receives no greater reward than the upvoters who merely read and vote, so the system pays the same for crafting a comment as for voting on it, which encourages voting over commenting.",
   "type": "failure",
   "topics": [
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "assumes very low denial of service fees for posting"
   ],
   "supporting_quote": "Similarly, successful comments (assuming very low DoS fees) give their posters no greater reward than their fellow upvoters receive. So the same reward is given for crafting a comment as is given for reading and voting, which encourages voting over commenting."
  },
  {
   "id": "kaal:claim:3125822-046",
   "url": "https://wulfkaal.github.io/claims/3125822-046",
   "claim": "The proposed fix is to value tokens by how the post was received and cited: tokens minted at a node with a large branch of positive references are worth more, while tokens from a post whose betting pool was close to 50-50 are worth less in future salaries than tokens from a post with uniform agreement.",
   "type": "design",
   "topics": [
    "citation-and-knowledge",
    "tokenomics",
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "argued",
   "scope_conditions": [
    "requires the forum to be treated as a weighted citation graph"
   ],
   "supporting_quote": "For instance if there is a large branch of positive references based at a node, the tokens minted at that node should be worth more. If the post was contentious, and its betting pool was close to 50-50, the tokens will be worth less in future salaries than uniform agreement."
  },
  {
   "id": "kaal:claim:3125822-047",
   "url": "https://wulfkaal.github.io/claims/3125822-047",
   "claim": "Under the proposed weighting scheme a post that was initially downvoted can never yield its creator tokens even if expert opinion later reverses, an asymmetry the authors flag as a limitation of the core design.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to the weighted directed acyclic graph valuation scheme",
    "could be changed only by allowing negative valued tokens"
   ],
   "supporting_quote": "Unfortunately a post p) which was initially downvoted can never give its creator tokens, even if opinion eventually reverses."
  },
  {
   "id": "kaal:claim:3125822-048",
   "url": "https://wulfkaal.github.io/claims/3125822-048",
   "claim": "The architecture is built for a hostile open environment containing malicious anonymous actors, and the authors concede it works even better in a centralized system with identified participants where the blockchain and its inefficiencies are unnecessary.",
   "type": "condition",
   "topics": [
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "blockchain hosting is justified only by anonymity and hostility of the environment"
   ],
   "supporting_quote": "The architecture for the platform was created to be effective in a hostile open environment containing malicious anonymous actors. It is more effective in a centralized system with identified participants where the blockchain is not necessary and its inefficiencies can be avoided."
  },
  {
   "id": "kaal:claim:3125822-049",
   "url": "https://wulfkaal.github.io/claims/3125822-049",
   "claim": "Reputation on the platform is domain specific by construction: a separate type of ERC-20 token is minted for each expertise tag, so reputation earned in one domain confers no voting power, salary claim, or selection weight in another.",
   "type": "design",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vlad Andrei, Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and A (2018). SSRN: https://ssrn.com/abstract=3125822",
   "year": "2018",
   "source_sha256": "d4d0bbaa3260968226186131d60e6d64a53e904d94e4295c61fd17042f1191ef",
   "confidence": "asserted",
   "scope_conditions": [
    "one token type per expertise tag"
   ],
   "supporting_quote": "Separate types of ERC-20 tokens are minted for each expertise tag."
  },
  {
   "id": "kaal:claim:3249860-001",
   "url": "https://wulfkaal.github.io/claims/3249860-001",
   "claim": "Crypto-economic incentive design is only limitedly successful at shaping future human behavior, because the designer must speculate about future human mental states and belief systems that may turn out entirely different from what was anticipated.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "scope_conditions": [
    "designs that rely on assumptions about human reactions to economic incentives"
   ],
   "supporting_quote": "Shaping future human behavior through incentive design is limitedly successful7 because the social engineer speculates about human future mental states and corresponding belief systems."
  },
  {
   "id": "kaal:claim:3249860-002",
   "url": "https://wulfkaal.github.io/claims/3249860-002",
   "claim": "Any survey of token models is necessarily incomplete, because the economic experimentation inherent in crypto-economics continuously generates new token models and incentive designs.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "asserted",
   "supporting_quote": "Because the economic experimentation inherent in crypto- economics continuously generates new token models and incentive designs for tokens, the token model examination herein is naturally incomplete."
  },
  {
   "id": "kaal:claim:3249860-003",
   "url": "https://wulfkaal.github.io/claims/3249860-003",
   "claim": "Crypto-economics is arguably a misnomer, since it is really just economics; what may legitimate the label is the unprecedented combination of disciplines required to analyze incentive designs in decentralized systems.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "supporting_quote": "Crypto-Economics really is just economics and, in fact, may be a misnomer."
  },
  {
   "id": "kaal:claim:3249860-004",
   "url": "https://wulfkaal.github.io/claims/3249860-004",
   "claim": "Decentralized solutions can challenge the basic assumptions of the theory of the firm, because the role of the firm changes if decentralized technology lowers the cost of using markets exponentially.",
   "type": "mechanism",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "scope_conditions": [
    "if decentralized solutions actually lower transaction costs for a significant portion of market transactions"
   ],
   "supporting_quote": "Decentralized solutions for human interaction can challenge the basic assumptions of the theory of the firm. In other words, the role of the firm may change if decentralized solutions help lower the cost of using markets exponentially."
  },
  {
   "id": "kaal:claim:3249860-005",
   "url": "https://wulfkaal.github.io/claims/3249860-005",
   "claim": "DAOs can replace the coordination and monitoring functions supplied by the firm, because they can measure each member's contribution to the finished work product more efficiently and allocate rewards accordingly.",
   "type": "mechanism",
   "topics": [
    "dao",
    "compliance",
    "reputation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "scope_conditions": [
    "supported by trust enhancing technologies such as reputation verification in decentralized anonymous systems"
   ],
   "supporting_quote": "Arguably, DAOs can replace the otherwise needed functions that are supplied by the firm that acts as the coordinator and monitor of a team because DAOs can more efficiently measure the contribution of each DAO member to the finished work product and allocate respective rewards accordingly."
  },
  {
   "id": "kaal:claim:3249860-006",
   "url": "https://wulfkaal.github.io/claims/3249860-006",
   "claim": "In decentralized systems the functions previously performed by policy designers, central bankers, and economists in centralized markets are taken over by the token designer for the respective token economy.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "systemic-risk",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "asserted",
   "supporting_quote": "Whereas policy designers, central bankers, and economists previously coordinated market design and economic regulations in centralized systems, these functions are taken over by the token designer for the respective token economy."
  },
  {
   "id": "kaal:claim:3249860-007",
   "url": "https://wulfkaal.github.io/claims/3249860-007",
   "claim": "The democratization of monetary policy in token economies creates a serious problem, because token designers lack the qualifications and institutional functions that centralized central banking distributes across multiple institutions and their staff.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "scope_conditions": [
    "token economies in which the designer sets supply, timing, and allocation"
   ],
   "supporting_quote": "This creates a serious problem for many token economies as the designers lack the qualifications and functions that are"
  },
  {
   "id": "kaal:claim:3249860-008",
   "url": "https://wulfkaal.github.io/claims/3249860-008",
   "claim": "An issuer's ICO strategy can pre-define the token economy's monetary policy by predetermining the fixed number of tokens created and issued in the ICO.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "asserted",
   "scope_conditions": [
    "token issuances conducted through an ICO"
   ],
   "supporting_quote": "An issuers' ICO strategy can pre-define monetary policy by predetermining the fixed number of tokens created and issued in the ICO."
  },
  {
   "id": "kaal:claim:3249860-009",
   "url": "https://wulfkaal.github.io/claims/3249860-009",
   "claim": "To avoid a token price crash, escrow accounts holding unissued tokens should carry usage and access controls assuring investors that escrowed tokens will not be issued at a discount, with lockups or phased releases minimizing crash risk.",
   "type": "design",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "scope_conditions": [
    "issuers that retain unissued tokens in escrow after an ICO"
   ],
   "supporting_quote": "To avoid a token price crash, token escrow accounts should provide usage and access controls that assure investors that escrowed tokens will not be issued at a discount. Lockups of escrowed tokens for a specified time period or phased releases can also help minimize the risks of token price crashes."
  },
  {
   "id": "kaal:claim:3249860-010",
   "url": "https://wulfkaal.github.io/claims/3249860-010",
   "claim": "Increasing the commercial benefits attached to a token heightens the aggregate demand for that token's given supply, which is why benefit adjustment functions as a quasi-fiscal policy tool.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "supporting_quote": "First, the increase in commercial benefits associated with a token heightens the aggregate demand of the given token supply."
  },
  {
   "id": "kaal:claim:3249860-011",
   "url": "https://wulfkaal.github.io/claims/3249860-011",
   "claim": "Commercial benefits attached to a token issuance can offset depreciated supply scarcity, meaning the dilutive effects of a large supply of the token in circulation.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "scope_conditions": [
    "issuances with large token supply in circulation"
   ],
   "supporting_quote": "Second, commercial benefits associated with a token issuance can help offset depreciated supply scarcity, e.g. the effects of a large issuance / supply of a given token in circulation."
  },
  {
   "id": "kaal:claim:3249860-012",
   "url": "https://wulfkaal.github.io/claims/3249860-012",
   "claim": "Adjusting the commercial benefits of a token issuance lets the issuer avoid more drastic monetary interventions such as emergency sales, building token reserves, or changing the token supply in circulation.",
   "type": "design",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "supporting_quote": "Fourth, adjusting the commercial benefits associated with a given token issuance avoids more drastic monetary policy intervention by way of emergency sales, building token reserves, or a decrease or increase of token supply in circulation."
  },
  {
   "id": "kaal:claim:3249860-013",
   "url": "https://wulfkaal.github.io/claims/3249860-013",
   "claim": "Combining quasi-fiscal policy, increasing benefits attached to tokens, with monetary policy, increasing supply in circulation, may or may not have an effect on the market price of the tokens.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "asserted",
   "scope_conditions": [
    "when benefit increases and supply increases are applied simultaneously"
   ],
   "supporting_quote": "The combined effect of quasi-fiscal policy (increasing benefits associated with the tokens) and monetary policy (increasing the token supply in circulation) may or may not have an effect on the market price of the respective tokens."
  },
  {
   "id": "kaal:claim:3249860-014",
   "url": "https://wulfkaal.github.io/claims/3249860-014",
   "claim": "The balance between the commercial benefits and use cases attached to a token and the scarcity of its supply is critical in the issuance of a token offering.",
   "type": "design",
   "topics": [
    "tokenomics",
    "economics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "asserted",
   "supporting_quote": "The balance of commercial benefits of a token offering and associated use cases of the token in combination with supply scarcity is critical in the issuance of a token offering."
  },
  {
   "id": "kaal:claim:3249860-015",
   "url": "https://wulfkaal.github.io/claims/3249860-015",
   "claim": "Because tokens move in and out of the top 100 daily, the study limits its time series dataset to all available data on the top 100 cryptocurrencies until April 2018, selecting coins by market capitalization before April 2018.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "empirical-evidence",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "dataset of N=100 cryptocurrencies",
    "data cutoff May 6, 2018"
   ],
   "supporting_quote": "Accordingly, the author limited the time series dataset to all available data on the top 100 cryptocurrencies until April 2018. The author chose cryptocurrencies for inclusion in the dataset based on the market capitalization of the respective coins before April 2018."
  },
  {
   "id": "kaal:claim:3249860-016",
   "url": "https://wulfkaal.github.io/claims/3249860-016",
   "claim": "For token issuers in the dataset that did not conduct an ICO, the author used the date of first publicly listed trade as a proxy variable for launch date.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "issuers in the dataset without an ICO"
   ],
   "supporting_quote": "For token issuers in the dataset that did not engage in an ICO, the author used the date of first publicly listed trade as a proxy variable."
  },
  {
   "id": "kaal:claim:3249860-017",
   "url": "https://wulfkaal.github.io/claims/3249860-017",
   "claim": "Many token whitepapers omit information necessary for a full economic analysis, and the research team could not find a single project among the top 100 that had examined blockchain governance fully.",
   "type": "failure",
   "topics": [
    "governance-design",
    "disclosure",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "whitepapers of the top 100 cryptocurrencies by market capitalization as of April 2018"
   ],
   "supporting_quote": "Many whitepapers do not include all the information that would generally be necessary for a full economic analysis. For instance, the researchers could not find a project that had examined blockchain governance fully."
  },
  {
   "id": "kaal:claim:3249860-018",
   "url": "https://wulfkaal.github.io/claims/3249860-018",
   "claim": "Coding categories frequently allowed a token to fall into more than one category, and where that occurred each category was given equal weight, coded as 0.5 and 0.5 for the corresponding dummy variables.",
   "type": "definitional",
   "topics": [
    "research-methods",
    "open-source-and-code",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "all figures in the study"
   ],
   "supporting_quote": "It is important to note, coding categories often allowed tokens to fall into more than one category. If the token fell into more than one category, the researchers gave equal weight to each category."
  },
  {
   "id": "kaal:claim:3249860-019",
   "url": "https://wulfkaal.github.io/claims/3249860-019",
   "claim": "The tokens in the sample of the top 100 cryptocurrencies were launched between January 2009 and March 2018, with the greatest number of top 100 coins launched in a single month occurring in November 2017.",
   "type": "empirical",
   "topics": [
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=100 dataset",
    "launch date measured by ICO start date or first trade date"
   ],
   "supporting_quote": "This stable growth of new coins occurred with the greatest number of the top 100 coins by month launched in November of 2017."
  },
  {
   "id": "kaal:claim:3249860-020",
   "url": "https://wulfkaal.github.io/claims/3249860-020",
   "claim": "Much of the stability in month over month coin launching from mid-2013 onward is attributable to the launching of the Ethereum platform.",
   "type": "mechanism",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "asserted",
   "scope_conditions": [
    "top 100 tokens by market capitalization"
   ],
   "supporting_quote": "Much of this stability can be attributed to the launching of the Ethereum platform in late 2011."
  },
  {
   "id": "kaal:claim:3249860-021",
   "url": "https://wulfkaal.github.io/claims/3249860-021",
   "claim": "Of the top 100 tokens, fifty-six held an ICO and thirty-eight did not.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "empirical-evidence",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "n=94 for the ICO figure; six ICO holders are excluded from the figure"
   ],
   "supporting_quote": "Of the top 100 tokens, fifty-six tokens held an ICO and thirty-eight tokens did not."
  },
  {
   "id": "kaal:claim:3249860-022",
   "url": "https://wulfkaal.github.io/claims/3249860-022",
   "claim": "Fifty-six of the top 100 tokens are implemented at the protocol level of a blockchain, thirty-five follow the ERC-20 Token Standard, six are implemented in a crypto economic protocol on top of a blockchain, and two are application level dapp tokens.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=100 dataset as of the May 6, 2018 cutoff"
   ],
   "supporting_quote": "Fifty-six tokens have a technical core that is implemented on the protocol level of a blockchain (blockchain native). Thirty-five tokens have a technical core that follows the ERC-20 Token Standard."
  },
  {
   "id": "kaal:claim:3249860-023",
   "url": "https://wulfkaal.github.io/claims/3249860-023",
   "claim": "Among the top 100 tokens, currency and utility models are the most common, USDT is the only purely Stablecoin token, Steem and Maker are both Stablecoin and utility, and only four tokens are asset-backed.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=100 dataset"
   ],
   "supporting_quote": "Of the top 100 tokens, currency and utility tokens were seen most commonly. USDT was the only purely Stablecoin token; two tokens (Steem and Maker) were characterized as both Stablecoin and utility. Bytom, DigiByte, Syscoin, and Salt are asset-backed."
  },
  {
   "id": "kaal:claim:3249860-024",
   "url": "https://wulfkaal.github.io/claims/3249860-024",
   "claim": "The utility token model dominates the top 100 tokens, but the utility category as coded includes tokens that behave like a security, and no Howey test was performed in this research.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "securities-law",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=100 dataset",
    "utility category aggregates network, network value, usage, and work token subtypes"
   ],
   "supporting_quote": "attributes: tokens offer owners clearly defined utility within a network or application (utility tokens); tokens that behave like a security, although no Howey test was performed in this research;"
  },
  {
   "id": "kaal:claim:3249860-025",
   "url": "https://wulfkaal.github.io/claims/3249860-025",
   "claim": "Seven of the top 100 tokens could not be classified into any token model, with NEM, VeChain, ICON, and Lisk qualifying as outliers with no justification and SUB's whitepaper failing to disclose which model best describes the token.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=100 dataset",
    "classification based on issuer whitepapers"
   ],
   "supporting_quote": "Seven tokens were outliers. NEO is a network enabling creation of asset-backed smart contracts.18 NEM, VeChain, ICON, Lisk were outliers with no justification. It was not clear in the whitepaper of SUB what token model type best describes the token."
  },
  {
   "id": "kaal:claim:3249860-026",
   "url": "https://wulfkaal.github.io/claims/3249860-026",
   "claim": "Thirty-two of the top 100 tokens have inherent value, for example as a currency, and thirty-two derive their underlying value from giving holders permission to use a digital service.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=100 dataset"
   ],
   "supporting_quote": "Thirty-two tokens have inherent value, for example as a currency. The underlying value of thirty-two tokens is that they give token holders permission to use a digital service."
  },
  {
   "id": "kaal:claim:3249860-027",
   "url": "https://wulfkaal.github.io/claims/3249860-027",
   "claim": "Permission to use a service via the token took over as the dominant type of underlying value in June 2017, and the author sees multiple indicia that this trend toward tokens granting rights to use services will continue.",
   "type": "predictive",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "top 100 tokens by market capitalization"
   ],
   "supporting_quote": "Permission to use (a given service etc. via the token) took over as the dominant type of underlying value in June 2017. The author has seen multiple indicia that this trend towards tokens that grant rights to use services etc. will continue."
  },
  {
   "id": "kaal:claim:3249860-028",
   "url": "https://wulfkaal.github.io/claims/3249860-028",
   "claim": "Seventy-two of the top 100 tokens cap the number of tokens that will ever be issued, a deflationary model of token issuance.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=100 dataset"
   ],
   "supporting_quote": "Seventy-two tokens in the dataset capped the number of tokens that will ever be issued by the respective token issuer, otherwise known as a deflationary model of token issuance."
  },
  {
   "id": "kaal:claim:3249860-029",
   "url": "https://wulfkaal.github.io/claims/3249860-029",
   "claim": "Under a deflationary token model, prices are expected to increase because of the fundamental scarcity of token supply.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "asserted",
   "scope_conditions": [
    "tokens with a capped maximum issuance"
   ],
   "supporting_quote": "With a deflationary method, prices are expected to increase due to fundamental scarcity of token supply."
  },
  {
   "id": "kaal:claim:3249860-030",
   "url": "https://wulfkaal.github.io/claims/3249860-030",
   "claim": "The remaining twenty-eight tokens in the dataset use inflationary models that operate similarly to fiat currency, contemplating no maximum issuance and a continuing minting process that gives the issuer more flexibility.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=100 dataset"
   ],
   "supporting_quote": "The other twenty-eight tokens in the dataset are using an inflationary token model in various sub-settings. Tokens that utilize an inflationary model often attempt to operate similar to a fiat currency."
  },
  {
   "id": "kaal:claim:3249860-031",
   "url": "https://wulfkaal.github.io/claims/3249860-031",
   "claim": "Unlike deflationary token models, inflationary token models permit the use of stability mechanisms, which is why inflationary designs may become more popular as the cryptocurrency market matures.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "scope_conditions": [
    "as the cryptocurrency market matures"
   ],
   "supporting_quote": "Unlike deflationary token models, inflationary token models allow the use of stability mechanisms."
  },
  {
   "id": "kaal:claim:3249860-032",
   "url": "https://wulfkaal.github.io/claims/3249860-032",
   "claim": "It is unclear whether the cryptocurrency market on its own can over time produce the level of stability and absence of volatility that cryptocurrencies need to become truly mainstream.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "scope_conditions": [
    "absent external stabilization"
   ],
   "supporting_quote": "It is unclear if the cryptocurrency market alone will over time be able to create the level of stability and lack of volatility that is needed for cryptocurrencies to become truly mainstream."
  },
  {
   "id": "kaal:claim:3249860-033",
   "url": "https://wulfkaal.github.io/claims/3249860-033",
   "claim": "Sixty-six of the top 100 tokens are user facing, letting ecosystem participants handle the token directly, while thirty-four are layered and operate underneath another token, platform, or chain.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=100 dataset"
   ],
   "supporting_quote": "Sixty-six tokens allow ecosystem participants to handle the token directly. Thirty-four tokens operate underneath another token, platform, chain, etc."
  },
  {
   "id": "kaal:claim:3249860-034",
   "url": "https://wulfkaal.github.io/claims/3249860-034",
   "claim": "Layered tokens are expected to remain more popular in the future because the interoperability of tokens generally assures survivability.",
   "type": "predictive",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "supporting_quote": "The author expects the layered tokens to remain more popular in the future as the interoperability of tokens generally assures survivability."
  },
  {
   "id": "kaal:claim:3249860-035",
   "url": "https://wulfkaal.github.io/claims/3249860-035",
   "claim": "Sixty of the top 100 tokens allow or intend inter-system functionality, while thirty-two are fundamentally restricted to use within a given ecosystem.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=100 dataset"
   ],
   "supporting_quote": "Sixty tokens allow or intend inter-system functionality, while thirty-two tokens are fundamentally restricted for use in a given ecosystem."
  },
  {
   "id": "kaal:claim:3249860-036",
   "url": "https://wulfkaal.github.io/claims/3249860-036",
   "claim": "App-specific tokens exert less influence over value from other projects and typically fail to support a broader user market, because their limited use curtails user access.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "scope_conditions": [
    "tokens fundamentally restricted for use in a given ecosystem"
   ],
   "supporting_quote": "App-specific tokens generally can exert less influence over the value from other projects. App-specific tokens also typically do not allow for a broader user market as the limited use of the token curtails user access."
  },
  {
   "id": "kaal:claim:3249860-037",
   "url": "https://wulfkaal.github.io/claims/3249860-037",
   "claim": "The data support the conclusion that interoperability as a means of survivability dictates token design, with a majority of tokens seeking a broader base of users by making the token interoperable.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "top 100 tokens by market capitalization"
   ],
   "supporting_quote": "The trends in the data again support that interoperability as a means of survivability dictates token design, e.g. a majority of tokens are looking to have a broader base of individuals by making their token interoperable."
  },
  {
   "id": "kaal:claim:3249860-038",
   "url": "https://wulfkaal.github.io/claims/3249860-038",
   "claim": "Proof of Work remains the most popular consensus protocol type among the top 100 tokens, and the Other category alone comprises thirty-four tokens.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "N=100 dataset; consensus time series n=97"
   ],
   "supporting_quote": "Figure 9a shows that the \"Other\" consensus protocol type, made up of thirty-four tokens."
  },
  {
   "id": "kaal:claim:3249860-039",
   "url": "https://wulfkaal.github.io/claims/3249860-039",
   "claim": "Attempts to increase throughput and scale in consensus protocols concentrate on proof of stake, and the data are consistent with anecdotal evidence that proof of stake may be the most dominant attempt at scaling.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "top 100 tokens by market capitalization"
   ],
   "supporting_quote": "Attempts to increase throughput and scale for consensus protocols often focus on proof of stake attempts. The data is consistent with anecdotal evidence that suggests that proof of stake may be the most dominant attempt at scaling."
  },
  {
   "id": "kaal:claim:3249860-040",
   "url": "https://wulfkaal.github.io/claims/3249860-040",
   "claim": "To date no blockchain coherently and comprehensively combines scale, security, and decentralization, the three objectives of the blockchain trilemma, although continued experimentation with consensus algorithms can help overcome it over time.",
   "type": "failure",
   "topics": [
    "blockchain",
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "scope_conditions": [
    "as of the study's 2018 data"
   ],
   "supporting_quote": "To date, no blockchain truly combines these three objectives coherently and comprehensively. Experimentation with different consensus algorithms can, over time, help overcome the blockchain trilemma."
  },
  {
   "id": "kaal:claim:3249860-041",
   "url": "https://wulfkaal.github.io/claims/3249860-041",
   "claim": "Tokens experimenting with alternative consensus protocols typically change the transfer process in an effort to become more efficient.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "outlier consensus protocols among the top 100 tokens"
   ],
   "supporting_quote": "Tokens experimenting with alternative consensus protocols often change the transfer process in an effort to become more efficient."
  },
  {
   "id": "kaal:claim:3249860-042",
   "url": "https://wulfkaal.github.io/claims/3249860-042",
   "claim": "Tokens launched before 2015 were overwhelmingly developed on a hardfork governance mechanism or a combination of hardfork and one other governance type.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "consensus-and-security",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "top 100 tokens, governance types coded as hard fork, soft fork with tokenholder voting, masternodes, or other"
   ],
   "supporting_quote": "Tokens launched prior to 2015 were overwhelmingly developed on a hardfork or a combination of hardfork and one of the other governance types depicted."
  },
  {
   "id": "kaal:claim:3249860-043",
   "url": "https://wulfkaal.github.io/claims/3249860-043",
   "claim": "Outlier governance mechanisms rose sharply in the dataset: three per year in 2015 and 2016, then eighteen in 2017, and five in the first six months of 2018.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "governance types coded as other"
   ],
   "supporting_quote": "During 2015 and 2016, three outlier tokens were launched per year. These tokens were Tether, Factom, and Iota; DigixDAO, Gas, and Ark. During 2017, this figure jumped to eighteen tokens."
  },
  {
   "id": "kaal:claim:3249860-044",
   "url": "https://wulfkaal.github.io/claims/3249860-044",
   "claim": "The emergence of inflationary token models and the increasing interoperability of token models are the core developments for the industry visible in the data.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "top 100 coins by market capitalization"
   ],
   "supporting_quote": "The emergence of inflationary token models and the increasing interoperability of token models, visible in the data analysis, are core developments for the industry."
  },
  {
   "id": "kaal:claim:3249860-045",
   "url": "https://wulfkaal.github.io/claims/3249860-045",
   "claim": "Increased interoperability of tokens optimizes survivability, and the data suggest token designs are increasingly focused on longer term survivability designs.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "top 100 coins by market capitalization"
   ],
   "supporting_quote": "Increased interoperability of tokens optimizes survivability. Given these trends, the data seems to suggest that token designs are increasingly focused on longer terms survivability designs."
  },
  {
   "id": "kaal:claim:3249860-046",
   "url": "https://wulfkaal.github.io/claims/3249860-046",
   "claim": "Long-term survivability of token designs may depend more on infrastructure capabilities than on temporary fixes made within token designs themselves.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860",
   "year": "2018",
   "source_sha256": "72b13f11002ba26206cd53e74c324b913d1830c642bfa024da6bac0d3af3a7b0",
   "confidence": "argued",
   "supporting_quote": "Yet, long-term survivability of token designs may be more tied to infrastructure capabilities and less to temporary fixes in token designs."
  },
  {
   "id": "kaal:claim:3128900-001",
   "url": "https://wulfkaal.github.io/claims/3128900-001",
   "claim": "Because micro tasks require human judgment that machines cannot currently replace, they let organizations build products and outcomes that machines alone could not synthesize.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "asserted",
   "scope_conditions": [
    "as of the current state of machine capability"
   ],
   "supporting_quote": "Because of the necessity of human judgment that cannot currently be replaced by machines/computers, micro tasks enable organizations to build products or create outcomes that cannot be synthesized by machines/computers alone."
  },
  {
   "id": "kaal:claim:3128900-002",
   "url": "https://wulfkaal.github.io/claims/3128900-002",
   "claim": "Supervised machine learning currently depends on labelled data produced by micro task work, because unsupervised and reinforcement learning remain more complex and less relied upon for AI development.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "current state of machine learning practice",
    "may change as unsupervised and reinforcement learning evolve"
   ],
   "supporting_quote": "While this may change as unsupervised and reinforcement learning evolve, currently, supervised learning depends on labelled data that is produced via micro task work."
  },
  {
   "id": "kaal:claim:3128900-003",
   "url": "https://wulfkaal.github.io/claims/3128900-003",
   "claim": "The performance of an AI neural network's learning algorithm during supervised training rises with the quality and quantity of the labelled datasets it is trained on, which ties AI progress directly to micro task work.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "supervised training process"
   ],
   "supporting_quote": "The higher the quality and quantity of such labelled datasets the better the AI neural network's learning algorithm during the supervised training process."
  },
  {
   "id": "kaal:claim:3128900-004",
   "url": "https://wulfkaal.github.io/claims/3128900-004",
   "claim": "Micro task platform systems carry significant limitations that hold back the evolution of AI itself, so platform design is a bottleneck on AI progress rather than a peripheral concern.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "existing micro task platform systems"
   ],
   "supporting_quote": "But alas, microtasks platform systems are subject to significant limitations that inhibit the evolution of AI."
  },
  {
   "id": "kaal:claim:3128900-005",
   "url": "https://wulfkaal.github.io/claims/3128900-005",
   "claim": "Existing centralized micro task marketplaces cannot adequately meet the rising demand for high quality labelled AI training data.",
   "type": "failure",
   "topics": [
    "decentralization",
    "ai-and-agents",
    "education-and-practice",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "existing centralized marketplaces",
    "demand for high quality AI training datasets"
   ],
   "supporting_quote": "The existing centralized marketplaces for micro task work cannot adequately fulfil the increasing demand for high quality micro task work for AI labelled training datasets."
  },
  {
   "id": "kaal:claim:3128900-006",
   "url": "https://wulfkaal.github.io/claims/3128900-006",
   "claim": "The cost structure of centralized micro task systems, which require intermediation, produces significant overpricing that does not benefit the workers themselves.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "centralized systems that necessitate intermediation"
   ],
   "supporting_quote": "First and foremost, the cost structure for micro task work in centralized systems that necessitate intermediation results in significant overpricing without benefiting the micro task workers directly."
  },
  {
   "id": "kaal:claim:3128900-007",
   "url": "https://wulfkaal.github.io/claims/3128900-007",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "manual verification of micro task work"
   ],
   "supporting_quote": "All too human shortcomings of micro task works, such as limited attention span, irrationality, and inaccuracies result in verification requirements for micro task work. However, manual verification of micro task work is subject to the same human limitations."
  },
  {
   "id": "kaal:claim:3128900-008",
   "url": "https://wulfkaal.github.io/claims/3128900-008",
   "claim": "To offset human limitations, requesters in centralized micro task structures assign the same task to teams of up to fifteen workers to form a consensus.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "centralized micro task structures",
    "quality sensitive tasks"
   ],
   "supporting_quote": "In an attempt to ensure quality of results and minimize the impact of the human limitations of their workers, requesters in centralized micro task structures set up teams of up to 15 workers to perform the same task in an effort to form a consensus."
  },
  {
   "id": "kaal:claim:3128900-009",
   "url": "https://wulfkaal.github.io/claims/3128900-009",
   "claim": "Consensus by redundancy fails economically: multiplying the same work across many workers significantly increases the cost of micro task work.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "centralized platforms using redundant task assignment"
   ],
   "supporting_quote": "The multiplication of work inherent in this process significantly increases the cost of micro task work."
  },
  {
   "id": "kaal:claim:3128900-010",
   "url": "https://wulfkaal.github.io/claims/3128900-010",
   "claim": "Paying proportionally, up to fifteen times, for the same project output is waste, and the necessity of multiplying work also pushes micro task workers into lower rates with no pay increases.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "centralized platforms using redundant task assignment"
   ],
   "supporting_quote": "Requiring requesters to pay proportionally (e.g. up to 15 times) for work per project result in waste. The necessity of multiplication of work also subjects micro task workers to lower rates and lack of payment increases."
  },
  {
   "id": "kaal:claim:3128900-011",
   "url": "https://wulfkaal.github.io/claims/3128900-011",
   "claim": "Roughly 38 percent of the labor pool is unbanked but skilled, and this group has no access to centralized micro task marketplaces.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "global labor pool",
    "centralized micro task marketplaces"
   ],
   "supporting_quote": "Most importantly, the circa 38% of the labor pool that is unbanked but skilled does not currently have access to the centralized micro task marketplaces."
  },
  {
   "id": "kaal:claim:3128900-012",
   "url": "https://wulfkaal.github.io/claims/3128900-012",
   "claim": "A bank account is a necessary condition for participation in the existing centralized micro task marketplace: without one, a worker can neither contribute nor profit.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "existing centralized micro task marketplaces"
   ],
   "supporting_quote": "Without a bank account, workers cannot contribute and profit from the existing centralized micro task marketplace."
  },
  {
   "id": "kaal:claim:3128900-013",
   "url": "https://wulfkaal.github.io/claims/3128900-013",
   "claim": "Signup and approval processes in centralized micro task systems are invasive, privacy challenging, time consuming, and unclear, and they function as market entry barriers for micro task workers.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "centralized micro task systems"
   ],
   "supporting_quote": "Finally, micro workers in centralized systems are faced with invasive, privacy challenging, time consuming, and unclear signup and approval processes that create market entry barriers for micro task workers."
  },
  {
   "id": "kaal:claim:3128900-014",
   "url": "https://wulfkaal.github.io/claims/3128900-014",
   "claim": "Decentralized crypto market solutions can significantly optimize the existing mechanical turk market while simultaneously democratizing access to it.",
   "type": "design",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "mechanical turk and micro task markets"
   ],
   "supporting_quote": "Decentralized crypto market solutions for the existing mechanical turk market can provide significant optimization while democratizing market access."
  },
  {
   "id": "kaal:claim:3128900-015",
   "url": "https://wulfkaal.github.io/claims/3128900-015",
   "claim": "Semada is stipulated as an autonomous, decentralized, open source protocol on the Ethereum blockchain that enables domain specific reputation verification for human task crowdsourcing.",
   "type": "definitional",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "asserted",
   "supporting_quote": "Semada is an autonomous, decentralized, open-source protocol29 that enables domain specific reputation verification for human task crowdsourcing, built on the ETHEREUM blockchain."
  },
  {
   "id": "kaal:claim:3128900-016",
   "url": "https://wulfkaal.github.io/claims/3128900-016",
   "claim": "The protocol lowers cost because it removes the manual verification step and the associated multiplication of micro task work that centralized systems require, letting decentralized workers capture the gains from disintermediation.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "micro task crowdsourcing under the Semada Protocol"
   ],
   "supporting_quote": "the Semada Protocol removes the manual verification and the associated multiplication of micro task work necessitated by centralized systems, enabling its decentralized micro task workers to profit from the disintermediation."
  },
  {
   "id": "kaal:claim:3128900-017",
   "url": "https://wulfkaal.github.io/claims/3128900-017",
   "claim": "Reputation tokens supply a staking mechanism that incentivizes high quality work and task completion by workers, and that simultaneously lets requesters verify and track worker quality, integrity, and quantity.",
   "type": "design",
   "topics": [
    "reputation",
    "ai-and-agents",
    "risk-and-incentives",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "asserted",
   "scope_conditions": [
    "participants staking reputation tokens on the platform"
   ],
   "supporting_quote": "Through the reputation tokens, the Semada Protocol provides a micro task worker reputation staking mechanism that incentivizes high quality work and task completion by workers."
  },
  {
   "id": "kaal:claim:3128900-018",
   "url": "https://wulfkaal.github.io/claims/3128900-018",
   "claim": "Unlike its decentralized competitors, the Semada Protocol is claimed to be resistant to both Sybil attacks and Tyranny of the Majority attacks.",
   "type": "design",
   "topics": [
    "consensus-and-security",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "asserted",
   "scope_conditions": [
    "comparison with existing decentralized mechanical turk protocols"
   ],
   "supporting_quote": "However, unlike its decentralized competitors, the Semada Protocol ensures Sybil Attack and Tyranny of the Majority attack resistance."
  },
  {
   "id": "kaal:claim:3128900-019",
   "url": "https://wulfkaal.github.io/claims/3128900-019",
   "claim": "The protocol architecture together with its incentive structure is what produces enhanced 51 percent attack resistance, which the author claims exceeds prior reputation verification attempts in both decentralized and centralized networks.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "risk-and-incentives",
    "reputation",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "asserted",
   "scope_conditions": [
    "reputation verification networks"
   ],
   "supporting_quote": "The Semada Protocol architecture and its incentive structure facilitates enhanced 51% attack resistance unlike any previous reputation verification attempts in decentralized and centralized networks."
  },
  {
   "id": "kaal:claim:3128900-020",
   "url": "https://wulfkaal.github.io/claims/3128900-020",
   "claim": "Because platform access requires only an internet connection rather than a bank account, the decentralized design expands the micro task labor pool by up to 40 percent, including the unbanked.",
   "type": "predictive",
   "topics": [
    "systemic-risk",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "workers with internet access",
    "including unbanked workers"
   ],
   "supporting_quote": "The Semada Platform GUI gives access to anyone with an internet connection, including the unbanked. Thus, expanding the micro task labor pool by up to 40%."
  },
  {
   "id": "kaal:claim:3128900-021",
   "url": "https://wulfkaal.github.io/claims/3128900-021",
   "claim": "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.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "architecture of the validation platform"
   ],
   "supporting_quote": "A key design goal of Semada is to create a minimal and robust architecture that allows for creating much more complex and automated validation logic, as well as machine expert validators."
  },
  {
   "id": "kaal:claim:3128900-022",
   "url": "https://wulfkaal.github.io/claims/3128900-022",
   "claim": "Validation experts could evolve from humans into smart contracts, which would allow validation itself to become automated.",
   "type": "predictive",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "speculative",
   "scope_conditions": [
    "future development of the platform"
   ],
   "supporting_quote": "For instance, experts could evolve from humans to smart contracts in order to allow for the automation of validation."
  },
  {
   "id": "kaal:claim:3128900-023",
   "url": "https://wulfkaal.github.io/claims/3128900-023",
   "claim": "Rather than repeating the same task across many workers to reach quality, the architecture verifies quality directly by examining and validating individual worker task performance through reputation verification.",
   "type": "design",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "micro tasks routed through the reputation verification architecture"
   ],
   "supporting_quote": "Instead of repeating work on given tasks to attain high quality work products for micro tasks, Semada uses an architecture of reputation verification that examines micro worker task performance and verifies the validity and quality of the work."
  },
  {
   "id": "kaal:claim:3128900-024",
   "url": "https://wulfkaal.github.io/claims/3128900-024",
   "claim": "Staking creates disincentives for malicious actors, and it is this disincentive structure that makes the network both more efficient and attack resistant.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "workers and verifiers who have reputation tokens at stake"
   ],
   "supporting_quote": "Semada staking mechanism creates disincentives for malicious actors, enhancing the efficiency of the Semada Network and making it attack resistant."
  },
  {
   "id": "kaal:claim:3128900-025",
   "url": "https://wulfkaal.github.io/claims/3128900-025",
   "claim": "Verifiers stake proportionally smaller amounts of reputation tokens than workers, because their higher reputation scores make them less likely to be malicious actors.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "verifiers with higher reputation scores than the workers they verify"
   ],
   "supporting_quote": "Similarly, verifiers stake (a proportionally smaller) amount of reputation tokens because verifiers have a higher reputation score and are therefore less likely to be malicious actors."
  },
  {
   "id": "kaal:claim:3128900-026",
   "url": "https://wulfkaal.github.io/claims/3128900-026",
   "claim": "Reputation scores clear the market on both sides: a low requester score makes workers less likely to accept that requester's offers, and a low worker score reduces the worker's likelihood of retention.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "two sided reputation scoring visible to both parties"
   ],
   "supporting_quote": "If requesters have a lower reputation score, workers become less likely to accept requesters' offers. In turn, low reputation scores for micro task workers result in a lower likelihood of retention for micro task work on the Semada Network."
  },
  {
   "id": "kaal:claim:3128900-027",
   "url": "https://wulfkaal.github.io/claims/3128900-027",
   "claim": "Because requesters select workers by reputation score, workers acquire an incentive to keep their scores high by performing tasks with high accuracy and efficiency.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "requesters can observe and select on reputation score"
   ],
   "supporting_quote": "Requesters can select workers based on their reputation score, giving workers an incentive to keep the reputation scores high by performing micro tasks with high accuracy and efficiency."
  },
  {
   "id": "kaal:claim:3128900-028",
   "url": "https://wulfkaal.github.io/claims/3128900-028",
   "claim": "The reputation score mechanism serves a discriminating function, separating malicious actors from simple mistakes and protecting workers and verifiers against fraudulent requesters and badly designed requests.",
   "type": "design",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "asserted",
   "supporting_quote": "The reputation score mechanism helps discern malicious actors and simple mistakes. It also protects workers and verifiers from fraudulent requesters and suboptimally designed requests."
  },
  {
   "id": "kaal:claim:3128900-029",
   "url": "https://wulfkaal.github.io/claims/3128900-029",
   "claim": "Sharing all work fees with the expertise creates a positive feedback loop: the more fees flow to the platform, the more reputation is worth, and the more workers prefer reputation tokens to one time fees.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "protocol enforces that users seeking validation send all work fees to the platform"
   ],
   "supporting_quote": "Choosing to enforce a protocol where all fees are shared with the expertise creates a successful positive feedback loop: The more fees are sent to the platform, the more the reputation is worth; which means the reputation tokens will be more desirable to workers than one-time fees."
  },
  {
   "id": "kaal:claim:3128900-030",
   "url": "https://wulfkaal.github.io/claims/3128900-030",
   "claim": "Once participants are vested through reputation, they police the system themselves, which raises security, which in turn attracts more public fees and closes the loop.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "constituents hold vested reputation stakes"
   ],
   "supporting_quote": "This in turn means the system will be carefully policed by vested constituents. This makes the system more secure; so the platform will attract more public fees."
  },
  {
   "id": "kaal:claim:3128900-031",
   "url": "https://wulfkaal.github.io/claims/3128900-031",
   "claim": "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.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "asserted",
   "scope_conditions": [
    "payments among requesters, workers, and verifiers"
   ],
   "supporting_quote": "It allows for secure off chain payments without using gas before transferring those payments on the ETHEREUM blockchain at a later date."
  },
  {
   "id": "kaal:claim:3128900-032",
   "url": "https://wulfkaal.github.io/claims/3128900-032",
   "claim": "The gamification design borrows the foundational proof of work principle that verifying a game was played properly is far easier than playing it properly, which is why bench validators can check task performance almost fully automatically.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "tasks structured as games with forum defined rules and rewards"
   ],
   "supporting_quote": "The foundational principle of proof of work in the blockchain suggests that it is a lot easier to verify a game was played properly than it is to play it properly."
  },
  {
   "id": "kaal:claim:3128900-033",
   "url": "https://wulfkaal.github.io/claims/3128900-033",
   "claim": "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.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "asserted",
   "supporting_quote": "Gamification is defined as the process of adding games or game-like elements, such as a micro-task, to encourage active task worker participation, boost motivation, and increase user loyalty."
  },
  {
   "id": "kaal:claim:3128900-034",
   "url": "https://wulfkaal.github.io/claims/3128900-034",
   "claim": "Existing decentralized gamification attempts for micro task workers fail because they are monodimensional and permit earning only by playing the game, whereas a multidimensional design gives players several ways to earn and builds stronger loyalty.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized micro task platforms using gamification"
   ],
   "supporting_quote": "Unlike other decentralized gamification attempts for micro task workers that are monodimensional and only allow earning by playing the game, the Semada platform offers players multiple opportunities to earn by playing."
  },
  {
   "id": "kaal:claim:3128900-035",
   "url": "https://wulfkaal.github.io/claims/3128900-035",
   "claim": "Centralized mechanical turk marketplace leaders operate as rent seeking intermediaries that generate numerous inefficiencies in the market and deprive freelance workers of a share in the profits the platforms capture.",
   "type": "failure",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "centralized micro task marketplaces including MTurk and Crowdflower"
   ],
   "supporting_quote": "Similarly, centralized mechanical turk marketplace leaders act as rent seeking intermediaries that create numerous inefficiencies in the market."
  },
  {
   "id": "kaal:claim:3128900-036",
   "url": "https://wulfkaal.github.io/claims/3128900-036",
   "claim": "Centralized industry leaders in the freelancer market, including Upwork, Amazon, and Fiverr, charge up to 40 percent in transaction fees.",
   "type": "empirical",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "centralized freelance marketplaces as of 2018"
   ],
   "supporting_quote": "Centralized industry leaders in the freelancer market, including Upwork, Amazon, and Fiverr charge up to 40% in transaction fees."
  },
  {
   "id": "kaal:claim:3128900-037",
   "url": "https://wulfkaal.github.io/claims/3128900-037",
   "claim": "Attack resistance should be designed to increase as the platform grows, in contrast to designs like GEMS that detect and ban malicious actors, because a self enforcement mechanism lets the incentive system steer users away from bad actors once the system matures.",
   "type": "design",
   "topics": [
    "compliance",
    "consensus-and-security",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "after the system reaches maturity"
   ],
   "supporting_quote": "Unlike GEMS, which bans malicious actors detected through the GEMS trust mechanism from the platform, the Semada platform has a self-enforcement mechanism."
  },
  {
   "id": "kaal:claim:3128900-038",
   "url": "https://wulfkaal.github.io/claims/3128900-038",
   "claim": "Centralized platform fees charged to requesters for the right to submit tasks exert downward pressure on worker compensation, so the fee structure itself is what depresses pay.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "centralized marketplaces such as Crowdflower and MTurk"
   ],
   "supporting_quote": "Such centralized fees add downward pressure on the platforms' worker compensation."
  },
  {
   "id": "kaal:claim:3128900-039",
   "url": "https://wulfkaal.github.io/claims/3128900-039",
   "claim": "Removing centralized fees produces a more efficient marketplace for workers, verifiers, and requesters alike by eliminating rent seeking intermediaries, leaving gas for posters as the only cost.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "posters pay gas on the Ethereum blockchain, viewers do not"
   ],
   "supporting_quote": "The lack of fees on the Semada platform creates a more efficient marketplace for workers, verifiers, and requesters alike through the removal of the rent seeking intermediators."
  },
  {
   "id": "kaal:claim:3128900-040",
   "url": "https://wulfkaal.github.io/claims/3128900-040",
   "claim": "Payment intermediary fees such as Paypal's are viable only for higher volume workers who can eventually avoid them, so they operate as an entry barrier against new micro task workers.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "centralized platforms relying on third party payment intermediaries"
   ],
   "supporting_quote": "The fees make is only economically viable for higher volume workers who can at some point avoid the Paypal fees but create barriers to entry for new micro task workers."
  },
  {
   "id": "kaal:claim:3128900-041",
   "url": "https://wulfkaal.github.io/claims/3128900-041",
   "claim": "Because holding and storing the platform's tokens requires no banking relationship, internet access is the only requirement for a micro task worker to earn a living on the platform.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "payment entirely in crypto tokens",
    "requesters post ETH to request task completion"
   ],
   "supporting_quote": "Holding and storing Semada tokens does not necessitate a banking relationship. All that is needed for a micro task worker to earn a living on the Semada Platform is access to the Internet."
  },
  {
   "id": "kaal:claim:3128900-042",
   "url": "https://wulfkaal.github.io/claims/3128900-042",
   "claim": "Poor user interface quality on centralized micro task platforms increases both the time workers need per task and their error rate, and both effects lower worker earning ability.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "centralized micro task platforms with outdated interfaces"
   ],
   "supporting_quote": "The lacking quality in mechanical turk user interfaces also significantly increases the time for workers to perform tasks and increases the error rate in performing tasks both of which significantly lower worker earning ability on such platforms."
  },
  {
   "id": "kaal:claim:3128900-043",
   "url": "https://wulfkaal.github.io/claims/3128900-043",
   "claim": "Building interface modules as reusable open source components lets future requesters build new modules on existing ones, which generates network effects within the platform.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "modules built on top of the platform as open source"
   ],
   "supporting_quote": "All open source software components of modules are reusable and enable future requesters to build new modules on existing ones, enabling superior network effects within the Semada Platform."
  },
  {
   "id": "kaal:claim:3128900-044",
   "url": "https://wulfkaal.github.io/claims/3128900-044",
   "claim": "Centralized approval processes and identity requirements for worker registration significantly limit the registration of new micro task workers.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "evidenced",
   "scope_conditions": [
    "centralized micro task platforms requiring identity verified registration"
   ],
   "supporting_quote": "According to a study by the World Bank, centralized approval processes and identity requirements for mechanical turk worker registration creates significant limitations for the registration of new workers for micro task platforms."
  },
  {
   "id": "kaal:claim:3128900-045",
   "url": "https://wulfkaal.github.io/claims/3128900-045",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "centralized micro task platforms"
   ],
   "supporting_quote": "However, centralized micro task platforms need to verify identity to prevent malicious actors from abusing the network and ensure work quality."
  },
  {
   "id": "kaal:claim:3128900-046",
   "url": "https://wulfkaal.github.io/claims/3128900-046",
   "claim": "Because the reputation token staking mechanism supplies attack resistance directly, users need not verify their identity to complete micro tasks, which circumvents the costs, delays, and privacy surrender attached to centralized identity verification and thereby enlarges the willing labor pool.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "argued",
   "scope_conditions": [
    "workers staking reputation tokens rather than proving identity"
   ],
   "supporting_quote": "By contrast, on the Semada Platform, users do not need to verify their identity to complete micro tasks. The Semada Protocol architecture, and specifically its reputation token staking mechanism, make the Semada Platform attack resistant."
  },
  {
   "id": "kaal:claim:3128900-047",
   "url": "https://wulfkaal.github.io/claims/3128900-047",
   "claim": "Mechanical turk is only one application of the underlying reputation protocol, and further use cases that cannot presently be conceptualized will emerge over time.",
   "type": "predictive",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Mechanical Turk Through Verified Reputation (2018). SSRN: https://ssrn.com/abstract=3128900",
   "year": "2018",
   "source_sha256": "381d72e85d976e2af852e8ec3bba87bc6a05ccb3349a2c3dd6f9e64de96ab4b0",
   "confidence": "speculative",
   "scope_conditions": [
    "future evolution of the protocol ecosystem"
   ],
   "supporting_quote": "Other use cases will evolve on the Semada Platform over time and applications for the Semada Protocol that cannot currently be conceptualized will materialize."
  },
  {
   "id": "kaal:claim:3117224-001",
   "url": "https://wulfkaal.github.io/claims/3117224-001",
   "claim": "Initial Coin Offerings provide unprecedented liquidity and efficiency for capital formation while minimizing transaction cost.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "tokenomics",
    "defi",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "asserted",
   "supporting_quote": "Initial Coin Offerings (ICOs) provide unprecedented liquidity and efficiency for capital formation while minimizing transaction cost."
  },
  {
   "id": "kaal:claim:3117224-002",
   "url": "https://wulfkaal.github.io/claims/3117224-002",
   "claim": "Unlike other means of capital formation, ICOs allow promoters to raise funds without sacrificing equity, so proceeds can be used exclusively for product development.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "argued",
   "supporting_quote": "Unlike other means of capital formation, ICO's allow promoters to avoid sacrificing equity for financing. Instead, ICO promoters can use the proceeds of the ICO exclusively for product development."
  },
  {
   "id": "kaal:claim:3117224-003",
   "url": "https://wulfkaal.github.io/claims/3117224-003",
   "claim": "ICOs lower barriers to entry for a diverse body of investors and thereby increase the diversity and heterogeneity of start-up funding.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "tokenomics",
    "risk-and-incentives",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "asserted",
   "supporting_quote": "ICOs provide low barriers to entry for a diverse body of investors and thus increase the diversity and the heterogeneity of start-up funding."
  },
  {
   "id": "kaal:claim:3117224-004",
   "url": "https://wulfkaal.github.io/claims/3117224-004",
   "claim": "ICOs enable borderless online sales with fewer points of friction, letting promoters bypass typical legal, jurisdictional, and business hurdles by marketing directly to a worldwide investor pool.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "tokenomics",
    "regulatory-failure",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "argued",
   "supporting_quote": "First, ICOs enable borderless online sales with much fewer points of friction. ICOs enable the promoters to bypass the typical legal, jurisdictional, and business hurdles by directly marketing to a worldwide pool of investors."
  },
  {
   "id": "kaal:claim:3117224-005",
   "url": "https://wulfkaal.github.io/claims/3117224-005",
   "claim": "Unlike shareholders in traditional corporate structures who can vote for or nominate directors, ICO investors have no control whatsoever over promoters.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "argued",
   "supporting_quote": "Unlike shareholders in the traditional corporate infrastructure who are able vote for or against directors or to nominate directors, ICO investors have not control over the promoters whatsoever."
  },
  {
   "id": "kaal:claim:3117224-006",
   "url": "https://wulfkaal.github.io/claims/3117224-006",
   "claim": "Capped ICO raises, adopted to address investor uncertainty about platform valuation in uncapped raises, backfire by creating strong incentives for investors to get in first and thereby raising the likelihood of retail investor frenzy.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "argued",
   "scope_conditions": [
    "capped ICO raises"
   ],
   "supporting_quote": "However, capped ICO raises crate significant incentive for investors to attempt to get in first, raising the likelihood of retail investor frenzy."
  },
  {
   "id": "kaal:claim:3117224-007",
   "url": "https://wulfkaal.github.io/claims/3117224-007",
   "claim": "The absence of mandatory disclosure requirements for ICOs leads many promoters to make irregular or no disclosures about the platform over time, producing a significant lack of transparency in the ICO market.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "securities-law",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "argued",
   "supporting_quote": "Moreover, the lack of mandatory disclosures for ICOs leads many promoters to make irregular or no disclosures about the platform as time passes, leading to a significant lack of transparency in the ICO market."
  },
  {
   "id": "kaal:claim:3117224-008",
   "url": "https://wulfkaal.github.io/claims/3117224-008",
   "claim": "ICO promoters can alter the smart contract to change the sales rules mid-course during the ICO.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "asserted",
   "supporting_quote": "Promoters can also change the smart contract to change ICO sales rules mid-course during the ICO."
  },
  {
   "id": "kaal:claim:3117224-009",
   "url": "https://wulfkaal.github.io/claims/3117224-009",
   "claim": "Because crypto platforms have no product and no revenue to offset costs, the funds they raise must typically last for the entire lifecycle of the platform, forcing them to set aside a large number of tokens for future funding needs.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "argued",
   "scope_conditions": [
    "crypto platforms without revenue-generating products"
   ],
   "supporting_quote": "because they have no product and no revenue to offset costs, crypto platforms' revenue raised is typically required to last for the lifecycle of the platform, requiring crypto platforms to set aside a large number of tokens for future funding needs."
  },
  {
   "id": "kaal:claim:3117224-010",
   "url": "https://wulfkaal.github.io/claims/3117224-010",
   "claim": "ICO investors have no preemptive rights or other anti-dilution protections, so they may be diluted if promoters later issue more reserve tokens to additional investors.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "argued",
   "supporting_quote": "ICO investors have no preemptive rights or other anti- dilution protections. If the promoters decide to issue more reserve tokens to additional investors, the ICO investors may be diluted in the future."
  },
  {
   "id": "kaal:claim:3117224-011",
   "url": "https://wulfkaal.github.io/claims/3117224-011",
   "claim": "Because ICOs give investors very limited assurances through upfront and continuous disclosures, the token market is highly volatile.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "argued",
   "supporting_quote": "ICOs on the other hand, give investors very limited assurances through upfront and continuous disclosures, making the token market highly volatile."
  },
  {
   "id": "kaal:claim:3117224-012",
   "url": "https://wulfkaal.github.io/claims/3117224-012",
   "claim": "Token holders typically receive no liquidity preference protecting them if the platform they invested in goes bankrupt or terminates.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "defi",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "argued",
   "supporting_quote": "Token holders typically do not receive a liquidity preference that would protect them in the case of bankruptcy or termination of the platform they invested in."
  },
  {
   "id": "kaal:claim:3117224-013",
   "url": "https://wulfkaal.github.io/claims/3117224-013",
   "claim": "The top 25 ICO jurisdictions in this study are identified from ICO WatchList data, which ranks countries by the number of ICOs launched and reports how much was raised through those ICO projects.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "securities-law",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "top 25 ICO countries",
    "ICO WatchList as the underlying data source"
   ],
   "supporting_quote": "To determine the ICO's used for this project, the author used data generated by ICO WatchList.1 ICO WatchList ranks countries by the number of ICO's launched and provides information as to how much was raised through these ICO projects."
  },
  {
   "id": "kaal:claim:3117224-014",
   "url": "https://wulfkaal.github.io/claims/3117224-014",
   "claim": "Switzerland leads the world in total ICO funds raised, followed by the United States.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "2017 time period",
    "top 25 ICO countries by funds raised"
   ],
   "supporting_quote": "Switzerland leads the world in total ICO Funds raised, followed by the United States."
  },
  {
   "id": "kaal:claim:3117224-015",
   "url": "https://wulfkaal.github.io/claims/3117224-015",
   "claim": "Switzerland ranks only fourth in the number of ICOs launched yet first in total funds raised, so the average Swiss ICO project raises a greater than average amount of funds.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "2017 data",
    "top 25 ICO countries"
   ],
   "supporting_quote": "Switzerland is the country with the 4th most ICO's launched but the greatest amount of funds raised in total. Accordingly, the average project in Switzerland is raising a greater than average amount of funds."
  },
  {
   "id": "kaal:claim:3117224-016",
   "url": "https://wulfkaal.github.io/claims/3117224-016",
   "claim": "Switzerland's disproportionate share of ICO funds raised relative to ICO count is attributable to the fact that many of the world's most successful ICOs are launched there.",
   "type": "mechanism",
   "topics": [
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "argued",
   "supporting_quote": "This can be attributed to the fact that many of the world's most successful ICOs get launched in Switzerland."
  },
  {
   "id": "kaal:claim:3117224-017",
   "url": "https://wulfkaal.github.io/claims/3117224-017",
   "claim": "Although federal securities law is the main instrument countries use to regulate ICO technology, there is also concern about regulating exchanges, which may fall outside federal securities laws at least in part.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "top 25 ICO countries"
   ],
   "supporting_quote": "Although (federal) securities law is the main way countries are regulating this technology, there is also concern about the regulation of exchanges within such countries which may fall outside of the federal securities laws, at least in part."
  },
  {
   "id": "kaal:claim:3117224-018",
   "url": "https://wulfkaal.github.io/claims/3117224-018",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "top 25 ICO countries"
   ],
   "supporting_quote": "Finally, few governments have prohibited financial investors from investing, but a greater number of governments have suggested not to take part. Many countries have issued warnings, but have not made a suggestion to its citizens as to whether to take part or not."
  },
  {
   "id": "kaal:claim:3117224-019",
   "url": "https://wulfkaal.github.io/claims/3117224-019",
   "claim": "The comparative summaries of national regulatory responses are necessarily incomplete and require much more analysis before they can be determinative for jurisdictional choice.",
   "type": "empirical",
   "topics": [
    "research-methods",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "asserted",
   "scope_conditions": [
    "scope of this study"
   ],
   "supporting_quote": "The summaries provided below on the regulatory responses are naturally incomplete and require much more analysis to be determinative for jurisdictional choices."
  },
  {
   "id": "kaal:claim:3117224-020",
   "url": "https://wulfkaal.github.io/claims/3117224-020",
   "claim": "The United States was excluded from the comparative jurisdictional analysis because its regulatory setup for cryptocurrencies and DLT business was still too uncertain at the time of publication.",
   "type": "empirical",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "asserted",
   "scope_conditions": [
    "as of publication in 2018"
   ],
   "supporting_quote": "The regulatory setup for cryptocurrencies and DLT business was still too uncertain in the United States to be included in the below discussion at the time of publication of this article."
  },
  {
   "id": "kaal:claim:3117224-021",
   "url": "https://wulfkaal.github.io/claims/3117224-021",
   "claim": "The UK Financial Conduct Authority takes the position that ICOs may be regulated as securities depending on the aspects and rights the coin holder obtains through holding the coin, assessed case by case.",
   "type": "condition",
   "topics": [
    "securities-law",
    "systemic-risk",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "United Kingdom"
   ],
   "supporting_quote": "The FCA has taken the position that ICO's may be regulated as securities depending on the different aspects and rights the coin holder obtains through holding the coin."
  },
  {
   "id": "kaal:claim:3117224-022",
   "url": "https://wulfkaal.github.io/claims/3117224-022",
   "claim": "The FCA has acknowledged that distributed ledger technology has unique aspects capable of working around current regulations.",
   "type": "failure",
   "topics": [
    "decentralization",
    "blockchain",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "United Kingdom"
   ],
   "supporting_quote": "the FCA has acknowledged that DLT has unique aspects that can work around current regulations."
  },
  {
   "id": "kaal:claim:3117224-023",
   "url": "https://wulfkaal.github.io/claims/3117224-023",
   "claim": "The Central Bank of Russia has indicated that regulation of ICO and cryptocurrency technology is premature and has therefore declined to issue any regulations controlling ICOs, cryptocurrency, or DLT.",
   "type": "empirical",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Russian Federation",
    "as of publication"
   ],
   "supporting_quote": "At the time of publication, the Central Bank of Russia has indicated that the regulation of this technology is premature. For this reason, the Central Bank of Russia has declined to put forth any regulations to control ICO's, cryptocurrency, or DLT."
  },
  {
   "id": "kaal:claim:3117224-024",
   "url": "https://wulfkaal.github.io/claims/3117224-024",
   "claim": "In Singapore there is no direct regulation of digital tokens under the Securities and Futures Act unless the currency is linked to an ownership or security interest in the issuer's assets or property.",
   "type": "condition",
   "topics": [
    "securities-law",
    "systemic-risk",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Singapore"
   ],
   "supporting_quote": "There is no direct regulation under the SFA unless the currency is linked to an ownership or security interest in the issuers assets or property."
  },
  {
   "id": "kaal:claim:3117224-025",
   "url": "https://wulfkaal.github.io/claims/3117224-025",
   "claim": "If a digital token security falls outside Monetary Authority of Singapore regulation, no duty of fair dealing applies to it.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Singapore",
    "tokens outside MAS regulation"
   ],
   "supporting_quote": "If the security falls outside the MAS- regulations, there will be no duty of fair dealing."
  },
  {
   "id": "kaal:claim:3117224-026",
   "url": "https://wulfkaal.github.io/claims/3117224-026",
   "claim": "In Australia, an ICO that falls under the Corporations Act triggers additional disclosure requirements, for example where the ICO constitutes a managed investment scheme.",
   "type": "condition",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Australia"
   ],
   "supporting_quote": "If an ICO/cryptocurrency falls under the Corporations Act, additional disclosures are triggered. For instance, an ICO might trigger a disclosure requirement if the ICO is a managed investment scheme (MIS)."
  },
  {
   "id": "kaal:claim:3117224-027",
   "url": "https://wulfkaal.github.io/claims/3117224-027",
   "claim": "Gibraltar treats DLT regulation as better achieved through the application of principles rather than rigid rules, because the area of law is evolving and innovative.",
   "type": "design",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Gibraltar"
   ],
   "supporting_quote": "Gibraltar recognizes that this area of the law is evolving and innovative, and as such is better achieved through the \"application of principles rather than rigid rules\""
  },
  {
   "id": "kaal:claim:3117224-028",
   "url": "https://wulfkaal.github.io/claims/3117224-028",
   "claim": "Under German law the decisive factor in classifying a token is which rights are associated with it; labels such as participation token, utility token, or payment token give only initial guidance and cannot be relied upon outside a comprehensive and binding regulatory classification.",
   "type": "definitional",
   "topics": [
    "systemic-risk",
    "tokenomics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Germany",
    "BaFin securities supervision"
   ],
   "supporting_quote": "A prior classification of the token (i.e. as a \"participation token\", \"utility token\", or \"payment token\") can provide initial guidance as to the type of token it is under German law, but is not to be relied upon outside a comprehensive and binding regulatory classification."
  },
  {
   "id": "kaal:claim:3117224-029",
   "url": "https://wulfkaal.github.io/claims/3117224-029",
   "claim": "The Canadian Securities Administrators apply a four-factor test to determine whether a cryptocurrency must be registered as a security.",
   "type": "condition",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Canada"
   ],
   "supporting_quote": "The CSA applies a four-factor test in determining whether a cryptocurrency have to be registered as securities."
  },
  {
   "id": "kaal:claim:3117224-030",
   "url": "https://wulfkaal.github.io/claims/3117224-030",
   "claim": "At the time of publication there were no registered marketplaces or alternative trading systems for cryptocurrency in Canada.",
   "type": "empirical",
   "topics": [
    "defi",
    "securities-law",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Canada",
    "as of publication"
   ],
   "supporting_quote": "At the time of publication, there were no registered marketplaces or ATS's in Canada."
  },
  {
   "id": "kaal:claim:3117224-031",
   "url": "https://wulfkaal.github.io/claims/3117224-031",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Israel",
    "February 2018 Tax Authority position"
   ],
   "supporting_quote": "cryptocurrencies will be subject to capital gains tax at rates between twenty percent and twenty-five percent, while individuals mining or trading cryptocurrencies in connection with businesses must pay a seventeen percent value-added tax (VAT) in addition to capital gains tax."
  },
  {
   "id": "kaal:claim:3117224-032",
   "url": "https://wulfkaal.github.io/claims/3117224-032",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Poland",
    "April 2018 tax interpretation"
   ],
   "supporting_quote": "the sale and exchange of cryptocurrencies into traditional currency and vice versa, as well as the exchange of one cryptocurrency for another, could create a VAT tax obligation."
  },
  {
   "id": "kaal:claim:3117224-033",
   "url": "https://wulfkaal.github.io/claims/3117224-033",
   "claim": "The People's Republic of China has banned ICOs entirely, including the offering of coins and the exchanges used to trade them, on the view that ICOs hurt the market through potential deception and fraud.",
   "type": "empirical",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "China"
   ],
   "supporting_quote": "The People Republic of China have taken a firm stance against ICO's, banning them entirely."
  },
  {
   "id": "kaal:claim:3117224-034",
   "url": "https://wulfkaal.github.io/claims/3117224-034",
   "claim": "Because cryptocurrencies are not issued by foreign central banks, Costa Rica does not consider them foreign currency and they cannot fall under the regulations of the exchange regime.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Costa Rica"
   ],
   "supporting_quote": "As cryptocurrencies are also not issued by foreign central banks, they cannot be considered foreign currency and so cannot fall under the regulations of the exchange regime."
  },
  {
   "id": "kaal:claim:3117224-035",
   "url": "https://wulfkaal.github.io/claims/3117224-035",
   "claim": "The National Bank of Slovakia takes the view that cryptocurrencies are not money because countries enjoy monetary sovereignty.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Slovakia"
   ],
   "supporting_quote": "The national bank takes the view that cryptocurrencies are not considered money because countries enjoy monetary sovereignty."
  },
  {
   "id": "kaal:claim:3117224-036",
   "url": "https://wulfkaal.github.io/claims/3117224-036",
   "claim": "The National Bank of Serbia holds that financial institutions may not participate in ICOs or other cryptocurrency investments because cryptocurrencies are not legal tender.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Serbia"
   ],
   "supporting_quote": "Serbia has taken the position that financial institutional are not allowed to participate in ICO's or other cryptocurrency investments because they are not legal tender."
  },
  {
   "id": "kaal:claim:3117224-037",
   "url": "https://wulfkaal.github.io/claims/3117224-037",
   "claim": "Sweden's Finansinspektionen treats ICOs as investment products that may be traded, and although there is no explicit ban on financial companies raising money through ICOs, no Swedish company had attempted to do so.",
   "type": "empirical",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "Sweden",
    "as of publication"
   ],
   "supporting_quote": "Although there is no explicit ban on financial companies raising money through ICO's, no Swedish company has attempted to do so yet."
  },
  {
   "id": "kaal:claim:3117224-038",
   "url": "https://wulfkaal.github.io/claims/3117224-038",
   "claim": "Across the top 25 ICO jurisdictions the majority permit ICOs and cryptocurrencies or do not explicitly prohibit them, and only a very small minority has banned them outright.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "top 25 ICO jurisdictions"
   ],
   "supporting_quote": "The majority of the countries examined in this study permit ICO's and cryptocurrencies or do not explicitly prohibit them."
  },
  {
   "id": "kaal:claim:3117224-039",
   "url": "https://wulfkaal.github.io/claims/3117224-039",
   "claim": "World governments largely either apply existing laws to cryptocurrencies or wait to see how other countries react to the crypto evolution.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "evidenced",
   "scope_conditions": [
    "top 25 ICO jurisdictions"
   ],
   "supporting_quote": "For the most part, the general view of the world governments appears to be that they are using existing laws to regulate cryptocurrencies or wait to see how other countries react to the crypto evolution."
  },
  {
   "id": "kaal:claim:3117224-040",
   "url": "https://wulfkaal.github.io/claims/3117224-040",
   "claim": "Regulatory efforts toward ICOs take several forms or permutations of them, including regulating ICOs, cryptocurrencies, and DLT, mandating compliance programs, and regulating exchanges.",
   "type": "empirical",
   "topics": [
    "compliance",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224",
   "year": "2018",
   "source_sha256": "83e9ccb9219a217d9fcfc5c098b897229ee7cf85623bee3ae22d2e986548466b",
   "confidence": "argued",
   "scope_conditions": [
    "top 25 ICO jurisdictions"
   ],
   "supporting_quote": "Regulatory efforts can take several forms but appear to involve some of the following approaches or permutations thereof: regulating ICOs, regulating cryptocurrencies, regulating DLT, mandating compliance programs, regulating exchanges,"
  },
  {
   "id": "kaal:claim:3227967-001",
   "url": "https://wulfkaal.github.io/claims/3227967-001",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "a world of ubiquitous computing where code structures everyday experience"
   ],
   "supporting_quote": "The deep architecture of a digital world can regulate in a host of ways, ways that one cannot begin to see (or understand) unless you consider the nature of such code and how it operates."
  },
  {
   "id": "kaal:claim:3227967-002",
   "url": "https://wulfkaal.github.io/claims/3227967-002",
   "claim": "Lawyers have historically been most effective and most socially useful when acting as transaction engineers who facilitate new business and social relationships, and the engineering of the near future will largely be code based.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "periods of fast paced technological change"
   ],
   "supporting_quote": "Historically, lawyers have been at their most effective – and socially useful - when they operate as \"transaction engineers,\" i.e., facilitating new forms of business and other social relationships.6 It seems obvious that the \"engineering\" of the near-future will, to a large extent, be code-based."
  },
  {
   "id": "kaal:claim:3227967-003",
   "url": "https://wulfkaal.github.io/claims/3227967-003",
   "claim": "The ability to understand and communicate with coders, as distinct from professional coding competence, is a necessary skill for the lawyer of the future, so law students benefit from grasping the basic concepts and power of coding.",
   "type": "condition",
   "topics": [
    "education-and-practice",
    "open-source-and-code",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "legal practice in a code based economy"
   ],
   "supporting_quote": "However, we do believe that the ability to understand and communicate with coders is a necessary skill for the lawyer of the future. As such, we think that law students will benefit from understanding the basic concepts and power of coding."
  },
  {
   "id": "kaal:claim:3227967-004",
   "url": "https://wulfkaal.github.io/claims/3227967-004",
   "claim": "The traditional knowledge transmission model of education is ill suited to a world of fast paced change and easy access to information, because prior experience may not be relevant to a fast changing reality and information is always one search away.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "fast paced technological change",
    "low cost universal access to information"
   ],
   "supporting_quote": "But, this model seems ill-suited to a world of fast-paced change and easy access to information. Prior experience may not be relevant to a fast-changing reality and information is only ever one Google search away."
  },
  {
   "id": "kaal:claim:3227967-005",
   "url": "https://wulfkaal.github.io/claims/3227967-005",
   "claim": "That the technologies driving social change remain a mystery to most people is itself a problem, so practical technical knowledge must be integrated into many fields of education, with coding and data analysis as the starting point.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "education across many fields, not only law"
   ],
   "supporting_quote": "For many of us, the underlying technologies that are driving social change remain a mystery, and that is a problem. Practical technical knowledge needs to be integrated into many fields of education. Coding and data analysis seem a good starting point."
  },
  {
   "id": "kaal:claim:3227967-006",
   "url": "https://wulfkaal.github.io/claims/3227967-006",
   "claim": "In early Silicon Valley the contractual mechanisms lawyers designed, together with the lawyer dominated market for reputation, reduced information asymmetries between entrepreneurs and investors and were necessary to bring the demand and supply sides of venture capital together effectively.",
   "type": "mechanism",
   "topics": [
    "innovation",
    "disclosure",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "evidenced",
   "scope_conditions": [
    "venture capital markets with young and inexperienced entrepreneurs",
    "Silicon Valley from the early 1970s"
   ],
   "supporting_quote": "Finally, the contractual mechanisms and the lawyer-dominated market for reputation reduced the information asymmetries between the entrepreneurs and investors and, as such, were necessary to bring the demand-side and supply-side of \"venture capital\" together effectively."
  },
  {
   "id": "kaal:claim:3227967-007",
   "url": "https://wulfkaal.github.io/claims/3227967-007",
   "claim": "A transaction engineer is a crucial intermediary who brings together, in a safe environment, parties holding different but mutually compatible interests and expertise.",
   "type": "definitional",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "supporting_quote": "In this sense, we can see how lawyers functioned as \"transaction engineers,\" i.e., crucial intermediaries that brought together in a \"safe\" environment various parties with different but mutually compatible interests and expertise."
  },
  {
   "id": "kaal:claim:3227967-008",
   "url": "https://wulfkaal.github.io/claims/3227967-008",
   "claim": "Lawyers have often failed to perform the function of active transaction engineer and have instead become a hindrance or obstacle to transactions.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "supporting_quote": "The problem, however, is that lawyers have often failed to perform this function of being active transaction engineers and have become a hindrance or obstacle to transactions."
  },
  {
   "id": "kaal:claim:3227967-009",
   "url": "https://wulfkaal.github.io/claims/3227967-009",
   "claim": "The major cause of lawyers obstructing transactions is the tendency to standardize or proceduralize legal solutions and to use standard form templates, because fixed standardized solutions imposed on complex, dynamic transactions produce frustration and difficulties.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "complex, dynamic transactions"
   ],
   "supporting_quote": "This can happen for many reasons but the tendency to standardize – or \"proceduralize\" - legal solutions and to employ standard form \"templates\" is one major factor. Fixed and standardized solutions are imposed on complex, dynamic transactions resulting in frustration and difficulties."
  },
  {
   "id": "kaal:claim:3227967-010",
   "url": "https://wulfkaal.github.io/claims/3227967-010",
   "claim": "The result of this pattern is reputational: lawyers have developed a reputation as the least trusted of professions.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "evidenced",
   "supporting_quote": "As a result, lawyers have developed a reputation as the least trusted of professions."
  },
  {
   "id": "kaal:claim:3227967-011",
   "url": "https://wulfkaal.github.io/claims/3227967-011",
   "claim": "Legal tech will profoundly disrupt the legal profession, and because these technologies are code based, lawyers must be able to understand and talk about code in order to participate in designing them.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "asserted",
   "scope_conditions": [
    "legal technologies built on software code"
   ],
   "supporting_quote": "\"Legal tech\" will profoundly disrupt the legal profession18 and since these technologies are code-based lawyers need to be able to understand and talk about code to participate in the design of such legal technologies"
  },
  {
   "id": "kaal:claim:3227967-012",
   "url": "https://wulfkaal.github.io/claims/3227967-012",
   "claim": "Since companies are increasingly managed by and run on software code, facilitating transactions, that is, acting as an active transaction engineer, now involves coding.",
   "type": "mechanism",
   "topics": [
    "education-and-practice",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "businesses built around code based products or services"
   ],
   "supporting_quote": "Since all companies are now increasingly managed by and run on software code, facilitating transactions – i.e., being an active transaction engineer - involves coding."
  },
  {
   "id": "kaal:claim:3227967-013",
   "url": "https://wulfkaal.github.io/claims/3227967-013",
   "claim": "Junior legal professionals and legal support staff are the first casualties of the Legal Tech evolution, because applications will soon perform most junior lawyer work without the human elements that create imprecision, flaws, inaccuracies, possible lawsuits and delay.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "continued decentralization of legal services by startups"
   ],
   "supporting_quote": "Junior legal professionals and legal support staff are likely the first victims of the Legal Tech evolution.32 Legal Tech applications will be able to perform most of the junior lawyers' work soon without the human elements that create imprecision, flaws, inaccuracies, possible lawsuits, and delay."
  },
  {
   "id": "kaal:claim:3227967-014",
   "url": "https://wulfkaal.github.io/claims/3227967-014",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "innovation",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "incumbent law firms and legal departments facing startup competition"
   ],
   "supporting_quote": "Second, and most importantly, the legal profession will be forced by such startup companies to innovate in perpetuity, a task that is not easily accomplished by overextended and – often – cumbersome legal organizations that have lost the capacity for rapid re-invention."
  },
  {
   "id": "kaal:claim:3227967-015",
   "url": "https://wulfkaal.github.io/claims/3227967-015",
   "claim": "Contrary to commentators who predict the end of lawyers, the authors reject that claim but hold that lawyers of the future can only function as effective transaction engineers if they understand the power of code.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "lawyers seeking to function as transaction engineers in a digital economy"
   ],
   "supporting_quote": "We certainly don't make this claim, but we do think that if the lawyers of the future are to function as effective transaction engineers, they are going to need to understand the power of code."
  },
  {
   "id": "kaal:claim:3227967-016",
   "url": "https://wulfkaal.github.io/claims/3227967-016",
   "claim": "Lawyers of the future will need to act as project managers or at least as active participants in the multi-disciplinary teams that design the solutions and transactions of the future.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "design of code dependent solutions and transactions"
   ],
   "supporting_quote": "Firstly, lawyers of the future will need to be able to assume the role of project managers or, at least, active participants in the new multi- disciplinary teams that are going to design the solutions/transactions of the future."
  },
  {
   "id": "kaal:claim:3227967-017",
   "url": "https://wulfkaal.github.io/claims/3227967-017",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance",
    "institutional-design",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "asserted",
   "scope_conditions": [
    "fast growth technology companies with few assets and employees"
   ],
   "supporting_quote": "Significantly, however, many such \"new\" firms have often struggled to maintain this new governance model and fulfill their initial promise."
  },
  {
   "id": "kaal:claim:3227967-018",
   "url": "https://wulfkaal.github.io/claims/3227967-018",
   "claim": "Because blockchain network nodes verify, validate and audit transactions both before and after execution, the model is safer than a traditional one in which transactions can only be accomplished through third party intermediaries such as a bank, judiciary or notary.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "consensus-and-security",
    "decentralization",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "peer to peer networks using a distributed consensus model"
   ],
   "supporting_quote": "verify, validate and audit transactions before and after they are executed. 49 This is safer than a traditional model in which transactions can only be accomplished through third-party intermediaries, such as a bank, judiciary or notary."
  },
  {
   "id": "kaal:claim:3227967-019",
   "url": "https://wulfkaal.github.io/claims/3227967-019",
   "claim": "Cryptographic hashing makes tampering with blockchain records extremely difficult because even a minuscule change produces a different hash value, rendering manipulation instantly and readily detectable.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "records secured by cryptographic hash functions"
   ],
   "supporting_quote": "The use of cryptographic hashes makes tampering with blockchain records even more difficult, if not impossible. 52 Cryptographic hashes comprise complex algorithms. Even a minuscule change to the blockchain will result in a different hash value, making manipulation instantly and readily detectable."
  },
  {
   "id": "kaal:claim:3227967-020",
   "url": "https://wulfkaal.github.io/claims/3227967-020",
   "claim": "Blockchain replaces intermediaries, bureaucracy and old fashioned procedures with the four Cs of code, connectivity, crowd and collaboration, which increases openness and speed while significantly reducing costs.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "decentralization",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "supporting_quote": "Intermediaries, bureaucracy and old-fashioned procedures are replaced by the 4 Cs: code, connectivity, crowd, and collaboration. 55 The technology increases openness and speed, while at the same time significantly reducing costs."
  },
  {
   "id": "kaal:claim:3227967-021",
   "url": "https://wulfkaal.github.io/claims/3227967-021",
   "claim": "A smart contract is computer program code that enables the verification, execution and enforcement of specific terms and conditions of a contractual arrangement.",
   "type": "definitional",
   "topics": [
    "smart-contracts",
    "blockchain",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "asserted",
   "supporting_quote": "A smart contract is a computer program code that enables the verification, execution, and enforcement of specific terms and conditions of a contractual arrangement."
  },
  {
   "id": "kaal:claim:3227967-022",
   "url": "https://wulfkaal.github.io/claims/3227967-022",
   "claim": "Smart contract use scales with device connectivity: the more devices are connected to each other, the more smart contracts will be used to execute and enforce legal transactions, and they are already disrupting traditional legal assumptions, doctrines and concepts.",
   "type": "predictive",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "growth of the Internet of Things"
   ],
   "supporting_quote": "The more devices are connected to each other, the more \"smart contracts\" will be used to execute and enforce \"legal transactions.\" There is no doubt that smart contracts are already disrupting traditional legal assumptions, doctrines, and concepts."
  },
  {
   "id": "kaal:claim:3227967-023",
   "url": "https://wulfkaal.github.io/claims/3227967-023",
   "claim": "A decentralized autonomous organization is merely computer code with no directors, managers or employees, its governance structure built with software, code and smart contracts running on a public decentralized blockchain platform.",
   "type": "definitional",
   "topics": [
    "dao",
    "smart-contracts",
    "blockchain",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "asserted",
   "scope_conditions": [
    "DAOs built on public platforms, in most cases Ethereum"
   ],
   "supporting_quote": "DAOs are \"merely\" computer code. They don't have any directors, managers or employees. The governance structure is built with and on software, code and smart contracts that ran on a public decentralized blockchain platform (in most cases Ethereum)."
  },
  {
   "id": "kaal:claim:3227967-024",
   "url": "https://wulfkaal.github.io/claims/3227967-024",
   "claim": "As software code automates procedures and tasks, the focus of knowledge work shifts from the routine application of procedures to designing the systems and standardized functions that machines then perform.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "a flatter, decentralized and automated economy"
   ],
   "supporting_quote": "DOAs fit in the flatter, decentralized and automated world. With software code automating procedures and tasks, the focus of \"knowledge work\" is shifting from the routine \"application of procedures\" to designing the systems and standardized functions that are then performed by machines."
  },
  {
   "id": "kaal:claim:3227967-025",
   "url": "https://wulfkaal.github.io/claims/3227967-025",
   "claim": "Law programs have been slow to adapt to these technological developments and most students are still being prepared for a hierarchical, centralized and proceduralized world.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "asserted",
   "scope_conditions": [
    "law school curricula as of 2018"
   ],
   "supporting_quote": "Unfortunately, law programs have been slow to adapt to these technological developments. Most students are still being prepared for a hierarchical, centralized and \"proceduralized\" world."
  },
  {
   "id": "kaal:claim:3227967-026",
   "url": "https://wulfkaal.github.io/claims/3227967-026",
   "claim": "Because the new solutions rewarded by the future labor market will be code based, an understanding of code and coding will be essential to participate effectively in the digital world.",
   "type": "condition",
   "topics": [
    "education-and-practice",
    "open-source-and-code",
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "a labor market that rewards designing rather than following procedures"
   ],
   "supporting_quote": "And since these new solutions will be code-based, an understanding of code and coding will be essential to participate effectively in our digital world."
  },
  {
   "id": "kaal:claim:3227967-027",
   "url": "https://wulfkaal.github.io/claims/3227967-027",
   "claim": "In a digital world trust can be embedded directly in software code, and recent interest in smart contracts suggests this will be a significant growth area in the near future.",
   "type": "predictive",
   "topics": [
    "reputation",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "digital transactions where code can carry contractual terms"
   ],
   "supporting_quote": "In a digital world, trust can be embedded in software code. Recent interest in smart contracts suggests that this is going to be a significant growth area in the near-future."
  },
  {
   "id": "kaal:claim:3227967-028",
   "url": "https://wulfkaal.github.io/claims/3227967-028",
   "claim": "As machine to machine interaction becomes normal in an Internet of Things environment, trust ceases to be primarily a legal question and becomes a technical and design problem.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "machine to machine transactions in an Internet of Things environment"
   ],
   "supporting_quote": "code is also crucial in machine-to-machine (M2M) based transactions. As M2M interaction becomes normal in an Internet of Things environment, the issue of trust becomes a technical and design problem."
  },
  {
   "id": "kaal:claim:3227967-029",
   "url": "https://wulfkaal.github.io/claims/3227967-029",
   "claim": "Cybersecurity should not be addressed by introducing more law in books; law students should instead look for technology based solutions and at minimum acquire the knowledge needed to evaluate such solutions against the alternatives.",
   "type": "normative",
   "topics": [
    "consensus-and-security",
    "law-and-legal-systems",
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "cloud delivered software and Internet of Things environments"
   ],
   "supporting_quote": "But instead of combatting \"cybersecurity\" with the introduction of \"more law in books,\" law students should look for technology-based solutions. At the very least, they need to have the necessary knowledge to evaluate technology-based solutions and compare them with the alternatives."
  },
  {
   "id": "kaal:claim:3227967-030",
   "url": "https://wulfkaal.github.io/claims/3227967-030",
   "claim": "Building lawyers' capacity to think about the social and ethical implications of code is both essential and inevitable, but saying anything sensible about the ethics of technology first requires understanding coding and coders.",
   "type": "condition",
   "topics": [
    "education-and-practice",
    "open-source-and-code",
    "law-and-legal-systems",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "ethical questions raised by automation, artificial intelligence and driverless vehicles"
   ],
   "supporting_quote": "Building the capacity of the lawyers of the future to think about the social and ethical implications of code is both essential and inevitable. But, to say something sensible about the ethical aspects of technology, it is necessary to understand both more about coding and coders."
  },
  {
   "id": "kaal:claim:3227967-031",
   "url": "https://wulfkaal.github.io/claims/3227967-031",
   "claim": "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.",
   "type": "predictive",
   "topics": [
    "dao",
    "blockchain",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "comparison with organizations lacking DAO incentives and efficiencies"
   ],
   "supporting_quote": "we also concluded (as we did in class) that DAOs will eventually overtake any organization which lacks these incentives and efficiencies. Moreover, DAOs are cheap and straightforward to \"clone,\" which will potentially lead to more competition."
  },
  {
   "id": "kaal:claim:3227967-032",
   "url": "https://wulfkaal.github.io/claims/3227967-032",
   "claim": "Existing blockchains and DAOs still lack genuine decentralization, and there are currently no true DAOs: Bitcoin's proof of work protocol has produced mining pools because of economies of scale and unbalanced reward structures.",
   "type": "failure",
   "topics": [
    "blockchain",
    "dao",
    "decentralization",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "proof of work blockchains as of 2018"
   ],
   "supporting_quote": "In our discussion, the following weaknesses were highlighted. There is still a lack of decentralization (there are currently no \"true\" DAOs). For instance, Bitcoin's proof of work protocol has led to \"mining pools\" because of economies of scale and unbalanced reward structures."
  },
  {
   "id": "kaal:claim:3227967-033",
   "url": "https://wulfkaal.github.io/claims/3227967-033",
   "claim": "Anonymity in blockchain organizations makes them prone to Sybil attacks and 51 percent attacks, and anonymity combined with autonomy has led to many hacks.",
   "type": "failure",
   "topics": [
    "blockchain",
    "consensus-and-security",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous and autonomous blockchain organizations"
   ],
   "supporting_quote": "Also, the anonymity in blockchain organizations means that they are prone to \"Sybil attacks\" and \"51% attacks.\" We also discussed the many examples in which the anonymity (and autonomy) have led to hacks."
  },
  {
   "id": "kaal:claim:3227967-034",
   "url": "https://wulfkaal.github.io/claims/3227967-034",
   "claim": "In a truly decentralized system any mistake, such as a stolen or lost password or a programming bug, is permanent and irrevocable.",
   "type": "failure",
   "topics": [
    "blockchain",
    "dao",
    "risk-and-incentives",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "asserted",
   "scope_conditions": [
    "truly decentralized systems with no reversal authority"
   ],
   "supporting_quote": "Remember that in a truly decentralized system, any mistakes (stolen/lost passwords, programming bugs, etc.) are permanent and irrevocable."
  },
  {
   "id": "kaal:claim:3227967-035",
   "url": "https://wulfkaal.github.io/claims/3227967-035",
   "claim": "A reputation verification platform matters because trust created through an eternal reputational record would be open to review and driven by proper incentives.",
   "type": "design",
   "topics": [
    "reputation",
    "blockchain",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain based reputation systems that reward trustful parties and punish bad actors"
   ],
   "supporting_quote": "This was considered to be important because if the trust were to be created through an eternal reputational record, it would be open to review and driven by proper incentives."
  },
  {
   "id": "kaal:claim:3227967-036",
   "url": "https://wulfkaal.github.io/claims/3227967-036",
   "claim": "The real design challenge for consensus protocols is to find a proof of stake protocol that offers both trust and security without unintentionally creating just another centralized validation system.",
   "type": "design",
   "topics": [
    "consensus-and-security",
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain consensus protocol design"
   ],
   "supporting_quote": "The students understood that the real challenge is to find a \"proof of stake\" protocol that offers both trust and security (without unintentionally creating just another centralized validation system)."
  },
  {
   "id": "kaal:claim:3227967-037",
   "url": "https://wulfkaal.github.io/claims/3227967-037",
   "claim": "The Coding for Lawyers course is not about teaching students how to code but about making them realize how important it is to think about their relationship with new technology and with technology experts.",
   "type": "definitional",
   "topics": [
    "education-and-practice",
    "open-source-and-code",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "asserted",
   "scope_conditions": [
    "the course as taught in Europe and the United States"
   ],
   "supporting_quote": "It is not about teaching students \"how to code,\" but about making them realize how important it is to think about our relationship with new technology and technology experts."
  },
  {
   "id": "kaal:claim:3227967-038",
   "url": "https://wulfkaal.github.io/claims/3227967-038",
   "claim": "Coders and developers do not always understand the industry or business environment they target with their software solutions, nor do they always consider the trust or ethical issues raised by the technology based business solutions they implement.",
   "type": "failure",
   "topics": [
    "education-and-practice",
    "reputation",
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "technology based business solutions built by developers"
   ],
   "supporting_quote": "Coders, programmers, and other developers do not always understand the industry or business environment they target with their software solutions. Nor do they always consider the trust or ethical issues when implementing technology-based business solutions."
  },
  {
   "id": "kaal:claim:3227967-039",
   "url": "https://wulfkaal.github.io/claims/3227967-039",
   "claim": "Developers are not trained to consider business context or ethics because most tech education focuses almost exclusively on technical training and skills, so a parallel reconfiguration of technical education is required alongside the reform of legal education.",
   "type": "design",
   "topics": [
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "current technical education curricula"
   ],
   "supporting_quote": "They are not trained to think in this way. Most tech- education is almost exclusively focused on technical training and skills. A parallel reconfiguration in our technical education is also required."
  },
  {
   "id": "kaal:claim:3227967-040",
   "url": "https://wulfkaal.github.io/claims/3227967-040",
   "claim": "Co-creation partnerships between developers and non-developers will be crucial to building a better digital future, and understanding coding is what enables lawyers to engage constructively with coders, programmers and other software developers.",
   "type": "mechanism",
   "topics": [
    "education-and-practice",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "multi-disciplinary software development projects"
   ],
   "supporting_quote": "\"Co-creation\" involving partnerships between developers and non- developers will be crucial to building a \"better\" digital future. And understanding coding enables lawyers to constructively engage with coders, programmers, and other software developers."
  },
  {
   "id": "kaal:claim:3227967-041",
   "url": "https://wulfkaal.github.io/claims/3227967-041",
   "claim": "If standardized legal work and legal research can be performed by algorithms, the result is an opportunity rather than a threat, because it frees lawyer time for assisting clients with the new and very specific challenges of the digital world.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967",
   "year": "2018",
   "source_sha256": "f6e13b956f864ab32ec3305d095a35a127770327d75b3688f785cefc437d369f",
   "confidence": "argued",
   "scope_conditions": [
    "successful algorithmic automation of standardized legal work"
   ],
   "supporting_quote": "If the \"standardized work\" and legal research activities can be performed by algorithms, there is more time for assisting the client with the new and very specific challenges of the digital world."
  },
  {
   "id": "kaal:claim:3266953-001",
   "url": "https://wulfkaal.github.io/claims/3266953-001",
   "claim": "Internet based platform businesses and distributed ledger technology businesses have not reached their full potential, and the core factor holding them back is worldwide decreasing trust in the internet together with under developed trust in decentralized technology solutions.",
   "type": "failure",
   "topics": [
    "reputation",
    "decentralization",
    "blockchain",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "internet based platform businesses",
    "distributed ledger technology businesses"
   ],
   "supporting_quote": "Multiple studies, data, and anecdotal evidence suggest that one core factor that undermines their evolution is the worldwide decreasing trust in the internet and under-developed trust in decentralized technology solutions."
  },
  {
   "id": "kaal:claim:3266953-002",
   "url": "https://wulfkaal.github.io/claims/3266953-002",
   "claim": "Adding more regulations, processes and procedures cannot restore confidence in institutions, because the traditional trust and cohesion mechanisms have already reached their limits.",
   "type": "failure",
   "topics": [
    "reputation",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "attempts to restore institutionalized trust"
   ],
   "supporting_quote": "To restore confidence in the \"old world\", efforts have tended to focus on introducing and implementing more regulations, processes, and procedures. Yet, the traditional trust and cohesion mechanisms have reached their limits."
  },
  {
   "id": "kaal:claim:3266953-003",
   "url": "https://wulfkaal.github.io/claims/3266953-003",
   "claim": "Digitized and automated trust is not a stable substitute for institutional trust, because it is experiencing crises of its own that undermine the proliferation of value enhancing internet based platform businesses and distributed ledger technology businesses.",
   "type": "failure",
   "topics": [
    "reputation",
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "trust migrated from organizations to machines and algorithms"
   ],
   "supporting_quote": "Yet, this digitized trust is experiencing its own crises which undermines the proliferation of value-enhancing internet-based platform businesses and DLT businesses."
  },
  {
   "id": "kaal:claim:3266953-004",
   "url": "https://wulfkaal.github.io/claims/3266953-004",
   "claim": "The trust humans place in machines on the internet has never been verified, because neither centralized nor decentralized authentication engines have typically confirmed that trust or otherwise enabled a trusting environment for internet based transactions.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "asserted",
   "scope_conditions": [
    "human to machine interaction on the internet"
   ],
   "supporting_quote": "Yet no centralized or decentralized authentication engine has typically verified the trust humans place in machines or otherwise enabled a trusting environment for internet-based transactions."
  },
  {
   "id": "kaal:claim:3266953-005",
   "url": "https://wulfkaal.github.io/claims/3266953-005",
   "claim": "Today's internet is designed for hierarchical societal structures on an underlying authoritative trust model, and that traditional hierarchical trust model carries many inefficiencies including serious cyber security vulnerabilities.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "asserted",
   "supporting_quote": "Worse yet, today's internet is designed for hierarchical societal structures and with an underlying authoritative trust model. Many inefficiencies are associated with the traditional hierarchical trust model including serious cyber security vulnerabilities."
  },
  {
   "id": "kaal:claim:3266953-006",
   "url": "https://wulfkaal.github.io/claims/3266953-006",
   "claim": "The centralized version of the internet cannot scale to the thirty to fifty billion connected devices that experts expect by 2020, which is why decentralized authentication solutions for internet of things devices are needed.",
   "type": "predictive",
   "topics": [
    "decentralization",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "evidenced",
   "scope_conditions": [
    "projected device counts by the year 2020"
   ],
   "supporting_quote": "By the year 2020 the majority of experts estimates that a total of 30 to 50 billion devices will connect to the internet.8 The prevailing opinion of these researchers suggests that the centralized version of the internet cannot scale to that level."
  },
  {
   "id": "kaal:claim:3266953-007",
   "url": "https://wulfkaal.github.io/claims/3266953-007",
   "claim": "Displayed net feedback scores are a poor reputation instrument because they encourage Pollyanna assessments of reputation and are far from the best predictor of performance available in the data.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "evidenced",
   "scope_conditions": [
    "eBay feedback data from 1999"
   ],
   "supporting_quote": "However, the net feedback scores that eBay displays encourages Pollyanna assessments of reputations, and is far from the best predictor available."
  },
  {
   "id": "kaal:claim:3266953-008",
   "url": "https://wulfkaal.github.io/claims/3266953-008",
   "claim": "Every centralized reputation score can be sybil attacked, because fake internet accounts or fictitious ratings disrupt true reputation scoring.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "decentralization",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "asserted",
   "scope_conditions": [
    "centralized reputation scoring systems"
   ],
   "supporting_quote": "All centralized reputation scores can be sybil attacked, e.g. fake internet accounts (sockpuppets) or fictitious ratings disrupt true reputation scoring"
  },
  {
   "id": "kaal:claim:3266953-009",
   "url": "https://wulfkaal.github.io/claims/3266953-009",
   "claim": "Users on internet based platforms earn their reputation but do not own it, so if a platform deletes an account, years of reputation data disappear and users have near zero ability to reclaim it.",
   "type": "failure",
   "topics": [
    "reputation",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "centralized platforms such as Facebook"
   ],
   "supporting_quote": "Users earned their reputation but do NOT own reputation - e.g. if Facebook and other internet-based platform businesses accidentally deleted user account, years of data would be removed and users have near zero ability to reclaim the data"
  },
  {
   "id": "kaal:claim:3266953-010",
   "url": "https://wulfkaal.github.io/claims/3266953-010",
   "claim": "Financial and reputation scores are trapped in platform silos, and that data incompatibility undermines interoperability between platforms and leaves no way to aggregate a user's reputation across disparate platforms.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "asserted",
   "scope_conditions": [
    "centralized internet platforms"
   ],
   "supporting_quote": "All financial and reputation scores are trapped in Silos. Such reputation data incompatibility undermines interoperability between platforms. There is also no way to aggregate user reputation in disparate platforms."
  },
  {
   "id": "kaal:claim:3266953-011",
   "url": "https://wulfkaal.github.io/claims/3266953-011",
   "claim": "Nobody has yet created a reputation engine that is genuinely resistant to Sybil attack and that cannot be corrupted regardless of the economics at stake, despite the many platforms that capture reputation.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "asserted",
   "scope_conditions": [
    "as of the time of writing",
    "platforms including Facebook, Linkedin, Twitter, Uber, Airbnb and Yelp"
   ],
   "supporting_quote": "Yet, nobody has created a truly Sybil-attack resistant reputation engine that cannot be corrupted, regardless of the economics at stake."
  },
  {
   "id": "kaal:claim:3266953-012",
   "url": "https://wulfkaal.github.io/claims/3266953-012",
   "claim": "Because power exercised over a store of value inevitably produces economies of scale, cryptocurrencies and any other transferable store of value drive networks toward centralization.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "any fungible store of value, not only cryptocurrencies"
   ],
   "supporting_quote": "Because of the store of value entailed in cryptocurrencies (and really any currencies or store of value), exercise of power over such value inevitably leads to centralization due to economies of scale."
  },
  {
   "id": "kaal:claim:3266953-013",
   "url": "https://wulfkaal.github.io/claims/3266953-013",
   "claim": "Reputation does not push a network toward centralization the way currency does, because reputation must be earned and can be lost yet cannot be turned into a fungible store of value exchangeable for goods.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "reputation held as a non transferable metric"
   ],
   "supporting_quote": "Reputation as a metric and store of value does not suffer the same consequences described above and does not lead to centralization because it must be earned, it can be lost, yet it cannot be turned into a fungible store of value that allows the exchange for goods etc."
  },
  {
   "id": "kaal:claim:3266953-014",
   "url": "https://wulfkaal.github.io/claims/3266953-014",
   "claim": "Smart contracts cannot by themselves carry human business interactions, because those interactions require flexibility in interpreting intent that is at odds with the merciless mathematical logic of smart contract code.",
   "type": "condition",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "business collaborations with unanticipated eventualities or partial performance"
   ],
   "supporting_quote": "Human business interactions require a flexibility that is at odds with the merciless mathematical logic of smart contracts."
  },
  {
   "id": "kaal:claim:3266953-015",
   "url": "https://wulfkaal.github.io/claims/3266953-015",
   "claim": "A pure code is law smart contract between anonymous parties creates a zero sum scenario in which each party is incentivized to deliver only the minimum that satisfies the rigid self executing terms, so this type of business ultimately degenerates.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "self executing contracts between often anonymous parties",
    "no reputation at stake"
   ],
   "supporting_quote": "This creates a zero-sum scenario where both parties are entirely incentivized to provide the minimum possible to fulfill the perfectly rigid self-executing contract. This type of business ultimately degenerates as people will spend extra effort to deliver the minimum acceptable products."
  },
  {
   "id": "kaal:claim:3266953-016",
   "url": "https://wulfkaal.github.io/claims/3266953-016",
   "claim": "Putting the counterparties' reputation at stake reverses smart contracting's degeneration, because the opportunity to earn new valuable reputation tokens makes members act in ways that improve the platform over the long term rather than exploit short term arbitrage.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "reputation tokens that can be earned and lost"
   ],
   "supporting_quote": "This effect changes if reputation of the counterparties is at stake. With the opportunity to create new valuable reputation tokens, members strive to act in ways which improve the platform for the long term instead of exploiting short-term arbitrage opportunities."
  },
  {
   "id": "kaal:claim:3266953-017",
   "url": "https://wulfkaal.github.io/claims/3266953-017",
   "claim": "Meaningful and secure reputation tokens supply the incentives needed for secure proof of stake consensus in block production, which eliminates the unsustainable inefficiencies of proof of work based blockchains.",
   "type": "design",
   "topics": [
    "consensus-and-security",
    "reputation",
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "tokens that represent reputation per type of expertise"
   ],
   "supporting_quote": "giving the proper incentives for guaranteeing secure proof-of- stake consensus protocols for block production. This eliminates the unsustainable inefficiencies of proof-of-work based blockchains."
  },
  {
   "id": "kaal:claim:3266953-018",
   "url": "https://wulfkaal.github.io/claims/3266953-018",
   "claim": "Semada replaces fungible currency staking with reputation staking for block propagation, a consensus algorithm the authors call Semada Proof of Reputation.",
   "type": "definitional",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "asserted",
   "scope_conditions": [
    "Semada platform block propagation"
   ],
   "supporting_quote": "Block propagation in the Semada platform is facilitated by staking reputation, not a fungible currency as in PoS. Accordingly, the consensus algorithm is called Semada Proof of Reputation (PoR)."
  },
  {
   "id": "kaal:claim:3266953-019",
   "url": "https://wulfkaal.github.io/claims/3266953-019",
   "claim": "Under the Anchor Protocol, staking means anchoring reputation to a block, so a block producer whose block turns out to be invalid or is cancelled out suffers depreciation of their reputation.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "asserted",
   "scope_conditions": [
    "Semada block production"
   ],
   "supporting_quote": "Moreover, staking in the Anchor Protocol means anchoring your reputation to a block. In other words, Semada block producers anchor their reputation to a block, and if the block is invalid or cancelled out, their reputation depreciates."
  },
  {
   "id": "kaal:claim:3266953-020",
   "url": "https://wulfkaal.github.io/claims/3266953-020",
   "claim": "The fungibility of the staked currency is the main point of attack against proof of stake and leads inevitably to centralization.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "proof of stake consensus using fungible currency"
   ],
   "supporting_quote": "The fungibility of currency is the main point of attacks on PoS and leads inevitably to centralization."
  },
  {
   "id": "kaal:claim:3266953-021",
   "url": "https://wulfkaal.github.io/claims/3266953-021",
   "claim": "Because Semada's Anchor Protocol uses reputation scores as a non fungible currency to qualify for block propagation, the resulting proof of reputation consensus is attack resistant, fully decentralized, scalable, and open to evolutionary protocol upgrades.",
   "type": "design",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "reputation scores that cannot be transferred"
   ],
   "supporting_quote": "Unlike traditional PoS, PoR, e.g. Semada's Anchor Protocol, uses reputation scores as a non-fungible currency to qualify for block propagation. As such, the Anchor protocol (PoR) is attack resistant, fully decentralized, scalable and allows evolutionary protocol upgrades."
  },
  {
   "id": "kaal:claim:3266953-022",
   "url": "https://wulfkaal.github.io/claims/3266953-022",
   "claim": "Block producers are selected pseudo randomly with weight proportional to their Anchor token holdings, so a participant with more reputation is more likely to be selected to produce a block.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "asserted",
   "scope_conditions": [
    "Semada Core block producer selection"
   ],
   "supporting_quote": "Semada Core (pseudo) randomly selects the block producers weighted by their holdings, meaning if you have more reputation, as evidenced by the Anchor holdings, you are more likely to be selected."
  },
  {
   "id": "kaal:claim:3266953-023",
   "url": "https://wulfkaal.github.io/claims/3266953-023",
   "claim": "A successful Semada block producer wins half of the newly minted reputation tokens for a block while the remaining members share the other half for policing the block in the validation pool.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "asserted",
   "scope_conditions": [
    "each produced and validated block"
   ],
   "supporting_quote": "they win the lottery of half of a great deal of new reputation tokens if they are chosen while the rest of the members share the other half of newly minted reputation tokens for policing the block in the validation pool."
  },
  {
   "id": "kaal:claim:3266953-024",
   "url": "https://wulfkaal.github.io/claims/3266953-024",
   "claim": "Because all fungible fees are already shared in proper proportion among Anchor holders, participants have less reason to join a mining pool, which makes the system more decentralized.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "fee distribution proportional to Anchor token holdings"
   ],
   "supporting_quote": "is less reason to join a mining pool, since all fungible fees are already shared in proper proportion, so it is more decentralized)."
  },
  {
   "id": "kaal:claim:3266953-025",
   "url": "https://wulfkaal.github.io/claims/3266953-025",
   "claim": "New reputation tokens are minted in every validation pool for every block, so block production is strongly encouraged through a larger share for the successful producer while policing is only gently encouraged through a shared allocation to all active members.",
   "type": "design",
   "topics": [
    "tokenomics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "every block and its validation pool"
   ],
   "supporting_quote": "Active participation is encouraged because new reputation tokens are minted in every validation pool for every block. So block production is strongly encouraged (because a greater percentage of the new tokens are given to a successful producer) and policing is gently encouraged"
  },
  {
   "id": "kaal:claim:3266953-026",
   "url": "https://wulfkaal.github.io/claims/3266953-026",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "asserted",
   "scope_conditions": [
    "blocks rejected by the validation pool"
   ],
   "supporting_quote": "Producing bad blocks is slashed because the bad block producer will lose their availability stakes (the tokens the producer staked to be considered for the random selection of block producers) in the validation pool."
  },
  {
   "id": "kaal:claim:3266953-027",
   "url": "https://wulfkaal.github.io/claims/3266953-027",
   "claim": "Anchor tokens are highly inflationary because new ones are minted in proportion to the SEM denominated transaction fees collected in each block, so a member must keep participating simply to maintain their relative power.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "Anchor token holders in the block production DAO"
   ],
   "supporting_quote": "New Anchor tokens are created in proportion to the number of SEM denominated transaction fees collected by the system in each block. Therefore, Anchor tokens are highly inflationary. To maintain his relative power, Bob must continue to participate."
  },
  {
   "id": "kaal:claim:3266953-028",
   "url": "https://wulfkaal.github.io/claims/3266953-028",
   "claim": "A Web of Trust reputation system can be gamed with sockpuppet accounts, because an attacker can behave well for a while and then transact with himself repeatedly and rate himself high to raise his reputation arbitrarily.",
   "type": "failure",
   "topics": [
    "reputation",
    "consensus-and-security",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "reputation systems based on counting positive peer rated transactions"
   ],
   "supporting_quote": "If I use a lot of sockpuppet accounts, I can raise my reputation arbitrarily high, by behaving well for a while, then making a lot of transactions with myself and rating myself high."
  },
  {
   "id": "kaal:claim:3266953-029",
   "url": "https://wulfkaal.github.io/claims/3266953-029",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "reputation that carries real economic value"
   ],
   "supporting_quote": "The problem with this is, if the reputation is genuinely valuable, a sockpuppet account can afford to go through whatever hoops you have in place to create false identities (including stealing biometric data if necessary), then increase their reputation arbitrarily, as described above."
  },
  {
   "id": "kaal:claim:3266953-030",
   "url": "https://wulfkaal.github.io/claims/3266953-030",
   "claim": "The other horn of the identity verification dilemma is that when reputation is not valuable, honest users will not bother to go through the hoops required to identify themselves securely.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "low value reputation systems"
   ],
   "supporting_quote": "If the reputation is not valuable, then you won't be able to get honest users to go through the hoops required to identify themselves securely, since it"
  },
  {
   "id": "kaal:claim:3266953-031",
   "url": "https://wulfkaal.github.io/claims/3266953-031",
   "claim": "The Web of Trust is only trustworthy where the service is not valuable, such as essentially free PGP email, because only then is it not worth creating sockpuppet accounts.",
   "type": "condition",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "services with negligible economic value at stake"
   ],
   "supporting_quote": "So the only time WoT works is when the service is not valuable, such as PGP (email which is essentially free). Then it's not worth it to create sock puppet accounts, so in that case you can trust the WoT network."
  },
  {
   "id": "kaal:claim:3266953-032",
   "url": "https://wulfkaal.github.io/claims/3266953-032",
   "claim": "In an economic network where real money is at stake, historical good behavior cannot be assumed to prove future good behavior, because sockpuppet accounts allow participants to game the system automatedly, create valuable reputation falsely, and leach value out of the system.",
   "type": "failure",
   "topics": [
    "reputation",
    "regulatory-failure",
    "consensus-and-security",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "networks where trust must support real monetary value"
   ],
   "supporting_quote": "you can't just assume their historical good behavior will prove their future behavior will also be good. Sockpuppet accounts allow us to automatedly game the system and falsely create valuable reputation, so we can leach whatever value there is out of the system."
  },
  {
   "id": "kaal:claim:3266953-033",
   "url": "https://wulfkaal.github.io/claims/3266953-033",
   "claim": "Sockpuppet accounts grow their reputation value much faster than honest users can in a Web of Trust, because sockpuppets validate each other, and the system is therefore flawed and should not be used where fungible currency is at stake.",
   "type": "failure",
   "topics": [
    "reputation",
    "tokenomics",
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "web of trust style reputation used by many distributed ledger startups"
   ],
   "supporting_quote": "However, sockpuppet accounts can grow their value much quicker in the web of trust by validating each other. Honest users are much slower than the sockpuppets validating each other. Hence, the system is flawed."
  },
  {
   "id": "kaal:claim:3266953-034",
   "url": "https://wulfkaal.github.io/claims/3266953-034",
   "claim": "Semada's voting algorithm is designed so that gaming the system is not economically feasible without contributing genuinely valuable improvements, because value is proven through the fees added to the system and every fee is subject to a fair validation pool.",
   "type": "design",
   "topics": [
    "governance-design",
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "fees attached to each contribution",
    "validation pool review of every fee"
   ],
   "supporting_quote": "The voting algorithm of Semada core is designed to combat that very system, so that it is not economically feasible to game the system without adding genuinely valuable improvements, as proven with the fees that are added to the system and the fair validation pool that every fee is subject to."
  },
  {
   "id": "kaal:claim:3266953-035",
   "url": "https://wulfkaal.github.io/claims/3266953-035",
   "claim": "The Sockpuppet Protocol breaks the incentive for Sybil attacks because all power derives from validation pools in relation to what members stake and all fungible currency rewards are shared with the group in proportion to individual reputation.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "reward changes occur only through validation pools"
   ],
   "supporting_quote": "All power comes from validation pools in relation to what DAO members stake, and all fungible currency rewards are shared fairly with the group in proportion to their individual reputation. The Sockpuppet Protocol thus breaks the incentives for Sybil attacks."
  },
  {
   "id": "kaal:claim:3266953-036",
   "url": "https://wulfkaal.github.io/claims/3266953-036",
   "claim": "The Persona Protocol redistributes power toward people who have no agency in centralized systems, because community originated audits sit at the core of every Semada DAO whereas existing systems rarely include audits deriving from the community itself.",
   "type": "normative",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "Semada DAO governance"
   ],
   "supporting_quote": "From a social justice perspective, the Semada Persona Protocol takes power and spreads it out much further to people who have no agency in the centralized systems. In the existing systems very few audits exist that derive from the community itself."
  },
  {
   "id": "kaal:claim:3266953-037",
   "url": "https://wulfkaal.github.io/claims/3266953-037",
   "claim": "Semada's biometric onboarding technology uses zero knowledge proofs so that users retain continuing anonymity once they are onboarded.",
   "type": "design",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "asserted",
   "scope_conditions": [
    "mobile biometric sign in to a wallet",
    "biometric onboarding is optional"
   ],
   "supporting_quote": "Semada uses zero knowledge proofs for its biometrics onboarding technology that guarantees continuing anonymity for users, once onboarded."
  },
  {
   "id": "kaal:claim:3266953-038",
   "url": "https://wulfkaal.github.io/claims/3266953-038",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "law-and-legal-systems",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "Semada Forum governance posts and citations"
   ],
   "supporting_quote": "more reputation weight and salaries are allocated to posts on the Semada Forum that get continuously referenced by other posts. As a precedent dissipates over time, new precedence in the Semada Forum emerge naturally to replace older precedent."
  },
  {
   "id": "kaal:claim:3266953-039",
   "url": "https://wulfkaal.github.io/claims/3266953-039",
   "claim": "A decentralized network of DAOs is significantly more efficient than a centralized platform because the centralized intermediary fee, twenty five percent in Uber's case, can instead be shared between the driver members and the passengers.",
   "type": "design",
   "topics": [
    "dao",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "ride sharing style platform businesses"
   ],
   "supporting_quote": "Second, the decentralized network of DAOs is significantly more efficient because the centralized fees, e.g. in Uber's case 25%, can be shared between the drivers / DAO members and the passengers."
  },
  {
   "id": "kaal:claim:3266953-040",
   "url": "https://wulfkaal.github.io/claims/3266953-040",
   "claim": "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.",
   "type": "predictive",
   "topics": [
    "dao",
    "institutional-design",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953",
   "year": "2018",
   "source_sha256": "781758dea356e55d79c73ad7f1debe7c83de398bd1cd9e0a9a6c2802f276b4c0",
   "confidence": "argued",
   "scope_conditions": [
    "DAO infrastructure hosting decentralized companies"
   ],
   "supporting_quote": "The combined efficiencies of DAOs over existing businesses suggest that DAO businesses could effectively overcome collective action problems and outcompete internet-based businesses such as Uber."
  },
  {
   "id": "kaal:claim:3125827-001",
   "url": "https://wulfkaal.github.io/claims/3125827-001",
   "claim": "No single, fixed, entirely algorithmic policing solution can completely prevent independent nodes in a distributed system from gaming block production to advantage some parties over others. Any consensus protocol that relies on a permanently fixed rule set will therefore be gamed as conditions change.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "regulatory-failure",
    "blockchain",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "distributed systems with independent, self interested nodes",
    "protocols that are fixed rather than continually revisable"
   ],
   "supporting_quote": "In fact it is obvious there can be no single, fixed, entirely algorithmic policing solution which completely prevents independent nodes in a distributed system from gaming the system by producing blocks with transactions that advantage some parties over others1."
  },
  {
   "id": "kaal:claim:3125827-002",
   "url": "https://wulfkaal.github.io/claims/3125827-002",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "consensus-and-security",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "changing market and network conditions",
    "adversaries who adapt their strategies over time"
   ],
   "supporting_quote": "Therefore a successful PoS protocol must be flexible enough to continually police new attack strategies."
  },
  {
   "id": "kaal:claim:3125827-003",
   "url": "https://wulfkaal.github.io/claims/3125827-003",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "risk-and-incentives",
    "consensus-and-security",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized systems without a central enforcement authority"
   ],
   "supporting_quote": "A secure PoS protocol requires a proper incentive structure which perpetually motivates users to produce valuable blocks, to police the production of blocks which violate protocols, and to improve block production protocols in response to gaming."
  },
  {
   "id": "kaal:claim:3125827-004",
   "url": "https://wulfkaal.github.io/claims/3125827-004",
   "claim": "Because all block creation fees are shared with the whole group as a reputation weighted salary, SPoS removes the direct monetary reward for forming mining pools or block production cartels, which the authors identify as a decentralization threat that raises the likelihood of 51% attacks.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "consensus-and-security",
    "decentralization",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "fees distributed as a reputation weighted salary rather than paid to the producer"
   ],
   "supporting_quote": "Therefore, unlike every other implemented platform, there is no direct monetary reward incentive for creating mining pools or block production cartels, which are a threat to decentralization which increases the likelihood of 51% attacks."
  },
  {
   "id": "kaal:claim:3125827-005",
   "url": "https://wulfkaal.github.io/claims/3125827-005",
   "claim": "Because the stakes in SPoS are reputation tokens that are far less fungible than cryptocurrency stakes, long term probity is incentivized and many short term arbitrage opportunities are eliminated. Fungibility of the staked asset is what makes short horizon attacks profitable in other proof of stake systems.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "stakes denominated in non fungible reputation tokens rather than currency"
   ],
   "supporting_quote": "In particular, the stakes (sem tokens) are naturally far less fungible than cryptocurrency stakes, so long-term probity is incentivized, eliminating many short- term arbitrage opportunities."
  },
  {
   "id": "kaal:claim:3125827-006",
   "url": "https://wulfkaal.github.io/claims/3125827-006",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "asserted",
   "scope_conditions": [
    "community voting on the value of contributions",
    "anonymous or pseudonymous participants"
   ],
   "supporting_quote": "The staking of tokens, with its potential for slashing, is necessary to avoid the tragedy of the commons."
  },
  {
   "id": "kaal:claim:3125827-007",
   "url": "https://wulfkaal.github.io/claims/3125827-007",
   "claim": "Because at least half of the sem tokens minted when a user buys in with a fee are shared with the community that polices the application, the ability to purchase tokens does not open a profitable 51% attack; the authors claim a mathematical proof that this feature alone eliminates the incentive.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "evidenced",
   "scope_conditions": [
    "token purchase mints tokens split with the existing community",
    "proof holds under the worst case assumptions of Appendix A.1"
   ],
   "supporting_quote": "at least half of the tokens minted are shared with the community who polices the application. We provide a mathematical proof that shows this alone completely eliminates all incentives to perform the 51% attack in Appendix A.1."
  },
  {
   "id": "kaal:claim:3125827-008",
   "url": "https://wulfkaal.github.io/claims/3125827-008",
   "claim": "Given that Byzantine faults are inevitable in a distributed system, the known impossibility results force any consensus protocol to hedge: it can promise only a probability of finality and security, and that probability is inversely proportional to liveness and speed.",
   "type": "condition",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "evidenced",
   "scope_conditions": [
    "asynchronous distributed networks",
    "presence of Byzantine faults"
   ],
   "supporting_quote": "Given the inevitable possibility of Byzantine faults in a distributed system, such results require any protocol to hedge, promising only a probability of finality and security inversely proportional to liveness and speed."
  },
  {
   "id": "kaal:claim:3125827-009",
   "url": "https://wulfkaal.github.io/claims/3125827-009",
   "claim": "Even though proof of stake mitigates the economy of scale advantage, block production cartels can still arise in PoS systems through lotteries, through built in voting delegations, or because the stakes required to be a block producer can simply be bought.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "PoS systems that use lotteries, delegation, or purchasable stakes"
   ],
   "supporting_quote": "However, block production cartels may still arise due to lotteries, or the fact that voting delegations are built into the system, or the fact that the stakes needed to be a block producer may be bought"
  },
  {
   "id": "kaal:claim:3125827-010",
   "url": "https://wulfkaal.github.io/claims/3125827-010",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain goes offline for a long period or has too few active nodes"
   ],
   "supporting_quote": "can the blockchain restart or regenerate autonomously13? Or is there a need for social coordination between the nodes? If so, anonymity is threatened and famous nodes are required."
  },
  {
   "id": "kaal:claim:3125827-011",
   "url": "https://wulfkaal.github.io/claims/3125827-011",
   "claim": "If block producers' identities are revealed, the supranational independence and security of the blockchain are threatened, because local jurisdictions can then exert legal power over block production. This threat is most acute in delegated proof of stake, where delegates must win popularity contests.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "governance-design",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "protocols where producers must identify themselves to be chosen",
    "especially delegated proof of stake"
   ],
   "supporting_quote": "identities are revealed, the supranational independence of the blockchain is threatened as is its security. In this case local jurisdictions could exert legal power over block production"
  },
  {
   "id": "kaal:claim:3125827-012",
   "url": "https://wulfkaal.github.io/claims/3125827-012",
   "claim": "No consensus protocol can guard against Byzantine faults when a single transaction is worth more than the promise of all future fees for the entire platform, because in that case a party can profitably bribe the whole node set to destroy the chain's own integrity.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "a single transaction whose value exceeds the present value of all future platform fees"
   ],
   "supporting_quote": "No protocol can guard against Byzantine faults if a transaction is more valuable than the promise of all future fees for the entire platform; in this case a party could bribe the entire set of nodes (or 51%)"
  },
  {
   "id": "kaal:claim:3125827-013",
   "url": "https://wulfkaal.github.io/claims/3125827-013",
   "claim": "Altruism cannot be relied on in a decentralized anonymous system, so fees are ultimately crucial; the authors conclude that several blockchains with different fee structures must exist so that different transaction values can be given correspondingly different security.",
   "type": "condition",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "selfish participants in anonymous decentralized systems",
    "transactions of widely varying value"
   ],
   "supporting_quote": "Fees are crucial at some point, since we cannot rely on altruism in a decentralized, anonymous system in our selfish world. Therefore it seems necessary for there to exist several blockchains with different fee structures to guarantee different security for different"
  },
  {
   "id": "kaal:claim:3125827-014",
   "url": "https://wulfkaal.github.io/claims/3125827-014",
   "claim": "Because almost all other blockchains distribute perfectly fungible currency tokens through initial sales or mining, there is a clear, computable answer to how much it would cost to corrupt or destroy a chain running a proof of stake protocol on cryptocurrency stakes.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "securities-law",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "PoS chains whose stakes are perfectly fungible currency tokens"
   ],
   "supporting_quote": "Either way, these tokens are almost always perfectly fungible currencies, so there is a clear answer to how much it would cost to corrupt or destroy blockchain running a PoS protocol based on cryptocurrency stakes."
  },
  {
   "id": "kaal:claim:3125827-015",
   "url": "https://wulfkaal.github.io/claims/3125827-015",
   "claim": "The long range attack is a fundamental problem every proof of stake protocol must address: because no energetic outlay is required to build blocks, a malicious producer can fabricate a long chain forked from an earlier valid block, and a newly joining node lacking proof of work hashes cannot objectively tell which chain is genuine.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "new nodes joining without a trusted checkpoint",
    "PoS chains with no energy cost to block creation"
   ],
   "supporting_quote": "The long-range attack is a fundamental problem PoS protocols must address, where a malicious producer may create a long list of blocks forked from an earlier valid block, because there is no PoW energetic outlay required to prevent this16."
  },
  {
   "id": "kaal:claim:3125827-016",
   "url": "https://wulfkaal.github.io/claims/3125827-016",
   "claim": "SPoS prevents the long range attack without token locking, because a false chain cannot be manufactured with more total validation than the real chain: votes are transactions moving validators' sem tokens under their public keys, so upvotes cannot be forged from existing tokens.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "votes recorded as sem token transactions signed by validator public keys"
   ],
   "supporting_quote": "SPoS naturally prevents this attack without such locking, since a false chain cannot be manufactured with more total validation than the real chain."
  },
  {
   "id": "kaal:claim:3125827-017",
   "url": "https://wulfkaal.github.io/claims/3125827-017",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "commit and reveal voting where symmetric keys are published after the window closes",
    "at least one non colluding validator"
   ],
   "supporting_quote": "in SPoS the seed used is a hash of the joined alphabetized symmetric keys that were submitted by all validators during the vote revealing process. This protocol completely prevents stake grinding even if only one validator is not colluding."
  },
  {
   "id": "kaal:claim:3125827-018",
   "url": "https://wulfkaal.github.io/claims/3125827-018",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "imperfect communication between nodes",
    "block producers with discretion over transaction inclusion"
   ],
   "supporting_quote": "In a distributed system--which cannot achieve constant perfect communication between nodes--we can never certainly determine that a block producer was censoring certain transactions, instead of simply not being aware of them."
  },
  {
   "id": "kaal:claim:3125827-019",
   "url": "https://wulfkaal.github.io/claims/3125827-019",
   "claim": "Any blockchain whose soft forks are decided through private communication between famous token holding whales is ultimately less secure than legacy centralized systems, which at least address centralized security risks deliberately.",
   "type": "failure",
   "topics": [
    "blockchain",
    "governance-design",
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "off chain governance conducted privately among large holders and developers"
   ],
   "supporting_quote": "Any blockchain subject to such governance is ultimately less secure than legacy centralized systems which pointedly address centralized security risks."
  },
  {
   "id": "kaal:claim:3125827-020",
   "url": "https://wulfkaal.github.io/claims/3125827-020",
   "claim": "The current dominance of altruists in the crypto space will not persist: once the crypto economy matures, an influx of hedgers and rent seekers can be anticipated with certainty, and they will exploit any weakness in the system for profit.",
   "type": "predictive",
   "topics": [
    "risk-and-incentives",
    "consensus-and-security",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "maturation of the crypto economy beyond its emerging industry phase"
   ],
   "supporting_quote": "However, once the crypto economy is mature, we cannot assume users will continue to behave altruistically. We can anticipate, with certainty, an influx of hedgers and rent seekers who will quite naturally exploit any weakness in the system for profit."
  },
  {
   "id": "kaal:claim:3125827-021",
   "url": "https://wulfkaal.github.io/claims/3125827-021",
   "claim": "Successful proof of stake experiments running today cannot be used to infer that their protocols are truly secure, because the current participant population is atypically altruistic; confidence must instead come from sound reasoning about incentives.",
   "type": "normative",
   "topics": [
    "empirical-evidence",
    "consensus-and-security",
    "research-methods",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "nascent crypto economy dominated by altruists"
   ],
   "supporting_quote": "Therefore we cannot use any successful experiments at this time to infer protocols are truly secure. We must rely on sound reasoning in order to obtain any confidence that our projects will continue to succeed."
  },
  {
   "id": "kaal:claim:3125827-022",
   "url": "https://wulfkaal.github.io/claims/3125827-022",
   "claim": "Experts who fail to participate in the validation pool are punished stably rather than abruptly: because the system is inflationary and they gain none of the newly minted sem tokens, their holdings become a smaller percentage of the total and earn a smaller share of future reputation weighted salaries.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "new sem tokens minted with every fee",
    "salary distributed in proportion to token holdings"
   ],
   "supporting_quote": "will be stably punished because the system is inflationary: if they don't participate they will not gain any portion of the newly minted sem tokens, so their own unused sem token holdings will represent a smaller percentage of the total"
  },
  {
   "id": "kaal:claim:3125827-023",
   "url": "https://wulfkaal.github.io/claims/3125827-023",
   "claim": "The reference system lets each validated new post change the relative value of sem tokens created in the graph of connected earlier posts, so the value of a past contribution depends on how important later users judge it to be. This gives the forum the structure of a weighted directed acyclic citation graph.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "new post is itself validated",
    "references weighted according to the goals of the particular DAO"
   ],
   "supporting_quote": "Each new post has the opportunity to reference older posts. If the new post is validated, the reference will change the relative value of sem tokens created in the graph of connected posts."
  },
  {
   "id": "kaal:claim:3125827-024",
   "url": "https://wulfkaal.github.io/claims/3125827-024",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "institutional-design",
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "well functioning expertise where all members run the same validated algorithms"
   ],
   "supporting_quote": "A healthy expertise will continually have near-unanimous consensus on every evidence-of-work validation pool. This creates an impediment to development."
  },
  {
   "id": "kaal:claim:3125827-025",
   "url": "https://wulfkaal.github.io/claims/3125827-025",
   "claim": "In SPoS, validators download the most recently upvoted validation algorithm and faithfully running it unedited automatically produces the winning vote, so honest validators are rewarded; this holds on the assumption that users controlling 51% of sem token power act honestly.",
   "type": "condition",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "users holding 51% of sem token power act honestly",
    "honesty defined as running the forum approved algorithm unedited"
   ],
   "supporting_quote": "Faithfully running this algorithm on the block will automatically choose the correct vote to win the validation pool, rewarding honest validators, assuming users with 51% of sem token power act honestly. Honesty is defined as faithfully running the algorithm, unedited."
  },
  {
   "id": "kaal:claim:3125827-026",
   "url": "https://wulfkaal.github.io/claims/3125827-026",
   "claim": "Forcing validation pools to close in finite time, which practical demand for swift resolution requires, opens the possibility of network partition and of a lack of genuine consensus, and therefore of forks. Complete finality would require unbounded validation time.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "validation windows bounded to seconds for practical liveness"
   ],
   "supporting_quote": "By forcing validation pools to end in finite time, we open the possibility of network partition and lack of genuine consensus which opens the possibility of forks,"
  },
  {
   "id": "kaal:claim:3125827-027",
   "url": "https://wulfkaal.github.io/claims/3125827-027",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "availability stake smart contracts persist through the outage",
    "outage shorter than the chain history"
   ],
   "supporting_quote": "This ensures any network outage shorter than the history of the blockchain will not eternally disrupt chain production. This addresses the availability/regeneracy problem: even if the network loses all but one node, block production will continue"
  },
  {
   "id": "kaal:claim:3125827-028",
   "url": "https://wulfkaal.github.io/claims/3125827-028",
   "claim": "When a fork skips valid blocks, fees previously distributed to the bench from those blocks lose their valid histories and ownership reverts to the transaction authors, which creates a direct disincentive for validators to endorse such forks.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "a producer points to a block earlier than the previous time slot",
    "skipped blocks become orphans"
   ],
   "supporting_quote": "skipped blocks will no longer have valid histories in those skipped blocks, and so the fees' ownership will automatically revert to the authors of the transactions contained in the skipped blocks. This creates a disincentive for validating such forks."
  },
  {
   "id": "kaal:claim:3125827-029",
   "url": "https://wulfkaal.github.io/claims/3125827-029",
   "claim": "If a Byzantine producer equivocates during a network partition and wins validation pools in separate subnets, the fork is not permanent: once connectivity is restored the next honest producer points to a previous block, and with 51% honest producers the Byzantine fork is eventually orphaned because honest producers outproduce it.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "at least 51% honest producers",
    "network connectivity is eventually restored"
   ],
   "supporting_quote": "The next honest producer would point to a previous block and all Byzantine forks would be invalidated. If there are 51% honest producers the Byzantine fork would eventually be orphaned, since honest producers will outproduce the Byzantine producers"
  },
  {
   "id": "kaal:claim:3125827-030",
   "url": "https://wulfkaal.github.io/claims/3125827-030",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "network partitions occur",
    "consensus recognizes only blocks validated by a supermajority of active validators"
   ],
   "supporting_quote": "More importantly, due to the CAP theorem33, it limits the availability of the system, which is why it is not included in the initial implementation."
  },
  {
   "id": "kaal:claim:3125827-031",
   "url": "https://wulfkaal.github.io/claims/3125827-031",
   "claim": "Running the reputation platform on the very blockchain it validates destabilizes the system because it increases the likelihood of forks: every validation pool result is itself a transaction that must be included in a future block requiring its own validation, without end. The authors judge this destabilization non catastrophic for most imagined uses.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "platform DApp hosted on the same chain it validates"
   ],
   "supporting_quote": "But this self-referential architecture destabilizes the system as it increases the likelihood of forks."
  },
  {
   "id": "kaal:claim:3125827-032",
   "url": "https://wulfkaal.github.io/claims/3125827-032",
   "claim": "SPoS is far more computationally efficient than proof of work implementations because nodes no longer hash mine; the only computation added beyond the block validity checking every blockchain performs is one validation pool per block, in which each node sends a single up or down vote transaction.",
   "type": "mechanism",
   "topics": [
    "economics",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "comparison against PoW chains such as bitcoin and Ethereum"
   ],
   "supporting_quote": "Nodes will no longer hash mine. They will check the validity of the blocks, but they do that under any blockchain. The only added computation is the validation pool which happens once for each block, where nodes send one transaction, an up- or downvote."
  },
  {
   "id": "kaal:claim:3125827-033",
   "url": "https://wulfkaal.github.io/claims/3125827-033",
   "claim": "If the bench institutes protocols for rejecting applicants through the validation pool, it gains both the incentive and the opportunity to block all new users entirely, so that existing bench members keep sharing all the fees among themselves.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "bench adopts admission screening for new experts"
   ],
   "supporting_quote": "Unfortunately this gives the incentive and opportunity for existing experts to completely block all new users, so the existing bench members share all the fees."
  },
  {
   "id": "kaal:claim:3125827-034",
   "url": "https://wulfkaal.github.io/claims/3125827-034",
   "claim": "Finality in SPoS is measurable because forking away from a given block would cost the community all sem tokens created on the chain after it, and that quantity equals half of all fees sent since the block was produced.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "tokenomics",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "sem minted in proportion to fees on every validated block"
   ],
   "supporting_quote": "the sem that members gain from policing block production is equal to half of all fees sent since the production of the block. In order to fork a chain from that particular block, the community will lose all sem tokens created subsequently"
  },
  {
   "id": "kaal:claim:3125827-035",
   "url": "https://wulfkaal.github.io/claims/3125827-035",
   "claim": "Because each sem token carries a different value depending on the post that minted it and on its position in the reference graph, the total value is difficult to determine, which makes it almost impossible to execute a 51% attack by purchasing tokens on an exchange.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "token value derived from position in the forum WDAG",
    "most tokens constantly in use and continually created"
   ],
   "supporting_quote": "their value is difficult to determine since each token has a different value depending on the post in which it was minted. So it is almost impossible to execute a 51% attack by purchasing tokens on an exchange."
  },
  {
   "id": "kaal:claim:3125827-036",
   "url": "https://wulfkaal.github.io/claims/3125827-036",
   "claim": "An attacker who buys sem tokens directly from the platform by sending fees must spend at least twice, and more likely six times, the entire historical value of the platform, so the griefing factor is a minimum of 2 with an average of 6.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "evidenced",
   "scope_conditions": [
    "attacker buys in by paying fees rather than on an exchange",
    "good faith experts continue investing alongside the attacker"
   ],
   "supporting_quote": "attacker would lose a significant amount of money to achieve their goal, at least twice the entire historical value of the platform--more likely the factor would be 6 times the total value (see Appendix A.1 for a proof). So the griefing factor is a minimum of 2 with an average of 6,"
  },
  {
   "id": "kaal:claim:3125827-037",
   "url": "https://wulfkaal.github.io/claims/3125827-037",
   "claim": "Under the worst case model with no admission safeguards and no other users paying fees, a malicious group must invest at minimum twice the total sem tokens of the system to reach 50% voting power in the validation pool, because half of every fee it pays mints tokens for the existing good faith experts.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "evidenced",
   "scope_conditions": [
    "no safeguards on joining as an expert",
    "no other users adding fees",
    "continuous micro payment strategy, which is the attacker's optimum"
   ],
   "supporting_quote": "Consequently the malicious group would need to invest an absolute minimum of 2g8 , that is, double the total sem tokens of the system to gain 50% power in the system in order to outvote the rest of the good-faith experts in the validation pool."
  },
  {
   "id": "kaal:claim:3125827-038",
   "url": "https://wulfkaal.github.io/claims/3125827-038",
   "claim": "The sem token economy is inflationary at equilibrium, and the authors argue this is a feature: inflation improves security and discourages rent seeking by penalizing holders who do not use their tokens to evaluate posts.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "consensus-and-security",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "evidenced",
   "scope_conditions": [
    "fees paid in at a constant or linearly growing rate",
    "new tokens minted with every fee and never destroyed"
   ],
   "supporting_quote": "The conclusion is that the economy is inflationary at equilibrium, which improves its security and discourages rent-seeking."
  },
  {
   "id": "kaal:claim:3125827-039",
   "url": "https://wulfkaal.github.io/claims/3125827-039",
   "claim": "Because earlier sem tokens represent a larger percentage of the total and therefore pay out more, later experts have less motivation to join when fees are at a steady state; the authors propose that the bench may need to change the fee to token exchange rate to recruit new members.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "steady state rate of fees paid into the expertise",
    "tokens created with every fee and never destroyed"
   ],
   "supporting_quote": "This may mean later experts have less motivation to join if fees paid into the system are at a steady state. To combat this, the bench may choose to change the exchange rate between fees and sem tokens to encourage new recruits."
  },
  {
   "id": "kaal:claim:3125827-040",
   "url": "https://wulfkaal.github.io/claims/3125827-040",
   "claim": "A malicious party using Sybil accounts cannot be prevented from cloning the structure of a successful proof of stake blockchain at far lower cost than cloning a proof of work chain, leaving a new user unable to distinguish the truly decentralized chain from a clone that has manufactured even more tokens. The authors answer that this is resolved off chain, by a trusted user interface, as with cloned web pages.",
   "type": "failure",
   "topics": [
    "blockchain",
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827",
   "year": "2018",
   "source_sha256": "598d9bd95e4af7a0a35328677c6bfc069f69f2e32c30c720b3a0be98a23a40cb",
   "confidence": "argued",
   "scope_conditions": [
    "new users joining without prior knowledge of the genuine chain",
    "PoS chains where clone creation costs only new public keys"
   ],
   "supporting_quote": "Then, when a new user joins the network, how will they be able to distinguish a truly decentralized blockchain from a cloned blockchain that has manufactured an even larger number of tokens?"
  },
  {
   "id": "kaal:claim:3227933-001",
   "url": "https://wulfkaal.github.io/claims/3227933-001",
   "claim": "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.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "asserted",
   "supporting_quote": "(i) a centralized source of authority; (ii) a closed and formal hierarchy with clearly defined and functionally differentiated roles; and, (iii) standardized (bureaucratic) systems and operating procedures dictated and policed by the centralized authority/hierarchy."
  },
  {
   "id": "kaal:claim:3227933-002",
   "url": "https://wulfkaal.github.io/claims/3227933-002",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "applies to periods of technological uncertainty"
   ],
   "supporting_quote": "Previous technological revolutions led to a concentration of such organizations, as society adapted to the uncertain meaning, effects, and risks of technological change by pooling (i.e., centralizing) authority."
  },
  {
   "id": "kaal:claim:3227933-003",
   "url": "https://wulfkaal.github.io/claims/3227933-003",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "reputation",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "asserted",
   "scope_conditions": [
    "fast-changing reality"
   ],
   "supporting_quote": "Most obviously, such organizations are slow to adapt to a fast-changing reality and are losing public trust."
  },
  {
   "id": "kaal:claim:3227933-004",
   "url": "https://wulfkaal.github.io/claims/3227933-004",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "supporting_quote": "A tension or \"disconnect\" is emerging between traditional regulatory models and the form of contemporary business organizations. It, therefore, seems appropriate to deepen our understanding of these new organizational forms as a pre-condition to developing new regulatory models"
  },
  {
   "id": "kaal:claim:3227933-005",
   "url": "https://wulfkaal.github.io/claims/3227933-005",
   "claim": "The paper's central claims are that digital technologies have already disrupted centralized corporate organizations by enabling platforms, that this disruption will continue as blockchain based technologies proliferate, and that regulators must attend to these changes.",
   "type": "predictive",
   "topics": [
    "blockchain",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "supporting_quote": "The central claims of the paper are (i) digital technologies have already disrupted centralized, hierarchical corporate organizations by facilitating \"platforms;\" (ii) this process of disruption will only continue as new blockchain-based technologies proliferate;"
  },
  {
   "id": "kaal:claim:3227933-006",
   "url": "https://wulfkaal.github.io/claims/3227933-006",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "platform business models"
   ],
   "supporting_quote": "the platform creates value by facilitating exchanges between two different but interdependent groups"
  },
  {
   "id": "kaal:claim:3227933-007",
   "url": "https://wulfkaal.github.io/claims/3227933-007",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "requires networked digital technologies and large-scale exchange"
   ],
   "supporting_quote": "This creates a global ecosystem that encourages registered users and content consumers to add more value to the platform by repeatedly creating more content which will, in turn, attract additional content creators and consumers"
  },
  {
   "id": "kaal:claim:3227933-008",
   "url": "https://wulfkaal.github.io/claims/3227933-008",
   "claim": "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.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "supporting_quote": "What makes a platform-style of organization distinctive is that it uses stakeholders' input and feedback to improve the user experience and engagement with the platform and its products, services, and other solutions."
  },
  {
   "id": "kaal:claim:3227933-009",
   "url": "https://wulfkaal.github.io/claims/3227933-009",
   "claim": "In the most successful firms governance is no longer about hierarchy or control; it is about creating a flat, open and inclusive ecosystem that leverages the talents of all stakeholders in the company's network.",
   "type": "design",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "asserted",
   "scope_conditions": [
    "successful platform-style firms"
   ],
   "supporting_quote": "In the best and most successful firms, governance is no longer about hierarchy or control. Instead, the focus is on creating a flat, open and inclusive organizational environment or \"eco-system\" that leverages the talents of all stakeholders in that company's network."
  },
  {
   "id": "kaal:claim:3227933-010",
   "url": "https://wulfkaal.github.io/claims/3227933-010",
   "claim": "Blockchain extends what the Internet did for information: it makes it possible to transfer and exchange value and assets without traditional centralized intermediaries, by storing information in a decentralized, accessible and secure online environment.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "supporting_quote": "The blockchain adds another dimension by making it possible to transfer and exchange value and assets without the involvement of traditional (centralized and authoritative) intermediaries. Blockchain technology achieves this by storing personal and other information in a decentralized"
  },
  {
   "id": "kaal:claim:3227933-011",
   "url": "https://wulfkaal.github.io/claims/3227933-011",
   "claim": "It is the decentralized character of the blockchain, that is the distribution of the ledger to countless nodes in peer-to-peer networks, rather than any other feature, that makes the technology potentially disruptive.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "decentralization",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "supporting_quote": "It is the decentralized character of the blockchain that makes it so potentially disruptive."
  },
  {
   "id": "kaal:claim:3227933-012",
   "url": "https://wulfkaal.github.io/claims/3227933-012",
   "claim": "The only condition for hosting a copy of the blockchain and participating in the network is a smartphone or Internet connection, which is why the technology can extend financial inclusion to those traditionally excluded from financial services.",
   "type": "condition",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "requires a smartphone or Internet connection"
   ],
   "supporting_quote": "The only condition is that they have a smartphone or Internet connection. Everybody with a smartphone can create a real digital ID and interact with other people in the blockchain network."
  },
  {
   "id": "kaal:claim:3227933-013",
   "url": "https://wulfkaal.github.io/claims/3227933-013",
   "claim": "Peer-to-peer transactions are possible because a distributed consensus model has network nodes verify, validate and audit transactions before and after execution, and this is often safer than routing transactions through a single trusted third-party intermediary.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "blockchain",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "supporting_quote": "\"Peer-to-peer\" transactions are possible because the technology uses a \"distributed consensus model\" where the network \"nodes\" verify, validate and audit transactions before and after they are executed."
  },
  {
   "id": "kaal:claim:3227933-014",
   "url": "https://wulfkaal.github.io/claims/3227933-014",
   "claim": "Network connectivity is what makes blockchain records practically immutable, because it allows multiple identical copies of the ledger to exist simultaneously across the network.",
   "type": "mechanism",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "requires broad network connectivity"
   ],
   "supporting_quote": "Network connectivity is vital because it allows for multiple identical copies of the blockchain to be available simultaneously across the network. This makes it practically impossible to alter or erase information in the blockchain."
  },
  {
   "id": "kaal:claim:3227933-015",
   "url": "https://wulfkaal.github.io/claims/3227933-015",
   "claim": "Cryptographic hashing makes tampering detectable because even a minuscule change to the blockchain produces a different hash value, which other participants can observe instantly.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "supporting_quote": "The result of this combination of technologies is that even a minuscule change to the blockchain will result in a different hash value, making manipulation instantly and readily detectable by other participants."
  },
  {
   "id": "kaal:claim:3227933-016",
   "url": "https://wulfkaal.github.io/claims/3227933-016",
   "claim": "Blockchain technology creates an independent and transparent platform for establishing truth and building trust, replacing intermediaries, bureaucracy and old procedures with what the authors call the four Cs of code, connectivity, crowd, and collaboration.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "asserted",
   "supporting_quote": "In short, blockchain technology creates an independent and transparent platform for establishing truth and building trust. Intermediaries, bureaucracy, and old-fashioned procedures are replaced by the \"4 Cs\" of code, connectivity, crowd, and collaboration."
  },
  {
   "id": "kaal:claim:3227933-017",
   "url": "https://wulfkaal.github.io/claims/3227933-017",
   "claim": "A smart contract is a computer program code or protocol that automates the verification, execution, and enforcement of specific terms and conditions of a contractual arrangement.",
   "type": "definitional",
   "topics": [
    "smart-contracts",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "asserted",
   "supporting_quote": "a smart contract refers to a computer program code or protocol that automates the verification, execution, and enforcement of certain terms and conditions of a \"contractual\" arrangement."
  },
  {
   "id": "kaal:claim:3227933-018",
   "url": "https://wulfkaal.github.io/claims/3227933-018",
   "claim": "Smart contracts will become more prevalent as the Internet of Things grows, because the more devices are connected to each other, the more smart contracts will be used to execute and enforce legal transactions.",
   "type": "predictive",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "growth of connected devices"
   ],
   "supporting_quote": "Such smart contracts will become more prevalent in the growing world of the Internet of Things. As more devices are connected to each other, the more \"smart contracts\" will be used to execute and enforce \"legal transactions.\""
  },
  {
   "id": "kaal:claim:3227933-019",
   "url": "https://wulfkaal.github.io/claims/3227933-019",
   "claim": "Most current blockchain applications lack complete decentralization: proof of work style validation has produced mining pools because of economies of scale and unbalanced reward structures.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "proof of work validation mechanisms"
   ],
   "supporting_quote": "For instance, the traditional mechanism for validating and verifying a new block of transactions – e.g., Bitcoin's proof of work protocol - has led to \"mining pools\" as a result of economies of scale and unbalanced reward structures."
  },
  {
   "id": "kaal:claim:3227933-020",
   "url": "https://wulfkaal.github.io/claims/3227933-020",
   "claim": "Anonymity in blockchain organizations makes them prone to Sybil attacks and 51 percent attacks, and anonymity combined with autonomy has already produced hacks.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous, permissionless blockchain organizations"
   ],
   "supporting_quote": "Also, the anonymity in blockchain organizations means that they are prone to \"Sybil attacks\" or \"51% attacks.\""
  },
  {
   "id": "kaal:claim:3227933-021",
   "url": "https://wulfkaal.github.io/claims/3227933-021",
   "claim": "In a truly decentralized system where code is law, any mistake such as a stolen or lost password or a programming bug is permanent and irrevocable, because there is no authority able to reverse it.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "truly decentralized systems where code is law"
   ],
   "supporting_quote": "Remember that in a truly decentralized system, the code is law. This means that any mistakes (stolen/lost passwords, programming bugs, etc.) are permanent and irrevocable."
  },
  {
   "id": "kaal:claim:3227933-022",
   "url": "https://wulfkaal.github.io/claims/3227933-022",
   "claim": "The claim that blockchain is secure by design cannot yet be relied on, because the technology has not been adopted widely enough to be severely tested, and hacking attacks on digital currencies underscore the concern.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "current state of adoption"
   ],
   "supporting_quote": "Another important challenge is cybersecurity; supporters of blockchain claim that it is secure by design, but the technology hasn't been adopted widely enough yet for it to be severely tested."
  },
  {
   "id": "kaal:claim:3227933-023",
   "url": "https://wulfkaal.github.io/claims/3227933-023",
   "claim": "Adoption of blockchain is costly and technically difficult because the technology is continually evolving and integrating blockchain databases with existing systems raises many technical challenges, such as interfacing a payment ledger with a vehicle's control software.",
   "type": "failure",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "integration with legacy systems"
   ],
   "supporting_quote": "And then there are the costs of shifting to the new technology, which is continually evolving, and which are also high. Not to mention the many technical challenges involved in integrating blockchain databases with existing systems."
  },
  {
   "id": "kaal:claim:3227933-024",
   "url": "https://wulfkaal.github.io/claims/3227933-024",
   "claim": "There is great regulatory uncertainty around blockchain and smart contracts, especially in financial services, and legal frameworks globally will have to change to adapt to the growing use of the technology.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "asserted",
   "scope_conditions": [
    "especially financial services"
   ],
   "supporting_quote": "Finally, there is a great deal of regulatory uncertainty surrounding blockchain and smart contracts, especially in the financial services industry. Legal frameworks globally will have to change to adapt to the growing use of this type of new technology."
  },
  {
   "id": "kaal:claim:3227933-025",
   "url": "https://wulfkaal.github.io/claims/3227933-025",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "evidenced",
   "supporting_quote": "The fact that so many \"old world\" organizations are exploring possible uses of blockchains and smart contracts suggests that it not all hype."
  },
  {
   "id": "kaal:claim:3227933-026",
   "url": "https://wulfkaal.github.io/claims/3227933-026",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "fast-paced, consumer-driven economy"
   ],
   "supporting_quote": "A particular problem with \"old world\" centralized, hierarchical organizations is that decision-making processes can become slow, cumbersome and costly."
  },
  {
   "id": "kaal:claim:3227933-027",
   "url": "https://wulfkaal.github.io/claims/3227933-027",
   "claim": "Centralized organizations also lose the competition for talent, because the younger generation views centralization as a threat to personal autonomy, choice and happiness and is increasingly sceptical of traditional hierarchies.",
   "type": "empirical",
   "topics": [
    "ai-and-agents",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "evidenced",
   "scope_conditions": [
    "younger, Millennial workforce"
   ],
   "supporting_quote": "The younger \"Millennial\" generation view centralization as a threat to personal autonomy, choice, and happiness."
  },
  {
   "id": "kaal:claim:3227933-028",
   "url": "https://wulfkaal.github.io/claims/3227933-028",
   "claim": "Personal happiness, freedom and expression can thrive better in a decentralized world only on the condition that the decentralized world provides a secure environment, which is why blockchain platforms attract people.",
   "type": "condition",
   "topics": [
    "decentralization",
    "consensus-and-security",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "requires a secure environment"
   ],
   "supporting_quote": "Personal happiness, freedom and expression can better thrive in a decentralized world, provided, of course, that it offers a secure environment. This is why so many people are intrigued and captured by blockchain platforms."
  },
  {
   "id": "kaal:claim:3227933-029",
   "url": "https://wulfkaal.github.io/claims/3227933-029",
   "claim": "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.",
   "type": "design",
   "topics": [
    "dao",
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "asserted",
   "scope_conditions": [
    "organizations aiming to automate governance"
   ],
   "supporting_quote": "The DAO intended to automate governance and was based on the idea that since \"people\" don't always follow the rules (even if the rules are well-designed), it is better to use computer code to manage an organization."
  },
  {
   "id": "kaal:claim:3227933-030",
   "url": "https://wulfkaal.github.io/claims/3227933-030",
   "claim": "The DAO showed that a corporate-type organization can operate with no physical address, no directors, no managers and no employees, with its governance structure built entirely from software, code and smart contracts running on Ethereum.",
   "type": "empirical",
   "topics": [
    "dao",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "evidenced",
   "scope_conditions": [
    "the DAO, 2016"
   ],
   "supporting_quote": "Indeed, the DAO didn't have any directors, managers or employees. The governance structure was built with software, code and smart contracts that ran on the public decentralized blockchain platform, Ethereum."
  },
  {
   "id": "kaal:claim:3227933-031",
   "url": "https://wulfkaal.github.io/claims/3227933-031",
   "claim": "The DAO raised more than 150 million dollars from approximately 10,000 investors through a crowdfunding campaign in May 2016, with DAO Tokens designed to be fully transferable and tradable on peer-to-peer exchanges like shares in a listed corporation.",
   "type": "empirical",
   "topics": [
    "dao",
    "securities-law",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "evidenced",
   "scope_conditions": [
    "the DAO token sale, May 2016"
   ],
   "supporting_quote": "The DAO raised more than $150 million from approximately 10,000 \"investors.\" Like shares in a traditional listed corporation, DAO Tokens were designed to be fully transferable and tradable on \"peer-to-peer\" exchanges."
  },
  {
   "id": "kaal:claim:3227933-032",
   "url": "https://wulfkaal.github.io/claims/3227933-032",
   "claim": "In a DAO, blockchain-based smart contracts granting token holders voting rights perform the function that articles of association or bylaws perform in a conventional corporation.",
   "type": "mechanism",
   "topics": [
    "dao",
    "smart-contracts",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "supporting_quote": "A series of smart contracts granted the holders of the tokens voting rights. In this respect, the blockchain-based smart contract mimicked the role of articles of association or bylaws."
  },
  {
   "id": "kaal:claim:3227933-033",
   "url": "https://wulfkaal.github.io/claims/3227933-033",
   "claim": "A DAO inhibits rent-seeking and delivers transparency because its governance protocols are open source, so weaknesses are constantly tested and revised in the open rather than hidden inside a managerial hierarchy.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "dao",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "open source governance protocols"
   ],
   "supporting_quote": "Such an organization inhibits \"rent-seeking\" and offers transparency. And they are secure. For instance, the governance protocols used in a DAO are open source and weaknesses are constantly tested and revised."
  },
  {
   "id": "kaal:claim:3227933-034",
   "url": "https://wulfkaal.github.io/claims/3227933-034",
   "claim": "DAOs will replace many organizations that lack their incentive structures and efficiencies, and because DAOs are cheap and straightforward to clone, their proliferation will increase competition while their distributed and anonymous nature prevents natural and political monopolies.",
   "type": "predictive",
   "topics": [
    "dao",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "supporting_quote": "When we look at the strengths and advantages, we can conclude that DAOs will replace many organizations that lack these incentives and efficiencies. Moreover, DAOs are cheap and straightforward to \"clone,\" which will potentially lead to more competition."
  },
  {
   "id": "kaal:claim:3227933-035",
   "url": "https://wulfkaal.github.io/claims/3227933-035",
   "claim": "Fundamental flaws in the DAO's code allowed hackers to transfer one third of the total contributed funds to a subsidiary account, and this together with other technological limitations ended the initiative, but the authors argue it did not end the underlying vision of decentralized autonomous organization.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "evidenced",
   "scope_conditions": [
    "the DAO, 2016"
   ],
   "supporting_quote": "To be sure, fundamental flaws in the DAO code made it possible for hackers to transfer one-third of the total contributed funds to a subsidiary account. This, and other technological limitations meant the end of the initiative"
  },
  {
   "id": "kaal:claim:3227933-036",
   "url": "https://wulfkaal.github.io/claims/3227933-036",
   "claim": "Unlike a conventional corporate loyalty program, company or industry tokens offer liquidity, because platform participants can sell and transfer them on crypto exchanges or secondary markets, which integrates the token and the platform into the mainstream economy.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "defi",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "existence of crypto exchanges or secondary markets"
   ],
   "supporting_quote": "Platform participants can sell and transfer them to other interested parties on crypto exchanges or secondary markets. These parties could be the \"public\" or a more restricted and pre-defined group of people. Either way, it integrates the token (and the platform) into the mainstream economy."
  },
  {
   "id": "kaal:claim:3227933-037",
   "url": "https://wulfkaal.github.io/claims/3227933-037",
   "claim": "Because token holders are not locked into the program, issuing coins or tokens becomes a straightforward and relatively simple way for a platform to attract capital without issuing shares in the company.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "supporting_quote": "Because the owners of the coins/tokens aren't \"locked\" into the loyalty program, the issuance of coins/tokens can be a straightforward and relatively simple means to attract capital/funding for the platform (without issuing shares in the company)."
  },
  {
   "id": "kaal:claim:3227933-038",
   "url": "https://wulfkaal.github.io/claims/3227933-038",
   "claim": "Issuing coins or tokens across all ecosystem participants creates a level playing field and helps establish a flatter, community-owned platform that is not based on the traditional hierarchies between shareholders, executives, managers and staff.",
   "type": "design",
   "topics": [
    "tokenomics",
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "well-designed token distribution across ecosystem participants"
   ],
   "supporting_quote": "As such, the issuance of coins or tokens creates a \"level playing field.\" Crucially, this helps establish a flatter, \"community-owned\" platform, which isn't based on traditional hierarchies between the platform participants"
  },
  {
   "id": "kaal:claim:3227933-039",
   "url": "https://wulfkaal.github.io/claims/3227933-039",
   "claim": "Decentralized organization has not yet displaced the centralized world: traditional incumbents still enjoy enormous market power, and the success of more decentralized systems still depends on the goodwill of the parties involved.",
   "type": "failure",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "current state, 2018"
   ],
   "supporting_quote": "Traditional incumbents still enjoy enormous market power and the \"success\" of more decentralized systems and organizations currently still depends on the goodwill of the parties involved."
  },
  {
   "id": "kaal:claim:3227933-040",
   "url": "https://wulfkaal.github.io/claims/3227933-040",
   "claim": "The authors argue that the tipping point in experiments with decentralization has already been passed, so rather than affirming the centralized world or remaining trapped between the two realities, it is necessary to become actively involved in developing blockchain and smart contracts.",
   "type": "normative",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "supporting_quote": "We have already passed the \"tipping point\" in our experiments with decentralization."
  },
  {
   "id": "kaal:claim:3227933-041",
   "url": "https://wulfkaal.github.io/claims/3227933-041",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933",
   "year": "2018",
   "source_sha256": "a9e9660c4dc25a2202f1da4e762f5885256e05f68c53ca51942f5833a7a4c108",
   "confidence": "argued",
   "scope_conditions": [
    "hyper-competitive global markets"
   ],
   "supporting_quote": "Such an unmediated and tech-driven culture will give them a competitive advantage in attracting talent, raising capital, finding suitable partners and, perhaps most importantly, in remaining relevant in today's hyper-competitive global markets."
  },
  {
   "id": "kaal:claim:3441904-001",
   "url": "https://wulfkaal.github.io/claims/3441904-001",
   "claim": "The core underlying agency problems of corporate governance cannot be fully resolved within the existing theoretical and legal infrastructure, despite decades of governance experiments and extensive rule revisions.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "existing corporate law and theory of the firm infrastructure"
   ],
   "supporting_quote": "Despite decades of governance experiments and extensive rule revisions, the existing scope of agency problems suggest that the core underlying agency problems cannot fully be resolved within the existing theoretical and legal infrastructure."
  },
  {
   "id": "kaal:claim:3441904-002",
   "url": "https://wulfkaal.github.io/claims/3441904-002",
   "claim": "Shareholder activism reform, taken by itself, has been unable to sufficiently improve the corporate governance system.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States corporate governance"
   ],
   "supporting_quote": "Shareholder activism reform by itself has been unable to sufficiently improve the corporate governance system."
  },
  {
   "id": "kaal:claim:3441904-003",
   "url": "https://wulfkaal.github.io/claims/3441904-003",
   "claim": "Because blockchain guarantees prevent any participant from circumventing the coded set of governance rules, a lower level of oversight and monitoring of agents is needed, which changes the cost structure of the principal agent relationship.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "compliance",
    "blockchain",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain infrastructure with consensus verified contract execution"
   ],
   "supporting_quote": "Hence, in the blockchain infrastructure, a lower level of oversight and monitoring of agents changes the cost structure of the principal agent relationship."
  },
  {
   "id": "kaal:claim:3441904-004",
   "url": "https://wulfkaal.github.io/claims/3441904-004",
   "claim": "DAOs are unlikely to disrupt existing corporate structures in the foreseeable future because the blockchain industry is still in its infancy and core decentralized infrastructure elements will remain lacking.",
   "type": "predictive",
   "topics": [
    "dao",
    "decentralization",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "near term horizon",
    "current state of decentralized infrastructure"
   ],
   "supporting_quote": "Because the blockchain industry is still in its infancy and core decentralized infrastructure elements will remain lacking for the foreseeable future, DAOs are less likely to disrupt existing corporate structures and the associated governance solutions in the foreseeable future."
  },
  {
   "id": "kaal:claim:3441904-005",
   "url": "https://wulfkaal.github.io/claims/3441904-005",
   "claim": "Forking a chain is an insufficient governance mechanism, and even attempts to create socially optimal chain forking rules cannot suffice as a substitute for evolutionary blockchain governance protocols.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "blockchain",
    "governance-design",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "existing blockchain governance that relies on forks"
   ],
   "supporting_quote": "Existing blockchain governance still mainly consist of forking a given chain. Even attempts to create socially optimal chain forking rules cannot suffice."
  },
  {
   "id": "kaal:claim:3441904-006",
   "url": "https://wulfkaal.github.io/claims/3441904-006",
   "claim": "Without evolutionary governance upgrades to blockchain protocols, the cost reduction that blockchain brings to the agency relationship cannot be maintained.",
   "type": "condition",
   "topics": [
    "corporate-governance",
    "governance-design",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "a changing environment for blockchain based coded guarantees"
   ],
   "supporting_quote": "Without evolutionary governance upgrades the cost reduction for the agency relationship cannot be maintained."
  },
  {
   "id": "kaal:claim:3441904-007",
   "url": "https://wulfkaal.github.io/claims/3441904-007",
   "claim": "Traditional limited liability entities can only partially benefit from blockchain based governance, because the dynamic regulatory features it offers are partially incompatible with the rule based legal environment those entities must comply with.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "law-and-legal-systems",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "traditional centralized limited liability entities",
    "existing rule based legal environment"
   ],
   "supporting_quote": "Blockchain-based corporate governance offers dynamic regulatory features that are partially incompatible with the rule-based traditional legal environment that traditional limited liability entities are required to comply with."
  },
  {
   "id": "kaal:claim:3441904-008",
   "url": "https://wulfkaal.github.io/claims/3441904-008",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "systems without a central intelligence or hierarchical leadership"
   ],
   "supporting_quote": "Decentralized systems can also very easily mutate and change because the information flow is optimized through dynamic feedback effects. As a result, such systems become more attack resistant on multiple levels."
  },
  {
   "id": "kaal:claim:3441904-009",
   "url": "https://wulfkaal.github.io/claims/3441904-009",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "dao",
    "institutional-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "DAO designs in which each member is given autonomous power"
   ],
   "supporting_quote": "DAOs can be more productive in comparison with hierarchical organizations because the information allocation and feedback effects allow them to distribute the optimal amount of power to the optimal talent at the optimal point in time."
  },
  {
   "id": "kaal:claim:3441904-010",
   "url": "https://wulfkaal.github.io/claims/3441904-010",
   "claim": "Dynamic power organization in a DAO succeeds only if the decentralized governance structure motivates token holders to collaborate productively by fairly rewarding development, work, and the policing of any diminishments.",
   "type": "condition",
   "topics": [
    "dao",
    "ai-and-agents",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "DAO designs that distribute autonomous power to members"
   ],
   "supporting_quote": "The successful implementation of such dynamic power organization requires a decentralized governance structure that motivates DAO token holders to collaborate productively, by fairly rewarding development, work, and the policing of any diminishments."
  },
  {
   "id": "kaal:claim:3441904-011",
   "url": "https://wulfkaal.github.io/claims/3441904-011",
   "claim": "Inexpensive open source smart contracts eliminate a major motivation for creating a firm under Coase's transaction cost theory, because they enable trustworthy transactions of any size with minimal transaction cost and high transaction security.",
   "type": "mechanism",
   "topics": [
    "economics",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "transactions that can be executed through smart contracts"
   ],
   "supporting_quote": "Inexpensive open-source smart contracts eliminate a major motivation for creating a firm under Ronald Coase's transaction cost theory."
  },
  {
   "id": "kaal:claim:3441904-012",
   "url": "https://wulfkaal.github.io/claims/3441904-012",
   "claim": "Barzel's rationale for the firm, the added efficiency of a centralized production monitoring agency, becomes largely irrelevant under efficient smart contracting, because the smart contract performs the production monitoring function and largely removes agents.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "efficient smart contracting environments"
   ],
   "supporting_quote": "is also largely irrelevant with efficient smart contracting as the smart contract performs the production-monitoring function and largely removes agents."
  },
  {
   "id": "kaal:claim:3441904-013",
   "url": "https://wulfkaal.github.io/claims/3441904-013",
   "claim": "Unlike corporate governance systems, the decentralized nexus of incomplete smart contracts has no supply of majoritarian default rules to fill its gaps, and corporate law's default rules are largely incompatible because they are based on natural language.",
   "type": "failure",
   "topics": [
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain based entities organized through smart contracts"
   ],
   "supporting_quote": "Unlike existing corporate governance systems, however, the decentralized nexus of incomplete smart contracts does not have a supply of majoritarian default rules that could fill incomplete code-based smart contracts."
  },
  {
   "id": "kaal:claim:3441904-014",
   "url": "https://wulfkaal.github.io/claims/3441904-014",
   "claim": "The core governance failure of the original 2016 DAO was its inability to create dynamic governance protocol upgrades in real time through dynamic feedback loops, because its voting structure was built for investment proposals rather than governance design.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "evidenced",
   "scope_conditions": [
    "the original 2016 DAO",
    "flaws materializing in already deployed code"
   ],
   "supporting_quote": "The core governance failure illustrated by the 2016 DAO is its failure to create dynamic governance protocol upgrades in real-time through dynamic feedback loops."
  },
  {
   "id": "kaal:claim:3441904-015",
   "url": "https://wulfkaal.github.io/claims/3441904-015",
   "claim": "Curators were the core point of centralization in the original 2016 DAO because the smart contract could not on its own distinguish real from fake proposals, leaving curators with approval and vote prioritization power before any community vote.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "evidenced",
   "scope_conditions": [
    "the original 2016 DAO curator whitelist design"
   ],
   "supporting_quote": "Because the smart contract on its own could not distinguish real from fake proposals, the curators had approval power and vote prioritization power over contractor proposals before the proposals were put up to a DAO community vote."
  },
  {
   "id": "kaal:claim:3441904-016",
   "url": "https://wulfkaal.github.io/claims/3441904-016",
   "claim": "Fungible cryptocurrencies are by their nature a corruptive element because decision makers can be influenced by power that grows with the size of fungible holdings; decentralized decision making therefore requires non fungible payout metrics combined with an indirect fungible payout structure.",
   "type": "design",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized decision making structures",
    "DAO payment and voting designs"
   ],
   "supporting_quote": "Decentralized decision making necessitates non-fungible payouts metrics combined with an indirect fungible payout structure."
  },
  {
   "id": "kaal:claim:3441904-017",
   "url": "https://wulfkaal.github.io/claims/3441904-017",
   "claim": "If curators and contractors are paid from a fungible currency source without a direct or indirect penalty for underperformance, such as lower token scores, DAO contractors and workers may be corrupted by external sources.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "fungible payment without an underperformance penalty"
   ],
   "supporting_quote": "If curators' and contractors' payment come from a fungible currency source without a direct or indirect penalty for underperformance, such as lower token scores, DAO contractors and workers may be corrupted by external sources."
  },
  {
   "id": "kaal:claim:3441904-018",
   "url": "https://wulfkaal.github.io/claims/3441904-018",
   "claim": "Participants must be incentivized to improve their own utility while simultaneously benefiting the institution over the long run; without that duality of incentivization, rational and opportunistic internal and external constituents will attempt to game the governance design.",
   "type": "condition",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives",
    "governance-design",
    "regulatory-failure",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "all blockchain governance structures, especially on chain governance"
   ],
   "supporting_quote": "Without that duality of incentivization, rational and opportunistic internal and external constituents will attempt to game the governance design."
  },
  {
   "id": "kaal:claim:3441904-019",
   "url": "https://wulfkaal.github.io/claims/3441904-019",
   "claim": "Corruption is possible whenever actors in a governance design can be identified, and every historical instantiation of institutional governance design involving identifiable humans was afflicted by corruption sooner or later.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "asserted",
   "scope_conditions": [
    "governance designs whose members are individually identifiable"
   ],
   "supporting_quote": "Corruption is possible if actors can be identified. Every instantiation of institutional governance design involving identifiable humans was afflicted by corruption sooner or later."
  },
  {
   "id": "kaal:claim:3441904-020",
   "url": "https://wulfkaal.github.io/claims/3441904-020",
   "claim": "Fiduciary duties are less relevant in DAOs because the disciplining effect of such duties on management conduct is less needed where centralized management is minimal and there are fewer or no supervisors.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "DAO structures with minimal centralized management"
   ],
   "supporting_quote": "The disciplining effect of fiduciary duties on management's conduct is less needed because centralized management is minimal in DAOs."
  },
  {
   "id": "kaal:claim:3441904-021",
   "url": "https://wulfkaal.github.io/claims/3441904-021",
   "claim": "A one token one vote mechanism in existing decentralized protocols with on chain governance resembles a plutocracy, because holders of a significant share of total token supply hold more power than the rest of the members.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "evidenced",
   "scope_conditions": [
    "decentralized protocols with on chain governance as of the end of 2019"
   ],
   "supporting_quote": "A one-token-one-vote voting mechanism in existing decentralized protocols with on-chain governance resembles a plutocracy."
  },
  {
   "id": "kaal:claim:3441904-022",
   "url": "https://wulfkaal.github.io/claims/3441904-022",
   "claim": "Token concentration in existing decentralized protocols is extreme: on and around September 12, 2017, 4.11 percent of bitcoin addresses controlled 96.53 percent of the total bitcoin supply.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "evidenced",
   "scope_conditions": [
    "bitcoin addresses as of September 2017"
   ],
   "supporting_quote": "For instance, on and around September 12, 2017, 4.11% of the bitcoin addresses controlled 96.53% of the total bitcoin supply."
  },
  {
   "id": "kaal:claim:3441904-023",
   "url": "https://wulfkaal.github.io/claims/3441904-023",
   "claim": "In delegated proof of stake protocols the significant block validation power of elected nodes leads to corruption, because those nodes are incentivized to bribe voters to be elected as delegates in exchange for some of the newly inflated tokens.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "evidenced",
   "scope_conditions": [
    "delegated proof of stake protocols such as EOS, Lisk, and Ark"
   ],
   "supporting_quote": "That power leads to corruption. Block validation nodes in delegated proof of stake protocols are incentivized to bribe voters to be elected as delegates in exchange for some of the newly inflated tokens."
  },
  {
   "id": "kaal:claim:3441904-024",
   "url": "https://wulfkaal.github.io/claims/3441904-024",
   "claim": "Hard forks can reintroduce the double spend problem, because wallets, merchants, and users running the previous code deem the new code invalid and cannot detect spending on it, so coins spent in a new block could be spent again on an old block.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "hard forks only, since old nodes read both block versions after a soft fork"
   ],
   "supporting_quote": "Because wallets, merchants, and users running the previous code deem the new code invalid and thus cannot detect the spending on the new code, cryptocurrencies spent in a new block could be spent again on an old block."
  },
  {
   "id": "kaal:claim:3441904-025",
   "url": "https://wulfkaal.github.io/claims/3441904-025",
   "claim": "If a community cannot agree after a hard fork on which chain is the true chain, the result can be two blockchains competing in perpetuity, and the only viable remedy is abandoning one branch, which causes some miners to lose re-allocated transactions.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "blockchain",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "evidenced",
   "scope_conditions": [
    "contentious hard forks",
    "example of the fork that created Bitcoin Cash"
   ],
   "supporting_quote": "If after a hard fork, the respective community cannot agree on which chain is the true chain, e.g. the chain that provides the most likely survivable protocol, it may result in two blockchains that compete in perpetuity."
  },
  {
   "id": "kaal:claim:3441904-026",
   "url": "https://wulfkaal.github.io/claims/3441904-026",
   "claim": "The complex systems that decentralized infrastructure technology will reform are interdependent, so development of the infrastructure elements alone is not enough: structural and cultural changes in legacy systems must be worked through before the technology can be applied.",
   "type": "condition",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "interdependent complex legacy systems"
   ],
   "supporting_quote": "Even if the decentralized infrastructure elements are being developed in any of the major areas of use cases for blockchain technology, complex discussions around structural and cultural changes in legacy systems are needed before the technology can be applied."
  },
  {
   "id": "kaal:claim:3441904-027",
   "url": "https://wulfkaal.github.io/claims/3441904-027",
   "claim": "Reform of agency relationships in decentralized systems is possible only if and when a truly decentralized public blockchain emerges that is scalable and fully secure; without it, information asymmetries, censorship, agent opportunism, and system corruption may persist.",
   "type": "condition",
   "topics": [
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "absence of a scalable and fully secure decentralized public blockchain"
   ],
   "supporting_quote": "In decentralized systems, reform of the agency relationships is possible if and when a truly decentralized public blockchain emerges that is scalable and fully secure."
  },
  {
   "id": "kaal:claim:3441904-028",
   "url": "https://wulfkaal.github.io/claims/3441904-028",
   "claim": "The notion that smart contract agency relationships run exactly as coded with no possibility of agent opportunism is less likely to hold in complex agency relationships, so a decentralized human backstop to code becomes necessary as those relationships grow more complex.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "complex decentralized agency relationships"
   ],
   "supporting_quote": "The notion that agency relationships in smart contracts run exactly as coded without any possibility of opportunistic behavior of the agent is less likely to uphold in complex agency relationships."
  },
  {
   "id": "kaal:claim:3441904-029",
   "url": "https://wulfkaal.github.io/claims/3441904-029",
   "claim": "Facts based, ex post, trial and error rulemaking with stable and presumptively optimal rules is incompatible with the needs of decentralized systems, because knowledge filters in at the edges of such systems and cannot be encapsulated in a timely fashion.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized smart contracting and DAO environments"
   ],
   "supporting_quote": "Centralized governance via stable and presumptively optimal rules in an environment of decentralized smart contracting and DAOs further exacerbates the shortcomings of stable and presumptively optimal rules in centralized structures."
  },
  {
   "id": "kaal:claim:3441904-030",
   "url": "https://wulfkaal.github.io/claims/3441904-030",
   "claim": "The speed of smart contracting and associated DAO revisions will render regulations aimed at morphing decentralized systems obsolete before static centralized regulations are even finalized.",
   "type": "predictive",
   "topics": [
    "dynamic-regulation",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "formal centralized rulemaking processes",
    "rapidly morphing decentralized systems"
   ],
   "supporting_quote": "The speed of smart contracting and the associated DAO revisions will make regulations pertaining to morphing and evolving decentralized systems obsolete before static centralized regulations are finalized."
  },
  {
   "id": "kaal:claim:3441904-031",
   "url": "https://wulfkaal.github.io/claims/3441904-031",
   "claim": "The cost of translating coded contractual intent into natural language has the potential to become overwhelming for the existing centralized legal infrastructure, because coded intent may be unclear and natural language intent often cannot be used for interpretation.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "smart contract disputes brought before existing courts and regulators"
   ],
   "supporting_quote": "Coded contractual intent may be unclear and natural language intent can often not be used for interpretation."
  },
  {
   "id": "kaal:claim:3441904-032",
   "url": "https://wulfkaal.github.io/claims/3441904-032",
   "claim": "Traditional jurisdictional principles cannot directly apply to blockchain technology because the blockchain is merely a collection of agreed upon calculations by decentralized computer systems, and no particular node holds the entire blockchain.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "blockchain",
    "compliance",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "public decentralized blockchains maintained by anonymous global users"
   ],
   "supporting_quote": "Traditional jurisdictional principles cannot directly apply to blockchain technology because the blockchain is a mere collection of agreed-upon calculations by decentralized computer systems."
  },
  {
   "id": "kaal:claim:3441904-033",
   "url": "https://wulfkaal.github.io/claims/3441904-033",
   "claim": "Rulemaking via code is not itself a cure for static regulation, because coded solutions are subject to natural flaws such as bugs and cannot evolutionarily change protocols, making them another stable and presumptively optimal attempt.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized rulemaking via code without dynamic elements"
   ],
   "supporting_quote": "On the other hand, coded solutions are subject to natural flaws (bugs) and cannot evolutionarily change protocols."
  },
  {
   "id": "kaal:claim:3441904-034",
   "url": "https://wulfkaal.github.io/claims/3441904-034",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "dynamic decentralized governance frameworks with peer to peer information transfer"
   ],
   "supporting_quote": "Rather than acquiring the necessary information ex-post after rules have emerged as suboptimal, feedback effects help increase the availability of relevant information for governance rules ex-ante and anticipate necessary revisions before rules emerge as suboptimal."
  },
  {
   "id": "kaal:claim:3441904-035",
   "url": "https://wulfkaal.github.io/claims/3441904-035",
   "claim": "Static complex sets of DAO rules inevitably produce corruptive opportunistic gaming and arbitrage behavior, so effective DAO governance designs should be focused on dynamic elements.",
   "type": "design",
   "topics": [
    "regulatory-failure",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "open and democratic systems with complex static rule sets"
   ],
   "supporting_quote": "With static complex sets of DAO rules comes inevitable corruptive opportunistic gaming and arbitrage behavior."
  },
  {
   "id": "kaal:claim:3441904-036",
   "url": "https://wulfkaal.github.io/claims/3441904-036",
   "claim": "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.",
   "type": "design",
   "topics": [
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs with dynamic governance mechanisms allowing token holder votes on code"
   ],
   "supporting_quote": "Ex-post code-based majoritarian rules are superior to ex-ante majoritarian rules because they are based on more accurate real-time information from the edge and decentralized feedback effects."
  },
  {
   "id": "kaal:claim:3441904-037",
   "url": "https://wulfkaal.github.io/claims/3441904-037",
   "claim": "A decentralized on chain precedent system makes reputation based DAO governance dynamic: a post or template that is increasingly referenced gains non fungible reputation weight and associated fungible salaries, while unused precedent dissipates over time.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "reputation",
    "governance-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "DAO designs with a weighted directed acyclic graph and public on chain posts"
   ],
   "supporting_quote": "As a post/template on the blockchain gets increasingly referenced by the DAO members and other users, it increases in non-fungible reputation weight and associated fungible salaries."
  },
  {
   "id": "kaal:claim:3441904-038",
   "url": "https://wulfkaal.github.io/claims/3441904-038",
   "claim": "Optimized DAO governance should pay members only indirectly, through fungible salary tokens issued in proportion to non fungible merit tokens, because the indirect economic effects remove corruptive elements and make the design more attack resistant and stable in the long run.",
   "type": "design",
   "topics": [
    "tokenomics",
    "ai-and-agents",
    "risk-and-incentives",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "bifurcated DAO designs with two disparate token types"
   ],
   "supporting_quote": "The indirect economic effects remove corruptive elements and make the governance design more attack resistant and stable in the long run."
  },
  {
   "id": "kaal:claim:3441904-039",
   "url": "https://wulfkaal.github.io/claims/3441904-039",
   "claim": "Community driven audits work in DAOs and rarely in centralized systems because the users of the system typically know best how to assess other members, whereas centralized incentive design does not enable incorruptible internal controls.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "DAO governance equipped with an effective incentive design"
   ],
   "supporting_quote": "The decentralized nature of DAOs enhances efficiency of coordination because the users of the system, e.g. DAO members, typically know best how to assess other users / DAO members."
  },
  {
   "id": "kaal:claim:3441904-040",
   "url": "https://wulfkaal.github.io/claims/3441904-040",
   "claim": "On chain governance is a necessity for most public blockchains because all existing blockchains need to calibrate soft forks for protocol upgrades.",
   "type": "condition",
   "topics": [
    "governance-design",
    "consensus-and-security",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "public blockchain communities that value decentralization"
   ],
   "supporting_quote": "On-chain governance is a necessity for most public blockchains. Because all existing blockchains need to calibrate soft forks for protocol upgrades, most public blockchain communities that value decentralization have considered on-chain governance for their protocol."
  },
  {
   "id": "kaal:claim:3441904-041",
   "url": "https://wulfkaal.github.io/claims/3441904-041",
   "claim": "Reputation based staking removes the corruptive elements of fungible tokens from voting because third parties are less likely to be able to take over a non fungible asset that is organically grown and maintained through actual expertise in the DAO subject matter.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "voting by staking non fungible reputation tokens"
   ],
   "supporting_quote": "The corruptive elements of fungible assets/tokens are removed because third parties are less likely able to take over a non-fungible assets, such as reputation, that is organically grown and maintained through actual expertise in a given DAO subject matter."
  },
  {
   "id": "kaal:claim:3441904-042",
   "url": "https://wulfkaal.github.io/claims/3441904-042",
   "claim": "Reputation based metrics were ineffective in centralized governance systems because before blockchain, reputation could not be stored autonomously, anonymously, and transparently, so it was not a reliable predictor of actors' future actions.",
   "type": "failure",
   "topics": [
    "reputation",
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "pre blockchain centralized reputation systems such as the web of trust and platform ratings"
   ],
   "supporting_quote": "Before the emergence of blockchain technology, reputation could not be stored autonomously, anonymously, and transparently. Accordingly, reputation was not a reliable predictor of actors' future actions in centralized governance systems."
  },
  {
   "id": "kaal:claim:3441904-043",
   "url": "https://wulfkaal.github.io/claims/3441904-043",
   "claim": "Reputation based DAO governance turns a zero sum game into a positive sum game, because members are given incentives to build lasting non fungible value through a long term record of productive cooperation that improves the DAO.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "DAO designs using non fungible reputation rather than fungible rewards"
   ],
   "supporting_quote": "DAO members have incentives to create lasting non-fungible value for the institution by developing a long-term non-fungible record of productive cooperation that in effect improves the DAO."
  },
  {
   "id": "kaal:claim:3441904-044",
   "url": "https://wulfkaal.github.io/claims/3441904-044",
   "claim": "DAO member reputation should be designed as inflationary rather than as a permanent stock, so that non use such as non staking or non voting leads to value depreciation.",
   "type": "design",
   "topics": [
    "reputation",
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "reputation based DAO governance designs"
   ],
   "supporting_quote": "The DAO member reputation should be inflationary in the DAO design."
  },
  {
   "id": "kaal:claim:3441904-045",
   "url": "https://wulfkaal.github.io/claims/3441904-045",
   "claim": "Non performance reputational penalties in a DAO are free from racial and cultural biases because the token holders are unlikely to even know each other and work toward the common goal of optimizing the DAO and its token value.",
   "type": "mechanism",
   "topics": [
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "ideal typical DAO governance designs with anonymized proposal voting"
   ],
   "supporting_quote": "Crucially, non-performance reputational penalties are entirely free from racial or cultural biases and associated implications as the token holders are unlikely to even know each other."
  },
  {
   "id": "kaal:claim:3441904-046",
   "url": "https://wulfkaal.github.io/claims/3441904-046",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "institutional-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904",
   "year": "2019",
   "source_sha256": "e6b562527f7f19accaa35491db0a0db168b6a936755e1dca424e9f30bee7a815",
   "confidence": "argued",
   "scope_conditions": [
    "ideal typical DAO governance design parameters"
   ],
   "supporting_quote": "Most hierarchical organizations rely predominantly on extrinsic incentive structures, through wages etc. By contrast, the core common denominator for all DAO token members is the unifying desire to optimize the DAO structure and the DAO reputation token value."
  },
  {
   "id": "kaal:claim:3411110-001",
   "url": "https://wulfkaal.github.io/claims/3411110-001",
   "claim": "Existing ledger structures for securities offerings are defective: because individual firms rely on batch processing, the model generates dependencies, multi-day settlement times, distinctive operational risks, and duplicative costs.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "asserted",
   "scope_conditions": [
    "legacy, non blockchain securities settlement infrastructure"
   ],
   "supporting_quote": "ledger structures applicable to securities offerings are subject to significant shortcomings: While for individual firms, batch-processing is the norm, this model creates numerous dependencies, multi-day settlement times, unique operational risks, and duplicative costs."
  },
  {
   "id": "kaal:claim:3411110-002",
   "url": "https://wulfkaal.github.io/claims/3411110-002",
   "claim": "When multiple firms trade the same securities in legacy systems, each maintains its own ledger, and that duplication is itself the source of increased operational risk and cost.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "risk-and-incentives",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "asserted",
   "scope_conditions": [
    "multiple firms trading the same security",
    "legacy multi ledger systems"
   ],
   "supporting_quote": "Legacy systems in which multiple firms are trading the same securities utilize multiple ledgers which increases operational risks and increases costs."
  },
  {
   "id": "kaal:claim:3411110-003",
   "url": "https://wulfkaal.github.io/claims/3411110-003",
   "claim": "Blockchain reduces counterparty credit risk through a specific mechanism: a single shared ledger compresses the settlement cycle so that cash or securities are verifiably in the account within seconds of the trade, leaving almost no window for counterparty default.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "a single shared ledger used across trading firms",
    "near instantaneous settlement"
   ],
   "supporting_quote": "credit risk is reduced because cash (if selling) or the securities (if purchasing) are in the account for verification shortly after the trade (which could be seconds, if not fractions of a second), because the settlement cycle is substantially reduced."
  },
  {
   "id": "kaal:claim:3411110-004",
   "url": "https://wulfkaal.github.io/claims/3411110-004",
   "claim": "Legal certainty is a necessary condition for the maturation of blockchain securities trading; the technology alone will not carry it there.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "economics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "asserted",
   "scope_conditions": [
    "United States regulatory environment"
   ],
   "supporting_quote": "Only by creating more legal certainty will blockchain security trading reach maturity."
  },
  {
   "id": "kaal:claim:3411110-005",
   "url": "https://wulfkaal.github.io/claims/3411110-005",
   "claim": "Overstock.com issued the first SEC registered digital securities using blockchain technology, and because the issuer was a public company conducting a shelf registration, the offering functions as a working model of blockchain benefits and as a map of the U.S. regulatory gaps.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "evidenced",
   "scope_conditions": [
    "U.S. registered public offering",
    "shelf registration structure"
   ],
   "supporting_quote": "OSTK issued the first Securities and Exchange Commission (\"SEC\") registered \"digital securities\" that utilizes blockchain technology."
  },
  {
   "id": "kaal:claim:3411110-006",
   "url": "https://wulfkaal.github.io/claims/3411110-006",
   "claim": "The defining legal difference between the Overstock offering and a traditional offering is that the purchaser had to hold the record directly as beneficial owner and could not delegate custody to the broker, so the securities were not held in street name.",
   "type": "definitional",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "Overstock Series A digital securities traded on the PRO ATS"
   ],
   "supporting_quote": "The core difference between the OSTK offering and a traditional securities offering is that the purchaser of OSTK must hold the record directly and as beneficial owner of the securities could not delegate the authority to hold the securities to the broker"
  },
  {
   "id": "kaal:claim:3411110-007",
   "url": "https://wulfkaal.github.io/claims/3411110-007",
   "claim": "Because direct ownership on a blockchain removes the need for the Depository Trust Corporation to hold the certificate and for a broker to record beneficial ownership, agency costs can be cut and ownership clarity increases.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "decentralization",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "direct registration of ownership on the ledger",
    "no third party custodian"
   ],
   "supporting_quote": "By establishing a system that makes the DTC obsolete, agency costs have the potential to be cut and clarity surrounding ownership will increase."
  },
  {
   "id": "kaal:claim:3411110-008",
   "url": "https://wulfkaal.github.io/claims/3411110-008",
   "claim": "The compliance burden attached to operating an alternative trading system, including fees, consumer protection, examination, and books and records requirements, is typically cost prohibitive for startups.",
   "type": "failure",
   "topics": [
    "compliance",
    "economics",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "asserted",
   "scope_conditions": [
    "startup firms seeking to operate an ATS",
    "SEC and FINRA compliance regime"
   ],
   "supporting_quote": "ATS compliance costs are typically cost prohibitive for startups."
  },
  {
   "id": "kaal:claim:3411110-009",
   "url": "https://wulfkaal.github.io/claims/3411110-009",
   "claim": "Running an alternative trading system on a blockchain cures the ATS system's traditional price discovery latency, because every trade is posted to a public ledger that everyone can access.",
   "type": "mechanism",
   "topics": [
    "economics",
    "disclosure",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "ATS operating on a public blockchain ledger"
   ],
   "supporting_quote": "By creating an ATS that trades securities over blockchain, there is no latency in price discovery, which has traditionally been a criticism of the ATS system. This is because every trade is posted to a public ledger to which everyone has access."
  },
  {
   "id": "kaal:claim:3411110-010",
   "url": "https://wulfkaal.github.io/claims/3411110-010",
   "claim": "Naked or out of the box short selling is possible only because settlement takes three days, so eliminating the window between trade and settlement on a blockchain eliminates that abuse.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "multi-day settlement regimes such as T+3"
   ],
   "supporting_quote": "This tactic is only possible because it takes three days to settle a trade. By eliminating the window between trade and settlement, the blockchain eliminates out-of- the-box shorting."
  },
  {
   "id": "kaal:claim:3411110-011",
   "url": "https://wulfkaal.github.io/claims/3411110-011",
   "claim": "Blockchain removes the class of costs generated by human error in record keeping, because it eliminates the possibility that transactions are misreported in ways that cause irreparable harm.",
   "type": "mechanism",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "asserted",
   "scope_conditions": [
    "record keeping for securities issuance and transfer"
   ],
   "supporting_quote": "Blockchain technology allows corporations to eliminate costs associated with human errors in record keeping. Blockchain eliminates the possibility of transactions being misreported due to human error that can cause irreparable harm."
  },
  {
   "id": "kaal:claim:3411110-012",
   "url": "https://wulfkaal.github.io/claims/3411110-012",
   "claim": "Transfer agents become unnecessary in blockchain based trading models because every function they perform, including maintaining the holding record, can be automated in code and is already produced by the ledger's design.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "fully blockchain based trading and settlement models"
   ],
   "supporting_quote": "In blockchain- based trading models, transfer agents will not be needed because every task they preform can be automated through coding."
  },
  {
   "id": "kaal:claim:3411110-013",
   "url": "https://wulfkaal.github.io/claims/3411110-013",
   "claim": "The double spending problem has not been eradicated in theory: a group or syndicate obtaining 51 percent control of a network could reverse transactions and create a private chain that the market could only limitedly discern as not real.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "a decentralized network where one party can amass majority hashing control"
   ],
   "supporting_quote": "There is the possibility a group or syndicate could gain 51% control over the network and would therefore be able to reverse transactions and create a private blockchain, which the market could only limitedly discern as not real."
  },
  {
   "id": "kaal:claim:3411110-014",
   "url": "https://wulfkaal.github.io/claims/3411110-014",
   "claim": "Any settlement completed in less than ten seconds removes counterparty risk and with it systemic risk entirely, which makes settlement speed, not disclosure, the operative variable for systemic risk.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "settlement finality achieved in under ten seconds",
    "if such speed is ever achieved in any setting"
   ],
   "supporting_quote": "Most importantly, any settlement that takes less than 10 seconds, if ever achieved in any setting, removes counterparty risk and with it systemic risk entirely."
  },
  {
   "id": "kaal:claim:3411110-015",
   "url": "https://wulfkaal.github.io/claims/3411110-015",
   "claim": "If blockchain pushes settlement finality into the seconds range, the entire regulatory infrastructure built to address counterparty and systemic risk would have to be reformed, and most systemic risk and counterparty risk regulation would become unnecessary.",
   "type": "predictive",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "settlement finality in the seconds range",
    "blockchain based settlement adopted at scale"
   ],
   "supporting_quote": "Arguably the entire regulatory infrastructure that has been tailored to address counterparty- and systemic risk would need to be reformed if settlement finality can be increased to the seconds range with blockchain technology."
  },
  {
   "id": "kaal:claim:3411110-016",
   "url": "https://wulfkaal.github.io/claims/3411110-016",
   "claim": "Instant settlement destroys an existing business practice: without the T+3 grace period, institutional investors can no longer lend idle shares to investors covering short positions.",
   "type": "failure",
   "topics": [
    "securities-law",
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain based settlement without a grace period"
   ],
   "supporting_quote": "Without this grace period in a blockchain-based settlement system, institutional investors will no longer be able to lend their idle shares to investors to cover short positions."
  },
  {
   "id": "kaal:claim:3411110-017",
   "url": "https://wulfkaal.github.io/claims/3411110-017",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "evidenced",
   "scope_conditions": [
    "post trade service providers serving large investors"
   ],
   "supporting_quote": "According to some estimates, if every trade needs to be processed, providers would need to process an additional 2.9 million orders a day."
  },
  {
   "id": "kaal:claim:3411110-018",
   "url": "https://wulfkaal.github.io/claims/3411110-018",
   "claim": "Neither the Overstock offering nor the Linq based offerings were structured to support widespread ownership or trading through blockchain, and no major exchange or inter-dealer market permits or will foreseeably permit trading of blockchain issued securities.",
   "type": "failure",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. exchanges and inter-dealer markets as of the time of writing"
   ],
   "supporting_quote": "no major exchange or inter- dealer market permits, or will permit in the foreseeable future, trading of securities issued through blockchain."
  },
  {
   "id": "kaal:claim:3411110-019",
   "url": "https://wulfkaal.github.io/claims/3411110-019",
   "claim": "A blockchain based offering routed through a single broker produces a specific cluster of risks, including limited price discovery, no market making and therefore less liquidity, constrained short selling, impaired best execution, and no print to a tape or national exchange.",
   "type": "failure",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "offering structures with only one authorized broker-dealer",
    "single non-scalable ATS"
   ],
   "supporting_quote": "Several additional risks are associated with the limited trading and associated limited material liquidity that results from a blockchain-based offering involving only one broker."
  },
  {
   "id": "kaal:claim:3411110-020",
   "url": "https://wulfkaal.github.io/claims/3411110-020",
   "claim": "Blockchain based offerings introduce technology risks from code design and functioning and from third party intrusions that are generally absent in traditional offerings, and these risks cannot really be quantified.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain based offerings compared with traditional offerings"
   ],
   "supporting_quote": "Technology-based risks include risks from the design and functioning of code, and from third-party intrusions. Such risks are generally not present in a traditional offering."
  },
  {
   "id": "kaal:claim:3411110-021",
   "url": "https://wulfkaal.github.io/claims/3411110-021",
   "claim": "Regulators' relative unsophistication about the technology is itself a risk driver, because a poorly informed regulator is likely to over-react and precipitate new or expanded regulation.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "regulators lacking technical understanding of blockchain"
   ],
   "supporting_quote": "The relative unsophistication of the regulators and the lack of regulators' understanding of the technology could result in an over-reaction which in turn can precipitate creating new / expanding existing regulations."
  },
  {
   "id": "kaal:claim:3411110-022",
   "url": "https://wulfkaal.github.io/claims/3411110-022",
   "claim": "Regulatory uncertainty produces a chilling effect: because early adopters must apply traditional law to novel instruments and cannot reach a comfortable level of certainty, legacy businesses hold back from adoption.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "current U.S. regulatory climate for tokens and digital securities"
   ],
   "supporting_quote": "As a result, there is a chilling effect over the industry where legacy businesses are weary to adopt because of regulatory uncertainty."
  },
  {
   "id": "kaal:claim:3411110-023",
   "url": "https://wulfkaal.github.io/claims/3411110-023",
   "claim": "Digital securities are not recognized under any state's current commercial law, which matters because that recognition governs margining and the pledging of securities as collateral.",
   "type": "failure",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "asserted",
   "scope_conditions": [
    "state commercial law as codified in the UCC"
   ],
   "supporting_quote": "The lack of recognition of \"digital\" securities under any state's current commercial law,51 which is relevant for margin / pledging securities as collateral"
  },
  {
   "id": "kaal:claim:3411110-024",
   "url": "https://wulfkaal.github.io/claims/3411110-024",
   "claim": "The regulatory challenges of blockchain based offerings should be addressed by revising federal securities law provisions to recognize digital securities, to permit broad based trading of equity-equivalent digital securities, and to permit their margining.",
   "type": "design",
   "topics": [
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. federal securities law"
   ],
   "supporting_quote": "may be in part addressed by revising several federal securities law provisions to allow: (i) recognition of \"digital securities,\" (ii) broad-based trading of equity-equivalent \"digital securities,\" and (iii) margining of \"digital securities.\""
  },
  {
   "id": "kaal:claim:3411110-025",
   "url": "https://wulfkaal.github.io/claims/3411110-025",
   "claim": "The SEC has developed neither blockchain-specific offering disclosure standards nor retail investor protection measures particular to blockchain based offerings, leaving issuers without guidance.",
   "type": "failure",
   "topics": [
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "asserted",
   "scope_conditions": [
    "SEC rulemaking and guidance as of the time of writing"
   ],
   "supporting_quote": "SEC has not identified or developed any blockchain-specific offering disclosure standards, or provided guidance, 2. SEC has not identified or developed any retail investor-protection measures unique / particular to blockchain- based offerings"
  },
  {
   "id": "kaal:claim:3411110-026",
   "url": "https://wulfkaal.github.io/claims/3411110-026",
   "claim": "Near instant settlement creates its own regulatory problem: there is no practical ability to correct trade errors when settlement is same day, whereas the T+2 or T+3 structure supplies a correction window even as its delay causes other trading violations.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "same day or near instant settlement compared with T+2 and T+3"
   ],
   "supporting_quote": "Settlement-related issues (e.g., no practical ability to correct trade errors because of same-day / near-instant settlement versus T+3 / T+2 structure)."
  },
  {
   "id": "kaal:claim:3411110-027",
   "url": "https://wulfkaal.github.io/claims/3411110-027",
   "claim": "Despite an early call for regulatory leadership from Commissioner Stein in 2015, the SEC has not addressed core recognition questions for blockchain in finance, including cryptocurrencies, tokens as securities, and DAOs as investment advisers.",
   "type": "failure",
   "topics": [
    "securities-law",
    "tokenomics",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "SEC action between 2015 and the time of writing"
   ],
   "supporting_quote": "Despite this early cautioning and call for action, the SEC has not yet addressed core issues pertaining to the recognition of blockchain technology applications in finance."
  },
  {
   "id": "kaal:claim:3411110-028",
   "url": "https://wulfkaal.github.io/claims/3411110-028",
   "claim": "The SEC's rejection of the Winklevoss Bitcoin ETF, reasoned on Bitcoin's unregulated nature and susceptibility to fraud, reflects agency distrust of the crypto asset class as a whole rather than a narrow product objection.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "securities-law",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC order disapproving the Winklevoss Bitcoin Trust listing"
   ],
   "supporting_quote": "The SEC's decision regarding the Bitcoin ETF reflects its distrust towards the crypto asset class as a whole, especially funds attempting to trade digital currencies."
  },
  {
   "id": "kaal:claim:3411110-029",
   "url": "https://wulfkaal.github.io/claims/3411110-029",
   "claim": "The SEC's reasoning against the Bitcoin ETF does not transfer to blockchain based private investment funds such as those built on Melonport, because such funds trade a diverse array of cryptocurrencies and reach a much more limited and accredited audience, which curtails investor risk.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "private investment funds limited to accredited investors",
    "funds trading diversified crypto portfolios rather than Bitcoin alone"
   ],
   "supporting_quote": "Moreover, the audience of a Melonport-type fund is much more limited and curtails the risk to investors."
  },
  {
   "id": "kaal:claim:3411110-030",
   "url": "https://wulfkaal.github.io/claims/3411110-030",
   "claim": "Delaware's 2017 amendment to the Delaware General Corporation Law recognizing distributed electronic networks or databases as a valid means of creating and maintaining corporate records, including the stock ledger, is the leading state law accommodation of blockchain.",
   "type": "empirical",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "evidenced",
   "scope_conditions": [
    "Delaware corporate law after the 2017 DGCL amendment",
    "records must be convertible into legible paper form"
   ],
   "supporting_quote": "Most notably, Delaware amended the Delaware General Corporate Law (DGCL) in 2017 to use \"distributed electronic networks or databases\" to create and maintain corporate records."
  },
  {
   "id": "kaal:claim:3411110-031",
   "url": "https://wulfkaal.github.io/claims/3411110-031",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "evidenced",
   "scope_conditions": [
    "Vermont public recordkeeping",
    "state report Blockchain Technology: Opportunities and Risk"
   ],
   "supporting_quote": "at present, the costs and challenges associated with the use of blockchain technology for Vermont's public recordkeeping outweigh the identifiable benefits."
  },
  {
   "id": "kaal:claim:3411110-032",
   "url": "https://wulfkaal.github.io/claims/3411110-032",
   "claim": "Self regulatory organizations occupy a distinctive position, holding some regulatory authority while remaining beholden to the SEC, which makes them the right actors to educate the SEC toward a more crypto friendly stance by demonstrating successful use cases.",
   "type": "design",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "SROs such as FINRA, Nasdaq, and NYSE that remain subject to SEC oversight"
   ],
   "supporting_quote": "SROs are also in a unique position to help educate the SEC to becoming more crypto friendly."
  },
  {
   "id": "kaal:claim:3411110-033",
   "url": "https://wulfkaal.github.io/claims/3411110-033",
   "claim": "Widespread retail investor trading of digital securities, including the ability to margin them, is the linchpin of survivability for blockchain based securities offerings; without retail access the technology may remain marginalized in the offering process.",
   "type": "condition",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "retail investor access on a widespread basis",
    "margining of digital securities permitted"
   ],
   "supporting_quote": "will be the linchpin of survivability and evolution of blockchain-based securities offerings. Without retail investor access, the technology may remain marginalized in the offering process."
  },
  {
   "id": "kaal:claim:3411110-034",
   "url": "https://wulfkaal.github.io/claims/3411110-034",
   "claim": "Validating blockchain as a cost effective means of supporting securities offerings does not by itself increase capital raising for private companies, because outside of unicorns there is unlikely to be broad retail interest in privately placed digital securities or in securities trading on a single non-scalable ATS.",
   "type": "failure",
   "topics": [
    "defi",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "privately placed digital securities",
    "securities trading on a single non-scalable ATS",
    "issuers other than unicorns"
   ],
   "supporting_quote": "Hence, capital-raising opportunities for private companies likely would not be materially increased despite the validation of blockchain technology as a means of cost-effectively supporting securities offerings."
  },
  {
   "id": "kaal:claim:3411110-035",
   "url": "https://wulfkaal.github.io/claims/3411110-035",
   "claim": "Using blockchain as a more efficient public offering medium will almost certainly require modifying the regulations governing the offering process, the processes for offering, settling, and administering securities, and the roles of market participants built up over decades.",
   "type": "condition",
   "topics": [
    "economics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. public offering infrastructure"
   ],
   "supporting_quote": "The utilization of blockchain as a more efficient and reliable public offering medium will almost certainly require modifying many of the (i) regulations applicable to the offering process"
  },
  {
   "id": "kaal:claim:3411110-036",
   "url": "https://wulfkaal.github.io/claims/3411110-036",
   "claim": "Governmental endorsement and guidance on crypto investments is essential for future securities offerings involving cryptocurrencies and blockchain, and absent it the gap between the existing regulatory infrastructure and crypto securities investment will inevitably widen as the market grows.",
   "type": "predictive",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "growth in the market for crypto investments",
    "United States regulatory infrastructure"
   ],
   "supporting_quote": "As the market for crypto investments grows, the regulatory gap between the existing regulatory infrastructure and crypto securities investment will inevitably increase further."
  },
  {
   "id": "kaal:claim:3411110-037",
   "url": "https://wulfkaal.github.io/claims/3411110-037",
   "claim": "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.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "transition period for securities market infrastructure"
   ],
   "supporting_quote": "will take several years if not decades, and so the most likely circumstance is that legacy and blockchain-based securities issuance, trading, settlement, and related systems and processes will have to co-exist side-by-side for the foreseeable future."
  },
  {
   "id": "kaal:claim:3411110-038",
   "url": "https://wulfkaal.github.io/claims/3411110-038",
   "claim": "Private blockchains are the rational transitional vehicle for cautious enterprises, because they let firms experiment at relatively low cost and be better positioned when mass adoption occurs, while allowing the corporation to screen access to transaction records.",
   "type": "design",
   "topics": [
    "blockchain",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "corporations apprehensive about the cost and uncertainty of technology upgrades",
    "private permissioned chains with a governance system for access"
   ],
   "supporting_quote": "By setting companies up on private blockchains, companies can experiment with the technology which allows them to be better positioned when mass adoption occurs while keeping cost relatively low."
  },
  {
   "id": "kaal:claim:3411110-039",
   "url": "https://wulfkaal.github.io/claims/3411110-039",
   "claim": "The Overstock structure fails to deliver investor privacy, because all existing broker-dealer customer agreements contain provisions allowing the broker-dealer to share the customer's identity, whereas ideally the individual's privacy would be contained.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "year": "2019",
   "source_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "confidence": "argued",
   "scope_conditions": [
    "existing broker-dealer customer agreements"
   ],
   "supporting_quote": "For instance, all existing broker-dealer customer agreements included provisions which allows the broker-dealer to share the identity of the customer. Ideally, the privacy of the individual would be contained."
  },
  {
   "id": "kaal:claim:3373393-001",
   "url": "https://wulfkaal.github.io/claims/3373393-001",
   "claim": "As a foundational technology, blockchain technology builds the infrastructure for decentralized networked governance, which over time creates an environment in which the internal and external monitoring mechanisms previously necessitated by agency problems in corporate governance can be removed.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "governance-design",
    "corporate-governance",
    "compliance",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "asserted",
   "scope_conditions": [
    "over a multi-decade time horizon",
    "requires the supporting infrastructure components to be built"
   ],
   "supporting_quote": "As a foundational technology, blockchain technology creates the infrastructure for decentralized networked governance that, over time, creates the environment that enables the removal of internal and external monitoring mechanisms previously necessitated by agency problems in corporate governance."
  },
  {
   "id": "kaal:claim:3373393-002",
   "url": "https://wulfkaal.github.io/claims/3373393-002",
   "claim": "Blockchain technology produces a substantial increase in the efficiency of the agency relationship and lowers agency costs by orders of magnitude.",
   "type": "predictive",
   "topics": [
    "blockchain",
    "corporate-governance",
    "economics",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "asserted",
   "supporting_quote": "Blockchain technology facilitates a substantial increase in efficiency in the agency relationship and lowers agency costs in orders of magnitude."
  },
  {
   "id": "kaal:claim:3373393-003",
   "url": "https://wulfkaal.github.io/claims/3373393-003",
   "claim": "The core agency conflicts that emanate from the separation of ownership by shareholder principals and control by manager agents cannot be fully addressed by the existing theoretical and legal framework, because monitoring agents is inevitably costly and transaction costs abound.",
   "type": "failure",
   "topics": [
    "compliance",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "under the existing theoretical and legal framework for corporate governance"
   ],
   "supporting_quote": "However, the core agency conflicts emanating from the separation of ownership (shareholder principal) and control (manager agent) cannot be fully addressed by the existing theoretical and legal framework."
  },
  {
   "id": "kaal:claim:3373393-004",
   "url": "https://wulfkaal.github.io/claims/3373393-004",
   "claim": "Blockchain is not a disruptive technology but a foundational technology, and its transformational impact therefore takes decades rather than years.",
   "type": "definitional",
   "topics": [
    "blockchain",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "supporting_quote": "blockchain technology is not a disruptive technology, it is a foundational technology whose transformational impact takes decades rather than years"
  },
  {
   "id": "kaal:claim:3373393-005",
   "url": "https://wulfkaal.github.io/claims/3373393-005",
   "claim": "Blockchain use cases involve interdependent structures, so development of any one area alone cannot succeed without the simultaneous existence of multiple additional support structures.",
   "type": "condition",
   "topics": [
    "blockchain",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "applies to complex, interdependent use cases such as corporate governance"
   ],
   "supporting_quote": "In other words, development of one area alone cannot be successful as the existence of multiple additional support structures are needed."
  },
  {
   "id": "kaal:claim:3373393-006",
   "url": "https://wulfkaal.github.io/claims/3373393-006",
   "claim": "Applying blockchain to corporate governance requires the relevant authorities, who most likely understand the governance use case but not the technology, to reach consensus on how and when to implement it.",
   "type": "condition",
   "topics": [
    "blockchain",
    "governance-design",
    "corporate-governance",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "asserted",
   "scope_conditions": [
    "corporate governance implementations within existing centralized structures"
   ],
   "supporting_quote": "in the corporate governance context it requires the authorities, who most likely understand the use case and not the technology, to come to a consensus on how and when to implement such technology for that governance use case."
  },
  {
   "id": "kaal:claim:3373393-007",
   "url": "https://wulfkaal.github.io/claims/3373393-007",
   "claim": "Agency problems originate from the lack of trust between principals and agents, which itself stems from information asymmetries and agents' opportunistic self-interested behavior.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "supporting_quote": "Agency problems originate from the lacking trust between principals and agents."
  },
  {
   "id": "kaal:claim:3373393-008",
   "url": "https://wulfkaal.github.io/claims/3373393-008",
   "claim": "Because of bounded rationality, incomplete foresight, and information asymmetries, it is impossible for principals to contract for every possible action or inaction of the agent so as to induce the agent to act in the principal's best interests.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "where principals and agents face bounded rationality and incomplete foresight"
   ],
   "supporting_quote": "it is impossible for principals to contract for every possible action or inaction of the agent in order to induce the agent to act in the best interests of the principal."
  },
  {
   "id": "kaal:claim:3373393-009",
   "url": "https://wulfkaal.github.io/claims/3373393-009",
   "claim": "The interests of manager agents and shareholder principals are never fully aligned despite best efforts at monitoring and bonding, so agency losses in the form of residual loss inevitably arise.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "supporting_quote": "Despite best efforts at monitoring and bonding, the interest of manager agents and shareholder principals in corporate governance are never fully aligned and agency losses inevitably arise from conflicts of interest between principals and agents, known as residual loss."
  },
  {
   "id": "kaal:claim:3373393-010",
   "url": "https://wulfkaal.github.io/claims/3373393-010",
   "claim": "Residual loss arises because the cost of enforcing suboptimal contracts between principals and agents always exceeds the benefits of performing the contractual obligations.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "asserted",
   "supporting_quote": "Residual loss arises because the cost of enforcing suboptimal contracts between principals and agents always exceed the benefits of performing the contractual obligations."
  },
  {
   "id": "kaal:claim:3373393-011",
   "url": "https://wulfkaal.github.io/claims/3373393-011",
   "claim": "Agency costs are the sum of monitoring costs, bonding costs, and residual loss, and in the corporate context they can be seen as the lost share value resulting from diverging interests between shareholders and corporate managers.",
   "type": "definitional",
   "topics": [
    "corporate-governance",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "asserted",
   "supporting_quote": "As such, agency costs are the sum of monitoring costs, bonding costs, and residual loss."
  },
  {
   "id": "kaal:claim:3373393-012",
   "url": "https://wulfkaal.github.io/claims/3373393-012",
   "claim": "The standard remedy of appointing outside independent directors to separate decision management from decision control is undermined because CEOs often dominate the board, which makes the separation much more difficult and hurts shareholders.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "boards where the CEO is dominant"
   ],
   "supporting_quote": "However, CEOs who often dominate the board make the separation of these functions much more difficult, which hurts shareholders."
  },
  {
   "id": "kaal:claim:3373393-013",
   "url": "https://wulfkaal.github.io/claims/3373393-013",
   "claim": "Shareholder activism reform by itself has been unable to sufficiently improve the corporate governance system.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "evidenced",
   "supporting_quote": "activism reform by itself has been unable to sufficiently improve the corporate governance system."
  },
  {
   "id": "kaal:claim:3373393-014",
   "url": "https://wulfkaal.github.io/claims/3373393-014",
   "claim": "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.",
   "type": "normative",
   "topics": [
    "governance-design",
    "innovation",
    "institutional-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "asserted",
   "supporting_quote": "organizational experimentation that enables new business models and new organizational structures is desirable and valuable and may be one of the few ways to facilitate the much needed corporate governance reform."
  },
  {
   "id": "kaal:claim:3373393-015",
   "url": "https://wulfkaal.github.io/claims/3373393-015",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "corporate-governance",
    "compliance",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "supporting_quote": "The popularity of existing mechanisms to address the agency problems in corporate governance may be related to path dependencies created by the evolution of internal and external monitoring mechanisms in corporate governance"
  },
  {
   "id": "kaal:claim:3373393-016",
   "url": "https://wulfkaal.github.io/claims/3373393-016",
   "claim": "Existing governance mechanisms work well in some firms but are ineffective in others, because agency conflicts and their specific scope differ from firm to firm.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "across a heterogeneous population of firms"
   ],
   "supporting_quote": "However, existing governance mechanisms work well in some firms but are ineffective in others."
  },
  {
   "id": "kaal:claim:3373393-017",
   "url": "https://wulfkaal.github.io/claims/3373393-017",
   "claim": "Supervisory tasks traditionally performed by principals to control their agents can be delegated to decentralized computer networks that are reliable, secure, immutable, and independent of fallible human input and discretionary human goodwill.",
   "type": "design",
   "topics": [
    "blockchain",
    "compliance",
    "governance-design",
    "decentralization",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "assumes a functioning decentralized network"
   ],
   "supporting_quote": "Supervisory tasks that were traditionally performed by principals to control their agents can be delegated to decentralized computer networks that are highly reliable, secure, immutable, and independent of fallible human input and discretionary human goodwill."
  },
  {
   "id": "kaal:claim:3373393-018",
   "url": "https://wulfkaal.github.io/claims/3373393-018",
   "claim": "Blockchain provides an alternative governance mechanism that eliminates agency costs, meaning the principal's cost of supervising agents, by creating trust in the contractual relationship between principal and agent.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "corporate-governance",
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "supporting_quote": "Blockchain technology provides an alternative governance mechanism that eliminates agency costs - the principal's cost of supervising agents - by creating trust in the contractual relationship between the principal and the agent."
  },
  {
   "id": "kaal:claim:3373393-019",
   "url": "https://wulfkaal.github.io/claims/3373393-019",
   "claim": "The immutability of the blockchain and its cryptographic security systems provide transactional guarantees that create trust between principals and agents in the integrity of their contractual relationship, and ensure that no participant can circumvent the rules embedded in blockchain code.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "consensus-and-security",
    "citation-and-knowledge",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "supporting_quote": "The immutability of the blockchain and its cryptographic security systems provide transactional guarantees and create trust between principals and agents in the integrity of their contractual relationship."
  },
  {
   "id": "kaal:claim:3373393-020",
   "url": "https://wulfkaal.github.io/claims/3373393-020",
   "claim": "A blockchain guarantee means that a contract between principal and agent executes only if and when all contract parameters have been fulfilled by both parties and verified by a majority of miners or nodes in the system.",
   "type": "definitional",
   "topics": [
    "blockchain",
    "smart-contracts",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "asserted",
   "supporting_quote": "Blockchain guarantees include contract execution between principal and agent only if and when all contract parameters were fulfilled by both parties and verified by a majority of miners/nodes in the system."
  },
  {
   "id": "kaal:claim:3373393-021",
   "url": "https://wulfkaal.github.io/claims/3373393-021",
   "claim": "Because governance guarantees are embedded in code, there is no need in the blockchain infrastructure for the principal to institute oversight and monitoring, and the associated agency costs disappear.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "compliance",
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "assumes the coded guarantees hold"
   ],
   "supporting_quote": "Hence, in the blockchain infrastructure, there is no need for the principal to institute oversight and monitoring with the associated agency costs."
  },
  {
   "id": "kaal:claim:3373393-022",
   "url": "https://wulfkaal.github.io/claims/3373393-022",
   "claim": "It is decentralized network connectivity via the Internet, rather than blockchain's use of digital signatures, that provides the most protection against fraud, because multiple copies of the blockchain are available to all participants across the distributed network.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "fully distributed, decentralized networks"
   ],
   "supporting_quote": "blockchain's use of digital signatures helps establish the identity and authenticity of the parties involved in the transaction, it is the completely decentralized network connectivity via the Internet that allows the most protection against fraud."
  },
  {
   "id": "kaal:claim:3373393-023",
   "url": "https://wulfkaal.github.io/claims/3373393-023",
   "claim": "The distributed consensus model, in which network nodes verify and validate transactions before execution, makes it extremely rare for a fraudulent transaction to be recorded in the blockchain, and it does so without compromising the privacy of the parties.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "supporting_quote": "Blockchains' distributed consensus model, e.g. the network \"nodes\" verify and validate chain transactions before transaction execution, makes it extremely rare for a fraudulent transaction to be recorded in the blockchain."
  },
  {
   "id": "kaal:claim:3373393-024",
   "url": "https://wulfkaal.github.io/claims/3373393-024",
   "claim": "Cryptographic hashes increase blockchain security and remove the trust barriers in agency relationships that otherwise require monitoring of agents and generate agency costs.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge",
    "blockchain",
    "reputation",
    "compliance",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "supporting_quote": "Cryptographic hashes used in blockchain technology further increase blockchain security and removes trust barriers in agency relationships that require monitoring of agents and create agency costs."
  },
  {
   "id": "kaal:claim:3373393-025",
   "url": "https://wulfkaal.github.io/claims/3373393-025",
   "claim": "Smart contracts enabled by blockchain technology allow comprehensive, near error free, and zero transaction and agency cost coordination of agency relationships.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "economics",
    "corporate-governance",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "asserted",
   "supporting_quote": "Smart contracts enabled by blockchain technology allow for the comprehensive, near error free, and zero transaction/agency cost coordination of agency relationships."
  },
  {
   "id": "kaal:claim:3373393-026",
   "url": "https://wulfkaal.github.io/claims/3373393-026",
   "claim": "Agency relationships embedded in smart contracts run exactly as coded, without any possibility of opportunistic behavior by the agent, and all contractual terms are public and fully transparent.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "asserted",
   "scope_conditions": [
    "simple agency relationships; the author later qualifies this for complex relationships"
   ],
   "supporting_quote": "Agency relationships in smart contracts run exactly as coded without any possibility of opportunistic behavior of the agent. All contractual terms are public and fully transparent."
  },
  {
   "id": "kaal:claim:3373393-027",
   "url": "https://wulfkaal.github.io/claims/3373393-027",
   "claim": "The removal of checks and balances, agent monitoring, audit requirements, disclosure regimes, market pressure, and executive compensation schemes produces a qualitative shift in efficiency in the agency relationship and in corporate governance overall.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "economics",
    "compliance",
    "disclosure",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "asserted",
   "supporting_quote": "The removal of checks and balances in corporate governance, monitoring of agents, audit requirements, disclosure regimes, market pressure, executive agent compensation schemes, among many others, provides a qualitative shift in efficiency in the agency relationship"
  },
  {
   "id": "kaal:claim:3373393-028",
   "url": "https://wulfkaal.github.io/claims/3373393-028",
   "claim": "Decentralized Autonomous Organizations have begun to challenge the core belief that governance necessitates agency, because blockchain enables the removal of agents as intermediaries through code, peer-to-peer connectivity, crowds, and collaboration.",
   "type": "mechanism",
   "topics": [
    "dao",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "supporting_quote": "Decentralized Autonomous Organizations (DAOs) have started to challenge the core believe that governance necessitates agency."
  },
  {
   "id": "kaal:claim:3373393-029",
   "url": "https://wulfkaal.github.io/claims/3373393-029",
   "claim": "The first DAO had no physical address, no jurisdiction able to claim control over it, no directors, managers, or employees, so all the core control mechanisms typically employed by principals in agency relationships were entirely removed.",
   "type": "empirical",
   "topics": [
    "dao",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "evidenced",
   "scope_conditions": [
    "the first DAO, launched May 2016 on Ethereum"
   ],
   "supporting_quote": "Indeed, it had no directors, managers or employees. In essence, all the core control mechanisms typically employed by principals in agency relationships were entirely removed in the DAO."
  },
  {
   "id": "kaal:claim:3373393-030",
   "url": "https://wulfkaal.github.io/claims/3373393-030",
   "claim": "Fundamental flaws in the DAO code enabled hackers to transfer one third of total funds to a subsidiary account, and that hack combined with additional technological limitations brought down the first DAO initiative.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "evidenced",
   "scope_conditions": [
    "the first DAO, 2016"
   ],
   "supporting_quote": "This hack in combination with additional technological limitations brought down the first DAO initiative."
  },
  {
   "id": "kaal:claim:3373393-031",
   "url": "https://wulfkaal.github.io/claims/3373393-031",
   "claim": "The unifying interest of DAO token holders in raising token value means they will voluntarily perform optimization tasks, because doing so is directly in their own interest.",
   "type": "mechanism",
   "topics": [
    "dao",
    "tokenomics",
    "risk-and-incentives",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "DAO structures where members hold tokens whose value tracks the organization"
   ],
   "supporting_quote": "the DAO token holders will desire to perform such optimization tasks as it is in their very interest to do so to help increase the value of the DAO tokens."
  },
  {
   "id": "kaal:claim:3373393-032",
   "url": "https://wulfkaal.github.io/claims/3373393-032",
   "claim": "Once an optimization proponent has made a deal with the DAO, the deal is recorded in the blockchain and the proponent must deliver on the proposal or the contract is cancelled, which enforces performance without a supervisor.",
   "type": "mechanism",
   "topics": [
    "dao",
    "smart-contracts",
    "compliance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "DAO proposal and voting structures"
   ],
   "supporting_quote": "once the optimization proponent has made a deal with the DAO, it's in the blockchain and the proponent is required to deliver on the proposal or her contract is cancelled."
  },
  {
   "id": "kaal:claim:3373393-033",
   "url": "https://wulfkaal.github.io/claims/3373393-033",
   "claim": "Non-performance reputational penalties in a DAO are entirely free from racial or cultural biases, because the token holders imposing them are unlikely to even know each other.",
   "type": "mechanism",
   "topics": [
    "dao",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs where token holders are pseudonymous and mutually unknown"
   ],
   "supporting_quote": "Crucially, non-performance reputational penalties are entirely free from racial or cultural biases and associated implications as the token holders are unlikely to even know each other."
  },
  {
   "id": "kaal:claim:3373393-034",
   "url": "https://wulfkaal.github.io/claims/3373393-034",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "dao",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "DAO structures without supervisors"
   ],
   "supporting_quote": "because the DAO structure functions without supervisors, DAO token holders who decide they cannot add value on a given task can move to more productive endeavors that better utilize their skills without any penalties"
  },
  {
   "id": "kaal:claim:3373393-035",
   "url": "https://wulfkaal.github.io/claims/3373393-035",
   "claim": "Because of the value to effort focus of work flows in the DAO structure, supervision of management and the imposition of legal duties on management are less needed, since there are fewer or no supervisors, so the fiduciary duties on which the traditional regulatory infrastructure relies become less necessary.",
   "type": "mechanism",
   "topics": [
    "dao",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "DAO structures with few or no supervisors"
   ],
   "supporting_quote": "Because of the value to effort focus of work flows in the DAO structure, supervision of management and imposition of legal duties on management is less needed because there are fewer or no supervisors."
  },
  {
   "id": "kaal:claim:3373393-036",
   "url": "https://wulfkaal.github.io/claims/3373393-036",
   "claim": "The core issues that afflict centralized governance solutions, including information asymmetries, censorship, opportunism of agents, breaches of fiduciary duties, and fraud, can only be truly removed if and when a truly decentralized public blockchain emerges that is scalable and fully secure.",
   "type": "condition",
   "topics": [
    "decentralization",
    "consensus-and-security",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized rather than centralized blockchain implementations"
   ],
   "supporting_quote": "and fraud or third-party interference, can only be truly removed to fully reform the agency relationship if and when a truly decentralized public blockchain emerges that is scalable and fully secure."
  },
  {
   "id": "kaal:claim:3373393-037",
   "url": "https://wulfkaal.github.io/claims/3373393-037",
   "claim": "As agency relationships become more complex, a backstop for human behavior becomes necessary, and the claim that smart contract agency relationships run exactly as coded with no possibility of agent opportunism is less likely to hold in complex agency relationships.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "complex agency relationships"
   ],
   "supporting_quote": "As agency relationships become more complex, a backstop for human behavior in agency relationships becomes necessary."
  },
  {
   "id": "kaal:claim:3373393-038",
   "url": "https://wulfkaal.github.io/claims/3373393-038",
   "claim": "Without a decentralized human backstop to code, the immutability of the blockchain and its cryptographic security systems may not be able to create truly transactional guarantees and trust between principals and agents.",
   "type": "failure",
   "topics": [
    "reputation",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "complex agency relationships"
   ],
   "supporting_quote": "Similarly, without a decentralized human backstop to code, the immutability of the blockchain and its cryptographic security systems may not be able to create truly transactional guarantees and trust between principals and agents in the integrity of their contractual relationship."
  },
  {
   "id": "kaal:claim:3373393-039",
   "url": "https://wulfkaal.github.io/claims/3373393-039",
   "claim": "Blockchain-based corporate governance solutions in DAOs require evolutionary blockchain governance protocols, and socially optimal hard-forking rules cannot suffice.",
   "type": "design",
   "topics": [
    "dao",
    "governance-design",
    "institutional-design",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "scope_conditions": [
    "DAO-based governance"
   ],
   "supporting_quote": "Blockchain-based corporate governance solutions in DAOs require evolutionary blockchain governance protocols. Socially optimal hard- forking rules cannot suffice."
  },
  {
   "id": "kaal:claim:3373393-040",
   "url": "https://wulfkaal.github.io/claims/3373393-040",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "governance-design",
    "institutional-design",
    "corporate-governance",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "supporting_quote": "Without evolutionary governance upgrades the cost reduction for the agency relationship cannot be maintained."
  },
  {
   "id": "kaal:claim:3373393-041",
   "url": "https://wulfkaal.github.io/claims/3373393-041",
   "claim": "Because blockchain is a foundational technology, blockchain-based governance solutions for agency problems depend on the creation of infrastructure components that have not yet been conceptualized in the decentralized technology evolution.",
   "type": "condition",
   "topics": [
    "blockchain",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393",
   "year": "2019",
   "source_sha256": "4d1424b9ba9aff8a61bc7a0dddd02cded93785e5843685dde76c07dcdb23961e",
   "confidence": "argued",
   "supporting_quote": "blockchain- based governance solutions for agency problems in corporate governance depend on the creation of infrastructure components that have not yet been conceptualized in the decentralized technology"
  },
  {
   "id": "kaal:claim:3406323-001",
   "url": "https://wulfkaal.github.io/claims/3406323-001",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "asserted",
   "scope_conditions": [
    "existing decentralized systems"
   ],
   "supporting_quote": "decentralized systems do not have a central intelligence or leadership system with traditional hierarchies. Instead, the intelligence is spread throughout the system."
  },
  {
   "id": "kaal:claim:3406323-002",
   "url": "https://wulfkaal.github.io/claims/3406323-002",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "supporting_quote": "Decentralized systems can also very easily mutate and change because the information flow is optimized through dynamic feedback effects. As a result, such systems become more attack resistant on multiple levels."
  },
  {
   "id": "kaal:claim:3406323-003",
   "url": "https://wulfkaal.github.io/claims/3406323-003",
   "claim": "Decentralized commerce is defined as the global exchange of financial instruments, goods, and services via emerging decentralized technologies.",
   "type": "definitional",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "asserted",
   "supporting_quote": "Decentralized commerce may generically be defined as the global exchange of financial instruments, goods and services via emerging decentralized technologies."
  },
  {
   "id": "kaal:claim:3406323-004",
   "url": "https://wulfkaal.github.io/claims/3406323-004",
   "claim": "The ICO share of total blockchain startup fundraising collapsed from about 80% to roughly 35% by August 2018, recovered only marginally to 40% to 50% through February 2019, and then fell to 20% in March 2019.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "economics",
    "blockchain",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "evidenced",
   "scope_conditions": [
    "blockchain startup fundraising, March 2018 through March 2019"
   ],
   "supporting_quote": "The percentage of ICOs in relation to total fundraising of blockchain startups dropped from 80% to around 35% in August 2018 and only marginally recovered between September 2018 and February 2019 at around 40% to 50% before dropping to 20% in March 2019."
  },
  {
   "id": "kaal:claim:3406323-005",
   "url": "https://wulfkaal.github.io/claims/3406323-005",
   "claim": "ICOs changed the venture funding market because they provide investors liquidity far faster than the traditional venture capital path to a late IPO or acquisition, letting venture funds capitalize on profits early.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "economics",
    "innovation",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "venture capital funds invested in crypto start-ups"
   ],
   "supporting_quote": "By contrast, ICOs provide liquidity to investors much faster and allow venture capital funds to capitalize on existing profits early."
  },
  {
   "id": "kaal:claim:3406323-006",
   "url": "https://wulfkaal.github.io/claims/3406323-006",
   "claim": "During the ICO boom years the venture capital market in the decentralized technology sector ground to a halt, and the later demise of the ICO market reversed the trend back toward venture funding.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "economics",
    "innovation",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized technology sector during the ICO boom, roughly March 2017 to June 2018"
   ],
   "supporting_quote": "During the ICO boom years, the venture capital market in the decentralized technology sector ground to a halt."
  },
  {
   "id": "kaal:claim:3406323-007",
   "url": "https://wulfkaal.github.io/claims/3406323-007",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "dao",
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs instantiated on public blockchain platforms such as Ethereum"
   ],
   "supporting_quote": "Decentralized Autonomous Organizations (DAOs) have started to challenge the core believe that governance necessitates agency."
  },
  {
   "id": "kaal:claim:3406323-008",
   "url": "https://wulfkaal.github.io/claims/3406323-008",
   "claim": "Every time decentralization emerges in a given industry, profit margins disappear, as demonstrated by Skype in telecommunications and by Napster and Emule in the music industry.",
   "type": "empirical",
   "topics": [
    "innovation",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "evidenced",
   "scope_conditions": [
    "industries entered by decentralized systems",
    "historical examples predating decentralized blockchain technology"
   ],
   "supporting_quote": "Historical evidence has demonstrated that every time decentralization emerges in a given industry, profit margins disappear."
  },
  {
   "id": "kaal:claim:3406323-009",
   "url": "https://wulfkaal.github.io/claims/3406323-009",
   "claim": "Decentralization transcends the capitalism versus socialism dichotomy because it uses elements of both profit generation and redistribution, organizing economic structures that generate profits while simultaneously redistributing resources.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "supporting_quote": "Decentralization uses elements of profit generation and redistribution in a way that in effect combines capitalistic and socialistic ideas."
  },
  {
   "id": "kaal:claim:3406323-010",
   "url": "https://wulfkaal.github.io/claims/3406323-010",
   "claim": "In decentralized systems profit generation rests less on capitalistic economies of scale and more on open source volunteer contributions and greater good perspectives, with profits arising only if and when the solutions become mainstream.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "emerging decentralized solutions for commerce and society"
   ],
   "supporting_quote": "The profit generation is less based on capitalistic notions of economies of scale but rather revolves around notions of open source volunteer contributions and greater good perspectives for society."
  },
  {
   "id": "kaal:claim:3406323-011",
   "url": "https://wulfkaal.github.io/claims/3406323-011",
   "claim": "Personal data, preferences, and opinions can only be limitedly commercialized inside centralized structures, whereas in decentralized structures the same assets can be tokenized, valued, and mobilized, including in real time.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "supporting_quote": "Such assets, e.g. one's data, preferences, opinions etc. currently in centralized structures can only limitedly be commercialized. In decentralized structures such assets can be tokenized, valued, and mobilized."
  },
  {
   "id": "kaal:claim:3406323-012",
   "url": "https://wulfkaal.github.io/claims/3406323-012",
   "claim": "Decentralized technologies increase consumer and market trust at unprecedented scale, which lowers transaction costs and raises confidence and certainty, thereby facilitating economies of scale that centralized structures may not be able to achieve.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "technology enabled decentralized commerce"
   ],
   "supporting_quote": "Trust can help lower transaction costs but it also increases consumer and overall market confidence and certainty, which facilitate economies of scale that may not be possible in centralized structures."
  },
  {
   "id": "kaal:claim:3406323-013",
   "url": "https://wulfkaal.github.io/claims/3406323-013",
   "claim": "Because decentralized cryptocurrency platforms have lower cost structures, they can remove the consumer fees integral to centralized competitors, which eradicates downward pressure on platform worker compensation and creates a more efficient marketplace by removing rent seeking intermediaries.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized cryptocurrency platforms competing with centralized platforms"
   ],
   "supporting_quote": "Removing such centralized fees also allows for the eradication of downward pressure on the platforms' worker compensation. The lack of fees can help create a more efficient marketplace through the removal of the rent seeking intermediators."
  },
  {
   "id": "kaal:claim:3406323-014",
   "url": "https://wulfkaal.github.io/claims/3406323-014",
   "claim": "Centralized fiat payment systems require consumers to hold an existing banking relationship, while holding and storing cryptocurrencies does not, which gives decentralized payment systems comparative advantages in orders of magnitude.",
   "type": "condition",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "payment systems relying entirely on cryptocurrencies"
   ],
   "supporting_quote": "Centralized fiat payment systems and platforms typically require some form of an existing banking relationship in order for consumers to utilize their services. Holding and storing cryptocurrencies does not require a banking relationship."
  },
  {
   "id": "kaal:claim:3406323-015",
   "url": "https://wulfkaal.github.io/claims/3406323-015",
   "claim": "The high intermediary fees of centralized fiat payment systems make those systems economically viable only at higher transaction volumes, which creates barriers to entry that decentralized payment systems do not face.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "centralized fiat payment rails intermediated by banks and services such as PayPal"
   ],
   "supporting_quote": "The fees make it only economically viable for higher volumes of transactions, creating barriers to entry in the process."
  },
  {
   "id": "kaal:claim:3406323-016",
   "url": "https://wulfkaal.github.io/claims/3406323-016",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States"
   ],
   "supporting_quote": "In the United States, transacting in cash costs the consumer around 200 billion dollars annually - about $637 per person."
  },
  {
   "id": "kaal:claim:3406323-017",
   "url": "https://wulfkaal.github.io/claims/3406323-017",
   "claim": "The poor and those with less access to institutions bear a disproportionate share of the costs of using cash.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "evidenced",
   "scope_conditions": [
    "cash based economies"
   ],
   "supporting_quote": "Several studies demonstrate that the poor and those with less access to institutions bear a disproportionate share of these costs of using cash."
  },
  {
   "id": "kaal:claim:3406323-018",
   "url": "https://wulfkaal.github.io/claims/3406323-018",
   "claim": "Growth in stable cryptocurrencies traces back to attempts to combine the benefits of cryptocurrencies and blockchain with remedies for market volatility, and the growth data suggests demand for volatility management products will keep increasing.",
   "type": "predictive",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "evidenced",
   "scope_conditions": [
    "cryptocurrency markets as of 2019"
   ],
   "supporting_quote": "demand for products that help manage the volatility inherent in other crypto assets is likely to continue to increase."
  },
  {
   "id": "kaal:claim:3406323-019",
   "url": "https://wulfkaal.github.io/claims/3406323-019",
   "claim": "The low transaction throughput of public blockchains is a core limitation that holds back more advanced distributed applications, which is why decentralized commerce in 2019 remains relegated to cryptocurrency trading and basic smart contracting.",
   "type": "failure",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "asserted",
   "scope_conditions": [
    "public blockchains as of 2019"
   ],
   "supporting_quote": "The low transaction throughputs of public blockchains is a core limitation that holds back more advanced DApps."
  },
  {
   "id": "kaal:claim:3406323-020",
   "url": "https://wulfkaal.github.io/claims/3406323-020",
   "claim": "Without a core use case other than the store of value provided by Bitcoin, decentralization technology is less likely to proliferate; banking, money transmission, and triple entry accounting are natural but insufficient as universal use cases for public blockchains.",
   "type": "condition",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "public blockchains as of 2019"
   ],
   "supporting_quote": "Without a core use case, other than the store of value (in Bitcoin), decentralization technology is less likely to proliferate."
  },
  {
   "id": "kaal:claim:3406323-021",
   "url": "https://wulfkaal.github.io/claims/3406323-021",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "existing decentralized technologies as of 2019"
   ],
   "supporting_quote": "It will be very difficult to educate the public sufficiently to seamlessly adopt decentralized protocols in their daily life if users have to discern and manage public and private keys to wallets, among other concerns."
  },
  {
   "id": "kaal:claim:3406323-022",
   "url": "https://wulfkaal.github.io/claims/3406323-022",
   "claim": "People will not enter into long term smart contracts without a stable currency to refer to, since no renter and landlord will gamble future wealth on a lease that may halve or double in value in any given month.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "long term smart contracts denominated in volatile cryptocurrencies"
   ],
   "supporting_quote": "Finally, people will not enter into a long-term smart contract unless they have a stable currency to refer to."
  },
  {
   "id": "kaal:claim:3406323-023",
   "url": "https://wulfkaal.github.io/claims/3406323-023",
   "claim": "Because cryptocurrencies embody a transferable store of value, the exercise of power over that value inevitably leads back to centralization through economies of scale, creating core points of attack that undermine the very nature of decentralization.",
   "type": "failure",
   "topics": [
    "decentralization",
    "economics",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "any currency or transferable store of value, not only cryptocurrencies"
   ],
   "supporting_quote": "Because of the store of value entailed in cryptocurrencies (and really any currencies or store of value), exercise of power over such value inevitably leads to centralization due to economies of scale."
  },
  {
   "id": "kaal:claim:3406323-024",
   "url": "https://wulfkaal.github.io/claims/3406323-024",
   "claim": "Because of their disciplining and market stability enhancing effects, stable cryptocurrencies form the backbone of the financial technology infrastructure required for any distributed app economy and decentralized commerce to emerge.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "emergence of a distributed app economy and decentralized commerce"
   ],
   "supporting_quote": "Because of their disciplining and market stability enhancing effects, stable cryptocurrencies are part of the financial technology infrastructure that will form the backbone of any emergence of the distributed app economy and decentralized commerce."
  },
  {
   "id": "kaal:claim:3406323-025",
   "url": "https://wulfkaal.github.io/claims/3406323-025",
   "claim": "Without something that functions as an insurance policy when commercial risks materialize, the public has no reason to pursue the benefits of decentralized commerce, so decentralized underwriting is of core importance to any future decentralized technology solution.",
   "type": "condition",
   "topics": [
    "decentralization",
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "sophisticated smart contracts carrying risk of failure"
   ],
   "supporting_quote": "Without someone or something that functions as an insurance policy should risks in commerce materialize, the public has no reason to try to benefit from the potential benefits of decentralized commerce"
  },
  {
   "id": "kaal:claim:3406323-026",
   "url": "https://wulfkaal.github.io/claims/3406323-026",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "smart-contracts",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "legacy insurance companies facing smart contract risk"
   ],
   "supporting_quote": "Most legacy insurance companies will not consider underwriting a smart contract that is not subject to the traditional legal framework."
  },
  {
   "id": "kaal:claim:3406323-027",
   "url": "https://wulfkaal.github.io/claims/3406323-027",
   "claim": "Democratized decentralized underwriting is more secure and stable than centralized underwriting because diversifying lenders and underwriters adds liquidity in all states of the economy and silos losses so that there is less cascading during economic crises.",
   "type": "design",
   "topics": [
    "decentralization",
    "defi",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized underwriting organized through an underwriting DAO"
   ],
   "supporting_quote": "it diversifies lenders and underwriters, which adds liquidity in all states of the economy; 2. this diversity silo losses so there is less cascading during economic crises;"
  },
  {
   "id": "kaal:claim:3406323-028",
   "url": "https://wulfkaal.github.io/claims/3406323-028",
   "claim": "Democratized banking is more responsive to regulation than centralized structures because ideas at the edge have greater opportunity to affect policy, unlike the existing global hierarchy in which a single group in Basel provides the dominant voice.",
   "type": "design",
   "topics": [
    "decentralization",
    "systemic-risk",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized banking and underwriting with well designed governance"
   ],
   "supporting_quote": "democratized banking is more responsive to regulation because ideas at the edge have a greater opportunity for affecting policy than centralized structures such as the existing global hierarchy which leads to a single group in Basel, Switzerland providing the dominant voice."
  },
  {
   "id": "kaal:claim:3406323-029",
   "url": "https://wulfkaal.github.io/claims/3406323-029",
   "claim": "Decentralized banking substitutes blockchain transparency, a permanently uneditable record, and equal access for the governmental fiat that traditionally created public confidence, building slowly toward the higher confidence equilibrium that raises economic efficiency.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "systemic-risk",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "banking systems whose efficiency depends on public confidence equilibria"
   ],
   "supporting_quote": "Decentralized banking uses blockchain technology's property of complete transparency, a permanently uneditable record, and equal access to all, in order to provide a continually auditable system to slowly and stably build toward this higher equilibrium of public confidence."
  },
  {
   "id": "kaal:claim:3406323-030",
   "url": "https://wulfkaal.github.io/claims/3406323-030",
   "claim": "Smart contracts enable anonymous parties to engage in decentralized commerce because automated contracting self-executes and self-regulates according to mathematical strictures, removing the need for agency and intermediaries almost entirely.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "smart contracts running on a blockchain"
   ],
   "supporting_quote": "Smart contracts allow anonymous parties to engage in decentralized commerce by providing automated contracting that self-executes and self-regulates according to mathematical strictures."
  },
  {
   "id": "kaal:claim:3406323-031",
   "url": "https://wulfkaal.github.io/claims/3406323-031",
   "claim": "Smart contracts remove centralized guarantors and self-regulate, with the consequence that only limited legal recourse is available if execution of the contract terms goes wrong.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "supporting_quote": "Most importantly, the smart contract removes centralized guarantors. The smart contract self-regulates. Only limited legal recourse is available if something goes wrong in the execution of the terms of the contract."
  },
  {
   "id": "kaal:claim:3406323-032",
   "url": "https://wulfkaal.github.io/claims/3406323-032",
   "claim": "Smart contracts fail to accommodate human business interaction because code does not follow the same logic on similar terms as natural human language, so the flexibility in interpreting intent that human dealings require cannot be ensured.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "human business interactions requiring interpretation of intent"
   ],
   "supporting_quote": "Human interaction requires flexibility in interpreting intent that cannot be ensured by smart contracting because smart contract code does not follow the same logic on similar terms as natural human language."
  },
  {
   "id": "kaal:claim:3406323-033",
   "url": "https://wulfkaal.github.io/claims/3406323-033",
   "claim": "Smart contracts undermine the parties' ability to continue collaborating when unanticipated eventualities arise, because in most cases of unfulfilled parameters the contract will simply cancel out rather than allow partial performance.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "contracts where parties may fulfill only a portion of an intended collaboration"
   ],
   "supporting_quote": "Smart contracts also undermine counterparties' ability to continue collaboration when unanticipated eventualities arise. In most cases of unfulfilled parameters, the smart contract will simply cancel out."
  },
  {
   "id": "kaal:claim:3406323-034",
   "url": "https://wulfkaal.github.io/claims/3406323-034",
   "claim": "The flexibility that human business requires will unlikely ever be attained in existing decentralized protocols unless a decentralized verification system is built into decentralized commerce.",
   "type": "condition",
   "topics": [
    "smart-contracts",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "existing decentralized protocols"
   ],
   "supporting_quote": "the needed flexibility in existing decentralized protocols will unlikely ever be attained unless a decentralized verification system is built into decentralized commerce."
  },
  {
   "id": "kaal:claim:3406323-035",
   "url": "https://wulfkaal.github.io/claims/3406323-035",
   "claim": "Reputation avoids the recentralization dynamic that afflicts currencies because it must be earned and can be lost yet cannot be converted into a fungible store of value exchangeable for goods.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "reputation used as a metric and store of value in decentralized systems"
   ],
   "supporting_quote": "Reputation as a metric and store of value does not suffer the same consequences and does not lead to centralization because it must be earned, it can be lost, yet it cannot be turned into a fungible store of value that allows the"
  },
  {
   "id": "kaal:claim:3406323-036",
   "url": "https://wulfkaal.github.io/claims/3406323-036",
   "claim": "Decentralized reputation verification is the backstop for smart contracting: it makes mathematically rigid smart contracts more adjustable for business needs and validates smart contract templates, which raises counterparty trust and removes the need for costly back-testing.",
   "type": "design",
   "topics": [
    "reputation",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized smart contract based commerce",
    "the code is law standard is retained"
   ],
   "supporting_quote": "Decentralized reputation verification systems enable mathematically rigid smart contracts to become more adjustable for the needs of business. Reputation verification becomes the backstop for smart contracting."
  },
  {
   "id": "kaal:claim:3406323-037",
   "url": "https://wulfkaal.github.io/claims/3406323-037",
   "claim": "Increasing counterparty trust in decentralized commerce requires that the full history of transactions be openly viewable and verifiable, so that counterparties' actions endure as part of a public record and a meaningful precedence system.",
   "type": "condition",
   "topics": [
    "reputation",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized smart contract based commerce between anonymous parties"
   ],
   "supporting_quote": "The history of transactions has to be fully openly viewable and verifiable, so that business parties can see that their counterparties will perform as expected."
  },
  {
   "id": "kaal:claim:3406323-038",
   "url": "https://wulfkaal.github.io/claims/3406323-038",
   "claim": "Without a core common ethical denominator, decentralized systems cannot last: they lose coherence, become attackable, and can be corrupted, leading to suboptimal societal outcomes.",
   "type": "failure",
   "topics": [
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized systems, as with any prior attempt to organize society"
   ],
   "supporting_quote": "Without a core common ethical denominator, decentralized systems cannot last, they lose coherence, become attackable, and can be corrupted, leading to suboptimal societal outcomes."
  },
  {
   "id": "kaal:claim:3406323-039",
   "url": "https://wulfkaal.github.io/claims/3406323-039",
   "claim": "A DAO's profit distribution weights across present workers, past workers, protocol designers, and governance designers should match the DAO's current values, since a greater share for new workers attracts new workers, a greater share for older workers signals long term stability, and a greater share for protocol designers attracts innovation.",
   "type": "design",
   "topics": [
    "dao",
    "tokenomics",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "algorithmic token design in a DAO"
   ],
   "supporting_quote": "A greater share for new workers will attract new workers, a greater share for the older workers will signal long-term stability, while a greater share for the protocol designers will attract more innovation."
  },
  {
   "id": "kaal:claim:3406323-040",
   "url": "https://wulfkaal.github.io/claims/3406323-040",
   "claim": "For any static set of rules in an infinitely repeated game using reputation stakes there is a way to subvert the rules for individual profit at the expense of the group, a result the author attributes to the Folk Theorems of game theory.",
   "type": "failure",
   "topics": [
    "economics",
    "consensus-and-security",
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "argued",
   "scope_conditions": [
    "infinitely repeated games using reputation or stakes",
    "static rule sets"
   ],
   "supporting_quote": "For any static set of rules in an infinitely repeated game using reputation (stakes), there is a way to subvert the rules for an individual's profit at the expense of the group."
  },
  {
   "id": "kaal:claim:3406323-041",
   "url": "https://wulfkaal.github.io/claims/3406323-041",
   "claim": "A dynamic, changing set of governance rules can address the problem that any static rule set is gameable, and can establish the incentives necessary to stop such abuses.",
   "type": "design",
   "topics": [
    "governance-design",
    "risk-and-incentives",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323",
   "year": "2019",
   "source_sha256": "6293780b57a1ae1de17ec00f99cc94295d4f72ea4d08b17a5c08c44772b221db",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized governance systems exposed to strategic attack"
   ],
   "supporting_quote": "A dynamic, changing set of governance rules can address the conundrum, and can set up the incentives necessary to stop the abuses."
  },
  {
   "id": "kaal:claim:3411897-001",
   "url": "https://wulfkaal.github.io/claims/3411897-001",
   "claim": "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.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to the author's stipulated working definition of decentralization"
   ],
   "supporting_quote": "Decentralization is not just the redistribution of centrally organized authority or redistribution of centrally collected revenue · Decentralization is not just the delegation of centralized authority to managers on all levels of an organization"
  },
  {
   "id": "kaal:claim:3411897-002",
   "url": "https://wulfkaal.github.io/claims/3411897-002",
   "claim": "Decentralized systems have no central intelligence or hierarchical leadership; intelligence is instead spread throughout the system, and information filters in at the edges where the action is and where most real time information is created.",
   "type": "definitional",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to existing decentralized systems generally"
   ],
   "supporting_quote": "systems do not have a central intelligence or leadership system based on traditional hierarchies. Instead, the intelligence is spread throughout the system. Information and knowledge naturally filter in at the edges of the system"
  },
  {
   "id": "kaal:claim:3411897-003",
   "url": "https://wulfkaal.github.io/claims/3411897-003",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "holds for systems whose information flow is genuinely distributed"
   ],
   "supporting_quote": "Decentralized systems can also very easily mutate and change because the information flow is optimized through dynamic feedback effects. As a result, such systems become more attack resistant on multiple levels."
  },
  {
   "id": "kaal:claim:3411897-004",
   "url": "https://wulfkaal.github.io/claims/3411897-004",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "applies across the five types the author identifies"
   ],
   "supporting_quote": "These five types of decentralization are each subject to iterative decentralization processes and affect each other by way of feedback effects. As one type proliferates, the other types are slowly but increasingly affected, leading to changes that, in turn, affect each other."
  },
  {
   "id": "kaal:claim:3411897-005",
   "url": "https://wulfkaal.github.io/claims/3411897-005",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "decentralization",
    "institutional-design",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "asserted",
   "scope_conditions": [
    "pre and post internet era corporate reorganization",
    "no new technological innovation required"
   ],
   "supporting_quote": "Welch's method enabled each business unit to be run efficiently and profitably, while allowing unit heads significant flexibility and independence. GE's market value skyrocketed as a result of its decentralization of business units."
  },
  {
   "id": "kaal:claim:3411897-006",
   "url": "https://wulfkaal.github.io/claims/3411897-006",
   "claim": "The disillusionment with political institutions after the 2008 to 2009 financial crisis inaugurated a new form of technological decentralization, of which the 2009 Bitcoin protocol is the leading result, conceived as an alternative to the shortcomings of the financial system.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "post financial crisis period",
    "links political legitimacy crisis to technological decentralization"
   ],
   "supporting_quote": "crisis of 2008-9 inaugurated a new form of technological decentralization. As one result, among many, the Bitcoin protocol emerged in 2009 as an attempt by its founders to provide an alternative to the shortcomings of the financial system."
  },
  {
   "id": "kaal:claim:3411897-007",
   "url": "https://wulfkaal.github.io/claims/3411897-007",
   "claim": "eBay's user rating system, despite being its biggest competitive advantage, is clearly flawed, and the persistence of those flaws demonstrates the unmet need for a decentralized reputation verification system, since no better technology has yet been produced.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "applies to centralized platform reputation systems as of 2019"
   ],
   "supporting_quote": "While the user ratings eBay uses clearly have flaws (that illustrate the need for a decentralized reputation verification system – discussed in Chapter 6), so far, nobody has been able to come up with a better technology."
  },
  {
   "id": "kaal:claim:3411897-008",
   "url": "https://wulfkaal.github.io/claims/3411897-008",
   "claim": "Decentralized Autonomous Organizations challenge the core belief that governance necessitates agency, attacking organizational design at a fundamental level rather than merely reforming it.",
   "type": "mechanism",
   "topics": [
    "dao",
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "applies to DAOs built on smart contracting platforms such as Ethereum"
   ],
   "supporting_quote": "While it is still difficult to imagine a world without governance structures facilitated by agency constructs, Decentralized Autonomous Organizations (DAOs) have started to challenge the core believe that governance necessitates agency."
  },
  {
   "id": "kaal:claim:3411897-009",
   "url": "https://wulfkaal.github.io/claims/3411897-009",
   "claim": "The first DAO removed, in essence, all of the core control mechanisms that principals typically employ in agency relationships, having no directors, no managers, and no employees.",
   "type": "empirical",
   "topics": [
    "dao",
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "asserted",
   "scope_conditions": [
    "refers to the DAO launched in May 2016 on Ethereum"
   ],
   "supporting_quote": "Indeed, it had no directors, managers or employees. In essence, all the core control mechanisms typically employed by principals in agency relationships were entirely removed in the DAO."
  },
  {
   "id": "kaal:claim:3411897-010",
   "url": "https://wulfkaal.github.io/claims/3411897-010",
   "claim": "Market leaders, successful institutions, and managers fail specifically when they do not distinguish sustaining technologies from disruptive technologies.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "environments in which disruptive innovation is present"
   ],
   "supporting_quote": "Market leaders, successful institutions, and managers fail when they do not distinguish sustaining technologies from disruptive technologies."
  },
  {
   "id": "kaal:claim:3411897-011",
   "url": "https://wulfkaal.github.io/claims/3411897-011",
   "claim": "A market leader's lack of investment in disruptive technologies often causes abrupt loss of market dominance and even total replacement, because market leaders shortsightedly refuse to cannibalize their own dominance through disruptive technologies.",
   "type": "failure",
   "topics": [
    "innovation",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "markets subject to disruptive technological entry"
   ],
   "supporting_quote": "A market leader's lack of investment in disruptive technologies often results in the abrupt loss of market dominance and often even total replacement in such markets. Market leaders often shortsightedly refuse to cannibalize their market dominance through the use of disruptive technologies."
  },
  {
   "id": "kaal:claim:3411897-012",
   "url": "https://wulfkaal.github.io/claims/3411897-012",
   "claim": "Nokia, Kodak, and Blackberry all collapsed after fast changes in their markets rendered their products and services irrelevant, illustrating that successful companies drift into obscurity when they fail to embrace change.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "evidenced",
   "scope_conditions": [
    "firms facing rapid market change"
   ],
   "supporting_quote": "examples of successful companies that drifted into obscurity after failing to embrace change. Nokia, Kodak, and Blackberry are prominent examples. All these firms collapsed after fast changes in their respective markets rendered their products/services irrelevant."
  },
  {
   "id": "kaal:claim:3411897-013",
   "url": "https://wulfkaal.github.io/claims/3411897-013",
   "claim": "Less successful companies share a myopic short term focus on shareholder value maximization, which produces an unhealthy emphasis on share price, market valuations, and financial metrics that obscure issues of relevancy.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "particularly acute for listed companies"
   ],
   "supporting_quote": "Less successful companies often share a myopic and short-term focus on shareholder value maximization that has led to an unhealthy emphasis on firm share price, market valuations, and financial metrics that obscure issues of relevancy."
  },
  {
   "id": "kaal:claim:3411897-014",
   "url": "https://wulfkaal.github.io/claims/3411897-014",
   "claim": "Microsoft under Steve Ballmer missed the shift to networked technologies and mobile consumption because it focused on short term financial metrics rather than on designing products relevant to the next generation of consumers, and so ceased to be relevant despite excellent traditional metrics.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "evidenced",
   "scope_conditions": [
    "Ballmer's tenure as CEO from 2000"
   ],
   "supporting_quote": "Microsoft missed these developments because it focused on short-term financial metrics, rather than on designing products relevant for the next generation of consumers."
  },
  {
   "id": "kaal:claim:3411897-015",
   "url": "https://wulfkaal.github.io/claims/3411897-015",
   "claim": "Big data is often not the output of instruments designed to generate valid and reliable data suitable for scientific analysis, so foundational data quality problems persist regardless of how much data is collected.",
   "type": "failure",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "applies where data is drawn from databases requiring only generalized accuracy"
   ],
   "supporting_quote": "Big data is often not the output of instruments designed to generate valid and reliable data suitable for scientific analysis."
  },
  {
   "id": "kaal:claim:3411897-016",
   "url": "https://wulfkaal.github.io/claims/3411897-016",
   "claim": "RegLegalTech startups will force the legal profession to innovate, but that task is not easily accomplished by overextended and cumbersome legal organizations that have lost the capacity for agile reinvention.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "applies to incumbent legal organizations facing RegLegalTech entrants"
   ],
   "supporting_quote": "Second, and most importantly, the legal profession will be forced by such startup companies to innovate, a task that is not easily accomplished by overextended, and often cumbersome, legal organizations that have lost the capacity for agile reinvention."
  },
  {
   "id": "kaal:claim:3411897-017",
   "url": "https://wulfkaal.github.io/claims/3411897-017",
   "claim": "Because governance guarantees are embedded in blockchain code, there is no need for a principal to institute oversight and monitoring, which eliminates the associated agency costs.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "corporate-governance",
    "compliance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "assumes guarantees are genuinely enforced by the protocol"
   ],
   "supporting_quote": "Hence, in the blockchain infrastructure, there is no need for the principal to institute oversight and monitoring with the associated agency costs."
  },
  {
   "id": "kaal:claim:3411897-018",
   "url": "https://wulfkaal.github.io/claims/3411897-018",
   "claim": "It is the completely decentralized network connectivity via the internet, not blockchain's digital signatures, that provides the greatest protection against fraud, because connectivity puts multiple copies of the chain in the hands of all participants.",
   "type": "mechanism",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "applies to fully distributed public blockchains"
   ],
   "supporting_quote": "While blockchain's use of digital signatures helps establish the identity and authenticity of the parties involved in the transaction, it is the completely decentralized network connectivity via the internet that allows the most protection against fraud."
  },
  {
   "id": "kaal:claim:3411897-019",
   "url": "https://wulfkaal.github.io/claims/3411897-019",
   "claim": "Intermediary fees in centralized fiat payment systems make those systems economically viable only at higher transaction volumes, which creates barriers to entry that decentralized payment systems do not impose.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "centralized payment systems requiring bank or processor intermediaries"
   ],
   "supporting_quote": "The fees make it only economically viable for higher volumes of transactions, creating barriers to entry in the process. Decentralized payment systems are not subject to these limitations."
  },
  {
   "id": "kaal:claim:3411897-020",
   "url": "https://wulfkaal.github.io/claims/3411897-020",
   "claim": "Tether, like every other stable cryptocurrency project, remains afflicted with significant design challenges, even though its market capitalization and stability around one dollar give some support for stable cryptocurrencies' capacity to create market stability.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "as of the state of stable cryptocurrency design described in 2019"
   ],
   "supporting_quote": "Like all other stable cryptocurrency projects, Tether is still afflicted with significant design challenges."
  },
  {
   "id": "kaal:claim:3411897-021",
   "url": "https://wulfkaal.github.io/claims/3411897-021",
   "claim": "Legacy businesses' attempts to control decentralized competition by acquiring and integrating decentralized firms into centralized power structures may actually produce the opposite of the intended effect, namely long term incremental proliferation of decentralized solutions.",
   "type": "predictive",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "speculative",
   "scope_conditions": [
    "legacy incumbents acquiring decentralized competitors",
    "control efforts still in their infancy"
   ],
   "supporting_quote": "The effect of curtailing decentralized solutions by integrating them into centralized power structures may actually be the long-term incremental proliferation of decentralized solutions."
  },
  {
   "id": "kaal:claim:3411897-022",
   "url": "https://wulfkaal.github.io/claims/3411897-022",
   "claim": "DAOs are in their infancy and cannot currently overcome core governance problems while maintaining a decentralized structure; the two objectives are, as of 2019, in tension.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "asserted",
   "scope_conditions": [
    "state of DAO technology as of 2019"
   ],
   "supporting_quote": "DAOs are in their infancy and cannot currently overcome core governance problems while maintaining a decentralized structure."
  },
  {
   "id": "kaal:claim:3411897-023",
   "url": "https://wulfkaal.github.io/claims/3411897-023",
   "claim": "The low transaction throughput of public blockchains is a core limitation that holds back more advanced distributed applications.",
   "type": "failure",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "asserted",
   "scope_conditions": [
    "public blockchains as of 2019"
   ],
   "supporting_quote": "The low transaction throughputs of public blockchains is a core limitation that holds back more advanced DApps."
  },
  {
   "id": "kaal:claim:3411897-024",
   "url": "https://wulfkaal.github.io/claims/3411897-024",
   "claim": "The data mining that produces scarcity in existing blockchains also slows creation, so high speed transactions cannot be achieved for the foreseeable future without a different consensus design.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "proof of work style mining that manufactures scarcity"
   ],
   "supporting_quote": "Currently, the data mining required to provide scarcity also slows creation so that high speed transactions cannot be achieved for the foreseeable future."
  },
  {
   "id": "kaal:claim:3411897-025",
   "url": "https://wulfkaal.github.io/claims/3411897-025",
   "claim": "Without a core use case beyond Bitcoin's store of value function, decentralization technology is less likely to proliferate.",
   "type": "failure",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "absent a widely adopted killer application for public blockchains"
   ],
   "supporting_quote": "Without a core use case, other than the store of value (in Bitcoin), decentralization technology is less likely to proliferate."
  },
  {
   "id": "kaal:claim:3411897-026",
   "url": "https://wulfkaal.github.io/claims/3411897-026",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "current decentralized system requirements that force users to manage keys"
   ],
   "supporting_quote": "Without such intuitive consumer support access points, it is difficult to see how decentralized systems can ever reach mainstream consumer adoption."
  },
  {
   "id": "kaal:claim:3411897-027",
   "url": "https://wulfkaal.github.io/claims/3411897-027",
   "claim": "People will not enter into long term smart contracts without a stable currency to refer to, because the current level of cryptocurrency volatility does not lend itself to consumption.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "long duration smart contracts such as leases",
    "volatile cryptocurrency denominations"
   ],
   "supporting_quote": "Finally, people will not enter into a long-term smart contract unless they have a stable currency to refer to. The current level of volatility in cryptocurrencies does not lend itself to consumption."
  },
  {
   "id": "kaal:claim:3411897-028",
   "url": "https://wulfkaal.github.io/claims/3411897-028",
   "claim": "Because cryptocurrencies embody a transferable store of value, the exercise of power over that value inevitably leads to centralization through economies of scale, which creates core points of attack and undermines the very nature of decentralization.",
   "type": "failure",
   "topics": [
    "decentralization",
    "economics",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "applies to any currency or transferable store of value, not only cryptocurrencies"
   ],
   "supporting_quote": "Because of the store of value entailed in cryptocurrencies (and really any currencies or store of value), exercise of power over such value inevitably leads to centralization due to economies of scale."
  },
  {
   "id": "kaal:claim:3411897-029",
   "url": "https://wulfkaal.github.io/claims/3411897-029",
   "claim": "Decentralized underwriting is a necessary precondition for decentralized commerce: without something functioning as an insurance policy when commercial risks materialize, the public has no reason to pursue the benefits of decentralized commerce.",
   "type": "condition",
   "topics": [
    "decentralization",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "applies to any iteration of future decentralized technology solutions"
   ],
   "supporting_quote": "Without someone or something that functions as an insurance policy should risks in commerce materialize, the public has no reason to try to benefit from the potential benefits of decentralized commerce,"
  },
  {
   "id": "kaal:claim:3411897-030",
   "url": "https://wulfkaal.github.io/claims/3411897-030",
   "claim": "Most legacy insurance companies will not consider underwriting a smart contract that is not subject to the traditional legal framework, which leaves sophisticated smart contracts without the insurance they require.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "asserted",
   "scope_conditions": [
    "smart contracts operating outside the traditional legal framework"
   ],
   "supporting_quote": "Most sophisticated smart contracts will require a form of insurance/underwriting to offset the risks of possible failure. Most legacy insurance companies will not consider underwriting a smart contract that is not subject to the traditional legal framework."
  },
  {
   "id": "kaal:claim:3411897-031",
   "url": "https://wulfkaal.github.io/claims/3411897-031",
   "claim": "Even if legacy insurers do enter the DApp market, their products may not fit the need, because actuarial methods for risk assessment under traditional insurance metrics are only partially compatible with rapidly evolving decentralized products.",
   "type": "failure",
   "topics": [
    "research-methods",
    "decentralization",
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "rapidly evolving decentralized products",
    "traditional actuarial risk assessment"
   ],
   "supporting_quote": "Actuarial methods for risk assessment under traditional insurance metrics may be only partially compatible with rapidly evolving decentralized products."
  },
  {
   "id": "kaal:claim:3411897-032",
   "url": "https://wulfkaal.github.io/claims/3411897-032",
   "claim": "Human business interactions require a flexibility that is at odds with the merciless mathematical logic of smart contracts, so smart contracting cannot ensure the flexible interpretation of intent that human interaction requires.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "human commercial relationships requiring interpretation of intent"
   ],
   "supporting_quote": "Human business interactions require a flexibility that is at odds with merciless mathematical logic of smart contracts."
  },
  {
   "id": "kaal:claim:3411897-033",
   "url": "https://wulfkaal.github.io/claims/3411897-033",
   "claim": "Smart contracts undermine counterparties' ability to continue collaborating when unanticipated eventualities arise, because in most cases of unfulfilled parameters the smart contract will simply cancel out rather than allow partial performance.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "unanticipated eventualities and partial performance scenarios"
   ],
   "supporting_quote": "Smart contracts also undermine counterparties' ability to continue collaboration when unanticipated eventualities arise. In most cases of unfulfilled parameters, the smart contract will simply cancel out."
  },
  {
   "id": "kaal:claim:3411897-034",
   "url": "https://wulfkaal.github.io/claims/3411897-034",
   "claim": "The flexibility that human business requires will unlikely ever be attained in existing decentralized protocols unless a decentralized verification system is built into decentralized commerce.",
   "type": "condition",
   "topics": [
    "smart-contracts",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "existing decentralized protocols",
    "even as smart contracts grow more sophisticated"
   ],
   "supporting_quote": "While more sophisticated smart contracts over time can fulfill some of these human business requirements, the needed flexibility in existing decentralized protocols will unlikely ever be attained unless a decentralized verification system is built into decentralized commerce."
  },
  {
   "id": "kaal:claim:3411897-035",
   "url": "https://wulfkaal.github.io/claims/3411897-035",
   "claim": "Until blockchain technology arrived with Bitcoin in 2009, decentralized reputation systems rested on the roughly twenty five year old and corruptible concept of the Web of Trust.",
   "type": "failure",
   "topics": [
    "reputation",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "asserted",
   "scope_conditions": [
    "pre 2009 decentralized reputation systems"
   ],
   "supporting_quote": "Until blockchain technology was introduced via Bitcoin in 2009, decentralized reputation systems mostly relied on the roughly 25 year old corruptible concept of the Web of Trust."
  },
  {
   "id": "kaal:claim:3411897-036",
   "url": "https://wulfkaal.github.io/claims/3411897-036",
   "claim": "It is immaterial whether security incidents occur on centralized exchanges, on centralized systems appended to decentralized structures, or in the decentralized systems themselves, because the public perceives the resulting security concerns as a technology risk across all of these technologies.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "public perception of cryptocurrency and blockchain security"
   ],
   "supporting_quote": "structures or the decentralized systems themselves is immaterial in this context. The security concerns are seen by the public as a technology risk across technologies."
  },
  {
   "id": "kaal:claim:3411897-037",
   "url": "https://wulfkaal.github.io/claims/3411897-037",
   "claim": "Decentralized reputation verification systems make mathematically rigid smart contracts more adjustable for the needs of business by serving as the backstop for smart contracting.",
   "type": "design",
   "topics": [
    "reputation",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "requires an operational decentralized reputation verification layer"
   ],
   "supporting_quote": "mathematically rigid smart contracts to become more adjustable for the needs of business. Reputation verification becomes the backstop for smart contracting."
  },
  {
   "id": "kaal:claim:3411897-038",
   "url": "https://wulfkaal.github.io/claims/3411897-038",
   "claim": "Historical evidence demonstrates that every time decentralization emerges in a given industry, profit margins disappear.",
   "type": "empirical",
   "topics": [
    "innovation",
    "decentralization",
    "defi",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "examples cited predate decentralized blockchain technology"
   ],
   "supporting_quote": "Historical evidence has demonstrated that every time decentralization emerges in a given industry, profit margins disappear."
  },
  {
   "id": "kaal:claim:3411897-039",
   "url": "https://wulfkaal.github.io/claims/3411897-039",
   "claim": "Without a core common ethical denominator, decentralized systems cannot last: they lose coherence, become attackable, and can be corrupted, leading to suboptimal societal outcomes.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "applies to decentralized systems as to all attempts to organize society"
   ],
   "supporting_quote": "Without a core common ethical denominator, decentralized systems cannot last, they lose coherence, become attackable, and can be corrupted, leading to suboptimal societal outcomes."
  },
  {
   "id": "kaal:claim:3411897-040",
   "url": "https://wulfkaal.github.io/claims/3411897-040",
   "claim": "For any static set of rules in an infinitely repeated game using reputation stakes, there is a way to subvert the rules for an individual's profit at the expense of the group, which is why static decentralized governance rules can always be gamed and only dynamic, changing rules can address the problem.",
   "type": "failure",
   "topics": [
    "economics",
    "governance-design",
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897",
   "year": "2019",
   "source_sha256": "82f0aea026b3e3a526ec51bc073b3b864dc06cd9083ff9c54c550037045edaa9",
   "confidence": "argued",
   "scope_conditions": [
    "infinitely repeated games with reputation or stake based rules",
    "static rule sets"
   ],
   "supporting_quote": "For any static set of rules in an infinitely repeated game using reputation (stakes), there is a way to subvert the rules for an individual's profit at the expense of the group."
  },
  {
   "id": "kaal:claim:3405401-001",
   "url": "https://wulfkaal.github.io/claims/3405401-001",
   "claim": "Decentralized commerce is the global exchange of financial instruments, goods and services conducted through decentralized and emerging technologies, a stipulated definition the paper relies on throughout.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "asserted",
   "supporting_quote": "Decentralized commerce may generically be defined as the global exchange of financial instruments, goods and services via decentralized and emerging technologies."
  },
  {
   "id": "kaal:claim:3405401-002",
   "url": "https://wulfkaal.github.io/claims/3405401-002",
   "claim": "Narrowly construed, a digital asset is instantiated through computer code and depends on consensus computer algorithms to trigger and validate any transaction in that asset; broadly construed, digital assets extend to items such as video game goods that have no validating consensus algorithm and no comparable security.",
   "type": "definitional",
   "topics": [
    "consensus-and-security",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "asserted",
   "scope_conditions": [
    "narrow versus broad construction of the term digital asset"
   ],
   "supporting_quote": "Narrowly construed, digital assets are instantiated through computer code and depend on so-called \"consensus computer algorithms\" to trigger and validate a transaction in a given digital asset."
  },
  {
   "id": "kaal:claim:3405401-003",
   "url": "https://wulfkaal.github.io/claims/3405401-003",
   "claim": "Smart contracts make decentralized commerce between anonymous parties possible because they provide automated contracting that self executes and self regulates according to mathematical strictures.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "asserted",
   "scope_conditions": [
    "parties are anonymous",
    "transaction occurs in a decentralized environment"
   ],
   "supporting_quote": "Smart contracts allow anonymous parties to engage in decentralized commerce by providing automated contracting that self-executes and self-regulates according to mathematical strictures."
  },
  {
   "id": "kaal:claim:3405401-004",
   "url": "https://wulfkaal.github.io/claims/3405401-004",
   "claim": "Smart contracts are evolving quickly, and that evolution will allow most business logic to be encoded in smart contracts over time.",
   "type": "predictive",
   "topics": [
    "smart-contracts",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "asserted",
   "supporting_quote": "Their evolution enables most business logic to be included in smart contracts over time."
  },
  {
   "id": "kaal:claim:3405401-005",
   "url": "https://wulfkaal.github.io/claims/3405401-005",
   "claim": "Smart contracts benefit business by simplifying and automating transactions, removing transaction costs, and creating certainty for counterparties, and they are inexpensive to run on a blockchain.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "asserted",
   "supporting_quote": "Smart contracts are intended to simplify and automate business, removing transaction costs and creating certainty for counterparties. They make business transactions fully secure and efficient. It is also inexpensive to run smart contracts on a blockchain."
  },
  {
   "id": "kaal:claim:3405401-006",
   "url": "https://wulfkaal.github.io/claims/3405401-006",
   "claim": "Automation in smart contracting reduces negotiation between counterparties to near minimal levels and removes almost all of the transaction costs typically associated with contracting.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "asserted",
   "supporting_quote": "Negotiation between counterparties is near minimal, transaction cost typically associated with contracting are almost entirely removed by the automation."
  },
  {
   "id": "kaal:claim:3405401-007",
   "url": "https://wulfkaal.github.io/claims/3405401-007",
   "claim": "The inherent mathematical logic of computerized code in smart contracts can clarify the parties' intent optimally, which increases certainty, creates efficiency, and thereby incentivizes commerce.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "asserted",
   "supporting_quote": "The inherent mathematical logic of computerized code in smart contracts can optimally clarify parties' intent. It also increases certainty and creates unparalleled efficiency which in turn incentivizes commerce."
  },
  {
   "id": "kaal:claim:3405401-008",
   "url": "https://wulfkaal.github.io/claims/3405401-008",
   "claim": "Because the smart contract removes centralized guarantors and self regulates, only limited legal recourse remains available when execution of the contract terms goes wrong.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "something goes wrong in execution of the contract terms"
   ],
   "supporting_quote": "Most importantly, the smart contract removes centralized guarantors. The smart contract self-regulates. Only limited legal recourse is available if something goes wrong in the execution of the terms of the contract."
  },
  {
   "id": "kaal:claim:3405401-009",
   "url": "https://wulfkaal.github.io/claims/3405401-009",
   "claim": "Despite their benefits, smart contracts are subject to significant limitations because human business interactions require a flexibility that is at odds with the merciless mathematical logic of smart contracts.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "human business interactions rather than fully mechanical exchanges"
   ],
   "supporting_quote": "Despite the significant benefits of smart contracting for business and society, smart contracts are subject to significant limitations. Human business interactions require a flexibility that is at odds with merciless mathematical logic of smart contracts."
  },
  {
   "id": "kaal:claim:3405401-010",
   "url": "https://wulfkaal.github.io/claims/3405401-010",
   "claim": "Smart contracting cannot ensure the flexibility in interpreting intent that human interaction requires, because smart contract code does not follow the same logic on similar terms as natural human language.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "interpretation of party intent is required"
   ],
   "supporting_quote": "Human interaction requires flexibility in interpreting intent that cannot be ensured by smart contracting because smart contract code does not follow the same logic on similar terms as natural human language."
  },
  {
   "id": "kaal:claim:3405401-011",
   "url": "https://wulfkaal.github.io/claims/3405401-011",
   "claim": "Smart contracts undermine the ability of counterparties to continue collaborating when unanticipated eventualities arise, because in most cases of unfulfilled parameters the smart contract will simply cancel out.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "unanticipated eventualities arise",
    "contract parameters go unfulfilled"
   ],
   "supporting_quote": "Smart contracts also undermine counterparties' ability to continue collaboration when unanticipated eventualities arise. In most cases of unfulfilled parameters, the smart contract will simply cancel out."
  },
  {
   "id": "kaal:claim:3405401-012",
   "url": "https://wulfkaal.github.io/claims/3405401-012",
   "claim": "Human business interaction typically requires the possibility that each party may fulfill only a portion of an intended collaboration, a partial performance option that mathematically rigid smart contracts do not accommodate.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "partial performance is contemplated by the parties"
   ],
   "supporting_quote": "Human business interaction also typically requires the possibility that each party may fulfill only a portion of any intended collaboration."
  },
  {
   "id": "kaal:claim:3405401-013",
   "url": "https://wulfkaal.github.io/claims/3405401-013",
   "claim": "The flexibility that human business requires will unlikely ever be attained in existing decentralized protocols unless a decentralized verification system is built into decentralized commerce.",
   "type": "condition",
   "topics": [
    "decentralization",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "existing decentralized protocols"
   ],
   "supporting_quote": "flexibility in existing decentralized protocols will unlikely ever be attained unless a decentralized verification system is built into decentralized commerce."
  },
  {
   "id": "kaal:claim:3405401-014",
   "url": "https://wulfkaal.github.io/claims/3405401-014",
   "claim": "Trust barometers such as the Edelman report show a radical depreciation of trust in centralized institutions between 2017 and 2018.",
   "type": "empirical",
   "topics": [
    "reputation",
    "decentralization",
    "institutional-design",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "evidenced",
   "scope_conditions": [
    "measured between 2017 and 2018",
    "trust in centralized institutions"
   ],
   "supporting_quote": "Trust barometers, such as the Edelman report, assessing the level of trust in centralized institutions suggests radical depreciation in trust between the years 2017 and 2018."
  },
  {
   "id": "kaal:claim:3405401-015",
   "url": "https://wulfkaal.github.io/claims/3405401-015",
   "claim": "Although smart contracting in decentralized systems is perceived as creating trust through preordained coded coordination without agency problems, decentralized commerce is equally afflicted with trust issues.",
   "type": "failure",
   "topics": [
    "reputation",
    "decentralization",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "supporting_quote": "While smart contracting in decentralized system can be perceived as creating trust through mathematical and coded — preordained coordination without agency problems, several factors suggest that decentralized commerce via decentralized solutions is equally afflicted with trust issues."
  },
  {
   "id": "kaal:claim:3405401-016",
   "url": "https://wulfkaal.github.io/claims/3405401-016",
   "claim": "Trust between counterparties in decentralized systems can only limitedly be assured by smart contracts, because the contract cannot verify the underlying qualities or future conduct of the parties.",
   "type": "failure",
   "topics": [
    "reputation",
    "smart-contracts",
    "risk-and-incentives",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized systems with anonymous counterparties"
   ],
   "supporting_quote": "Trust between counterparties in decentralized systems can only limitedly be assured by smart contracts."
  },
  {
   "id": "kaal:claim:3405401-017",
   "url": "https://wulfkaal.github.io/claims/3405401-017",
   "claim": "Smart contracts leave counterparty information asymmetries unresolved: the tenant of a smart property cannot fully know whether the landlord is providing a worthy property, and the landlord cannot know in advance how likely the tenant is to destroy the premises.",
   "type": "failure",
   "topics": [
    "disclosure",
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "smart property rental scenario"
   ],
   "supporting_quote": "In our example above, the tenant of the smart property cannot fully know if the landlord is providing a worthy property. In turn, the landlord cannot know in advance how likely the tenant will destroy the premises."
  },
  {
   "id": "kaal:claim:3405401-018",
   "url": "https://wulfkaal.github.io/claims/3405401-018",
   "claim": "Counterparty trust in the programmed parameters of a smart contract is more justified in simpler contracts, and specifically where the smart contract template has a history of successful executions.",
   "type": "condition",
   "topics": [
    "smart-contracts",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "simpler smart contracts",
    "template has a prior record of successful executions"
   ],
   "supporting_quote": "In simpler smart contracts such trust may be more justified if the smart contract template has a history of successful executions."
  },
  {
   "id": "kaal:claim:3405401-019",
   "url": "https://wulfkaal.github.io/claims/3405401-019",
   "claim": "In more complex smart contracts the counterparties cannot fully know whether the contract will do what it was programmed to do, or whether it will contain bugs or follow a logic the parties did not anticipate.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "risk-and-incentives",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "more complex smart contracts"
   ],
   "supporting_quote": "In other words, in more complex smart contracts, the counterparties to the contract cannot fully know if the contract will do what it was programmed to do and whether it will have bugs or otherwise follow another logic that was not anticipated by the parties to the contract."
  },
  {
   "id": "kaal:claim:3405401-020",
   "url": "https://wulfkaal.github.io/claims/3405401-020",
   "claim": "Even small and simple smart contracts often contain bugs that trigger unforeseeable consequences, so contract simplicity is not by itself a guarantee of correct execution.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "asserted",
   "supporting_quote": "Even small and simple smart contracts often have bugs that trigger unforeseeable consequences."
  },
  {
   "id": "kaal:claim:3405401-021",
   "url": "https://wulfkaal.github.io/claims/3405401-021",
   "claim": "Solving the trust problem in decentralized commerce requires an intangible value system, not a further transferable store of value.",
   "type": "condition",
   "topics": [
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized commerce"
   ],
   "supporting_quote": "To solve the issues of trust in decentralized commerce, an intangible value system is needed."
  },
  {
   "id": "kaal:claim:3405401-022",
   "url": "https://wulfkaal.github.io/claims/3405401-022",
   "claim": "The transferability of the stores of value entailed in cryptocurrencies creates core points of attack and undermines the very nature of decentralization.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "cryptocurrencies and other transferable stores of value"
   ],
   "supporting_quote": "The transferability of stores of value entailed in cryptocurrencies creates core points of attack and undermines the very nature of decentralization."
  },
  {
   "id": "kaal:claim:3405401-023",
   "url": "https://wulfkaal.github.io/claims/3405401-023",
   "claim": "Because cryptocurrencies, like any currency or store of value, entail transferable value, the exercise of power over that value inevitably leads to centralization through economies of scale.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "any transferable store of value, including fiat currencies"
   ],
   "supporting_quote": "Because of the store of value entailed in cryptocurrencies (and really any currencies or store of value), exercise of power over such value inevitably leads to centralization due to economies of scale."
  },
  {
   "id": "kaal:claim:3405401-024",
   "url": "https://wulfkaal.github.io/claims/3405401-024",
   "claim": "Reputation used as a metric and store of value does not lead to centralization because it must be earned, it can be lost, and it cannot be converted into a fungible store of value exchangeable for goods.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "decentralization",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "reputation is non fungible and non transferable"
   ],
   "supporting_quote": "Reputation as a metric and store of value does not suffer the same consequences and does not lead to centralization because it must be earned, it can be lost, yet it cannot be turned into a fungible store of value that allows the exchange for goods etc."
  },
  {
   "id": "kaal:claim:3405401-025",
   "url": "https://wulfkaal.github.io/claims/3405401-025",
   "claim": "Reputation is the key ingredient that enables commerce, and it is precisely the ingredient that makes truly decentralized solutions possible.",
   "type": "condition",
   "topics": [
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "supporting_quote": "In as much as reputation enables truly decentralized solutions reputation is also the key ingredient that enables commerce."
  },
  {
   "id": "kaal:claim:3405401-026",
   "url": "https://wulfkaal.github.io/claims/3405401-026",
   "claim": "Centralized capitalist institutions have been built entirely around centralized and hierarchical reputation systems, which is why replacing them requires a decentralized reputation substitute.",
   "type": "empirical",
   "topics": [
    "reputation",
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "asserted",
   "supporting_quote": "Centralized capitalist institutions have been built entirely around centralized and hierarchical reputation systems."
  },
  {
   "id": "kaal:claim:3405401-027",
   "url": "https://wulfkaal.github.io/claims/3405401-027",
   "claim": "Bitcoin proved that a decentralized system can automate the transfer of valuable digital currency without intermediaries and without a centralized authority for recourse, doing so efficiently, securely, cheaply and expeditiously.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "digital currency transfer, not general business logic"
   ],
   "supporting_quote": "Bitcoin proved that a decentralized system can automate the transfer of valuable digital currency without intermediaries, no centralized authority for recourse, efficiently, securely, cheaply, and expeditiously."
  },
  {
   "id": "kaal:claim:3405401-028",
   "url": "https://wulfkaal.github.io/claims/3405401-028",
   "claim": "Until blockchain technology was introduced via bitcoin in 2009, decentralized reputation systems mostly relied on the old and corruptible concept of the Web of Trust.",
   "type": "failure",
   "topics": [
    "reputation",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "asserted",
   "scope_conditions": [
    "period before 2009"
   ],
   "supporting_quote": "Until blockchain technology was introduced via bitcoin in 2009, decentralized reputation system mostly relied on the old and corruptible concept of the Web of Trust."
  },
  {
   "id": "kaal:claim:3405401-029",
   "url": "https://wulfkaal.github.io/claims/3405401-029",
   "claim": "Decentralized reputation verification systems enable mathematically rigid smart contracts to become more adjustable to the needs of business, with reputation verification serving as the backstop for smart contracting.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "supporting_quote": "Decentralized reputation verification systems enable mathematically rigid smart contracts to become more adjustable for the needs of business. Reputation verification becomes the backstop for smart contracting."
  },
  {
   "id": "kaal:claim:3405401-030",
   "url": "https://wulfkaal.github.io/claims/3405401-030",
   "claim": "The rigorous code is law standard associated with smart contracting can be upheld while still gaining flexibility, because reputation verification operates at the level of smart contract template verification rather than altering contract execution.",
   "type": "design",
   "topics": [
    "smart-contracts",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "verification applied to smart contract templates"
   ],
   "supporting_quote": "While the rigorous standard of \"code is law\", associated with smart contracting, can be upheld, reputation verification enables smart contract template verification."
  },
  {
   "id": "kaal:claim:3405401-031",
   "url": "https://wulfkaal.github.io/claims/3405401-031",
   "claim": "Validated smart contract templates increase trust for counterparties and remove the need for costly back testing and experimentation with smart contract templates.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "templates have been validated through reputation verification"
   ],
   "supporting_quote": "Validated templates of smart contracts increase trust for counterparties. The validation removes the need for costly back-testing and experimentation with smart contract templates."
  },
  {
   "id": "kaal:claim:3405401-032",
   "url": "https://wulfkaal.github.io/claims/3405401-032",
   "claim": "By removing the need for costly back testing, template validation facilitates decentralized business transactions at unprecedented scale.",
   "type": "predictive",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "asserted",
   "supporting_quote": "The validation removes the need for costly back- testing and facilitates decentralized business transactions at unprecedented scale."
  },
  {
   "id": "kaal:claim:3405401-033",
   "url": "https://wulfkaal.github.io/claims/3405401-033",
   "claim": "Truly increasing counterparty trust in decentralized smart contract based commerce requires that counterparties be able to review a long history of each other's conduct in decentralized commerce and of performance in earlier smart contracts.",
   "type": "condition",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized smart contract based commerce"
   ],
   "supporting_quote": "To truly increase trust for counterparties in decentralized smart contract-based commerce, counterparties need to be able to review a long history of each other's conduct in decentralized commerce and the history of performance in earlier smart contracts."
  },
  {
   "id": "kaal:claim:3405401-034",
   "url": "https://wulfkaal.github.io/claims/3405401-034",
   "claim": "The required review of counterparty history is possible through a platform that creates reputation for both parties and for the smart contract itself, so reputation must attach to code as well as to persons.",
   "type": "design",
   "topics": [
    "reputation",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "supporting_quote": "This is possible through a platform that creates reputation for both parties and for the smart contract itself."
  },
  {
   "id": "kaal:claim:3405401-035",
   "url": "https://wulfkaal.github.io/claims/3405401-035",
   "claim": "Similar business deals and contracts between counterparties must be organized and reviewable by the public, and the transaction history has to be fully openly viewable and verifiable so that parties can see that counterparties will perform as expected.",
   "type": "design",
   "topics": [
    "disclosure",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "supporting_quote": "The history of transactions has to be fully openly viewable and verifiable, so that business parties can see that their counterparties will perform as expected."
  },
  {
   "id": "kaal:claim:3405401-036",
   "url": "https://wulfkaal.github.io/claims/3405401-036",
   "claim": "A functioning decentralized reputation system requires that counterparties' actions in decentralized commerce endure and become part of a public record: their actions must stick and become part of a meaningful precedence system.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401",
   "year": "2019",
   "source_sha256": "bc2d6f0ddc0852fb4085c4543c7c1dec19aaf8745eb67e3acc637e552bd7fb7d",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized commerce"
   ],
   "supporting_quote": "This necessitates that counterparties' actions in decentralized commerce endure and become part of a public record. In other words, counterparties' actions need to stick. Their actions have to become part of a precedence system that is meaningful."
  },
  {
   "id": "kaal:claim:3396542-001",
   "url": "https://wulfkaal.github.io/claims/3396542-001",
   "claim": "Insurance underwriting as currently organized imposes significant costs and inefficiencies and erects high barriers to entry, and it provides no democratized access to the underwriting process or collective decision making on risk.",
   "type": "empirical",
   "topics": [
    "defi",
    "risk-and-incentives",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "asserted",
   "supporting_quote": "The insurance market is dominated by a few core players and subject to high barriers to entry for new market entrants. In the current system, democratized access to the underwriting process and collective decision making on risk does not exist."
  },
  {
   "id": "kaal:claim:3396542-002",
   "url": "https://wulfkaal.github.io/claims/3396542-002",
   "claim": "In the traditional insurance structure, financial distress or bankruptcy of an individual underwriter harms consumers, who lose the protection of their insurance contract and must seek new coverage.",
   "type": "failure",
   "topics": [
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "asserted",
   "scope_conditions": [
    "traditional centralized insurance structure"
   ],
   "supporting_quote": "Financial distress or bankruptcy of an individual underwriter affects consumers who may no longer be protected by the insurance contract and have to look for new coverage."
  },
  {
   "id": "kaal:claim:3396542-003",
   "url": "https://wulfkaal.github.io/claims/3396542-003",
   "claim": "The authors propose that insurance underwriting be operated by a Decentralized Autonomous Organization in which cryptocurrency tokens function as claims on the future cash flows of the underwriting business.",
   "type": "design",
   "topics": [
    "dao",
    "tokenomics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "Insurance products can be optimized with emerging decentralized technology. We propose the use of cryptocurrencies as claims on future cash flows of an underwriting business operated by a Decentralized Autonomous Organization (DAO)."
  },
  {
   "id": "kaal:claim:3396542-004",
   "url": "https://wulfkaal.github.io/claims/3396542-004",
   "claim": "The reputation tokens of the underwriting DAO are separate and distinct from the cash currency that insureds use to pay premia; the two must not be conflated.",
   "type": "definitional",
   "topics": [
    "reputation",
    "tokenomics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "asserted",
   "supporting_quote": "It is important to note that the reputation tokens are separate and distinct from the cash currency that the insured use to pay their premia."
  },
  {
   "id": "kaal:claim:3396542-005",
   "url": "https://wulfkaal.github.io/claims/3396542-005",
   "claim": "Tokens in the proposed DAO function as reputation because an agent's proportional token holdings will grow over time only if that agent follows sound and successful underwriting practices.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics",
    "risk-and-incentives",
    "dao",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "tokens are minted as rewards for staking on underwritten policies"
   ],
   "supporting_quote": "We will refer to these tokens on occasion as reputation tokens as an agent's proportional holdings of these tokens is likely to increase over time only if the agent were to follow sound and successful underwriting practices."
  },
  {
   "id": "kaal:claim:3396542-006",
   "url": "https://wulfkaal.github.io/claims/3396542-006",
   "claim": "Participation in underwriting is gated by token ownership: only token holders may underwrite insurance policies in the DAO, and inbuilt processes assign new business among them.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "dao",
    "governance-design",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "asserted",
   "supporting_quote": "First, only token holders are allowed to participate in underwriting insurance policies. Inbuilt processes are used to assign new business to token holders."
  },
  {
   "id": "kaal:claim:3396542-007",
   "url": "https://wulfkaal.github.io/claims/3396542-007",
   "claim": "Insurance premia are treated as revenue of the entire DAO rather than of the underwriters who wrote the policy, and are shared among DAO participants; consequently the value of a token is a function of the DAO's expected future cash flows.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "economics",
    "dao",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "Instead, the premia are treated as the revenue of the entire DAO and shared among the DAO participants. Thus, the value of the tokens is a function of the expected future cash flows of the DAO."
  },
  {
   "id": "kaal:claim:3396542-008",
   "url": "https://wulfkaal.github.io/claims/3396542-008",
   "claim": "Because newly minted reward tokens go only to agents who stake tokens on policies, passive holders are diluted over time, which pushes agents toward active underwriting while still permitting passive investment.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "risk-and-incentives",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "reward tokens minted per policy underwritten"
   ],
   "supporting_quote": "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."
  },
  {
   "id": "kaal:claim:3396542-009",
   "url": "https://wulfkaal.github.io/claims/3396542-009",
   "claim": "The design requires underwriters to stake or encumber tokens against each policy they underwrite, and those encumbered tokens serve to secure the underwriters' promises.",
   "type": "design",
   "topics": [
    "tokenomics",
    "dao",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "Fourth, the design requires the underwriters to \"stake\" or \"encumber\" an appropriate number of tokens against each policy they underwrite. These tokens in effect serve to secure the promises of the underwriters."
  },
  {
   "id": "kaal:claim:3396542-010",
   "url": "https://wulfkaal.github.io/claims/3396542-010",
   "claim": "The number of tokens an underwriter must encumber is set by a preset formula whose objective is to make the value of the encumbered tokens sufficient to meet any claim arising at any point in the policy's life.",
   "type": "design",
   "topics": [
    "tokenomics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "The number of tokens to be encumbered is based on a preset formula with the objective of ensuring that the value of the encumbered tokens is sufficient to meet any claims that may arise at any point in the life of the policy."
  },
  {
   "id": "kaal:claim:3396542-011",
   "url": "https://wulfkaal.github.io/claims/3396542-011",
   "claim": "If underwriters decline to reclaim their encumbered tokens, that breach is resolved by selling the encumbered tokens, plus additional freshly minted tokens as needed, in an auction open to current DAO participants and to outsiders wishing to join.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "tokenomics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "breach by underwriters on a specific policy"
   ],
   "supporting_quote": "In such a case, the encumbered tokens, along with additional freshly minted tokens as needed, would be sold in an auction. All current DAO participants as well as outsiders interested in joining the DAO may bid for the tokens in this auction."
  },
  {
   "id": "kaal:claim:3396542-012",
   "url": "https://wulfkaal.github.io/claims/3396542-012",
   "claim": "A breach by the underwriters of a policy does not amount to a default by the DAO, and under normal market conditions a well designed DAO should experience very few breaches if any.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "normal market conditions",
    "well designed DAO"
   ],
   "supporting_quote": "Note that a breach by underwriters on a policy does not imply a default by the DAO. Under normal market conditions, a well-designed DAO should experience very few breaches, if any"
  },
  {
   "id": "kaal:claim:3396542-013",
   "url": "https://wulfkaal.github.io/claims/3396542-013",
   "claim": "A breach occurs only when the underwriters concerned believe that the value of their encumbered tokens is less than the payment they would have to make in order to reclaim those tokens.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "economics",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "Under what circumstances would a breach occur? It would occur only if the underwriters concerned believed that the value of these tokens is less than the payment they need to make in order to reclaim the tokens."
  },
  {
   "id": "kaal:claim:3396542-014",
   "url": "https://wulfkaal.github.io/claims/3396542-014",
   "claim": "Breach by underwriters will in general happen only after a dramatic shift in the DAO's future prospects, such as a sharp decrease in expected future revenues or a sharp increase in expected payments on outstanding policies.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "dramatic shift in the DAO's future prospects"
   ],
   "supporting_quote": "In general, this will happen only if there is a dramatic shift in the future prospects of the DAO, such as a sharp decrease in expected future revenues or a sharp increase in expected payments on outstanding policies."
  },
  {
   "id": "kaal:claim:3396542-015",
   "url": "https://wulfkaal.github.io/claims/3396542-015",
   "claim": "The underwriting use case is broader than traditional insurance: almost any blockchain transaction that does not consist purely of an exchange of digital tokens may require or benefit from underwriting.",
   "type": "predictive",
   "topics": [
    "defi",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "asserted",
   "scope_conditions": [
    "blockchain transactions involving non digital assets or performance"
   ],
   "supporting_quote": "In fact, almost any transaction on the blockchain that does not involve an exchange of purely digital tokens may require or benefit from underwriting."
  },
  {
   "id": "kaal:claim:3396542-016",
   "url": "https://wulfkaal.github.io/claims/3396542-016",
   "claim": "Unlike prior token research, the purpose of issuing tokens here is not only to raise capital but also to give owners the opportunity and incentive to develop the DAO's business.",
   "type": "design",
   "topics": [
    "tokenomics",
    "risk-and-incentives",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "Another key difference is that in our study, the purpose of issuing tokens is not only to raise capital but also to provide the owners the opportunity and incentive to develop the business of the DAO."
  },
  {
   "id": "kaal:claim:3396542-017",
   "url": "https://wulfkaal.github.io/claims/3396542-017",
   "claim": "The value of a token is not uniform across tokens: it depends on whether the token is currently encumbered and, for encumbered tokens, the sooner the token is expected to be released from encumbrance the greater its value.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "economics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "steady state DAO"
   ],
   "supporting_quote": "In general, the sooner a token is expected to be released from encumbrance (by the policy on which it is staked terminating due to either a payout or reaching maturity), the greater its value."
  },
  {
   "id": "kaal:claim:3396542-018",
   "url": "https://wulfkaal.github.io/claims/3396542-018",
   "claim": "The DAO design requires that the value of the tokens staked on a set of policies be large enough to cover the maximum possible liability on those policies, which in turn imposes a minimum condition on the premium charged.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "economics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "steady state model with constant M and p"
   ],
   "supporting_quote": "The design of the DAO requires that v1 should be large enough to cover the maximum possible liability on the M policies against which these tokens are to be encumbered. We will later derive a condition on the premium"
  },
  {
   "id": "kaal:claim:3396542-019",
   "url": "https://wulfkaal.github.io/claims/3396542-019",
   "claim": "Because the total supply of tokens grows at a constant rate each period, the value of individual tokens depreciates over time.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "economics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "token supply growing at rate rho per period"
   ],
   "supporting_quote": "Note that as the total number of tokens is growing at a rate of ρ per period, the value of individual tokens will depreciate over time."
  },
  {
   "id": "kaal:claim:3396542-020",
   "url": "https://wulfkaal.github.io/claims/3396542-020",
   "claim": "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.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "Thus, m is the amount of premium per dollar in excess of the probability of a claim on the policy sometime during its life."
  },
  {
   "id": "kaal:claim:3396542-021",
   "url": "https://wulfkaal.github.io/claims/3396542-021",
   "claim": "The DAO is insolvent when the present value of expected cash flows from new policies falls below the expected cash outflow on currently outstanding policies, and in that state the value of a token is negative.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "economics",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "The DAO will be insolvent if the value of the DAO becomes negative - in other words, if the Present Value (PV) of expected cash flows from new policies is less than the expected cash outflow from currently outstanding (old) policies. If the DAO is insolvent, the value of a token will be negative."
  },
  {
   "id": "kaal:claim:3396542-022",
   "url": "https://wulfkaal.github.io/claims/3396542-022",
   "claim": "A sufficiently large negative shock to the number of policies issued per period drives the value of the DAO negative and renders the DAO insolvent, so falling new business volume is a principal insolvency channel.",
   "type": "failure",
   "topics": [
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "Mt follows a random walk",
    "one time large decrease in M"
   ],
   "supporting_quote": "Thus, if ε0 is sufficiently negative and large in magnitude (i.e., if there is a sufficiently large decrease in M), then the value of DAO will become negative and the DAO will become insolvent."
  },
  {
   "id": "kaal:claim:3396542-023",
   "url": "https://wulfkaal.github.io/claims/3396542-023",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "insolvency triggered by a negative shock to policy issuance"
   ],
   "supporting_quote": "Of course, a remedial course of action that could perhaps be taken in period 0 is to increase the margin m if that is possible. However, we would need to consider the impact of an increase in the margin on future demand."
  },
  {
   "id": "kaal:claim:3396542-024",
   "url": "https://wulfkaal.github.io/claims/3396542-024",
   "claim": "In the DAO structure, provided an adequate token encumbrance system is in place, each agent is individually responsible for the payouts on the policies that agent underwrote, so the burden of holding adequate capital shifts from the entity to each individual agent.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "a good system ensures adequate tokens are encumbered per policy"
   ],
   "supporting_quote": "each agent is responsible for meeting the payouts on the policies they have underwritten. Consequently, the burden of maintaining adequate capital falls on each individual agent"
  },
  {
   "id": "kaal:claim:3396542-025",
   "url": "https://wulfkaal.github.io/claims/3396542-025",
   "claim": "Aggregate capital under the DAO structure is lower than under a traditional corporate insurer only if the incremental risk that contingent underwriting liabilities add to agents' private portfolios is small enough; the reduction is conditional, not automatic.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "all policies and agents identical",
    "agent payouts independent and identically distributed and uncorrelated with private portfolios"
   ],
   "supporting_quote": "Thus, to reiterate the main point, if the incremental risk to the private portfolios of the agents from the contingent liabilities is small enough, the sum of the individual amounts of capital the DAO agents will hold will be less than the capital requirement for a traditional corporate entity."
  },
  {
   "id": "kaal:claim:3396542-026",
   "url": "https://wulfkaal.github.io/claims/3396542-026",
   "claim": "The burden of maintaining sufficient liquidity to meet claims does not rest on the DAO but on the individual underwriters that make it up.",
   "type": "mechanism",
   "topics": [
    "defi",
    "risk-and-incentives",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "We note that the burden of maintaining sufficient liquidity in order to meet claims is not on the DAO, but rather on the individual underwriters that make up the DAO."
  },
  {
   "id": "kaal:claim:3396542-027",
   "url": "https://wulfkaal.github.io/claims/3396542-027",
   "claim": "Because each underwriter sizes capital against the risk of that underwriter's overall portfolio, and underwriting can be diversifying for a non traditional participant, the sum of the underwriters' incremental Values at Risk may be less than the Value at Risk of a single insurance firm writing the same contracts.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "underwriter capital set by overall portfolio risk",
    "especially for non traditional underwriters"
   ],
   "supporting_quote": "As a result, the sum of the incremental VaRs (Value at Risk amounts) of the individual underwriters may be less than the VaR of an insurance firm that has underwritten the same contracts."
  },
  {
   "id": "kaal:claim:3396542-028",
   "url": "https://wulfkaal.github.io/claims/3396542-028",
   "claim": "How much capital an underwriter holds is ultimately a matter of personal risk preference, and an underwriter willing to tolerate fluctuations in token holdings need provide only for expected losses.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "asserted",
   "scope_conditions": [
    "underwriter tolerant of fluctuations in token holdings"
   ],
   "supporting_quote": "More importantly, how much capital an underwriter holds is a matter of their personal risk preference. An underwriter who is willing to tolerate fluctuations in their token holdings need only provide for expected losses."
  },
  {
   "id": "kaal:claim:3396542-029",
   "url": "https://wulfkaal.github.io/claims/3396542-029",
   "claim": "From the viewpoint of consumers and regulators, encumbered tokens, whose value derives from the DAO's future cash flows, serve as a substitute for regulatory capital.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "The key point is this: from the viewpoint of consumers and regulators, the encumbered tokens (which as we know derive their value from the DAO's future cash flows) essentially serve as a substitute for capital."
  },
  {
   "id": "kaal:claim:3396542-030",
   "url": "https://wulfkaal.github.io/claims/3396542-030",
   "claim": "Barring highly adverse market conditions, the DAO's ability to mint and sell tokens on demand functions as capital on tap and protects the DAO from default and bankruptcy.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "not highly adverse market conditions"
   ],
   "supporting_quote": "Barring highly adverse market conditions, the availability of \"capital on tap\" protects the DAO from default and bankruptcy."
  },
  {
   "id": "kaal:claim:3396542-031",
   "url": "https://wulfkaal.github.io/claims/3396542-031",
   "claim": "In the proposed design, bad business decisions by one underwriter need not impact other underwriters or the DAO, because losses from underestimating the insured risk fall purely on that underwriter so long as the staked tokens cover the claim.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "systemic-risk",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "scope_conditions": [
    "value of staked or encumbered tokens covers the claim"
   ],
   "supporting_quote": "If a certain underwriter makes the mistake of underestimating the risk of the insured event, the losses will be suffered purely by the underwriter as long as the value of the staked or encumbered tokens covers the claim."
  },
  {
   "id": "kaal:claim:3396542-032",
   "url": "https://wulfkaal.github.io/claims/3396542-032",
   "claim": "Even where the underwriters of a policy breach the contract, the auction of the encumbered tokens together with the sale of additional tokens as needed ensures the policy holder's claim is fully met.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "Even if the underwriters of a particular policy were to breach the contract, the auction of the encumbered tokens and the sale of additional tokens as needed ensures that the policy holder's claim is fully met."
  },
  {
   "id": "kaal:claim:3396542-033",
   "url": "https://wulfkaal.github.io/claims/3396542-033",
   "claim": "The design's innovative features stem from tokens serving several purposes at once: as reward for risk taking and as a substitute for both reputation and capital.",
   "type": "design",
   "topics": [
    "reputation",
    "tokenomics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "In sum, many of the innovative features of this design stem from the fact that the tokens serve multiple purposes: as reward for risk- taking, and a substitute for reputation and capital."
  },
  {
   "id": "kaal:claim:3396542-034",
   "url": "https://wulfkaal.github.io/claims/3396542-034",
   "claim": "Trust requirements in the DAO are minimized by appropriately designed economic incentives rather than by intermediary reputation or regulation.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives",
    "dao",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "asserted",
   "supporting_quote": "The need to trust is minimized by appropriately designed economic incentives."
  },
  {
   "id": "kaal:claim:3396542-035",
   "url": "https://wulfkaal.github.io/claims/3396542-035",
   "claim": "The governance rules of the DAO can be set up so as to ensure that minority token holders are appropriately protected.",
   "type": "design",
   "topics": [
    "dao",
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "asserted",
   "supporting_quote": "The governance rules of the DAO can be set up so as to ensure that minority token holders are appropriately protected."
  },
  {
   "id": "kaal:claim:3396542-036",
   "url": "https://wulfkaal.github.io/claims/3396542-036",
   "claim": "Assuming all agents are active underwriters, the DAO's rules can be designed so that the proportion of policies an agent writes in the long run is commensurate with that agent's proportion of token holdings.",
   "type": "design",
   "topics": [
    "dao",
    "governance-design",
    "defi",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "asserted",
   "scope_conditions": [
    "all agents are active underwriters"
   ],
   "supporting_quote": "In general, assuming all agents are active underwriters, the rules can be designed to ensure that the proportion of policies written by an agent in the long run is commensurate with the proportion of the agent's token holdings."
  },
  {
   "id": "kaal:claim:3396542-037",
   "url": "https://wulfkaal.github.io/claims/3396542-037",
   "claim": "The proposed DAO design is likely to lower barriers to entry in insurance, since non traditional firms and even individual investors can buy tokens at auction and then either underwrite with them or hold them passively.",
   "type": "predictive",
   "topics": [
    "risk-and-incentives",
    "economics",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "In addition, the particular design outlined above is likely to facilitate the entry of new players to the insurance market. It is possible for a DAO to allow the participation of non-traditional firms and even individual investors."
  },
  {
   "id": "kaal:claim:3396542-038",
   "url": "https://wulfkaal.github.io/claims/3396542-038",
   "claim": "What the authors call a breach on a particular insurance contract does not necessarily imply any losses for the consumer, so underwriter breach and consumer harm are decoupled in this design.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542",
   "year": "2019",
   "source_sha256": "ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0",
   "confidence": "argued",
   "supporting_quote": "Thus, what we are referring to as a breach on a particular insurance contract does not necessarily imply any losses for the consumer."
  },
  {
   "id": "kaal:claim:3409548-001",
   "url": "https://wulfkaal.github.io/claims/3409548-001",
   "claim": "Hedge fund managers adopt emerging technology because it converts into a fee premium: technology driven outperformance makes them more competitive than other funds and financial institutions, which in turn lets them charge higher fees.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "private investment fund managers competing on performance"
   ],
   "supporting_quote": "Being more competitive through technology and creating higher returns for their clients, in turn, allows them to charge higher fees than traditional financial institutions."
  },
  {
   "id": "kaal:claim:3409548-002",
   "url": "https://wulfkaal.github.io/claims/3409548-002",
   "claim": "The traditional 2 and 20 fee model has become increasingly difficult to justify, and embracing modern financial products is what allows managers to produce returns that still support that model.",
   "type": "condition",
   "topics": [
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "recent years of compressed hedge fund returns"
   ],
   "supporting_quote": "In recent years, it became increasingly more difficult to justify the 2 and 20 fee model.4 Embracing modern financial products allows them to produce returns that can still justify that fee model."
  },
  {
   "id": "kaal:claim:3409548-003",
   "url": "https://wulfkaal.github.io/claims/3409548-003",
   "claim": "Current hedge fund trading technology is hard coded by humans, whereas deep learning systems can be given a simple command and derive a result from data on their own; this is the operative difference between legacy quantitative tools and machine learning.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "asserted",
   "supporting_quote": "The current technology used in hedge fund trading is hard coded by a human. In contrast, a deep learning AI machine learning algorithm can be given a simple command and automatically find a result based on data."
  },
  {
   "id": "kaal:claim:3409548-004",
   "url": "https://wulfkaal.github.io/claims/3409548-004",
   "claim": "Easier access to trading data and to information about the hedge fund industry has been a significant factor in the growth of hedge fund assets, because analytic platforms let managers manipulate peer and style data and build targeted marketing materials.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "commercial hedge fund databases and analytic platforms available"
   ],
   "supporting_quote": "Easier access to trading data and information about the hedge fund industry has been a significant factor in the growth of hedge fund assets."
  },
  {
   "id": "kaal:claim:3409548-005",
   "url": "https://wulfkaal.github.io/claims/3409548-005",
   "claim": "Systematic, computer model driven funds do not reliably outperform human managed funds: research finds the typical systematic fund does not always perform as well as funds run by human managers.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "evidenced",
   "scope_conditions": [
    "typical systematic fund",
    "Preqin research as of 2016"
   ],
   "supporting_quote": "However, according to research done by Preqin, the typical systematic fund doesn't always perform as well as funds operated by human managers."
  },
  {
   "id": "kaal:claim:3409548-006",
   "url": "https://wulfkaal.github.io/claims/3409548-006",
   "claim": "Hedge funds that base their strategies on artificial intelligence have delivered better results than the industry average over the preceding five years.",
   "type": "empirical",
   "topics": [
    "ai-and-agents",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "evidenced",
   "scope_conditions": [
    "five year window preceding 2019"
   ],
   "supporting_quote": "Hedge funds that base their strategies on AI have provided better results over the last five years than the average."
  },
  {
   "id": "kaal:claim:3409548-007",
   "url": "https://wulfkaal.github.io/claims/3409548-007",
   "claim": "Machine learning improves portfolio diversification by searching for instruments that are uncorrelated with each other and that still match the requirements of the target risk profile.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "asserted",
   "scope_conditions": [
    "portfolio construction against a defined risk profile"
   ],
   "supporting_quote": "ML can help in accurate portfolio diversification by looking for uncorrelated instruments that match requirements of the risk profile."
  },
  {
   "id": "kaal:claim:3409548-008",
   "url": "https://wulfkaal.github.io/claims/3409548-008",
   "claim": "In the Numerai model, using artificial intelligence to synthesize competing data scientist models into a meta model raises efficiency and improves capital allocation by reducing overhead costs.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "crowdsourced data science model with a synthesized meta model"
   ],
   "supporting_quote": "In the Numerai model, the use of artificial intelligence increases efficiency and optimum capital allocation by reducing overhead costs."
  },
  {
   "id": "kaal:claim:3409548-009",
   "url": "https://wulfkaal.github.io/claims/3409548-009",
   "claim": "Repeated use of the same data set by data scientists creates an overfitting risk: the training model overfits the test set, which limits the performance of the applied model on a different dataset.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "data scientists reusing a single data set repetitively"
   ],
   "supporting_quote": "When data scientists use the same data set repetitively a risk exists that the training model will overfit the test set of data, which can limit the performance of the applied model on a different dataset."
  },
  {
   "id": "kaal:claim:3409548-010",
   "url": "https://wulfkaal.github.io/claims/3409548-010",
   "claim": "Requiring data scientists to stake a cryptocurrency on their own predictions is a workable remedy for overfitting, because the stake expresses confidence in live performance and lets the fund select the optimal model.",
   "type": "design",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "crowdsourced modeling competition with a stakeable token"
   ],
   "supporting_quote": "The staking process, in turn, enables Numerai to choose the optimal model and in the process improve the performance of its hedge fund."
  },
  {
   "id": "kaal:claim:3409548-011",
   "url": "https://wulfkaal.github.io/claims/3409548-011",
   "claim": "Blockchain adoption by private investment funds followed a staged path: minimal use from 2000 to 2012, then experimentation through separate new fund entities beginning in 2012, and from 2015 the creation of blockchain substructures inside existing funds.",
   "type": "empirical",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "asserted",
   "scope_conditions": [
    "private investment fund industry, 2000 to 2015"
   ],
   "supporting_quote": "They began to experiment with the technology by setting up separate and new fund entities that utilized the technology in various forms. In 2015, however, existing funds also started to create substructures that utilized blockchain technology."
  },
  {
   "id": "kaal:claim:3409548-012",
   "url": "https://wulfkaal.github.io/claims/3409548-012",
   "claim": "High levels of investor activity in the blockchain sector are a reliable indicator of the commercial maturity of blockchain technology.",
   "type": "empirical",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "asserted",
   "supporting_quote": "The high levels of investor activity in the blockchain area appears to provide a reliable indicator of the commercial maturity of blockchain technology."
  },
  {
   "id": "kaal:claim:3409548-013",
   "url": "https://wulfkaal.github.io/claims/3409548-013",
   "claim": "Business, administrative, and legal processes that depend on legal intermediaries may become redundant as blockchain technology advances and is accepted, with ledger keeping services such as notary and registry services, motions practice, and title companies among the first to disappear.",
   "type": "predictive",
   "topics": [
    "decentralization",
    "law-and-legal-systems",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "as blockchain acceptance and implementation advance"
   ],
   "supporting_quote": "Business, administrative, and legal processes that rely on legal intermediaries may become redundant because of advances in and acceptance and implementation of blockchain technology."
  },
  {
   "id": "kaal:claim:3409548-014",
   "url": "https://wulfkaal.github.io/claims/3409548-014",
   "claim": "The 2018 ICO boom exposed a core limitation of blockchain technology: ICOs sold investors decentralized infrastructure products on the assumption that a baseline infrastructure already existed, and that assumption proved false.",
   "type": "failure",
   "topics": [
    "securities-law",
    "blockchain",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "ICO market of 2018",
    "projects presupposing mature base layer infrastructure"
   ],
   "supporting_quote": "The limitations of blockchain technology became most apparent in the aftermath of the ICO boom of 2018. ICOs promised investors core decentralized infrastructure products that assumed a baseline infrastructure existed. This turned out to be false"
  },
  {
   "id": "kaal:claim:3409548-015",
   "url": "https://wulfkaal.github.io/claims/3409548-015",
   "claim": "Smart contracts face a legal origin problem: lawyers may argue that they are void and unenforceable, and contract law rules on formation, interpretation, conditions and remedies require substantive adjustment before smart contracts fit within it.",
   "type": "condition",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "absent statutory recognition of smart contracts"
   ],
   "supporting_quote": "While smart contracts may reflect the underlying contract between parties, lawyers may argue that \"smart contracts\" are void and unenforceable under the law.65 Contractual legal rules regarding formation, interpretation, conditions and remedies require substantive adjustments for smart contracts"
  },
  {
   "id": "kaal:claim:3409548-016",
   "url": "https://wulfkaal.github.io/claims/3409548-016",
   "claim": "The legal limitations on smart contracts are slowly disappearing through state legislation, as shown by Arizona's 2017 law making smart contracts fully enforceable and Delaware's parallel Blockchain Initiative proposals.",
   "type": "empirical",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States state law, as of 2017 to 2019"
   ],
   "supporting_quote": "Such limitations are slowly disappearing. For instance, Arizona passed a law in early 2017 that makes smart contracts fully enforceable under Arizona law.67 Delaware is looking into similar rules proposed in the Blockchain Initiative."
  },
  {
   "id": "kaal:claim:3409548-017",
   "url": "https://wulfkaal.github.io/claims/3409548-017",
   "claim": "Blockchain-enabled sharing services are unlikely to be accepted quickly or without resistance, because incumbents challenged by new ways of delivering a service or product will resist, as the existing legal disputes over sharing platforms demonstrate.",
   "type": "predictive",
   "topics": [
    "economics",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "services that displace incumbent delivery models"
   ],
   "supporting_quote": "demonstrate that future blockchain-enabled sharing services may not be accepted quickly and without resistance on the part of incumbents challenged by new ways of delivering a service or product."
  },
  {
   "id": "kaal:claim:3409548-018",
   "url": "https://wulfkaal.github.io/claims/3409548-018",
   "claim": "The absence of regulatory recognition of blockchain technology is not merely an inconvenience: it hinders implementation of the technology across industries and undermines the conversion of infrastructure to blockchain.",
   "type": "failure",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions lacking regulatory recognition of blockchain"
   ],
   "supporting_quote": "The lacking recognition hinders the implementation of the technology across industries and undermines the infrastructure conversion via blockchain technology."
  },
  {
   "id": "kaal:claim:3409548-019",
   "url": "https://wulfkaal.github.io/claims/3409548-019",
   "claim": "The Northern Trust and IBM blockchain removes a specific inefficiency in private equity deal practice by letting all involved parties in a deal look at a single compiled version of the transaction and all data relating to it, rather than reconciling multiple copies of the deal documents.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "blockchain",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "evidenced",
   "scope_conditions": [
    "private equity deal administration",
    "Northern Trust and IBM partnership from February 2017"
   ],
   "supporting_quote": "the blockchain program announced by Northern Trust and IBM allows all involved parties in an equity deal to look at a single compiled version of the transaction and all other data relating to the deal."
  },
  {
   "id": "kaal:claim:3409548-020",
   "url": "https://wulfkaal.github.io/claims/3409548-020",
   "claim": "Blockchain-based funds can invert the traditional secrecy of hedge funds: the LendingRobot ledger discloses detailed holdings and supplies a hash code signature evidencing that the data is tamper proof.",
   "type": "design",
   "topics": [
    "defi",
    "disclosure",
    "blockchain",
    "private-funds",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "evidenced",
   "scope_conditions": [
    "funds recording trades to a public blockchain ledger"
   ],
   "supporting_quote": "Unlike traditional hedge funds that are rather secretive, the LendingRobot ledger shows detailed holdings and provides a \"hash code\" signature as evidence that the data is tamper- proof in the blockchain."
  },
  {
   "id": "kaal:claim:3409548-021",
   "url": "https://wulfkaal.github.io/claims/3409548-021",
   "claim": "A fund constituted purely through smart contracts on the Ethereum blockchain may have no domicile, foreign or domestic, which makes jurisdiction over blockchain transactions a genuine problem for the funds that use the technology.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "funds set up entirely through Ethereum smart contracting"
   ],
   "supporting_quote": "Some private investment funds may exist through the combination of smart contracts on the Ethereum blockchain.85 Such funds may not have a domicile either foreign or domestic."
  },
  {
   "id": "kaal:claim:3409548-022",
   "url": "https://wulfkaal.github.io/claims/3409548-022",
   "claim": "Managers of funds that exist entirely in cyberspace cannot assume they are judgment proof; the practical consequence of operating across a global node network is exposure to more regulation, not less.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "blockchain",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "funds operating through digital currencies and smart contracts without a domicile"
   ],
   "supporting_quote": "However, managers cannot assume that they are judgment-proof."
  },
  {
   "id": "kaal:claim:3409548-023",
   "url": "https://wulfkaal.github.io/claims/3409548-023",
   "claim": "Legacy systems at private investment funds and banks are more expensive, more error prone, and slower than emerging blockchain technologies, a gap illustrated by the $1.7 trillion in processing fees banks charged in 2014.",
   "type": "empirical",
   "topics": [
    "blockchain",
    "economics",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "evidenced",
   "scope_conditions": [
    "comparison of bank and fund legacy processing systems with blockchain"
   ],
   "supporting_quote": "Most legacy systems at private investment funds and banks are much more expensive than emerging blockchain technologies, are subject to human error, and take much more time. Banks charged $1.7 trillion in processing fees in 2014."
  },
  {
   "id": "kaal:claim:3409548-024",
   "url": "https://wulfkaal.github.io/claims/3409548-024",
   "claim": "Because blockchain is transparent, verifiable, self-authenticating and self-enforcing, transactions can settle instantaneously at near zero cost, and it is this combination plus technology-driven democratized trust that drove the financial industry's large blockchain investments out of fear of obsolescence.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "economics",
    "decentralization",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "supporting_quote": "Blockchain technology is transparent, verifiable, self- authenticating, and self-enforcing, financial transactions can be executed instantaneously at near zero transaction costs, increasing the efficiency for business and individuals exponentially."
  },
  {
   "id": "kaal:claim:3409548-025",
   "url": "https://wulfkaal.github.io/claims/3409548-025",
   "claim": "Machine learning applied to execution algorithms lets large orders be split into thousands of smaller transactions without moving the market, with the algorithm adjusting its aggressiveness to market conditions.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "asserted",
   "scope_conditions": [
    "large order execution"
   ],
   "supporting_quote": "ML can be applied in execution algorithms that help execute large orders by dividing them into thousands of smaller transactions without influencing the market, while adjusting their aggressiveness to the market situation."
  },
  {
   "id": "kaal:claim:3409548-026",
   "url": "https://wulfkaal.github.io/claims/3409548-026",
   "claim": "Artificial intelligence and machine learning are used far more heavily for idea generation and portfolio optimization than for execution: two thirds of surveyed funds use them to generate trading ideas and optimize portfolios, while only just over a quarter use automation to execute trades.",
   "type": "empirical",
   "topics": [
    "ai-and-agents",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "evidenced",
   "scope_conditions": [
    "2018 BarclayHedge survey respondents"
   ],
   "supporting_quote": "Two-thirds of respondents use AI/ML to generate trading ideas and optimize portfolios.101 Just over a quarter of respondents use automation to execute trades."
  },
  {
   "id": "kaal:claim:3409548-027",
   "url": "https://wulfkaal.github.io/claims/3409548-027",
   "claim": "Adoption of artificial intelligence in hedge funds remains partial rather than total: more than four out of ten survey respondents still rely on conventional human thinking to guide their investment processes.",
   "type": "empirical",
   "topics": [
    "ai-and-agents",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "evidenced",
   "scope_conditions": [
    "2018 BarclayHedge survey respondents"
   ],
   "supporting_quote": "However, more than four out of ten of survey respondents still rely on conventional human thinking to guide their investment processes."
  },
  {
   "id": "kaal:claim:3409548-028",
   "url": "https://wulfkaal.github.io/claims/3409548-028",
   "claim": "Whether deep learning can identify particular features of a stock that would be profitable remains contested rather than settled.",
   "type": "predictive",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "speculative",
   "supporting_quote": "There is disagreement over whether deep learning may be able to identify particular features of a stock that could be profitable."
  },
  {
   "id": "kaal:claim:3409548-029",
   "url": "https://wulfkaal.github.io/claims/3409548-029",
   "claim": "Digital currencies can serve as a hedge against traditional investments even though crypto investments can be as volatile as or more volatile than traditional ones, because they are not tied to the vicissitudes of the equity markets.",
   "type": "condition",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "portfolios seeking diversification away from traditional equity markets"
   ],
   "supporting_quote": "Although crypto investments can be just as and more volatile than traditional investments, digital currencies might be used to hedge against traditional investments."
  },
  {
   "id": "kaal:claim:3409548-030",
   "url": "https://wulfkaal.github.io/claims/3409548-030",
   "claim": "Crypto hedge funds deliver diversification by giving investors exposure to a wide range of digital currencies without the risk of investing in either the underlying organization behind a protocol or the digital currency itself.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "crypto funds holding broad baskets of digital assets"
   ],
   "supporting_quote": "Such funds provide investors with exposure to a wide range of digital currencies without the risk of investing in either the underlying organization behind a protocol or the digital currency itself."
  },
  {
   "id": "kaal:claim:3409548-031",
   "url": "https://wulfkaal.github.io/claims/3409548-031",
   "claim": "The shift of the digital asset market back from the ICO model to the venture model since late 2017 has reduced, not increased, diversification for investors.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "innovation",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "digital asset market after late 2017"
   ],
   "supporting_quote": "Since late 2017, the market for digital assets has moved back from the ICO model to the venture model, leading to less diversification."
  },
  {
   "id": "kaal:claim:3409548-032",
   "url": "https://wulfkaal.github.io/claims/3409548-032",
   "claim": "ICO funding collapsed as a share of blockchain startup fundraising, falling from 80% to around 35% by August 2018, recovering only marginally to 40% to 50% between September 2018 and February 2019, and dropping to 20% in March 2019.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "blockchain",
    "innovation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "evidenced",
   "scope_conditions": [
    "blockchain startup fundraising, 2018 to March 2019"
   ],
   "supporting_quote": "The percentage of ICOs in relation to total fundraising of blockchain startups dropped from 80% to around 35% in August 2018 and only marginally recovered between September 2018 and February 2019 at around 40% to 50% before dropping to 20% in March 2019."
  },
  {
   "id": "kaal:claim:3409548-033",
   "url": "https://wulfkaal.github.io/claims/3409548-033",
   "claim": "The legacy private investment fund model delays liquidity: the investment process is long, complex and time intensive and leads up to a very late liquidity event in the form of an IPO or acquisition, which is why funds seek the early liquidity cryptocurrencies provide.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "defi",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "private investment funds investing in blockchain start-ups"
   ],
   "supporting_quote": "In the existing legacy business for private investment funds, the investment process is subject to long, complex, and time intensive processes leading up to a very late liquidity event in the form of an IPO or acquisition."
  },
  {
   "id": "kaal:claim:3409548-034",
   "url": "https://wulfkaal.github.io/claims/3409548-034",
   "claim": "Cryptocurrencies created by blockchain start-ups generate investment returns that legacy investments cannot match.",
   "type": "empirical",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "evidenced",
   "scope_conditions": [
    "2017 to 2018 cryptocurrency price appreciation"
   ],
   "supporting_quote": "Cryptocurrencies created by blockchain start-ups generate investment returns that cannot be matched by legacy investments."
  },
  {
   "id": "kaal:claim:3409548-035",
   "url": "https://wulfkaal.github.io/claims/3409548-035",
   "claim": "Recording every fund transaction together with its associated documentation on a blockchain cuts the significant costs of human oversight in recording, organizing and maintaining investment fund data and records.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "fund back office and recordkeeping functions"
   ],
   "supporting_quote": "blockchain technology reduces the otherwise significant costs associated with human oversight in recording, organizing, and maintaining investment fund data and records."
  },
  {
   "id": "kaal:claim:3409548-036",
   "url": "https://wulfkaal.github.io/claims/3409548-036",
   "claim": "Recording all transactions in the public blockchain is what lets LendingRobot comply with its best execution obligations, making the public ledger a compliance instrument and not only an investment record.",
   "type": "design",
   "topics": [
    "compliance",
    "securities-law",
    "disclosure",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "funds writing executed trades to a public ledger"
   ],
   "supporting_quote": "Moreover, by recording all transactions in the public blockchain, LendingRobot is able to comply with its best execution"
  },
  {
   "id": "kaal:claim:3409548-037",
   "url": "https://wulfkaal.github.io/claims/3409548-037",
   "claim": "Most large private equity and hedge fund advisers have not yet even considered combining blockchain with big data and artificial intelligence, leaving first mover efficiency gains to smaller competitors.",
   "type": "empirical",
   "topics": [
    "blockchain",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "asserted",
   "scope_conditions": [
    "large fund advisers as of 2019"
   ],
   "supporting_quote": "Most large fund advisers in the private equity and hedge fund industry have not yet considered implementing blockchain technology in combination with big data applications and artificial intelligence."
  },
  {
   "id": "kaal:claim:3409548-038",
   "url": "https://wulfkaal.github.io/claims/3409548-038",
   "claim": "Large managers will begin innovating only once the long-term benefits of the technologies exceed their implementation cost, and because that cost is much larger for large managers than for the smaller managers currently experimenting, the threshold for change is higher for them.",
   "type": "condition",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "larger fund managers facing higher implementation costs than smaller rivals"
   ],
   "supporting_quote": "If and when the long- term benefits of using the technologies exceed the implementation cost, which are much larger for larger managers than for the smaller managers who are currently experimenting with such technologies, larger managers are incentivized to start the innovation process as well."
  },
  {
   "id": "kaal:claim:3409548-039",
   "url": "https://wulfkaal.github.io/claims/3409548-039",
   "claim": "The structural characteristic of blockchain as a decentralized model for financial transactions disintermediates and disrupts the existing financial infrastructure, so funds implementing it are spearheading radical change in financial markets rather than merely adopting a tool.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "argued",
   "scope_conditions": [
    "funds implementing decentralized financial infrastructure"
   ],
   "supporting_quote": "First and foremost, the structural characteristic of blockchain as a decentralized model for financial transactions disintermediates and disrupts the existing financial infrastructure."
  },
  {
   "id": "kaal:claim:3409548-040",
   "url": "https://wulfkaal.github.io/claims/3409548-040",
   "claim": "Continued evolution and blockchain integration in the private investment fund industry depends on regulatory guidance, which the author identifies as essential rather than optional.",
   "type": "normative",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548",
   "year": "2019",
   "source_sha256": "74227ab2656b06bfe4a29c942fc2ba26df9f476917e0a9f85ec038b8c3402c40",
   "confidence": "asserted",
   "scope_conditions": [
    "private investment fund industry adopting blockchain"
   ],
   "supporting_quote": "Regulatory guidance will be essential to ensuring the continuing evolution and blockchain integration for the private investment fund industry."
  },
  {
   "id": "kaal:claim:3405660-001",
   "url": "https://wulfkaal.github.io/claims/3405660-001",
   "claim": "Direct hedge fund regulation faces a two sided trap: strong direct rules push hedge funds offshore where they escape regulation altogether, while weak rules leave investors without adequate protection.",
   "type": "failure",
   "topics": [
    "private-funds",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "regulators rely on national direct regulatory tools",
    "hedge funds retain the option to relocate offshore"
   ],
   "supporting_quote": "Yet, regulators are faced with the problem of jurisdictional arbitrage, i.e. if they regulate directly, hedge funds may relocate offshore and escape from regulation altogether. If regulators impose weak regulations, investors may not be afforded adequate protection."
  },
  {
   "id": "kaal:claim:3405660-002",
   "url": "https://wulfkaal.github.io/claims/3405660-002",
   "claim": "Moral hazard in hedge fund lending persists even when the lender is fully informed, because high enforcement costs can make prevention too costly for the lender.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "compliance",
    "private-funds",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "lender to hedge fund relationship",
    "enforcement costs are high relative to expected loss"
   ],
   "supporting_quote": "Moral hazard can also occur because high enforcement costs might make it too costly for the lenders to hedge funds to prevent moral hazard even when the lender is fully informed about the hedge fund's activities."
  },
  {
   "id": "kaal:claim:3405660-003",
   "url": "https://wulfkaal.github.io/claims/3405660-003",
   "claim": "Hedge fund secrecy is not incidental but competitively necessary: the less the market knows about a fund's activities, the easier it is for the fund to compete and generate the returns clients demand.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "disclosure",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "Their penchant for secrecy originates in hedge funds' need to stay competitive to generate the returns demanded by their clients. The less information the market has about hedge funds' activities, the easier it is for them to compete with other funds."
  },
  {
   "id": "kaal:claim:3405660-004",
   "url": "https://wulfkaal.github.io/claims/3405660-004",
   "claim": "Neither national nor international regulators have the resources to fully investigate or regulate hedge fund activity, and the industry actively lobbies to preserve the resulting information asymmetries.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "asserted",
   "supporting_quote": "National and international regulators do not have the resources to fully investigate or regulate the activities of hedge funds. Hedge funds are lobbying to preserve information asymmetries as far as possible and avoid enhanced transparency."
  },
  {
   "id": "kaal:claim:3405660-005",
   "url": "https://wulfkaal.github.io/claims/3405660-005",
   "claim": "Indirect regulation of hedge funds attains most regulatory objectives while still leaving the industry the operating freedom it needs, which makes it preferable to the direct alternatives.",
   "type": "design",
   "topics": [
    "private-funds",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "The chapter shows that indirect regulation of the hedge fund industry attains most regulatory objectives while providing the industry with the needed freedoms."
  },
  {
   "id": "kaal:claim:3405660-006",
   "url": "https://wulfkaal.github.io/claims/3405660-006",
   "claim": "LTCM was diversified across markets but not across strategy, so its positions failed together; market level diversification does not imply strategy level diversification.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "evidenced",
   "scope_conditions": [
    "stress conditions in which risk spreads widen across markets simultaneously"
   ],
   "supporting_quote": "It became obvious that while the fund was diversified in terms of markets, its overall strategy was not diversified."
  },
  {
   "id": "kaal:claim:3405660-007",
   "url": "https://wulfkaal.github.io/claims/3405660-007",
   "claim": "Conventional risk models understated LTCM's losses because the models were estimated during more stable periods and therefore did not describe behavior under stress.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "evidenced",
   "scope_conditions": [
    "models calibrated on data from stable market periods",
    "subsequent stress conditions"
   ],
   "supporting_quote": "markets greatly exceeded what conventional risk models suggested were probable, but these were estimated during more stable periods."
  },
  {
   "id": "kaal:claim:3405660-008",
   "url": "https://wulfkaal.github.io/claims/3405660-008",
   "claim": "The same leverage that produced LTCM's high returns magnified its losses, so leverage is a symmetric amplifier rather than a one directional source of performance.",
   "type": "mechanism",
   "topics": [
    "private-funds",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "evidenced",
   "supporting_quote": "In spite of the fact that leverage was key to LTCM ́s high returns, it also magnified LTCM ́s losses."
  },
  {
   "id": "kaal:claim:3405660-009",
   "url": "https://wulfkaal.github.io/claims/3405660-009",
   "claim": "Before its collapse LTCM held roughly $4.8 billion in capital while controlling $160 billion in stocks and bonds, with derivatives of a notional value of $1 trillion.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "evidenced",
   "scope_conditions": [
    "position as of the period immediately before the 1998 crash"
   ],
   "supporting_quote": "LTCM had $4.8 billion in capital prior to the crash and controlled $160 billion in stocks and bonds. In addition, derivatives of the fund had a notional value of $1 trillion."
  },
  {
   "id": "kaal:claim:3405660-010",
   "url": "https://wulfkaal.github.io/claims/3405660-010",
   "claim": "Hedge fund disclosure to counterparties and investors relies on balance sheet concepts that are uninformative about the actual nature of market risk and credit risk exposures.",
   "type": "failure",
   "topics": [
    "disclosure",
    "economics",
    "risk-and-incentives",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "Disclosure by hedge funds to counterparties and investors are often made by using balance-sheet concepts, which are not informative about the nature of the exposures to market risk and credit risk."
  },
  {
   "id": "kaal:claim:3405660-011",
   "url": "https://wulfkaal.github.io/claims/3405660-011",
   "claim": "LTCM reached systemically dangerous size because banks lent to it without regard to repayment capacity, and in doing so the banks endangered their own existence.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "LTCM grew as large as it did because banks lent it money without regard for whether this money could be paid back. Banks put their own existence at risk with their lending practices during this time."
  },
  {
   "id": "kaal:claim:3405660-012",
   "url": "https://wulfkaal.github.io/claims/3405660-012",
   "claim": "Banks continue to find hedge fund business desirable because hedge funds take risks other participants will not, borrow heavily and pay a premium for borrowing, which sustains the lending relationship despite its dangers.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "defi",
    "private-funds",
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "Hedge funds are significant clients and counterparties to banks, particularly because they take on risks that other financial participants would not, borrow massive amounts and are willing to pay a premium for borrowing. Therefore, banks management still view business from hedge funds as desirable."
  },
  {
   "id": "kaal:claim:3405660-013",
   "url": "https://wulfkaal.github.io/claims/3405660-013",
   "claim": "A single global financial regulator is not a serious policy option because national political interests are incoherent and cannot readily be united to establish such a body.",
   "type": "failure",
   "topics": [
    "economics",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "Given national incoherent political interests and the problem of uniting them to set up an international body, the idea of a single global regulator is not on any serious agenda."
  },
  {
   "id": "kaal:claim:3405660-014",
   "url": "https://wulfkaal.github.io/claims/3405660-014",
   "claim": "Additional direct limitations on hedge funds spill over onto other private investment pools such as venture capital funds and structured financings, which do not present the same systemic risk concerns.",
   "type": "failure",
   "topics": [
    "innovation",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "rules drafted broadly enough to capture private investment pools generally"
   ],
   "supporting_quote": "The imposition of additional limitations on hedge funds can impose unwarranted burdens on other types of private investment pools, such as venture capital funds and structured financings that do not raise the same concerns as hedge funds in terms of systemic risk."
  },
  {
   "id": "kaal:claim:3405660-015",
   "url": "https://wulfkaal.github.io/claims/3405660-015",
   "claim": "Coordinated international cooperation in hedge fund regulation will ultimately be hindered by administrative costs, immense transaction costs, setup costs and, above all, the divergent interests of offshore havens and the resulting jurisdictional arbitrage, so it may never become a realistic regulatory option.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "The administrative costs, the immense transaction costs as well as the costs of setting up such a venture and, most importantly, the differing interests especially of off-shore heavens and, hence, jurisdictional arbitrage will ultimately hinder such actions."
  },
  {
   "id": "kaal:claim:3405660-016",
   "url": "https://wulfkaal.github.io/claims/3405660-016",
   "claim": "If coordinated international regulation forces hedge funds out, the funds can absorb the costs of relocating offshore while the market segments and jurisdictions they leave will inevitably suffer.",
   "type": "predictive",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "coordinated international cooperation is actually implemented"
   ],
   "supporting_quote": "Hedge funds may be able to afford to relocate off- shore with all its detrimental repercussions, i.e. costs, client losses etc. but certain market segments and jurisdictions will inevitably suffer when all its hedge funds are forced out."
  },
  {
   "id": "kaal:claim:3405660-017",
   "url": "https://wulfkaal.github.io/claims/3405660-017",
   "claim": "There is currently no precise formula for devising effective integrated prudential hedge fund regulation, so the prudential model remains underspecified.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "private-funds"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "asserted",
   "supporting_quote": "Currently, no precise formula exist for devising effective integrated prudential hedge fund regulation."
  },
  {
   "id": "kaal:claim:3405660-018",
   "url": "https://wulfkaal.github.io/claims/3405660-018",
   "claim": "The complex trading, investing and corporate structures of active international hedge funds are a major constraint on effective prudential supervision.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "internationally active hedge funds with complex group structures"
   ],
   "supporting_quote": "One of the major constraining factors that constricts effective prudential supervision of hedge funds is the complex trading-, investing- and corporate structure of active international hedge funds."
  },
  {
   "id": "kaal:claim:3405660-019",
   "url": "https://wulfkaal.github.io/claims/3405660-019",
   "claim": "Indirect regulation is defined as a regulatory approach that regulates the counterparties and intermediaries of hedge funds rather than the hedge funds themselves, addressing the critical regulatory issues without acting on the funds directly.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "asserted",
   "supporting_quote": "Indirect regulation of hedge funds is a regulatory approach that emphasizes the regulation of counterparties to hedge funds and intermediaries rather than hedge funds themselves."
  },
  {
   "id": "kaal:claim:3405660-020",
   "url": "https://wulfkaal.github.io/claims/3405660-020",
   "claim": "Indirect regulation is often the only feasible tool available, because in many jurisdictions regulators lack full direct regulatory authority over hedge funds and can act only through the regulated entities they do control.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions where regulators lack full direct authority over hedge funds",
    "regulators have authority over broker dealers, prime brokers and affiliates"
   ],
   "supporting_quote": "Indirect regulation if often the only feasible regulatory tool for regulators seeking to lower risks associated with the hedge fund industry and protect investors and markets. In many jurisdictions, regulators do not have (full) direct regulatory authority over hedge funds."
  },
  {
   "id": "kaal:claim:3405660-021",
   "url": "https://wulfkaal.github.io/claims/3405660-021",
   "claim": "Indirect regulation minimizes regulatory expense by relying on the private sector risk practices of counterparties and creditors, producing an equilibrium between regulatory cost and regulatory attainment.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "counterparties and creditors actually maintain disciplined private sector practices"
   ],
   "supporting_quote": "Relying on private sector practices by counterparties and creditors minimizes regulatory expenses significantly. Indirect regulation enables a state of equilibrium between costs and attainments of regulatory initiatives."
  },
  {
   "id": "kaal:claim:3405660-022",
   "url": "https://wulfkaal.github.io/claims/3405660-022",
   "claim": "Indirect regulation lets hedge funds preserve the opacity their strategies require, on the condition that their counterparties rather than the funds become the primary regulatory targets.",
   "type": "design",
   "topics": [
    "private-funds",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "hedge fund counterparties are made the primary regulatory targets"
   ],
   "supporting_quote": "Indirect regulation allows the hedge fund industry to preserve the necessary opaqueness of the activities of hedge funds if hedge fund's counterparties become the primary regulatory targets."
  },
  {
   "id": "kaal:claim:3405660-023",
   "url": "https://wulfkaal.github.io/claims/3405660-023",
   "claim": "Indirect regulation asks banks to fully assess the risk they incur from hedge fund counterparties, but that assessment is often dubious at best because of the opacity of hedge fund activity.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "banks face opaque hedge fund counterparties"
   ],
   "supporting_quote": "Regulators who regulate banks' risk management processes are in essence asking banks to fully assess the risks they incur in engaging with hedge funds as their counterparties. That assessment is often dubious at best."
  },
  {
   "id": "kaal:claim:3405660-024",
   "url": "https://wulfkaal.github.io/claims/3405660-024",
   "claim": "Any risk assessment of hedge funds as counterparties is necessarily incomplete, because there is no common measure for calculating leverage and exposure and because fund trading strategies are dynamic.",
   "type": "failure",
   "topics": [
    "research-methods",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "The absence of a common measure with which to calculate leverage and exposure and the dynamic nature of hedge funds ́ trading strategies is just one example that shows the incomplete nature of any risk assessment of hedge funds as counterparties."
  },
  {
   "id": "kaal:claim:3405660-025",
   "url": "https://wulfkaal.github.io/claims/3405660-025",
   "claim": "Competition among creditor banks undermines indirect regulation, because competing banks compromise on important elements of the risk management process and agree to overly generous credit conditions.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "multiple banks competing to lend to the same hedge funds"
   ],
   "supporting_quote": "Competition among creditor banks can also lead to compromising on important elements of the risk management process and agreeing to overly generous credit conditions."
  },
  {
   "id": "kaal:claim:3405660-026",
   "url": "https://wulfkaal.github.io/claims/3405660-026",
   "claim": "Banks can restrain borrower risk taking because they can credibly threaten to cut off future lending, a disciplinary tool other intermediaries lack.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "ongoing lending relationship in which future credit matters to the borrower"
   ],
   "supporting_quote": "They have advantages in preventing risk taking by borrowers because they can use the threat of cutting off future lending to improve a borrower's behavior."
  },
  {
   "id": "kaal:claim:3405660-027",
   "url": "https://wulfkaal.github.io/claims/3405660-027",
   "claim": "The Basel framework serves indirect hedge fund regulation by aligning regulatory capital requirements more closely with underlying risks and by giving banks and supervisors several options for assessing capital adequacy.",
   "type": "design",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "The Basel framework aligns regulatory capital requirements more closely with underlying risks, and provides banks and their supervisors with several options for the assessment of capital adequacy."
  },
  {
   "id": "kaal:claim:3405660-028",
   "url": "https://wulfkaal.github.io/claims/3405660-028",
   "claim": "Basel II was at least partly motivated by the LTCM rescue and the 1998 market turbulence, so it responds to the same concerns that animate hedge fund regulation.",
   "type": "empirical",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "Accordingly, Basle II was, at least partly, motivated by the events surrounding LTCM and, therefore, by the same concerns and problems."
  },
  {
   "id": "kaal:claim:3405660-029",
   "url": "https://wulfkaal.github.io/claims/3405660-029",
   "claim": "The three pillars of Basel II and its successors are rules addressed to banks that thereby indirectly regulate hedge funds.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "The three pillars of Basle II and its successors, constitute a set of rules applicable to financial intermediaries i.e. banks which indirectly regulate hedge funds."
  },
  {
   "id": "kaal:claim:3405660-030",
   "url": "https://wulfkaal.github.io/claims/3405660-030",
   "claim": "Applying the Basel Framework to hedge fund regulation conforms to the requirements of incomplete contract theory, which supplies the theoretical justification for the indirect approach.",
   "type": "design",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "asserted",
   "supporting_quote": "Applying the Basel Framework to hedge fund regulation is in conformity with the requirements of incomplete contract theory."
  },
  {
   "id": "kaal:claim:3405660-031",
   "url": "https://wulfkaal.github.io/claims/3405660-031",
   "claim": "Indirect regulation removes the problem of missing jurisdictional authority and therefore of jurisdictional arbitrage, because the Basel Framework applies to banks worldwide rather than to funds in any one jurisdiction.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "Basel Framework is broadly adopted across banking jurisdictions"
   ],
   "supporting_quote": "Indirect regulation of hedge funds removes the problem of lacking jurisdictional authority and, thus, jurisdictional arbitrage. The Basel Framework is a framework for banks worldwide."
  },
  {
   "id": "kaal:claim:3405660-032",
   "url": "https://wulfkaal.github.io/claims/3405660-032",
   "claim": "By letting funds implement their own risk monitoring systems, indirect regulation avoids compliance costs that would otherwise threaten the profitability needed to justify the 2 and 20 fee structure to clients.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "private-funds"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "Indirect regulation enables the hedge fund industry to avoid costs by implementing their own risk monitoring systems and measurements. Accordingly, indirect regulation helps address the danger that hedge funds might not be sufficiently profitable to justify their 2/20 fee structure to clients."
  },
  {
   "id": "kaal:claim:3405660-033",
   "url": "https://wulfkaal.github.io/claims/3405660-033",
   "claim": "The Basel Framework reduces systemic risk by regulating bank credit standards, which indirectly constrains hedge fund leverage and makes credit markets safer.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "Systemic risk problems are addressed because the Basel Framework regulates the credit standards of banks but indirectly also hedge funds' level of leverage. Hence, credit markets are saver."
  },
  {
   "id": "kaal:claim:3405660-034",
   "url": "https://wulfkaal.github.io/claims/3405660-034",
   "claim": "Market discipline, internal ratings and supervisory review under the Basel Framework change bank lending practice and disclosure, which in turn lowers hedge fund leverage and mitigates moral hazard of the kind seen at LTCM.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "Moral hazard problems are addressed because the Basel Framework guarantees, by introducing market discipline, internal ratings and supervisory review, a change in lending practice and disclosure. This, in turn, will further decrease the capital – leverage ratio of hedge funds."
  },
  {
   "id": "kaal:claim:3405660-035",
   "url": "https://wulfkaal.github.io/claims/3405660-035",
   "claim": "Indirect regulation makes ex post opportunism by hedge funds less likely because the financial intermediaries, not just the funds, stand to lose reputation and market position if their counterparty risk evaluation proves insufficient.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "intermediaries face reputational exposure in the market"
   ],
   "supporting_quote": "ex post opportunism of hedge funds is less likely considering that not only hedge funds but also their financial intermediaries are endangered to lose their reputation and market position in case it transpired that their risk evaluation of a counterparty hedge fund is insufficient"
  },
  {
   "id": "kaal:claim:3405660-036",
   "url": "https://wulfkaal.github.io/claims/3405660-036",
   "claim": "The internal ratings based approach reduces information asymmetry because internal ratings capture supplementary borrower information that external credit assessors cannot reach and cover a broader range of borrowers.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "risk-and-incentives",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "scope_conditions": [
    "banks use the internal ratings based approach"
   ],
   "supporting_quote": "internal ratings may incorporate supplementary information about borrowers that is usually beyond the reach of institutions providing external credit assessments, and may cover a much broader range of borrowers"
  },
  {
   "id": "kaal:claim:3405660-037",
   "url": "https://wulfkaal.github.io/claims/3405660-037",
   "claim": "The author concedes a standing tension: hedge funds must remain secretive because less market information about their activities is what keeps them profitable, which limits how far any transparency oriented reform can go.",
   "type": "condition",
   "topics": [
    "private-funds",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "On the other hand, however, hedge funds need to remain in secrecy because the less information the market has about hedge fund's activities, the easier it is for them to stay profitable."
  },
  {
   "id": "kaal:claim:3405660-038",
   "url": "https://wulfkaal.github.io/claims/3405660-038",
   "claim": "Under an indirect approach hedge funds can remain exempt from disclosure and transparency requirements because only the financial intermediaries are required to reveal the relevant information, which is why the approach reconciles secrecy with reduced information asymmetry.",
   "type": "design",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "At the same time, under an indirect regulatory approach, hedge funds can remain exempt from disclosure and transparency requirements. Only financial intermediaries are required to unveil that information."
  },
  {
   "id": "kaal:claim:3405660-039",
   "url": "https://wulfkaal.github.io/claims/3405660-039",
   "claim": "Because the Basel Framework applies on a consolidated basis to the holding companies of banking groups, it captures risks across the whole group and so addresses the complex structures that defeat prudential supervision.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "The Basel Framework is extended on a consolidated basis to holding companies of banking groups in order to ensure that risks within the entire banking group are considered."
  },
  {
   "id": "kaal:claim:3405660-040",
   "url": "https://wulfkaal.github.io/claims/3405660-040",
   "claim": "Indirect regulation through Basel banking supervision removes the need for joint regulatory action and avoids each national regulator's transaction and implementation costs, because an international framework requires only one implementation and compliance then falls to participating banks.",
   "type": "mechanism",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "year": "2019",
   "source_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "confidence": "argued",
   "supporting_quote": "Indirect regulation of hedge funds via the banking supervision in the Basel Framework also removes the need for joint regulatory action and individual regulators' transaction costs and implementation costs."
  },
  {
   "id": "kaal:claim:3396522-001",
   "url": "https://wulfkaal.github.io/claims/3396522-001",
   "claim": "The unfettered discretion of fiat monetary policy makers can lead to arbitrary outcomes, because the overall value and stability of any fiat currency is contingent on the fluctuations and successes of a country's economy rather than on any fixed valuation basis.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "systemic-risk",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "supporting_quote": "The unfettered discretion of policy makers can lead to arbitrary outcomes.8 The overall value and stability of any fiat currency is contingent on fluctuations and successes of a country's economy.9"
  },
  {
   "id": "kaal:claim:3396522-002",
   "url": "https://wulfkaal.github.io/claims/3396522-002",
   "claim": "Monetary policy making for fiat currencies largely lacks transparency, and that opacity prevents markets from taking anticipatory action on policy indicators.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "disclosure",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "supporting_quote": "Lastly, monetary policy making for fiat currencies is largely lacking transparency. The lacking transparency of monetary policy making does not allow for anticipatory market action based on policy indicators."
  },
  {
   "id": "kaal:claim:3396522-003",
   "url": "https://wulfkaal.github.io/claims/3396522-003",
   "claim": "Significant failure of decentralization projects is not merely tolerable but necessary and useful, because failures are how appropriate use cases get explored during the immature phase of the technology.",
   "type": "normative",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "asserted",
   "scope_conditions": [
    "during the early, pre maturity phase of decentralization technology"
   ],
   "supporting_quote": "Significant decentralization project failures are necessary and useful while appropriate use cases are being explored ."
  },
  {
   "id": "kaal:claim:3396522-004",
   "url": "https://wulfkaal.github.io/claims/3396522-004",
   "claim": "Tether's growth in market capitalization, its stability around one dollar, and investors' use of it as a temporary safe haven provide some empirical support for the proposition that stable cryptocurrencies can create market stability.",
   "type": "empirical",
   "topics": [
    "economics",
    "tokenomics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "evidenced",
   "scope_conditions": [
    "support is partial and, on the authors' own framing, possibly only temporary"
   ],
   "supporting_quote": "The rise of an early stable cryptocurrency design, Tether, in terms of its total market capitalization,169 its stability around $1 value, and investors' uses of Tether as a temporary safe haven, provide some support for stable cryptocurrencies' ability to create market stability."
  },
  {
   "id": "kaal:claim:3396522-005",
   "url": "https://wulfkaal.github.io/claims/3396522-005",
   "claim": "Every stable cryptocurrency project, Tether included, remains afflicted with significant design challenges; no existing design has solved the stability problem.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "asserted",
   "scope_conditions": [
    "as of the 2019 state of the market"
   ],
   "supporting_quote": "Like all other stable cryptocurrency projects, Tether is still afflicted with significant design challenges."
  },
  {
   "id": "kaal:claim:3396522-006",
   "url": "https://wulfkaal.github.io/claims/3396522-006",
   "claim": "Central bank operated wholesale payment systems are at the end of their technological life cycle, running on largely obsolete database designs and computing languages that are very expensive to maintain, which is one reason central banks are experimenting with token designs.",
   "type": "empirical",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "evidenced",
   "supporting_quote": "Central bank- operated wholesale payment systems are already at the end of their technological life cycle, using database designs and computing languages that are largely obsolete and very expensive to maintain."
  },
  {
   "id": "kaal:claim:3396522-007",
   "url": "https://wulfkaal.github.io/claims/3396522-007",
   "claim": "JPM Coin's closed structure, restricting the token to existing J.P. Morgan clients, is an anachronism, because closed ecosystems are unsustainable in emerging decentralized commerce.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to permissioned stable cryptocurrencies limited to a single institution's clients"
   ],
   "supporting_quote": "The close structure of the JPM coin, e.g. JPM makes it only available to existing clients, appears to be an anachronism.95 Closed ecosystems are unsustainable in the emerging decentralized commerce."
  },
  {
   "id": "kaal:claim:3396522-008",
   "url": "https://wulfkaal.github.io/claims/3396522-008",
   "claim": "Both collateralization strategies carry significant downsides: fiat collateralized pegs bear the brunt of expensive capital requirements, while cryptocurrency pegs face heavy volatility pressures and swings.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "supporting_quote": "Collateralized fiat currency pegs bear the brunt of expensive capital requirements and uncollateralized cryptocurrency pegs face heavy volatility pressures and swings."
  },
  {
   "id": "kaal:claim:3396522-009",
   "url": "https://wulfkaal.github.io/claims/3396522-009",
   "claim": "A fiat backed stable cryptocurrency that is not fully collateralized is exposed to arbitrage trade attacks of the kind George Soros used against the pound sterling; full collateralization is therefore a necessary defense.",
   "type": "condition",
   "topics": [
    "consensus-and-security",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "applies to stable cryptocurrencies claiming a fiat peg"
   ],
   "supporting_quote": "Without a 100% fiat collateralization, such projects would run the risk of arbitrage trade attacks similar to what Financier George Soros used to \"break the bank of England"
  },
  {
   "id": "kaal:claim:3396522-010",
   "url": "https://wulfkaal.github.io/claims/3396522-010",
   "claim": "Fiat currency collateralization is expensive and inefficient because the entire backing value must be held liquid; anything less opens arbitrage opportunities of the Soros type.",
   "type": "mechanism",
   "topics": [
    "defi",
    "consensus-and-security",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "assumes the backing must remain fully liquid to prevent arbitrage"
   ],
   "supporting_quote": "Fiat currency collateralization is expensive and inefficient because all of the value that is backing the cryptocurrency needs to be liquid, otherwise arbitrage opportunities, such as the Soros attack, are possible."
  },
  {
   "id": "kaal:claim:3396522-011",
   "url": "https://wulfkaal.github.io/claims/3396522-011",
   "claim": "The minimum price of a fiat backed stable cryptocurrency is the interest rate of the fiat currency it is pegged to, because the collateral must sit liquid rather than earn a return.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "applies to fully collateralized fiat backed tokens"
   ],
   "supporting_quote": "Therefore, the price tag of fiat-backed tokens is, at a minimum, the interest rate of the pegged fiat currency."
  },
  {
   "id": "kaal:claim:3396522-012",
   "url": "https://wulfkaal.github.io/claims/3396522-012",
   "claim": "Cryptocurrency backed tokens are more expensive than fiat backed tokens because stability is sourced from far more volatile assets, so such tokens must be backed by substantially more than 100 percent of the collateral's current value to survive a drop in the collateral basket.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "holds while the backing cryptocurrencies remain more volatile than fiat"
   ],
   "supporting_quote": "Any cryptocurrency-backed token must be backed with much more than 100% of the current value of the cryptocurrency in case the basket of other crypto currencies' value drops."
  },
  {
   "id": "kaal:claim:3396522-013",
   "url": "https://wulfkaal.github.io/claims/3396522-013",
   "claim": "No uncollateralized algorithmic stable cryptocurrency, such as Basis or NuBits, had produced a provably stable mechanism for its tokens as of the time of writing.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "asserted",
   "scope_conditions": [
    "as of 2019"
   ],
   "supporting_quote": "At the time of this writing no uncollateralized algorithmic project had created a provable stable mechanism for its tokens."
  },
  {
   "id": "kaal:claim:3396522-014",
   "url": "https://wulfkaal.github.io/claims/3396522-014",
   "claim": "Trading a token directly against a well established stable cryptocurrency removes several layers of conversion fees and eliminates the risk that the bridge currency depreciates during the sequence of trades.",
   "type": "mechanism",
   "topics": [
    "contingent-capital",
    "tokenomics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "requires the stable cryptocurrency to be traded in pairs with the token in question"
   ],
   "supporting_quote": "The use of stable cryptocurrencies, if traded in pairs with the cryptocurrency in question, allows investors to remove several levels of conversion fees and removes the risk of depreciation of the bridge currency during the trades."
  },
  {
   "id": "kaal:claim:3396522-015",
   "url": "https://wulfkaal.github.io/claims/3396522-015",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "defi",
    "institutional-design",
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "requires a universal exchange bridging traditional and crypto assets"
   ],
   "supporting_quote": "In essence, the combination of a well- established stable cryptocurrency with a universal exchange create a positive feedback loop. The exchange liquidity is enhanced by the stable cryptocurrency and the stability and adoption of the stable currency is enhanced through the exchange."
  },
  {
   "id": "kaal:claim:3396522-016",
   "url": "https://wulfkaal.github.io/claims/3396522-016",
   "claim": "Because cryptocurrency transactions are possible without a banking relationship, stable cryptocurrencies can remedy the disproportionate burden that cash economies impose on the poor and the unbanked by equalizing access to the payment system.",
   "type": "design",
   "topics": [
    "systemic-risk",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "assumes the poor and unbanked can access the technology itself"
   ],
   "supporting_quote": "Access to cryptocurrency transactions is possible without a banking relationship. With equality of payment system access, the poor and unbanked are no longer disadvantaged through the use of cash."
  },
  {
   "id": "kaal:claim:3396522-017",
   "url": "https://wulfkaal.github.io/claims/3396522-017",
   "claim": "Conducting commerce on public blockchains counteracts corruption because every transaction becomes publicly visible and traceable to both consumers and the government, removing the untraceability that corrupt dealing requires.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "requires use of public rather than permissioned blockchains"
   ],
   "supporting_quote": "The transparency and traceability of public blockchain transactions in business and commerce counteracts corruption. Using public blockchains in commerce makes every and all transactions publicly visible and traceable for consumers and the government alike."
  },
  {
   "id": "kaal:claim:3396522-018",
   "url": "https://wulfkaal.github.io/claims/3396522-018",
   "claim": "Stability drives a causal chain in commerce: the more stable a cryptocurrency, the more it proliferates, and the more stable cryptocurrencies proliferate in commerce, the less able corruption is to destroy economic growth, making the degree of currency stability negatively correlated with corruption.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "supporting_quote": "The more stable a cryptocurrency is, the more likely it is to proliferate.137 In turn, the more proliferation of stable cryptocurrencies occurs in commerce, the less likely it is for corruption to destroy economic growth."
  },
  {
   "id": "kaal:claim:3396522-019",
   "url": "https://wulfkaal.github.io/claims/3396522-019",
   "claim": "The cryptocurrency market structure is fundamentally convoluted because each project requires its own volatile token, which is equivalent to forcing grocery shoppers to buy a different currency for every store and every product.",
   "type": "failure",
   "topics": [
    "economics",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "describes the market from inception through 2019"
   ],
   "supporting_quote": "The market structure of cryptocurrencies from its inception to 2019 can be compared to mandating customers who wish to purchase groceries to purchase a different currency for each store they visit and for each product chosen in such store."
  },
  {
   "id": "kaal:claim:3396522-020",
   "url": "https://wulfkaal.github.io/claims/3396522-020",
   "claim": "Leverage offered by cryptocurrency exchanges worsens rather than cures the market's illiquidity, because borrowed money rather than genuine demand is driving the price.",
   "type": "failure",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "applies to exchanges offering five to ten times leverage on crypto trades"
   ],
   "supporting_quote": "Cryptocurrency exchanges such as Bitmax, Kraken, among others, offer 5-10x leverage for cryptocurrency trades. This exacerbates the problem of illiquidity as borrowed money is driving the price."
  },
  {
   "id": "kaal:claim:3396522-021",
   "url": "https://wulfkaal.github.io/claims/3396522-021",
   "claim": "Extreme illiquidity combined with the herd mentality of crypto investors systematically benefits speculators, because it lets apparent scarcity materialize out of nowhere precisely when investors are about to decide, prompting misinformed buy and sell decisions.",
   "type": "mechanism",
   "topics": [
    "defi",
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "holds in deeply illiquid markets where speculators control supply"
   ],
   "supporting_quote": "The very high illiquidity of the cryptocurrency market in combination with the herd mentality of crypto investors benefits speculators because it allows scarcity to appear out of nowhere including for investors who are about to make an investment decision."
  },
  {
   "id": "kaal:claim:3396522-022",
   "url": "https://wulfkaal.github.io/claims/3396522-022",
   "claim": "Capping token supply, the dominant design choice in early cryptocurrency projects, is self defeating: fixing supply removes the core policy tool, minting additional tokens, that would otherwise address overvaluation, excessive speculation, market frenzy, and irrational exuberance.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "applies to hardcoded fixed supply token designs"
   ],
   "supporting_quote": "In fact, fixing token supply removes the core policy tool, minting of additional tokens to increase supply, intended to address overvaluation, speculation, market frenzy and irrational exuberance."
  },
  {
   "id": "kaal:claim:3396522-023",
   "url": "https://wulfkaal.github.io/claims/3396522-023",
   "claim": "Central bank price stability is elusive for two structural reasons: central banks are constantly lobbied to move money supply away from equilibrium, and even absent lobbying they face information asymmetries that prevent them from determining the optimal supply at any given moment.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "economics",
    "disclosure",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "supporting_quote": "Central banks are constantly being lobbied to increase or decrease money supply away from equilibrium.149 Moreover, even without lobbying, Central banks are subject to information asymmetries that do not allow them to determine the optimal amount of supply at any given point in time."
  },
  {
   "id": "kaal:claim:3396522-024",
   "url": "https://wulfkaal.github.io/claims/3396522-024",
   "claim": "Stable cryptocurrencies escape part of the lobbying problem by hardcoding their policy rationales and outcomes into the protocol, which limits the amount of lobbying that can influence policy decisions.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "holds to the extent policy is genuinely hardcoded rather than discretionary"
   ],
   "supporting_quote": "By making part of their policy rationales and outcomes hardcoded solutions, stable cryptocurrencies limit the amount of lobbying that can affect policy decisions."
  },
  {
   "id": "kaal:claim:3396522-025",
   "url": "https://wulfkaal.github.io/claims/3396522-025",
   "claim": "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.",
   "type": "predictive",
   "topics": [
    "disclosure",
    "tokenomics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "assumes policy rules remain largely hardcoded and transparent"
   ],
   "supporting_quote": "Because of this transparency and associated predictability, market participants can anticipate policy making and adjust behavior accordingly. In fact, such anticipatory policy reactions could, over time, make actual policy-making the exception rather than the rule."
  },
  {
   "id": "kaal:claim:3396522-026",
   "url": "https://wulfkaal.github.io/claims/3396522-026",
   "claim": "Full hardcoding is impossible: no stable cryptocurrency can encode all required policies and policy actions with full transparency, because future policy needs cannot be anticipated ex ante.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "supporting_quote": "No stable cryptocurrency can hardcode all required policies and policy making actions with full transparency as future policy cannot be fully anticipated ex ante, before the needs occur."
  },
  {
   "id": "kaal:claim:3396522-027",
   "url": "https://wulfkaal.github.io/claims/3396522-027",
   "claim": "Monetary policy for stable cryptocurrencies should combine hardcoded transparent rules with protocols enabling decentralized autonomous organizations, with decentralized but fully transparent policy DAOs functioning as the policy makers for what cannot be hardcoded.",
   "type": "design",
   "topics": [
    "dao",
    "governance-design",
    "tokenomics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "depends on DAO governance designs that address expertise and incentive problems"
   ],
   "supporting_quote": "monetary policy for cryptocurrencies can additionally be supported by protocols enabling decentralized autonomous organizations (DAOs).152 Decentralized but fully transparent policy DAOs can help function as policy makers."
  },
  {
   "id": "kaal:claim:3396522-028",
   "url": "https://wulfkaal.github.io/claims/3396522-028",
   "claim": "The authors qualify their own case: stable cryptocurrencies can experiment with monetary policy on an unprecedented scale only because they are insulated from real world complexities and political positioning, and that advantage shrinks once real world market factors actually apply to them.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "applies as stable cryptocurrencies scale into real world use"
   ],
   "supporting_quote": "This allows them to experiment with monetary policy tools on an unprecedented scale. Such experimentation is limited if and when real-world market factors pertain to such stable cryptocurrencies."
  },
  {
   "id": "kaal:claim:3396522-029",
   "url": "https://wulfkaal.github.io/claims/3396522-029",
   "claim": "The interoperability deficit in cryptocurrency markets is partly intrinsic to blockchain technology itself, because the consensus mechanism that allows block propagation on one chain in some ways negates interoperability with other chains and their consensus.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "blockchain",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "supporting_quote": "The lack of interoperability can in part be traced back to blockchain technology itself. The consensus created to allow block propagation in some ways negates interoperability with other chains and their consensus."
  },
  {
   "id": "kaal:claim:3396522-030",
   "url": "https://wulfkaal.github.io/claims/3396522-030",
   "claim": "The lack of interoperability is a very serious threat to the survivability of cryptocurrency projects, as the crypto winter of 2018 and 2019 demonstrated when thousands of competing, non interoperable projects failed.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "evidenced",
   "supporting_quote": "The lack of interoperability is a very serious threat of survivability of cryptocurrency projects."
  },
  {
   "id": "kaal:claim:3396522-031",
   "url": "https://wulfkaal.github.io/claims/3396522-031",
   "claim": "Currency stability should be used as the consumer facing proxy for interoperability, because teaching the public to value stability is easier than educating it about the blockchain technology that produces technical interoperability.",
   "type": "design",
   "topics": [
    "education-and-practice",
    "economics",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "supporting_quote": "Rather than using technological solutions and educating the public on the blockchain technology that helps create interoperability, currency stability, and the public's recognition of the desirability of currency stability, serves as a proxy for interoperability."
  },
  {
   "id": "kaal:claim:3396522-032",
   "url": "https://wulfkaal.github.io/claims/3396522-032",
   "claim": "The low transaction throughput of public blockchains is a core limitation holding back more advanced distributed applications and, with them, decentralized commerce.",
   "type": "failure",
   "topics": [
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "as of 2019 throughput levels"
   ],
   "supporting_quote": "The low transaction throughputs of public blockchains158 is a core limitation that holds back more advanced DApps."
  },
  {
   "id": "kaal:claim:3396522-033",
   "url": "https://wulfkaal.github.io/claims/3396522-033",
   "claim": "Decentralization technology is unlikely to proliferate without a core use case beyond store of value; banking, money transmission, and triple entry accounting are natural use cases but fall short of being universal use cases for public blockchains.",
   "type": "condition",
   "topics": [
    "blockchain",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "supporting_quote": "Moreover, without a core use case, other than the store of value, decentralization technology is less likely to proliferate."
  },
  {
   "id": "kaal:claim:3396522-034",
   "url": "https://wulfkaal.github.io/claims/3396522-034",
   "claim": "A decentralized crypto economy requires a stable coin because no rational party will risk wealth on a long term contract denominated in a volatile currency: neither renter nor landlord will sign a lease whose rent may halve or double in any given week.",
   "type": "condition",
   "topics": [
    "economics",
    "decentralization",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "applies to long term business contracts denominated in the currency"
   ],
   "supporting_quote": "Neither party to a business transaction should be willing to risk their wealth on a long-term business contract which uses a volatile currency. Neither the renter nor the landlord will sign a contract if the rent may halve or double in any given week."
  },
  {
   "id": "kaal:claim:3396522-035",
   "url": "https://wulfkaal.github.io/claims/3396522-035",
   "claim": "Because stable cryptocurrencies are free of the real world pressures that constrain emerging market currencies, they may be able to experiment with solutions that overcome the currency trilemma, attaining a fixed exchange rate, free capital movement, and an independent monetary policy at once.",
   "type": "predictive",
   "topics": [
    "tokenomics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "speculative",
   "scope_conditions": [
    "hinges on DAO governance protocols that deliver full decentralization and independence"
   ],
   "supporting_quote": "lack of real-world pressures that afflict emerging market currencies may enable stable cryptocurrency projects to experiment with solutions that can help overcome the trilemma."
  },
  {
   "id": "kaal:claim:3396522-036",
   "url": "https://wulfkaal.github.io/claims/3396522-036",
   "claim": "Mass adoption fails at the user level: the average user will not identify, research, and purchase diverse sets of tokens even where those tokens would create value, because the existing cryptocurrency market structure is simply too cumbersome.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "supporting_quote": "The average user is unwilling to identify, research, and purchase diverse sets of tokens, even if their application and use cases would create value. The existing market structure for cryptocurrencies is simply too cumbersome for the average user."
  },
  {
   "id": "kaal:claim:3396522-037",
   "url": "https://wulfkaal.github.io/claims/3396522-037",
   "claim": "Non speculator lay people will not use cryptocurrencies for daily consumption, groceries, or banking transactions unless the value of the currency is stable; stability is a precondition of ordinary consumer use, not merely a convenience.",
   "type": "condition",
   "topics": [
    "economics",
    "risk-and-incentives",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "supporting_quote": "In other words, non- speculator lay people are not going to use cryptocurrencies for their daily consumption tasks, payment of groceries, banking transactions, among other examples, if the value of their cryptocurrency is not stable."
  },
  {
   "id": "kaal:claim:3396522-038",
   "url": "https://wulfkaal.github.io/claims/3396522-038",
   "claim": "Merchant adoption of stable cryptocurrencies turns on a concrete threshold: merchants pay 2.9 percent to credit card companies on non cash transactions, so any medium of exchange costing less than 2.9 percent benefits merchants, who can pass the saving to consumers as a discount.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "scope_conditions": [
    "assumes exchange rate risk for the consumer stays below the 2.9 percent threshold"
   ],
   "supporting_quote": "In the existing digital commerce, merchants pay 2.9% to the credit card company for any transaction involving non-cash transfer with credit cards. Merchants would benefit from any medium of exchange that requires them to pay less than that 2.9%."
  },
  {
   "id": "kaal:claim:3396522-039",
   "url": "https://wulfkaal.github.io/claims/3396522-039",
   "claim": "Near instant settlement with stable cryptocurrencies removes counterparty risk, and the resulting reduction in counterparty risk boosts consumer confidence and increases transactional certainty relative to systems like Visa that take five to seven business days to pay merchants.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "argued",
   "supporting_quote": "Such speed in settlement takes away the counterparty risk and with less counterparty risk, speed of settlement with cryptocurrencies boosts consumer confidence and increases certainty for transactions."
  },
  {
   "id": "kaal:claim:3396522-040",
   "url": "https://wulfkaal.github.io/claims/3396522-040",
   "claim": "The authors adopt Schilling and Uhlig's result that official money and cryptocurrencies can co-exist in a manner consistent with stability, rejecting the framing that private currency and central bank money are necessarily mutually exclusive.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522",
   "year": "2019",
   "source_sha256": "ef5031b16aa53476ed618f0bdf92601cd4affb893692c701134bd9cba3ea8acf",
   "confidence": "evidenced",
   "scope_conditions": [
    "drawn from a model with decentralized Bitcoin production and a Dollar supply controlled to an inflation target"
   ],
   "supporting_quote": "For our purposes, the important result is that it is possible for official money and cryptocurrencies to co-exist in a manner consistent with stability."
  },
  {
   "id": "kaal:claim:3402701-001",
   "url": "https://wulfkaal.github.io/claims/3402701-001",
   "claim": "A currency that does not hold a stable store of value forces continual recalculation and renegotiation of contracts, so any future decentralized economy will require stable cryptocurrencies.",
   "type": "condition",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized economies that rely on contracts denominated in the currency"
   ],
   "supporting_quote": "A fluctuating currency requires continual recalculation and renegotiation. Therefore, any future decentralized economy will require stable cryptocurrencies"
  },
  {
   "id": "kaal:claim:3402701-002",
   "url": "https://wulfkaal.github.io/claims/3402701-002",
   "claim": "Fiat currency collateralization is expensive and inefficient because the entire backing value must be held liquid; anything less opens arbitrage attacks of the kind Soros used against the Bank of England.",
   "type": "mechanism",
   "topics": [
    "defi",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "fiat-backed pegs claiming full collateralization"
   ],
   "supporting_quote": "Fiat currency collateralization is expensive and inefficient because all of the value that is backing the cryptocurrency needs to be liquid, otherwise arbitrage opportunities, such as the Soros attack, are possible"
  },
  {
   "id": "kaal:claim:3402701-003",
   "url": "https://wulfkaal.github.io/claims/3402701-003",
   "claim": "The minimum cost of a fiat-backed token equals the interest rate of the pegged fiat currency, because the backing capital must sit idle and liquid.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "supporting_quote": "Therefore, the price tag of fiat-backed tokens is, at a minimum, the interest rate of the pegged fiat currency"
  },
  {
   "id": "kaal:claim:3402701-004",
   "url": "https://wulfkaal.github.io/claims/3402701-004",
   "claim": "Cryptocurrency-backed tokens must be overcollateralized well beyond 100 percent of current value because the backing basket can fall, which makes them even more expensive than fiat-backed tokens.",
   "type": "condition",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "backing assets are volatile cryptocurrencies"
   ],
   "supporting_quote": "Any cryptocurrency-backed token must be backed with much more than 100% of the current value of the cryptocurrency in case the basket of other crypto currencies' value drops"
  },
  {
   "id": "kaal:claim:3402701-005",
   "url": "https://wulfkaal.github.io/claims/3402701-005",
   "claim": "As of the time of writing, no uncollateralized algorithmic stable cryptocurrency project had produced a provably stable mechanism for its tokens.",
   "type": "empirical",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "asserted",
   "scope_conditions": [
    "as of 2019"
   ],
   "supporting_quote": "At the time of this writing no uncollateralized algorithmic project had created a provable stable mechanism for its tokens"
  },
  {
   "id": "kaal:claim:3402701-006",
   "url": "https://wulfkaal.github.io/claims/3402701-006",
   "claim": "Transacting in cash imposes large measurable costs: roughly 200 billion dollars annually in the United States, about 637 dollars per person, driven by counting, managing, storing, transporting, guarding and accounting for bank notes.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States, 2018 estimates"
   ],
   "supporting_quote": "In the United States, transacting in cash costs the consumer around 200 billion dollars annually - about $637 per person"
  },
  {
   "id": "kaal:claim:3402701-007",
   "url": "https://wulfkaal.github.io/claims/3402701-007",
   "claim": "Good governance principles are crucial to every aspect of a long-term stable currency because markets inevitably change and because the Folk Theorems of game theory pose a fundamental obstacle to any fixed protocol.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "long-term stable currency designs"
   ],
   "supporting_quote": "Most importantly, good governance principles are crucial for every aspect of instituting any long-term stable currency due to inevitable changes in the market and the fundamental obstacle represented by the Folk Theorems of game theory"
  },
  {
   "id": "kaal:claim:3402701-008",
   "url": "https://wulfkaal.github.io/claims/3402701-008",
   "claim": "Under the quantity theory of money, minting twice as much currency halves its price and burning half of the existing currency doubles it, which is the mechanism by which a supply rule can theoretically stabilize price.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "quantity theory of money holds",
    "price measured as an average across exchanges"
   ],
   "supporting_quote": "QTM dictates that minting twice as much currency will halve its price, and burning half of the existing currency will double its price"
  },
  {
   "id": "kaal:claim:3402701-009",
   "url": "https://wulfkaal.github.io/claims/3402701-009",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "supporting_quote": "Such calculations are only valid in the ideal. In practice, the scheme's success depends on how the money is printed and distributed or burned"
  },
  {
   "id": "kaal:claim:3402701-010",
   "url": "https://wulfkaal.github.io/claims/3402701-010",
   "claim": "Distributing newly minted coins to shareholders, as Basis planned, is exploitable: shareholders can collude to hold their new money and drive the price up, which triggers further minting that benefits the colluders.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "new supply distributed to an identifiable shareholder group"
   ],
   "supporting_quote": "However, it is possible the shareholders would collude to drive the price up by holding their new money"
  },
  {
   "id": "kaal:claim:3402701-011",
   "url": "https://wulfkaal.github.io/claims/3402701-011",
   "claim": "The Folk Theorems of game theory imply that no matter how complicated a stable coin protocol becomes, a powerful and patient player has strategies to subvert the system and profit at the expense of the group.",
   "type": "failure",
   "topics": [
    "economics",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "any fixed protocol, however complex"
   ],
   "supporting_quote": "No matter how complicated the protocols become for creating a stable coin, there are strategies that a powerful and patient player can use to subvert the system to profit at the expense of the group"
  },
  {
   "id": "kaal:claim:3402701-012",
   "url": "https://wulfkaal.github.io/claims/3402701-012",
   "claim": "Because no fixed rule set can resist a patient adversary, any stable coin scheme requires a nimble and responsive governance process whose rules can always be adjusted to changing market conditions.",
   "type": "design",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "stable coin schemes operating over time in changing markets"
   ],
   "supporting_quote": "This means a nimble and responsive governance process is required for any such stable coin scheme, because the rules must always be ready to be adjusted to respond to the changing conditions of the market"
  },
  {
   "id": "kaal:claim:3402701-013",
   "url": "https://wulfkaal.github.io/claims/3402701-013",
   "claim": "Bonds are the appropriate burning mechanism for a temporary drop in currency price caused by larger economic instability such as an act of God or war, since bonds can be redeemed above their sale price once the economy rebounds.",
   "type": "design",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "price decline caused by temporary economy-wide shock, not hot money"
   ],
   "supporting_quote": "Bonds should be used to address a temporary larger economic instability which lowers a currency's price--due to an act of God, for instance, or war"
  },
  {
   "id": "kaal:claim:3402701-014",
   "url": "https://wulfkaal.github.io/claims/3402701-014",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "evidenced",
   "scope_conditions": [
    "demand stagnant at equilibrium"
   ],
   "supporting_quote": "According to our simulations, this scheme will succeed as long as demand for the currency is growing at a sufficient rate, but it will fail if the demand is stagnant at equilibrium"
  },
  {
   "id": "kaal:claim:3402701-015",
   "url": "https://wulfkaal.github.io/claims/3402701-015",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "bond redemption contingent on future price recovery",
    "no expiration on bonds"
   ],
   "supporting_quote": "More generally, since the bonds would sell at a price lower than they were redeemed, the bond queue would grow without bound, leading to lower prices for the bonds and a positive feedback loop which would lead to a death spiral and the failure of the peg"
  },
  {
   "id": "kaal:claim:3402701-016",
   "url": "https://wulfkaal.github.io/claims/3402701-016",
   "claim": "Stable cryptocurrency bonds should be minted with a fixed expiration, following the practice of historical central banks, because fixed expiration makes price discovery more efficient.",
   "type": "design",
   "topics": [
    "economics",
    "systemic-risk",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "supporting_quote": "We also recommend following the example of historical central banks, in minting bonds with fixed expiration so price discovery is more efficient"
  },
  {
   "id": "kaal:claim:3402701-017",
   "url": "https://wulfkaal.github.io/claims/3402701-017",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "instability driven by hot money flows"
   ],
   "supporting_quote": "Reserves are necessary to address the instability of a currency due to hot money"
  },
  {
   "id": "kaal:claim:3402701-018",
   "url": "https://wulfkaal.github.io/claims/3402701-018",
   "claim": "Because most of the value of contemporary cryptocurrencies comes from speculation on future uses that do not yet exist, the vast majority of cryptocurrency is technically hot money, and reserves are the best defense against the resulting price fluctuations.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "contemporary cryptocurrency markets dominated by speculation"
   ],
   "supporting_quote": "Therefore the vast majority of cryptocurrencies are technically hot money. The best way to prevent price fluctuations due to hot money is to use reserves"
  },
  {
   "id": "kaal:claim:3402701-019",
   "url": "https://wulfkaal.github.io/claims/3402701-019",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "the reserve currency is more stable than the base currency",
    "the cost to implement and maintain the reserve is ignored"
   ],
   "supporting_quote": "In the next paragraph we demonstrate the obvious result that selling the currency when the price is high to build a reserve, then buying the currency back with the reserve when the price is low will yield an arbitrage profit"
  },
  {
   "id": "kaal:claim:3402701-020",
   "url": "https://wulfkaal.github.io/claims/3402701-020",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "reserve held in a volatile asset",
    "reserve maintenance cost exceeds arbitrage profit"
   ],
   "supporting_quote": "The first requirement leads to a criticism of the MakerDAO protocol (e.g.), the second requirement leads to a criticism of the Reserve protocol (e.g"
  },
  {
   "id": "kaal:claim:3402701-021",
   "url": "https://wulfkaal.github.io/claims/3402701-021",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "currency possesses intrinsic worth, for example genuine transactional use"
   ],
   "supporting_quote": "On the contrary, we argue that a 100% reserve is not always necessary, as is the case with any currency which has an intrinsic worth"
  },
  {
   "id": "kaal:claim:3402701-022",
   "url": "https://wulfkaal.github.io/claims/3402701-022",
   "claim": "Contesting the standard reading, the authors argue Soros broke the Bank of England not because the pound lacked full foreign reserve backing but because the pound was pegged at an inauthentic value.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "supporting_quote": "Soros was not able to break the Bank of England because it wasn't fully backed with foreign reserves, but because the British pound was being pegged at a value that was inauthentic"
  },
  {
   "id": "kaal:claim:3402701-023",
   "url": "https://wulfkaal.github.io/claims/3402701-023",
   "claim": "Determining what fraction of a currency is hot money is necessary for efficient defense of its stability, because the reserve requirement follows from that ratio rather than from a blanket full-backing rule.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "supporting_quote": "Therefore determining the fraction of a currency that is hot money is necessary for efficient defense of its stability"
  },
  {
   "id": "kaal:claim:3402701-024",
   "url": "https://wulfkaal.github.io/claims/3402701-024",
   "claim": "Misestimating the hot money ratio fails in both directions: overestimation makes the currency more costly to use, and underestimation leaves it insecure, so efficiency and security are in direct tension.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "economics",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "supporting_quote": "A currency that overestimates this hot money ratio will cost more to use. A currency that underestimates the ratio will be insecure"
  },
  {
   "id": "kaal:claim:3402701-025",
   "url": "https://wulfkaal.github.io/claims/3402701-025",
   "claim": "Defining the energy of money as the product of economic momentum and velocity gives a basis for discussing economic frictions and for distinguishing genuine from artificial network energy, which is what guards against hot money instability.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "speculative",
   "scope_conditions": [
    "proposed research framework, analogy to kinetic theory of gases"
   ],
   "supporting_quote": "With clearly specified definitions of energy we can discuss \"frictions\" in an economy due to inefficiencies, and we can distinguish \"genuine\" versus \"artificial\" network energy to guard against the instability arising from hot money"
  },
  {
   "id": "kaal:claim:3402701-026",
   "url": "https://wulfkaal.github.io/claims/3402701-026",
   "claim": "In a blockchain cryptocurrency, transaction taxes should be set to match the cost of running the network, meaning the cost of incentivizing enough nodes for the desired level of decentralization plus the cost of maintaining the coin's stability.",
   "type": "design",
   "topics": [
    "risk-and-incentives",
    "decentralization",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain cryptocurrencies with node incentive costs"
   ],
   "supporting_quote": "In a blockchain cryptocurrency, transaction taxes should match the cost of running the network, i.e., the cost required to incentivize a sufficient number of nodes to operate in order to maintain the level of decentralization desired"
  },
  {
   "id": "kaal:claim:3402701-027",
   "url": "https://wulfkaal.github.io/claims/3402701-027",
   "claim": "Holding taxes are the implicit result of inflation borne by coin holders, and they should be set to account for the inefficiencies of the economy rather than the inefficiencies of maintaining the currency.",
   "type": "design",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "supporting_quote": "Holding taxes should account for the inefficiencies of the economy, instead of the inefficiencies of the maintenance of the currency"
  },
  {
   "id": "kaal:claim:3402701-028",
   "url": "https://wulfkaal.github.io/claims/3402701-028",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "prevailing internet culture of free node service"
   ],
   "supporting_quote": "In the contemporary climate, however, these taxes or fees are not likely to be implemented appropriately"
  },
  {
   "id": "kaal:claim:3402701-029",
   "url": "https://wulfkaal.github.io/claims/3402701-029",
   "claim": "Blockchain users are likely to demand zero transaction fees while failing to notice holding fees below about 3 percent annually, which a USD peg institutes implicitly through a comparable inflation target.",
   "type": "predictive",
   "topics": [
    "tokenomics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized economy inheriting internet fee culture",
    "peg to USD"
   ],
   "supporting_quote": "Most likely this culture will continue to the decentralized economy, where blockchain users will expect 0 transaction fees but will probably not notice holding fees below 3% annual"
  },
  {
   "id": "kaal:claim:3402701-030",
   "url": "https://wulfkaal.github.io/claims/3402701-030",
   "claim": "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.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "long-lived currencies",
    "black swan events"
   ],
   "supporting_quote": "For any long-lived currency a major shift in the perception of the value of a currency is at some point inevitable; a shift that is not accounted for by a reserve defending against hot money fluctuations or bonds defending against temporary instability in the larger economy"
  },
  {
   "id": "kaal:claim:3402701-031",
   "url": "https://wulfkaal.github.io/claims/3402701-031",
   "claim": "When a fundamental shift in value occurs, repegging the currency at its more accurate value is more efficient than soldiering on with tax mechanisms to restabilize at the old peg.",
   "type": "design",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "fundamental change in the economy, black swan event"
   ],
   "supporting_quote": "but it is more efficient to repeg the currency after discovering its more accurate value"
  },
  {
   "id": "kaal:claim:3402701-032",
   "url": "https://wulfkaal.github.io/claims/3402701-032",
   "claim": "The day-to-day stability mechanism can be fully automated by algorithm, but monetary and fiscal policy choices cannot be: the algorithm's parameters must be chosen by hand and adjusted regularly to balance security against efficiency.",
   "type": "condition",
   "topics": [
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "stability mechanisms operating in changing markets"
   ],
   "supporting_quote": "However, monetary and fiscal policy choices cannot be fully automated. The parameters for the algorithm must be chosen by hand and adjusted regularly to balance security with maximal efficiency in response to network performance"
  },
  {
   "id": "kaal:claim:3402701-033",
   "url": "https://wulfkaal.github.io/claims/3402701-033",
   "claim": "Parameter and policy choices for a stable cryptocurrency should be made by a decentralized autonomous organization, the Stability DAO or SDAO, which functions as a transparent, decentralized, open analog of the US Federal Reserve.",
   "type": "design",
   "topics": [
    "governance-design",
    "decentralization",
    "dao",
    "ai-and-agents",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "asserted",
   "supporting_quote": "Such choices need to be made by a decentralized autonomous organization, which we call the Stability DAO or SDAO"
  },
  {
   "id": "kaal:claim:3402701-034",
   "url": "https://wulfkaal.github.io/claims/3402701-034",
   "claim": "Centralized hierarchies and decentralized flat organizations fail in opposite ways: hierarchies filter out information signals at the edge, while flat organizations amplify edge noise so important information never finds a champion to drive action.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "supporting_quote": "Decentralized flat organizations have a tendency to fail from the inverse quality of amplifying the noise at the edge, so that important information cannot find its champion to lead to useful action"
  },
  {
   "id": "kaal:claim:3402701-035",
   "url": "https://wulfkaal.github.io/claims/3402701-035",
   "claim": "Transparency is not an unqualified good for monetary policy: a currency only partially backed by reserves can be arbitraged by a Soros-style shorting strategy much more easily when the quantity of reserves is public.",
   "type": "failure",
   "topics": [
    "disclosure",
    "consensus-and-security",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "partial reserve backing",
    "reserve quantities publicly known"
   ],
   "supporting_quote": "For instance, a currency partially backed by reserves can be successfully arbitraged by Soros' shorting strategy much easier if the quantity of reserves is known"
  },
  {
   "id": "kaal:claim:3402701-036",
   "url": "https://wulfkaal.github.io/claims/3402701-036",
   "claim": "The Folk Theorems of game theory prove that no protocol, however complex or well engineered, can eliminate corruption, understood as behavior that profits a minority at the greater expense of the majority.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "supporting_quote": "Finally, we repeat the idea that the Folk Theorems of game theory prove that it is impossible to create protocols, no matter how complex or well- engineered, which can eliminate corruption"
  },
  {
   "id": "kaal:claim:3402701-037",
   "url": "https://wulfkaal.github.io/claims/3402701-037",
   "claim": "No static set of rules can prevent the corruption that will eventually cause any stability design to fail, but a changing rule set administered by nimble governance can prevent that failure if enough resources reward anti-corruption effort.",
   "type": "design",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "governance that devotes resources to detecting and rewarding anti-corruption effort"
   ],
   "supporting_quote": "No static set of rules can prevent the corruption that will eventually lead to the failure of any stability design. But a changing set of rules can prevent such failure"
  },
  {
   "id": "kaal:claim:3402701-038",
   "url": "https://wulfkaal.github.io/claims/3402701-038",
   "claim": "Because the Folk Theorems make governance protocols permanently provisional, long-term stability requires that the group be organized around a transcendental value, a goal meaningful and commonly held that cannot be captured by any logical rule set.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "long-term stability of a governed group"
   ],
   "supporting_quote": "Therefore, for long-term stability, a group must be organized around a transcendental value that guides the members' behavior"
  },
  {
   "id": "kaal:claim:3402701-039",
   "url": "https://wulfkaal.github.io/claims/3402701-039",
   "claim": "Commonly held expressions of organizational values are essential to designing and implementing any governance structure and are far more important in decentralized organizations, which inherently have less motivational structure than centralized hierarchies.",
   "type": "design",
   "topics": [
    "decentralization",
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized organizations"
   ],
   "supporting_quote": "such values are far more important in decentralized organizations, which inherently have less motivational structure than centralized hierarchies"
  },
  {
   "id": "kaal:claim:3402701-040",
   "url": "https://wulfkaal.github.io/claims/3402701-040",
   "claim": "The authors recommend an SDAO governance design coordinated through reputation-weighted democratic governance, whose core objective is to create incentives that lead independent and selfish actors to collaborate productively toward a common goal.",
   "type": "design",
   "topics": [
    "reputation",
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701",
   "year": "2019",
   "source_sha256": "72ed2581b4cac2bd18a5b2640be959487a3cbc34c86ab5e5664924bcdb53c8e0",
   "confidence": "argued",
   "supporting_quote": "In that paper we recommend an SDAO design coordinated through reputation-weighted democratic governance"
  },
  {
   "id": "kaal:claim:3709041-001",
   "url": "https://wulfkaal.github.io/claims/3709041-001",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "scope_conditions": [
    "applies where common good objectives require coordinating many individuals"
   ],
   "supporting_quote": "While centralized common good coordination of human behavior risks undermining individual effort, blockchain technology's autonomous and anonymous decentralized network coordination of individual human action can help overcome the threat to individualism and its welfare enhancing effects."
  },
  {
   "id": "kaal:claim:3709041-002",
   "url": "https://wulfkaal.github.io/claims/3709041-002",
   "claim": "Blockchain technology incentivizes direct transactions between creator and consumer, including compensation, which eliminates the need for intermediation.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "risk-and-incentives",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "asserted",
   "supporting_quote": "The technology incentivizes direct transactions, including compensation, between the creator and consumer, eliminating the need for intermediation."
  },
  {
   "id": "kaal:claim:3709041-003",
   "url": "https://wulfkaal.github.io/claims/3709041-003",
   "claim": "Blockchain's formal immutable guarantees, improved data ownership, transparency, network integrity, and data privacy together generate a form of trust that helps optimize both business and society.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "Through its formal immutable guarantees, improved data ownership, transparency, network integrity, and data privacy, blockchain technology facilitates unprecedented trust that helps to optimize business and society."
  },
  {
   "id": "kaal:claim:3709041-004",
   "url": "https://wulfkaal.github.io/claims/3709041-004",
   "claim": "Power in a blockchain system is exercised through the consensus protocol, which places control of data with multiple networked parties and thereby creates checks and balances that prevent any single vested interest from controlling the system.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "asserted",
   "supporting_quote": "Power is exercised by way of blockchain's consensus protocol. The consensus protocol enables the control of data by multiple networked parties. It facilitates a system of checks and balances that prohibits any vested interest and control of the system."
  },
  {
   "id": "kaal:claim:3709041-005",
   "url": "https://wulfkaal.github.io/claims/3709041-005",
   "claim": "Because individual network nodes verify and validate transactions before execution under the distributed consensus model, recording a fraudulent transaction on the blockchain is extremely rare.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "scope_conditions": [
    "requires a distributed consensus model with independent node validation"
   ],
   "supporting_quote": "The distributed consensus model, individual network nodes verify and validate chain transactions before the execution of the transactions, makes it extremely rare for a fraudulent transaction to be recorded in the blockchain."
  },
  {
   "id": "kaal:claim:3709041-006",
   "url": "https://wulfkaal.github.io/claims/3709041-006",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "The tension between socialist principles for the organization of society and capitalistic principles for the organization of society has undermined societal goals for the betterment of humanity for centuries."
  },
  {
   "id": "kaal:claim:3709041-007",
   "url": "https://wulfkaal.github.io/claims/3709041-007",
   "claim": "Both dominant ideologies fail in symmetrical ways: capitalism produces inequity, inequality, monopolies, and other market failures, while socialism has incentive design defects in which hard work is not effectively rewarded and external costs are largely ignored.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "Capitalism can lead to significant inequities, inequality, as well as monopolies, and other market failures. Similarly, socialism has significant incentive design issues, where hard work is not rewarded effectively and external cost are largely ignored."
  },
  {
   "id": "kaal:claim:3709041-008",
   "url": "https://wulfkaal.github.io/claims/3709041-008",
   "claim": "Decentralization is the antidote to the failures of both socialism and capitalism: centralized coordination of societal and economic activity, in whichever ideological form, should be held to a minimum in order to free human potential and improve society.",
   "type": "normative",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "Decentraliszation posits that centralized coordination of societal and economic activity, as instituted and instantiated in capitalistic or socialistic doctrine, should be held to a minimum in order to free the human potential and improve society."
  },
  {
   "id": "kaal:claim:3709041-009",
   "url": "https://wulfkaal.github.io/claims/3709041-009",
   "claim": "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.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "decentralism calls the concept of ownership into question and focuses on the largest possible utility of assets for human kind."
  },
  {
   "id": "kaal:claim:3709041-010",
   "url": "https://wulfkaal.github.io/claims/3709041-010",
   "claim": "Decentralism generates efficiency through higher levels of connectivity rather than through the linear cost cutting and economies of scale that capitalism and socialism debate.",
   "type": "mechanism",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "decentralism creates efficiency not in linear forms but via higher levels of connectivity"
  },
  {
   "id": "kaal:claim:3709041-011",
   "url": "https://wulfkaal.github.io/claims/3709041-011",
   "claim": "Decentralism produces greater equality not through markets or governmental redistribution but through preserving diversity of content, diversity of data sources, and enhanced node connectivity.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "decentralism creates higher levels of equality in society through the preservation of diversity of content, diversity of data sources, and enhanced node connectivity"
  },
  {
   "id": "kaal:claim:3709041-012",
   "url": "https://wulfkaal.github.io/claims/3709041-012",
   "claim": "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.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "decentralism's redistribution is based on ownership rights in persons' individuality-derived data that creates economic value."
  },
  {
   "id": "kaal:claim:3709041-013",
   "url": "https://wulfkaal.github.io/claims/3709041-013",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "As such, negative externalities are minimized without centralized planning."
  },
  {
   "id": "kaal:claim:3709041-014",
   "url": "https://wulfkaal.github.io/claims/3709041-014",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "reputation",
    "law-and-legal-systems",
    "compliance",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "scope_conditions": [
    "applies to trust generated by legal guarantees and judicial enforcement"
   ],
   "supporting_quote": "Legally created trust is often limited as it can be arbitrary because it is only indirectly democratically legitimized, inflexible, untimely, resistant to change, with fallible human-centric decision processes, and human speed."
  },
  {
   "id": "kaal:claim:3709041-015",
   "url": "https://wulfkaal.github.io/claims/3709041-015",
   "claim": "Trust in decentralized legal solutions can be more democratically legitimized than legally created trust because it runs through microdemocratic, individualistic yet technology centric autonomous decision processes, coded guarantees, and machine speed.",
   "type": "design",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "Trust in decentralized legal solutions can be more democratically legitimized through microdemocratic, individualistic yet technology-centric autonomous decision processes, coded guarantees, and machine speed."
  },
  {
   "id": "kaal:claim:3709041-016",
   "url": "https://wulfkaal.github.io/claims/3709041-016",
   "claim": "Personal assets such as data, preferences, and opinions can only be commercialized to a limited extent in centralized structures, whereas decentralized structures allow those same assets to be tokenized, valued, and mobilized.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "Such assets, e.g. one's data, preferences, opinions etc. can only limitedly be commercialized in existing centralized structures. In decentralized structures such assets can be tokenized, valued, and mobilized."
  },
  {
   "id": "kaal:claim:3709041-017",
   "url": "https://wulfkaal.github.io/claims/3709041-017",
   "claim": "Under a quadratic style microdemocratic allocation, each voter receives a capped number of votes to distribute by priority, so voters concentrate votes on the issues most relevant to them and outcomes track actual preference intensity.",
   "type": "design",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "scope_conditions": [
    "requires an electronic voting system with a capped per voter vote allocation"
   ],
   "supporting_quote": "Each voter in a given microdemocratic voting scenario may be allocated a maximum number of votes. Such votes may be allocated by priority to any issues the respective voter wants to engage with."
  },
  {
   "id": "kaal:claim:3709041-018",
   "url": "https://wulfkaal.github.io/claims/3709041-018",
   "claim": "Microdemocratic vote allocation improves outcome quality because a voter's proportional allocation of votes to an issue is itself evidence of that voter's higher knowledge of the issue, and voters are unlikely to give top priority to issues they know little about.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "Moreover, part of the power of this microdemocratic approach derives from the higher levels of knowledge a given voter has on a particular issue that is evidenced by the voters' proportional allocation of votes on such issue."
  },
  {
   "id": "kaal:claim:3709041-019",
   "url": "https://wulfkaal.github.io/claims/3709041-019",
   "claim": "Vote delegation inevitably reintroduces corruption into a microdemocratic system, because representatives may seek to bribe or purchase votes to gain power, so delegation necessitates a policing system.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "scope_conditions": [
    "applies where microdemocratic systems permit delegation of voting power"
   ],
   "supporting_quote": "Yet, the delegation of voting power inevitably allows corruptive element back into the system as certain representatives may wish to bribe or purchase votes to provide them with more power in the system."
  },
  {
   "id": "kaal:claim:3709041-020",
   "url": "https://wulfkaal.github.io/claims/3709041-020",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "scope_conditions": [
    "applies to microdemocratic shared resource systems without controls"
   ],
   "supporting_quote": "Acting for their own self-interest may be contrary to the common good of all voters. Without controls, some self-interested voters may be depleting or spoiling resources they share with the rest of society, such as the environment, public goods, among others."
  },
  {
   "id": "kaal:claim:3709041-021",
   "url": "https://wulfkaal.github.io/claims/3709041-021",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "scope_conditions": [
    "applies to majority rule voting in microdemocratic systems"
   ],
   "supporting_quote": "Similarly, majority rule may mean discrimination of the minority. A majority that is unaffected by a rule they instantiate may have a discriminatory impact on a minority that is disproportionately affected by the change in the rules."
  },
  {
   "id": "kaal:claim:3709041-022",
   "url": "https://wulfkaal.github.io/claims/3709041-022",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "asserted",
   "scope_conditions": [
    "describes representative democracies as of the early 2020s"
   ],
   "supporting_quote": "In the early 2020s, representative democracies were largely slow and inflexible because of their constitutional and institutional infrastructure and their respective legal systems."
  },
  {
   "id": "kaal:claim:3709041-023",
   "url": "https://wulfkaal.github.io/claims/3709041-023",
   "claim": "A blockchain based microdemocracy's key advantage is speed of change: because technology enables incorruptible instantaneous counting and tallying of votes, voting becomes dynamic and incremental and political will is exercised more directly.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "Because technology enables the incorruptible counting and tallying of votes instantaneously, voting can be more dynamic and incremental and political will is exercised more directly."
  },
  {
   "id": "kaal:claim:3709041-024",
   "url": "https://wulfkaal.github.io/claims/3709041-024",
   "claim": "Decentralized voting pools can become supplemental voting systems that help overcome the legitimacy deficit of representative democracies, but installing them as upgrades to existing representative democracies would require constitutional or democratic support that is dubious at best.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "scope_conditions": [
    "requires constitutional or democratic authorization for adoption"
   ],
   "supporting_quote": "Of course, such upgrades to existing representative democracies may require constitutional or democratic support which is dubious at best."
  },
  {
   "id": "kaal:claim:3709041-025",
   "url": "https://wulfkaal.github.io/claims/3709041-025",
   "claim": "Blockchain voting solutions require political will as well as technical capability, and incumbent governments may refuse to surrender control over the voting process, preferring private blockchains that preserve their control.",
   "type": "failure",
   "topics": [
    "blockchain",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "scope_conditions": [
    "applies to adoption of public blockchain voting by existing representative democracies"
   ],
   "supporting_quote": "Yet, governments in the existing representative democracies may not wish to surrender control over the voting process and may prefer to use private blockchains to facilitate voting outcomes."
  },
  {
   "id": "kaal:claim:3709041-026",
   "url": "https://wulfkaal.github.io/claims/3709041-026",
   "claim": "Regulating centralized technology conglomerates addresses only part of the problem, because even fully regulated conglomerates retain the power to set standards and norms for emerging technologies that government cannot effectively trace.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "Even if fully regulated, centralized technology conglomerates still have the power to set standards and norms for emerging technologies that government cannot effectively trace."
  },
  {
   "id": "kaal:claim:3709041-027",
   "url": "https://wulfkaal.github.io/claims/3709041-027",
   "claim": "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.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "Unlike developed countries, third world- and developing countries will likely be enabled by blockchain technology to leapfrog several stages of development, otherwise necessitated in existing legacy systems."
  },
  {
   "id": "kaal:claim:3709041-028",
   "url": "https://wulfkaal.github.io/claims/3709041-028",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "scope_conditions": [
    "applies where identity or title verification is a prerequisite to service access"
   ],
   "supporting_quote": "Such blockchain title data can serve as collateral for accessing credit or verifying identities which is often a challenging and prohibitive requirement for accessing both financial and non-financial services."
  },
  {
   "id": "kaal:claim:3709041-029",
   "url": "https://wulfkaal.github.io/claims/3709041-029",
   "claim": "In a proprietary dataset of thirty three blockchain for good projects, the projects proliferated between 2013 and 2017 and peaked in 2017, and many of them did not launch successfully or perished over time.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on the author's dataset of n=33 blockchain for good projects whose whitepapers were reviewed"
   ],
   "supporting_quote": "Figure 1 shows that blockchain for good projects proliferated between 2013-17 and peaked in 2017. Many of the projects in the dataset did not launch successfully or perished over time."
  },
  {
   "id": "kaal:claim:3709041-030",
   "url": "https://wulfkaal.github.io/claims/3709041-030",
   "claim": "Regulatory concerns and lack of market confidence were the cited reasons for postponing the token sale of GiftCoin, a charitable donation tracking project that launched in 2017 and shut down in June 2018.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "evidenced",
   "scope_conditions": [
    "specific to the GiftCoin project"
   ],
   "supporting_quote": "Regulatory concerns and lack of confidence in the market were cited as reasons for postponing the sale."
  },
  {
   "id": "kaal:claim:3709041-031",
   "url": "https://wulfkaal.github.io/claims/3709041-031",
   "claim": "In the author's dataset, the overwhelming majority of blockchain for good projects cluster in healthcare, exchanges, environmental protection, and charities.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on the author's dataset of n=33 projects, categorized by industry"
   ],
   "supporting_quote": "The data suggest that the overwhelming majority of projects in the blockchain for good context are in healthcare, exchanges and in the environmental protection sectors, as well as charities."
  },
  {
   "id": "kaal:claim:3709041-032",
   "url": "https://wulfkaal.github.io/claims/3709041-032",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "scope_conditions": [
    "assumes records are dispersed across multiple uncoordinated providers"
   ],
   "supporting_quote": "Blockchain technology allows secure shared access to health-related records amongst necessary parties. This can significantly lower fraud in healthcare payments, aid in addressing coverage gaps, and eliminate misinformation provided to healthcare providers."
  },
  {
   "id": "kaal:claim:3709041-033",
   "url": "https://wulfkaal.github.io/claims/3709041-033",
   "claim": "Consumers increasingly favor genetically unmodified organic food from local and sustainable sources, yet the integrity of such products is usually difficult to verify, a verification gap blockchain technology can close.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "Blockchain technology can help ascertain the integrity of clean food for consumers. Consumers increasingly favor genetically unmodified organic food from local and sustainable sources. Yet, it is usually difficult to verify the integrity of products."
  },
  {
   "id": "kaal:claim:3709041-034",
   "url": "https://wulfkaal.github.io/claims/3709041-034",
   "claim": "A distributed ledger of food origin and production methods would benefit not only consumers tracing food origin but would also help ensure the fair and sustainable treatment of food producers around the globe.",
   "type": "design",
   "topics": [
    "tokenomics",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "scope_conditions": [
    "most effective if integrated into the existing supply chain"
   ],
   "supporting_quote": "The ledger could not only benefit consumers of food to trace the food origin but also can help ensure the fair and sustainable treatment of producers of foods around the globe."
  },
  {
   "id": "kaal:claim:3709041-035",
   "url": "https://wulfkaal.github.io/claims/3709041-035",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to centrally managed grids coordinating distributed energy resources"
   ],
   "supporting_quote": "Coordinating larger numbers of decentralized resources from a central point of control is slow, inefficient, and resource-intensive."
  },
  {
   "id": "kaal:claim:3709041-036",
   "url": "https://wulfkaal.github.io/claims/3709041-036",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "asserted",
   "supporting_quote": "Many government departments work largely without sufficient integration with other governmental bodies. A result of this separation is their inability to share information across agencies."
  },
  {
   "id": "kaal:claim:3709041-037",
   "url": "https://wulfkaal.github.io/claims/3709041-037",
   "claim": "Linking necessary data between governmental departments via blockchain could eradicate potential government corruption and increase the efficiency of the public sector.",
   "type": "design",
   "topics": [
    "economics",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "asserted",
   "supporting_quote": "Linking necessary data between governmental departments via blockchain could eradicate potential government corruption and increase the efficiency of the public sector."
  },
  {
   "id": "kaal:claim:3709041-038",
   "url": "https://wulfkaal.github.io/claims/3709041-038",
   "claim": "The transparency that blockchain offers can address the public's diminishing trust in traditional charities, because blockchain based giving allows donations to be tracked to their destination, kept anonymous or named, and freed of administrative cost or fee.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "The transparency blockchain technology offers can help address the public's diminishing trust in traditional charities."
  },
  {
   "id": "kaal:claim:3709041-039",
   "url": "https://wulfkaal.github.io/claims/3709041-039",
   "claim": "The cost of legal services traditionally creates an unfair advantage in the law based on wealth, an inequity that blockchain based smart contract programs for streamlined alternative dispute resolution are designed to address.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "Traditionally, the cost of legal services often create an unfair advantage in the law based on wealth."
  },
  {
   "id": "kaal:claim:3709041-040",
   "url": "https://wulfkaal.github.io/claims/3709041-040",
   "claim": "Complete supply chain tracking is particularly difficult in the mineral industry because of the prevalence of smelting during processing, which is why supply chain mapping for conflict mineral due diligence is costly, time intensive, and not entirely effective.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "scope_conditions": [
    "applies to conflict mineral due diligence under US disclosure requirements"
   ],
   "supporting_quote": "Complete tracking is particularly difficult in the mineral industry because of the prevalence of smelting during processing."
  },
  {
   "id": "kaal:claim:3709041-041",
   "url": "https://wulfkaal.github.io/claims/3709041-041",
   "claim": "The long-term benefit of blockchain technology for the common good of humanity depends on decentralized infrastructure development; blockchain for good projects can only realize their potential as that underlying infrastructure emerges.",
   "type": "condition",
   "topics": [
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "year": "2020",
   "source_sha256": "5216a7bca45a48e3bef11ec524936e66af737c0fd66271e9f6866dc20a4482cc",
   "confidence": "argued",
   "supporting_quote": "The long-term benefit of blockchain technology for the common good of humanity depends on decentralized infrastructure development."
  },
  {
   "id": "kaal:claim:3652481-001",
   "url": "https://wulfkaal.github.io/claims/3652481-001",
   "claim": "Tying a DAO's legal existence to an existing legal and jurisdictional framework typically forces the DAO to appoint a representative in that jurisdiction, and that representative centralizes the DAO, which causes the DAO concept itself to fail.",
   "type": "failure",
   "topics": [
    "dao",
    "law-and-legal-systems",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "the chosen jurisdiction requires local legal representation"
   ],
   "supporting_quote": "Tying the legal existence of a DAO to any forms of existing legal and jurisdictional frameworks typically results in the need for a representative in the chosen legal framework and jurisdiction, which, in turn, centralizes the DAO and results in the failure of the DAO concept."
  },
  {
   "id": "kaal:claim:3652481-002",
   "url": "https://wulfkaal.github.io/claims/3652481-002",
   "claim": "A jurisdiction is only truly favorable to DAOs if it grants the DAO limited liability as an entity and accepts its independent status without requiring any representative in that jurisdiction.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "dao",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "supporting_quote": "Only a jurisdiction that gives the DAO limited liability as an entity and accepts its independent status without the need for representation may truly be favorable for DAO concepts."
  },
  {
   "id": "kaal:claim:3652481-003",
   "url": "https://wulfkaal.github.io/claims/3652481-003",
   "claim": "Third generation DAOs are defined by taking an association or organization that already holds a legal construct with completed administrative paperwork and adding the DAO to that existing legal construct.",
   "type": "definitional",
   "topics": [
    "dao",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "asserted",
   "supporting_quote": "The third generation of DAOs considered an actual association or organization that already has a legal construct with completed administrative paperwork. The DAO itself was then added to the existing legal construct."
  },
  {
   "id": "kaal:claim:3652481-004",
   "url": "https://wulfkaal.github.io/claims/3652481-004",
   "claim": "A DAO realigns the otherwise disparate interests of principals and agents because all participants in the DAO share the same goal, which reduces behavior contrary to the interests of the organization.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "corporate-governance",
    "risk-and-incentives",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "supporting_quote": "Incentives are realigned between otherwise disparate interests of principals and agents because all participants in a DAO share the same goal, which reduces behavior that is contrary to the interests of the organization."
  },
  {
   "id": "kaal:claim:3652481-005",
   "url": "https://wulfkaal.github.io/claims/3652481-005",
   "claim": "Reputational penalties for non performance in a DAO are free from racial and cultural bias, because token holders are unlikely even to know one another.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "members are pseudonymous or unknown to each other"
   ],
   "supporting_quote": "Crucially, non-performance reputational penalties are entirely free from racial or cultural biases and associated implications as the token holders are unlikely to even know each other."
  },
  {
   "id": "kaal:claim:3652481-006",
   "url": "https://wulfkaal.github.io/claims/3652481-006",
   "claim": "DAOs require values shared by their members in order to unify the membership and guarantee stability of cooperation while the structure remains decentralized.",
   "type": "condition",
   "topics": [
    "decentralization",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "supporting_quote": "DAOs need values shared by the DAO members to unify them and to guarantee stability of cooperation while maintaining a decentralized structure."
  },
  {
   "id": "kaal:claim:3652481-007",
   "url": "https://wulfkaal.github.io/claims/3652481-007",
   "claim": "The longevity of a DAO depends on its ability to maintain the fluidity and decentralized order that existed in the DAO's initial stages.",
   "type": "condition",
   "topics": [
    "decentralization",
    "dao",
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "asserted",
   "supporting_quote": "The longevity of DAOs depends on their ability to maintain the fluidity and decentralized order that was possible in the initial stages of the DAO."
  },
  {
   "id": "kaal:claim:3652481-008",
   "url": "https://wulfkaal.github.io/claims/3652481-008",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "decentralization",
    "institutional-design",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "no ongoing effort is made to preserve decentralized order"
   ],
   "supporting_quote": "Without continual efforts to maintain decentralized order, values that initially unite DAO members have a tendency to result in ever tighter and complex hierarchical structures in the DAO."
  },
  {
   "id": "kaal:claim:3652481-009",
   "url": "https://wulfkaal.github.io/claims/3652481-009",
   "claim": "The immutability of blockchain ledgers is itself a vulnerability, because once a DAO is in operation its essential construction is very difficult to alter should a bug in the code appear.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "consensus-and-security",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "evidenced",
   "scope_conditions": [
    "a bug exists in deployed DAO code"
   ],
   "supporting_quote": "The immutable nature of blockchain ledgers could also make the DAO vulnerable to attacks because it is so difficult to alter the essential construction of the DAO once the system is in operation, should a bug in the code arise."
  },
  {
   "id": "kaal:claim:3652481-010",
   "url": "https://wulfkaal.github.io/claims/3652481-010",
   "claim": "A DAO focus on the value enhancement of fungible tokens can produce short termism and lead the organization to ignore ethical and governance issues.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "fungible tokens are the dominant value metric"
   ],
   "supporting_quote": "Yet, the focus on the value enhancement of fungible tokens can lead to short termism and may ignore ethical and governance issues."
  },
  {
   "id": "kaal:claim:3652481-011",
   "url": "https://wulfkaal.github.io/claims/3652481-011",
   "claim": "DAO developers are themselves subject to path dependencies that undermine the evolution of decentralized DAO designs, because the communication structures of the developing organization invariably shape future designs.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "supporting_quote": "DAO developers are also subject to path dependencies which undermines the evolution of decentralized DAO designs. The communication structures in organizations will invariably influence future designs."
  },
  {
   "id": "kaal:claim:3652481-012",
   "url": "https://wulfkaal.github.io/claims/3652481-012",
   "claim": "Regulatory uncertainty is holding back both the development of DAOs and the optimization potential DAOs offer for digital assets.",
   "type": "failure",
   "topics": [
    "dao",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "supporting_quote": "Regulatory uncertainty is holding back the development of DAOs and the optimization potential of DAOs for digital assets."
  },
  {
   "id": "kaal:claim:3652481-013",
   "url": "https://wulfkaal.github.io/claims/3652481-013",
   "claim": "If DAO members do not formalize a structure for their human created entity, courts are very likely to impose one on them, which is a serious risk of DAO membership.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "evidenced",
   "scope_conditions": [
    "the DAO has no off chain legal entity",
    "a dispute reaches a court"
   ],
   "supporting_quote": "However, a very serious risk is associated with DAO membership in the sense that if the DAO members do not formalize a structure for their human-created entity, courts are very likely to impose one for the members of the DAO."
  },
  {
   "id": "kaal:claim:3652481-014",
   "url": "https://wulfkaal.github.io/claims/3652481-014",
   "claim": "Where no legal entity is involved, partnership rules operate as the default rules that apply to all interactions between parties trying to achieve a common goal.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "evidenced",
   "scope_conditions": [
    "no legal entity has been formed"
   ],
   "supporting_quote": "If no legal entity is involved, partnership rules are default rule that apply to all interactions between parties trying to achieve a common goal."
  },
  {
   "id": "kaal:claim:3652481-015",
   "url": "https://wulfkaal.github.io/claims/3652481-015",
   "claim": "Parties may try to limit remedies to DAO assets through private agreements, but if the DAO faces a tort suit such an agreement is unlikely to be upheld.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "evidenced",
   "scope_conditions": [
    "a tort claim is brought against the DAO"
   ],
   "supporting_quote": "Parties may be able to limit remedies to DAO assets through private agreements. But, if the DAO should face a tort suit such an agreement is unlikely to be upheld."
  },
  {
   "id": "kaal:claim:3652481-016",
   "url": "https://wulfkaal.github.io/claims/3652481-016",
   "claim": "Applying a common legal anchor and traditional jurisdictional principles to cybernetic systems is near impossible, because the status of a cybernetic system is constantly changing.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "the system is cybernetic, meaning the community continually chooses which protocol version to adopt"
   ],
   "supporting_quote": "Applying a common legal anchor and traditional jurisdictional principles to cybernetic systems is near impossible because the status of the cybernetic system is constantly changing."
  },
  {
   "id": "kaal:claim:3652481-017",
   "url": "https://wulfkaal.github.io/claims/3652481-017",
   "claim": "Under current securities laws, DAOs governed solely by smart contracts are restricted in their ability to pool assets and generate profit, because those laws limit their ability to fund ecosystem development and deploy capital efficiently.",
   "type": "failure",
   "topics": [
    "securities-law",
    "smart-contracts",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "evidenced",
   "scope_conditions": [
    "US securities law",
    "the DAO has no legal wrapper"
   ],
   "supporting_quote": "Under current laws, DAOs solely governed by smart contracts are restricted in their ability to pool assets and generate profit because securities laws limit their ability to fund ecosystem development and deploy capital efficiently."
  },
  {
   "id": "kaal:claim:3652481-018",
   "url": "https://wulfkaal.github.io/claims/3652481-018",
   "claim": "Bifurcation of nodes in a decentralized network through forking can cause significant economic loss, errors, confusion and bugs, including reemergence of the double spend problem that the pre fork network had already solved.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "a chain fork splits nodes across incompatible protocol versions"
   ],
   "supporting_quote": "The bifurcation of nodes in a given decentralized network can lead to significant economic loss, errors, confusion, and bugs. For example, the bifurcation of network nodes can result in the reemergence of the double spend problem that the previous network had overcome."
  },
  {
   "id": "kaal:claim:3652481-019",
   "url": "https://wulfkaal.github.io/claims/3652481-019",
   "claim": "Overcoming attempts by rational and opportunistic internal and external constituents to game a DAO's governance design requires a duality of incentives, in which actors improve their own utility while their actions simultaneously benefit the whole institution over the long run.",
   "type": "condition",
   "topics": [
    "risk-and-incentives",
    "regulatory-failure",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "supporting_quote": "Human nature and any effective machine derivates of human engagements in institutional form require a duality of incentives in order to overcome attempts of rational and opportunistic internal and external constituents to game the governance design of a given DAO."
  },
  {
   "id": "kaal:claim:3652481-020",
   "url": "https://wulfkaal.github.io/claims/3652481-020",
   "claim": "DAO designs at the beginning of the 2020s did not effectively master the duality of incentives that a workable DAO governance design requires.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "asserted",
   "scope_conditions": [
    "DAO designs as of the early 2020s"
   ],
   "supporting_quote": "DAO designs at the beginning of the 2020s did not effectively master this duality."
  },
  {
   "id": "kaal:claim:3652481-021",
   "url": "https://wulfkaal.github.io/claims/3652481-021",
   "claim": "The identity of actors in a DAO governance design typically creates corruptive elements, and merit identifiers other than individual identity remove the most corruptive influences.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "supporting_quote": "Similarly, the identity of actors in a DAO governance design creates typically corruptive elements. Merit identifiers other than individual identity remove the most corruptive influences."
  },
  {
   "id": "kaal:claim:3652481-022",
   "url": "https://wulfkaal.github.io/claims/3652481-022",
   "claim": "Lasting legal solutions for DAOs must increase and maintain the decentralization already achieved inside the DAO, because DAOs cannot exist and persist without ever increasing degrees of decentralization.",
   "type": "condition",
   "topics": [
    "decentralization",
    "dao",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "asserted",
   "supporting_quote": "Lasting legal solutions for DAOs have to increase and maintain the internal and external decentralization accomplished in the DAO. DAOs cannot exist and persist without ever increasing degrees of decentralization."
  },
  {
   "id": "kaal:claim:3652481-023",
   "url": "https://wulfkaal.github.io/claims/3652481-023",
   "claim": "Existing legal solutions for DAOs typically require some form of legal representation in the relevant jurisdiction, and jurisdictional requirements pertaining to legal representation are always a point of centralization.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "decentralization",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "supporting_quote": "Existing legal solutions for DAOs typically require forms of legal representation in the respective jurisdiction. Jurisdictional requirements pertaining to legal representation are always a point of centralization."
  },
  {
   "id": "kaal:claim:3652481-024",
   "url": "https://wulfkaal.github.io/claims/3652481-024",
   "claim": "Because consumer protection is a core mandate of any legislature, legislatures are unlikely to surrender control and jurisdiction over a DAO, which would mean no legal recourse and no ability to sue in national courts, while at the same time granting the DAO limited liability.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions with a consumer protection mandate"
   ],
   "supporting_quote": "Because consumer protection is a core mandate for any legislature, it seems less likely that they will surrender control and jurisdiction over the DAO which includes no legal recourse, inability to sue in national courts etc, while also giving the DAO limited liability in that jurisdiction."
  },
  {
   "id": "kaal:claim:3652481-025",
   "url": "https://wulfkaal.github.io/claims/3652481-025",
   "claim": "A DAO needs a legal wrapper to represent it because a DAO on its own cannot rent an office or sign a contract that can only be executed on paper.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "evidenced",
   "supporting_quote": "First, a DAO with a legal wrapper enables the DAO's operations in the real world and beyond. A DAO needs a legal wrapper representing the DAO in the sense that a DAO cannot rent an office or sign a contract that can only happen on paper."
  },
  {
   "id": "kaal:claim:3652481-026",
   "url": "https://wulfkaal.github.io/claims/3652481-026",
   "claim": "Stable and presumptively optimal static or constitutional rules for DAO governance typically enable gaming and arbitrage opportunities, because rational opportunistic parties will circumvent complex static rules to increase their share of power and profit.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "the system is open and democratic",
    "the rule set is static and complex"
   ],
   "supporting_quote": "Stable and presumptively optimal static and/or constitutional rules for DAO governance therefore typically enable gaming and arbitrage opportunities."
  },
  {
   "id": "kaal:claim:3652481-027",
   "url": "https://wulfkaal.github.io/claims/3652481-027",
   "claim": "To avoid the corruptive gaming and arbitrage that static complex DAO rules invite, effective DAO governance designs should be focused on dynamic elements, including members' ability to re evaluate existing precedent in the system.",
   "type": "design",
   "topics": [
    "governance-design",
    "law-and-legal-systems",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "supporting_quote": "To avoid these negative effects of static complex DAO rules, effective DAO governance designs should be focused on dynamic elements."
  },
  {
   "id": "kaal:claim:3652481-028",
   "url": "https://wulfkaal.github.io/claims/3652481-028",
   "claim": "Presumptively stable ex ante majoritarian rules are flawed because they are inevitably suboptimal in an environment that has evolved away from the conditions that produced the rule.",
   "type": "failure",
   "topics": [
    "governance-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "supporting_quote": "Presumptively stable ex-ante majoritarian rules are flawed because they are inevitably suboptimal in an ever-changing environment that evolves from the environment that precipitated the promulgation of the ex-ante majoritarian rule."
  },
  {
   "id": "kaal:claim:3652481-029",
   "url": "https://wulfkaal.github.io/claims/3652481-029",
   "claim": "Kaal accepts that the arguments against on chain governance remain strong: in an off chain model miners supply checks and balances over protocol changes, and on chain governance arguably removes those checks and balances.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "public blockchains with miner based off chain governance"
   ],
   "supporting_quote": "Despite the ever-widening need for on-chain governance solutions, arguments against on-chain governance remain strong. In an off- chain governance model, miners provide checks and balances on power over protocol changes. On-chain governance arguably removes such checks and balances."
  },
  {
   "id": "kaal:claim:3652481-030",
   "url": "https://wulfkaal.github.io/claims/3652481-030",
   "claim": "The one token one vote designs popular in the early 2020s produced suboptimal voting outcomes because they allocate more power to holders of a large share of total token supply, leaving majority holders more powerful than all remaining holders combined.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "one token one vote voting mechanisms"
   ],
   "supporting_quote": "Suboptimal voting outcomes in existing decentralized protocols were associated with the then popular one-token-one-vote voting mechanisms. A one- token-one-vote design allocates more power to token holders who have a significant share of the total supply of a given token."
  },
  {
   "id": "kaal:claim:3652481-031",
   "url": "https://wulfkaal.github.io/claims/3652481-031",
   "claim": "Reputation based staking removes the corruptive elements of fungible tokens because a third party is less likely to be able to take over a non fungible asset such as reputation that was organically grown and maintained through actual expertise in the DAO's subject matter.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "reputation is non fungible and expertise based"
   ],
   "supporting_quote": "The corruptive elements of fungible assets/tokens are removed because third parties are less likely able to take over a non-fungible asset, such as reputation, that is organically grown and maintained through actual expertise in a given DAO subject matter."
  },
  {
   "id": "kaal:claim:3652481-032",
   "url": "https://wulfkaal.github.io/claims/3652481-032",
   "claim": "Because a Swiss Association is a legal entity, a DAA must have a seed in Switzerland and be run in Switzerland even though its members can be located anywhere in the world.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "evidenced",
   "scope_conditions": [
    "Swiss Association legal form"
   ],
   "supporting_quote": "Members of the DAA can be all over the world, but because the Association is a legal entity, it must have a \"seed\" in Switzerland, run in Switzerland."
  },
  {
   "id": "kaal:claim:3652481-033",
   "url": "https://wulfkaal.github.io/claims/3652481-033",
   "claim": "Only the most basic common denominator required to operate a fully functional Swiss Association can be run entirely on chain.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "Swiss Association legal form"
   ],
   "supporting_quote": "Therefore, only the most basic common denominator enabling the operation of a fully functional Swiss Association, runs entirely on- chain."
  },
  {
   "id": "kaal:claim:3652481-034",
   "url": "https://wulfkaal.github.io/claims/3652481-034",
   "claim": "Where a DAO's internal voting mechanism is centralized and burdened with legacy voting problems, any higher degree of decentralization achieved in its external legal design will typically be cancelled out over the long run.",
   "type": "failure",
   "topics": [
    "decentralization",
    "governance-design",
    "dao",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "the internal voting mechanism is centralized or uses legacy voting designs"
   ],
   "supporting_quote": "For many attempts to create legal solutions, if the internal voting mechanism of a DAO is more centralized and afflicted with existing legacy voting issues, a higher degree of decentralization in the external legal design will typically be cancelled out in the long run."
  },
  {
   "id": "kaal:claim:3652481-035",
   "url": "https://wulfkaal.github.io/claims/3652481-035",
   "claim": "When the degrees of internal and external governance decentralization cancel each other out, the DAO is less likely to succeed in its decentralization attempt and correspondingly more likely to fail.",
   "type": "failure",
   "topics": [
    "dao",
    "decentralization",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "supporting_quote": "If the degrees of internal and external governance decentralization cancel each other out, the respective DAO is less likely to succeed in its decentralization attempt, which in turn makes it more likely for the DAO to fail."
  },
  {
   "id": "kaal:claim:3652481-036",
   "url": "https://wulfkaal.github.io/claims/3652481-036",
   "claim": "Paying DevDAO salaries in fungible stable tokens in proportion to members' non fungible reputation scores makes the economic benefit indirect, which removes corruptive elements and makes the governance design more attack resistant and stable over the long run.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "a bifurcated token design with non fungible reputation tokens and fungible salary tokens"
   ],
   "supporting_quote": "The salary payments in fungible stable tokens are in proportion to DevDAO members' respective non-fungible reputation token scores. The indirect economic effects remove corruptive elements and make the governance design more attack resistant and stable in the long run."
  },
  {
   "id": "kaal:claim:3652481-037",
   "url": "https://wulfkaal.github.io/claims/3652481-037",
   "claim": "The reputation based DevDAO governance design creates a positive sum game, because members have incentives to build lasting non fungible value through a long term record of productive cooperation that improves the DevDAO itself.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "reputation is non fungible and publicly reviewable"
   ],
   "supporting_quote": "By contrast, the reputation- based DevDAO governance design creates a positive-sum game because DevDAO members have incentives to create lasting non- fungible value for the DevDAO by developing a long-term non- fungible record of productive cooperation that in effect improves the DevDAO."
  },
  {
   "id": "kaal:claim:3652481-038",
   "url": "https://wulfkaal.github.io/claims/3652481-038",
   "claim": "DevDAO member reputation is inflationary by design, so that non use, meaning failure to stake reputation tokens or to vote, causes value depreciation, which incentivizes action and makes liveness faults less likely.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "supporting_quote": "The DevDAO member reputation is inflationary in the DevDAO design. As such, non-use, e.g. non-staking of reputation tokens or non-voting, would lead to value depreciation, which incentivizes action and thus value enhancement. Liveness faults become less likely."
  },
  {
   "id": "kaal:claim:3652481-039",
   "url": "https://wulfkaal.github.io/claims/3652481-039",
   "claim": "Reputation weighted salary distribution defeats sock puppet attacks, because a member who creates ten accounts holding one reputation token each ends up in the same position as one account holding ten reputation tokens.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "salary is distributed in proportion to reputation token holdings"
   ],
   "supporting_quote": "This solves the sock- puppet attack because if a DevDAO member creates 10 accounts with 1 reputation token each, it is the same as 1 account with 10 reputation tokens."
  },
  {
   "id": "kaal:claim:3652481-040",
   "url": "https://wulfkaal.github.io/claims/3652481-040",
   "claim": "Without a legal wrapper, DAOs face potential regulatory enforcement actions and civil liability not only at the organization level but against individual participants.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "compliance",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481",
   "year": "2020",
   "source_sha256": "530b3a40c244aeca2eb4c53f4c9b4d6b2962bd6be9f92b4ebe17139c17f4c0e0",
   "confidence": "argued",
   "scope_conditions": [
    "no off chain legal entity has been formed"
   ],
   "supporting_quote": "Without a legal wrapper, DAOs face potential regulatory enforcement actions and civil liability, not only at the organization level but against individual participants."
  },
  {
   "id": "kaal:claim:3606663-001",
   "url": "https://wulfkaal.github.io/claims/3606663-001",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "digital asset and blockchain startups",
    "token issuance treated primarily as a funding mechanism"
   ],
   "supporting_quote": "Because equity investments in blockchain startups make it less likely and less necessary for the respective startups to issue digital currencies, at least as a funding source, the market for digital currencies and the total volume of issued digital currencies is likely to recede"
  },
  {
   "id": "kaal:claim:3606663-002",
   "url": "https://wulfkaal.github.io/claims/3606663-002",
   "claim": "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.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "innovation",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "evidenced",
   "scope_conditions": [
    "digital asset and blockchain startups",
    "2016 to early 2020s"
   ],
   "supporting_quote": "Since 2016/17, the funding sources for digital asset startups and blockchain startups moved from equity funding to initial coin offerings (ICOs), to equity offerings, and initial exchange offerings (IEOs), just to return back to equity funding in the early 2020s."
  },
  {
   "id": "kaal:claim:3606663-003",
   "url": "https://wulfkaal.github.io/claims/3606663-003",
   "claim": "The expected growth rate of DeFi, across diverse estimates, is large enough to call into question the long term viability of the existing decentralized technology infrastructure unless core infrastructure improvements are made.",
   "type": "failure",
   "topics": [
    "defi",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized finance built on existing public blockchains",
    "growth continues at estimated rates"
   ],
   "supporting_quote": "Normatively, the paper points out that the expected growth rate of the DeFi, according to diverse sets of estimates, is substantial enough to call into question the long-term viability of the decentralized technology infrastructure without core infrastructure improvements."
  },
  {
   "id": "kaal:claim:3606663-004",
   "url": "https://wulfkaal.github.io/claims/3606663-004",
   "claim": "The article stipulates a broad definition of digital assets covering all virtual and electronic assets regardless of how regulators name or categorize them, including cryptocurrencies, security tokens, utility tokens, virtual collectibles, stablecoins, and altcoins.",
   "type": "definitional",
   "topics": [
    "systemic-risk",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "asserted",
   "scope_conditions": [
    "definition adopted for the purposes of this article"
   ],
   "supporting_quote": "For the purposes of this article, digital assets are defined broadly. Digital assets cover all types of virtual and electronic assets, regardless of how they are otherwise named or categorized by regulatory agencies, including cryptocurrencies, security tokens,"
  },
  {
   "id": "kaal:claim:3606663-005",
   "url": "https://wulfkaal.github.io/claims/3606663-005",
   "claim": "The assumption by ICO issuers that token sales let them circumvent securities registration and disclosure requirements proved to be a fallacy for many U.S. issuers, who faced increased SEC enforcement actions in late 2019.",
   "type": "failure",
   "topics": [
    "securities-law",
    "compliance",
    "regulatory-failure",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "U.S. issuers of tokens in ICOs",
    "post 2017 enforcement environment"
   ],
   "supporting_quote": "Of course, for many U.S. issuers of tokens in ICOs this presumption became in retrospective a fallacy that should haunt them in the aftermath of increased SEC enforcement actions of ICOs in late 2019."
  },
  {
   "id": "kaal:claim:3606663-006",
   "url": "https://wulfkaal.github.io/claims/3606663-006",
   "claim": "By 2019 the ICO market had lost its defining advantage over venture capital: because most ICOs between 2018 and 2019 imposed one to three year lockups, neither market offered early liquidity to investors or issuers, making the two substantively similar.",
   "type": "failure",
   "topics": [
    "securities-law",
    "innovation",
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "ICOs conducted between 2018 and 2019",
    "lockup periods of one to three years"
   ],
   "supporting_quote": "Most ICOs during that period required one to three-year lockup period for their investors. Accordingly, the ICO market in 2019 is very similar to the venture market in the sense that neither of these markets offers early liquidity to investors and issuers."
  },
  {
   "id": "kaal:claim:3606663-007",
   "url": "https://wulfkaal.github.io/claims/3606663-007",
   "claim": "Once the staggered private sale discounts of up to fifty percent are counted as a cost of capital, the cost structure of an ICO is arguably significantly higher than that of an IPO, notwithstanding the ICO's lower legal and offering expenses.",
   "type": "failure",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "ICOs conducted in 2017 and 2018 with staggered discount structures",
    "comparison against average IPO underwriting fees of four to seven percent"
   ],
   "supporting_quote": "Considering these steep discounts to incentivize earliest possible investments, the cost structure of ICOs is arguably significantly higher than the cost structure of an IPO."
  },
  {
   "id": "kaal:claim:3606663-008",
   "url": "https://wulfkaal.github.io/claims/3606663-008",
   "claim": "ICO issuance exceeded venture capital financing of startups for the first time in the second quarter of 2017, with $210 million invested through ICOs against $180 million invested through traditional venture capital funds.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "innovation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "evidenced",
   "scope_conditions": [
    "second quarter of 2017",
    "blockchain and crypto startups"
   ],
   "supporting_quote": "In the second quarter of 2017, ICO issuances exceeded venture capital financing of start-ups for the first time,56 with $210 million invested in ICOs versus $180 million invested into start-ups via traditional venture capital funds."
  },
  {
   "id": "kaal:claim:3606663-009",
   "url": "https://wulfkaal.github.io/claims/3606663-009",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "defi",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "cryptocurrency exchanges",
    "aftermath of the ICO market collapse in January 2019"
   ],
   "supporting_quote": "Initial exchange offers (\"IEO\") 66 evolved as a response to the near disappearance of the ICO market in January 2019."
  },
  {
   "id": "kaal:claim:3606663-010",
   "url": "https://wulfkaal.github.io/claims/3606663-010",
   "claim": "The IEO reinserts an intermediary into token offerings: the exchange screens the offering and the issuer no longer interacts with investors directly, reversing the direct issuer to investor structure of the ICO.",
   "type": "design",
   "topics": [
    "defi",
    "securities-law",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "asserted",
   "scope_conditions": [
    "initial exchange offerings",
    "token offerings listed on a cryptocurrency exchange"
   ],
   "supporting_quote": "In an IEO, the cryptocurrency exchange acts as a screening device for token offerings. In an IEO the issuer does no longer interact with investors directly."
  },
  {
   "id": "kaal:claim:3606663-011",
   "url": "https://wulfkaal.github.io/claims/3606663-011",
   "claim": "Capped ICO raises, adopted by the crypto community to reduce investor uncertainty about platform valuation in uncapped raises, backfire because the cap creates strong incentives for investors to get in first, raising the likelihood of retail investor frenzy.",
   "type": "failure",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "capped ICO raises",
    "retail investor participation"
   ],
   "supporting_quote": "However, capped ICO raises create significant incentives for investors to attempt to get in first, raising the likelihood of retail investor frenzy."
  },
  {
   "id": "kaal:claim:3606663-012",
   "url": "https://wulfkaal.github.io/claims/3606663-012",
   "claim": "The absence of mandatory disclosure obligations for ICOs leads promoters to make irregular disclosures or none at all as time passes, producing a significant lack of transparency in the ICO market.",
   "type": "failure",
   "topics": [
    "securities-law",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "ICO markets without mandatory disclosure rules",
    "post issuance period"
   ],
   "supporting_quote": "Moreover, the lack of mandatory disclosures for ICOs leads many promoters to make irregular or no disclosures about the platform as time passes, leading to a significant lack of transparency in the ICO market."
  },
  {
   "id": "kaal:claim:3606663-013",
   "url": "https://wulfkaal.github.io/claims/3606663-013",
   "claim": "ICO sale terms are not fixed at launch: promoters can alter the smart contract to change the sales rules mid course during an offering, a risk factor for retail investors that has no analogue in a registered offering.",
   "type": "failure",
   "topics": [
    "securities-law",
    "smart-contracts",
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "asserted",
   "scope_conditions": [
    "ICOs administered through promoter controlled smart contracts"
   ],
   "supporting_quote": "Promoters can also alter the smart contract to change ICO sales rules mid-course during an ICO."
  },
  {
   "id": "kaal:claim:3606663-014",
   "url": "https://wulfkaal.github.io/claims/3606663-014",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "early 2020s digital asset market",
    "absence of sufficient regulatory guidance"
   ],
   "supporting_quote": "The regulatory uncertainty in the market for digital assets is curtailing the growth of the industry. Many investor classes - from retail to the largest institutions - are hesitant to participate in the market because of the regulatory uncertainty."
  },
  {
   "id": "kaal:claim:3606663-015",
   "url": "https://wulfkaal.github.io/claims/3606663-015",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "corporate-governance",
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "institutional investors subject to fiduciary duties",
    "early 2020s absence of regulator recognized custody solutions"
   ],
   "supporting_quote": "While larger institutional players face the same issues, they are also limited by their fiduciary responsibility to their clients, which limits the type of risk they can be exposed to. Compounding these challenges is the lack of stable custody solution(s) that are recognized by the regulators."
  },
  {
   "id": "kaal:claim:3606663-016",
   "url": "https://wulfkaal.github.io/claims/3606663-016",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "economics",
    "institutional-design",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "immature or nascent asset markets",
    "digital asset market as of 2020"
   ],
   "supporting_quote": "Immature markets, such as the market for digital assets in 2020 often cannot attract institutional investors and venture capitalists that have sufficient operating experience in that market."
  },
  {
   "id": "kaal:claim:3606663-017",
   "url": "https://wulfkaal.github.io/claims/3606663-017",
   "claim": "Early stage investing in digital assets is a relationships business, and without access to a network of core industry expertise early stage investments in the digital asset industry are rarely successful.",
   "type": "condition",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "asserted",
   "scope_conditions": [
    "early stage investors in digital asset startups"
   ],
   "supporting_quote": "Without access to a network of core expertise early stage investments in the digital asset industry are rarely successful."
  },
  {
   "id": "kaal:claim:3606663-018",
   "url": "https://wulfkaal.github.io/claims/3606663-018",
   "claim": "Anonymity in decentralized networks imposes a specific design constraint: system architects need a special skillset to navigate the limits that anonymity places on system design, and that skillset remains very rare in the early 2020s.",
   "type": "condition",
   "topics": [
    "risk-and-incentives",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized networks with anonymous and autonomous participants",
    "incentive compatible token design"
   ],
   "supporting_quote": "The anonymity in decentralized networks requires a special skillset for system architects who know how to navigate the limitations in system design that is associated with anonymity."
  },
  {
   "id": "kaal:claim:3606663-019",
   "url": "https://wulfkaal.github.io/claims/3606663-019",
   "claim": "Because the digital asset market has been so hype driven, technical experience has not added significantly to overall market development and maturity, leaving many top projects in 2020 still afflicted by unresolved technical issues.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "cryptocurrency market through the early 2020s",
    "hype driven market conditions"
   ],
   "supporting_quote": "Because the market has been so hype driven, technical experience has not added significantly to overall market development and maturity."
  },
  {
   "id": "kaal:claim:3606663-020",
   "url": "https://wulfkaal.github.io/claims/3606663-020",
   "claim": "Bitcoin functions as a medium of exchange for a number of businesses but arguably fails as a store of value and as a unit of account, because of its volatility and its lack of intrinsic value.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "Bitcoin as evaluated against the three classical money functions"
   ],
   "supporting_quote": "but it arguably fails as a store of value and as a unit of account because of its volatility and lack of intrinsic value."
  },
  {
   "id": "kaal:claim:3606663-021",
   "url": "https://wulfkaal.github.io/claims/3606663-021",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "defi",
    "systemic-risk",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "digital asset exchanges affected by cyber security incidents",
    "author flags other contributing reasons"
   ],
   "supporting_quote": "Some indicia suggest that cyber security incidents contribute to the volatility of the digital asset market as consumers withdraw instantaneously their assets from an exchange that has been affected by a cyber security incident, among other reasons for this relationship."
  },
  {
   "id": "kaal:claim:3606663-022",
   "url": "https://wulfkaal.github.io/claims/3606663-022",
   "claim": "Token design must be treated as an iterative process in which data collection and flexibility in core design parameters are essential, because prior crypto economic assumptions routinely turn out to be suboptimal once the network grows and user preferences change.",
   "type": "design",
   "topics": [
    "economics",
    "tokenomics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "token and crypto economic design for growing decentralized networks"
   ],
   "supporting_quote": "Data collection and flexibility in core design parameters are essential because prior crypto-economic assumptions often materialize as suboptimal in the light of network growth and changing user and consumer preferences."
  },
  {
   "id": "kaal:claim:3606663-023",
   "url": "https://wulfkaal.github.io/claims/3606663-023",
   "claim": "The evolution of the DeFi market and its new monetary system depends on the stability of DeFi products and digital assets, and both stability and adoption of DeFi are undermined by the instability of most cryptocurrencies.",
   "type": "condition",
   "topics": [
    "defi",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "DeFi platforms denominated in volatile cryptocurrencies"
   ],
   "supporting_quote": "The evolution of the DeFi market and its new monetary system depends on the stability of DeFi products and digital assets. Stability and adoption of DeFi is undermined by the instability of most cryptocurrencies."
  },
  {
   "id": "kaal:claim:3606663-024",
   "url": "https://wulfkaal.github.io/claims/3606663-024",
   "claim": "DeFi platforms grant the unbanked access to the loan market by disintermediating existing banks, connecting borrowers and lenders directly in peer to peer networks and accepting digital assets as collateral with far less documentation than banks require.",
   "type": "mechanism",
   "topics": [
    "defi",
    "systemic-risk",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "borrowers excluded from centralized banking for lack of documentation",
    "DeFi lending protocols"
   ],
   "supporting_quote": "DeFi platforms grant the unbanked access to the loan market by disintermediating existing banks. DeFi Dapps connect borrowers and lenders in peer-to-peer networks directly."
  },
  {
   "id": "kaal:claim:3606663-025",
   "url": "https://wulfkaal.github.io/claims/3606663-025",
   "claim": "The DeFi lending market is highly concentrated: MakerDAO alone accounts for almost ninety percent of the total USD value locked in DeFi projects.",
   "type": "empirical",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "evidenced",
   "scope_conditions": [
    "DeFi projects measured by total USD value locked",
    "period covered by DeFi Pulse data"
   ],
   "supporting_quote": "MakerDAO accounts for almost ninety percent of total USD value locked in DeFi projects."
  },
  {
   "id": "kaal:claim:3606663-026",
   "url": "https://wulfkaal.github.io/claims/3606663-026",
   "claim": "Centralized financial technology does not complete the disintermediation it promises, because users still deal with a technology company as intermediary instead of a financial institution, which leaves room for the decentralized solutions DeFi attempts to provide.",
   "type": "failure",
   "topics": [
    "decentralization",
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "centralized FinTech platforms",
    "peer to peer transaction settings"
   ],
   "supporting_quote": "In existing centralized forms of financial technology disintermediation users are still dealing with a technology company as intermediary instead of a financial institution.286 Accordingly, centralized financial technology disintermediation is incomplete and allows for further improvements."
  },
  {
   "id": "kaal:claim:3606663-027",
   "url": "https://wulfkaal.github.io/claims/3606663-027",
   "claim": "DeFi is more efficient than existing financial intermediation including FinTech, and that superior efficiency traces to its extensive reliance on code and automation, which removes large parts of the human element and the errors and inefficiencies that come with it.",
   "type": "mechanism",
   "topics": [
    "defi",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of DeFi with legacy financial intermediation and FinTech"
   ],
   "supporting_quote": "DeFi is more efficient than existing financial intermediation, including FinTech. Its superior efficiency can be traced to its extensive reliance on code and automation that remove large parts of the human element and the associated errors and inefficiencies."
  },
  {
   "id": "kaal:claim:3606663-028",
   "url": "https://wulfkaal.github.io/claims/3606663-028",
   "claim": "DeFi's decentralization remains theoretical in one important respect: as of the early 2020s DeFi is still largely relegated to one dominant platform, with 87 percent of all publicly funded DeFi projects built on Ethereum.",
   "type": "empirical",
   "topics": [
    "defi",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "evidenced",
   "scope_conditions": [
    "publicly funded DeFi projects",
    "beginning of the 2020s"
   ],
   "supporting_quote": "At the beginning of the 2020s, DeFi is still largely relegated to the use of one dominant platform. 87% of all publicly funded DeFi projects have been built on Ethereum."
  },
  {
   "id": "kaal:claim:3606663-029",
   "url": "https://wulfkaal.github.io/claims/3606663-029",
   "claim": "At the beginning of the 2020s DeFi was not sufficiently user friendly, because core interfaces such as metamask, myetherwallet, and scatter require levels of technical know how in handling public and private keys that most lay users do not possess.",
   "type": "failure",
   "topics": [
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "lay retail users of DeFi interfaces",
    "beginning of the 2020s"
   ],
   "supporting_quote": "At the beginning of the 2020s, DeFi was not sufficiently user friendly."
  },
  {
   "id": "kaal:claim:3606663-030",
   "url": "https://wulfkaal.github.io/claims/3606663-030",
   "claim": "The digital asset market resulted from a technology push rather than a market pull: developers were driven by technical advancement rather than by usefulness and user friendliness, and market pull may only evolve once the DeFi technology infrastructure is more developed.",
   "type": "failure",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "digital asset and DeFi platform development",
    "immature technology infrastructure"
   ],
   "supporting_quote": "As with most innovative technologies, the digital asset market also resulted from a technology push rather than a market pull."
  },
  {
   "id": "kaal:claim:3606663-031",
   "url": "https://wulfkaal.github.io/claims/3606663-031",
   "claim": "DeFi platform technologies often have limited product market fit because the reliance on code over human judgment produces products built around automation that ignore the human element in financial transactions.",
   "type": "failure",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "DeFi products built primarily on automated code execution",
    "transactions involving subjective or non codifiable inputs"
   ],
   "supporting_quote": "DeFi platform technologies often have a limited product market fit. The reliance on code in the market for digital assets over human judgments resulted in a focus on products that predominantly rely on automation, ignoring the human element in financial transactions."
  },
  {
   "id": "kaal:claim:3606663-032",
   "url": "https://wulfkaal.github.io/claims/3606663-032",
   "claim": "Because human interactions in business are often too complex to be fully codified objectively, DeFi systems that exclude all non objective information from their analysis do not fully utilize available information, which limits their efficiency and usefulness.",
   "type": "mechanism",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "DeFi products analyzing only objectively recordable and verifiable inputs",
    "complex commercial interactions"
   ],
   "supporting_quote": "However, human interaction in business are often too complex to be fully codified objectively. By excluding all non- objective information from the product analysis, all available information may not be fully utilized which limits efficiency and potential usefulness of DeFi"
  },
  {
   "id": "kaal:claim:3606663-033",
   "url": "https://wulfkaal.github.io/claims/3606663-033",
   "claim": "Accountability is a structural concern in DeFi: without a central entity it can become unclear who is responsible for wrongdoing, and when problems arise no central party can freeze transactions, fix problems, or restore normal operations.",
   "type": "failure",
   "topics": [
    "defi",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "fully decentralized finance systems without a central operator"
   ],
   "supporting_quote": "\"Without central entity involvement, who should be held accountable for potential wrongdoing can become unclear. Who do you resort to for help? When problems arise, no central party can take actions to freeze transactions, fix problems and restore normal operations."
  },
  {
   "id": "kaal:claim:3606663-034",
   "url": "https://wulfkaal.github.io/claims/3606663-034",
   "claim": "In the early 2020s the DeFi technology infrastructure was insufficiently developed to support DeFi growth estimates and growth potential, and fulfilling that potential requires significant tradeoffs between scaling, security, and levels of decentralization.",
   "type": "failure",
   "topics": [
    "defi",
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "DeFi infrastructure as of the early 2020s",
    "projected DeFi growth rates"
   ],
   "supporting_quote": "In the early 2020s, the DeFi technology infrastructure was insufficiently developed to support DeFi growth estimates and growth potential."
  },
  {
   "id": "kaal:claim:3606663-035",
   "url": "https://wulfkaal.github.io/claims/3606663-035",
   "claim": "The tradeoff between transaction approval speed and immutability has the potential to undermine the DeFi infrastructure in the long run.",
   "type": "failure",
   "topics": [
    "defi",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "consensus based decentralized ledgers supporting DeFi"
   ],
   "supporting_quote": "The trade-off between transaction approval speed and immutability has the potential to undermine the DeFi infrastructure in the long run."
  },
  {
   "id": "kaal:claim:3606663-036",
   "url": "https://wulfkaal.github.io/claims/3606663-036",
   "claim": "Consensus in decentralized systems presents a two sided cost problem: creating consensus raises the costs of prepping, processing, and storing information, while reducing the number of computational checks increases the risk of collusion attacks that could change the record.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "public distributed consensus systems",
    "information distributed to and validated by all parties"
   ],
   "supporting_quote": "Creating consensus requires increase costs of prepping, processing, and storing information.333 On the other hand, fewer computational checks for consensus increase the risk of collusion attacks that could change the record."
  },
  {
   "id": "kaal:claim:3606663-037",
   "url": "https://wulfkaal.github.io/claims/3606663-037",
   "claim": "Read together with the network capacity failure that CryptoKitties caused on Ethereum in December 2017, the expected DeFi growth rates imply that the Ethereum network will continue to experience network shortages and throughput problems unless its infrastructure is upgraded to handle the expected transaction volume.",
   "type": "predictive",
   "topics": [
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "Ethereum network without infrastructure upgrades",
    "DeFi growth continuing at estimated rates",
    "author cautions that correlation is not causation"
   ],
   "supporting_quote": "the expected growth rate illustrated in Figures [__] and [__] could mean that the Ethereum network will continue to experience network shortages and throughput issues unless the Ethereum infrastructure is upgraded to deal with the expected volume of transactions."
  },
  {
   "id": "kaal:claim:3606663-038",
   "url": "https://wulfkaal.github.io/claims/3606663-038",
   "claim": "Conducting monetary policy through a central bank digital currency imposes a requirement on the technology layer: the underlying network protocol must enable the central bank to adjust the money supply at will and to act as lender of last resort with access to unlimited supply.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "argued",
   "scope_conditions": [
    "CBDC built on a blockchain style protocol",
    "central bank intends to conduct monetary policy through the CBDC"
   ],
   "supporting_quote": "Moreover, in order to be able to conduct monetary policy with CBDC, the underlying network protocol would have to enable the central bank to adjust the money supply at will."
  },
  {
   "id": "kaal:claim:3606663-039",
   "url": "https://wulfkaal.github.io/claims/3606663-039",
   "claim": "The Bank of Canada's year long Jasper trial revealed a tradeoff rather than a solution: Ethereum would make the wholesale payment system more resilient but was costly and raised privacy issues, while Corda addressed cost and privacy but made the system less resilient, and the Bank concluded in May 2017 that blockchain was not mature enough to run a national interbank payment system.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "decentralization",
    "blockchain",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "evidenced",
   "scope_conditions": [
    "Bank of Canada Jasper trial",
    "national interbank payment system use case",
    "as of May 2017"
   ],
   "supporting_quote": "While Ethereum would make the wholesale payment system more resilient but would be costly and raised privacy issues, Corda was able to address the cost and privacy concerns but made the system less resilient."
  },
  {
   "id": "kaal:claim:3606663-040",
   "url": "https://wulfkaal.github.io/claims/3606663-040",
   "claim": "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.",
   "type": "predictive",
   "topics": [
    "tokenomics",
    "systemic-risk",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "year": "2020",
   "source_sha256": "d1d4a15a293b715bb6a5a32e689f59c3a1587915039ba9a1cf4eeb8ee2a1e57c",
   "confidence": "speculative",
   "scope_conditions": [
    "coexistence of central bank digital currencies and privately issued coins"
   ],
   "supporting_quote": "it is possible that the public realm of the coin evolution could attempt to impact or even pre- empt the private coin development and use. For example, some central banks may attempt to censor the use of non-centrally-issued digital currencies."
  },
  {
   "id": "kaal:claim:3799320-001",
   "url": "https://wulfkaal.github.io/claims/3799320-001",
   "claim": "The concept of a DAO fails if it becomes centralized, and centralization in governance is the largest single threat to a DAO.",
   "type": "failure",
   "topics": [
    "decentralization",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "supporting_quote": "The concept of a DAO fails if it becomes centralized. Centralization is omnipresent in computing systems, economics, and society at large. Yet centralization in governance is perhaps the largest threat to a DAO."
  },
  {
   "id": "kaal:claim:3799320-002",
   "url": "https://wulfkaal.github.io/claims/3799320-002",
   "claim": "Decentralized governance must be dynamic and evolutionary, otherwise the system becomes centralized and brittle over time; most DAOs fail to accomplish this.",
   "type": "failure",
   "topics": [
    "governance-design",
    "institutional-design",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "governance that must persist over time",
    "systems relying on information from the edges"
   ],
   "supporting_quote": "Decentralized governance has to be dynamic and evolutionary in order to avoid for the system to become, over time, centralized and brittle. Most DAOs fail to accomplish this."
  },
  {
   "id": "kaal:claim:3799320-003",
   "url": "https://wulfkaal.github.io/claims/3799320-003",
   "claim": "Tying a DAO's legal existence to existing legal and jurisdictional frameworks typically requires a representative in the chosen jurisdiction, which centralizes the DAO and results in the failure of the DAO concept.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "law-and-legal-systems",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "DAO anchored in an existing jurisdiction",
    "frameworks that require local representation"
   ],
   "supporting_quote": "Tying the legal existence of a DAO to any forms of existing legal and jurisdictional frameworks typically results in the need for a representative in the chosen legal framework and jurisdiction, which, in turn, centralizes the DAO and results in the failure of the DAO concept."
  },
  {
   "id": "kaal:claim:3799320-004",
   "url": "https://wulfkaal.github.io/claims/3799320-004",
   "claim": "Only a jurisdiction that grants a DAO limited liability as an entity and accepts its independent status without requiring representation can be truly favorable to DAO concepts.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions competing to host DAOs"
   ],
   "supporting_quote": "Only a jurisdiction that gives the DAO limited liability as an entity and accepts its independent status without the need for representation may truly be favorable for DAO concepts."
  },
  {
   "id": "kaal:claim:3799320-005",
   "url": "https://wulfkaal.github.io/claims/3799320-005",
   "claim": "The focus on value enhancement of fungible tokens can drive short termism in DAOs and cause ethical and governance issues to be ignored.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs whose incentive design centers on fungible token value"
   ],
   "supporting_quote": "Yet, the focus on the value enhancement of fungible tokens can lead to short- termism and may ignore ethical and governance issues."
  },
  {
   "id": "kaal:claim:3799320-006",
   "url": "https://wulfkaal.github.io/claims/3799320-006",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "development anchored to first generation layer 1 networks"
   ],
   "supporting_quote": "Yet, working with suboptimal layer 1 blockchain solutions with high gas fees and low throughput delay the evolution of DAO infrastructure design as innovation and evolution is inhibited through suboptimal layer 1 features."
  },
  {
   "id": "kaal:claim:3799320-007",
   "url": "https://wulfkaal.github.io/claims/3799320-007",
   "claim": "Regulatory uncertainty is holding back both the development of DAOs and the potential of DAOs to optimize digital assets.",
   "type": "failure",
   "topics": [
    "dao",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "regulatory environment of the early 2020s"
   ],
   "supporting_quote": "Regulatory uncertainty is holding back the development of DAOs and the optimization potential of DAOs for digital assets."
  },
  {
   "id": "kaal:claim:3799320-008",
   "url": "https://wulfkaal.github.io/claims/3799320-008",
   "claim": "If DAO members do not formalize a legal structure for their entity, courts are very likely to impose one on them, which is a serious risk of DAO membership.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs with no off-chain legal entity",
    "litigation reaching a court"
   ],
   "supporting_quote": "However, a very serious risk is associated with DAO membership in the sense that if the DAO members do not formalize a structure for their human-created entity, courts are very likely to impose one for the members of the DAO."
  },
  {
   "id": "kaal:claim:3799320-009",
   "url": "https://wulfkaal.github.io/claims/3799320-009",
   "claim": "Default general partnership treatment would hold every stakeholder of a DAO liable for any debts or legal actions the DAO faces, exposing known participants to regulatory enforcement and civil actions.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "compliance",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "evidenced",
   "scope_conditions": [
    "no legal entity formed",
    "U.S. partnership default rules apply"
   ],
   "supporting_quote": "Many courts and lawyers would describe the relationship between members of a DAO and their investors as the default general partnership which holds every stakeholder of a DAO liable for any debts or legal actions that the DAO may face."
  },
  {
   "id": "kaal:claim:3799320-010",
   "url": "https://wulfkaal.github.io/claims/3799320-010",
   "claim": "Private agreements that limit remedies to DAO assets are unlikely to be upheld if the DAO faces a tort suit.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "asserted",
   "scope_conditions": [
    "tort claims rather than contract claims",
    "off-chain dispute settlement"
   ],
   "supporting_quote": "Parties may be able to limit remedies to DAO assets through private agreements. But, if the DAO should face a tort suit, such an agreement is unlikely to be upheld."
  },
  {
   "id": "kaal:claim:3799320-011",
   "url": "https://wulfkaal.github.io/claims/3799320-011",
   "claim": "Cybernetic systems change constantly and are less amenable to jurisdictional reach, which makes it nearly impossible to apply a common legal anchor and traditional jurisdictional principles to them.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "constantly changing cybernetic systems",
    "counterparties that do not concurrently exist"
   ],
   "supporting_quote": "Cybernetic systems are constantly changing and less amenable to jurisdictional reach, making it near impossible to apply a common legal anchor and traditional jurisdictional principles to cybernetic systems."
  },
  {
   "id": "kaal:claim:3799320-012",
   "url": "https://wulfkaal.github.io/claims/3799320-012",
   "claim": "Under current securities laws, DAOs governed solely by smart contracts are restricted in pooling assets and generating profit, because those laws limit their ability to fund ecosystem development and deploy capital efficiently.",
   "type": "failure",
   "topics": [
    "securities-law",
    "smart-contracts",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs governed solely by smart contracts",
    "current U.S. securities law"
   ],
   "supporting_quote": "Under current laws, DAOs solely governed by smart contracts are restricted in their ability to pool assets and generate profit because securities laws limit their ability to fund ecosystem development and deploy capital efficiently."
  },
  {
   "id": "kaal:claim:3799320-013",
   "url": "https://wulfkaal.github.io/claims/3799320-013",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "risk-and-incentives",
    "regulatory-failure",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "institutions with rational, opportunistic internal and external constituents"
   ],
   "supporting_quote": "Human nature and any effective machine derivatives of human engagements in institutional form require a duality of incentives in order to overcome attempts of rational and opportunistic internal and external constituents to game the governance design of a given DAO."
  },
  {
   "id": "kaal:claim:3799320-014",
   "url": "https://wulfkaal.github.io/claims/3799320-014",
   "claim": "When fungible assets are the dominant incentive design in the governance of a DAO with identifiable actors, rational and opportunistic internal and external participants will typically attempt to corrupt that governance design for their own gain.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "governance-design",
    "regulatory-failure",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "fungible assets used as the dominant governance incentive",
    "actors who are identifiable"
   ],
   "supporting_quote": "When fungible assets are used as the dominant incentive design in the governance of DAOs with identifiable actors, rational and opportunistic internal constituents and external participants will typically attempt to corrupt the governance design of the DAO for their own gain."
  },
  {
   "id": "kaal:claim:3799320-015",
   "url": "https://wulfkaal.github.io/claims/3799320-015",
   "claim": "The identity of actors in a DAO governance design is itself a source of corruption, so merit identifiers other than individual identity remove the most corruptive influences.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "governance designs that expose actor identity"
   ],
   "supporting_quote": "Similarly, the identity of actors in a DAO governance design creates typically corruptive elements. Merit identifiers other than individual identity remove the most corruptive influences."
  },
  {
   "id": "kaal:claim:3799320-016",
   "url": "https://wulfkaal.github.io/claims/3799320-016",
   "claim": "DAOs cannot exist and persist without ever increasing degrees of decentralization, so DAO legal designs must first and foremost supplement the internal decentralization the DAO has achieved.",
   "type": "condition",
   "topics": [
    "decentralization",
    "law-and-legal-systems",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "long lived DAOs"
   ],
   "supporting_quote": "DAOs cannot exist and persist without ever increasing degrees of decentralization. Therefore, first and foremost, DAO legal designs need to supplement the internal decentralization accomplished by the DAO."
  },
  {
   "id": "kaal:claim:3799320-017",
   "url": "https://wulfkaal.github.io/claims/3799320-017",
   "claim": "Existing legal solutions for DAOs typically require some form of legal representation in the relevant jurisdiction, and such representation is always a point of centralization.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "current legal wrappers available to DAOs"
   ],
   "supporting_quote": "Existing legal solutions for DAOs typically require forms of legal representation in the respective jurisdiction, which are always a point of centralization."
  },
  {
   "id": "kaal:claim:3799320-018",
   "url": "https://wulfkaal.github.io/claims/3799320-018",
   "claim": "A DAO needs a legal wrapper to represent it, because a DAO cannot by itself rent an office or sign a contract that can only happen on paper.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "DAO operations that touch the real world"
   ],
   "supporting_quote": "A DAO needs a legal wrapper representing the DAO in the sense that a DAO cannot rent an office or sign a contract that can only happen on paper."
  },
  {
   "id": "kaal:claim:3799320-019",
   "url": "https://wulfkaal.github.io/claims/3799320-019",
   "claim": "Under the legal wrapper concept individual DAO members are not liable and the third party knows exactly with whom she is interacting and where liabilities arise.",
   "type": "design",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "DAO represented by a legal wrapper entity"
   ],
   "supporting_quote": "Using the legal wrapper concept, the individual DAO members would not be liable and the third party knows exactly with whom she is interacting and where liabilities arise."
  },
  {
   "id": "kaal:claim:3799320-020",
   "url": "https://wulfkaal.github.io/claims/3799320-020",
   "claim": "Because a series of smart contracts grants DAO token holders voting rights, those smart contracts take the place of articles of association or bylaws and of the entire precedent system that a jurisdiction based legal structure would otherwise supply by default.",
   "type": "definitional",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs running on public decentralized blockchain platforms"
   ],
   "supporting_quote": "Because a series of smart contracts grants DAO token holders voting rights, the blockchain-based smart contracts imitates the role of articles of association or bylaws and the entirety of a precedent system that would otherwise be provided by default in a jurisdiction-based legal structure."
  },
  {
   "id": "kaal:claim:3799320-021",
   "url": "https://wulfkaal.github.io/claims/3799320-021",
   "claim": "Governance is the common denominator of the shortcomings in existing DAO infrastructure; it is not a bug or an afterthought in system design but the key feature.",
   "type": "normative",
   "topics": [
    "governance-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "supporting_quote": "The common denominator of the aforementioned shortcomings in the existing DAO infrastructure is governance. Governance is not a bug or an afterthought in system design. Governance is the key feature."
  },
  {
   "id": "kaal:claim:3799320-022",
   "url": "https://wulfkaal.github.io/claims/3799320-022",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "decentralization",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "absence of continual decentralization maintenance"
   ],
   "supporting_quote": "Without continual efforts to maintain decentralized order, values that initially unite DAO members have a tendency to result in ever tighter and complex hierarchical structures in the DAO."
  },
  {
   "id": "kaal:claim:3799320-023",
   "url": "https://wulfkaal.github.io/claims/3799320-023",
   "claim": "If a DAO's internal voting mechanism is more centralized and carries legacy voting problems, a higher degree of decentralization in its external legal design will typically be canceled out in the long run.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "law-and-legal-systems",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs pairing centralized internal voting with a decentralized legal design"
   ],
   "supporting_quote": "if the internal voting mechanism of a DAO is more centralized and afflicted with existing legacy voting issues, a higher degree of decentralization in the external legal design will typically be canceled out in the long run."
  },
  {
   "id": "kaal:claim:3799320-024",
   "url": "https://wulfkaal.github.io/claims/3799320-024",
   "claim": "The DAO of DAOs uses a duality of internal and external governance: internal governance runs on reputation token staking, while external legal relationships are handled by a legal wrapper that represents the DAO of DAOs in real world legal contexts.",
   "type": "design",
   "topics": [
    "dao",
    "law-and-legal-systems",
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "DAO of DAOs architecture"
   ],
   "supporting_quote": "For the external legal relationships and governance, the DAO of DAOs is represented in real-world legal contexts by a legal wrapper."
  },
  {
   "id": "kaal:claim:3799320-025",
   "url": "https://wulfkaal.github.io/claims/3799320-025",
   "claim": "In any open and democratic system, naturally opportunistic rational parties will attempt to circumvent and game the applicable complex static rules to increase their share of power and profit.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "open and democratic systems with complex static rule sets"
   ],
   "supporting_quote": "In any open and democratic system, naturally opportunistic rational parties will attempt to circumvent and game the sets of applicable complex static rules to increase their share of power and profit within the system."
  },
  {
   "id": "kaal:claim:3799320-026",
   "url": "https://wulfkaal.github.io/claims/3799320-026",
   "claim": "Because static complex DAO rule sets bring inevitable corruptive gaming and arbitrage behavior, effective DAO governance designs should focus on dynamic elements such as members' ability to re-evaluate existing precedent.",
   "type": "design",
   "topics": [
    "governance-design",
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "DAO governance that must both protect members and permit enhancement"
   ],
   "supporting_quote": "With static complex sets of DAO rules comes inevitable corruptive opportunistic gaming and arbitrage behavior. To avoid these negative effects of static complex DAO rules, effective DAO governance designs should be focused on dynamic elements."
  },
  {
   "id": "kaal:claim:3799320-027",
   "url": "https://wulfkaal.github.io/claims/3799320-027",
   "claim": "Suboptimal voting outcomes in existing decentralized protocols trace to one token one vote mechanisms, which allocate more power to holders of a significant share of total token supply.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "one token one vote governance designs"
   ],
   "supporting_quote": "Suboptimal voting outcomes in existing decentralized protocols were associated with the then-popular one-token-one-vote voting mechanisms. A one-token-one-vote design allocates more power to token holders who have a significant share of the total supply of a given token."
  },
  {
   "id": "kaal:claim:3799320-028",
   "url": "https://wulfkaal.github.io/claims/3799320-028",
   "claim": "Reputation based staking removes the corruptive elements of fungible tokens because third parties are less likely able to take over a non fungible asset such as reputation that is organically grown and maintained through actual expertise in the relevant subject matter.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "governance-design",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "reputation staked as a non fungible asset",
    "reputation earned through subject matter expertise"
   ],
   "supporting_quote": "The corruptive elements of fungible assets/tokens are removed because third parties are less likely able to take over a non-fungible asset, such as reputation, that is organically grown and maintained through actual expertise in a given DAO subject matter."
  },
  {
   "id": "kaal:claim:3799320-029",
   "url": "https://wulfkaal.github.io/claims/3799320-029",
   "claim": "Reputation voting has two advantages over one token one vote: it is non fungible, which avoids corruptive elements, and it aligns incentives for members individually and for the institution as a whole at the same time.",
   "type": "design",
   "topics": [
    "reputation",
    "governance-design",
    "ai-and-agents",
    "risk-and-incentives",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "DAO of DAOs internal governance"
   ],
   "supporting_quote": "1) it is non-fungible which avoids corruptive elements, and 2) it optimally aligns incentives for DAO of DAOs members individually and at the same time aligns their incentives for the totality of the DAO of DAOs as an institution."
  },
  {
   "id": "kaal:claim:3799320-030",
   "url": "https://wulfkaal.github.io/claims/3799320-030",
   "claim": "In the bifurcated DAO of DAOs token design, non fungible reputation tokens give members voting rights while fungible reputation salary tokens let members earn a salary in proportion to their non fungible reputation holdings.",
   "type": "design",
   "topics": [
    "tokenomics",
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "DAO of DAOs two token architecture"
   ],
   "supporting_quote": "1. the non-fungible reputation tokens give DAO of DAOs members voting rights, and 2. fungible reputation salary tokens allow DAO of DAOs members to earn a fungible salary in proportion to their non-fungible reputation tokens."
  },
  {
   "id": "kaal:claim:3799320-031",
   "url": "https://wulfkaal.github.io/claims/3799320-031",
   "claim": "Paying members indirectly, through a fungible stable salary proportional to non fungible reputation, removes corruptive elements and makes the governance design more attack resistant and more stable over the long run.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "consensus-and-security",
    "tokenomics",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "salary paid in proportion to non fungible reputation scores"
   ],
   "supporting_quote": "The indirect economic effects remove corruptive elements and make the governance design more attack-resistant and stable in the long run."
  },
  {
   "id": "kaal:claim:3799320-032",
   "url": "https://wulfkaal.github.io/claims/3799320-032",
   "claim": "Reputation based governance creates a positive sum game because members have incentives to build lasting non fungible value through a long term record of productive cooperation.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "non fungible reputation as the reward"
   ],
   "supporting_quote": "By contrast, the reputation-based DAO of DAOs governance design creates a positive-sum game because DAO of DAOs members have incentives to create lasting non-fungible value for the DAO of DAOs by developing a long- term non-fungible record of productive cooperation"
  },
  {
   "id": "kaal:claim:3799320-033",
   "url": "https://wulfkaal.github.io/claims/3799320-033",
   "claim": "Member reputation is inflationary by design, so non staking of reputation tokens or non voting leads to value depreciation, which incentivizes action and makes liveness faults less likely.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics",
    "risk-and-incentives",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "reputation that depreciates with non-use"
   ],
   "supporting_quote": "reputation is inflationary in the DAO of DAOs design. As such, non-use, i.e., non-staking of reputation tokens or non-voting, would lead to value depreciation, which incentivizes action and thus value enhancement. Liveness faults become less likely."
  },
  {
   "id": "kaal:claim:3799320-034",
   "url": "https://wulfkaal.github.io/claims/3799320-034",
   "claim": "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.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized on chain precedent system"
   ],
   "supporting_quote": "If the new post/template gets more often referenced by the DAO of DAOs members and other users, it becomes over time the new prevailing precedent. The old precedent dissipates over time with non-use."
  },
  {
   "id": "kaal:claim:3799320-035",
   "url": "https://wulfkaal.github.io/claims/3799320-035",
   "claim": "Charging an admission fee disincentivizes betrayal and defection, because the sunk cost of joining makes cheating expensive when rejoining would also be expensive even under anonymity.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "members who can be blacklisted",
    "anonymous membership"
   ],
   "supporting_quote": "The DAO of DAOs disincentivizes betrayal and defection by charging an admission fee to become a DAO of DAOs member. Given the sunk cost of joining the DAO of DAOs, it is more expensive for prospective members to cheat because it would be expensive to rejoin even if members could be anonymous."
  },
  {
   "id": "kaal:claim:3799320-036",
   "url": "https://wulfkaal.github.io/claims/3799320-036",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "network growth",
    "salary allocated in proportion to reputation"
   ],
   "supporting_quote": "In the DAO of DAOs design the loss of opportunity from slashing DAO of DAOs member reputation grows as the size of the network increases. In other words, the larger the DAO of DAOs network, the more competition for reputation tokens to receive fungible token salaries."
  },
  {
   "id": "kaal:claim:3799320-037",
   "url": "https://wulfkaal.github.io/claims/3799320-037",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "algorithmic contract allocation conditioned on reputation"
   ],
   "supporting_quote": "By contrast, in the DAO of DAOs, algorithms can be written which exclude DAO of DAOs members who cheat from having access to their market. Punishment for cheating becomes automated and therefore credible. Free riding in policing can at least partially be eliminated by automation."
  },
  {
   "id": "kaal:claim:3799320-038",
   "url": "https://wulfkaal.github.io/claims/3799320-038",
   "claim": "Superficial identifiers such as language, race, culture, social media profiles, and credit scores play less of a role in DAO of DAOs voting design, which allows inclusion of constituents who have no agency in centralized systems.",
   "type": "design",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "reputation based voting rather than identity based access"
   ],
   "supporting_quote": "Such relatively superficial identifiers play less of a role in the DAO of DAOs voting designs. The more equal distribution of power in the DAO of DAOs governance design allows the inclusion of constituents who otherwise have no agency in centralized systems."
  },
  {
   "id": "kaal:claim:3799320-039",
   "url": "https://wulfkaal.github.io/claims/3799320-039",
   "claim": "Reputation weighted salary distribution solves the sockpuppet attack, because a member who creates ten accounts holding one reputation token each ends up in the same position as one account holding ten reputation tokens.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "salary pool distributed in proportion to reputation holdings"
   ],
   "supporting_quote": "This solves the sockpuppet attack because if a DAO of DAOs member creates 10 accounts with 1 reputation token each, it is the same as 1 account with 10 reputation tokens."
  },
  {
   "id": "kaal:claim:3799320-040",
   "url": "https://wulfkaal.github.io/claims/3799320-040",
   "claim": "Weighted keys are preferable to NFTs for reputation accounting because the smart contract itself holds the weights and each smart contract may require a different weight for the same key.",
   "type": "design",
   "topics": [
    "reputation",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320",
   "year": "2021",
   "source_sha256": "c3dff852f2d3f04718c829a24189309a7db4d92d84f6045d3d4f562d87c03e63",
   "confidence": "argued",
   "scope_conditions": [
    "third generation blockchains that provide weighted keys",
    "the same key used across multiple DAO smart contracts"
   ],
   "supporting_quote": "Weighted keys are preferable to NFTs because the smart contract itself holds the weights and each smart contract may require a different weight for a given key"
  },
  {
   "id": "kaal:claim:3782203-001",
   "url": "https://wulfkaal.github.io/claims/3782203-001",
   "claim": "Any set process or set of rules that can ever be designed will ultimately fail to secure a network for all time, so no static rule set can serve as the permanent foundation of a DAO.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized networks",
    "open global membership",
    "anonymous participation"
   ],
   "supporting_quote": "A core precept for the creation of DAOs is the recognition that any set process or set of rules that can ever be designed will ultimately fail to secure a network for all time."
  },
  {
   "id": "kaal:claim:3782203-002",
   "url": "https://wulfkaal.github.io/claims/3782203-002",
   "claim": "Building effective and efficient DAOs requires three things together: a secure and meaningful reputation system, maximum bureaucratic transparency through a dynamic governance structure, and coherent transcendental values for long-term stability.",
   "type": "condition",
   "topics": [
    "dao",
    "reputation",
    "disclosure",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs with open membership to anonymous individuals worldwide"
   ],
   "supporting_quote": "In this chapter we argue that building effective and efficient DAOs requires a secure and meaningful reputation system, maximum bureaucratic transparency through a dynamic govern- ance structure, and coherent transcendental values for long-term stability."
  },
  {
   "id": "kaal:claim:3782203-003",
   "url": "https://wulfkaal.github.io/claims/3782203-003",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "historical rule by law systems",
    "rigidly enforced protocols"
   ],
   "supporting_quote": "When the laws were strict—Rule by Law—then the hierarchy formed rigidly and was very efficient temporarily, before its rigidity led to its instability and eventual collapse. This is pro- tocol centralization."
  },
  {
   "id": "kaal:claim:3782203-004",
   "url": "https://wulfkaal.github.io/claims/3782203-004",
   "claim": "Protocol centralization, meaning rigid and immediately enforced rules such as those executed by smart contracts, leads to instability unless it is implemented wisely.",
   "type": "failure",
   "topics": [
    "decentralization",
    "smart-contracts",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "asserted",
   "scope_conditions": [
    "smart contract enforced protocols",
    "politically decentralized networks"
   ],
   "supporting_quote": "However, protocol centralization leads to instability if it is not implemented wisely."
  },
  {
   "id": "kaal:claim:3782203-005",
   "url": "https://wulfkaal.github.io/claims/3782203-005",
   "claim": "No static set of rules can perfectly reflect the will of a group without leaving loopholes that adversaries exploit to profit at the majority's expense, and this produces a permanent arms race between policing and those who push the rules to their limit.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "static rule sets",
    "groups containing adversarial members"
   ],
   "supporting_quote": "No static set of rules can ever perfectly reflect the will of the group without leav- ing loopholes for adversaries to profit at the expense of the majority. There will always be an arms race between policing and those who will push strict rules to the limit."
  },
  {
   "id": "kaal:claim:3782203-006",
   "url": "https://wulfkaal.github.io/claims/3782203-006",
   "claim": "To achieve stability a DAO must institute a dynamic governance system that includes clear and accessible processes both for amending the rules and for appealing the automated conclusions reached by smart contracts.",
   "type": "design",
   "topics": [
    "governance-design",
    "smart-contracts",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs governed by smart contracts"
   ],
   "supporting_quote": "Therefore, to achieve stability a DAO must institute a dynamic governance system with a clear and accessible processes for amending the rules and appealing the automated conclusion of smart contracts."
  },
  {
   "id": "kaal:claim:3782203-007",
   "url": "https://wulfkaal.github.io/claims/3782203-007",
   "claim": "Because decentralized organizations have no leaders and no hierarchy of control, any governance process must be instituted from the very beginning; it cannot be added later by an authority.",
   "type": "condition",
   "topics": [
    "dao",
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "asserted",
   "scope_conditions": [
    "leaderless decentralized organizations"
   ],
   "supporting_quote": "Since decentralized organizations don't have leaders or a hierarchy of control, any governance process must be instituted from the very beginning."
  },
  {
   "id": "kaal:claim:3782203-008",
   "url": "https://wulfkaal.github.io/claims/3782203-008",
   "claim": "Impossibility results establish that no static set of rules can eternally sustain a DAO, which is why DAOs must be set up to run with a dynamic set of rules from the very beginning.",
   "type": "condition",
   "topics": [
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "fixed toolsets and fixed rule sets"
   ],
   "supporting_quote": "The impossibility results show we can never design a static set of rules which will eternally sustain a DAO. But that just means we need to set up DAOs to run from the beginning with a dynamic set of rules."
  },
  {
   "id": "kaal:claim:3782203-009",
   "url": "https://wulfkaal.github.io/claims/3782203-009",
   "claim": "Condorcet's paradox demonstrates that it is impossible to construct any democratic voting method that will faithfully discover the will of a group, because cyclic preferences can leave no clear winner.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "evidenced",
   "scope_conditions": [
    "three or more candidates",
    "any democratic voting system"
   ],
   "supporting_quote": "Condorcet's paradox5 demonstrates it is impossible to construct any method that will faithfully discover the will of a group, with any type of democratic voting system."
  },
  {
   "id": "kaal:claim:3782203-010",
   "url": "https://wulfkaal.github.io/claims/3782203-010",
   "claim": "Because a group sometimes genuinely has no consensus to be discovered, network forking is at times inevitable rather than a governance failure that better rules could prevent.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "blockchain",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "cyclic or irreconcilable group preferences",
    "decentralized networks whose members can exit"
   ],
   "supporting_quote": "First, that is a major problem for democracy. Sometimes there is no consensus to be had. This leads to the second conclusion that sometimes network forking is inevitable."
  },
  {
   "id": "kaal:claim:3782203-011",
   "url": "https://wulfkaal.github.io/claims/3782203-011",
   "claim": "Plurality voting predictably produces a system that swings between two polarized parties who are less acceptable to the majority but strongly preferred by interested minorities, because voters are incentivized to vote for their preferred one of the perceived top two rather than waste their vote.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "plurality voting rules",
    "voters who want their vote to matter"
   ],
   "supporting_quote": "So plurality voting predictably leads to a system which swings between two polarized parties who are less acceptable to the majority, but strongly preferred by interested minorities—Duverger's Law."
  },
  {
   "id": "kaal:claim:3782203-012",
   "url": "https://wulfkaal.github.io/claims/3782203-012",
   "claim": "Given a process with static rules and finite, discrete execution, a sufficiently patient and clever minority can always corrupt the process and profit at the majority's expense while following the rules, so no perfect voting system exists.",
   "type": "failure",
   "topics": [
    "governance-design",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "evidenced",
   "scope_conditions": [
    "static rules",
    "finite discrete execution",
    "three or more options"
   ],
   "supporting_quote": "A sufficiently patient and clever minority power can always corrupt the process and profit at the expense of the majority, assuming your process has static rules and finite, discrete execution. There is no perfect voting system."
  },
  {
   "id": "kaal:claim:3782203-013",
   "url": "https://wulfkaal.github.io/claims/3782203-013",
   "claim": "Across all the alternative polling methods explored in the literature, changes both help and hurt: new approaches solve old problems while creating new opportunities for manipulation, a pattern the authors identify with increasing the attack surface.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "alternative voting and polling mechanisms",
    "continuous or weighted voting technologies"
   ],
   "supporting_quote": "In all the methods dis- cussed the answer has always been that changes both help and hurt. New approaches solve old problems, but they create new opportunities for manipulation."
  },
  {
   "id": "kaal:claim:3782203-014",
   "url": "https://wulfkaal.github.io/claims/3782203-014",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "long run repeated interaction",
    "even under perfect enforcement"
   ],
   "supporting_quote": "It is impossible to set up formal rules for a group to keep them behaving in a cooper- ative manner in the long run, even if the rules are policed perfectly."
  },
  {
   "id": "kaal:claim:3782203-015",
   "url": "https://wulfkaal.github.io/claims/3782203-015",
   "claim": "Keeping dynamic rules coherent over the long run requires a decentralized organization to commit to transcendental values as primary, where transcendental means values that cannot be specified precisely, logically, and completely with formal rules.",
   "type": "definitional",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized organizations with evolving rule sets",
    "long time horizons"
   ],
   "supporting_quote": "To keep these dynamic rules coherent in the long run, a decentralized organization must commit to transcendental values as primary."
  },
  {
   "id": "kaal:claim:3782203-016",
   "url": "https://wulfkaal.github.io/claims/3782203-016",
   "claim": "The efficiency gain from cooperation in repeated games can only be achieved if a policeable reputation system exists: players must have histories and those histories must be available to other players, which makes transparency and communication essential to effective policing.",
   "type": "condition",
   "topics": [
    "reputation",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "repeated games",
    "grim trigger or similar punishment strategies"
   ],
   "supporting_quote": "This new leap in efficiency as the players cooperate can only be achieved if there is the possibility of creating a policeable reputational system. The players must have a history, and that history must be available to the other players."
  },
  {
   "id": "kaal:claim:3782203-017",
   "url": "https://wulfkaal.github.io/claims/3782203-017",
   "claim": "However rules are formalized in a realistic setting, there exist strategies that follow the rules yet subvert the intentions of the framers, so legal strategies will always be available that profit an individual adversary at the expense of the group.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "realistic repeated games",
    "players able to precommit to strategies"
   ],
   "supporting_quote": "This leads to the intuition that however rules are formalized in a realistic situation, there are strategies which follow the rules, but still subvert the intentions of the fram- ers. There are legal strategies that profit the individual adversary at the expense of the group."
  },
  {
   "id": "kaal:claim:3782203-018",
   "url": "https://wulfkaal.github.io/claims/3782203-018",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "policing costs exceed the value of the losses",
    "repeated interaction with asymmetric power"
   ],
   "supporting_quote": "Similar game setups with reputation policing explain the situation where a busi- ness will rationally tolerate a small level of theft when policing is more expensive, such as when a grocer will ignore a street urchin who nabs an apple once per day."
  },
  {
   "id": "kaal:claim:3782203-019",
   "url": "https://wulfkaal.github.io/claims/3782203-019",
   "claim": "Allowing periodic opportunities for renegotiation lets players escape the grim trigger trap, but it does not improve outcomes overall because it creates new incentives to defect and then gamble on talking one's way out of the punishment.",
   "type": "failure",
   "topics": [
    "contingent-capital",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "repeated games with renegotiation windows"
   ],
   "supporting_quote": "Or if you allow periodic opportunities for renegotiation, then you might be able to get out of a grim trigger trap. This sounds like it would improve outcomes, but in fact it gives new opportunities for defecting/cheating."
  },
  {
   "id": "kaal:claim:3782203-020",
   "url": "https://wulfkaal.github.io/claims/3782203-020",
   "claim": "For any game, a new assumption can be added that generalizes the game so that the previous winning strategy becomes a losing strategy and a new winning strategy arises; the authors offer this as a meta-theorem that cannot itself be formalized.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "any formal game model",
    "actors free to change their behavior and desires"
   ],
   "supporting_quote": "No matter which game you are playing, you can add a new assumption to make a more complicated generalization of the game, so that the previous winning strategy becomes a losing strategy, and a new winning strategy arises."
  },
  {
   "id": "kaal:claim:3782203-021",
   "url": "https://wulfkaal.github.io/claims/3782203-021",
   "claim": "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.",
   "type": "predictive",
   "topics": [
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "open global decentralized networks",
    "anonymous membership",
    "changing environments"
   ],
   "supporting_quote": "Any set of rules that can ever be designed will always need to be amended in the future as the environment changes, to keep the network running healthily. We cannot rely eternally on a static set of rules, or else the system will inevitably become corrupt or irrelevant."
  },
  {
   "id": "kaal:claim:3782203-022",
   "url": "https://wulfkaal.github.io/claims/3782203-022",
   "claim": "Despite its alluring simplicity, the Code is Law credo taken as an absolute is not an efficient solution for business, because unintended consequences of contracts arise in almost every business arrangement.",
   "type": "normative",
   "topics": [
    "smart-contracts",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "commercial smart contract relationships",
    "unintended consequences of contract execution"
   ],
   "supporting_quote": "Despite how alluring the simplicity of the Code-is-Law credo is, that extreme pu- ritanical line is not an efficient solution for business."
  },
  {
   "id": "kaal:claim:3782203-023",
   "url": "https://wulfkaal.github.io/claims/3782203-023",
   "claim": "For mutually beneficial long-term cooperation to thrive, contracts must be reviewable on the assumption of good faith from both parties when unintended consequences arise.",
   "type": "condition",
   "topics": [
    "smart-contracts",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "long-term business cooperation",
    "unforeseeable contract outcomes"
   ],
   "supporting_quote": "For mutually-beneficial, long-term cooperation to thrive, it is nec- essary to allow review of contracts assuming good faith from both parties when unin- tended consequences arise."
  },
  {
   "id": "kaal:claim:3782203-024",
   "url": "https://wulfkaal.github.io/claims/3782203-024",
   "claim": "If the decentralized economy is constructed as a zero-sum game, cooperation becomes impossible because the only feasible long-term strategy is maximal extraction, and participants are incentivized to play the most ruthless strategies available against their counterparties.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "zero-sum reward structures",
    "especially where counterparties are anonymous"
   ],
   "supporting_quote": "a zero-sum game, then cooperation is not possible as the only feasible long-term strat- egy is the pirate code: take anything not nailed down and leave nothing for your op- ponent. Then people are incentivized to play the most ruthless strategies available to hurt the other parties of a contract."
  },
  {
   "id": "kaal:claim:3782203-025",
   "url": "https://wulfkaal.github.io/claims/3782203-025",
   "claim": "A Code is Law assumption remains necessary for machine-scale commerce, because the multiplicity of options in a dynamically changing market demands instantaneous legal enforcement without waiting for a centralized human response.",
   "type": "design",
   "topics": [
    "smart-contracts",
    "compliance",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "AI enabled IoT devices contracting across supply chains",
    "high frequency automated business interactions"
   ],
   "supporting_quote": "The multiplicity of options in a dynamically changing market demands instantaneous legal enforce- ment without waiting for a centralized response of human interjection."
  },
  {
   "id": "kaal:claim:3782203-026",
   "url": "https://wulfkaal.github.io/claims/3782203-026",
   "claim": "Marketing a consensus algorithm as correct by construction is false advertising, because such proofs establish resistance only to the attacks the theorists considered reasonable at the time, not to all possible attacks.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "correct by construction proof of stake designs",
    "adversaries able to invent new attacks"
   ],
   "supporting_quote": "In the first place, this is simply false advertising. Most people don't understand that CBC doesn't mean it's mathematically proven to be perfectly resistant to all attacks; it's only resistant to the attacks the theorists consider reasonable at the time."
  },
  {
   "id": "kaal:claim:3782203-027",
   "url": "https://wulfkaal.github.io/claims/3782203-027",
   "claim": "Finding a correct by construction algorithm that incorporates all possible or even all practical assumptions about network status is not possible, because for any set of assumptions about network behavior an actor can break those assumptions by valuing some other result.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "consensus algorithms for open anonymous networks"
   ],
   "supporting_quote": "Finding a correct by construction algorithm that incorporates all possible, or even practical, assumptions of possible network statuses, is not possible. Given any set of assumptions about how the network will behave, you can always break those assump- tions by valuing some other result."
  },
  {
   "id": "kaal:claim:3782203-028",
   "url": "https://wulfkaal.github.io/claims/3782203-028",
   "claim": "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.",
   "type": "design",
   "topics": [
    "institutional-design",
    "governance-design",
    "consensus-and-security",
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "proof of stake and other consensus protocols",
    "networks facing evolving adversaries"
   ],
   "supporting_quote": "Given the impossibility of creating an algorithm that will be perfectly secure in all circumstances, we should instead focus on developing a governance process that al- lows us to update our algorithm to adapt to the changing network circumstances to the security level required"
  },
  {
   "id": "kaal:claim:3782203-029",
   "url": "https://wulfkaal.github.io/claims/3782203-029",
   "claim": "The authors hold that the Bitcoin proof of work algorithm is ultimately flawed, that every consensus algorithm is flawed, and that it is not possible to create an algorithm that is not flawed.",
   "type": "predictive",
   "topics": [
    "consensus-and-security",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "asserted",
   "scope_conditions": [
    "real world networks with changing markets and anonymous actors"
   ],
   "supporting_quote": "However, we suspect that the Bitcoin PoW algorithm is ultimately flawed. In fact, we believe that every consensus algorithm is flawed. Further we are confident it is not possible to create an algorithm that is not flawed."
  },
  {
   "id": "kaal:claim:3782203-030",
   "url": "https://wulfkaal.github.io/claims/3782203-030",
   "claim": "Bitcoin's proof of work has produced no protocol violation in more than a decade, meaning no rule breaking message has been incorporated into the finalized blockchain, even though anyone can run a hacked version of the algorithm anonymously at any time.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "asserted",
   "scope_conditions": [
    "Bitcoin proof of work as of 2021",
    "network of millions of users"
   ],
   "supporting_quote": "Despite the fact that anyone can run any hacked version of the algo- rithm at any time from an anonymous account, there has not been a single protocol violation—meaning no message has been incorporated in the finalized blockchain which breaks the rules of the algorithm."
  },
  {
   "id": "kaal:claim:3782203-031",
   "url": "https://wulfkaal.github.io/claims/3782203-031",
   "claim": "Charging admission to a DAO disincentivizes defection because the sunk cost of joining makes cheating expensive when rejoining would require paying again, a mechanism the authors identify as costly signaling that works better the more cheaters the surrounding environment contains.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous membership",
    "environments with many bad actors"
   ],
   "supporting_quote": "First, we can disincentivize defection/betrayal by charging admission to the DAO. With the sunk cost of joining, it is more expensive to cheat, since then it would be expensive to rejoin even if members could be anonymous. This is described as costly signaling."
  },
  {
   "id": "kaal:claim:3782203-032",
   "url": "https://wulfkaal.github.io/claims/3782203-032",
   "claim": "Cooperation is sustained only when the promise of future profits outweighs the present value of defecting, so a discount factor that is too low, or a game known to be ending soon, makes defection the rational choice.",
   "type": "condition",
   "topics": [
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "repeated games with end periods",
    "impatient players or high discounting"
   ],
   "supporting_quote": "Therefore, the promise of future profits must outweigh the present value to en- sure cooperation."
  },
  {
   "id": "kaal:claim:3782203-033",
   "url": "https://wulfkaal.github.io/claims/3782203-033",
   "claim": "Anonymity increases rather than decreases the value of reputation tokens, because when potential business partners have less knowledge of a counterparty's identity, the number of reputation tokens held becomes the more important signal.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous or pseudonymous networks",
    "incomplete information about counterparties"
   ],
   "supporting_quote": "When potential business partners have less knowledge of your identity, the knowledge from the number of reputation tokens you hold becomes more important."
  },
  {
   "id": "kaal:claim:3782203-034",
   "url": "https://wulfkaal.github.io/claims/3782203-034",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "open global networks",
    "digital reputation tokens"
   ],
   "supporting_quote": "Another advantage to digital tokens in open global networks is that the loss of opportunity from having your reputation slashed grows as the size of the network in- creases."
  },
  {
   "id": "kaal:claim:3782203-035",
   "url": "https://wulfkaal.github.io/claims/3782203-035",
   "claim": "A DAO permitting anonymous membership is exposed to a sockpuppet attack in which one account behaves honestly while another cheats, and if the cheating account can funnel its gains to the honest account without detection or punishment the system is set up for failure.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous DAOs allowing multiple accounts per person"
   ],
   "supporting_quote": "One strategy is to have one account which acts honestly and one which cheats. If the cheating account can funnel the gains to the honest account, without detection or punishment, this sets the system up for failure."
  },
  {
   "id": "kaal:claim:3782203-036",
   "url": "https://wulfkaal.github.io/claims/3782203-036",
   "claim": "Paying contributors in reputation tokens rather than fees, and then distributing all fees as a periodic reputation weighted salary, defeats the sockpuppet attack because splitting a holding across many accounts yields exactly the same share of fees.",
   "type": "design",
   "topics": [
    "reputation",
    "consensus-and-security",
    "dao",
    "tokenomics",
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous DAOs with multiple accounts per member",
    "all DAO fees pooled and shared"
   ],
   "supporting_quote": "A periodic reputation-weighted salary will distribute all fees the DAO earns to all members. Individuals who perform tasks that bring fees to the DAO will be rewarded with reputation tokens, not the fees. Members who own more reputation tokens share in a larger percentage of the fees."
  },
  {
   "id": "kaal:claim:3782203-037",
   "url": "https://wulfkaal.github.io/claims/3782203-037",
   "claim": "Automating exclusion of cheaters through smart contracts makes punishment credible and removes the infinite regress of traditional enforcement, where members would have to police those who failed to police those who failed to police cheaters.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs where contract allocation is algorithmic",
    "reputation thresholds enforced in code"
   ],
   "supporting_quote": "Algorithms can be written which exclude members who cheat from hav- ing access to their market. Punishment for cheating becomes automated and there- fore credible. Free riding in policing can at least partly be eliminated by automation."
  },
  {
   "id": "kaal:claim:3782203-038",
   "url": "https://wulfkaal.github.io/claims/3782203-038",
   "claim": "The value of reputation is directly related to how well punishment can be distributed in response to cheating, so a more transparent system produces more accurate and efficient policing and therefore more valuable reputation.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "systems with reputation based punishment"
   ],
   "supporting_quote": "Another motivation for transparency is that the value of reputation is directly re- lated to how well punishment can be distributed in response to cheating. The more transparent the system, the more accurate and efficient policing can be."
  },
  {
   "id": "kaal:claim:3782203-039",
   "url": "https://wulfkaal.github.io/claims/3782203-039",
   "claim": "Because the Folk Theorems rule out a perfect reward system, the design goal for a DAO should be reduced to making it easier for members to help the group than to hurt it, with members themselves incentivized to police bad actors to protect their own profits.",
   "type": "design",
   "topics": [
    "dao",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "leaderless DAOs with anonymous members",
    "no external enforcement available"
   ],
   "supporting_quote": "From the Folk Theorems, we know we cannot set up a perfect system. The best we can hope for, is to design a system which makes it easier to help the group than to hurt it."
  },
  {
   "id": "kaal:claim:3782203-040",
   "url": "https://wulfkaal.github.io/claims/3782203-040",
   "claim": "Sharing all fees with all members eliminates the incentive to review a product favorably because its sponsor paid a large fee, since a single expert reviewer cannot be cheaply bribed when the fee is distributed across the whole membership.",
   "type": "mechanism",
   "topics": [
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203",
   "year": "2021",
   "source_sha256": "ab8a22d0dbb026a09212a4c85963f3c05787cf80775e8613ae3724e3883e7a56",
   "confidence": "argued",
   "scope_conditions": [
    "review DAOs where fees are pooled and shared by reputation weight",
    "randomly assigned reviewers"
   ],
   "supporting_quote": "Since all fees are shared with all members, this eliminates the incentive to positively review software just because a company sends a big fee."
  },
  {
   "id": "kaal:claim:3782198-001",
   "url": "https://wulfkaal.github.io/claims/3782198-001",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to Web 2.0 platforms whose value derives from user generated content and behavior"
   ],
   "supporting_quote": "The network of users has the answers in their members' behavior. The social media companies simply monitor the networks' transactions and statistically analyze the information with automated algorithms."
  },
  {
   "id": "kaal:claim:3782198-002",
   "url": "https://wulfkaal.github.io/claims/3782198-002",
   "claim": "Rapid movement of edge knowledge into the mainstream via social media is not costless: it can dissolve existing societal consensus, social cohesion among established groups, and order in the process.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "asserted",
   "supporting_quote": "Similarly, knowledge and views from the edges of society can be moved into societal mainstream very quickly via social media. This transfer can remove existing societal consensus, social cohesion among established groups, and order in the process."
  },
  {
   "id": "kaal:claim:3782198-003",
   "url": "https://wulfkaal.github.io/claims/3782198-003",
   "claim": "The social media coordination function remains largely flawed and corruptible because the incentive design underlying social proof is suboptimal.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to platform ratings, reviews, and social proof mechanisms under centralized ownership"
   ],
   "supporting_quote": "However, because the incentive design for social proof is suboptimal, the social media coordination function is still largely flawed and corruptible."
  },
  {
   "id": "kaal:claim:3782198-004",
   "url": "https://wulfkaal.github.io/claims/3782198-004",
   "claim": "Rating systems on centralized marketplaces are actively gamed: new Amazon sellers are solicited by sock puppet operators offering to inflate their ratings and attack competitors.",
   "type": "empirical",
   "topics": [
    "reputation",
    "regulatory-failure",
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "asserted",
   "scope_conditions": [
    "observed on major centralized e-commerce platforms"
   ],
   "supporting_quote": "For example, one of the first things that will hap- pen if you open a shop on Amazon is that you will receive several messages from ma- licious sock-puppet wranglers offering to game the rating system to improve your company's ratings while attacking your major competitor."
  },
  {
   "id": "kaal:claim:3782198-005",
   "url": "https://wulfkaal.github.io/claims/3782198-005",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "institutional-design",
    "decentralization",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to networks whose value comes from member interaction"
   ],
   "supporting_quote": "But these networks are stifled by the centralized ownership and governance of the Web ).5 companies that run them. Governing decentralized information flow ne- cessitates decentralized incentive designs."
  },
  {
   "id": "kaal:claim:3782198-006",
   "url": "https://wulfkaal.github.io/claims/3782198-006",
   "claim": "Centralized platforms are locked into an arms race in which developers infer the rules of the ranking algorithm and exploit them, forcing the owner to keep the algorithm opaque and under constant revision.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to centrally owned information filtering algorithms such as search ranking"
   ],
   "supporting_quote": "The Google search engine algorithm is constantly be- ing improved, because website developers infer the rules of the algorithm and exploit its properties to raise their site"
  },
  {
   "id": "kaal:claim:3782198-007",
   "url": "https://wulfkaal.github.io/claims/3782198-007",
   "claim": "If a peer to peer network were decentrally owned by its users, its algorithms could be open source and still remain safe, because the network could reward members for policing exploitation instead of relying on a centralized company to keep the algorithm opaque.",
   "type": "design",
   "topics": [
    "open-source-and-code",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "requires an incentive design that rewards members for defending the algorithm they own"
   ],
   "supporting_quote": "if the P)P network were decentrally owned by the users them- selves, the algorithms can be open source and still remain safe."
  },
  {
   "id": "kaal:claim:3782198-008",
   "url": "https://wulfkaal.github.io/claims/3782198-008",
   "claim": "The sharing economy is defined as the utilization of previously idle services and goods and the partial use of others' property rights in goods, typically coordinated over a platform rather than through centralized employment.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "asserted",
   "supporting_quote": "The sharing economy refers to the utilization of previously idle services and goods and the partial use of others' property rights in goods."
  },
  {
   "id": "kaal:claim:3782198-009",
   "url": "https://wulfkaal.github.io/claims/3782198-009",
   "claim": "The sharing economy requires a reframing of legacy legal regimes, because the legal frameworks regulating disrupted and adjacent industries are often incompatible with the trends the sharing economy generates.",
   "type": "condition",
   "topics": [
    "economics",
    "law-and-legal-systems",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to regulation of disrupted industries such as transport and lodging"
   ],
   "supporting_quote": "The sharing economy necessitates a reframing of legacy legal regimes and frame- works. The legal frameworks that regulate disrupted and associated industries are of- ten incompatible with the emerging trends generated by the sharing economy."
  },
  {
   "id": "kaal:claim:3782198-010",
   "url": "https://wulfkaal.github.io/claims/3782198-010",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the early ISP era of Web 1.0 bandwidth provision"
   ],
   "supporting_quote": "This didn't solve the problem, as naturally the Tragedy of the Commons9 asserted itself. Porn sites and pirated file sharing (often set up by the ISPs themselves to game the payment design10) quickly used up any available bandwidth."
  },
  {
   "id": "kaal:claim:3782198-011",
   "url": "https://wulfkaal.github.io/claims/3782198-011",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to low volume, non commercial content providers in the Web 1.0 era"
   ],
   "supporting_quote": "The ISP charged low-volume providers on a per connection basis. If your site suddenly became popular, with thousands of people constantly accessing your content, you had to pay for thousands of long-dis- tance phone calls. Individuals with popular pages were forced to delete their content."
  },
  {
   "id": "kaal:claim:3782198-012",
   "url": "https://wulfkaal.github.io/claims/3782198-012",
   "claim": "Web 2.0 companies solved the hosting problem through a Faustian bargain: free hosting is exchanged for access to shared content, ownership of viewers' personal information, control over what may be shared, and access to user attention.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "supporting_quote": "In exchange they have access to the information that content providers want to share. They own any personal in- formation from viewers that can be gleaned. They control what content can and can't be shared, guiding popular opinion."
  },
  {
   "id": "kaal:claim:3782198-013",
   "url": "https://wulfkaal.github.io/claims/3782198-013",
   "claim": "Because centralized owners control the platform software they control the market and can dictate prices, charging non transparent fees that adjust to real time supply and demand to maximize their own profit.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to platform businesses such as ride sharing where the owner sets the matching software"
   ],
   "supporting_quote": "owners control this software and therefore control the market and can dictate prices. They don't charge transparent fees. They adjust to real-time information about supply and demand to maximize their profits."
  },
  {
   "id": "kaal:claim:3782198-014",
   "url": "https://wulfkaal.github.io/claims/3782198-014",
   "claim": "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.",
   "type": "condition",
   "topics": [
    "disclosure",
    "decentralization",
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to organizations that claim to be decentralized"
   ],
   "supporting_quote": "In order to have a truly decentralized organization, the rules must be transpar- ently available to all members. Otherwise the keepers of the knowledge have a higher status, creating a hierarchy."
  },
  {
   "id": "kaal:claim:3782198-015",
   "url": "https://wulfkaal.github.io/claims/3782198-015",
   "claim": "If any single person could own the copyright to software that a decentralized organization uses, that person would hold de facto power over the organization, re establishing hierarchies of power inside it.",
   "type": "condition",
   "topics": [
    "open-source-and-code",
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies where proprietary code is embedded in a decentralized organization's stack"
   ],
   "supporting_quote": "If one person could own the copyright to some of the software a decentralized organization uses, then they would have de facto power over the organization, again establishing hierarchies of power within the organization."
  },
  {
   "id": "kaal:claim:3782198-016",
   "url": "https://wulfkaal.github.io/claims/3782198-016",
   "claim": "Paid corporate contributors are a source of tension in open source communities: they can outwork and push out volunteers, then leave once their employer's duties are complete, leaving no one to maintain and upgrade the software.",
   "type": "failure",
   "topics": [
    "open-source-and-code",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "observed in the Apache Software Foundation's volunteer community"
   ],
   "supporting_quote": "These workers often devote far more effort to a project and sometimes push out volunteers. Then the paid workers leave once their duties are complete, leaving no one to maintain and upgrade the software in the future."
  },
  {
   "id": "kaal:claim:3782198-017",
   "url": "https://wulfkaal.github.io/claims/3782198-017",
   "claim": "The Apache Foundation's minimal governance works only because its members are not competing for power and money within the organization, which limits how far the model can be transferred to for profit settings.",
   "type": "condition",
   "topics": [
    "governance-design",
    "decentralization",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to non profit open source foundations"
   ],
   "supporting_quote": "But how can they thrive? The Apache Software Founda- tion's near trivial governance system works in an organization whose members are not competing for power and money within the organization."
  },
  {
   "id": "kaal:claim:3782198-018",
   "url": "https://wulfkaal.github.io/claims/3782198-018",
   "claim": "Open source projects sometimes fail to attract the quality of developer that a closed source project can reliably procure with greater funding and control.",
   "type": "failure",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to projects operating under maximal transparency without funding"
   ],
   "supporting_quote": "Sometimes open source projects fail to attract the necessary quality of developer that a closed-source project can reliably procure with more fund- ing and control."
  },
  {
   "id": "kaal:claim:3782198-019",
   "url": "https://wulfkaal.github.io/claims/3782198-019",
   "claim": "The success of the open source movement itself creates a vulnerability: major corporations can pressure smaller projects to reveal their code, then take it and exploit the work more profitably than the startup can.",
   "type": "failure",
   "topics": [
    "open-source-and-code",
    "regulatory-failure",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to small open source projects competing with resource rich incumbents"
   ],
   "supporting_quote": "Another problem is that the very success of the open source move- ment allows major corporations to pressure smaller projects to reveal their code, then take it and use their power to exploit the work more profitably than the startup."
  },
  {
   "id": "kaal:claim:3782198-020",
   "url": "https://wulfkaal.github.io/claims/3782198-020",
   "claim": "The goal of the Web3 movement is to foster radical bureaucratic transparency through open source design, to advance individual autonomy and privacy through cryptography, and to level access to information and computing resources through decentralized networks.",
   "type": "definitional",
   "topics": [
    "disclosure",
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "asserted",
   "supporting_quote": "The goal of the WebG movement is to foster radical bureaucratic transparency using open source design, to further individual au- tonomy and privacy using cryptography, and to level the access to information and computing resources with decentralized networks."
  },
  {
   "id": "kaal:claim:3782198-021",
   "url": "https://wulfkaal.github.io/claims/3782198-021",
   "claim": "Earlier centralized companies defeated more decentralized peer to peer platforms because of the technology of the time and the incentive design built into capitalist civilization: consumer devices could not match industrial upload speeds, centralized firms had the incentive to polish user interfaces, and economies of scale made central bureaucracy worth negotiating.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "describes the competitive conditions of the early internet era"
   ],
   "supporting_quote": "The reason earlier centralized companies succeeded against more decentralized P)P platforms is due to the existing technology of the time and the natural incentive design that is built into our capitalist civilization."
  },
  {
   "id": "kaal:claim:3782198-022",
   "url": "https://wulfkaal.github.io/claims/3782198-022",
   "claim": "Existing decentralized filesharing networks cannot guarantee the availability of unpopular files such as personal files, whereas centralized cloud services guarantee availability for a fee.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to filesharing networks without an incentive design for storing unpopular data"
   ],
   "supporting_quote": "One problem with most existing decentralized filesharing networks is that unpop- ular files (such as your personal files) are not guaranteed to be available, unlike cen- tralized cloud computing services which guarantee availability for a fee."
  },
  {
   "id": "kaal:claim:3782198-023",
   "url": "https://wulfkaal.github.io/claims/3782198-023",
   "claim": "Peer to peer networks scale more favorably than client server architectures because client server costs increase linearly per unit while peer to peer network costs can decrease with each added node, depending on topology.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "asserted",
   "scope_conditions": [
    "depends on network topology"
   ],
   "supporting_quote": "Network effects proliferate in peer-to-peer networks because, unlike the traditional client- server architecture which is subject to the linearly increasing per-unit costs, the peer- to-peer network costs can decrease with each added node (depending on topology)."
  },
  {
   "id": "kaal:claim:3782198-024",
   "url": "https://wulfkaal.github.io/claims/3782198-024",
   "claim": "Bitcoin proved that a decentralized peer to peer network can manage valuable assets without a central authority, but the centralizing force of competition concentrated power anyway, as economies of scale produced large mining farms in place of millions of individual members maintaining the ledger.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "decentralization",
    "economics",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to proof of work networks where mining rewards create economies of scale"
   ],
   "supporting_quote": "But the centralizing forces of competition led to concentration of power in the Bitcoin network, as econo- mies of scale led to large computer farms devoted to mining for bitcoins, instead of millions of individual network members maintaining the ledger on their laptops."
  },
  {
   "id": "kaal:claim:3782198-025",
   "url": "https://wulfkaal.github.io/claims/3782198-025",
   "claim": "Bitcoin and Ethereum have no formal binding governance framework declaring how consensus protocols may be changed in the future, which the authors identify as a deep flaw that weakens the networks and will lead to instability.",
   "type": "failure",
   "topics": [
    "blockchain",
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to major blockchains lacking on chain governance"
   ],
   "supporting_quote": "In Bitcoin and Ethereum, there is no formal binding governance framework de- claring how the protocols for consensus might be changed in the future. This is a deep flaw which weakens these networks and will lead to instability."
  },
  {
   "id": "kaal:claim:3782198-026",
   "url": "https://wulfkaal.github.io/claims/3782198-026",
   "claim": "Decentralization is most valuable in chaotic times because the most talented members for a task are not blocked by a rigid hierarchy, unlike bureaucracies that respond to new problems with an outdated structure.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "holds when technology and business arrangements are continually changing"
   ],
   "supporting_quote": "Second, decentralization is ideal in chaotic times, when technology and business arrangements are continually changing. The most talented members for any task are not blocked by a rigid hierarchy."
  },
  {
   "id": "kaal:claim:3782198-027",
   "url": "https://wulfkaal.github.io/claims/3782198-027",
   "claim": "Contrary to the common engineering view that automated processes remove regulation, the purpose of smart contracts is to deliver much more fine grained regulation and more control, not less.",
   "type": "normative",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to smart contract mediated business relations such as AI enabled IoT supply chains"
   ],
   "supporting_quote": "In fact, the purpose of smart contracts is to give much more fine-grained regulation, more control, not less."
  },
  {
   "id": "kaal:claim:3782198-028",
   "url": "https://wulfkaal.github.io/claims/3782198-028",
   "claim": "Hash functions let a leaderless network reach consensus on identity and ordering, because every node independently hashes a transaction's data and deterministically arrives at the same unique identifier that everyone recognizes.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "tokenomics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "requires all nodes to run the same deterministic hash protocol"
   ],
   "supporting_quote": "Thanks to the hash function, every node in the network hashes the transaction's data and independently arrives at the same an- swer, giving the transaction a unique ID that everyone recognizes."
  },
  {
   "id": "kaal:claim:3782198-029",
   "url": "https://wulfkaal.github.io/claims/3782198-029",
   "claim": "A blockchain is immutable because any attempt to edit an old block changes the hash of that information and is immediately rejected by the network that follows the protocol.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "holds as long as the network keeps following the blockchain protocol"
   ],
   "supporting_quote": "The blockchain is immutable, because any attempt to edit the old blocks will be immediately rejected by the network. A single number or letter changed anywhere in its entire history will result in a different hash of the information."
  },
  {
   "id": "kaal:claim:3782198-030",
   "url": "https://wulfkaal.github.io/claims/3782198-030",
   "claim": "The GDPR's removal remedy cannot be enforced against a public blockchain: scrubbing private information would require more than half of the network's nodes to change their entire protocol and restart the chain, and would have to be repeated for every violating entry.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to open, uncensorable blockchains such as Bitcoin holding personal data"
   ],
   "supporting_quote": "More than half of the network's nodes would be required to change their entire protocol to scrub the data and restart the blockchain. This would need to happen every time information was found on the blockchain which violated the GDPR."
  },
  {
   "id": "kaal:claim:3782198-031",
   "url": "https://wulfkaal.github.io/claims/3782198-031",
   "claim": "Proof of work consensus is energetically wasteful because the entire global network redundantly computes wrong nonces, with the Bitcoin network consuming as much energy as the country of the Czech Republic.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "evidenced",
   "scope_conditions": [
    "figures given for June 2020"
   ],
   "supporting_quote": "The Bitcoin network is performing about #)!% =K55,555,555,555,555,555,555 hashes every second in June )5)5. That requires as much energy as the entire country of the Czech Republic."
  },
  {
   "id": "kaal:claim:3782198-032",
   "url": "https://wulfkaal.github.io/claims/3782198-032",
   "claim": "Proof of stake carries an unresolved failure mode: if anyone devises a clever algorithm for hijacking the block producer selection process, the network would fail.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to proof of stake designs that select block producers pseudorandomly"
   ],
   "supporting_quote": "The problem is that if someone comes up with a clever algorithm for hijacking the process, then the network would fail."
  },
  {
   "id": "kaal:claim:3782198-033",
   "url": "https://wulfkaal.github.io/claims/3782198-033",
   "claim": "Blockchain transactions will always be expensive whether or not proof of stake is solved, because full participation requires downloading the entire transaction history to verify validity, an extreme redundancy that cannot be removed.",
   "type": "failure",
   "topics": [
    "blockchain",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to blockchains that require full history verification"
   ],
   "supporting_quote": "If you want to fully participate in the network, you need to download a copy of the entire history of every transaction of every bitcoin in existence. This extreme re- dundancy and inefficiency means transactions will always be expensive."
  },
  {
   "id": "kaal:claim:3782198-034",
   "url": "https://wulfkaal.github.io/claims/3782198-034",
   "claim": "A decentralized banking DAO built on top of the Bitcoin ledger could charge a smaller fee to hold minor transactions temporarily and bundle them into a single larger Bitcoin transaction on the eternal blockchain.",
   "type": "design",
   "topics": [
    "dao",
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "speculative",
   "scope_conditions": [
    "proposed as a response to the permanent expense of on chain transactions"
   ],
   "supporting_quote": "A good idea for a DAO is a decentralized banking system built on top of the Bitcoin ledger that charges a smaller fee for temporarily storing minor trans- actions."
  },
  {
   "id": "kaal:claim:3782198-035",
   "url": "https://wulfkaal.github.io/claims/3782198-035",
   "claim": "Anonymity can exacerbate second and third order discrimination because it makes such discrimination more difficult to detect, so other governance mechanisms in a decentralized organization must be used to combat it.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies where members infer protected characteristics from behavior, and to systemic discrimination"
   ],
   "supporting_quote": "In fact, anonymity can exacerbate )nd and Grd-order effects, as it makes it more difficult to detect. To combat such effects, different mechanisms in the governance of a decentralized organization must be employed."
  },
  {
   "id": "kaal:claim:3782198-036",
   "url": "https://wulfkaal.github.io/claims/3782198-036",
   "claim": "The Tragedy of the Commons is a natural consequence of allowing anonymous participation, which is why the unfiltered layers of platforms such as Twitter, YouTube comments, and Reddit display toxic results.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to open networks with anonymous broadcasting and no reputation cost"
   ],
   "supporting_quote": "The Tragedy of the Commons is a natural consequence of al- lowing anonymous participation. Anyone who has spent a few hours delving past the top filtered contributions on platforms such as Twitter, YouTube comments, or Reddit can observe the toxic results of anonymity."
  },
  {
   "id": "kaal:claim:3782198-037",
   "url": "https://wulfkaal.github.io/claims/3782198-037",
   "claim": "Anonymity should be balanced rather than absolute: a member's power to broadcast should be tied to a pseudonymous account carrying meaningful and valuable reputation that is lost when the broadcasting power is abused.",
   "type": "design",
   "topics": [
    "reputation",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to decentralized networks that permit anonymous participation"
   ],
   "supporting_quote": "Therefore, anonymity should be balanced. Your power to broadcast your voice should be tempered by hav- ing that voice tied with a pseudonymous36 account with meaningful and valuable rep- utation. If you abuse your broadcasting power, then you should lose your reputation."
  },
  {
   "id": "kaal:claim:3782198-038",
   "url": "https://wulfkaal.github.io/claims/3782198-038",
   "claim": "The r/place experiment showed that anonymous groups can self correct: each time a hate symbol such as a swastika appeared on the shared canvas, it was replaced with something more positive.",
   "type": "empirical",
   "topics": [
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on the r/place experiment run from April 2017"
   ],
   "supporting_quote": "In the end, however, each time a hate symbol cropped up, it was replaced with something more positive."
  },
  {
   "id": "kaal:claim:3782198-039",
   "url": "https://wulfkaal.github.io/claims/3782198-039",
   "claim": "Ethereum is Turing complete in theory but cannot practically match even a cheap smartphone, because everything stored on the blockchain must be stored redundantly on thousands of nodes forever, so decentralized smart contract computation is necessarily primitive compared with centralized Web 2.0 services.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "applies to on chain computation and storage on general purpose blockchains"
   ],
   "supporting_quote": "However, Ethereum is not practically capable of mimicking the power of even the cheapest smartphone. The storage limit is currently extremely small, because anything stored in the blockchain needs to be stored redundantly on thousands of nodes for all time in the future."
  },
  {
   "id": "kaal:claim:3782198-040",
   "url": "https://wulfkaal.github.io/claims/3782198-040",
   "claim": "Truly successful DAOs do not yet exist, but once the architecture of a single DAO succeeds it will be quickly cloned and adapted to every imaginable economic and social organization.",
   "type": "predictive",
   "topics": [
    "dao",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198",
   "year": "2021",
   "source_sha256": "e7e1378e3eed06cace6534e7792a7307d607d18bc6beb4ac45896476280728e4",
   "confidence": "argued",
   "scope_conditions": [
    "stated as of the book's writing"
   ],
   "supporting_quote": "Truly successful DAOs don't exist, yet. Once the architecture of a single DAO is successful, however, it will be quickly cloned and adapted to every imaginable economic and social organization."
  },
  {
   "id": "kaal:claim:3936876-001",
   "url": "https://wulfkaal.github.io/claims/3936876-001",
   "claim": "Fully compliant legal custody solutions for digital assets increase legal certainty and mainstream investor confidence, and that increased confidence in turn builds markets in digital assets.",
   "type": "mechanism",
   "topics": [
    "defi",
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "applies to digital asset markets in their formative stage"
   ],
   "supporting_quote": "Fully compliant legal custody solutions for digital assets increase legal certainty and mainstream investor confidence which, in turn, helps build markets in digital assets."
  },
  {
   "id": "kaal:claim:3936876-002",
   "url": "https://wulfkaal.github.io/claims/3936876-002",
   "claim": "The more digital assets are held by their owners in self-custody, the less likely intermediation by custody service providers becomes, so self-custody is the key driver of decentralization in emerging blockchain networks.",
   "type": "mechanism",
   "topics": [
    "defi",
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "asserted",
   "scope_conditions": [
    "holds for emerging blockchain networks",
    "assumes users are capable of securing their own keys"
   ],
   "supporting_quote": "In other words, the more digital assets are held by their owners in self-custody, the less likely intermediation of custody service providers becomes."
  },
  {
   "id": "kaal:claim:3936876-003",
   "url": "https://wulfkaal.github.io/claims/3936876-003",
   "claim": "Without the ability to rely on proven custody providers, mainstream and legacy institutional investors are restrained from making digital asset investments for legal or business reasons.",
   "type": "condition",
   "topics": [
    "institutional-design",
    "defi",
    "economics",
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to mainstream and legacy institutional investors"
   ],
   "supporting_quote": "Without the ability to rely on proven custody providers, mainstream and legacy institutional investors are restrained from making digital asset investments for legal and / or business reasons."
  },
  {
   "id": "kaal:claim:3936876-004",
   "url": "https://wulfkaal.github.io/claims/3936876-004",
   "claim": "The majority of digital asset custody providers and digital asset exchanges require customers to surrender ownership of their digital assets as a precondition for access and trading.",
   "type": "empirical",
   "topics": [
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "asserted",
   "supporting_quote": "The majority of digital asset custody providers and digital asset exchanges are requiring customers to surrender digital asset ownership in order to get access and trade."
  },
  {
   "id": "kaal:claim:3936876-005",
   "url": "https://wulfkaal.github.io/claims/3936876-005",
   "claim": "Custody of a digital asset is not physical possession but ownership and control over a digital asset wallet, which in practice means holding the private keys and bearing responsibility for keeping the funds safe.",
   "type": "definitional",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to intangible digital assets rather than tangible chattel or real estate"
   ],
   "supporting_quote": "Custody of digital assets is typically associated with ownership and control over a digital asset wallet and its assets. Such ownership and control over a digital asset wallet typically means holding the private keys and the responsibility of keeping funds safe."
  },
  {
   "id": "kaal:claim:3936876-006",
   "url": "https://wulfkaal.github.io/claims/3936876-006",
   "claim": "Self-custody of securities declined in prevalence after the Stock Market Crash of 1929 because investors recognized how inherently risky the bearer certificate system was.",
   "type": "mechanism",
   "topics": [
    "defi",
    "securities-law",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "asserted",
   "scope_conditions": [
    "United States securities markets before and after 1929"
   ],
   "supporting_quote": "Self-custody decreased in prevalence after the Stock Market Crash of 1929 when investors recognized how inherently risky this system was."
  },
  {
   "id": "kaal:claim:3936876-007",
   "url": "https://wulfkaal.github.io/claims/3936876-007",
   "claim": "The paper certificate system failed at scale: trust companies and intermediaries were overwhelmed by changing ownership records, and from 1967 to 1970 a reported $400 million in securities was lost or stolen.",
   "type": "failure",
   "topics": [
    "securities-law",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States securities markets, 1967 to 1970"
   ],
   "supporting_quote": "The trust companies and intermediaries quickly became overwhelmed with changing ownership records, and from 1967 to 1970, a reported $400 million was lost or stolen in securities."
  },
  {
   "id": "kaal:claim:3936876-008",
   "url": "https://wulfkaal.github.io/claims/3936876-008",
   "claim": "The inefficiencies of paperwork based custodial requirements are what produced the first central securities depository, which substituted electronic book entry records for the physical exchange of certificates.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "United States securities markets after the 1960s paperwork crisis"
   ],
   "supporting_quote": "The inefficiencies in custodial requirements for paperwork led to the introduction of the first central securities depository (CSD)."
  },
  {
   "id": "kaal:claim:3936876-009",
   "url": "https://wulfkaal.github.io/claims/3936876-009",
   "claim": "Traditional custody has become highly concentrated, with four large banks holding roughly $114 trillion in assets under custody at the end of the first quarter of 2018, and barriers to entry make it likely that this concentration continues.",
   "type": "empirical",
   "topics": [
    "defi",
    "risk-and-incentives",
    "systemic-risk",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States custody market as of 2018"
   ],
   "supporting_quote": "At the end of the first quarter of 2018, these four banks had approximately $114 trillion in assets under custody.48 Recent trends suggest this highly concentrated model will continue, as ongoing barriers to entry have prevented other firms from challenging these incumbents."
  },
  {
   "id": "kaal:claim:3936876-010",
   "url": "https://wulfkaal.github.io/claims/3936876-010",
   "claim": "A private key differs from a password in that it is immutable and cannot be reset, so if the key is lost or stolen access to the digital asset may be permanently lost.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "applies to key based digital asset ownership on public blockchains"
   ],
   "supporting_quote": "However, private keys are distinguishable from a password in that a private key is immutable – it cannot be reset.82 If a user loses their private key or if the private key is stolen, access to the digital asset may be lost."
  },
  {
   "id": "kaal:claim:3936876-011",
   "url": "https://wulfkaal.github.io/claims/3936876-011",
   "claim": "Hot storage buys easy access and quick transferability of digital assets at the cost of exposure to cyber attacks and to the difficulty of keeping private keys safe.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "wallets stored and accessible online"
   ],
   "supporting_quote": "Hot storage ensures the easy access and quick transferability of digital assets but is also subject to possible asset security issues in the form of cyber attacks or issues with keeping private keys safe."
  },
  {
   "id": "kaal:claim:3936876-012",
   "url": "https://wulfkaal.github.io/claims/3936876-012",
   "claim": "Cryptocurrency exchanges store digital assets or private keys in internet connected hot storage because their main function is to provide liquidity rather than custody, unlike registered legacy stock exchanges which facilitate trading without taking custody.",
   "type": "mechanism",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "centralized cryptocurrency exchanges"
   ],
   "supporting_quote": "Because the main function of digital asset exchanges is to provide liquidity – not to provide custody - cryptocurrency exchanges typically store digital assets or private keys in hot storage, that is in wallets that are connected to the Internet."
  },
  {
   "id": "kaal:claim:3936876-013",
   "url": "https://wulfkaal.github.io/claims/3936876-013",
   "claim": "Centralized cryptocurrency exchanges require users to hand over their assets and then act as custodian, issuing what are essentially IOUs for users to trade with on the platform.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "asserted",
   "scope_conditions": [
    "centralized exchanges, as distinct from decentralized exchanges"
   ],
   "supporting_quote": "These centralized cryptocurrency exchanges require users to hand over their assets to the exchange, who then acts as a custodian and essentially issues IOUs for users to trade with on the platform."
  },
  {
   "id": "kaal:claim:3936876-014",
   "url": "https://wulfkaal.github.io/claims/3936876-014",
   "claim": "Because a wallet provider or exchange that has custody of a digital asset gains full control over transactions, hacking a digital asset exchange is equivalent to robbing a bank: the attacker obtains valuable cryptocurrency that can be cashed out.",
   "type": "mechanism",
   "topics": [
    "defi",
    "risk-and-incentives",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "exchanges holding pooled customer assets in hot storage"
   ],
   "supporting_quote": "As such, a hack of a digital asset exchange is akin to robbing a bank-- getting hold of valuable cryptocurrencies that they can cash out of."
  },
  {
   "id": "kaal:claim:3936876-015",
   "url": "https://wulfkaal.github.io/claims/3936876-015",
   "claim": "Between 2011 and 2018 there were 56 cyberattacks on cryptocurrency exchanges, initial coin offerings and other digital currency platforms worldwide, totaling $1.63 billion in hacking related losses.",
   "type": "empirical",
   "topics": [
    "defi",
    "consensus-and-security",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "evidenced",
   "scope_conditions": [
    "global, 2011 to 2018"
   ],
   "supporting_quote": "Between 2011 and 2018 there were 56 cyberattacks directed at cryptocurrency exchanges, initial coin offerings and other digital-currency platforms around the world, totaling $1.63 billion in hacking-related losses."
  },
  {
   "id": "kaal:claim:3936876-016",
   "url": "https://wulfkaal.github.io/claims/3936876-016",
   "claim": "As of 2017, 73 percent of digital asset exchanges took custody of their users' private keys while only 23 percent let users maintain control over their own keys.",
   "type": "empirical",
   "topics": [
    "defi",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "evidenced",
   "scope_conditions": [
    "global exchange survey data as of 2017"
   ],
   "supporting_quote": "As of 2017, 73 percent of digital asset exchanges took custody of private keys while 23 percent let users maintain control over their keys."
  },
  {
   "id": "kaal:claim:3936876-017",
   "url": "https://wulfkaal.github.io/claims/3936876-017",
   "claim": "Custodial exchanges are largely unprepared for breach: only 53 percent of small custodial exchanges and 78 percent of large custodial exchanges have a written policy setting out what happens to customer funds if a security breach causes loss.",
   "type": "empirical",
   "topics": [
    "defi",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "evidenced",
   "scope_conditions": [
    "custodial cryptocurrency exchanges surveyed in the 2017 benchmarking study"
   ],
   "supporting_quote": "Just 53% of small custodial exchanges and 78% of large custodial exchanges have a written policy outlining what happens to customer funds in the event of a security breach resulting in the loss of customer funds."
  },
  {
   "id": "kaal:claim:3936876-018",
   "url": "https://wulfkaal.github.io/claims/3936876-018",
   "claim": "The unprecedented growth rate of decentralized exchanges may be an early indicator of increasing reliance on decentralized self-custody by retail users, but mainstream institutional adoption of digital assets is unlikely to materialize through self-custody and DEXs.",
   "type": "predictive",
   "topics": [
    "decentralization",
    "defi",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "speculative",
   "scope_conditions": [
    "as of late 2020 and 2021 DEX growth",
    "distinguishes retail from institutional adoption"
   ],
   "supporting_quote": "If anything, the DEX growth rate may be an early indicator of increasing decentralized self-custody reliance by digital asset retail users. Mainstream institutional investor adoption of digital assets, in turn, may not materialize via self-custody and DEXs."
  },
  {
   "id": "kaal:claim:3936876-019",
   "url": "https://wulfkaal.github.io/claims/3936876-019",
   "claim": "Cold storage custody solutions are much more secure and resistant to cyber attacks than hot storage because the digital assets and associated private keys are held in wallets that are not connected to the Internet.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "wallets kept offline"
   ],
   "supporting_quote": "Because of these distinguishing features, cold storage has several key benefits. For one, cold storage custody solutions are much more secure and resistant to cyber attacks."
  },
  {
   "id": "kaal:claim:3936876-020",
   "url": "https://wulfkaal.github.io/claims/3936876-020",
   "claim": "Cold storage trades security for accessibility: retrieving digital assets from cold storage can take many hours or even days, which makes cold storage especially ill suited to dynamic trading strategies.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "assets held in cold storage devices",
    "matters most for actively traded positions"
   ],
   "supporting_quote": "In some cases, it can take many hours or even days for investors to obtain control of digital assets that are stored in cold storage devices. The timing makes it especially difficult to use cold storage security for dynamic trading strategies."
  },
  {
   "id": "kaal:claim:3936876-021",
   "url": "https://wulfkaal.github.io/claims/3936876-021",
   "claim": "Cold wallets typically lack the multisig feature that is common in hot storage, so the single employee acting as agent for a corporation may be the only access point to the corporate digital assets.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "corporate or treasury holdings in cold storage without multisig"
   ],
   "supporting_quote": "Accordingly, the person who acts as an agent to a corporation who holds the assets on behalf of the company may be the only access point to the corporate assets."
  },
  {
   "id": "kaal:claim:3936876-022",
   "url": "https://wulfkaal.github.io/claims/3936876-022",
   "claim": "Institutional investors are less likely to engage in digital asset investments where custody solutions for digital assets are underdeveloped, and they find it difficult to commit fully until a reliable and respected custody solution exists.",
   "type": "condition",
   "topics": [
    "institutional-design",
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "institutional investors with client safety obligations"
   ],
   "supporting_quote": "Institutional investors are less likely to engage in digital asset investments if the custody solutions for digital assets are underdeveloped."
  },
  {
   "id": "kaal:claim:3936876-023",
   "url": "https://wulfkaal.github.io/claims/3936876-023",
   "claim": "Self management of private keys or passphrases for individual digital assets is too cumbersome for institutional investors, so institutional custody solutions must be as robust as those provided for traditional assets.",
   "type": "condition",
   "topics": [
    "institutional-design",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "asserted",
   "scope_conditions": [
    "institutional scale holdings"
   ],
   "supporting_quote": "Private keys or maintaining passphrases for individual digital assets is too cumbersome for institutional investors."
  },
  {
   "id": "kaal:claim:3936876-024",
   "url": "https://wulfkaal.github.io/claims/3936876-024",
   "claim": "Applying the trust label to digital asset firms without an accompanying fiduciary duty is problematic, because the typical legal obligation of a trust company is to place customers' interests above its own.",
   "type": "normative",
   "topics": [
    "reputation",
    "governance-design",
    "corporate-governance",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "state trust charters used by digital asset firms"
   ],
   "supporting_quote": "The applicability of the trust label to digital asset firms, without a fiduciary duty, can be problematic. A typical legal obligation for trust companies is a fiduciary duty – to place customers' interests above the company's own."
  },
  {
   "id": "kaal:claim:3936876-025",
   "url": "https://wulfkaal.github.io/claims/3936876-025",
   "claim": "Wyoming special purpose depository institutions may obtain FDIC insurance but are not required to, because they are prohibited from making loans with customer deposits of fiat currency.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "asserted",
   "scope_conditions": [
    "Wyoming SPDIs under HB 74"
   ],
   "supporting_quote": "SDPIs can obtain insurance from the Federal Deposit Insurance Corporation (FDIC), but they are not required to because they are prohibited from making loans with customer deposits of fiat currency."
  },
  {
   "id": "kaal:claim:3936876-026",
   "url": "https://wulfkaal.github.io/claims/3936876-026",
   "claim": "State chartered special purpose depository institutions remove some of the legal hurdles that burden technological advances, notably the reluctance of the existing banking sector to tailor AML and BSA compliance processes to the global and censorship resistant nature of cryptocurrencies.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "asserted",
   "scope_conditions": [
    "state chartered SPDIs such as those in Wyoming"
   ],
   "supporting_quote": "State chartered SDPIs eliminate some of the legal hurdles that burdens technological advances - such as the reluctance of the existing banking sector to change / tailor AML / BSA compliance processes in order to accommodate the global & censorship resistant nature of cryptocurrencies."
  },
  {
   "id": "kaal:claim:3936876-027",
   "url": "https://wulfkaal.github.io/claims/3936876-027",
   "claim": "Operational risk is inherently high in custody services because of the high volume of transactions processed daily, and those risks are magnified in a global custody operation running around the clock across different markets.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "custody services generally, and global custody in particular"
   ],
   "supporting_quote": "Operational risk is inherently high in custody services because of the high volume of transactions processed daily."
  },
  {
   "id": "kaal:claim:3936876-028",
   "url": "https://wulfkaal.github.io/claims/3936876-028",
   "claim": "Information security infrastructure and controls to mitigate hacking, theft, and fraud must be enhanced when maintaining custody of digital assets, because digital assets have unique technical characteristics.",
   "type": "design",
   "topics": [
    "consensus-and-security",
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "banks and custodians holding digital assets"
   ],
   "supporting_quote": "Information security infrastructure and controls to mitigate hacking, theft, and fraud need to be enhanced when maintaining custody of digital assets due to their unique technical characteristics."
  },
  {
   "id": "kaal:claim:3936876-029",
   "url": "https://wulfkaal.github.io/claims/3936876-029",
   "claim": "Custodial service providers spend proportionally less on IT security than non custodial ones: custodians spend between 6 and 10 percent of resources on IT security while non custodial service providers spend between 11 and 20 percent.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "evidenced",
   "scope_conditions": [
    "surveyed cryptoasset service providers in the 2020 benchmarking study"
   ],
   "supporting_quote": "Notably, custodians spend between 6% to 10% of their resources on IT security while non-custodial service providers spend between 11% to 20% of its resources, both financial and human, on IT security."
  },
  {
   "id": "kaal:claim:3936876-030",
   "url": "https://wulfkaal.github.io/claims/3936876-030",
   "claim": "Every risk in a digital custody operation should carry both a preventative and a detective control, layered so that if some controls fail others remain to reduce the risk.",
   "type": "design",
   "topics": [
    "risk-and-incentives",
    "defi",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "digital asset custody risk management programs"
   ],
   "supporting_quote": "Every risk should have a preventative and detective control and there should be appropriate layers of controls so that if some fail, others will still be there to reduce the risk."
  },
  {
   "id": "kaal:claim:3936876-031",
   "url": "https://wulfkaal.github.io/claims/3936876-031",
   "claim": "Specialized digital custody audit procedures for verifying that a bank maintains access controls over a cryptographic key differ from the audit procedures used for physical assets, so some risk management processes must be tailored for digital custody.",
   "type": "design",
   "topics": [
    "compliance",
    "consensus-and-security",
    "citation-and-knowledge",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "national banks providing cryptocurrency custody"
   ],
   "supporting_quote": "Specialized digital custody audit procedures for verifying the bank maintains access controls for a cryptographic key will differ from the procedures used for physical assets."
  },
  {
   "id": "kaal:claim:3936876-032",
   "url": "https://wulfkaal.github.io/claims/3936876-032",
   "claim": "Externally led auditing of digital asset reserves among custodial service providers is declining, falling 24 percentage points relative to the 2018 sample.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "evidenced",
   "scope_conditions": [
    "surveyed custodial service providers, 2020 benchmarking study"
   ],
   "supporting_quote": "The report noted this is a 24-percentage point decline compared to their 2018 sample."
  },
  {
   "id": "kaal:claim:3936876-033",
   "url": "https://wulfkaal.github.io/claims/3936876-033",
   "claim": "Insurance coverage among digital asset service providers is far from universal: 46 percent of surveyed service providers reported not being insured against any risks.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "evidenced",
   "scope_conditions": [
    "surveyed cryptoasset service providers, 2020 benchmarking study"
   ],
   "supporting_quote": "46% of service providers surveyed as discussed above reported not being insured against any risks."
  },
  {
   "id": "kaal:claim:3936876-034",
   "url": "https://wulfkaal.github.io/claims/3936876-034",
   "claim": "Credit risk is low in digital asset transactions because the transactions are made instantaneously, which removes the counterparty performance window that generates credit risk in traditional custody.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "asserted",
   "scope_conditions": [
    "on chain digital asset transactions"
   ],
   "supporting_quote": "Fortunately, this risk is low in digital asset transactions because transactions are made instantaneously."
  },
  {
   "id": "kaal:claim:3936876-035",
   "url": "https://wulfkaal.github.io/claims/3936876-035",
   "claim": "Becoming an OCC regulated trust is one route by which crypto exchanges can operate nationwide without securing state level licenses in each of the 49 states that require one.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "governance-design",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "asserted",
   "scope_conditions": [
    "United States, national trust charter route"
   ],
   "supporting_quote": "Becoming an OCC-regulated trust is one way crypto exchanges can operate nationwide without needing to secure state-level licenses in each of the 49 different U.S. states (Montana doesn't have a licensing requirement)."
  },
  {
   "id": "kaal:claim:3936876-036",
   "url": "https://wulfkaal.github.io/claims/3936876-036",
   "claim": "Multi-signature wallets and a combination of hot and cold storage solutions are the advisable custody design for digital assets.",
   "type": "design",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "asserted",
   "supporting_quote": "Multi-signature wallets and a combination of hot and cold storage solutions are advisable."
  },
  {
   "id": "kaal:claim:3936876-037",
   "url": "https://wulfkaal.github.io/claims/3936876-037",
   "claim": "While the majority of cryptocurrency spot exchanges require ownership to be surrendered in order to transact, decentralized exchanges introduce the ability for users to transact without exposing their private keys to vulnerability.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of centralized spot exchanges with DEXs"
   ],
   "supporting_quote": "While the majority of cryptocurrency spot exchanges require ownership to be surrendered in order to transact, DEXs are introducing the ability for users to transact without exposing private keys to vulnerability."
  },
  {
   "id": "kaal:claim:3936876-038",
   "url": "https://wulfkaal.github.io/claims/3936876-038",
   "claim": "Applying current legacy custody rules developed for traditional assets to digital assets is inconsistent with the foundations of decentralization, because the very nature of a decentralized system mandates the avoidance and eradication of intermediaries for business transactions.",
   "type": "normative",
   "topics": [
    "decentralization",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "viewed from the perspective of decentralization"
   ],
   "supporting_quote": "From the perspective of decentralization, the application of current legacy rules around custody of traditional assets is inconsistent with decentralization foundations."
  },
  {
   "id": "kaal:claim:3936876-039",
   "url": "https://wulfkaal.github.io/claims/3936876-039",
   "claim": "Where owners do not rely on the cryptography of the wallet and of each transaction to avoid trusted third parties, single points of failure, rent seeking behaviors and other suboptimal outcomes of legacy systems inevitably seep back into decentralized solutions.",
   "type": "failure",
   "topics": [
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized systems that reintroduce trusted third parties"
   ],
   "supporting_quote": "Without it, single points of failure, rent- seeking behaviors and other suboptimal outcomes of legacy systems are inevitably seeping back into decentralized solutions."
  },
  {
   "id": "kaal:claim:3936876-040",
   "url": "https://wulfkaal.github.io/claims/3936876-040",
   "claim": "Delegation of rights to custody providers is only an incremental step toward centralization via delegation to third party investment managers, and it opens a floodgate because each additional level of investment discretion over digital assets exacerbates centralization concerns and compounds rent seeking suboptimalities.",
   "type": "failure",
   "topics": [
    "governance-design",
    "decentralization",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "delegation chains that begin with custody and extend to discretionary management"
   ],
   "supporting_quote": "This becomes a floodgate issue, as each level of investment discretion over digital assets exacerbates the centralization concerns and compounds the rent seeking suboptimalities."
  },
  {
   "id": "kaal:claim:3936876-041",
   "url": "https://wulfkaal.github.io/claims/3936876-041",
   "claim": "Taking the realities of decentralization and decentralized self-custody seriously would require investment advisers to provide digital asset investment advice for a fee without ever taking custody of the assets.",
   "type": "condition",
   "topics": [
    "private-funds",
    "defi",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "investment advisers serving digital asset clients"
   ],
   "supporting_quote": "The realities of decentralization and decentralized self-custody would require investment advisers to simply provide digital asset investment advice via fee without taking custody of digital assets."
  },
  {
   "id": "kaal:claim:3936876-042",
   "url": "https://wulfkaal.github.io/claims/3936876-042",
   "claim": "Legacy customer expectations of custodial solutions are what force continuous experimentation with digital asset custody within the existing and evolving legal framework, rather than a clean move to non custodial models.",
   "type": "mechanism",
   "topics": [
    "defi",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "argued",
   "scope_conditions": [
    "markets serving legacy customers with traditional expectations"
   ],
   "supporting_quote": "However, the expectations of legacy customers involve typically custodial solutions which may mandate continuous experimentation with digital asset custody solutions within the existing legal framework and the evolving legal legacy framework for digital asset custody solutions."
  },
  {
   "id": "kaal:claim:3936876-043",
   "url": "https://wulfkaal.github.io/claims/3936876-043",
   "claim": "Centralized custody solutions and decentralized non custodial deal platforms will run in parallel until both are more established, and existing DeFi trends suggest the decentralized non custodial deal platforms will produce more innovation and better deals.",
   "type": "predictive",
   "topics": [
    "defi",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "year": "2021",
   "source_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "confidence": "speculative",
   "scope_conditions": [
    "based on trends in DeFi as of 2021",
    "author explicitly marks the outcome as uncertain"
   ],
   "supporting_quote": "The existing trends in DeFi seem to suggest that the decentralized non-custodial deal platforms will have more innovation and better deals."
  },
  {
   "id": "kaal:claim:3808852-001",
   "url": "https://wulfkaal.github.io/claims/3808852-001",
   "claim": "The six types of decentralization are not independent: each is subject to its own iterative process and affects the others through feedback effects, so proliferation in one type progressively changes the others.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "applies across decentralization of science, technology, organization, markets, government, and society"
   ],
   "supporting_quote": "These types of decentralization, among others, are each subject to iterative decentralization processes and affect each other by way of feedback effects. As one type proliferates, the other types are slowly but increasingly affected, leading to changes that, in turn, affect each other."
  },
  {
   "id": "kaal:claim:3808852-002",
   "url": "https://wulfkaal.github.io/claims/3808852-002",
   "claim": "Because the instruments of scientific development and research are themselves centralized, the scientific consensus they produce is naturally centralized as well.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "asserted",
   "supporting_quote": "The centralized nature of instruments of scientific development and research results in naturally centralized scientific consensus."
  },
  {
   "id": "kaal:claim:3808852-003",
   "url": "https://wulfkaal.github.io/claims/3808852-003",
   "claim": "Journal publication incentives systematically bias the scientific record: journals prefer papers that reject the null hypothesis, use big datasets, and show big effect sizes, so significant findings failing those criteria may simply be ignored.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "applies to ranked scientific journals as the dominant publication channel"
   ],
   "supporting_quote": "Scientific journals typically prefer to publish papers that reject the null hypothesis, use big datasets, and demonstrate big effect sizes. Significant findings that do not meet these criteria may simply be ignored."
  },
  {
   "id": "kaal:claim:3808852-004",
   "url": "https://wulfkaal.github.io/claims/3808852-004",
   "claim": "Peer review exacerbates publication bias and can produce a cartelization of knowledge, because non-conforming innovative ideas may not receive full recognition and new findings that threaten existing hierarchies are delayed or denied recognition.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge",
    "institutional-design",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "The use of peer reviews can further exacerbate these effects and can result in forms of cartelization of knowledge because non- conforming innovative ideas may not get full recognition."
  },
  {
   "id": "kaal:claim:3808852-005",
   "url": "https://wulfkaal.github.io/claims/3808852-005",
   "claim": "The centralization of scientific methods and output has produced suboptimal outcomes for society, as evidenced by widespread irreproducibility, by non-expert forecasters often outperforming experts, and by random stock selection outperforming expert selection.",
   "type": "empirical",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "evidenced",
   "supporting_quote": "Non-expert forecasters are often better than expert forecasters.2 Random selection of stocks can produce superior results in comparison with expert selection.3"
  },
  {
   "id": "kaal:claim:3808852-006",
   "url": "https://wulfkaal.github.io/claims/3808852-006",
   "claim": "Increased networkability drives decentralization of science because it lowers the cost of ascertaining the accuracy of scientific results while raising the price a scientist pays for being inaccurate or wrong.",
   "type": "mechanism",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "requires interested parties to be networked through technology"
   ],
   "supporting_quote": "Economics of science supports this decentralized paradigm shift because through the increased networkability the cost of ascertaining the accuracy of scientific results is decreasing while the price for being inaccurate or wrong as a scientist is increasing."
  },
  {
   "id": "kaal:claim:3808852-007",
   "url": "https://wulfkaal.github.io/claims/3808852-007",
   "claim": "The transition from client-server computing to peer-to-peer networking was the most significant step in the evolution of decentralized technology, because removing centralized hosts lets nodes make disk storage, bandwidth, and processing power directly available to each other.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "The transition from a traditional client-server computing architecture to a peer-to-peer networking architecture was the most significant step toward the evolution of decentralized technology."
  },
  {
   "id": "kaal:claim:3808852-008",
   "url": "https://wulfkaal.github.io/claims/3808852-008",
   "claim": "Network effects proliferate in peer-to-peer networks because, unlike client-server architecture with linearly increasing per-unit costs, peer-to-peer network costs decrease with each added node.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "Network effects proliferate in peer-to-peer networks because, unlike the traditional client-server architecture which is subject to the linearly increasing per-unit costs, the peer-to-peer network costs decrease with each added node."
  },
  {
   "id": "kaal:claim:3808852-009",
   "url": "https://wulfkaal.github.io/claims/3808852-009",
   "claim": "Because of human shortcomings, bounded rationality, incomplete foresight, and information asymmetries, it is impossible for principals to contract for every possible action or inaction of the agent so as to induce the agent to act in the principal's best interest.",
   "type": "condition",
   "topics": [
    "risk-and-incentives",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to principal agent relationships in limited liability entities"
   ],
   "supporting_quote": "bounded rationality, incomplete foresight, and information asymmetries between principal and agent,7 it is impossible for principals to contract for every possible action or inaction of the agent in order to induce the agent to act in the best interest of the principal."
  },
  {
   "id": "kaal:claim:3808852-010",
   "url": "https://wulfkaal.github.io/claims/3808852-010",
   "claim": "Agency theory and the existing legal framework have failed to resolve the core agency conflict arising from the separation of ownership and control, so peaceable and productive coordination of human behavior remains wanting.",
   "type": "failure",
   "topics": [
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "applies to limited liability entities and their constituents"
   ],
   "supporting_quote": "Theory and practice have not successfully addressed the outstanding issues. For example, the core agency conflicts emanating from the separation of ownership (shareholder principal) and control (manager agent) cannot be fully addressed by the existing theoretical and legal framework."
  },
  {
   "id": "kaal:claim:3808852-011",
   "url": "https://wulfkaal.github.io/claims/3808852-011",
   "claim": "Societal path dependencies toward hierarchy and top-down command and control impose significant obstacles on organizational decentralization, hindering the transition of power from governments and large hierarchical organizations to the edges.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "Because of these societal path dependencies, organizational decentralization is subject to significant obstacles that hinder the transition of power from governments and large hierarchical organizations to the edges."
  },
  {
   "id": "kaal:claim:3808852-012",
   "url": "https://wulfkaal.github.io/claims/3808852-012",
   "claim": "Organizational decentralization can raise economic performance without new technology: Jack Welch's separation of GE business units, each with its own profit-and-loss statement and full accountability, allowed efficient and profitable operation and GE's market value skyrocketed as a result.",
   "type": "empirical",
   "topics": [
    "ai-and-agents",
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "evidenced",
   "scope_conditions": [
    "pre and post internet era corporate structures"
   ],
   "supporting_quote": "Welch's method enabled each business unit to be run efficiently and profitably, while allowing unit heads significant flexibility and independence. GE's market value skyrocketed as a result of its decentralization of business units."
  },
  {
   "id": "kaal:claim:3808852-013",
   "url": "https://wulfkaal.github.io/claims/3808852-013",
   "claim": "Hybrid organizations combining centralized structure and profit optimization with bottom-up decentralization in the form of customer reviews generate significant success but also create tensions, because users who trust each other through ratings still demand consumer safeguards that require command-and-control structures.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "applies to internet platform companies such as eBay and Amazon"
   ],
   "supporting_quote": "While people are willing to trust others by way of user ratings, they also require safeguards for consumers that typically require command-and-control centralized structures."
  },
  {
   "id": "kaal:claim:3808852-014",
   "url": "https://wulfkaal.github.io/claims/3808852-014",
   "claim": "eBay's user rating system is visibly flawed and illustrates the need for a decentralized reputation verification system, yet no entity or individual has produced a better technology, and those decentralized ratings remained eBay's biggest competitive advantage.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "While the user ratings eBay uses clearly have flaws (that illustrate the need for a decentralized reputation verification system), so far, no entity or individual has been able to come up with a better technology."
  },
  {
   "id": "kaal:claim:3808852-015",
   "url": "https://wulfkaal.github.io/claims/3808852-015",
   "claim": "Decentralized autonomous organizations epitomize organizational decentralization because the first DAO, built purely on code and smart contracts with no incorporation, physical address, or headquarters, entirely removed all traditional control mechanisms employed by principals in agency relationships.",
   "type": "definitional",
   "topics": [
    "dao",
    "smart-contracts",
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "describes the first DAO launched in May 2016"
   ],
   "supporting_quote": "Launched in May 2016, the first DAO was set up as an organization based purely on code and smart contracts. It did not have a conventional corporate structure, no incorporation, and had no physical address or headquarter."
  },
  {
   "id": "kaal:claim:3808852-016",
   "url": "https://wulfkaal.github.io/claims/3808852-016",
   "claim": "The DAO focus on enhancing the value of fungible tokens can produce short termism and can cause ethical and governance issues to be ignored, even as it frees non-performance reputational penalties from racial and cultural bias.",
   "type": "failure",
   "topics": [
    "dao",
    "risk-and-incentives",
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "applies where DAO membership is organized around fungible token value"
   ],
   "supporting_quote": "Yet, the focus on the value enhancement of fungible tokens can lead to short termism and may ignore ethical and governance issues."
  },
  {
   "id": "kaal:claim:3808852-017",
   "url": "https://wulfkaal.github.io/claims/3808852-017",
   "claim": "DAO developers are subject to path dependencies that undermine the evolution of decentralized DAO designs, because the communication structures of the organizations that design systems invariably shape future designs.",
   "type": "failure",
   "topics": [
    "dao",
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "DAO developers are also subject to path dependencies which undermine the evolution of decentralized DAO designs. The communication structures in organizations will invariably influence future designs.11"
  },
  {
   "id": "kaal:claim:3808852-018",
   "url": "https://wulfkaal.github.io/claims/3808852-018",
   "claim": "Because human brains simplify complex systems for coherence while complex adaptive systems evolve through self-organizing group behavior, decentralizing the interaction of DAO developers would support random developer interaction and make developer perspectives on software development more diverse.",
   "type": "design",
   "topics": [
    "decentralization",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "proposed as a remedy for developer path dependencies"
   ],
   "supporting_quote": "The decentralized interaction of DAO developers could help support random developer interaction and make developer perspectives on software development more diverse."
  },
  {
   "id": "kaal:claim:3808852-019",
   "url": "https://wulfkaal.github.io/claims/3808852-019",
   "claim": "At the beginning of the 2020s no forum existed that could support truly decentralized software development with a sufficient incentive design.",
   "type": "empirical",
   "topics": [
    "decentralization",
    "risk-and-incentives",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "asserted",
   "scope_conditions": [
    "as of the beginning of the 2020s"
   ],
   "supporting_quote": "At the beginning of the 2020s, no forum existed that could support truly decentralized software development with a sufficient incentive design."
  },
  {
   "id": "kaal:claim:3808852-020",
   "url": "https://wulfkaal.github.io/claims/3808852-020",
   "claim": "Markets whose trades do not depend on physical location evolved without centralized coordination, as shown by the foreign exchange market, which developed decentralized because currency trading required no physical location.",
   "type": "condition",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "evidenced",
   "scope_conditions": [
    "holds where physical location is not determinative for the trade"
   ],
   "supporting_quote": "For example, the foreign exchange (FX) market evolved without centralized coordination because currency trading did not require a physical location."
  },
  {
   "id": "kaal:claim:3808852-021",
   "url": "https://wulfkaal.github.io/claims/3808852-021",
   "claim": "The digitization of content is the most lasting contribution to market decentralization, because the physical location of assets matters less as content is digitized and virtual products emerge, so markets are becoming increasingly decentralized.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "The physical location of assets becomes less important when more content is digitized and online and virtual products emerge. As a result, markets are becoming increasingly decentralized."
  },
  {
   "id": "kaal:claim:3808852-022",
   "url": "https://wulfkaal.github.io/claims/3808852-022",
   "claim": "The ICO share of blockchain startup fundraising collapsed from 80 percent to around 35 percent by August 2018, recovered only marginally to 40 to 50 percent between September 2018 and February 2019, and then fell to 20 percent in March 2019.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "economics",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "evidenced",
   "scope_conditions": [
    "measured as percentage of total fundraising of blockchain startups"
   ],
   "supporting_quote": "The percentage of ICOs in relation to total fundraising of blockchain startups dropped from 80% to around 35% in August 2018 and only marginally recovered between September 2018 and February 2019 at around 40% to 50% before dropping to 20% in March 2019."
  },
  {
   "id": "kaal:claim:3808852-023",
   "url": "https://wulfkaal.github.io/claims/3808852-023",
   "claim": "Decentralized cryptocurrency exchanges epitomize market decentralization because they let users interact and trade anonymously in a secure environment without third party intermediation.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "DEX epitomize market decentralization because they allow users to interact and trade anonymously in a secure environment without the need for third party intermediation."
  },
  {
   "id": "kaal:claim:3808852-024",
   "url": "https://wulfkaal.github.io/claims/3808852-024",
   "claim": "Conflicts of interest and counterparty risks are absent on a decentralized exchange because proprietary trading intermediaries such as market makers and centralized third-party operators cannot inject themselves into a transaction.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "applies to DEX where settlement is delivery versus payment directly between trading parties"
   ],
   "supporting_quote": "Proprietary trading intermediaries, such as market makers and centralized third-party operators, cannot inject themselves in a transaction. As a result, conflicts and counterparty risks are absent in a DEX."
  },
  {
   "id": "kaal:claim:3808852-025",
   "url": "https://wulfkaal.github.io/claims/3808852-025",
   "claim": "Most decentralized exchanges have struggled with liquidity and price discovery.",
   "type": "failure",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "asserted",
   "supporting_quote": "Most DEX have been struggling with liquidity and price discovery."
  },
  {
   "id": "kaal:claim:3808852-026",
   "url": "https://wulfkaal.github.io/claims/3808852-026",
   "claim": "A decentralized exchange can be seen as architecturally centralized, because the DEX code and its operational rules in effect create the exchange and provide a central order exchange and price discovery function rather than a peer-to-peer exchange.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "applies to DEX whose operational rules are set by code"
   ],
   "supporting_quote": "Architecturally, DEX can be seen as centralized because the DEX code and the operational rules of the DEX code in effect create the exchange and facilitate a central order exchange function and price discovery, not a peer-to-peer exchange."
  },
  {
   "id": "kaal:claim:3808852-027",
   "url": "https://wulfkaal.github.io/claims/3808852-027",
   "claim": "Even though the creator of a DEX plays a limited role in its evolution, the code that provides the exchange's operational rules may still be subject to the centralized control of certain developers, and a completely open source DEX with no ongoing developer involvement remains untested.",
   "type": "failure",
   "topics": [
    "open-source-and-code",
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "the code that provides the operational rules of the exchange may still be subject to the centralized control of certain developers. The idea of a completely open source DEX without any ongoing developer involvement remains untested."
  },
  {
   "id": "kaal:claim:3808852-028",
   "url": "https://wulfkaal.github.io/claims/3808852-028",
   "claim": "Decentralized exchanges may fail to ensure market integrity, because the code that creates a DEX can allow asymmetric distribution of trading information based on user status.",
   "type": "failure",
   "topics": [
    "economics",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "evidenced",
   "supporting_quote": "the code that creates a DEX may also allow the asymmetric distribution of trading information based on user status.19"
  },
  {
   "id": "kaal:claim:3808852-029",
   "url": "https://wulfkaal.github.io/claims/3808852-029",
   "claim": "Automation and the absence of a human backstop in compliance, back office, and settlement create new risks to market integrity on decentralized exchanges, including wash trading, frontrunning, and insider trading.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "The code may also create new risks to market integrity because of its automation and lack of a human backstop in compliance, back office, and settlement."
  },
  {
   "id": "kaal:claim:3808852-030",
   "url": "https://wulfkaal.github.io/claims/3808852-030",
   "claim": "Governmental decentralization is the transference of responsibility and authority for public functions from centralized governmental agencies to centrally subordinated but quasi-independent public or private entities, and it is incommensurable because of its different kinds, degrees, and dimensions.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "asserted",
   "supporting_quote": "Governmental decentralization describes the process of transference of responsibility and authority for public functions from centralized governmental agencies to centrally subordinated but quasi- independent public or private entities."
  },
  {
   "id": "kaal:claim:3808852-031",
   "url": "https://wulfkaal.github.io/claims/3808852-031",
   "claim": "Local governments and private organizations can rarely fulfill government functions effectively without control over an adequate level of revenues, and that revenue control must be tied to authority over local expenditure decisions to be effective.",
   "type": "condition",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "applies to fiscal arrangements accompanying governmental decentralization"
   ],
   "supporting_quote": "For example, private organizations and local governments can rarely fulfill government functions effectively if they do not control an adequate level of revenues."
  },
  {
   "id": "kaal:claim:3808852-032",
   "url": "https://wulfkaal.github.io/claims/3808852-032",
   "claim": "The degree of success in governmental decentralization is tied to the level of accountability instituted in the process, and accountability in turn depends on the availability of transparent public information that lets the community monitor local government performance.",
   "type": "condition",
   "topics": [
    "disclosure",
    "decentralization",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "The degree of success in governmental decentralization is often associated with the level of accountability instituted in the process. Accountability depends on the availability of information."
  },
  {
   "id": "kaal:claim:3808852-033",
   "url": "https://wulfkaal.github.io/claims/3808852-033",
   "claim": "Decentralization is not always efficient, because centralized economies of scale can create the near-optimal efficiencies for economic growth and decentralization may therefore result in the loss of economies of scale.",
   "type": "failure",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "In fact, decentralization may not always be efficient as centralized economies of scale create the near-optimal efficiencies for economic growth."
  },
  {
   "id": "kaal:claim:3808852-034",
   "url": "https://wulfkaal.github.io/claims/3808852-034",
   "claim": "Standardized network-based services are very difficult to improve with decentralized approaches when local technical and administrative know-how is suboptimal, and this suboptimality is worsened when the local government lacks adequate financial resources.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "applies to standardized network-based public services"
   ],
   "supporting_quote": "Especially standardized network-based services are very difficult to improve with decentralized approaches when the level of technical and administrative know- how at the local level is suboptimal. This suboptimality is exacerbated if the local government does not have adequate financial resources."
  },
  {
   "id": "kaal:claim:3808852-035",
   "url": "https://wulfkaal.github.io/claims/3808852-035",
   "claim": "Government decentralization at the local level can favor local elites and may overcomplicate the coordination of national policies.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "asserted",
   "supporting_quote": "Furthermore, government decentralization at the local level can favor local elites and may overcomplicate the coordination of national policies."
  },
  {
   "id": "kaal:claim:3808852-036",
   "url": "https://wulfkaal.github.io/claims/3808852-036",
   "claim": "Silent governmental decentralization occurs without explicit policy: unlike affirmative reform, it results from inevitable changes in policy emphasis, networks, and resource availability, and can lead inevitably to a more decentralized system.",
   "type": "definitional",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "evidenced",
   "supporting_quote": "While most political decentralization is based on policy changes and affirmative reform efforts, silent governmental decentralization may occur as a result of inevitable changes in policy emphasis, networks, and resource availability.21"
  },
  {
   "id": "kaal:claim:3808852-037",
   "url": "https://wulfkaal.github.io/claims/3808852-037",
   "claim": "Governmental decentralization tends to occur during political or economic crises, because the fall of a regime and the resulting power vacuum causes power struggles, and it is during those struggles that forms of political decentralization emerge.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "conditioned on regime collapse or crisis of legitimacy"
   ],
   "supporting_quote": "Governmental decentralization often takes place during times of political or economic crises. The fall of a regime and the resultant power vacuum often causes power struggles. It is during those power struggles that forms of political decentralization emerge."
  },
  {
   "id": "kaal:claim:3808852-038",
   "url": "https://wulfkaal.github.io/claims/3808852-038",
   "claim": "Regulatory sandboxes are an instance of regulatory decentralization: by lowering regulatory barriers and costs for testing disruptive technologies while protecting consumers, the regulator fosters innovation in increasingly decentralized products and services.",
   "type": "design",
   "topics": [
    "decentralization",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on the UK FCA sandbox introduced April 2016 and later ASIC, MAS, and FSRA sandboxes"
   ],
   "supporting_quote": "With the sandbox, the regulator aims to foster innovation by lowering regulatory barriers and costs for testing disruptive innovative technologies, while ensuring that consumers will not be negatively affected."
  },
  {
   "id": "kaal:claim:3808852-039",
   "url": "https://wulfkaal.github.io/claims/3808852-039",
   "claim": "The role of central government is increasingly under attack because Bitcoin could not be controlled or regulated by centralized governments, which spawned a community effort to build decentralized applications free from government control.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "as observed in the early 2020s"
   ],
   "supporting_quote": "in the early 2020s, the Bitcoin cryptocurrency could not be controlled or regulated by centralized governments and has spawned a community effort to find more decentralized applications that are free from government control."
  },
  {
   "id": "kaal:claim:3808852-040",
   "url": "https://wulfkaal.github.io/claims/3808852-040",
   "claim": "Because social media can move knowledge and views from the edges of society into the mainstream very quickly, this transfer can remove existing societal consensus, social cohesion among established groups, and order in the process.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "Similarly, knowledge and views from the edges of society can be moved into societal mainstream very quickly via social media. This transfer can remove existing societal consensus, social cohesion among established groups, and order in the process."
  },
  {
   "id": "kaal:claim:3808852-041",
   "url": "https://wulfkaal.github.io/claims/3808852-041",
   "claim": "As each form of decentralization empowers heightened proliferation of the other forms, individuals perceive more opportunities for changes in consumer behavior, silent withdrawal, disengagement, and defiance of the established centralized order.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "decentralization",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "As each form of decentralization empowers heightened proliferation of other forms of decentralization, individuals in society perceive more opportunities for changes in consumer behavior, silent withdrawal, disengagement, and defiance of the established centralized order."
  },
  {
   "id": "kaal:claim:3808852-042",
   "url": "https://wulfkaal.github.io/claims/3808852-042",
   "claim": "The crypto movement illustrates the feedback effects between types of decentralization: its political philosophy could not be instantiated without technological decentralization in the form of cryptocurrencies, the combination created new markets, and the movement then created new organizational forms in DAOs.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "scope_conditions": [
    "describes the crypto movement of the late 2010s"
   ],
   "supporting_quote": "The particular political philosophy could not be instantiated without a form of technological decentralization, that is cryptocurrencies, which the movement believed to be immune from governmental control."
  },
  {
   "id": "kaal:claim:3808852-043",
   "url": "https://wulfkaal.github.io/claims/3808852-043",
   "claim": "The founders' initial vision of a truly decentralized internet without central points of failure could not be fulfilled, which is why internet idealists continue to seek technological ways to re-decentralize the internet.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852",
   "year": "2021",
   "source_sha256": "31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba",
   "confidence": "argued",
   "supporting_quote": "Because the initial vision of the founders of the internet, to create a truly decentralized network without central points of failure, could not be fulfilled, the community of internet idealists has been seeking technological ways to decentralize the internet."
  },
  {
   "id": "kaal:claim:3808873-001",
   "url": "https://wulfkaal.github.io/claims/3808873-001",
   "claim": "Improved incentive design is necessary but not sufficient for decentralization: better decentralized incentive designs can accelerate adoption, yet design alone will not produce the decentralization of business and society, because adoption depends on society's acceptance and use of the technology.",
   "type": "condition",
   "topics": [
    "decentralization",
    "risk-and-incentives",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized technology adoption at the level of business and society"
   ],
   "supporting_quote": "While improved decentralized incentive designs can accelerate adoption, design alone will not suffice in promoting the decentralization of business and society."
  },
  {
   "id": "kaal:claim:3808873-002",
   "url": "https://wulfkaal.github.io/claims/3808873-002",
   "claim": "Habits formed by analog era socialization are a decentralization neutralizer: people raised in the analog age hold work and social habits that are very hard to change, and they attribute superiority to outdated technology formats even when the content is identical.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "asserted",
   "scope_conditions": [
    "populations socialized before digital and decentralized technologies"
   ],
   "supporting_quote": "Analog habits remain strong. People who were raised in the analog age have been socialized into engaging in certain basic work related and social habits that are very hard to change."
  },
  {
   "id": "kaal:claim:3808873-003",
   "url": "https://wulfkaal.github.io/claims/3808873-003",
   "claim": "Legacy businesses actively neutralize decentralized competition by acquiring little known companies that hold highly competitive decentralized technologies, as Microsoft's acquisition of Skype illustrates.",
   "type": "mechanism",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "incumbent firms facing decentralized technology competitors"
   ],
   "supporting_quote": "In their attempts to neutralize their decentralized competitor businesses, legacy businesses are acquiring little-known companies with highly competitive decentralized technologies."
  },
  {
   "id": "kaal:claim:3808873-004",
   "url": "https://wulfkaal.github.io/claims/3808873-004",
   "claim": "The libertarian and reformist orientation of the crypto community itself neutralizes decentralization, because the strong idea of reforming society with decentralized technology makes cooperation with existing centralized structures often suboptimal.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "crypto community formed after the Bitcoin whitepaper",
    "early 2020s"
   ],
   "supporting_quote": "The idea of reforming society with decentralized technology remains strong in the crypto community. As a result, cooperation with existing centralized structures is often suboptimal."
  },
  {
   "id": "kaal:claim:3808873-005",
   "url": "https://wulfkaal.github.io/claims/3808873-005",
   "claim": "Decentralized issuers treated central bank issued digital currencies as a threat rather than as a pathway to mainstream acceptance of more decentralized cryptocurrencies, and that misreading forfeited a route to broader adoption.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "central bank digital currency debate of the early 2020s"
   ],
   "supporting_quote": "Rather than seeing the central bank issued digital currencies as a pathway to mainstream acceptance of more decentralized cryptocurrencies, the decentralized issuers of digital assets and their community perceived their centralized counterparts as a threat."
  },
  {
   "id": "kaal:claim:3808873-006",
   "url": "https://wulfkaal.github.io/claims/3808873-006",
   "claim": "The profit driven influx into the digital asset space brought rampant fraud that created a chasm between the decentralized asset space and mainstream investors, and lacking regulatory certainty and recognition of cryptocurrencies exacerbated that divide.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "digital asset markets between roughly 2010 and 2020"
   ],
   "supporting_quote": "With it came fraud in the digital asset space which was rampant and created a chasm between the decentralized assets space and mainstream investors."
  },
  {
   "id": "kaal:claim:3808873-007",
   "url": "https://wulfkaal.github.io/claims/3808873-007",
   "claim": "Decentralized technology systems require interoperability for survivability, yet most platforms attempt to go it alone in an effort to become the next Bitcoin, so decentralized community silos proliferate and the required infrastructure, which no single protocol can build, does not get built.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized protocol ecosystems in the early 2020s"
   ],
   "supporting_quote": "Decentralized technology systems require interoperability for survivability. Yet, most platforms attempt to make it alone in an effort to become the next Bitcoin. As a result, decentralized community silos proliferate."
  },
  {
   "id": "kaal:claim:3808873-008",
   "url": "https://wulfkaal.github.io/claims/3808873-008",
   "claim": "Proof of Work block rewards structurally reintroduce centralization: the economic nature of mining rewards incentivizes degrees of centralization through collective action of nodes that share rewards as a group, that is, mining pools.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "Proof of Work consensus with block rewards",
    "Bitcoin in the early 2020s"
   ],
   "supporting_quote": "The economic nature of these rewards incentivizes degrees of centralization in collective action of nodes that share in the mining rewards as a group, so called mining pools."
  },
  {
   "id": "kaal:claim:3808873-009",
   "url": "https://wulfkaal.github.io/claims/3808873-009",
   "claim": "Early stage consensus designs such as PoW, PoS and DPoS create a community belief system in certain foundational technology features that in effect inhibits higher degrees of decentralization, so suboptimal early decentralization becomes self perpetuating.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "early stage decentralized technologies such as PoW, PoS and DPoS"
   ],
   "supporting_quote": "For example, PoW, PoS, and DPoS, among others, create a community believe system in certain foundational technology features that in effect inhibit higher degrees of decentralization in technology."
  },
  {
   "id": "kaal:claim:3808873-010",
   "url": "https://wulfkaal.github.io/claims/3808873-010",
   "claim": "The decentralization of network technology is capped by its host environment: decentralized systems are built on and confined by the internet, which is decentralized in its foundation but has a centralized order structure.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized systems built on existing internet infrastructure"
   ],
   "supporting_quote": "The decentralization of network technology is limited because it operates in an environment of centralized technology. The internet, while in its foundation decentralized, has a centralized order structure."
  },
  {
   "id": "kaal:claim:3808873-011",
   "url": "https://wulfkaal.github.io/claims/3808873-011",
   "claim": "Centralization follows an S curve: in the expansion phase the benefits of centralizing power, capital and control rise faster than its costs, but in the decline phase the rising costs of centralization, including corruption, diseconomies of scale and cronyism, can no longer be offset, so centralized systems function less optimally and less efficiently.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "centralized systems in business and society over their life cycle"
   ],
   "supporting_quote": "Because of the increase in the cost of centralization, the benefits of centralization can no longer offset and outweigh the cost. As a result, centralized systems function less optimally and less efficiently."
  },
  {
   "id": "kaal:claim:3808873-012",
   "url": "https://wulfkaal.github.io/claims/3808873-012",
   "claim": "Even where superior decentralized technological solutions exist, the centralized elements deeply engrained in business and society can be perpetuated by the efficiency gains of the S curve of centralization, so superiority alone does not displace them.",
   "type": "failure",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "societies with deeply engrained centralized infrastructure such as legal systems and financial services"
   ],
   "supporting_quote": "Despite the emergence of superior decentralized technological solutions that have been emerging at the beginning of the 21st century, the centralized elements in business and society can be perpetuated via the efficiency gains in the S-curve of centralization."
  },
  {
   "id": "kaal:claim:3808873-013",
   "url": "https://wulfkaal.github.io/claims/3808873-013",
   "claim": "Applying decentralized technology to optimize a legacy system, for example using blockchain to improve the malfunctioning shareholder proxy voting process, perpetuates the outdated and malfunctioning centralized system rather than replacing it with a better performing decentralized one.",
   "type": "failure",
   "topics": [
    "blockchain",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized technology deployed as an optimization layer on centralized legacy processes"
   ],
   "supporting_quote": "In the process, the outdated and malfunctioning centralized legacy systems are being perpetuated rather than being replaced with better performing decentralized systems."
  },
  {
   "id": "kaal:claim:3808873-014",
   "url": "https://wulfkaal.github.io/claims/3808873-014",
   "claim": "Decentralized system design is itself path dependent on the centralized past: designers' prior experience in centralized structures infiltrates and undermines attempts to create more decentralized systems, through subconscious processes the designer cannot change or influence.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "human designers socialized and educated in centralized cultures"
   ],
   "supporting_quote": "The design of decentralized systems is subject to path dependencies that originate from the centralized past. Humans' past experience in centralized structures infiltrate and undermine attempts to create more decentralized system."
  },
  {
   "id": "kaal:claim:3808873-015",
   "url": "https://wulfkaal.github.io/claims/3808873-015",
   "claim": "Unintentional methodologically centralized design features in complex decentralized systems are inevitable, because human brains naturally simplify complex systems for the sake of coherence and designers therefore reach for centralized features that increase coherence.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "complex adaptive decentralized systems designed by humans"
   ],
   "supporting_quote": "Unintentional methodologically centralized design features in complex decentralized systems are inevitable."
  },
  {
   "id": "kaal:claim:3808873-016",
   "url": "https://wulfkaal.github.io/claims/3808873-016",
   "claim": "Biomimicry as a route to decentralized design optimization is disadvantaged ab initio, because nature's decentralized design is the product of millions of years of experimentation while human science is flawed until proven otherwise.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "attempts to emulate nature's decentralized design to improve resilience of human made systems"
   ],
   "supporting_quote": "Biomimicry for decentralized design optimization is subject to limitations. Attempts to emulate nature's decentralized design9 to enhance the resilience of human-made systems are typically disadvantaged ab initio as nature's design is the result of millions of years of design experimentation."
  },
  {
   "id": "kaal:claim:3808873-017",
   "url": "https://wulfkaal.github.io/claims/3808873-017",
   "claim": "To emulate nature's decentralized design, human designed decentralized systems must build experimentation with workable designs into the system as a core feature, yet at the beginning of the 2020s very few decentralized systems or design proposals incorporated such experimentation features.",
   "type": "design",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "human designed decentralized systems seeking natures resilience properties"
   ],
   "supporting_quote": "To emulate nature's decentralized experimentation design features, human designed decentralized systems would need to build experimentation with workable designs as a core feature into the system."
  },
  {
   "id": "kaal:claim:3808873-018",
   "url": "https://wulfkaal.github.io/claims/3808873-018",
   "claim": "Overreliance on the design of constitutional democracies limits experimentation with decentralized solutions for organizing society, because exclusive reliance on a single legal document combined with widespread voter apathy makes the constitutional model appear to be the only lasting form of organization.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "constitutional democracies as the dominant form of organizing society"
   ],
   "supporting_quote": "Overreliance on the design of constitutional democracies limits experimentation with decentralized solutions for the organization of society."
  },
  {
   "id": "kaal:claim:3808873-019",
   "url": "https://wulfkaal.github.io/claims/3808873-019",
   "claim": "As code proliferates as law, the democratic legitimacy of coded legal arrangements is increasingly called into question, because private actors have assumed governance tasks traditionally belonging to democratically elected sovereign states and may circumvent democratically legitimized governments.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "private coded legal arrangements and smart contracts governing online interaction"
   ],
   "supporting_quote": "Given the proliferation of code as law, the democratic legitimacy of coded legal arrangements are increasingly called into question. Through code, private actors have created governance tasks that were traditionally the responsibility of democratically elected sovereign states and state actors."
  },
  {
   "id": "kaal:claim:3808873-020",
   "url": "https://wulfkaal.github.io/claims/3808873-020",
   "claim": "Experimentation with decentralized organizational forms of society is curtailed by the principle of territorial integrity of nation states, a foundational principle of international law under which forced border change justifies war and which sustains a permanent national military presence.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "international legal order built on Article 2(4) of the UN Charter"
   ],
   "supporting_quote": "Experimentation with decentralized organizational forms of society is curtailed by the principle of territorial integrity of nation states."
  },
  {
   "id": "kaal:claim:3808873-021",
   "url": "https://wulfkaal.github.io/claims/3808873-021",
   "claim": "Governments will try to tax increasing distributed value creation wherever they can assert national jurisdiction, and exercising that assumed authority inhibits distributed value creation.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "distributed value creation that transcends the geographical constraints of nation states"
   ],
   "supporting_quote": "Naturally, governments will try to tax increasing distributed value creation if they can assert national jurisdiction. Exercising this assumed authority inhibits distributed value creation."
  },
  {
   "id": "kaal:claim:3808873-022",
   "url": "https://wulfkaal.github.io/claims/3808873-022",
   "claim": "Because humans crave certainty as complexity grows exponentially, they favor dogmatic approaches, and dogmatic approaches to new problems are unlikely to yield the needed solutions while groupthink and other forms of dogma undermine society's collective intelligence and decentralized decision making.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "environments of exponentially growing complexity and uncertainty in the 21st century"
   ],
   "supporting_quote": "Dogmatic approaches to new problems are unlikely to present the much-needed solutions. Groupthink and other forms of dogma undermine society's collective intelligence and decentralized decision making."
  },
  {
   "id": "kaal:claim:3808873-023",
   "url": "https://wulfkaal.github.io/claims/3808873-023",
   "claim": "Government controlled regulation of the evolving digital asset space was perhaps the leading decentralization neutralizer of the early 2020s, as regulators sought to fit decentralized solutions into existing regulatory infrastructure and discussed but did not seriously consider carve outs and safe harbors.",
   "type": "failure",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "United States digital asset regulation in the early 2020s"
   ],
   "supporting_quote": "In the early 2020s, government-controlled regulation of the evolving digital asset space was perhaps the leading decentralization neutralizer."
  },
  {
   "id": "kaal:claim:3808873-024",
   "url": "https://wulfkaal.github.io/claims/3808873-024",
   "claim": "Because decentralized technology at its core negates external control, censorship and oversight, regulatory approaches premised on government control undermined the technology's evolution, and without the ability to experiment in a legally protected environment decentralized products could not evolve.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "regulatory regimes that treat government control as indispensable",
    "early 2020s"
   ],
   "supporting_quote": "Accordingly, the then-proposed approaches largely undermined the decentralized technology evolution. Without the ability to experiment in a legally protected environment, decentralized products and technology could not evolve."
  },
  {
   "id": "kaal:claim:3808873-025",
   "url": "https://wulfkaal.github.io/claims/3808873-025",
   "claim": "Decentralized legal infrastructure solutions were almost entirely missing in the early 2020s despite strong demand, because other prerequisite decentralized infrastructure products, notably a functional public blockchain, were still missing.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "blockchain",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "early 2020s decentralized legal and arbitration startups using ERC-20 tokens"
   ],
   "supporting_quote": "Yet, other important decentralized infrastructure products, such as a functional public blockchain were still missing which undermined decentralized infrastructure solutions."
  },
  {
   "id": "kaal:claim:3808873-026",
   "url": "https://wulfkaal.github.io/claims/3808873-026",
   "claim": "Regulatory solutions tracked the characteristics of issuers, so the more decentralized, censorship resistant and autonomous products that regulators could not control were left in a regulatory vacuum that limited their expansion, reach and evolution.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdiction specific regulatory frameworks of the early 2020s"
   ],
   "supporting_quote": "As a result, the more decentralized products that were more censorship resistant, autonomous, and could not be controlled by regulatory agencies, were largely left in a regulatory vacuum that limited their expansion, reach, and evolution."
  },
  {
   "id": "kaal:claim:3808873-027",
   "url": "https://wulfkaal.github.io/claims/3808873-027",
   "claim": "The regulation of government coins versus corporate coins versus people coins bifurcated the regulatory infrastructure for decentralized technologies, because government and corporate coins were able to develop and evolve with regulatory oversight while more decentralized issuers were not.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "early 2020s token regulation across jurisdictions"
   ],
   "supporting_quote": "The regulation of government coins versus corporate coins versus people coins bifurcated the regulatory infrastructure for decentralized technologies. Government coins and corporate coins were able to develop and evolve with regulatory oversight."
  },
  {
   "id": "kaal:claim:3808873-028",
   "url": "https://wulfkaal.github.io/claims/3808873-028",
   "claim": "People coins and the innovations they created were largely subject to regulatory uncertainty and evolved much slower or not at all, so government and corporate coins created their own path dependencies and engrained product deficiencies with suboptimal levels of decentralization.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "community issued tokens without government or corporate sponsorship in the early 2020s"
   ],
   "supporting_quote": "People coins and the innovations they created were largely subject to regulatory uncertainty and evolved much slower or not at all."
  },
  {
   "id": "kaal:claim:3808873-029",
   "url": "https://wulfkaal.github.io/claims/3808873-029",
   "claim": "Centralized algorithmic automation, defined as artificially intelligent systems taking over core functions in human society, poses perhaps the greatest threat to decentralization.",
   "type": "definitional",
   "topics": [
    "ai-and-agents",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "proliferation of big data, predictive analytics and IoT sensing"
   ],
   "supporting_quote": "Centralized algorithmic automation poses perhaps the greatest threat to decentralization. Centralized algorithmic automation describes the process of artificially intelligent systems taking over core functions in human society."
  },
  {
   "id": "kaal:claim:3808873-030",
   "url": "https://wulfkaal.github.io/claims/3808873-030",
   "claim": "The availability of big data and algorithmic analytics increasingly limits individual choice, free will and the diversity of human experiences and actions, because the more analytics are available the less people make decisions that contradict them.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "domains where predictive analytics outperform individual judgment, for example DNA and health analytics"
   ],
   "supporting_quote": "Individual choice, free will, and diversity of human experiences and actions are increasingly limited through the availability of big data and algorithmic data analytics. For example, the more DNA analytics are available, the less people with make decisions that contradict the analytics."
  },
  {
   "id": "kaal:claim:3808873-031",
   "url": "https://wulfkaal.github.io/claims/3808873-031",
   "claim": "Because centralized algorithmically automated systems can know individuals' political preferences better than the individuals themselves, exercising political will through human voting becomes redundant and democratic elections may not be needed, though existing constitutional arrangements may delay that outcome.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "speculative",
   "scope_conditions": [
    "mature centralized algorithmic automation by platforms such as Google, Facebook and Amazon"
   ],
   "supporting_quote": "Because big data and algorithmic data analytics enable centralized algorithmically automated systems (such as Google, Facebook, and Amazon) to know individuals' political preferences better than the individual's themselves, exercising political will by way of human voting is redundant."
  },
  {
   "id": "kaal:claim:3808873-032",
   "url": "https://wulfkaal.github.io/claims/3808873-032",
   "claim": "An algorithmic future in which most human decisions are predicted or performed by algorithms threatens human individuality, and the resulting loss of diversity of human experience and of unpredictability threatens the diversity of nodes in decentralized systems.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "widespread centralized algorithmic automation of human decision making"
   ],
   "supporting_quote": "An algorithmic future where most of humans' decisions are predicted and or performed by algorithms creates a threat for human individuality. The lack of diversity of human experiences and lacking unpredictability create a threat to diversity of nodes in decentralized systems."
  },
  {
   "id": "kaal:claim:3808873-033",
   "url": "https://wulfkaal.github.io/claims/3808873-033",
   "claim": "Decentralized networks depend on dynamic governance because evolving blockchain protocols require updates, and the practice of hardforking that remained prevalent in the early 2020s created significant economic loss for such blockchains.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "governance-design",
    "consensus-and-security",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain protocols requiring upgrades in the early 2020s"
   ],
   "supporting_quote": "As blockchains protocols evolve in a given market, they require updates. The practice of hardforking, that was still prevalent in the early 2020s, created significant economic loss for such blockchains."
  },
  {
   "id": "kaal:claim:3808873-034",
   "url": "https://wulfkaal.github.io/claims/3808873-034",
   "claim": "Because basic standards for the governance of digital assets were still missing at the beginning of the 2020s, the digital asset market stagnated and decentralized finance remained in its infancy; without standards and governance, certainty and market confidence cannot develop.",
   "type": "condition",
   "topics": [
    "governance-design",
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "digital asset markets at the beginning of the 2020s"
   ],
   "supporting_quote": "At the beginning of the 2020s, basic standards for the governance of digital assets were still missing. As a result, the digital asset market stagnated and DeFi (decentralized finance) remained in its infancy."
  },
  {
   "id": "kaal:claim:3808873-035",
   "url": "https://wulfkaal.github.io/claims/3808873-035",
   "claim": "DAO governance designs of the early 2020s failed to take account of the historical precedent on governance, and most DAOs used centralized master nodes to institute blockchain protocol and DAO upgrades.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized autonomous organizations at the beginning of the 2020s"
   ],
   "supporting_quote": "At the beginning of the 2020s, the then existing DAO governance design structures failed to take into account the historical precedent on governance. Most DAOs utilized centralized forms of master nodes to institute blockchain protocol and DAO upgrades."
  },
  {
   "id": "kaal:claim:3808873-036",
   "url": "https://wulfkaal.github.io/claims/3808873-036",
   "claim": "Forking bifurcates network nodes and can reintroduce the double spend problem the network had already solved, because users running pre fork code treat post fork code as invalid and cannot detect spending on it, so coins spent in a post fork block can be spent again on a pre fork block.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "hard forks producing parallel chains with incompatible protocol rules"
   ],
   "supporting_quote": "For example, the bifurcation of network nodes can result in the reemergence of the double spend problem that the previous network had overcome. Users running the pre-fork code consider the post-fork code invalid, they cannot detect the spending on the post-fork code."
  },
  {
   "id": "kaal:claim:3808873-037",
   "url": "https://wulfkaal.github.io/claims/3808873-037",
   "claim": "Effective institutional governance, human or machine, requires a duality of incentives in which actors improve their own utility while their actions benefit the whole institution over the long run, and without that duality rational and opportunistic constituents will game the governance design.",
   "type": "condition",
   "topics": [
    "risk-and-incentives",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "DAO governance designs facing internal and external opportunistic actors"
   ],
   "supporting_quote": "Human nature and any effective machine derivates of human engagements in institutional form require a duality of incentives in order to overcome attempts of rational and opportunistic internal and external constituents to game the governance design of a given DAO."
  },
  {
   "id": "kaal:claim:3808873-038",
   "url": "https://wulfkaal.github.io/claims/3808873-038",
   "claim": "When fungible assets are the dominant incentive design in the governance of DAOs with identifiable actors, rational and opportunistic internal and external participants will typically attempt to corrupt the governance design for their own gain; merit identifiers other than individual identity remove the most corruptive influences.",
   "type": "mechanism",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "DAO governance using fungible assets and identifiable actors"
   ],
   "supporting_quote": "When fungible assets are used as the dominant incentive design in the governance of DAOs with identifiable actors, rational and opportunistic internal constituents and external participants will typically attempt to corrupt the governance design of the DAO for their own gain."
  },
  {
   "id": "kaal:claim:3808873-039",
   "url": "https://wulfkaal.github.io/claims/3808873-039",
   "claim": "One token one vote on chain governance produces plutocracy: it allocates more power to holders of a significant share of supply so that majority token holders have more power than all other holders combined, reintroducing the defects of one share one vote legacy designs.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "on chain voting mechanisms of the early 2020s"
   ],
   "supporting_quote": "A one- token-one-vote design allocates more power to token holders who have a significant share of the total supply of a given token. Majority token holders have more power than the rest of the token holders combined."
  },
  {
   "id": "kaal:claim:3808873-040",
   "url": "https://wulfkaal.github.io/claims/3808873-040",
   "claim": "Decentralized infrastructure is interdependent across layers, so even a fully developed and instantiated infrastructure product in one area may collapse without supporting decentralized infrastructure products in other, inevitably related areas.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "complex decentralized systems with multiple underdeveloped infrastructure layers"
   ],
   "supporting_quote": "Even a fully developed and instantiated infrastructure product in one area may collapse without the supporting structures build by decentralized infrastructure products in other, yet inevitably related, areas."
  },
  {
   "id": "kaal:claim:3808873-041",
   "url": "https://wulfkaal.github.io/claims/3808873-041",
   "claim": "Usability is the most important decentralized infrastructure requirement: without intuitive graphic user interfaces, decentralized systems may not reach mainstream consumer adoption, because requiring users to manage public and private keys and their own security makes sufficient public education very difficult.",
   "type": "condition",
   "topics": [
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "mainstream consumer adoption of decentralized protocols in daily life"
   ],
   "supporting_quote": "Without graphic user interfaces that are intuitive, decentralized systems may not be able to reach mainstream consumer adoption."
  },
  {
   "id": "kaal:claim:3808873-042",
   "url": "https://wulfkaal.github.io/claims/3808873-042",
   "claim": "A decentralized human backstop to code is a core and often overlooked infrastructure requirement, because without it the immutability of the blockchain and its cryptographic security may not create genuine transactional guarantees or trust between principals and agents in the integrity of their contractual relationship.",
   "type": "design",
   "topics": [
    "smart-contracts",
    "reputation",
    "ai-and-agents",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873",
   "year": "2021",
   "source_sha256": "f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized algorithmic systems mediating principal agent contractual relationships"
   ],
   "supporting_quote": "Without a decentralized human backstop to code, the immutability of the blockchain and its cryptographic security systems may not be able to create truly transactional guarantees and trust between principals and agents in the integrity of their contractual relationship."
  },
  {
   "id": "kaal:claim:3808859-001",
   "url": "https://wulfkaal.github.io/claims/3808859-001",
   "claim": "The ethos of interoperability in software development arose from a survival calculation rather than altruism: developers recognized that software which could not work across platforms would not survive.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "asserted",
   "scope_conditions": [
    "software development community, especially in its early period"
   ],
   "supporting_quote": "In turn, the realization in the software development community that interoperability of software means survivability, gave rise to an ethos of interoperability."
  },
  {
   "id": "kaal:claim:3808859-002",
   "url": "https://wulfkaal.github.io/claims/3808859-002",
   "claim": "Market leaders fail against disruptive technologies because they shortsightedly refuse to cannibalize their own dominant position, and that refusal often produces abrupt loss of market dominance or total replacement.",
   "type": "failure",
   "topics": [
    "innovation",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "scope_conditions": [
    "incumbent firms with an established customer base facing lower-end entrants"
   ],
   "supporting_quote": "A market leader's lack of investment in disruptive technologies often results in the abrupt loss of market dominance or even total replacement in such markets. Market leaders often shortsightedly refuse to cannibalize their market dominance"
  },
  {
   "id": "kaal:claim:3808859-003",
   "url": "https://wulfkaal.github.io/claims/3808859-003",
   "claim": "Firms that fare worst under disruptive innovation share a myopic short-term focus on shareholder value maximization, because emphasis on share price and financial metrics obscures the question of whether the firm remains relevant.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "scope_conditions": [
    "listed companies in particular"
   ],
   "supporting_quote": "Less successful companies often share a myopic and short-term focus on shareholder value maximization that has led to an unhealthy emphasis on firm share price, market valuations, and financial metrics that obscure issues of relevancy."
  },
  {
   "id": "kaal:claim:3808859-004",
   "url": "https://wulfkaal.github.io/claims/3808859-004",
   "claim": "Fintech is a precursor of decentralization rather than merely a financial innovation, because it pushes information toward the edge of the system and forces disrupted financial conglomerates to serve consumers better.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "Fintech brings information closer to the edge and serves the consumers, it disrupts centralized structures in finance and forces the disrupted financial conglomerates to serve the consumer better. As such, Fintech epitomizes some of the core principles of decentralization."
  },
  {
   "id": "kaal:claim:3808859-005",
   "url": "https://wulfkaal.github.io/claims/3808859-005",
   "claim": "Technological transformation stalls until its supporting infrastructure exists: the digital transformation was inhibited until infrastructure was built, laws were updated, and new institutions were created, just as the steam and combustion engines required new streets, wiring, laws, and institutions.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "scope_conditions": [
    "holds for transformational technologies that require societal coordination"
   ],
   "supporting_quote": "digital transformation was inhibited until the needed infrastructure was built, laws were updated, and new institutions were created."
  },
  {
   "id": "kaal:claim:3808859-006",
   "url": "https://wulfkaal.github.io/claims/3808859-006",
   "claim": "Digitization was the precondition for peer-to-peer transactions at scale, and the digital transformation of business enabled, for the first time in history, decentralized production at lower cost.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "Digitization was a precursor to peer-to-peer transactions at scale. Correspondingly, the digital transformation of business enabled for the first time in history a form of decentralized production at lower cost."
  },
  {
   "id": "kaal:claim:3808859-007",
   "url": "https://wulfkaal.github.io/claims/3808859-007",
   "claim": "Social media transfers knowledge from the edges of society into the mainstream by letting holders of marginalized views find kindred spirits, form groups, and incrementally grow influence until their perspective becomes mainstream, shifting the balance of power from a few to the masses.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "Social media allows people who hold otherwise marginalized or underappreciated views to meet kindred spirits online and form groups that promote their shared ideas."
  },
  {
   "id": "kaal:claim:3808859-008",
   "url": "https://wulfkaal.github.io/claims/3808859-008",
   "claim": "The social media coordination function is still largely flawed because the incentive design underlying social proof is suboptimal; decentralized technology solutions can take over that coordination function and improve it.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "scope_conditions": [
    "applies to social proof metrics such as share counts used as quality proxies"
   ],
   "supporting_quote": "Because the incentive design for social proof is suboptimal, the social media coordination function is still largely flawed. Decentralized technology solutions, however, can tap into the coordination function that was inaugurated by social media and improve it."
  },
  {
   "id": "kaal:claim:3808859-009",
   "url": "https://wulfkaal.github.io/claims/3808859-009",
   "claim": "Peer-to-peer architecture inverts the role of the audience: higher demand for a file produces more seeding nodes, which lowers the per-file delivery cost, whereas in client-server architecture demand consumes bandwidth proportionally.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "By contrast, in the peer-to-peer network, higher demand for a file triggers higher levels of seeding nodes for the high demand file. The higher seeding level for the file lowers the delivery cost for each distributed file."
  },
  {
   "id": "kaal:claim:3808859-010",
   "url": "https://wulfkaal.github.io/claims/3808859-010",
   "claim": "A peer-to-peer computing architecture is more efficient than client-server because client-server carries linearly increasing per-unit costs while peer-to-peer costs fall with each added node, which also leaves the traditional architecture more exposed to competition.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "The traditional client-server architecture is subject to the linearly increasing per-unit costs whereas with a peer-to-peer network, cost decreasse with each added node."
  },
  {
   "id": "kaal:claim:3808859-011",
   "url": "https://wulfkaal.github.io/claims/3808859-011",
   "claim": "Distributed routing makes a peer-to-peer network resistant to shutdown: BitTorrent could not be taken down even when authorities shut down specific servers, because nodes could update their own routing tables indefinitely.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to networks that removed central indexing servers"
   ],
   "supporting_quote": "Even if government authorities shut down specific servers, the BitTorrent network could not be shut down because nodes could update their own routing tables indefinitely."
  },
  {
   "id": "kaal:claim:3808859-012",
   "url": "https://wulfkaal.github.io/claims/3808859-012",
   "claim": "Platform businesses compound their advantage in technology infrastructure: platform data improves the platform's own technology, improved technology improves services, and better services generate still more data, creating a permanent learning and optimization environment.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "The feedback effects between data generation and technology optimization and vice versa creates a permanent learning and optimization environment for platform businesses."
  },
  {
   "id": "kaal:claim:3808859-013",
   "url": "https://wulfkaal.github.io/claims/3808859-013",
   "claim": "APIs dissolve traditional value-chain hierarchies because a company can obtain features more cheaply and more easily by connecting separate products through APIs than by controlling the entire value chain itself.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "Through the use of APIs, companies no longer need to control the entire value chain because it is much cheaper and technologically often easier to create application features in separate products that connect via APIs to existing ecosystems and/or other products."
  },
  {
   "id": "kaal:claim:3808859-014",
   "url": "https://wulfkaal.github.io/claims/3808859-014",
   "claim": "The sharing economy outran its legal frameworks: the legal regimes governing the disrupted industries were often incompatible with the trends the sharing economy generated, forcing cities and municipalities into a proactive regulatory stance.",
   "type": "failure",
   "topics": [
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "scope_conditions": [
    "applies to ridesharing and homesharing regulation at city and state level"
   ],
   "supporting_quote": "The legal frameworks that regulate disrupted and associated industries were often incompatible with the emerging trends generated by the sharing economy."
  },
  {
   "id": "kaal:claim:3808859-015",
   "url": "https://wulfkaal.github.io/claims/3808859-015",
   "claim": "The networked information economy, built on peer-to-peer exchange of information, may be replacing the centralized industrial information economy of the late nineteenth century, because cheaper access to information enables a much greater role for decentralized individual action.",
   "type": "predictive",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "Based on the proliferating peer-to-peer exchange of information, the networked information economy may be replacing the centralized industrial information economy of the late-nineteenth century."
  },
  {
   "id": "kaal:claim:3808859-016",
   "url": "https://wulfkaal.github.io/claims/3808859-016",
   "claim": "Diversity of inputs raises the value of network membership: because contributions increasingly come from the edges of the system, they are less homogenous and more diverse, which increases the utility of membership for every node.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "scope_conditions": [
    "holds where information is non-consumptive and computing power is progressively cheaper"
   ],
   "supporting_quote": "Because individual inputs come increasingly from the edges of the system, the inputs are less homogenous and more diverse which increases the utility of network membership for each member or node."
  },
  {
   "id": "kaal:claim:3808859-017",
   "url": "https://wulfkaal.github.io/claims/3808859-017",
   "claim": "Open source software accounts for somewhere between 78 percent and 98 percent of all core digital infrastructure software, according to industry estimates.",
   "type": "empirical",
   "topics": [
    "open-source-and-code",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on 2015 and 2017 industry survey estimates"
   ],
   "supporting_quote": "According to some estimates, open source software accounts for between 78%14 and 98%15 of all core digital infrastructure software."
  },
  {
   "id": "kaal:claim:3808859-018",
   "url": "https://wulfkaal.github.io/claims/3808859-018",
   "claim": "Open source contribution is governed by a cost-benefit calculation rather than pure altruism: the volunteer's opportunity costs of forgone paid work must be offset by satisfaction, autonomy, peer recognition, skill acquisition, or downstream commercial opportunity.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "Software developers perform a cost-benefit analysis when they decide to make an open source project contribution and throughout the respective project."
  },
  {
   "id": "kaal:claim:3808859-019",
   "url": "https://wulfkaal.github.io/claims/3808859-019",
   "claim": "The dominant failure of the open source model is that most projects never reach critical mass; only a small elite of projects attracts enough developers who believe in the vision, and the majority simply cannot.",
   "type": "failure",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "Perhaps most significantly, most open source projects cannot reach critical mass to further their development agenda. Only a small number of elite open source projects can attract developer contributions."
  },
  {
   "id": "kaal:claim:3808859-020",
   "url": "https://wulfkaal.github.io/claims/3808859-020",
   "claim": "The absence of a centralized authority makes open source projects prone to separation movements, because rival developer cliques form their own belief systems about the direction of development with no authority to resolve the dispute.",
   "type": "failure",
   "topics": [
    "open-source-and-code",
    "consensus-and-security",
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "scope_conditions": [
    "contrasted with centralized software projects"
   ],
   "supporting_quote": "Because no centralized authority decides the direction of development, open source projects are more prone to cliques of developers that develop their own belief system regarding certain aspects of the development process."
  },
  {
   "id": "kaal:claim:3808859-021",
   "url": "https://wulfkaal.github.io/claims/3808859-021",
   "claim": "An optimally incentivized democratic decision-making tool would make separation movements in open source less likely, because voters who know the process rewards truth-seeking are more likely to accept an adverse outcome; emerging decentralization technology makes such a tool theoretically feasible.",
   "type": "design",
   "topics": [
    "governance-design",
    "risk-and-incentives",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "speculative",
   "scope_conditions": [
    "conditional on incentive-optimal voting mechanisms being buildable"
   ],
   "supporting_quote": "Perhaps if the open source movement had an optimally incentivized democratic decision-making tool, such separation of interests and development would become less likely."
  },
  {
   "id": "kaal:claim:3808859-022",
   "url": "https://wulfkaal.github.io/claims/3808859-022",
   "claim": "Open source products are systematically weak on usability, documentation, support, and testing, because contributors are experts writing for experts and are more interested in the code than in explaining it to other users.",
   "type": "failure",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "scope_conditions": [
    "less true of large projects such as Linux and Mozilla that added developer documentation"
   ],
   "supporting_quote": "The usability of open source products is often underdeveloped and support and testing are often less evolved and not as readily available in open source projects."
  },
  {
   "id": "kaal:claim:3808859-023",
   "url": "https://wulfkaal.github.io/claims/3808859-023",
   "claim": "Courts expanded software patentability without proof that it would increase innovation, and the result was that corporations filed and acquired thousands of software patents used to strategically undermine competitor projects.",
   "type": "failure",
   "topics": [
    "open-source-and-code",
    "innovation",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "scope_conditions": [
    "United States courts, early 2000s onward"
   ],
   "supporting_quote": "What makes things worse, courts decided to increase the protections for software despite lacking proof that additional patentability of software would increase the level of innovation."
  },
  {
   "id": "kaal:claim:3808859-024",
   "url": "https://wulfkaal.github.io/claims/3808859-024",
   "claim": "Expanded patentability chills open source contribution because developers fear inadvertent infringement yet typically lack the knowledge and skills to determine whether their contribution infringes an existing software patent.",
   "type": "failure",
   "topics": [
    "open-source-and-code",
    "securities-law",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "scope_conditions": [
    "aggravated by the mandatory attestation requirements imposed on Linux contributors in 2004"
   ],
   "supporting_quote": "As a result of the accelerating patentability of open source solutions, developers increasingly fear they could inadvertently infringe patents during the open source development process."
  },
  {
   "id": "kaal:claim:3808859-025",
   "url": "https://wulfkaal.github.io/claims/3808859-025",
   "claim": "The degree of decentralization of an open source project is determined by the degree of hierarchy in its governance: a flat structure with consensus decision-making and no power disparities between developers is the most decentralized form.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "research-methods",
    "governance-design",
    "open-source-and-code",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "asserted",
   "scope_conditions": [
    "author stipulates this measure for comparing open source projects"
   ],
   "supporting_quote": "The degree of decentralization in open source communities and projects is dictated by the degree of hierarchies in the governance of a given project."
  },
  {
   "id": "kaal:claim:3808859-026",
   "url": "https://wulfkaal.github.io/claims/3808859-026",
   "claim": "Open source communities are not immune to centralization, because humans have a natural inclination to convert knowledge and resources into power over others, which is why projects such as Apache developed multiple ranked developer tiers with unequal voting rights.",
   "type": "failure",
   "topics": [
    "decentralization",
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "The open source development community is not immune to centralization. Humans have a natural inclination to use knowledge and resources to exert power over others."
  },
  {
   "id": "kaal:claim:3808859-027",
   "url": "https://wulfkaal.github.io/claims/3808859-027",
   "claim": "Meritocratic allocation of power in open source projects is often a fallacy, because rank can reflect timing and one-off contributions, deflation is not built into the perception of merit, and free riding on past reputation is therefore possible.",
   "type": "failure",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "scope_conditions": [
    "applies where rank is awarded on perceived merit and not periodically revisited"
   ],
   "supporting_quote": "In other words, deflation is not built into the perception of merit and free riding is possible."
  },
  {
   "id": "kaal:claim:3808859-028",
   "url": "https://wulfkaal.github.io/claims/3808859-028",
   "claim": "DeFi's distinctive disruption is that it attempts to make financial transactions permissionless, completely open to anybody, and borderless, promising reduced transaction costs, broader financial inclusion, and open access across borders.",
   "type": "definitional",
   "topics": [
    "defi",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "asserted",
   "scope_conditions": [
    "describes DeFi as an emerging movement from 2019"
   ],
   "supporting_quote": "The particular form of disruption in DeFi comes from its attempts to make financial transactions permissionless, completely open to anybody, and borderless."
  },
  {
   "id": "kaal:claim:3808859-029",
   "url": "https://wulfkaal.github.io/claims/3808859-029",
   "claim": "DeFi's disruptive potential may be blunted by incumbents: existing financial institutions can adopt decentralized technologies inside a controlled environment, capturing benefits such as transparency and interoperability while preserving centralized oversight.",
   "type": "predictive",
   "topics": [
    "defi",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "The disruption through DeFi may be mitigated by existing financial institutions' attempts to leverage decentralized technologies in a controlled environment that allows the utilization of its benefits, such as transparency and interoperability, while also facilitating centralized oversight."
  },
  {
   "id": "kaal:claim:3808859-030",
   "url": "https://wulfkaal.github.io/claims/3808859-030",
   "claim": "Tokenization of assets is the issuance of a digital asset that forms the digital representation of an existing real-world asset, analogous to securitization in that it converts liquid or illiquid real-world assets into tradable digital instruments.",
   "type": "definitional",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "asserted",
   "supporting_quote": "The tokenization of assets refers to the process of issuing a digital asset that forms the digital representation of an existing real-world asset."
  },
  {
   "id": "kaal:claim:3808859-031",
   "url": "https://wulfkaal.github.io/claims/3808859-031",
   "claim": "Tokenizing an existing real-world asset such as fractional real estate cannot be done without a sufficient depth of decentralized infrastructure solutions.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to tokenization of existing real-world assets"
   ],
   "supporting_quote": "Tokenization of existing assets, for instance, tokenized real estate is the instantiation of a fractural part of the respective piece of real estate as a whole, requires a certain depth of decentralized infrastructure solutions."
  },
  {
   "id": "kaal:claim:3808859-032",
   "url": "https://wulfkaal.github.io/claims/3808859-032",
   "claim": "Growth in connected IoT devices is offset by falling consumer confidence, because the sheer number of devices creates unprecedented cyber security exposure and attacks can be launched by unsophisticated parties at minimal cost with maximal potential damage.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "evidenced",
   "scope_conditions": [
    "estimates of 30 to 50 billion connected devices by 2020"
   ],
   "supporting_quote": "The IoT proliferation is offset by diminished consumer confidence. By the year 2020 the majority of experts estimate that a total of 30 to 50 billion devices will connect to the internet."
  },
  {
   "id": "kaal:claim:3808859-033",
   "url": "https://wulfkaal.github.io/claims/3808859-033",
   "claim": "The internet has become a network of vertically and horizontally integrated monopolies whose information silos constrain knowledge exchange, and the resulting lack of competition impedes innovation including at the protocol level while diminishing consumer protection and rights.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "These monopolies create information silos and constrain knowledge exchange. The resulting lack of competition impedes innovation, including at the protocol level and diminished consumer protection and rights."
  },
  {
   "id": "kaal:claim:3808859-034",
   "url": "https://wulfkaal.github.io/claims/3808859-034",
   "claim": "People increasingly substitute trust in machines, algorithms, and code for trust in organizations and procedures, but that reliance may be misplaced because the existing internet was designed for hierarchical societal structures on an authoritative hierarchical trust model carrying serious cyber security vulnerabilities.",
   "type": "failure",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "Peoples' increasing reliance on digitized, coded, and automated replacements of traditional cohesion mechanisms may be misplaced. The existing internet is designed for hierarchical societal structures and with an underlying authoritative and hierarchical trust model."
  },
  {
   "id": "kaal:claim:3808859-035",
   "url": "https://wulfkaal.github.io/claims/3808859-035",
   "claim": "Cloud computing increased connectivity but simultaneously produced monolithic, siloed applications built for a single business, department, or role, and that fragmentation of data and content now impairs collaboration as well as the search, organization, and discovery of content.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "Cloud computing has significantly increased connectivity in society and business but at the same time contributed to the creation of monolithic applications that solve a very specific problem for a specific business / department / role."
  },
  {
   "id": "kaal:claim:3808859-036",
   "url": "https://wulfkaal.github.io/claims/3808859-036",
   "claim": "Cloud computing is the enabling substrate for decentralized solutions rather than their competitor, because it has already established that applications can talk to each other, an integration that decentralized networks will extend.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "scope_conditions": [
    "requires applications to integrate regardless of technological and physical environment"
   ],
   "supporting_quote": "Cloud computing enables future decentralized solutions because it already allows applications to talk to each other."
  },
  {
   "id": "kaal:claim:3808859-037",
   "url": "https://wulfkaal.github.io/claims/3808859-037",
   "claim": "Future peer-to-peer networks will thrive on dissimilarity rather than redundancy: nodes contributing dissimilar resources and capabilities let the network perform tasks no individual peer could perform, and making those capabilities available to all nodes attracts further nodes.",
   "type": "predictive",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "scope_conditions": [
    "contrasted with current nodes that share resources while doing rather similar tasks"
   ],
   "supporting_quote": "future peer-to-peer computing networks will thrive by adding nodes to the network that contribute dissimilar resources and capabilities to the decentralized community of nodes."
  },
  {
   "id": "kaal:claim:3808859-038",
   "url": "https://wulfkaal.github.io/claims/3808859-038",
   "claim": "Decentralization requires its own infrastructure; the technologies of the internet era and its progeny alone may not suffice, and fully decentralized technologies require an enhanced decentralized network infrastructure.",
   "type": "condition",
   "topics": [
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "Decentralization requires its own infrastructure. The technologies of the internet era and its progeny alone may not suffice. Fully decentralized technologies require an enhanced decentralized network infrastructure."
  },
  {
   "id": "kaal:claim:3808859-039",
   "url": "https://wulfkaal.github.io/claims/3808859-039",
   "claim": "A truly decentralized public blockchain must satisfy three simultaneous requirements: no points of centralization and corruption, full security at the level of proof of work, and transaction throughput above one hundred thousand transactions per second.",
   "type": "design",
   "topics": [
    "blockchain",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "asserted",
   "scope_conditions": [
    "stated as the requirement for technological decentralization via blockchain"
   ],
   "supporting_quote": "That is, a public blockchain that is not subject to points of centralization and corruption, that is fully secure at the level of proof of work security with a transaction throughput of over one hundred thousand transactions per seconds."
  },
  {
   "id": "kaal:claim:3808859-040",
   "url": "https://wulfkaal.github.io/claims/3808859-040",
   "claim": "Without basic decentralized infrastructure products in place, on-chain governance of blockchains is not possible or is only limitedly possible, and the blockchain ecosystem may not be able to grow without a core decentralized infrastructure such as a functioning public blockchain to build on.",
   "type": "condition",
   "topics": [
    "governance-design",
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859",
   "year": "2021",
   "source_sha256": "304ad25d43b5ecea3158e3a2ca04e6e1e3bd2958e2134e2dcefbfedf3b6f3ab7",
   "confidence": "argued",
   "supporting_quote": "Without such basic infrastructure products, on-chain governance of blockchains may not be or may only limitedly be possible."
  },
  {
   "id": "kaal:claim:3782216-001",
   "url": "https://wulfkaal.github.io/claims/3782216-001",
   "claim": "The decentralized economy cannot fully proliferate until it acquires the institutions ordinary commerce depends on, above all a secure and meaningful reputation system for anonymous supranational partners and an effective, dynamic governance system.",
   "type": "condition",
   "topics": [
    "defi",
    "decentralization",
    "economics",
    "reputation",
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "the decentralized economy as of the early 2020s"
   ],
   "supporting_quote": "the decentralized economy is missing the major institutions that our society relies on to conduct profitable business, especially a secure and meaningful system for evaluating reputation for anonymous supranational partners, and an effective and dynamic governance system"
  },
  {
   "id": "kaal:claim:3782216-002",
   "url": "https://wulfkaal.github.io/claims/3782216-002",
   "claim": "Because the decentralized economy currently lacks many of the civil institutions available in the larger economy, the average person should not invest anything in the crypto economy.",
   "type": "normative",
   "topics": [
    "defi",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "before decentralized consumer protection institutions exist"
   ],
   "supporting_quote": "Since the de- centralized economy is currently lacking in many of the civil institutions that we enjoy in the larger economy, the average person should not invest anything in the crypto economy."
  },
  {
   "id": "kaal:claim:3782216-003",
   "url": "https://wulfkaal.github.io/claims/3782216-003",
   "claim": "Blockchain transactions will always be expensive compared with other peer to peer transactions, because blockchain data must be stored eternally and redundantly on as many machines as possible to support decentralization.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "Blockchain transactions will always be expensive compared with other P9P trans- actions. Blockchain transactions are required to be stored eternally and redundantly on as many machines as possible to aid decentralization."
  },
  {
   "id": "kaal:claim:3782216-004",
   "url": "https://wulfkaal.github.io/claims/3782216-004",
   "claim": "Decentralized banking addresses blockchain scaling, because the linear structure of a blockchain means that doubling the number of participants and transactions halves its speed.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "decentralization",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "Decentralized banking helps solve a major problem with blockchains called scaling. If you double the number of participants and transactions, the linear nature of the blockchain makes it slow down by half."
  },
  {
   "id": "kaal:claim:3782216-005",
   "url": "https://wulfkaal.github.io/claims/3782216-005",
   "claim": "Bundling transactions with zero knowledge proofs makes the scheme trustless, so users need not trust the bundlers: a malicious bundler cannot steal their data.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "ZK based bundling schemes such as Loopring's"
   ],
   "supporting_quote": "This makes the scheme trustless, meaning it doesn't matter whether you trust the bundlers or not, they can't steal your data."
  },
  {
   "id": "kaal:claim:3782216-006",
   "url": "https://wulfkaal.github.io/claims/3782216-006",
   "claim": "Maintaining consensus without a central authority forces a reputation system to verify members' votes extremely redundantly, which imposes serious computational overhead.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized networks with no central authority"
   ],
   "supporting_quote": "In order to maintain consensus in a decentralized network, with no central authority to check in with, a reputational system needs to verify each others' votes extremely redundantly, which leads to serious overhead costs in computation."
  },
  {
   "id": "kaal:claim:3782216-007",
   "url": "https://wulfkaal.github.io/claims/3782216-007",
   "claim": "The application that decentralized banking improves most is not currency tokens but reputation tokens, because reputation transactions such as voting and resolving validation pools are generated by every meaningful action.",
   "type": "design",
   "topics": [
    "reputation",
    "tokenomics",
    "decentralization",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "The application that banking most improves, however, is not currency tokens, but reputation tokens. Reputation transactions include voting, resolving a validation pool and distributing the results"
  },
  {
   "id": "kaal:claim:3782216-008",
   "url": "https://wulfkaal.github.io/claims/3782216-008",
   "claim": "Liquidity has always been a problem on decentralized exchanges because meaningful history and reputation cannot form where there is little or no governance structure, no insurance, no appeals process and no reputable decentralized news service.",
   "type": "failure",
   "topics": [
    "defi",
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "But liquidity has always been a problem in decentralized exchanges, as meaning- ful history and reputation are difficult to achieve when there is little to no governance structure, no insurance, no appeals process, and no reputable decentralized news ser- vice"
  },
  {
   "id": "kaal:claim:3782216-009",
   "url": "https://wulfkaal.github.io/claims/3782216-009",
   "claim": "Decentralized insurance requires networks of policy writers carrying individual reputations, since efficient underwriting of every type of transaction depends on those reputations.",
   "type": "condition",
   "topics": [
    "decentralization",
    "defi",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "asserted",
   "supporting_quote": "Decentralized insurance requires networks of policy writers with individual rep- utations for efficient underwriting of every type of transaction."
  },
  {
   "id": "kaal:claim:3782216-010",
   "url": "https://wulfkaal.github.io/claims/3782216-010",
   "claim": "Tokenization is meaningless unless the token is underwritten by someone who puts their reputation and ultimately their money on the line to attest that the token validly represents the asset.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "defi",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "Tokenization doesn't mean anything without something to back it up. A token's meaning must be attested by something substantial. It must be underwritten by someone who is putting their reputation—and ultimately their money—on the line to assert the validity of the to- ken."
  },
  {
   "id": "kaal:claim:3782216-011",
   "url": "https://wulfkaal.github.io/claims/3782216-011",
   "claim": "Applying Web3 technology to chit funds replaces the foremen and their commission with smart contracts, which eliminates the risk that a foreman absconds with the fund.",
   "type": "design",
   "topics": [
    "defi",
    "smart-contracts",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "chit fund style rotating savings and lending schemes"
   ],
   "supporting_quote": "First, smart contracts replace the foremen and their d% commission, eliminating the risk of a foreman absconding with the fund."
  },
  {
   "id": "kaal:claim:3782216-012",
   "url": "https://wulfkaal.github.io/claims/3782216-012",
   "claim": "Member default on premia is a major inefficiency in chit funds, with estimates that a large share of subscribers have defaulted at least once recently and a substantial share have defaulted after winning an auction.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "defi",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "evidenced",
   "scope_conditions": [
    "chit fund participants, per the cited study"
   ],
   "supporting_quote": "It's been estimated that Td% of chit fund sub- scribers have defaulted at least once recently and 9e% have defaulted after winning an auction."
  },
  {
   "id": "kaal:claim:3782216-013",
   "url": "https://wulfkaal.github.io/claims/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",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "requires a sufficiently strong reputation system"
   ],
   "supporting_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."
  },
  {
   "id": "kaal:claim:3782216-014",
   "url": "https://wulfkaal.github.io/claims/3782216-014",
   "claim": "Reputation must be grounded to be meaningful, so reputation tokens should be minted only when policy premia enter the group, reputation should dictate power, and fees should be shared through reputation weighted salaries.",
   "type": "design",
   "topics": [
    "reputation",
    "tokenomics",
    "dao",
    "defi",
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "design for an Underwriting DAO"
   ],
   "supporting_quote": "Reputation needs to be grounded to be meaningful, so reputation tokens should only be minted when fees (policy premia) enter the group. Reputation should dictate power in the group. So, reputation should determine how the fees are shared, through reputation-weighted salaries."
  },
  {
   "id": "kaal:claim:3782216-015",
   "url": "https://wulfkaal.github.io/claims/3782216-015",
   "claim": "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.",
   "type": "mechanism",
   "topics": [
    "dao",
    "defi",
    "reputation",
    "tokenomics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "Underwriting DAO that rewards underwriting with newly minted tokens"
   ],
   "supporting_quote": "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."
  },
  {
   "id": "kaal:claim:3782216-016",
   "url": "https://wulfkaal.github.io/claims/3782216-016",
   "claim": "Underwriters encumber reputation tokens against each policy under a preset formula, and if the insured event occurs they lose control of those tokens, which are auctioned to meet the claim, with new tokens minted and sold if the auction falls short.",
   "type": "design",
   "topics": [
    "dao",
    "defi",
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "Underwriting DAO design"
   ],
   "supporting_quote": "In case the insured event were to occur during the life of the policy, the agents who underwrote the policy would lose control of their encumbered tokens, which would be sold at auction to meet the claim."
  },
  {
   "id": "kaal:claim:3782216-017",
   "url": "https://wulfkaal.github.io/claims/3782216-017",
   "claim": "In the Underwriting DAO a breach occurs only when the market values the encumbered reputation tokens at less than the payout, which requires minting additional tokens to meet the claim.",
   "type": "failure",
   "topics": [
    "dao",
    "defi",
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "Underwriting DAO with encumbered reputation tokens"
   ],
   "supporting_quote": "We would consider the need to mint more reputation tokens to meet a policy claim to be a breach. Under what circumstances would a breach occur? It would occur only if the market values the encumbered reputation tokens as less than the payout."
  },
  {
   "id": "kaal:claim:3782216-018",
   "url": "https://wulfkaal.github.io/claims/3782216-018",
   "claim": "From the viewpoint of consumers and regulators, encumbered reputation tokens serve as a substitute for capital, because they derive their value from the DAO's future cash flows.",
   "type": "design",
   "topics": [
    "dao",
    "defi",
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "Underwriting DAO whose tokens are claims on future cash flows"
   ],
   "supporting_quote": "The key point is this: from the viewpoint of consumers and regulators, the encumbered tokens (which as we know derive their value from the DAO's future cash flows) essentially serve as a substitute for capital."
  },
  {
   "id": "kaal:claim:3782216-019",
   "url": "https://wulfkaal.github.io/claims/3782216-019",
   "claim": "Decentralization empowers knowledge at the edge: individuals with fine grained information about their neighbors and community can make better underwriting decisions than a centralized hierarchy can.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "citation-and-knowledge",
    "defi",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "Decentralization empowers knowledge at the edge. Individ- uals with more fine-grained information about their neighbors and community can make better underwriting decisions than a centralized hierarchy can."
  },
  {
   "id": "kaal:claim:3782216-020",
   "url": "https://wulfkaal.github.io/claims/3782216-020",
   "claim": "Concentration of power, especially monopolies or trusts, decreases market liquidity, while decentralization of power improves it.",
   "type": "mechanism",
   "topics": [
    "defi",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "Concentration of power (especially monopolies or trusts) decreases liquidity; decentralization of power improves liquidity."
  },
  {
   "id": "kaal:claim:3782216-021",
   "url": "https://wulfkaal.github.io/claims/3782216-021",
   "claim": "Greater transparency is in tension with more open membership, because larger networks are only achieved when privacy is ensured.",
   "type": "failure",
   "topics": [
    "disclosure",
    "consensus-and-security",
    "institutional-design",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "greater transparency is at odds with more open membership, because larger networks are only achieved when privacy is ensured."
  },
  {
   "id": "kaal:claim:3782216-022",
   "url": "https://wulfkaal.github.io/claims/3782216-022",
   "claim": "The code that constitutes a decentralized exchange can create new risks to market integrity, because automation removes the human backstop in compliance, back office and settlement.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized exchanges"
   ],
   "supporting_quote": "The code may also create new risks to market integrity because of its automation and lack of a human backstop in compliance, back office, and settlement."
  },
  {
   "id": "kaal:claim:3782216-023",
   "url": "https://wulfkaal.github.io/claims/3782216-023",
   "claim": "Decentralized derivatives must be capitalized at least fully because the platform and its anonymous users cannot be trusted, a requirement that would be impossibly onerous in traditional markets and that leaves the market for decentralized options extremely shallow.",
   "type": "failure",
   "topics": [
    "reputation",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized options and derivatives markets at the time of writing"
   ],
   "supporting_quote": "the inability to trust the platform or the anonymous users requires these decentralized derivatives to be capitalized at least c::%, which would be impossibly onerous in traditional markets."
  },
  {
   "id": "kaal:claim:3782216-024",
   "url": "https://wulfkaal.github.io/claims/3782216-024",
   "claim": "The antiregulation fervor that follows from the anarchist and libertarian philosophy of most Web3 developers is damaging the potential for widespread adoption of decentralized peer to peer tools.",
   "type": "failure",
   "topics": [
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "asserted",
   "supporting_quote": "The anarchist and libertarian philosophy that informs most WebT developers' public pronouncements has led to an antiregulation fervor that is damaging the po- tential for widespread adoption of decentralized P9P tools."
  },
  {
   "id": "kaal:claim:3782216-025",
   "url": "https://wulfkaal.github.io/claims/3782216-025",
   "claim": "Centralized securities bureaucracies are slow to update their regulations, so those regulations often hurt the very people they were designed to help.",
   "type": "failure",
   "topics": [
    "securities-law",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "However, these centralized bureaucracies are slow to update their regulations, which means these regulations often hurt the very people they were de- signed to help."
  },
  {
   "id": "kaal:claim:3782216-026",
   "url": "https://wulfkaal.github.io/claims/3782216-026",
   "claim": "It is not possible to create a centralized regulator like the SEC for the decentralized economy, because doing so would place a supranational market under competing jurisdictions with naturally contradictory regulations.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "decentralization",
    "governance-design",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "It is, however, not possible to create a centralized organization, such as the SEC, for regulating the decentralized economy. Submitting to such regulatory power would place the supranational decentralized market under competing jurisdictions which naturally have contradictory regulations."
  },
  {
   "id": "kaal:claim:3782216-027",
   "url": "https://wulfkaal.github.io/claims/3782216-027",
   "claim": "A decentralized economy requires stable cryptocurrencies, because renegotiating contracts every time a currency's value changes is inefficient and continually punishes one of the parties.",
   "type": "condition",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "absent stablecoins"
   ],
   "supporting_quote": "Renegotiating contracts each time the value of a currency changes is inefficient, and continually punishes one of the parties. The economy should not be founded on gambling, so any future decentralized economy requires stable cryptocurrencies."
  },
  {
   "id": "kaal:claim:3782216-028",
   "url": "https://wulfkaal.github.io/claims/3782216-028",
   "claim": "The lesson of the Soros attack is that when a cryptocurrency is pegged above its true market value, the difference must be fully backed by a foreign reserve of collateral, or financiers can profit by breaking the peg.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "pegged currencies, including algorithmic stablecoins"
   ],
   "supporting_quote": "The lesson of the Soros attack, is that if the value of a cryptocurrency is pegged at a value higher than its true market value, the difference must be backed c::% by a foreign reserve of collateral holdings."
  },
  {
   "id": "kaal:claim:3782216-029",
   "url": "https://wulfkaal.github.io/claims/3782216-029",
   "claim": "Maintaining a full reserve is too expensive to be efficient, because every unit of reserve value backing the currency must be held liquid or arbitrage attacks become possible, and liquidity forgoes investment returns.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "fiat collateralized and algorithmic stablecoins"
   ],
   "supporting_quote": "The maintenance of a c::% reserve is too expensive to be efficient, and signals the need for more sophisticated mechanisms. All of the value in the reserve which backs the cryptocurrency needs to be liquid, otherwise arbitrage opportunities, such as the Soros attack, are possible"
  },
  {
   "id": "kaal:claim:3782216-030",
   "url": "https://wulfkaal.github.io/claims/3782216-030",
   "claim": "Cryptocurrency backed stablecoins are even more expensive than fiat backed ones, because stability is being sought with far more unstable collateral.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "crypto collateralized designs such as MakerDAO"
   ],
   "supporting_quote": "Cryptocurrency-backed tokens are even more expensive than fiat backed tokens, because the stability is achieved with much more unstable cryptocurrencies."
  },
  {
   "id": "kaal:claim:3782216-031",
   "url": "https://wulfkaal.github.io/claims/3782216-031",
   "claim": "Contrary to the industry practice of full backing, a full reserve is not always necessary, because a currency also has intrinsic worth derived from the authentic economic activity it represents.",
   "type": "condition",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "currencies with intrinsic worth from authentic transactions"
   ],
   "supporting_quote": "On the contrary, we argue that a c::% reserve is not always necessary, as is the case with any currency which has an intrinsic worth."
  },
  {
   "id": "kaal:claim:3782216-032",
   "url": "https://wulfkaal.github.io/claims/3782216-032",
   "claim": "Determining what fraction of a currency is hot money is necessary for efficiently defending its stability: overestimating the hot money ratio makes the currency costlier to use, and underestimating it makes the currency insecure.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "consensus-and-security",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "Therefore, determining the fraction of a currency that is hot money is necessary for efficient defense of its stability. A currency that overestimates this hot money ratio will cost more to use. A currency that underestimates the ratio will be insecure."
  },
  {
   "id": "kaal:claim:3782216-033",
   "url": "https://wulfkaal.github.io/claims/3782216-033",
   "claim": "Because the tension between efficiency and security demands a careful estimate of the hot money ratio, a sophisticated decentralized governance system is crucial for any efficient stablecoin.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "governance-design",
    "decentralization",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "The tension between these two values of efficiency and security motivates a careful esti- mate of the hot money ratio. This means a sophisticated decentralized governance system is crucial for any efficient stablecoin."
  },
  {
   "id": "kaal:claim:3782216-034",
   "url": "https://wulfkaal.github.io/claims/3782216-034",
   "claim": "Stablecoin collateralization and a robust decentralized economy form a chicken and egg problem: a stablecoin cannot reduce its backing until a robust decentralized economy exists, and that economy cannot be built without an efficient stablecoin.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "while most cryptocurrency use is speculative hot money"
   ],
   "supporting_quote": "We need a robust decen- tralized economy before a stablecoin can reduce its collateralization. We need an ef- ficient and useful stablecoin before we can build a robust decentralized economy. This is another of the many chicken-and-egg problems that hamper the adoption of new systems."
  },
  {
   "id": "kaal:claim:3782216-035",
   "url": "https://wulfkaal.github.io/claims/3782216-035",
   "claim": "Trying to hold a peg at an artificial level deters new adopters and punishes existing members, and is the most likely way to induce a death spiral that collapses a currency; after a fundamental change in the economy the currency should be repegged instead.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "after a fundamental change such as a black swan event"
   ],
   "supporting_quote": "Trying to maintain a peg at an artificial level prevents new members from adopting the currency and punishes members as they need to pay to maintain the artificial valuation. Maintaining the artificial valuation is the most likely way to induce a death spiral which collapses a currency."
  },
  {
   "id": "kaal:claim:3782216-036",
   "url": "https://wulfkaal.github.io/claims/3782216-036",
   "claim": "The inability of anonymous participants to trust one another is crippling the DeFi market and forces decentralized markets into overcollateralization, giving traditional markets a fundamental advantage.",
   "type": "failure",
   "topics": [
    "defi",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "current decentralized markets, before decentralized reputation exists"
   ],
   "supporting_quote": "the inability to trust each other due to the requirements of anonymity is crippling the deFi market. So traditional markets have a fundamental advantage. Decentralized markets are overcollateralized."
  },
  {
   "id": "kaal:claim:3782216-037",
   "url": "https://wulfkaal.github.io/claims/3782216-037",
   "claim": "Once secure and meaningful reputation is incorporated into Web3, the collateral imbalance will reverse, and because reputation tokens are more meaningful than identity and easier to value, less collateralization will be required than in traditional protocols.",
   "type": "predictive",
   "topics": [
    "reputation",
    "tokenomics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "requires a coherent system that securely tracks the value of a reputation token"
   ],
   "supporting_quote": "However, once secure and meaningful reputation is incorporated into the WebT environment, this imbalance will be reversed. Since reputation tokens are more mean- ingful than identity, and much easier to valuate, even less collateralization will be re- quired than traditional protocols"
  },
  {
   "id": "kaal:claim:3782216-038",
   "url": "https://wulfkaal.github.io/claims/3782216-038",
   "claim": "Banning is the only control a centralized nation has over a decentralized network within its borders, and such bans pose no threat to the network's existence.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized networks that have grown past the tipping point"
   ],
   "supporting_quote": "The only way a centralized nation can control a decentralized network within their borders is to ban it completely, like the PRC has for many blockchains. But that will pose no threat to their existence."
  },
  {
   "id": "kaal:claim:3782216-039",
   "url": "https://wulfkaal.github.io/claims/3782216-039",
   "claim": "DeFi will take off only when cryptocurrency is used in authentic transactions such as insurance and equities across broad segments of industry and tokenization of commodities and properties is instituted.",
   "type": "predictive",
   "topics": [
    "defi",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "When will deFi take off? When the economy becomes viable—when cryptocur- rency is used in authentic transactions such as insurance and equities in broad seg- ments of industry and tokenization of commodities and properties is instituted."
  },
  {
   "id": "kaal:claim:3782216-040",
   "url": "https://wulfkaal.github.io/claims/3782216-040",
   "claim": "The decentralized economy still lacks trustworthy open source decentralized institutions for recording and parsing history, reporting news and guiding attention, without which the average person cannot judge which networks to join or what to invest in.",
   "type": "condition",
   "topics": [
    "decentralization",
    "institutional-design",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216",
   "year": "2021",
   "source_sha256": "f1739743aa06bbc1641cd65da790d531b69d8628ea3f5cc3fcad1bf5a1242373",
   "confidence": "argued",
   "supporting_quote": "We need trustworthy open source decentralized institutions for recording and parsing history, for investigating and reporting the news, for guiding our attention to the future."
  },
  {
   "id": "kaal:claim:3782214-001",
   "url": "https://wulfkaal.github.io/claims/3782214-001",
   "claim": "Reputation changes the incentive structure of a decentralized organization from a single stage, zero sum game into a repeated positive sum game, which is why the authors treat reputation as the key to effective decentralized governance.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives",
    "economics",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "the reputation system is formally linked to the organization's profits"
   ],
   "supporting_quote": "Reputation changes the incentive structure from a single-stage, zero-sum game to a repeated positive-sum game."
  },
  {
   "id": "kaal:claim:3782214-002",
   "url": "https://wulfkaal.github.io/claims/3782214-002",
   "claim": "Corruption has arisen in every organizational circumstance in recorded history, including the least extreme case of identified members of a single culture interacting face to face with deep community ties, so governance design cannot assume corruption can be eliminated.",
   "type": "failure",
   "topics": [
    "governance-design",
    "institutional-design",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "asserted",
   "supporting_quote": "Throughout history, however, people have repeatedly failed to organize effectively, and corruption has arisen in every circumstance, even without anonymity, in the less extreme situation involving identified members of the same culture under face-to-face circumstances with deep community ties."
  },
  {
   "id": "kaal:claim:3782214-003",
   "url": "https://wulfkaal.github.io/claims/3782214-003",
   "claim": "Every governance process ever implemented is flawed, and no perfect governance system is possible even under very minimal assumptions such as non dictatorship; the goal must therefore be practical and effective structures rather than perfect ones.",
   "type": "failure",
   "topics": [
    "governance-design",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "assumptions as minimal as non dictatorship"
   ],
   "supporting_quote": "There are flaws with every governance process that has ever been implemented. In fact, it seems clear no perfect governance system is possible under very minimal assumptions, such as non-dictatorship (cf., Chapter a)."
  },
  {
   "id": "kaal:claim:3782214-004",
   "url": "https://wulfkaal.github.io/claims/3782214-004",
   "claim": "Benevolent dictatorship is more efficient and effective than messy democracy in the short run, but centralized governance of that kind threatens the long term stability of a powerful public peer to peer network.",
   "type": "failure",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "large public peer to peer networks",
    "long time horizons"
   ],
   "supporting_quote": "Benevolent dictators are much more efficient and effective than messy democracies, but the long-term stability of a powerful public PCP network is threatened by such centralized governance."
  },
  {
   "id": "kaal:claim:3782214-005",
   "url": "https://wulfkaal.github.io/claims/3782214-005",
   "claim": "No major blockchain is entirely decentralized, because all of them lack binding, coded, anonymous peer to peer governance; on chain and off chain governance experiments to date fall short of that standard.",
   "type": "failure",
   "topics": [
    "governance-design",
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "evidenced",
   "scope_conditions": [
    "as of the time of writing"
   ],
   "supporting_quote": "At the moment, however, no major blockchain is entirely decentral- ized, because they all lack pure binding coded PCP anonymous governance."
  },
  {
   "id": "kaal:claim:3782214-006",
   "url": "https://wulfkaal.github.io/claims/3782214-006",
   "claim": "Declining to adopt explicit or formal rules is itself a governance choice, and it defaults to rule by might; since might in these systems is defined by wealth, the resulting order is oligarchy.",
   "type": "failure",
   "topics": [
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "platforms where power tracks token holdings or computing power"
   ],
   "supporting_quote": "Choosing no explicit or formal rules is still a governance choice. That choice de- faults to the prehistoric rule of might makes right. Since might is defined by wealth, they've chosen oligarchy."
  },
  {
   "id": "kaal:claim:3782214-007",
   "url": "https://wulfkaal.github.io/claims/3782214-007",
   "claim": "The absence of a governance process is especially dangerous for peer to peer platforms precisely because decentralized organizations find it extremely difficult to change their rules once established.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "large decentralized networks with distributed power"
   ],
   "supporting_quote": "The lack of governance is especially dangerous for these PCP platforms, because it is extremely difficult for decentralized organizations to change their rules."
  },
  {
   "id": "kaal:claim:3782214-008",
   "url": "https://wulfkaal.github.io/claims/3782214-008",
   "claim": "Fundamental rule changes in a large decentralized organization are typically demanded when a large minority is treated unfairly, which means the advantaged majority has no incentive to make the change; the resulting deadlock leaves revolution or a network split as the only route to foundational change.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "large decentralized organizations",
    "rules that advantage the majority"
   ],
   "supporting_quote": "When a large decentralized organization needs a fundamental rule change, it of- ten happens because a large minority subgroup is being treated unfairly. That typically means the majority is advantaged by the rules and are therefore not incentivized to change the rules."
  },
  {
   "id": "kaal:claim:3782214-009",
   "url": "https://wulfkaal.github.io/claims/3782214-009",
   "claim": "Because no major peer to peer organization has anything resembling effective decentralized governance, none of them are viable in the long term and all will eventually be displaced by superior clones, though the timing of that displacement cannot be predicted.",
   "type": "predictive",
   "topics": [
    "governance-design",
    "open-source-and-code",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "long time horizon",
    "as of the time of writing"
   ],
   "supporting_quote": "Since no major PCP organization has anything resembling effective decentralized governance, none of them are viable in the long term. They will all eventually be dis- rupted with superior clones."
  },
  {
   "id": "kaal:claim:3782214-010",
   "url": "https://wulfkaal.github.io/claims/3782214-010",
   "claim": "Designing a single consensus algorithm is vastly easier than designing a consensus algorithm that can incorporate all future updates to itself, which explains why immature decentralized systems lack sophisticated governance mechanisms.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "governance-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "asserted",
   "supporting_quote": "Designing a single consensus algorithm is infinitely easier than designing a consensus algorithm that will incorporate all future updates to the consensus algorithm."
  },
  {
   "id": "kaal:claim:3782214-011",
   "url": "https://wulfkaal.github.io/claims/3782214-011",
   "claim": "A decentralized network needs a constitution that separates powers into a legislative system which updates the constitution, an executive system which enforces it, and a judicial system which resolves the disputes that inevitably arise.",
   "type": "design",
   "topics": [
    "dao",
    "governance-design",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "pseudonymous membership across uncertain jurisdictions"
   ],
   "supporting_quote": "We need a constitution which outlines the powers of the legislative, executive, and judicial sys- tems of the decentralized network. The legislative system updates the constitution itself. The executive system enforces the constitution. The judicial system handles in- evitable disputes."
  },
  {
   "id": "kaal:claim:3782214-012",
   "url": "https://wulfkaal.github.io/claims/3782214-012",
   "claim": "The authors stipulate corruption in an organization as any action that benefits a minority at the greater expense of the group, and locate its source in power that is distributed inappropriately as measured by efficiency.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "asserted",
   "supporting_quote": "We broadly define corruption in an organization as any action that benefits a mi- nority at the greater expense of the group. Corruption arises when power is distrib- uted inappropriately as measured by efficiency."
  },
  {
   "id": "kaal:claim:3782214-013",
   "url": "https://wulfkaal.github.io/claims/3782214-013",
   "claim": "Recording every action on a blockchain does not by itself defeat corruption, because more information does not ensure more productive collaboration; members must additionally be motivated to behave correctly and to police corrupt behavior.",
   "type": "failure",
   "topics": [
    "disclosure",
    "risk-and-incentives",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "transparent ledgers without aligned incentives"
   ],
   "supporting_quote": "Just because we can cite every action from a company on a blockchain, however, does not mean we have conquered corruption. More information does not ensure more productive collaboration."
  },
  {
   "id": "kaal:claim:3782214-014",
   "url": "https://wulfkaal.github.io/claims/3782214-014",
   "claim": "When currency is the entire proximal goal of a transaction, all participants naturally behave as selfishly as possible and exploit any opportunity for individual profit at the group's expense, which makes cash profit a bad immediate incentive for both business and government.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous members staking currency on rigid smart contracts"
   ],
   "supporting_quote": "If the entire proximal goal of a transaction is currency, all participants will naturally be- have in the most selfish manner possible, exploiting any opportunity for individual profit at the expense of the group."
  },
  {
   "id": "kaal:claim:3782214-015",
   "url": "https://wulfkaal.github.io/claims/3782214-015",
   "claim": "Rigid code is law smart contracts over fungible currency are built to guarantee irreversible, unreviewable, self executing outcomes, which is a poor match for business because business ventures very rarely proceed exactly as imagined at the outset.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "compliance",
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "contracts involving fungible currency exchange",
    "commercial arrangements with uncertain execution"
   ],
   "supporting_quote": "Further, rigid \"code is law\" smart contracts involving fungible currency exchanges are designed to guarantee irreversible, unreviewable, programmed self-execution. Very rarely does any business venture proceed exactly as imagined from the begin- ning."
  },
  {
   "id": "kaal:claim:3782214-016",
   "url": "https://wulfkaal.github.io/claims/3782214-016",
   "claim": "Rigid code is law contracts must become extremely complex to cover the eventualities of real business situations, and bugs or hacks can never be certainly precluded in any programmable contract.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "open-source-and-code",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "any programmable contract, including those written in secure functional languages"
   ],
   "supporting_quote": "Moreover, rigid \"code is law\" smart contracts will need to be extremely complex to account for the many possible eventualities of practical business situations. The insurmountable reality is that bugs or hacks can never be certainly precluded in any programmable contract."
  },
  {
   "id": "kaal:claim:3782214-017",
   "url": "https://wulfkaal.github.io/claims/3782214-017",
   "claim": "The engineering assumption that such problems can be entirely avoided through perfect system design is naive: exceptions will always exist because business competition always seeks optimal solutions that sit at the limits of the rules.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "competitive commercial environments"
   ],
   "supporting_quote": "The typical engineering attitude is that such problems can be entirely avoided with perfect system design. This is naïve. Exceptions will always exist. Business com- petition always seeks optimal solutions which occur at the limits of the rules of behav- ior."
  },
  {
   "id": "kaal:claim:3782214-018",
   "url": "https://wulfkaal.github.io/claims/3782214-018",
   "claim": "Internal competition for profit creates a natural tendency to centralize power as members differentiate themselves through wins and losses, and this centralizing tendency is an additional destabilizing force on a decentralized organization.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "for profit organizations with internal competition"
   ],
   "supporting_quote": "The internal competition for profit creates the natural tendency to centralize power as the members differentiate themselves with wins and losses. This centralizing tendency is another force further destabilizing the organizations."
  },
  {
   "id": "kaal:claim:3782214-019",
   "url": "https://wulfkaal.github.io/claims/3782214-019",
   "claim": "Groups with decentralized, diverse values require protocol centralization in the form of explicit enforceable rules, because stability depends on the impartial application of law to display fairness, and explicit rules can unite a larger and more diverse membership.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "ideologically diverse membership",
    "groups seeking maximum inclusiveness"
   ],
   "supporting_quote": "Diverse (decentralized) values require protocol centralization (explicit, enforcea- ble rules), because stability requires impartial application of laws to display fairness. Explicit rules can unite a larger group of more diverse members."
  },
  {
   "id": "kaal:claim:3782214-020",
   "url": "https://wulfkaal.github.io/claims/3782214-020",
   "claim": "The very explicit rules that unify a diverse group destabilize it over the longer term, because internal corruption and external change render a fixed rule structure ineffective or inefficient.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "long time horizons",
    "changing market conditions"
   ],
   "supporting_quote": "However, these unifying rules further destabilize the group in the long-term, be- cause of internal corruption and external changes that make the rule structure inef- fective or inefficient."
  },
  {
   "id": "kaal:claim:3782214-021",
   "url": "https://wulfkaal.github.io/claims/3782214-021",
   "claim": "A for profit, open, diverse valued organization run under rigid Rule of Law is maximally unstable, so powerful stabilizing forces must be added to its governance rather than assumed.",
   "type": "condition",
   "topics": [
    "governance-design",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "for profit",
    "open membership",
    "diverse values",
    "rigid explicit rules"
   ],
   "supporting_quote": "This situation of for-profit, open, diverse-valued, rigid Rule of Law run decentral- ized organizations is maximally unstable. Therefore, you must add powerful stabilizing forces to their governance."
  },
  {
   "id": "kaal:claim:3782214-022",
   "url": "https://wulfkaal.github.io/claims/3782214-022",
   "claim": "The main problem with all current peer to peer governance structures is the lack of proper incentivization: participants are not motivated to improve the whole organization over the long term, so they game the system for short term personal profit.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "short term fungible rewards are available"
   ],
   "supporting_quote": "The main problem with all current PCP governance structures (such as they are) is the lack of proper incentivization. In business or in government, all participants need to be motivated to improve the whole organization over the long term."
  },
  {
   "id": "kaal:claim:3782214-023",
   "url": "https://wulfkaal.github.io/claims/3782214-023",
   "claim": "A reputational system formally linked to profits makes members forward thinking and cooperative, counteracting the tendency of competition to separate them, and it also motivates members to self police their own past investments.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "reputation is formally tied to the organization's profit stream"
   ],
   "supporting_quote": "A reputational system that is formally linked to profits makes the members for- ward-thinking and cooperative, to combat the natural tendency of competition to sep- arate members. It also motivates members to self-police their past investments."
  },
  {
   "id": "kaal:claim:3782214-024",
   "url": "https://wulfkaal.github.io/claims/3782214-024",
   "claim": "Reputation can be objectively valued by estimating the probability of future business deals, taking the expected value of that probability, and computing the present value of those deals, which is what makes reputation function as a promise of future rewards.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "economics",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "reputation is tied to a stream of future business opportunities"
   ],
   "supporting_quote": "Reputation gives the promise of future rewards. Reputation can be objectively valued, by estimating the probability of future business deals, taking the expected value of that probability, and calculating the present value of those business deals."
  },
  {
   "id": "kaal:claim:3782214-025",
   "url": "https://wulfkaal.github.io/claims/3782214-025",
   "claim": "No centralized platform such as Amazon or eBay has been able to create meaningful and secure online reputation, because central ownership and control prevent them from giving members the power and incentives needed to police their own reputation.",
   "type": "failure",
   "topics": [
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "centrally owned and controlled platforms"
   ],
   "supporting_quote": "No centralized platform, such as Amazon or eBay, has been able to create mean- ingful and secure online reputation. Because they are centrally owned and controlled they cannot give members the power and incentives they need to police their own reputation,"
  },
  {
   "id": "kaal:claim:3782214-026",
   "url": "https://wulfkaal.github.io/claims/3782214-026",
   "claim": "The alternatives to a reputational system for countering profit driven instability, namely external stabilizing forces such as governmental fiat and rapidly expanding profit opportunities, are inadequate because expansion driven stability lasts only as long as the expansion does.",
   "type": "failure",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "organizations destabilized by profit competition"
   ],
   "supporting_quote": "Alternatives to reputational systems for countering the instability generated by profit competition include external stabilizing forces (such as governmental fiat) or rapidly expanding profit opportunities (which will only stabilize a group until the ex- pansion stops)."
  },
  {
   "id": "kaal:claim:3782214-027",
   "url": "https://wulfkaal.github.io/claims/3782214-027",
   "claim": "The two sources of instability require different remedies and must not be swapped: dynamic rules are a mismatch for instability caused by the profit motive, and a reputational system is not an efficient method for attenuating instability caused by a group's diverse values.",
   "type": "failure",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "asserted",
   "supporting_quote": "Trying to institute dynamic rules to attenuate the instability due to a for-profit motive is a mismatch. Similarly instituting a reputational system is not an efficient method for attenuating the instability due to a group's diverse values."
  },
  {
   "id": "kaal:claim:3782214-028",
   "url": "https://wulfkaal.github.io/claims/3782214-028",
   "claim": "Instability generated by the rigidity of rules is solved by making the rules dynamic, with an appeals process stabilizing short term cooperation at the level of the single contract and legislation handling longer term amendment.",
   "type": "design",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "organizations governed by explicit rigid rules"
   ],
   "supporting_quote": "The instability generated by the rigidity of the rules is solved by making the rules dynamic. Dynamic governance includes short-term and long-term protocols. An ap- peals process stabilizes short-term cooperation (day to day business, single contract)."
  },
  {
   "id": "kaal:claim:3782214-029",
   "url": "https://wulfkaal.github.io/claims/3782214-029",
   "claim": "If unanimous consensus is strongly incentivized in every validation pool, a DAO will degenerate quickly, because members holding minority opinions will not raise alternatives for fear of losing all their reputation tokens; this is why loosely coupled votes are needed.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "contentious protocol development",
    "validation pools that penalize minority positions"
   ],
   "supporting_quote": "If unanimous consen- sus is strongly incentivized by every validation pool, our DAOs will degenerate quickly, as alternative options will not be raised by members with minority opinions for fear they will lose all reputation tokens."
  },
  {
   "id": "kaal:claim:3782214-030",
   "url": "https://wulfkaal.github.io/claims/3782214-030",
   "claim": "Loosely coupled voting, in which staked reputation cannot be lost, encourages dissenting opinions, while tightly coupled voting, in which losing stakes are redistributed, guarantees consensus; a DAO steers deliberation by moving between the two.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "reputation weighted validation pools"
   ],
   "supporting_quote": "Loosely-coupled voting encourages dissenting opinions. Tightly-coupled voting guarantees consensus."
  },
  {
   "id": "kaal:claim:3782214-031",
   "url": "https://wulfkaal.github.io/claims/3782214-031",
   "claim": "Code is law smart contracts deliver a genuine leap in efficiency and clarity through digital self execution, but their supposed self regulation will always ultimately fall short, which is why an appeals capacity is necessary in any business deal.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "any business arrangement executed by self enforcing code"
   ],
   "supporting_quote": "While code-is-law smart con- tracts give a technological leap in efficiency and clarity, with efficient digital self-exe- cution, their supposed self-regulation will always be ultimately lacking."
  },
  {
   "id": "kaal:claim:3782214-032",
   "url": "https://wulfkaal.github.io/claims/3782214-032",
   "claim": "To preserve the efficiency of a self executing code is law smart contract, the appeals process must be built into the code itself, with triggers either party can engage that freeze the encumbered assets and transfer partial powers of disbursement to a third party arbiter.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "self executing smart contracts hosted by a DAO"
   ],
   "supporting_quote": "To maintain the efficiency of the self-executing code-is-law smart contract, the appeals process must be built into the code."
  },
  {
   "id": "kaal:claim:3782214-033",
   "url": "https://wulfkaal.github.io/claims/3782214-033",
   "claim": "Without unifying transcendental ideals, liminal cases will fragment a decentralized network; transcendental values are therefore always necessary to maintain the stability of a network and should be the first thing a DAO establishes.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "novel disputes that fall outside existing hard protocols"
   ],
   "supporting_quote": "Without such unifying ideals, liminal cases will fragment the network. Ultimately, transcendental values are always necessary to maintain the sta- bility of a network, so they are the first thing the DAO should establish."
  },
  {
   "id": "kaal:claim:3782214-034",
   "url": "https://wulfkaal.github.io/claims/3782214-034",
   "claim": "Legitimacy requires members to believe the governance process is binding and will persist, which puts legitimacy directly at odds with a dynamic structure whose rules members know will change; in the presence of that tension stability requires the system to be balanced.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "competitive environments",
    "open and escapable governance systems"
   ],
   "supporting_quote": "Legitimacy is at odds with a a) dynamic structure, since members recognize the process will inevitably change. In the presence of this tension, stability requires the system to be C) balanced."
  },
  {
   "id": "kaal:claim:3782214-035",
   "url": "https://wulfkaal.github.io/claims/3782214-035",
   "claim": "It does not matter what a DAO architect intends, because the resulting rules of the game are what tell players what to value; governance parameters therefore determine the organization's actual values regardless of stated intent.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "systems observed at steady state"
   ],
   "supporting_quote": "it doesn't matter what the architects' intentions are, the resulting rules of the game tell the players what to value."
  },
  {
   "id": "kaal:claim:3782214-036",
   "url": "https://wulfkaal.github.io/claims/3782214-036",
   "claim": "Equal distribution of output, where every member receives an equal share regardless of contribution, is impossible to maintain under current technology in a system with open access and privacy, because sockpuppet accounts would be abused.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "open access membership",
    "privacy or pseudonymity preserved",
    "current identity technology"
   ],
   "supporting_quote": "This is impossible to maintain under the current technology with open access and privacy, since sockpuppet accounts would be abused. Improvements in ZK proofs and identity protocols, however, will soon make it possible to efficiently and securely com- bat such sockpuppet attacks."
  },
  {
   "id": "kaal:claim:3782214-037",
   "url": "https://wulfkaal.github.io/claims/3782214-037",
   "claim": "Without the ability to hold representatives to account, representatives are not incentivized to vote for outcomes reflecting their constituency's wishes and needs, but instead promote agendas that serve their personal interests and preserve their own power.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "modern societies where voters do not know their representatives personally"
   ],
   "supporting_quote": "Without the ability to hold them to account, representatives are not incentivized to vote for outcomes that reflect the presumptive wishes and needs of their larger constituency, but for promoting the agendas which benefit their per- sonal interests and maintaining their own power."
  },
  {
   "id": "kaal:claim:3782214-038",
   "url": "https://wulfkaal.github.io/claims/3782214-038",
   "claim": "Direct democracy failed to reflect the will of the group once villages grew into cities, because the information technology of the spoken word imposes a hard limit on how many people can speak and on the patience and endurance of listeners.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "governance conducted through oral assembly"
   ],
   "supporting_quote": "As villages grew to cities, direct democracy failed to reflect the will of the group. There is a limit to how many people can speak, even at an am- phitheater, because there is a limit to peoples' patience and endurance."
  },
  {
   "id": "kaal:claim:3782214-039",
   "url": "https://wulfkaal.github.io/claims/3782214-039",
   "claim": "Because major social media platforms are privately and centrally owned, their governance processes and reputation distribution algorithms are necessarily opaque, since their users' incentives are not aligned to police reputation against gaming.",
   "type": "failure",
   "topics": [
    "reputation",
    "decentralization",
    "disclosure",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "privately owned centralized platforms",
    "users hold no financial stake in the system"
   ],
   "supporting_quote": "Since Stack Overflow and Reddit and Facebook and Twitter and all the other successful social media sites are privately, centrally owned, their governance processes—their algorithms for distributing reputation—are necessarily opaque."
  },
  {
   "id": "kaal:claim:3782214-040",
   "url": "https://wulfkaal.github.io/claims/3782214-040",
   "claim": "Against Eric Raymond's argument that love does not scale, the authors hold that reputation does: weighted democracy, properly measured and aggregated, can scale from valuing local expertise to valuing expertise on global issues.",
   "type": "normative",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214",
   "year": "2021",
   "source_sha256": "ba892bb200c1455447c0014f5067a501a93ea9ec413c31942d95952eb3bdfd9d",
   "confidence": "argued",
   "scope_conditions": [
    "reputation valuations across DAOs reach equilibrium through market freedom"
   ],
   "supporting_quote": "Love doesn't scale, but reputation does. Weighted democracy, properly meas- ured and aggregated, can scale from valuating expertise on a local level to expertise on global issues."
  },
  {
   "id": "kaal:claim:3782205-001",
   "url": "https://wulfkaal.github.io/claims/3782205-001",
   "claim": "A radically decentralized economy cannot be achieved incrementally: eight institutional problems that centralized business solved centuries ago must all be solved simultaneously, and their solutions must be integrated with one another.",
   "type": "condition",
   "topics": [
    "decentralization",
    "institutional-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "scope_conditions": [
    "applies to a decentralized economy intended to replace centralized institutions"
   ],
   "supporting_quote": "Before the vision of a radically decentralized economy can be achieved, engineers and architects need to solve eight big problems that business solved centuries ago. All eight problems need to be solved simultaneously, and the solutions need to be inte- grated with each other."
  },
  {
   "id": "kaal:claim:3782205-002",
   "url": "https://wulfkaal.github.io/claims/3782205-002",
   "claim": "The electrical revolution took more than a century to mature because uniform standards for production, transmission, storage, and utilization had to be developed first, and decentralization faces the same standards bottleneck.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "scope_conditions": [
    "analogical argument from the history of electrification"
   ],
   "supporting_quote": "This is similar to the electrical revolution that took more than a century to come to fruition, because of the need to develop uniform standards for production, trans- mission, storage, and utilization."
  },
  {
   "id": "kaal:claim:3782205-003",
   "url": "https://wulfkaal.github.io/claims/3782205-003",
   "claim": "Prototypes exist for only two of the eight required institutions, decentralized currency in Bitcoin and distributed computation for smart contracts in Ethereum, and most of the rest are still missing.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "smart-contracts",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "scope_conditions": [
    "state of the field as of 2021"
   ],
   "supporting_quote": "Engineers have managed to prototype two of the solutions: decentralized cur- rency (Bitcoin) and the distributed computing needed to make smart contracts (Ethereum). We're still missing most of them."
  },
  {
   "id": "kaal:claim:3782205-004",
   "url": "https://wulfkaal.github.io/claims/3782205-004",
   "claim": "A DAO will not be a genuinely profitable addition to the economy until decentralized versions of the legal system, the political system, the media, banking, and other services exist to support it.",
   "type": "failure",
   "topics": [
    "dao",
    "institutional-design",
    "law-and-legal-systems",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "scope_conditions": [
    "profit-seeking DAOs competing in the contemporary economy"
   ],
   "supporting_quote": "The legal system, the political system, the media, banking, and other services are all needed before the first DAO will be a genuinely profitable addition to our economy."
  },
  {
   "id": "kaal:claim:3782205-005",
   "url": "https://wulfkaal.github.io/claims/3782205-005",
   "claim": "Decentralizing the power structures of core institutions improves them in both effectiveness and efficiency, because decentralization supplies transparency and liquidity.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "disclosure",
    "defi",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "supporting_quote": "All of these institutions will be improved, in effectiveness and efficiency, due to the benefits of transparency and liquidity provided by decentralizing their power structures."
  },
  {
   "id": "kaal:claim:3782205-006",
   "url": "https://wulfkaal.github.io/claims/3782205-006",
   "claim": "The eight institutions are necessary conditions for business, which grinds to a halt without them, yet when they run well they consume only a tiny fraction of the economy's resources.",
   "type": "condition",
   "topics": [
    "institutional-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "supporting_quote": "These eight institutions are necessary for business. Business grinds to a halt without them, but they require a tiny fraction of the resources in the economy when they are running well."
  },
  {
   "id": "kaal:claim:3782205-007",
   "url": "https://wulfkaal.github.io/claims/3782205-007",
   "claim": "Core institutions are perceived as leaching from the economy only because of corruption, and well designed systems eliminate those economic frictions.",
   "type": "mechanism",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "supporting_quote": "It is only corruption that leads them to be perceived as leaching from the economy. Well-designed systems eliminate those economic fric- tions."
  },
  {
   "id": "kaal:claim:3782205-008",
   "url": "https://wulfkaal.github.io/claims/3782205-008",
   "claim": "Keeping decentralized networks running productively requires a dynamic design with checks and balances combined with the incentive design insights of game theory.",
   "type": "condition",
   "topics": [
    "governance-design",
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to decentralized networks intended to operate over time"
   ],
   "supporting_quote": "A dynamic design with checks and balances and the incentive design insights of game theory are necessary to keep these networks running productively."
  },
  {
   "id": "kaal:claim:3782205-009",
   "url": "https://wulfkaal.github.io/claims/3782205-009",
   "claim": "The governance architecture designed for one decentralized institution can be ported to many other DAOs with only superficial changes, so institutional design effort is reusable across the ecosystem.",
   "type": "design",
   "topics": [
    "dao",
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "supporting_quote": "The archi- tecture guiding one institution can be reasonably ported to many other DAOs with superficial changes."
  },
  {
   "id": "kaal:claim:3782205-010",
   "url": "https://wulfkaal.github.io/claims/3782205-010",
   "claim": "Digital information storage makes decentralization newly viable because every participant can hold the authoritative record of the organization's entire history, removing the need for a central authority over the record.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "supporting_quote": "Digital information storage, which allows each person to be the authoritative holders of the entire organization's history. No centralized authority is needed to be in charge of the record."
  },
  {
   "id": "kaal:claim:3782205-011",
   "url": "https://wulfkaal.github.io/claims/3782205-011",
   "claim": "Networked communication makes complete bureaucratic transparency possible, because every member of an organization can connect immediately with every other member worldwide at speed and low cost.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "supporting_quote": "Networked communication from the internet allows each member of the organi- zation to immediately connect with every other member on the globe. Complete bu- reaucratic transparency is possible as global communication is speedy and affordable."
  },
  {
   "id": "kaal:claim:3782205-012",
   "url": "https://wulfkaal.github.io/claims/3782205-012",
   "claim": "Historically, whenever a healthy decentralized organization began to earn money it quickly devolved into a centralized institution, because its uniting ideals shifted from transcendental value to a desire for money.",
   "type": "failure",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "scope_conditions": [
    "historical decentralized organizations that became profitable"
   ],
   "supporting_quote": "Whenever a healthy decentralized organization in the past began to earn money, it quickly devolved to a centralized institution. Their ideals shifted from the transcen- dental value which originally united them to a desire for money."
  },
  {
   "id": "kaal:claim:3782205-013",
   "url": "https://wulfkaal.github.io/claims/3782205-013",
   "claim": "Once the equalizing ideal that moderates a decentralized organization is lost, competition generated by the profit motive leads inevitably to centralization with rigid rules about who holds power and wealth.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "scope_conditions": [
    "organizations lacking a moderating shared ideal"
   ],
   "supporting_quote": "Without the previous equalizing ideal to moderate, the competition generated by the profit motive led in- evitably to the organization centralizing with rigid rules for who has power and wealth."
  },
  {
   "id": "kaal:claim:3782205-014",
   "url": "https://wulfkaal.github.io/claims/3782205-014",
   "claim": "The largest and most decentralized organizations of the present are non-profits, which is evidence that decentralized organizations have historically struggled to survive economic success.",
   "type": "empirical",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "scope_conditions": [
    "organizational landscape as of 2021"
   ],
   "supporting_quote": "The largest and most decentralized organizations of the present are non-profit (e.g.,"
  },
  {
   "id": "kaal:claim:3782205-015",
   "url": "https://wulfkaal.github.io/claims/3782205-015",
   "claim": "Decentralized organizations can survive economic success, because current digital tools permit secure and efficient accounting of high transaction volumes so that money can be shared appropriately without centralized dictators arbitrating the dispersal of funds.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "scope_conditions": [
    "requires the digital storage, computation, networking, cryptography, and distributed computing tools described"
   ],
   "supporting_quote": "They allow secure and efficient accounting of voluminous transactions that happen in a decentralized network, so that money can be shared appropriately in an organization without resorting to centralized dicta- tors arbitrating the dispersal of funds."
  },
  {
   "id": "kaal:claim:3782205-016",
   "url": "https://wulfkaal.github.io/claims/3782205-016",
   "claim": "If an organization's goal is to maintain decentralization, its tools must be used deliberately to prevent the natural concentration of power that occurs when economic inefficiencies create pockets of corruption where rent-seeking actors accumulate.",
   "type": "condition",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "scope_conditions": [
    "assumes maintaining decentralization is the organization's goal"
   ],
   "supporting_quote": "If, however, the goal of the organization is to maintain decentralization (assuming that is preferable), then these tools must be used wisely to prevent the natural concentration of power that occurs when inefficiencies in the economy allow pockets of corruption to accumulate rent-seeking actors."
  },
  {
   "id": "kaal:claim:3782205-017",
   "url": "https://wulfkaal.github.io/claims/3782205-017",
   "claim": "No profit-seeking decentralized organization can succeed against centralized competitors in the contemporary marketplace until all eight institutional problems are solved at once.",
   "type": "failure",
   "topics": [
    "dao",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "scope_conditions": [
    "profit-oriented decentralized organizations in the contemporary marketplace"
   ],
   "supporting_quote": "Finally, no decentralized organization devoted to profit can be successful in the contemporary marketplace against centralized organizations until eight big problems are solved, all at once."
  },
  {
   "id": "kaal:claim:3782205-018",
   "url": "https://wulfkaal.github.io/claims/3782205-018",
   "claim": "Bitcoin proved that a decentralized digital representation of value is possible, but it is not efficient enough for wide use because the rest of a decentralized economic environment does not yet exist around it.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "scope_conditions": [
    "Bitcoin as a proof of concept lacking a surrounding decentralized economy"
   ],
   "supporting_quote": "Bitcoin proved it was possible to create a decentralized digital representation of value. Because this proof of concept technology doesn't have the rest of a decentralized eco- nomic environment to exist in, it is not efficient enough to use widely."
  },
  {
   "id": "kaal:claim:3782205-019",
   "url": "https://wulfkaal.github.io/claims/3782205-019",
   "claim": "The executive policing functions of business and government should be automated through smart contracts in order to prevent corruption.",
   "type": "design",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "supporting_quote": "The executive policing functions of our business and government should be auto- mated to prevent corruption."
  },
  {
   "id": "kaal:claim:3782205-020",
   "url": "https://wulfkaal.github.io/claims/3782205-020",
   "claim": "Ethereum will not be efficient until it operates inside a robust decentralized economy, and it will not last at all unless its governance is fixed.",
   "type": "failure",
   "topics": [
    "governance-design",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to Ethereum specifically"
   ],
   "supporting_quote": "Like Bitcoin, it won't be efficient until it lives in a robust decentralized economy. It won't last unless its gov- ernance is fixed."
  },
  {
   "id": "kaal:claim:3782205-021",
   "url": "https://wulfkaal.github.io/claims/3782205-021",
   "claim": "Reputation rather than money is the proper motivator of good behavior in business and governance, because properly accounting for reputation switches incentives from short-term zero-sum thinking to long-term positive-sum behavior.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "scope_conditions": [
    "requires a secure and meaningful system for accounting reputation"
   ],
   "supporting_quote": "This is the proper goal, instead of money, for motivating good behavior in business and governance. Properly accounting for reputation switches the incentives from short-term zero-sum thinking to long-term positive-sum behavior."
  },
  {
   "id": "kaal:claim:3782205-022",
   "url": "https://wulfkaal.github.io/claims/3782205-022",
   "claim": "Without a secure and meaningful reputation system, none of the other aspects of the decentralized economy will be effective, which makes reputation a precondition for the rest.",
   "type": "condition",
   "topics": [
    "reputation",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "supporting_quote": "Without building a secure and meaningful reputational system, none of the other aspects of the decen- tralized economy will be effective."
  },
  {
   "id": "kaal:claim:3782205-023",
   "url": "https://wulfkaal.github.io/claims/3782205-023",
   "claim": "Decentralized power regulation has been a conscious goal for centuries, but only now has technology improved enough to account for good and bad behavior on a near infinitesimal scale and to reward and punish fairly.",
   "type": "empirical",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "scope_conditions": [
    "depends on contemporary measurement and accounting technology"
   ],
   "supporting_quote": "Decentralized power regulation has been a conscious goal since the FGth century. To- day the technology has improved, so that it is possible to account for good and bad behavior on a near infinitesimal scale and reward and punish fairly."
  },
  {
   "id": "kaal:claim:3782205-024",
   "url": "https://wulfkaal.github.io/claims/3782205-024",
   "claim": "A sophisticated governance system is required for a decentralized organization to adjust effectively to market changes and to maintain stability.",
   "type": "condition",
   "topics": [
    "governance-design",
    "economics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "supporting_quote": "A sophisticated system of governance is required to effectively adjust to market changes and to main- tain stability."
  },
  {
   "id": "kaal:claim:3782205-025",
   "url": "https://wulfkaal.github.io/claims/3782205-025",
   "claim": "Decentralized governance design must address all three branches: executive governance as automated policing, legislative governance as non-automated protocol development, and judicial governance as both automated and non-automated dispute resolution.",
   "type": "design",
   "topics": [
    "governance-design",
    "systemic-risk",
    "law-and-legal-systems",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "supporting_quote": "Executive (automated policing), legislative (non-automated protocol de- velopment), and judicial (both automated and non-automated dispute resolution) governance must be considered."
  },
  {
   "id": "kaal:claim:3782205-026",
   "url": "https://wulfkaal.github.io/claims/3782205-026",
   "claim": "Reputation and governance are the two most important institutions missing from the decentralized economy, and once they are solved the remaining missing pieces are relatively easy to supply.",
   "type": "design",
   "topics": [
    "reputation",
    "governance-design",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "supporting_quote": "Reputation and governance are the two most important institutions that are lack- ing in the decentralized economy. They occupy the majority of our concern for the remainder of the book. Once they are solved, the rest of the missing pieces are rela- tively easy to supply."
  },
  {
   "id": "kaal:claim:3782205-027",
   "url": "https://wulfkaal.github.io/claims/3782205-027",
   "claim": "An artificially scarce currency such as bitcoin is deflationary as long as its market expands, and like gold its price fluctuation makes it unsuitable for daily commerce.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "scope_conditions": [
    "holds while the currency's market is expanding"
   ],
   "supporting_quote": "The artificially scarce bitcoin currency is deflationary as long as its market expands. Like gold, its fluctuation makes it unsuitable for daily commerce."
  },
  {
   "id": "kaal:claim:3782205-028",
   "url": "https://wulfkaal.github.io/claims/3782205-028",
   "claim": "Without price stability, typical consumers will never hold their checking account in a cryptocurrency and no one will enter a long-term contract for an essential service denominated in it.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "scope_conditions": [
    "volatile, non-stabilized cryptocurrencies"
   ],
   "supporting_quote": "Without stability, typical consumers will never hold their checking account in the currency. No one will make a long-term con- tract for an essential service."
  },
  {
   "id": "kaal:claim:3782205-029",
   "url": "https://wulfkaal.github.io/claims/3782205-029",
   "claim": "Renegotiating contracts every time the currency's value changes is expensive and continually and randomly punishes at least one of the contracting parties.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "scope_conditions": [
    "contracts denominated in a fluctuating currency"
   ],
   "supporting_quote": "Renegotiating contracts whenever the currency changes is expensive, and continually and randomly punishes at least one of the parties."
  },
  {
   "id": "kaal:claim:3782205-030",
   "url": "https://wulfkaal.github.io/claims/3782205-030",
   "claim": "The stablecoin cannot be efficient until a robust decentralized economy already exists, producing a chicken and egg problem in which the required institutions presuppose one another.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "supporting_quote": "We need a robust decentralized economy (#W, below) before the stablecoin can be efficient—another chicken and egg problem."
  },
  {
   "id": "kaal:claim:3782205-031",
   "url": "https://wulfkaal.github.io/claims/3782205-031",
   "claim": "Banking performs the necessary function of absorbing the risk of less secure but more efficient small transactions, which are then bundled before a more expensive but secure transaction is made with the central bank.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "supporting_quote": "Banking: provides a necessary service to absorb the risk of less secure but more effi- cient small transactions. These are then bundled before a more expensive but secure transaction happens with the central bank."
  },
  {
   "id": "kaal:claim:3782205-032",
   "url": "https://wulfkaal.github.io/claims/3782205-032",
   "claim": "In peer to peer systems the redundant and eternal storage of the blockchain takes the place of the central bank.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "scope_conditions": [
    "peer to peer decentralized settlement"
   ],
   "supporting_quote": "In P]P, the redundant and eternal storage of the blockchain takes the place of the central bank."
  },
  {
   "id": "kaal:claim:3782205-033",
   "url": "https://wulfkaal.github.io/claims/3782205-033",
   "claim": "Every type of economic action becomes more efficient when decisions are hedged, because hedging lets participants confidently change investments and keeps the market liquid, and lending and insurance therefore require someone to underwrite the risk.",
   "type": "mechanism",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "supporting_quote": "Every type of economic action is made more efficient when decisions are hedged, so we can confidently change our investments, keeping the market liquid. Lending and insurance are essential catalysts for business, that require someone to underwrite the risk."
  },
  {
   "id": "kaal:claim:3782205-034",
   "url": "https://wulfkaal.github.io/claims/3782205-034",
   "claim": "Underwriting, like policing, can be decentralized and automated, which gives each network member the power to choose the level of security they require.",
   "type": "design",
   "topics": [
    "defi",
    "decentralization",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "supporting_quote": "can be decentralized and automated, giving each member the power to control the level of security they require."
  },
  {
   "id": "kaal:claim:3782205-035",
   "url": "https://wulfkaal.github.io/claims/3782205-035",
   "claim": "A fully decentralized structure with proper governance could solve the abuses that pervade the gig economy.",
   "type": "predictive",
   "topics": [
    "economics",
    "governance-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "speculative",
   "scope_conditions": [
    "requires proper governance design"
   ],
   "supporting_quote": "The gig economy is rife with horror stories, but a fully decentralized structure with proper governance could solve such problems."
  },
  {
   "id": "kaal:claim:3782205-036",
   "url": "https://wulfkaal.github.io/claims/3782205-036",
   "claim": "News services acting as oracles and information repositories must themselves be decentralized if the decentralized economy is to have a trustworthy information layer.",
   "type": "design",
   "topics": [
    "smart-contracts",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "asserted",
   "supporting_quote": "News services (oracles) and information repositories need to be decentralized."
  },
  {
   "id": "kaal:claim:3782205-037",
   "url": "https://wulfkaal.github.io/claims/3782205-037",
   "claim": "DAOs derive their unity from ideals and aspirations that lie beyond their protocols, making strong unifying transcendental values the most important requirement for long-term coherence and stability.",
   "type": "condition",
   "topics": [
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205",
   "year": "2021",
   "source_sha256": "5ba52c63e81019b6867fb29c4a50821ff574e510d79b31b8ce9f4c726a0ebc71",
   "confidence": "argued",
   "scope_conditions": [
    "long-term survival of decentralized institutions"
   ],
   "supporting_quote": "DAOs derive unity from their ideals, their common goals and aspirations beyond the protocols. This final requirement is the most important for long-term stability, and will require eternal reevaluation. Decentralized institutions require strong unifying values to remain coherent."
  },
  {
   "id": "kaal:claim:3782201-001",
   "url": "https://wulfkaal.github.io/claims/3782201-001",
   "claim": "Contrary to criticism that blockchains are designed to dodge regulation, the authors argue the actual goal of decentralized supply chain recording is effective, efficient, adaptive regulation that ultimately exceeds the current level of oversight.",
   "type": "normative",
   "topics": [
    "blockchain",
    "dynamic-regulation",
    "disclosure",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "Contrary to the criticisms that have been lobbed against blockchains as being designed to dodge regulation, the actual goal is to ensure effective, efficient, adaptive regulation in a truly decentralized manner, ul- timately exceeding the current level of oversight."
  },
  {
   "id": "kaal:claim:3782201-002",
   "url": "https://wulfkaal.github.io/claims/3782201-002",
   "claim": "Effective decentralized DAO governance necessitates reputation verification systems.",
   "type": "condition",
   "topics": [
    "dao",
    "governance-design",
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "asserted",
   "supporting_quote": "We believe that effective decentralized DAO governance necessitates reputation verification systems."
  },
  {
   "id": "kaal:claim:3782201-003",
   "url": "https://wulfkaal.github.io/claims/3782201-003",
   "claim": "A DAO that is internally well governed by a reputation verification engine lets other entities clone its governance for their own purposes and run with the same governance metrics, so mastery of internal decentralization becomes transplantable infrastructure governance.",
   "type": "mechanism",
   "topics": [
    "dao",
    "governance-design",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "applies to IoT infrastructure entities seeking governance and interoperability"
   ],
   "supporting_quote": "DAOs that are internally well-governed by a reputation verification engine allow other IoT infrastructure entities to simply clone the DAO governance for their own purposes and run a DAO with the same gov- ernance metrics."
  },
  {
   "id": "kaal:claim:3782201-004",
   "url": "https://wulfkaal.github.io/claims/3782201-004",
   "claim": "Self policing is more effective when the members themselves hold the power, because a centralized hierarchy in which each member holds distinct powers and responsibilities is more prone to structural corruption.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "where members hold the best domain knowledge about their own processes"
   ],
   "supporting_quote": "The power of decentralization is individual autonomy. Self-policing their own members is more effective when the members have the power, unlike a centralized hierarchy which is more prone to structural corruption when each member holds distinct powers and responsibilities."
  },
  {
   "id": "kaal:claim:3782201-005",
   "url": "https://wulfkaal.github.io/claims/3782201-005",
   "claim": "Because algorithmic automation guides societal outcomes, it benefits some groups over others whether or not its owners and developers intentionally manipulate those outcomes, which makes centralized ownership and control of algorithmic automation an important societal issue.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "Algorithmic automation guides societal outcomes and therefore it benefits some groups over others—whether or not its owners and developers intentionally manipulate these outcomes. Central- ized ownership and control of algorithmic automation is an important issue for soci- ety."
  },
  {
   "id": "kaal:claim:3782201-006",
   "url": "https://wulfkaal.github.io/claims/3782201-006",
   "claim": "Taken to the extreme, centralized control of algorithmic automation could negate human input in data systems where those systems are designed to ignore individual choice in favor of the goals of the platform owners.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "only where systems are designed to prefer platform owners' goals over individual choice"
   ],
   "supporting_quote": "Taken to the extreme, centralized control of algorithmic automation could negate human input in data systems if the systems are designed to ignore individual choice, in preference to the goals of the platforms' owners."
  },
  {
   "id": "kaal:claim:3782201-007",
   "url": "https://wulfkaal.github.io/claims/3782201-007",
   "claim": "Code based trust in decentralized applications lowers transaction costs and simultaneously raises consumer and market confidence and certainty, which facilitates economies of scale that are only occasionally and temporarily possible in centralized structures.",
   "type": "mechanism",
   "topics": [
    "economics",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "holds despite the cybersecurity issues associated with cryptocurrencies"
   ],
   "supporting_quote": "code-based trust can help lower trans- action costs, but it also increases consumer and overall market confidence and cer- tainty, which facilitate economies of scale that are only occasionally and temporarily possible in centralized structures."
  },
  {
   "id": "kaal:claim:3782201-008",
   "url": "https://wulfkaal.github.io/claims/3782201-008",
   "claim": "Blockchain based guarantees remove agency costs because principals become less essential for monitoring agents, which addresses the inherent agency problems in modern finance and corporate governance.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "governance-design",
    "smart-contracts",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "where contracts execute only when all parameters are fulfilled and verified by a majority of miners or nodes"
   ],
   "supporting_quote": "Blockchain-based guarantees remove agency costs because principals are less essen- tial for monitoring agents, which addresses the inherent agency problems in modern finance and corporate governance."
  },
  {
   "id": "kaal:claim:3782201-009",
   "url": "https://wulfkaal.github.io/claims/3782201-009",
   "claim": "Keeping a decentralized organization aligned in pursuit of its goals requires providing something more valuable than money, namely reputation, following the Maghribi traders' example.",
   "type": "condition",
   "topics": [
    "reputation",
    "risk-and-incentives",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "politically decentralized networks devoted to profit"
   ],
   "supporting_quote": "In order to keep a decentralized organization aligned in the pursuit of their goals, you must provide something more valuable than money: reputation."
  },
  {
   "id": "kaal:claim:3782201-010",
   "url": "https://wulfkaal.github.io/claims/3782201-010",
   "claim": "Centralized authorities have a long record of using crises to justify the introduction of monitoring tools that outlast their original purpose.",
   "type": "empirical",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "evidenced",
   "supporting_quote": "centralized authorities have a long rec- ord of using crises to justify the introduction of monitoring tools that outlast their original purpose."
  },
  {
   "id": "kaal:claim:3782201-011",
   "url": "https://wulfkaal.github.io/claims/3782201-011",
   "claim": "Centralized and opaque reputation systems such as China's Social Credit System are unstable in the long run and particularly dangerous, because their computerized bureaucracy makes them inherently rigid and their early successes make them progressively more brittle.",
   "type": "failure",
   "topics": [
    "decentralization",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "centralized and opaque systems administered by computerized bureaucracy"
   ],
   "supporting_quote": "Centralized and opaque systems like the SCS are unstable in the long run. They are particularly dangerous, because their computerized bureaucracy makes them in- herently rigid. Their early successes will make them more and more brittle."
  },
  {
   "id": "kaal:claim:3782201-012",
   "url": "https://wulfkaal.github.io/claims/3782201-012",
   "claim": "Suggestions that artificial intelligence will solve the rigidity of centralized reputation systems are misguided and will fail for the same reason, because neural networks are merely a complex mathematical architecture for statistical regression, which is always extremely unreliable when applied to novel situations.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "where new social situations continually arise that lie outside the training distribution"
   ],
   "supporting_quote": "Suggestions that AI will solve these problems are misguided, and will fail for the same reason. Neural networks are merely a complex mathematical ar- chitecture for performing statistical regression, which is always extremely unreliable when applied to novel situations."
  },
  {
   "id": "kaal:claim:3782201-013",
   "url": "https://wulfkaal.github.io/claims/3782201-013",
   "claim": "An open source design is necessary to run any program in a peer to peer environment, because decentralization means the source code must be shared by all if it is not controlled centrally.",
   "type": "condition",
   "topics": [
    "open-source-and-code",
    "disclosure",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "peer to peer environments with decentralized governance"
   ],
   "supporting_quote": "An open source design is necessary to run any program in a PRP environment, because decentralization means the source code needs to be shared by all if it isn't controlled centrally."
  },
  {
   "id": "kaal:claim:3782201-014",
   "url": "https://wulfkaal.github.io/claims/3782201-014",
   "claim": "The democracy and transparency achieved by the founders of current institutions has been subverted by the natural concentration of power that evolves under competition, leaving hierarchies ossified and likely too brittle to adopt processes derived from radically different information technologies.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "legacy institutions whose legal constitutions predate modern information processing"
   ],
   "supporting_quote": "The hierarchies have ossified. They are likely too brittle now, to adopt processes that come from such radically different in- formation technologies. Changes are likely to be seen as a threat to power and re- sisted."
  },
  {
   "id": "kaal:claim:3782201-015",
   "url": "https://wulfkaal.github.io/claims/3782201-015",
   "claim": "The fallacy of uniformitarianism is the belief that the social harmony we enjoy today, especially in economically advanced nations, is natural and automatic rather than the product of cultural and public institutions.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "The fallacy of uniformitarianism is to believe that the social harmony we enjoy today, especially in economically advanced nations, is natural and automatic."
  },
  {
   "id": "kaal:claim:3782201-016",
   "url": "https://wulfkaal.github.io/claims/3782201-016",
   "claim": "Middlemen such as police, lawyers, and insurance salesmen are the catalysts that exist to overcome the friction of economic corruption, and engineers who eliminate them mistake the catalyst for the friction.",
   "type": "mechanism",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "Middlemen are the catalysts that exist to overcome the friction of economic cor- ruption. Police, lawyers, and insurance salesmen eliminate threats to business activity from different angles."
  },
  {
   "id": "kaal:claim:3782201-017",
   "url": "https://wulfkaal.github.io/claims/3782201-017",
   "claim": "Human middlemen have an incentive not to entirely eliminate the corruption they are paid to overcome, which is one reason they become falsely identified with the friction itself.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "These middlemen are paid to overcome these corruptions and frictions. Unfortunately, they have an incentive to not entirely eliminate the corrup- tion."
  },
  {
   "id": "kaal:claim:3782201-018",
   "url": "https://wulfkaal.github.io/claims/3782201-018",
   "claim": "Removing the middlemen who serve as business catalysts would kill the economy: liquidity would dry up because after a few people unfairly lose on business deals, no one will take the risk of initiating one.",
   "type": "failure",
   "topics": [
    "defi",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "where no automated substitute performs the catalyst function"
   ],
   "supporting_quote": "Remove the middlemen business catalysts and the economy will soon die. Liquid- ity will dry up. A few people will unfairly lose on business deals, then no one will take the risk to initiate a business deal."
  },
  {
   "id": "kaal:claim:3782201-019",
   "url": "https://wulfkaal.github.io/claims/3782201-019",
   "claim": "The correct goal is not to eliminate the middlemen but to automate them, because unlike human middlemen automated middlemen can be designed so that they do not contribute to the corruption they were built to fight.",
   "type": "design",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "Automating these middlemen functions makes them more efficient, like the chemical catalysts in a cell. Unlike human middlemen, automated middlemen can be designed so that they don't contribute to the corruption they were designed to fight."
  },
  {
   "id": "kaal:claim:3782201-020",
   "url": "https://wulfkaal.github.io/claims/3782201-020",
   "claim": "Bitcoin demonstrates the power of decentralized cooperation and transparency: after a decade without centralized oversight, no network transaction has sent the wrong quantity or gone to the wrong account and no bug has produced an accounting error in a system worth hundreds of billions of dollars.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "decentralization",
    "law-and-legal-systems",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to the network protocol itself, not to the centralized service organizations built on it, from which billions have been stolen"
   ],
   "supporting_quote": "No digital token has ever disappeared or was mistakenly duplicated. Not a single bug has been found to create any type of accounting error in a system worth hundreds of billions of dollars."
  },
  {
   "id": "kaal:claim:3782201-021",
   "url": "https://wulfkaal.github.io/claims/3782201-021",
   "claim": "Despite billions of dollars of investment, radically decentralized tools including bitcoin currency, Ethereum smart contracts, and the InterPlanetary File System have not pervaded the mainstream economy.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "asserted",
   "scope_conditions": [
    "as of the first decade after Bitcoin's invention"
   ],
   "supporting_quote": "These radically decentralized tools have not pervaded the mainstream economy despite billions of dollars in investment."
  },
  {
   "id": "kaal:claim:3782201-022",
   "url": "https://wulfkaal.github.io/claims/3782201-022",
   "claim": "The killer app for the decentralized economy is the DAO, a company governed autonomously by smart contracts and organized without any single permanent governing authority or concentrated ownership, whose existence would justify the other decentralized overhead tools.",
   "type": "predictive",
   "topics": [
    "dao",
    "decentralization",
    "economics",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "We are still waiting for a single application, a killer app for WebZ. What will be the killer app for the decentralized economy? The answer is a DAO."
  },
  {
   "id": "kaal:claim:3782201-023",
   "url": "https://wulfkaal.github.io/claims/3782201-023",
   "claim": "The re entrancy programming bug was not the 2016 DAO's most serious problem; the system would eventually have failed more spectacularly because it was designed poorly on other levels.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "But that technical design flaw was not its most serious problem. The system would have eventually failed more spectacularly, because it was designed poorly on other levels."
  },
  {
   "id": "kaal:claim:3782201-024",
   "url": "https://wulfkaal.github.io/claims/3782201-024",
   "claim": "Because voting power in the 2016 DAO could be purchased, the exact cost of destroying it was calculable, and had it lasted longer than a month someone would eventually have amassed the money to arbitrage its trivial governance structure.",
   "type": "failure",
   "topics": [
    "governance-design",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "governance systems in which voting power is purchasable"
   ],
   "supporting_quote": "Voting power could be purchased, so we know precisely how much money it would cost to destroy the RWOQ DAO. If it were more successful, and lasted longer than a month, someone would have eventually amassed the money to arbitrage the trivial governance structure."
  },
  {
   "id": "kaal:claim:3782201-025",
   "url": "https://wulfkaal.github.io/claims/3782201-025",
   "claim": "New DAO proposals appear almost quarterly in the 2020s and most fail because of a lack of decentralized governance solutions.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "asserted",
   "supporting_quote": "New DAO proposals appear almost quarterly in the RWRWs. Most fail because of a lack of decentralized governance solutions."
  },
  {
   "id": "kaal:claim:3782201-026",
   "url": "https://wulfkaal.github.io/claims/3782201-026",
   "claim": "Aragon's refusal to use its own protocol to arbitrate an internal dispute is testimony to the lack of trust its own system designers place in their system's capabilities, and its reputation and legislative and judicial governance protocols remain trivial.",
   "type": "empirical",
   "topics": [
    "dao",
    "governance-design",
    "systemic-risk",
    "law-and-legal-systems",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "evidenced",
   "supporting_quote": "In RWRW, Aragon declined to use their own protocol to arbitrate an internal dispute, which is testimony to the lack of trust of their system designers in their own system capabilities."
  },
  {
   "id": "kaal:claim:3782201-027",
   "url": "https://wulfkaal.github.io/claims/3782201-027",
   "claim": "Because DAO performance assessment is based on optimizing fungible token value rather than on hierarchical or political processes, the focus on token value enhancement can lead to short termism and may cause ethical and governance issues to be ignored.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "risk-and-incentives",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "DAO designs inheriting the path dependencies of the 2016 DAO",
    "fungible token based membership"
   ],
   "supporting_quote": "Yet, the focus on the value en- hancement of fungible tokens can lead to short-termism and may ignore ethical and governance issues."
  },
  {
   "id": "kaal:claim:3782201-028",
   "url": "https://wulfkaal.github.io/claims/3782201-028",
   "claim": "Path dependencies are a major obstacle to decentralizing institutions and businesses, because humans have psychological inertia and cling to familiar systems, especially those that have given them comfort in the past.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "Path dependencies create a major obstacle to decentralizing our institutions and businesses. Humans have psychological inertia, and cling to any familiar system, but especially those that have given them comfort in the past."
  },
  {
   "id": "kaal:claim:3782201-029",
   "url": "https://wulfkaal.github.io/claims/3782201-029",
   "claim": "Regulatory approaches of the early 2020s largely undermined the evolution of decentralized technology, because decentralized solutions at their core negate external control, censorship, and oversight while the legal initiatives treated government control as indispensable.",
   "type": "failure",
   "topics": [
    "securities-law",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "United States regulatory initiatives of the early 2020s focused on securities tokens"
   ],
   "supporting_quote": "Yet, decentralized technology solutions, at their core, negate external control, censorship, and oversight. Accordingly, the then-proposed approaches largely under- mined the evolution of decentralized technology."
  },
  {
   "id": "kaal:claim:3782201-030",
   "url": "https://wulfkaal.github.io/claims/3782201-030",
   "claim": "The more decentralized products are, meaning more censorship resistant, autonomous, and beyond regulatory control, the more they are left in a regulatory vacuum, and the resulting legal uncertainty limits their expansion, reach, and evolution.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "law-and-legal-systems",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "people coins as distinct from government coins and corporate coins"
   ],
   "supporting_quote": "As a result, the more decen- tralized products that are more censorship resistant, autonomous, and cannot be con- trolled by regulatory agencies, are largely left in a regulatory vacuum. The associated legal uncertainty limits their expansion, reach, and evolution."
  },
  {
   "id": "kaal:claim:3782201-031",
   "url": "https://wulfkaal.github.io/claims/3782201-031",
   "claim": "Centralized company formation is supported by an enormous infrastructure amounting to all of civilization, so the entire environment of the decentralized economy must be built before it can support its first truly successful DAO.",
   "type": "condition",
   "topics": [
    "dao",
    "institutional-design",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "The entire environment of the decentral- ized economy needs to be built before it can support its first truly successful DAO."
  },
  {
   "id": "kaal:claim:3782201-032",
   "url": "https://wulfkaal.github.io/claims/3782201-032",
   "claim": "Geographical monopolies over traffic control create information silos and constrain knowledge exchange, and the resulting lack of competition and cooperation impedes innovation, including at the protocol level, while diminishing consumer protection and rights.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "These monopolies cre- ate information silos and constrain knowledge exchange. The resulting lack of compe- tition and cooperation impedes innovation, including at the protocol level and dimin- ished consumer protection and rights."
  },
  {
   "id": "kaal:claim:3782201-033",
   "url": "https://wulfkaal.github.io/claims/3782201-033",
   "claim": "Instead of building compatible technologies in the service of interoperability, most crypto projects compete with each other, contradicting the open source culture the space needs if it has any hope of thriving.",
   "type": "failure",
   "topics": [
    "open-source-and-code",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "driven by the strong libertarian focus of influential Web3 developers"
   ],
   "supporting_quote": "Instead of building compatible tech- nologies in the service of interoperability, most are competing with each other, con- tradicting the open source culture that should pervade the space if it has any hope of thriving."
  },
  {
   "id": "kaal:claim:3782201-034",
   "url": "https://wulfkaal.github.io/claims/3782201-034",
   "claim": "Unless the Web3 vision builds at least the features and social advantages of the current political and legal systems into its economy, the decentralized economy will merely be a parasite on the dying host of the traditional mainstream economy, and once the host dies today's social advantages will be lost.",
   "type": "failure",
   "topics": [
    "decentralization",
    "economics",
    "institutional-design",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "if the contemporary political system does not itself incorporate the new information technology advances"
   ],
   "supporting_quote": "Otherwise the decentralized economy will merely be a parasite on the dying host that is the traditional mainstream economy; in that case, once the host is dead, the social advantages we enjoy today will be lost."
  },
  {
   "id": "kaal:claim:3782201-035",
   "url": "https://wulfkaal.github.io/claims/3782201-035",
   "claim": "The hope of most Web3 engineers that overhead institutions can be automated away until they vanish is largely misplaced, because business contracts are not getting simpler as technology becomes more sophisticated.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "Decentralized oracles will eliminate the need for any original investigation from independent media. Automated systems will eliminate the middleman. These hopes are largely misplaced."
  },
  {
   "id": "kaal:claim:3782201-036",
   "url": "https://wulfkaal.github.io/claims/3782201-036",
   "claim": "Middlemen persist rather than being automated away because there are certain junctures in business where novel problems regularly arise whenever circumstances change, requiring creative solutions that people step in to supply, and these persistent junctures become business institutions.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "There are certain junctures in business where novel problems regularly arise when- ever circumstances change. These problems require creative solutions, and people step in to capitalize. These persistent junctures become business institutions."
  },
  {
   "id": "kaal:claim:3782201-037",
   "url": "https://wulfkaal.github.io/claims/3782201-037",
   "claim": "Without decentralized versions of the services that overhead institutions provide, including justice, media, banking, underwriting, and insurance, DAOs will not be able to compete with centralized companies.",
   "type": "condition",
   "topics": [
    "dao",
    "institutional-design",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "supporting_quote": "The imagined future decentralized economy is missing almost all of the functions these institutions provide. Without decentralized versions of these services, DAOs will not be able to compete with centralized companies."
  },
  {
   "id": "kaal:claim:3782201-038",
   "url": "https://wulfkaal.github.io/claims/3782201-038",
   "claim": "Interoperability, meaning the API economy, is most efficiently achieved in the long run on decentralized platforms, because negotiations on a level playing field are fairer, resolve quicker, and encourage more business.",
   "type": "mechanism",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "in the long run"
   ],
   "supporting_quote": "Interoperability, the API economy, is most efficiently achieved, in the long run, on decentralized platforms. Negotiations made on a level playing field are fairer, resolve quicker, and encourage more business."
  },
  {
   "id": "kaal:claim:3782201-039",
   "url": "https://wulfkaal.github.io/claims/3782201-039",
   "claim": "People participate more willingly with decentralized apps when their information remains under their personal control, and zero knowledge proofs make exactly that possible by allowing complex information to be shared for social improvement while personal information stays controlled.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "contrasted with centralized monitoring apps that people resist, making those apps less effective"
   ],
   "supporting_quote": "People more willingly participate with decentralized apps, if their information remains under their personal control. ZK proofs allow people to do exactly that, sharing complex information for the purposes of social improvement, while maintaining control of their personal information."
  },
  {
   "id": "kaal:claim:3782201-040",
   "url": "https://wulfkaal.github.io/claims/3782201-040",
   "claim": "Because we are reared in a centralized world we reflexively turn to centralized solutions, but a decentralized approach is more effective for global problems, since decentralized networks encourage interoperability through bureaucratic transparency and thereby integrate data better than a single dictating source.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201",
   "year": "2021",
   "source_sha256": "bedf7bcfbb7a9b0112b5848cb0d941b1d41f330dafeee0143a30ff5e8aa53700",
   "confidence": "argued",
   "scope_conditions": [
    "global crises demanding coordination of many people's information"
   ],
   "supporting_quote": "Reared in a centralized world, we reflexively turn to centralized solutions. But a decentralized approach is more effective for such global problems. Decentralized networks encourage interoperability through bureaucratic transparency."
  },
  {
   "id": "kaal:claim:3782193-001",
   "url": "https://wulfkaal.github.io/claims/3782193-001",
   "claim": "Because more powerful members of a hierarchy are better positioned to capture whatever power becomes available, power distribution in an entrenched hierarchy becomes exponential, leaving the majority with minimal power and wealth. That discontent of the majority is the first destabilizing force acting on a centralized organization.",
   "type": "failure",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "hierarchies that organize through competition",
    "as the hierarchy becomes entrenched over time"
   ],
   "supporting_quote": "As the hierarchy becomes more entrenched, this exponentially distributed power structure crushes those at the bottom, leaving minimal power and wealth for the vast majority of people. The discontent of the majority is the first destabilizing force of a centralized organization."
  },
  {
   "id": "kaal:claim:3782193-002",
   "url": "https://wulfkaal.github.io/claims/3782193-002",
   "claim": "Rigid hierarchies are unstable and inevitably fall, eroded either by internal corruption or by novel external challenges that the hierarchy is not flexible enough to adapt to. These are the second and third destabilizing factors, alongside majority discontent.",
   "type": "failure",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "hierarchies whose power relations have become entrenched in secular, codified law"
   ],
   "supporting_quote": "Rigid hierarchies are unstable and inevitably fall, eroded from internal corruption or novel external challenges that the hierarchy is not flexible enough to adapt to. These are the second and third factors that explain why centralized organizations are unstable."
  },
  {
   "id": "kaal:claim:3782193-003",
   "url": "https://wulfkaal.github.io/claims/3782193-003",
   "claim": "In a rigid competitive hierarchy governed by secular laws, internal corruption arises because each member's optimal strategy is to push the written rules to their limit, while externally any change in the problems the group faces can find the hierarchy unready.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "competitive hierarchies",
    "power relations codified in secular law"
   ],
   "supporting_quote": "Rigid competitive hierar- chies with secular laws face internal corruption as members' optimal strategy is to push the rules to the limit. From the outside, any change in the problems the group faces can find the hierarchy unready to face the new challenge."
  },
  {
   "id": "kaal:claim:3782193-004",
   "url": "https://wulfkaal.github.io/claims/3782193-004",
   "claim": "The unusual multi-millennial stability of Ancient Egypt and Imperial China, despite their strong political hierarchies, is explained by protocol decentralization rather than by any feature of their political centralization.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "comparison against contemporaneous civilizations that rose and fell"
   ],
   "supporting_quote": "Ancient Egypt and Imperial China were relatively stable for millennia despite strong political hierarchies. What distinguished these civilizations from the many others that rose and fell around them? Their stability was due to protocol decentralization."
  },
  {
   "id": "kaal:claim:3782193-005",
   "url": "https://wulfkaal.github.io/claims/3782193-005",
   "claim": "Imperial China invented the printing press and applied it to centralize power through uniform edicts and the first printed money; the resulting bureaucratic rigidity left the hierarchy unable to respond to internal corruption and to external invaders.",
   "type": "failure",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "Imperial China's use of printing for political and economic centralization"
   ],
   "supporting_quote": "China invented the printing press and used it to centralize power—politically with uniform edicts and economically with the first printed money. Eventually, the hierarchy couldn't re- spond to internal corruption and external threats such as Mongolian, Manchurian, and Western imperial invaders."
  },
  {
   "id": "kaal:claim:3782193-006",
   "url": "https://wulfkaal.github.io/claims/3782193-006",
   "claim": "Europe, unlike Imperial China, used the printing press to decentralize knowledge rather than to centralize power, and this different application of the same information technology produced a cultural transformation that undermined Europe's centralized powers.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "Europe after the introduction of movable type",
    "comparison with Chinese use of printing"
   ],
   "supporting_quote": "Europe started its own printing presses a few centuries later. Instead of using the press to centralize power like the Chinese Empire did, Europe's use of the printing press greatly decentralized knowledge."
  },
  {
   "id": "kaal:claim:3782193-007",
   "url": "https://wulfkaal.github.io/claims/3782193-007",
   "claim": "The unstoppable power of decentralization is threatened by unregulated competition for profits, but it can be maintained even in extreme circumstances by a secure and meaningful reputational system.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized organizations exposed to profit competition",
    "requires the reputation system to be secure and meaningful"
   ],
   "supporting_quote": "The \"unstoppable power of decentralization\" is threatened by unregulated competition for profits, but can be maintained in the most extreme circumstances by a secure and meaningful reputa- tional system."
  },
  {
   "id": "kaal:claim:3782193-008",
   "url": "https://wulfkaal.github.io/claims/3782193-008",
   "claim": "Modern Western democracies, which the authors treat as the largest DAOs ever assembled, show that a network whose members hold diverse values can be united by protocol centralization, and that the destabilizing effect of that protocol centralization can be ameliorated by power decentralization through dynamic governance design.",
   "type": "design",
   "topics": [
    "dao",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "networks uniting members with diverse values",
    "requires dynamic design of governance"
   ],
   "supporting_quote": "Analyzing modern Western democracies, the largest DAOs ever as- sembled, shows networks of members with diverse values can be united with proto- col centralization, and its destabilizing effect can be ameliorated by power- decentralization through dynamic design of governance."
  },
  {
   "id": "kaal:claim:3782193-009",
   "url": "https://wulfkaal.github.io/claims/3782193-009",
   "claim": "Sacralized law generates more stable and successful institutions than secular belief systems, as shown by evidence that religious communes outlast secular communes at every stage of their life course.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "evidenced",
   "scope_conditions": [
    "comparative study of religious versus secular communes"
   ],
   "supporting_quote": "In fact, sacralized law has been shown to generate more stable and successful insti- tutions than secular beliefs. Sosis explains \"religious communes are more likely than secular communes to survive at every stage of their life course.\""
  },
  {
   "id": "kaal:claim:3782193-010",
   "url": "https://wulfkaal.github.io/claims/3782193-010",
   "claim": "Transcendental values are more stable unifiers of a group than formal secular rules.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "supporting_quote": "From an abstract perspective, transcendental values are more stable unifiers than formal secular rules."
  },
  {
   "id": "kaal:claim:3782193-011",
   "url": "https://wulfkaal.github.io/claims/3782193-011",
   "claim": "No set of written rules can be made complete: the Folk Theorems demonstrate that however rules are written, strategies exist that follow those rules yet profit the individual at the expense of the group, so a perfect secular constitution is impossible.",
   "type": "failure",
   "topics": [
    "economics",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "any static, formally specified set of rules governing a group"
   ],
   "supporting_quote": "The Folk theories demonstrate that how- ever the rules are written, strategies exist which follow the rules, yet profit the indi- vidual at the expense of the group."
  },
  {
   "id": "kaal:claim:3782193-012",
   "url": "https://wulfkaal.github.io/claims/3782193-012",
   "claim": "When a law is written down rigorously, specifying precisely what is acceptable and unacceptable, competition obliges people to find the most efficient behavior available inside those rules, which is typically behavior located right at the boundary of what is permissible.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "competitive environments",
    "rigorously codified rules"
   ],
   "supporting_quote": "When a law is written down rigorously, specifying precisely what is acceptable and not acceptable, people are obligated by competition to find the most efficient behavior possible within those rules."
  },
  {
   "id": "kaal:claim:3782193-013",
   "url": "https://wulfkaal.github.io/claims/3782193-013",
   "claim": "Because a transcendental value is by definition not rigorously formalizable, people organizing around an eternally unobtainable ideal without clear boundaries are less likely to probe the boundaries of acceptable behavior.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "groups organized around an ideal that has no clear formal boundaries"
   ],
   "supporting_quote": "On the other hand, a transcendental value by defini- tion is not rigorously formalizable. When people organize around an eternally unob- tainable ideal without clear boundaries, they are less likely to probe the boundaries of what is acceptable."
  },
  {
   "id": "kaal:claim:3782193-014",
   "url": "https://wulfkaal.github.io/claims/3782193-014",
   "claim": "An ideal DAO with open membership for anonymous members from any culture can maintain harmony only if its members share a transcendental value, work toward a common purpose even if that purpose is simply profit, and share fairly in the spoils of the work.",
   "type": "design",
   "topics": [
    "dao",
    "governance-design",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs with open, anonymous, cross-cultural membership"
   ],
   "supporting_quote": "An ideal DAO has an open membership policy for any anonymous person from any culture on the planet. How can they maintain harmony? They must share a tran- scendental value, work toward a common purpose (even if it's simply profit), and share fairly in the spoils of the work."
  },
  {
   "id": "kaal:claim:3782193-015",
   "url": "https://wulfkaal.github.io/claims/3782193-015",
   "claim": "Centralized hierarchies have at best always failed after a few centuries and usually much sooner, and the resulting chaos leaves fertile ground for reorganizing the old order, which is what the cyclical word revolution names.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "rigid centralized hierarchies viewed on a historical timescale"
   ],
   "supporting_quote": "At best, however, the hierar- chy has always failed after a few centuries, usually much sooner, and the resulting chaos leaves fertile ground for reorganizing the old order."
  },
  {
   "id": "kaal:claim:3782193-016",
   "url": "https://wulfkaal.github.io/claims/3782193-016",
   "claim": "Centralization is a powerful mechanism for rapidly building an efficient organization aimed at solving one specific problem, such as war in pre-unified China.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "organizations built around a single, well-defined problem"
   ],
   "supporting_quote": "Centralization is a powerful mechanism for rapidly building an effi- cient organization for solving a specific problem (e.g., war in pre-unified China)."
  },
  {
   "id": "kaal:claim:3782193-017",
   "url": "https://wulfkaal.github.io/claims/3782193-017",
   "claim": "The more effective a centralized architecture becomes at solving its target problem, the more rigid and unforgiving it becomes; rigid architectures are unstable and fail when met with novel challenges, so more decentralized organizations are more stable.",
   "type": "failure",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "when the organization encounters challenges different from the one it was designed for"
   ],
   "supporting_quote": "But rigid architectures are unstable and fail when met with novel challenges. More de- centralized organizations are more stable."
  },
  {
   "id": "kaal:claim:3782193-018",
   "url": "https://wulfkaal.github.io/claims/3782193-018",
   "claim": "The centralized hierarchy built by the Chinese Communist Revolution was extremely successful at the military goal it was designed for, but once the military threat was gone it failed completely at solving other important problems, producing catastrophic reforms such as the Cultural Revolution and the Great Leap Forward.",
   "type": "empirical",
   "topics": [
    "decentralization",
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "China from 1949 until Mao Zedong's death in 1976"
   ],
   "supporting_quote": "This centralized hierarchy was extremely successful at the military goal it was designed for, but completely failed at solving other important problems once the military threat was gone."
  },
  {
   "id": "kaal:claim:3782193-019",
   "url": "https://wulfkaal.github.io/claims/3782193-019",
   "claim": "The lesson the authors draw from Imperial China and Pharaonic Egypt is that decentralization of power and individual autonomy give long-term stability when the society also has unifying ideals it can believe in.",
   "type": "normative",
   "topics": [
    "decentralization",
    "ai-and-agents",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "requires unifying ideals the society believes in"
   ],
   "supporting_quote": "The lesson of Im- perial China, and Pharaonic Egypt before it, is that decentralization of power, individ- ual autonomy, gives long-term stability when there are unifying ideals that the society can believe in."
  },
  {
   "id": "kaal:claim:3782193-020",
   "url": "https://wulfkaal.github.io/claims/3782193-020",
   "claim": "Without a transcendental spiritual or philosophical principle to unify a society, its rules erode as exceptions to the routine are discovered that improve function temporarily yet violate the founding principles of the culture, and such violations split the population.",
   "type": "condition",
   "topics": [
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "societies lacking a unifying transcendental principle"
   ],
   "supporting_quote": "With- out a transcendental spiritual/philosophical principle to unify a society, the rules erode as exceptions to the routine are found which improve function temporarily, yet violate the founding principles of the culture. Such violations split the population."
  },
  {
   "id": "kaal:claim:3782193-021",
   "url": "https://wulfkaal.github.io/claims/3782193-021",
   "claim": "Decentralized organizations naturally respond to information at the edge and are energized rather than weakened when their leaders are attacked, because decentralized rebellions are strengthened by the loss of leaders who become martyrs.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "organizations without a fixed leadership hierarchy"
   ],
   "supporting_quote": "Decentralized organizations naturally respond to \"information at the edge\". They are energized when leaders are attacked. Decentral- ized rebellions are strengthened by the loss of their leaders, who become martyrs."
  },
  {
   "id": "kaal:claim:3782193-022",
   "url": "https://wulfkaal.github.io/claims/3782193-022",
   "claim": "When a group has more unity in its values it can tolerate less rigidity in its legal protocols, so greater value centralization permits greater protocol decentralization, which in turn produces greater long-term stability.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "groups whose members share a common set of values"
   ],
   "supporting_quote": "In general, the lesson of clans versus corporations is that when a group has more unity in their values, then they can have less rigidity in their legal protocols. So greater value centralization allows greater protocol decentralization which leads to greater long-term stability."
  },
  {
   "id": "kaal:claim:3782193-023",
   "url": "https://wulfkaal.github.io/claims/3782193-023",
   "claim": "A decentralized organization cannot be conquered by attacking it from the outside: when attacked, the group merely decentralizes further, and its members become more autonomous and more devoted to the founding principles of the organization.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "external coercive attack on a politically decentralized group"
   ],
   "supporting_quote": "This illustrates that a decentralized organization cannot be conquered by attacking it from the out- side. When you do, the group merely decentralizes further. Members become more autonomous and more devoted to the principles upon which the organization was founded."
  },
  {
   "id": "kaal:claim:3782193-024",
   "url": "https://wulfkaal.github.io/claims/3782193-024",
   "claim": "The Spanish strategy of capturing or killing a group's leader, which succeeded against the Aztec and Incan empires, was impossible to apply to the Apaches because they had no static, official rulers and no rigid power hierarchy to manipulate.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "evidenced",
   "scope_conditions": [
    "Spanish colonial expansion in the Americas",
    "groups whose leadership is by example rather than coercion"
   ],
   "supporting_quote": "The Apaches had no static, official rulers, which made it impossible for the Spanish to replay their strategy of killing or controlling the leader of each new territory they invaded. The Apaches had no rigid power hierarchy to manipulate."
  },
  {
   "id": "kaal:claim:3782193-025",
   "url": "https://wulfkaal.github.io/claims/3782193-025",
   "claim": "Giving the Apaches cattle in 1917 succeeded where military force had failed because the valuable assets created a zero-sum battle over resources between lineages, generating the internal competition necessary to produce a hierarchy of power over the disbursement of resources and property.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "evidenced",
   "scope_conditions": [
    "introduction of divisible valuable assets into a decentralized group"
   ],
   "supporting_quote": "As Nevins explained, the introduction of the cattle created \"a zero-sum battle over resources between lineages\".26 The valuable assets created the internal competition necessary to generate a hierarchy of power over disbursement of resources and property."
  },
  {
   "id": "kaal:claim:3782193-026",
   "url": "https://wulfkaal.github.io/claims/3782193-026",
   "claim": "The authors accept Brafman and Beckstrom's thesis that the best way to convert a decentralized organization into a centralized one is to introduce the profit motive, since money supplies a focal point for internal competition.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized organizations in which profits become available to members"
   ],
   "supporting_quote": "The thesis of The Starfish and the Spider is that the best way to convert a decentral- ized organization to a centralized organization is to introduce the profit motive."
  },
  {
   "id": "kaal:claim:3782193-027",
   "url": "https://wulfkaal.github.io/claims/3782193-027",
   "claim": "Bitcoin does not refute the thesis that money centralizes decentralized projects: hashing power has slowly become concentrated in mining pools until the majority of that power resides in the single country of China.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "Bitcoin after roughly ten years of operation, as of the authors' writing"
   ],
   "supporting_quote": "Slowly, Bitcoin hashing power has become more concentrated in mining pools, until today the ma- jority of power resides in the single country of China."
  },
  {
   "id": "kaal:claim:3782193-028",
   "url": "https://wulfkaal.github.io/claims/3782193-028",
   "claim": "Almost every blockchain project the authors are aware of is suffering under the centralizing force of competition for equity control and profit, and such projects predictably move toward centralization when unconscious of these forces.",
   "type": "empirical",
   "topics": [
    "blockchain",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "asserted",
   "scope_conditions": [
    "contemporary for-profit blockchain and Web3 projects"
   ],
   "supporting_quote": "In fact, almost every blockchain project we're aware of is suffering under the central- izing force of competition for equity control and profit."
  },
  {
   "id": "kaal:claim:3782193-029",
   "url": "https://wulfkaal.github.io/claims/3782193-029",
   "claim": "Good ideas will fail to be implemented unless the reward structure is balanced, because people rarely keep working idealistically toward group goals while rent seekers at the top split the rewards unfairly.",
   "type": "condition",
   "topics": [
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "projects where rewards are visibly distributed among contributors"
   ],
   "supporting_quote": "Good ideas will fail to be implemented unless the reward struc- ture is balanced."
  },
  {
   "id": "kaal:claim:3782193-030",
   "url": "https://wulfkaal.github.io/claims/3782193-030",
   "claim": "The strong trust that sustained Maghribi trade, in which embezzlement was rare despite extreme information asymmetry, cannot be explained by a strong centralized government, since the Maghribis could not form a centralized legal or political hierarchy and the official legal channels were slow and unreliable.",
   "type": "empirical",
   "topics": [
    "ai-and-agents",
    "corporate-governance",
    "disclosure",
    "reputation",
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "evidenced",
   "scope_conditions": [
    "Maghribi Jewish traders around 1000 AD under the Fatimid caliphate"
   ],
   "supporting_quote": "In point of fact, the records show that such embezzlement was rare. Instead, a strong sense of trust pervaded. So what mechanism protected the principals from their agents' asymmetric information? The answer was not a strong centralized gov- ernment."
  },
  {
   "id": "kaal:claim:3782193-031",
   "url": "https://wulfkaal.github.io/claims/3782193-031",
   "claim": "Honesty would be the wrong strategy for an agent if the contract were anonymous and its resolution did not affect future contracts, because that situation is a single-stage zero-sum game in which stealing all the entrusted wealth is optimal.",
   "type": "failure",
   "topics": [
    "economics",
    "ai-and-agents",
    "corporate-governance",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous contracting",
    "no effect of the outcome on future business"
   ],
   "supporting_quote": "Honesty would be a bad strategy for the agent if the contract was anonymous and the resolution didn't affect future contracts."
  },
  {
   "id": "kaal:claim:3782193-032",
   "url": "https://wulfkaal.github.io/claims/3782193-032",
   "claim": "Adding reputation to the contracting game converts it from a single-stage zero-sum game into a repeated positive-sum game in which the rest of the community becomes relevant, because reputation is a future-oriented commodity that pays off with the promise of future contracts.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "networks where reputation is observable and policed by the community"
   ],
   "supporting_quote": "By adding reputation to the game, it becomes a repeated game, and the rest of the community becomes relevant. Reputation is a future-oriented commodity, which pays off profits with the promise of future contracts. Now the game is a repeated game which is positive-sum."
  },
  {
   "id": "kaal:claim:3782193-033",
   "url": "https://wulfkaal.github.io/claims/3782193-033",
   "claim": "Reputation permits business with any member of a network regardless of personal acquaintance, but only if the network is closed and its size is limited by the ability to police reputation with the available information technology.",
   "type": "condition",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "reputation-based networks",
    "network must be closed",
    "size bounded by available information technology"
   ],
   "supporting_quote": "First, reputation allows business dealings with any member of the network, regard- less of personal acquaintance. This requires the network to be closed, however, with a size limited by the ability to police reputation using the information technology available."
  },
  {
   "id": "kaal:claim:3782193-034",
   "url": "https://wulfkaal.github.io/claims/3782193-034",
   "claim": "Focusing rewards on reputation rather than on immediately fungible cash encourages decentralized organization because it disperses power fairly: anyone with equivalent talent is equally acceptable, those already employed are unavailable, and the exponential rich-get-richer concentration of power is diminished.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "networks that reward members with reputation rather than immediate cash"
   ],
   "supporting_quote": "Finally, a focus on reputation instead of immediately fungible cash rewards encour- ages decentralized organization because it disperses power, and it does so fairly."
  },
  {
   "id": "kaal:claim:3782193-035",
   "url": "https://wulfkaal.github.io/claims/3782193-035",
   "claim": "The Articles of Confederation were consciously written to limit the authority of a weak central government with no chief executive, and this made the American war effort difficult because the organization was very inefficient at marshalling resources.",
   "type": "failure",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "the Thirteen Colonies during the seven years of rebellion"
   ],
   "supporting_quote": "These Articles were consciously authored to limit the authority of its weak central government which had no chief executive. This made the war effort difficult because it meant the organization was very inefficient at marshalling resources."
  },
  {
   "id": "kaal:claim:3782193-036",
   "url": "https://wulfkaal.github.io/claims/3782193-036",
   "claim": "Democracy itself decentralizes power, but to unify a large population holding diverse values the United States relies on rigid protocol centralization from a Rule-of-Law legal system, whose statutory clarity supplies the fairness and transparency that diverse groups require.",
   "type": "condition",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "large populations with diverse values"
   ],
   "supporting_quote": "Democracy itself decentralizes power. However, to bring unity to a large population with diverse values, the United States has rigid protocol-centralization from a Rule- of-Law legal system."
  },
  {
   "id": "kaal:claim:3782193-037",
   "url": "https://wulfkaal.github.io/claims/3782193-037",
   "claim": "The separation of powers works because it makes each branch's power derive from the others, harnessing the natural human competitive impulse to stop any branch from usurping power not enumerated in the Constitution, which is what the checks and balances prevent.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "a cyclic three-branch system where each branch depends on the others to act"
   ],
   "supporting_quote": "In the cyclical system, the powers of each branch derive from the others. The natural human competitive impulse is har- nessed to prevent any branch from usurping power not enumerated in the Constitu- tion, the checks and balances to prevent centralization of power."
  },
  {
   "id": "kaal:claim:3782193-038",
   "url": "https://wulfkaal.github.io/claims/3782193-038",
   "claim": "When the executive branch is given more centralizing power during a crisis, or simply takes it, the mechanism for removing that power once the threat has passed has rarely been followed.",
   "type": "failure",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "crisis conditions such as war",
    "U.S. constitutional practice"
   ],
   "supporting_quote": "When the executive branch is given more centralizing power during a crisis, or simply takes it, the mechanism for removing that power when the threat is over has rarely been followed."
  },
  {
   "id": "kaal:claim:3782193-039",
   "url": "https://wulfkaal.github.io/claims/3782193-039",
   "claim": "The authors stipulate that functioning democracies are decentralized autonomous organizations: the United States government is a DAO, as are Norway, Mauritius, Uruguay, and South Korea, and every functioning democracy is more akin to a DAO than to a centralized corporation.",
   "type": "definitional",
   "topics": [
    "dao",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "asserted",
   "scope_conditions": [
    "functioning democracies"
   ],
   "supporting_quote": "The United States government is a decentralized organization, a DAO. Norway is a DAO—the best DAO according to the democracy index.38 Mauritius, Uruguay, and South Korea are also DAOs. Every functioning democracy is more akin to a DAO than to a centralized corporation."
  },
  {
   "id": "kaal:claim:3782193-040",
   "url": "https://wulfkaal.github.io/claims/3782193-040",
   "claim": "In designing governance for large global networks, protocol centralization is necessary in order to display objective fairness, yet that same protocol centralization leads to instability, which is the core design tension the chapter's historical cases are meant to resolve.",
   "type": "condition",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193",
   "year": "2021",
   "source_sha256": "74df9cc9a19a098bdacd0424a4174795f6e184f7a31c8ee7541195186701ebd2",
   "confidence": "argued",
   "scope_conditions": [
    "large global networks open to members with diverse values"
   ],
   "supporting_quote": "Protocol centralization is necessary to display objective fairness, but this leads to instability."
  },
  {
   "id": "kaal:claim:3995709-001",
   "url": "https://wulfkaal.github.io/claims/3995709-001",
   "claim": "Modern code review imposes substantial hidden costs because developers spend an average of six hours per week reviewing others' changes and are forced to switch away from their own work, creating an opportunity cost on project development.",
   "type": "empirical",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "evidenced",
   "scope_conditions": [
    "modern code review in industry and open source settings"
   ],
   "supporting_quote": "Developers spend a significant amount of time reviewing the changes of others – an average of 6 hours per week.11 Not only is this a significant amount of time, it also requires an opportunity cost on project development as developers are forced to switch away from their current work."
  },
  {
   "id": "kaal:claim:3995709-002",
   "url": "https://wulfkaal.github.io/claims/3995709-002",
   "claim": "The benefit of a code review is negatively correlated with the size of the code under review: the larger the number of files in a single review, the lower the rate of beneficial feedback from reviewers.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "evidenced",
   "scope_conditions": [
    "single review submissions of increasing size"
   ],
   "supporting_quote": "Therefore, the benefit of attaining a code review is negatively correlated with the size of the code under review. In particular, the larger the amount of files in a single review, the lower the rate of beneficial feedback from the reviewers."
  },
  {
   "id": "kaal:claim:3995709-003",
   "url": "https://wulfkaal.github.io/claims/3995709-003",
   "claim": "Patch size degrades multiple dimensions of code review performance at once: comment density per reviewer falls as patches grow, the quality and amount of contribution is affected, and the time required to provide significant contributions increases.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "evidenced",
   "scope_conditions": [
    "studies measuring comment density against lines of code"
   ],
   "supporting_quote": "found that comment density by reviewer decreases as patches increased. 18 Accordingly, the quality and amount of contribution is affected by patch size.19 And, patch size increases the time required to provide significant contributions.20"
  },
  {
   "id": "kaal:claim:3995709-004",
   "url": "https://wulfkaal.github.io/claims/3995709-004",
   "claim": "Code review effectiveness is undermined by heavier review loads, because reviewers with longer review queues become overwhelmed and are more likely to submit poor quality code evaluations.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "evidenced",
   "scope_conditions": [
    "reviewers carrying long review queues"
   ],
   "supporting_quote": "another study found that code reviewers with longer review queues tend to get overwhelmed and are more likely to submit poor-quality code evaluations.22 Therefore, modern code review effectiveness is undermined by heavier review loads."
  },
  {
   "id": "kaal:claim:3995709-005",
   "url": "https://wulfkaal.github.io/claims/3995709-005",
   "claim": "Proposed remedies for patch size, namely distributing the workload across a broader set of reviewers and providing better transparency on developer review queues, have not solved the problem; patch size remains an issue affecting the quality, speed, and effectiveness of modern code review.",
   "type": "failure",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "existing remedies deployed within legacy review processes"
   ],
   "supporting_quote": "However, despite the proposed solutions, many commentators recognize that patch size remains to be an issue for modern code review affecting the quality, speed, and effectiveness of the process."
  },
  {
   "id": "kaal:claim:3995709-006",
   "url": "https://wulfkaal.github.io/claims/3995709-006",
   "claim": "Confusion during code review lengthens reviews through a message escalation mechanism: more confusion produces more messages exchanged during discussion, so the review takes longer than it should.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "evidenced",
   "scope_conditions": [
    "reviewers encountering unfamiliar code"
   ],
   "supporting_quote": "that more confusion leads to an increase in the number of messages exchanged during the discussion, therefore reviews take longer.34 If there is confusion between the reviewer and the code, the code review will take longer than it should."
  },
  {
   "id": "kaal:claim:3995709-007",
   "url": "https://wulfkaal.github.io/claims/3995709-007",
   "claim": "Code confusion produces blind approval, where a reviewer hopes a co-worker knows what they are doing and approves a change without understanding it, which can result in further bugs and delayed production.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "evidenced",
   "scope_conditions": [
    "reviewers confused by unfamiliar code",
    "peer trust within a team"
   ],
   "supporting_quote": "blind approval may occur when a reviewer hopes their co-worker knows what they're doing and blindly approves a change.36 Blind approval can result in further bugs and delay production."
  },
  {
   "id": "kaal:claim:3995709-008",
   "url": "https://wulfkaal.github.io/claims/3995709-008",
   "claim": "Failing to maximize developer participation and communication negatively affects the code review process and creates unnecessary costs on software development, and this is difficult to remedy because code review is subject to sensitivities arising from the egos of the individuals involved.",
   "type": "failure",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "code review conducted among human peers"
   ],
   "supporting_quote": "Therefore, failing to maximize developer participation and communication may negatively affect the code review process. This ultimately results in inefficiencies in the review process creating unnecessary costs on software development."
  },
  {
   "id": "kaal:claim:3995709-009",
   "url": "https://wulfkaal.github.io/claims/3995709-009",
   "claim": "Feedback in modern code review is deficient in both timeliness and substance: receiving feedback in a timely manner is developers' number one reported challenge, and the feedback that arrives is often not insightful because reviewers focus on insignificant details rather than larger issues.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "evidenced",
   "scope_conditions": [
    "surveyed developer populations in industry code review"
   ],
   "supporting_quote": "Moreover, even when developers finally receive feedback on their code change, it is often not insightful or helpful. For example, the study also found that some reviewers focus on \"insignificant details rather than larger issues.\"43"
  },
  {
   "id": "kaal:claim:3995709-010",
   "url": "https://wulfkaal.github.io/claims/3995709-010",
   "claim": "Organizational metrics, such as the number of developers working on a component, organizational distance between developers, and organizational code ownership, are better predictors of defect proneness than traditional metrics like churn, complexity, coverage, dependencies, and pre release bug measures.",
   "type": "empirical",
   "topics": [
    "institutional-design",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "evidenced",
   "scope_conditions": [
    "large organization software development"
   ],
   "supporting_quote": "including the number of developers working on a component, organizational distance between developers, and organizational code ownership, are \"better predictors of defect-proneness than traditional metrics like churn, complexity, coverage, dependencies, and pre-release bug measures.\"45"
  },
  {
   "id": "kaal:claim:3995709-011",
   "url": "https://wulfkaal.github.io/claims/3995709-011",
   "claim": "Organizational identity and structure affect the time and effectiveness of the code review process, as shown by a statistically significant difference in how quickly Apple accepts its own patches versus Google patches.",
   "type": "empirical",
   "topics": [
    "institutional-design",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "evidenced",
   "scope_conditions": [
    "cross organization patch submission"
   ],
   "supporting_quote": "treats their own patches differently from external patches.\"48 Therefore, organizational identity and structure may have impacts on the time and effectiveness of the code review process."
  },
  {
   "id": "kaal:claim:3995709-012",
   "url": "https://wulfkaal.github.io/claims/3995709-012",
   "claim": "The more hierarchical the code review process and the more barriers to entry it imposes, the lower the quality of the resulting code.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "open-source-and-code",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "legacy code review firms with hierarchical reviewer selection"
   ],
   "supporting_quote": "In other words, the more hierarchical the code review process and the more barriers to entry, the lower the quality of code."
  },
  {
   "id": "kaal:claim:3995709-013",
   "url": "https://wulfkaal.github.io/claims/3995709-013",
   "claim": "In hierarchical legacy review processes the first reviewer's output gets the highest priority and follow on reviewers add only minor upgrades, so the collective of reviewers is not incentivized to find flaws and optimize the code as a collective work product.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "legacy code review firms",
    "hierarchical ordering of reviewers"
   ],
   "supporting_quote": "often gets the highest priority and is often merely followed with minor upgrades by follow-on reviewers. The collective of reviewers is also not incentivized to find flaws in the code to optimize code as a work product of the collective."
  },
  {
   "id": "kaal:claim:3995709-014",
   "url": "https://wulfkaal.github.io/claims/3995709-014",
   "claim": "Increasing the number of reviewers who ask clarifying questions makes code simpler and clearer and thereby typically increases code quality, but hierarchical review processes make this impossible.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "hierarchical review structures"
   ],
   "supporting_quote": "Moreover, the more people review the code with comments that ask for clarification, the more likely it becomes that the code becomes simpler and clearer, which in turn typically increases code quality. However, that is no possible in hierarchical review processes."
  },
  {
   "id": "kaal:claim:3995709-015",
   "url": "https://wulfkaal.github.io/claims/3995709-015",
   "claim": "The hierarchical approach to code reviews undermines long term participation and opinion from the edges of the reviewer spectrum, because those reviewers either have no access or are in no position to help review the code.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "hierarchical legacy review processes"
   ],
   "supporting_quote": "The hierarchical approach to code reviews undermines long-term participation with opinion from the edges of the reviewer spectrum because those reviewers either have no access or are in no position to help review the code."
  },
  {
   "id": "kaal:claim:3995709-016",
   "url": "https://wulfkaal.github.io/claims/3995709-016",
   "claim": "Without crowd controls, the reviewer's views and the author's intent are at odds and the reviewer can impose their own logic, forcing the author to rewrite functionally sound code repeatedly, which is highly time consuming and inefficient.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "legacy code review processes lacking crowd control"
   ],
   "supporting_quote": "Because the code reviewer may wish to impose their own logic on the code author, the code author may be required to rewrite code over and over even though the core functionality of the code is sound and dangerous issues were controlled for. This can be highly time consuming and inefficient."
  },
  {
   "id": "kaal:claim:3995709-017",
   "url": "https://wulfkaal.github.io/claims/3995709-017",
   "claim": "A code review should focus on the functionality of the code and on keeping mistaken, badly constructed, and dangerous code out, rather than on the reviewer imposing their own stylistic logic.",
   "type": "normative",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "supporting_quote": "Instead, a code review should focus on functionality of the code and on keeping mistaken, badly constructed, and dangerous code out."
  },
  {
   "id": "kaal:claim:3995709-018",
   "url": "https://wulfkaal.github.io/claims/3995709-018",
   "claim": "Delays in legacy code reviews, which can be exacerbated by digital asset market conditions, can impact development and may require complete rewriting of contracts because the underlying protocol may have upgraded core libraries during the review.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "legacy code review settings",
    "fast moving protocol environments in digital asset markets"
   ],
   "supporting_quote": "This can get exacerbated by market conditions in the digital asset market. These significant delays can impact development and may require complete rewriting of contracts because the underlying protocol may have upgraded core libraries during the code review."
  },
  {
   "id": "kaal:claim:3995709-019",
   "url": "https://wulfkaal.github.io/claims/3995709-019",
   "claim": "The code review industry is dominated by a cartel formed by the top five code audit firms, and that cartel creates high barriers to entry for new players in the code review market.",
   "type": "empirical",
   "topics": [
    "economics",
    "risk-and-incentives",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "the code review and audit market as of 2021"
   ],
   "supporting_quote": "The top five code audit firms form a cartel. The cartel of the top 5 audit firms also creates high barriers to entry for new players to enter into the code review market."
  },
  {
   "id": "kaal:claim:3995709-020",
   "url": "https://wulfkaal.github.io/claims/3995709-020",
   "claim": "Cartelization of the code review industry causes significant overpricing, because clients will pay almost any price to obtain the stamp of approval from one of the top five audit firms.",
   "type": "mechanism",
   "topics": [
    "economics",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "clients needing market acceptance for their products"
   ],
   "supporting_quote": "As a result of the cartelization of the industry, most code reviews are significantly overpriced. Clients pretty much pay any price to get the stamp of approval from one of the top 5 audit firms."
  },
  {
   "id": "kaal:claim:3995709-021",
   "url": "https://wulfkaal.github.io/claims/3995709-021",
   "claim": "Cartel power undermines attempts by other industry players to create internal or external controls on the quality of code reviews, leaving the public with no or very weak control over the quality of the code review services it receives.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "a code review market dominated by a small number of firms"
   ],
   "supporting_quote": "The cartel power also undermines attempts by other industry players to create internal or external controls on the quality of code reviews. As a result, the public has no or very weak control over the quality of code review services it receives."
  },
  {
   "id": "kaal:claim:3995709-022",
   "url": "https://wulfkaal.github.io/claims/3995709-022",
   "claim": "Because customers cannot afford to search for better priced code reviews and are forced into cartel pricing to obtain market acceptance of their products, cartelization undermines any form of downward price pressure.",
   "type": "mechanism",
   "topics": [
    "economics",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "clients requiring market acceptance signals from audit firms"
   ],
   "supporting_quote": "Customers cannot afford to look for better priced code reviews and are forced into the cartel pricing to obtain market acceptance of their products. In turn, the cartelization of the market undermines any form of downward price pressure."
  },
  {
   "id": "kaal:claim:3995709-023",
   "url": "https://wulfkaal.github.io/claims/3995709-023",
   "claim": "There is little or no recourse for clients when reviewed code proves to be flawed even after functionality and quality review.",
   "type": "failure",
   "topics": [
    "compliance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "the existing code review and audit market"
   ],
   "supporting_quote": "Moreover, there is little or no recourse for clients in cases in which the code proved to be flawed even after functionality and quality review."
  },
  {
   "id": "kaal:claim:3995709-024",
   "url": "https://wulfkaal.github.io/claims/3995709-024",
   "claim": "Despite the significant flaws in code reviews and their often flawed results, the existing code review market does not allow for any form of insurance product of the kind associated with products in other markets.",
   "type": "failure",
   "topics": [
    "compliance",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "the existing code review and audit market"
   ],
   "supporting_quote": "Despite the significant flaws in the code review process and the associated often flawed results of code reviews, the existing code review market does not allow for any form of insurance products that are associated with other products in other markets."
  },
  {
   "id": "kaal:claim:3995709-025",
   "url": "https://wulfkaal.github.io/claims/3995709-025",
   "claim": "Even if code review and audit firms did engage in thorough insurance underwriting and guarantees for their clients, the remedy would still fail because those firms would remain subject to the flawed and centralized legacy insurance market, which is itself dominated by a cartel of a few core players.",
   "type": "failure",
   "topics": [
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "code review firms relying on legacy insurance markets"
   ],
   "supporting_quote": "Even if code review and audit firms were to engage in a more thorough insurance underwriting and guarantee process for their clients, they would still be subject to the flawed and centralized legacy insurance market."
  },
  {
   "id": "kaal:claim:3995709-026",
   "url": "https://wulfkaal.github.io/claims/3995709-026",
   "claim": "Decentralized code review underwriting makes the code review market more efficient because it democratizes the functions of code review and frees untapped sources of power and knowledge.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "defi",
    "economics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized underwriting of code reviews"
   ],
   "supporting_quote": "Decentralized code review underwriting democratizes the functions of code reviews. This makes the code review market more efficient because it frees untapped sources of power and knowledge."
  },
  {
   "id": "kaal:claim:3995709-027",
   "url": "https://wulfkaal.github.io/claims/3995709-027",
   "claim": "The CRDAO drives code review prices down through a bidding process and provides open access to anyone who qualifies rather than only members of the code review cartel.",
   "type": "design",
   "topics": [
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "a functioning code review DAO with decentralized governance"
   ],
   "supporting_quote": "The CRDAO provides a decentralized community-driven code review process that utilizes a bidding process on code reviews to drive prices down. It provides open access for code reviews from anyone who qualifies – not just members of the code review cartel."
  },
  {
   "id": "kaal:claim:3995709-028",
   "url": "https://wulfkaal.github.io/claims/3995709-028",
   "claim": "Universal access combined with a public bidding price discovery methodology creates low barriers to entry in the code review market, because anyone can join the CRDAO by submitting high quality code reviews through the CRDAO portal.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "public bidding on code review jobs",
    "qualification by submitted review quality"
   ],
   "supporting_quote": "Given its universal access and price discovery methodology (through a public bidding process), the CRDAO creates low barriers to entry in the code review market. Anyone can join the CRDAO by submitting high quality code reviews through the CRDAO portal."
  },
  {
   "id": "kaal:claim:3995709-029",
   "url": "https://wulfkaal.github.io/claims/3995709-029",
   "claim": "The CRDAO governance model enables a community policing and audit methodology for code reviews, and those governance and policing functions ensure less duplication of code reviews.",
   "type": "design",
   "topics": [
    "dao",
    "governance-design",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "DAO based governance over a reviewer community"
   ],
   "supporting_quote": "The CRDAO also uses a community policing and audit methodology for code reviews. This is enabled by the CRDAO governance model. Moreover, the CRDAO governance and policing functions ensure less duplication of code reviews."
  },
  {
   "id": "kaal:claim:3995709-030",
   "url": "https://wulfkaal.github.io/claims/3995709-030",
   "claim": "Crowd review and policing votes by the CRDAO collective filter out idiosyncratic reviewer preferences, because reviewers who submit highly idiosyncratic reviews would have to fear slashing and loss of standing in the community.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "mandatory crowd review of each code review",
    "slashing and reputation stakes in place"
   ],
   "supporting_quote": "Instead, the CRDAO mandates that reviews are subject to crowd review and policing votes by the CRDAO collective. Accordingly, code reviewers are less likely to engage in highly idiosyncratic reviews as they would need to fear slashing and loss of standing in the community."
  },
  {
   "id": "kaal:claim:3995709-031",
   "url": "https://wulfkaal.github.io/claims/3995709-031",
   "claim": "By creating a compendium of reviews, the CRDAO generates common code review standards that legacy code review environments lack, and reviewing under a shared set of standards aligns reviewers and the collective on expectations for functionality and quality outcomes.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "a collective reviewing code reviews under a common set of standards"
   ],
   "supporting_quote": "The CRDAO also fills the void left in legacy reviews without common standards. The CRDAO creates a compendium of reviews and through it a common standards for code reviews that are otherwise lacking in legacy code review environments."
  },
  {
   "id": "kaal:claim:3995709-032",
   "url": "https://wulfkaal.github.io/claims/3995709-032",
   "claim": "Lower cost early feedback from the CRDAO enables risk taking by development teams that wish to move quickly through governance and upgrade processes, which in turn enables accelerated growth and scaling of experimentation.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "dev teams operating with fast governance and upgrade cycles"
   ],
   "supporting_quote": "The feedback provided by the CRDAO for the developer community enables risk-taking for dev teams who wish to move quickly through their governance and upgrade process, which in turn enables accelerated growth and scaling of experimentation."
  },
  {
   "id": "kaal:claim:3995709-033",
   "url": "https://wulfkaal.github.io/claims/3995709-033",
   "claim": "Because the existing code review market provides no publicly transparent pricing, it arguably harms the public for the benefit of the cartel and its clients, since neither the client nor the code reviewer benefits from public scrutiny of cartel prices.",
   "type": "failure",
   "topics": [
    "disclosure",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "the pre existing code audit market"
   ],
   "supporting_quote": "As such, the existing market arguably harms the public for the benefit of the cartel and its clients. In the existing system, the cartel pricing is not disclosed because both the client and code reviewer may not benefit from public scrutiny of the cartel prices."
  },
  {
   "id": "kaal:claim:3995709-034",
   "url": "https://wulfkaal.github.io/claims/3995709-034",
   "claim": "Public price discovery is a necessary public service function, because without public pricing consumers cannot realistically select the service provider that provides the highest value to the customer.",
   "type": "condition",
   "topics": [
    "economics",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "argued",
   "scope_conditions": [
    "markets for professional code review services"
   ],
   "supporting_quote": "Price discovery is a key public services function because without public pricing, consumers cannot realistically select the service provider that provides the highest value to the customer."
  },
  {
   "id": "kaal:claim:3995709-035",
   "url": "https://wulfkaal.github.io/claims/3995709-035",
   "claim": "The CRDAO price discovery mechanism enables full price transparency for consumers through the visibility of internal and external bids on job posts, which is unprecedented in a market otherwise dominated by a cartel.",
   "type": "design",
   "topics": [
    "economics",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "bids on the post and the winner become public after the customer selects"
   ],
   "supporting_quote": "price discovery mechanism serves a key public service function in that it enables full price transparency for consumers based on the visibility of the internal and external bids on job posts. This price transparency is unique and unprecedented in a market that is otherwise dominated by a cartel."
  },
  {
   "id": "kaal:claim:3995709-036",
   "url": "https://wulfkaal.github.io/claims/3995709-036",
   "claim": "The CRDAO governance framework is the decentralized governance framework developed by Craig Calcaterra and Wulf Kaal, further enhanced and implemented by the code review DAO, and CRDAO members get paid to participate in that governance.",
   "type": "design",
   "topics": [
    "dao",
    "governance-design",
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "CRDAO network governance participation"
   ],
   "supporting_quote": "The CRDAO follows a decentralized framework of governance that was developed by Craig Calcaterra and Wulf Kaal50"
  },
  {
   "id": "kaal:claim:3995709-037",
   "url": "https://wulfkaal.github.io/claims/3995709-037",
   "claim": "In future iterations the CRDAO will offer the customer a form of insurance where the code review does not correspond with the contractual obligations of the parties.",
   "type": "design",
   "topics": [
    "defi",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "future iterations of the CRDAO",
    "code review failing to meet contractual obligations"
   ],
   "supporting_quote": "In future iterations, the CRDAO offers the customer a form of insurance if the code review does not correspond with the contractual obligations of the parties."
  },
  {
   "id": "kaal:claim:3995709-038",
   "url": "https://wulfkaal.github.io/claims/3995709-038",
   "claim": "CRDAO code review insurance is funded from the CRDAO Code Review Pool, which consists of the assets raised during the CRDAO token offering plus ten percent of any incoming code review job revenue.",
   "type": "design",
   "topics": [
    "securities-law",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "future iterations of the CRDAO with a token offering completed"
   ],
   "supporting_quote": "The insurance will be paid from the CRDAO Code Review Pool (CRP) which consists of the assets raised during the CRDAO token offering as well as 10% of any incoming code review job revenue."
  },
  {
   "id": "kaal:claim:3995709-039",
   "url": "https://wulfkaal.github.io/claims/3995709-039",
   "claim": "CRDAO community engagement is the mechanism that minimizes issues of lacking crowd controls, lowers the time requirements and prices of code reviews, increases developer participation, and increases overall feedback.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "asserted",
   "scope_conditions": [
    "an operating CRDAO community"
   ],
   "supporting_quote": "The code review process of the CRDAO revolves around CRDAO community engagement which minimizes issues of lack of crowd controls, lowers time requirements for code reviews, lowers prices of code reviews, increases developer participation, and increases overall feedback."
  },
  {
   "id": "kaal:claim:3995709-040",
   "url": "https://wulfkaal.github.io/claims/3995709-040",
   "claim": "As the CRDAO iterates on its design and moves into subsequent phases, the larger web3 community will continue to benefit from its key innovations.",
   "type": "predictive",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709",
   "year": "2021",
   "source_sha256": "6d77dbfb15ee86080bfde0b98089180cabafeb6defdf0f05eaaeb3cb99871e89",
   "confidence": "speculative",
   "scope_conditions": [
    "continued iteration of the CRDAO design"
   ],
   "supporting_quote": "As the CRDAO iterates on its design and moves into subsequent phases, the larger web3 community will continue to benefit from the key innovations."
  },
  {
   "id": "kaal:claim:3981021-001",
   "url": "https://wulfkaal.github.io/claims/3981021-001",
   "claim": "Existing legal incentives in many jurisdictions produce so called Zombie Charities, with the consequence that donative intent often cannot be optimally fulfilled.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "asserted",
   "scope_conditions": [
    "jurisdictions whose legal incentives favor endowment preservation"
   ],
   "supporting_quote": "Existing legal incentives often lead to so called Zombie Charities in many jurisdictions. The donative intent can therefore often not be optimally fulfilled."
  },
  {
   "id": "kaal:claim:3981021-002",
   "url": "https://wulfkaal.github.io/claims/3981021-002",
   "claim": "Decentralized autonomous organizations combine feedback loops and transparency features with community governance, and that combination addresses the shortcomings of charitable organizations in centralized structures.",
   "type": "mechanism",
   "topics": [
    "dao",
    "governance-design",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "asserted",
   "scope_conditions": [
    "DAO structured charitable organizations"
   ],
   "supporting_quote": "DAOs combine unique feedback loops and transparency features with community governance that address the existing shortcomings of charitable organizations in centralized structures."
  },
  {
   "id": "kaal:claim:3981021-003",
   "url": "https://wulfkaal.github.io/claims/3981021-003",
   "claim": "Private foundations exercise plutocratic power because their leaders and trustees are not elected democratically, they are permitted to operate in perpetuity, and their operations lack accountability and transparency.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "evidenced",
   "scope_conditions": [
    "private foundations",
    "jurisdictions permitting perpetual foundations"
   ],
   "supporting_quote": "Private foundations have plutocratic power because such organizations' leaders or trustees are not elected democratically, they are allowed to work in perpetuity, and their operations lack accountability and transparency."
  },
  {
   "id": "kaal:claim:3981021-004",
   "url": "https://wulfkaal.github.io/claims/3981021-004",
   "claim": "Survey evidence shows a public trust deficit toward charities: while 70 percent of Americans say trust is essential before making a donation, fewer than 20 percent say they highly trust charities.",
   "type": "empirical",
   "topics": [
    "reputation",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States survey populations",
    "Better Business Bureau survey"
   ],
   "supporting_quote": "Moreover, a survey by the Better Business Bureau found that 70% of Americans said that trust is essential before making a donation, but fewer than 20% of Americans said they highly trust charities."
  },
  {
   "id": "kaal:claim:3981021-005",
   "url": "https://wulfkaal.github.io/claims/3981021-005",
   "claim": "Modern philanthropic strategies entrust donors with identifying which problems need to be solved and with providing the solutions, rather than trusting the solutions proposed by the nonprofits themselves, which makes the approach more centralized and less grassroots.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "modern donor driven philanthropic strategies"
   ],
   "supporting_quote": "strategies that entrust donors with identifying which problems need to be solved and then provide the perceived appropriate solutions; rather than trusting the solutions proposed by the non-profits themselves.38 This approach is more centralized and less grassroots39 for solving societal issues."
  },
  {
   "id": "kaal:claim:3981021-006",
   "url": "https://wulfkaal.github.io/claims/3981021-006",
   "claim": "Modern philanthropy limits the autonomy of grassroots charitable organizations and substitutes a leveraged and exploitive relationship in which the goals of the donor are served above all.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "grassroots charitable organizations receiving major private philanthropic funding"
   ],
   "supporting_quote": "there is a growing concern amongst commentators that modern philanthropy limits the autonomy of grassroots charitable organizations and replaces it with a leveraged and exploitive relationship where the goals of the donor are served above all."
  },
  {
   "id": "kaal:claim:3981021-007",
   "url": "https://wulfkaal.github.io/claims/3981021-007",
   "claim": "Because boards and donors seek to preserve endowments rather than spend them, funds accrue tax free long after the donor has taken the deduction, which runs counter to the spirit of the rules governing charitable deductions and may contribute to harmful inefficiency.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions granting an immediate deduction with deferred payout obligations"
   ],
   "supporting_quote": "Rather than funds being employed immediately, the funds are allowed to accrue tax free. 49 This may run counter to the spirit of the rules governing charitable deductions and may contribute to harmful inefficiency."
  },
  {
   "id": "kaal:claim:3981021-008",
   "url": "https://wulfkaal.github.io/claims/3981021-008",
   "claim": "Although the five percent annual payout is only a legal minimum for foundations under 2021 law, many boards treat five percent as the default rule, which entrenches minimal disbursement.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States private foundations as of 2021"
   ],
   "supporting_quote": "As the law stands in 2021, foundations are only required to spend 5% of their assets a year.51 Although this is a minimum requirement for foundations, many boards view 5% as the default rule."
  },
  {
   "id": "kaal:claim:3981021-009",
   "url": "https://wulfkaal.github.io/claims/3981021-009",
   "claim": "The default regulatory remedy is impaired at the source: the IRS division charged with monitoring charities remains understaffed and underfinanced and is able to audit only a small percentage of charities annually.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States charity oversight",
    "IRS exempt organizations enforcement"
   ],
   "supporting_quote": "For example, the IRS division charged with monitoring charities remains understaffed and underfinanced and is only able to audit a small percentage of charities annually."
  },
  {
   "id": "kaal:claim:3981021-010",
   "url": "https://wulfkaal.github.io/claims/3981021-010",
   "claim": "Information sharing remedies are self limiting: the Pension Protection Act of 2006 let the IRS share more charity tax record information with state officials so they could investigate possible violations of state law, but the same act established strict controls over how that information could be used.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States federal to state charity enforcement coordination"
   ],
   "supporting_quote": "Pension Protection Act of 2006 allowed the IRS to share more information from charity tax records with state officials so they could investigate possible violations of state law. However, the act also established strict controls over how such information could be used;"
  },
  {
   "id": "kaal:claim:3981021-011",
   "url": "https://wulfkaal.github.io/claims/3981021-011",
   "claim": "Distributed ledger technologies are particularly capable of increasing trust among charitable organizations, sponsors, and beneficiaries, because the technology enables real time tracking of the donation supply chain.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "blockchain",
    "reputation",
    "disclosure",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "evidenced",
   "scope_conditions": [
    "charitable donation flows recorded on distributed ledgers"
   ],
   "supporting_quote": "Distributed ledger technologies (DLT) are particularly capable of increasing trust between charitable organizations, sponsors, and beneficiaries. The technology enables real-time tracking of the donation supply chain."
  },
  {
   "id": "kaal:claim:3981021-012",
   "url": "https://wulfkaal.github.io/claims/3981021-012",
   "claim": "DAOs are truly global borderless entities that coordinate agency relationships and limit liabilities via smart contracts, which is what positions them to address the identified flaws in the charitable giving process.",
   "type": "mechanism",
   "topics": [
    "dao",
    "smart-contracts",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "asserted",
   "scope_conditions": [
    "DAOs operating through smart contracts"
   ],
   "supporting_quote": "DAOs have the potential to address the above identified flaws in the charitable giving process. DAOs are truly global borderless entities that coordinate agency relationships and limit liabilities via smart contracts."
  },
  {
   "id": "kaal:claim:3981021-013",
   "url": "https://wulfkaal.github.io/claims/3981021-013",
   "claim": "Charitable giving has to be fully transparent and hosted by a group of charity experts who have hands on experience fostering common good outcomes directly, rather than acting as an intermediary or sponsor.",
   "type": "normative",
   "topics": [
    "disclosure",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "asserted",
   "scope_conditions": [
    "the CHARITYxDAO design premise"
   ],
   "supporting_quote": "The basic concept of the CHARITYxDAO derives from the basic insight that charitable giving has to be fully transparent and hosted by a group of charity experts who have hands-on experience in fostering common good outcomes directly – not as an intermediary or sponsor."
  },
  {
   "id": "kaal:claim:3981021-014",
   "url": "https://wulfkaal.github.io/claims/3981021-014",
   "claim": "Only applicants who demonstrate both successful fundraising and successful fulfillment of donative intent are eligible for CHARITYxDAO voting associate status.",
   "type": "condition",
   "topics": [
    "corporate-governance",
    "governance-design",
    "consensus-and-security",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "asserted",
   "scope_conditions": [
    "CHARITYxDAO onboarding of voting associates"
   ],
   "supporting_quote": "Only those who demonstrate both 1. Successful fundraising, and 2. Fulfilling the donative intent are eligible for CHARITYxDAO voting associate (VA) status."
  },
  {
   "id": "kaal:claim:3981021-015",
   "url": "https://wulfkaal.github.io/claims/3981021-015",
   "claim": "Because the CHARITYxDAO records governance on distributed ledger technology, all governance votes and endowment allocation decisions are fully publicly visible, auditable by the public at will, and immutable once on chain.",
   "type": "design",
   "topics": [
    "governance-design",
    "compliance",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "asserted",
   "scope_conditions": [
    "CHARITYxDAO using DLT and layer 2 solutions"
   ],
   "supporting_quote": "Through the use of DLT technology, all governance votes and endowment allocation decisions are fully publicly visible and can be audited by the public at will. Moreover, all onchain data is immutable and can be accessed by the public."
  },
  {
   "id": "kaal:claim:3981021-016",
   "url": "https://wulfkaal.github.io/claims/3981021-016",
   "claim": "The public commenting function on the forum lets the CHARITYxDAO internalize information from the edges of the charity ecosystem that would otherwise have no agency in any charitable organization, and that new information further increases the accountability of the DAO.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "DAO with an open public forum tied to governance"
   ],
   "supporting_quote": "The public commenting function on the forum helps the CHARITYxDAO internalize information form the edges of the charity ecosystem that otherwise would have no agency in any charitable organization. This new information from the edges of the charity ecosystem further increases the"
  },
  {
   "id": "kaal:claim:3981021-017",
   "url": "https://wulfkaal.github.io/claims/3981021-017",
   "claim": "Forum comments let existing voting associates identify the most competent commenters and invite them to apply for membership by providing work for a grant, creating constant onboarding feedback effects that cannot exist in traditional centralized charitable organizations.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "institutional-design",
    "dao",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "DAO charities with open forums and grant based onboarding"
   ],
   "supporting_quote": "This helps increase the quality of talent that is onboarded into the CHARITYxDAO VA pool and creates constant onboarding feedback effects. Such feedback effects cannot exist in traditional centralized charitable organizations."
  },
  {
   "id": "kaal:claim:3981021-018",
   "url": "https://wulfkaal.github.io/claims/3981021-018",
   "claim": "On chain governance takes the donation out of the hands of the individual donor, who may one sidedly or mistakenly allocate assets, and puts the asset allocation and policing decisions into the hands of the community of voting associates.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "endowments transferred to a DAO with expert voting associates"
   ],
   "supporting_quote": "the donation out of the hands of the individual donor (who may one-sidedly or mistakenly allocate assets to further the donor's donative intent). Instead, the asset allocation and policing decisions are put into the hands of the community of CHARITYxDAO VAs."
  },
  {
   "id": "kaal:claim:3981021-019",
   "url": "https://wulfkaal.github.io/claims/3981021-019",
   "claim": "By giving the power of the endowment to the DAO the donor relinquishes control over the assets in exchange for community governance, and that relinquishment builds trust and community buy in, which in turn secures growth and legacy for the donor's purpose.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "donors willing to cede asset control to a community of experts"
   ],
   "supporting_quote": "The donor can help mold the community to some extnt but at the same time the donor releases the control to the community. The relinquishment of control builds trust and community buy in. This in turn, ensures growth and legacy for the respective purpose of the donor and the associated DAO."
  },
  {
   "id": "kaal:claim:3981021-020",
   "url": "https://wulfkaal.github.io/claims/3981021-020",
   "claim": "In contrast to existing legacy structures that incentivize delay and hoarding, and depending on the respective DAO design, DAOs are incentivized to release the endowed assets immediately once the work for the donation has been finished.",
   "type": "design",
   "topics": [
    "risk-and-incentives",
    "compliance",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "DAO designs where community governance sets release policies"
   ],
   "supporting_quote": "In contrast to the existing legacy structures, and depending on the respective DAO design, DAOs are incentivized to immediately release the endowed assets if and when the work for the donation has been finished."
  },
  {
   "id": "kaal:claim:3981021-021",
   "url": "https://wulfkaal.github.io/claims/3981021-021",
   "claim": "Decentralized evolutionary and dynamic governance forms the foundation of the CHARITYxDAO community values and core beliefs, and decentralized governance is what provides cohesion and longevity in the DAO.",
   "type": "design",
   "topics": [
    "decentralization",
    "governance-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "DAO communities adopting decentralized dynamic governance"
   ],
   "supporting_quote": "provides the necessary decentralized evolutionary and dynamic governance that forms the foundation of the CHARITYxDAO community values and core beliefs. Decentralized governance provides cohesion and longevity in the CHARITYxDAO."
  },
  {
   "id": "kaal:claim:3981021-022",
   "url": "https://wulfkaal.github.io/claims/3981021-022",
   "claim": "Any exercise of the multisig endowment wallet keys ultimately depends on a vote in the assembly of the DAO association that serves as legal wrapper, so a donor holding one key among many is involved in endowment payment decisions without controlling them.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "endowment wallets held in a DAO legal wrapper such as a Swiss Association"
   ],
   "supporting_quote": "The exercise of the multisig wallet keys will ultimately always depend on a CHARITYxDAO vote in the assembly of the CHARITYxDAO association (the legal wrapper – if chosen to be a Swiss Association). As a multisig key holder, the donor will be involved in multisig endowment payment"
  },
  {
   "id": "kaal:claim:3981021-023",
   "url": "https://wulfkaal.github.io/claims/3981021-023",
   "claim": "The CHARITYxDAO's long term success depends on maintaining dynamic decentralized fluidity and order; without it the values that initially united the voting associates are at risk of morphing into ever tighter, more complex, and hierarchical structures.",
   "type": "condition",
   "topics": [
    "decentralization",
    "institutional-design",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs holding fungible assets over long time horizons"
   ],
   "supporting_quote": "long-term success depends on its ability to maintain the dynamic decentralized fluidity and dynamic decentralized order. Without it, the CHARITYxDAO's values that initially united and reinforced the CHARITYxDAO VAs are at risk of morphing into ever tighter, complex, and hierarchical structures."
  },
  {
   "id": "kaal:claim:3981021-024",
   "url": "https://wulfkaal.github.io/claims/3981021-024",
   "claim": "Merit in the CHARITYxDAO is expressed by a non fungible reputation token that cannot be bought or sold, and voting is designed around staking those non fungible reputation tokens.",
   "type": "design",
   "topics": [
    "reputation",
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "asserted",
   "scope_conditions": [
    "CHARITYxDAO voting design"
   ],
   "supporting_quote": "c. decisions in the CHARITYxDAO are made with a voting design that revolves around staking of non-fungible reputation tokens; d. non-fungibility of CHARITYxDAO reputation tokens; e.g. merit of a CHARITYxDAO VA is expressed by a non-fungible reputation token that cannot be bought or sold;"
  },
  {
   "id": "kaal:claim:3981021-025",
   "url": "https://wulfkaal.github.io/claims/3981021-025",
   "claim": "Voting associate salaries are paid in fungible tokens pro rata to each associate's non fungible reputation score at the point of payment, which creates second order economic effects and indirect economic incentives in the DAO.",
   "type": "design",
   "topics": [
    "tokenomics",
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "asserted",
   "scope_conditions": [
    "CHARITYxDAO salary design"
   ],
   "supporting_quote": "In other words, the reputation salary is paid out in fungible tokens pro rata to reputation score of each VA at the point of payment. This design ensures second order economic effects and indirect economic incentives in the"
  },
  {
   "id": "kaal:claim:3981021-026",
   "url": "https://wulfkaal.github.io/claims/3981021-026",
   "claim": "Every CHARITYxDAO decision runs through a two vote model: a loosely coupled sentiment vote with no reputation at stake, followed by a tightly coupled final vote with reputation at stake.",
   "type": "design",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "asserted",
   "scope_conditions": [
    "all CHARITYxDAO governance decisions"
   ],
   "supporting_quote": "i. Two vote model a) loosely coupled (sentiment) vote (no reputation at stake), b) tightly coupled (final) vote (reputation at stake):"
  },
  {
   "id": "kaal:claim:3981021-027",
   "url": "https://wulfkaal.github.io/claims/3981021-027",
   "claim": "Because voting associates can see the sentiment vote outcomes and who staked what reputation before the binding vote, it is reasonable to expect that the overwhelming majority of final tightly coupled votes will end in unanimity on the issue at hand.",
   "type": "predictive",
   "topics": [
    "consensus-and-security",
    "governance-design",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "two vote designs where sentiment results are visible before the binding vote"
   ],
   "supporting_quote": "Accordingly, it is reasonable to expect that the overwhelming majority of CHARITYxDAO's final tightly coupled votes will end in unanimity on the issue at hand."
  },
  {
   "id": "kaal:claim:3981021-028",
   "url": "https://wulfkaal.github.io/claims/3981021-028",
   "claim": "Reputation staking overcomes the polarizing effects and suboptimal vote outcomes produced by one token one vote voting mechanisms.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "asserted",
   "scope_conditions": [
    "governance systems choosing between token weighted and reputation weighted voting"
   ],
   "supporting_quote": "First, it overcomes the all too common polarizing effects and suboptimal vote outcomes of one- token-one-vote voting mechanisms."
  },
  {
   "id": "kaal:claim:3981021-029",
   "url": "https://wulfkaal.github.io/claims/3981021-029",
   "claim": "Reputation staking avoids the corruptive effects of fungible token staking because non fungible reputation has to be built organically through merit and time, needs to be earned, and cannot be bought.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "governance systems using non transferable reputation"
   ],
   "supporting_quote": "Second, the reputation staking design avoid the corruptive effects of fungible token staking because non-fungible reputation has to be built organically through merit and time, it needs to be earned and cannot be bought."
  },
  {
   "id": "kaal:claim:3981021-030",
   "url": "https://wulfkaal.github.io/claims/3981021-030",
   "claim": "Reputation staking serves the common good because the more the aggregated individual reputation of all voting associates increases, the more the overall value of the DAO increases and the more the DAO creates value enhancing outcomes for sponsors and the associate community at large.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives",
    "reputation",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "reputation weighted DAO governance tied to common good objectives"
   ],
   "supporting_quote": "gets served through this design in particular because the more the aggregated individual reputation of all CHARITYxDAO VAs increases the more the overall CHARITYxDAO value increases and the more the CHARITYxDAO creates value enhancing outcomes for the sponsors and VA"
  },
  {
   "id": "kaal:claim:3981021-031",
   "url": "https://wulfkaal.github.io/claims/3981021-031",
   "claim": "The design decreases the likelihood of individual and, in turn, community liveness fault, because non use of existing reputation at the individual level leads to inflationary devaluation of that reputation.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics",
    "risk-and-incentives",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "reputation systems with built in inflationary decay"
   ],
   "supporting_quote": "The design decreases the likelihood of individual and, in turn, community liveness fault because non-use of existing reputation on the individual level leads to inflationary devaluation."
  },
  {
   "id": "kaal:claim:3981021-032",
   "url": "https://wulfkaal.github.io/claims/3981021-032",
   "claim": "Charging an admission or denial of service fee to become a voting associate disincentivizes betrayal and defection, because the sunk cost of joining makes cheating expensive even where associates can remain anonymous.",
   "type": "mechanism",
   "topics": [
    "economics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "DAO membership with paid admission and blacklisting"
   ],
   "supporting_quote": "- The CHARITYxDAO disincentivize betrayal and defection by charging an admission fee, ie. DoS fee to become a CHARITYxDAO VA. Given the sunk cost of joining the CHARITYxDAO, it is more expensive for prospective VAs to cheat because it would be expensive to rejoin even if VAs could be anonymous."
  },
  {
   "id": "kaal:claim:3981021-033",
   "url": "https://wulfkaal.github.io/claims/3981021-033",
   "claim": "The loss of opportunity from slashing a voting associate's reputation grows as the size of the network increases, because a larger network intensifies competition among associates for the reputation tokens that determine fungible salary payouts.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "reputation weighted networks where salary tracks reputation"
   ],
   "supporting_quote": "reputation tokens to receive fungible token salaries that are paid in proportion to reputation tokens. Accordingly, in the CHARITYxDAO design, the loss of opportunity from slashing CHARITYxDAO VA reputation grows as the size of the network increases."
  },
  {
   "id": "kaal:claim:3981021-034",
   "url": "https://wulfkaal.github.io/claims/3981021-034",
   "claim": "Anonymity increases the value of the reputation token, because as information asymmetries and incomplete information increase, the value of the information that derives from reputation tokens increases.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "pseudonymous participation in reputation based systems"
   ],
   "supporting_quote": "- Anonymity increases the value of the reputation token. As the information asymmetries and incomplete information increase because of the increasing anonymity, the value of the information that derives from reputation tokens increases."
  },
  {
   "id": "kaal:claim:3981021-035",
   "url": "https://wulfkaal.github.io/claims/3981021-035",
   "claim": "Punishment for nefarious conduct becomes credible when it is automated, and the value of a voting associate's reputation is directly related to how well punishment can be distributed in response to nefarious conduct.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "algorithmic detection and slashing of misconduct in DAO governance"
   ],
   "supporting_quote": "- Punishment for nefarious conduct becomes automated and therefore credible. The CHARITYxDAO reputation staking design also enhances policing and compliance. The value of CHARITYxDAO VA reputation is directly related to how well punishment can be distributed in"
  },
  {
   "id": "kaal:claim:3981021-036",
   "url": "https://wulfkaal.github.io/claims/3981021-036",
   "claim": "Commonly used identifiers such as social media profiles and credit scores play less of a role in the DAO voting design, and the resulting more equal distribution of power allows the inclusion of constituents who otherwise have no agency in centralized systems.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "governance designs using pseudonymous reputation rather than legacy identifiers"
   ],
   "supporting_quote": "play less of a role in the CHARITYxDAO voting designs. The more equal distribution of power in the CHARITYxDAO governance design allows the inclusion of constituents who otherwise have no agency in centralized systems."
  },
  {
   "id": "kaal:claim:3981021-037",
   "url": "https://wulfkaal.github.io/claims/3981021-037",
   "claim": "Community audits enable enhanced efficiency of coordination because voting associates, with their highly specialized philanthropic skillsets, are ideally positioned to identify other experts in philanthropy.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "citation-and-knowledge",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs whose members hold specialized philanthropic expertise"
   ],
   "supporting_quote": "governance structure of the CHARITYxDAO enables enhanced efficiency of coordination because the VAs in the CHARITYxDAO, with their unique and highly specialized skillsets in the context of philanthropy, are ideally positioned to identify other experts in philanthropy."
  },
  {
   "id": "kaal:claim:3981021-038",
   "url": "https://wulfkaal.github.io/claims/3981021-038",
   "claim": "Just as centralized institutions rely on the vetting of candidates by other centralized institutions, the CHARITYxDAO may serve as a decentralized oracle for philanthropic endeavors.",
   "type": "predictive",
   "topics": [
    "decentralization",
    "smart-contracts",
    "corporate-governance",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "speculative",
   "scope_conditions": [
    "growth in the scale of the CHARITYxDAO",
    "analogy to centralized institutions vetting each other's candidates"
   ],
   "supporting_quote": "Similar to how centralized institutions rely on the vetting of candidates from other centralized institutions, the CHARITYxDAO may serve as a decentralized oracle for philanthropic endeavors."
  },
  {
   "id": "kaal:claim:3981021-039",
   "url": "https://wulfkaal.github.io/claims/3981021-039",
   "claim": "Under Type 1 onboarding the DAO treasury matches the assets the candidate raised, and the value of those raised assets is used to mint reputation under the DEVxDAO MVPR at a ratio of one thousand dollars per reputation unit.",
   "type": "design",
   "topics": [
    "corporate-governance",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "asserted",
   "scope_conditions": [
    "Type 1 CHARITYxDAO onboarding of candidates with a prior fundraising record"
   ],
   "supporting_quote": "a. The treasury of the CHARITYxDAO will match the assets the candidate raised b. The value of the assets they raised will be used for the minting of reputation under the DEVxDAO MVPR with a minting ratio of $1000/Rep1"
  },
  {
   "id": "kaal:claim:3981021-040",
   "url": "https://wulfkaal.github.io/claims/3981021-040",
   "claim": "Matched or treasury assets are held in the smart contract and released only if the candidate shows satisfactory evidence of expected distribution, and once upvoted the assets are distributed via milestone votes that each require evidence of fulfilled donative intent.",
   "type": "design",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Autonomous Organizations Optimize Charitable Giving (2021). SSRN: https://ssrn.com/abstract=3981021",
   "year": "2021",
   "source_sha256": "9d8bc78d119c780c96c89ce3e820f4ac8b037d39b3ade59feb4e40d46b048288",
   "confidence": "asserted",
   "scope_conditions": [
    "CHARITYxDAO Type 1 and Type 2 onboarding disbursements"
   ],
   "supporting_quote": "e. Once the project gets upvoted under 1.d. above, the assets will be distributed via milestone votes. In each milestone, the candidate has to provide evidence of fulfilling donative intent and allocation of assets in accordance with the project parameters."
  },
  {
   "id": "kaal:claim:3808867-001",
   "url": "https://wulfkaal.github.io/claims/3808867-001",
   "claim": "Decentralized systems create a self reinforcing feedback loop between unique individual inputs and personal freedom: as the quality of unique individual inputs improves the system, the system places higher value on the uniqueness of human inputs, and personal liberties expand as a result.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized computing systems that aggregate individual inputs"
   ],
   "supporting_quote": "As the system improves with the quality of unique individual inputs, the system increasingly values the uniqueness of human inputs, and as a result, personal liberties and freedom increase."
  },
  {
   "id": "kaal:claim:3808867-002",
   "url": "https://wulfkaal.github.io/claims/3808867-002",
   "claim": "Decentralized systems invert the collectivist tradeoff: rather than demanding that individuals sacrifice personal fulfilment for the group, they prioritize personal fulfilment because it produces the unique inputs and innovation that raise the collective wisdom of the group.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized computing networks",
    "contrasted with collectivism as a political philosophy"
   ],
   "supporting_quote": "Where collectivism would demand a sacrifice of personal fulfilment for the group, decentralized systems would prioritize personal fulfilment as it enhances unique inputs and innovation that increase the collective wisdom of the group."
  },
  {
   "id": "kaal:claim:3808867-003",
   "url": "https://wulfkaal.github.io/claims/3808867-003",
   "claim": "Appeals to individual sacrifice for a common good constitute ethical collectivism, which corrupts society and undermines the reason and rational thought of individuals.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "supporting_quote": "Appeals to a human individualistic sacrifice for a common good is a form of ethical collectivism which corrupts society and undermines reason and rational thoughts of individuals."
  },
  {
   "id": "kaal:claim:3808867-004",
   "url": "https://wulfkaal.github.io/claims/3808867-004",
   "claim": "Capitalism and socialism each fail in characteristic ways: capitalism produces inequities, monopolies, and other market failures, while socialism suffers incentive design failures in which hard work is not effectively rewarded and external costs are largely ignored.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "supporting_quote": "Capitalism can lead to significant inequities, inequality, as well as monopolies, and other market failures. Similarly, socialism has significant incentive design issues, where hard work is not rewarded effectively and external costs are largely ignored."
  },
  {
   "id": "kaal:claim:3808867-005",
   "url": "https://wulfkaal.github.io/claims/3808867-005",
   "claim": "Decentralism transcends both socialism and capitalism by positing that centralized coordination of societal and economic activity, in whichever doctrinal form, should be minimized in order to free human potential.",
   "type": "definitional",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "asserted",
   "supporting_quote": "Decentralism transcends socialism and capitalism. Decentralism posits that centralized coordination of societal and economic activity, as instituted and instantiated in capitalistic or socialistic doctrine, should be held to a minimum in order to free the human potential."
  },
  {
   "id": "kaal:claim:3808867-006",
   "url": "https://wulfkaal.github.io/claims/3808867-006",
   "claim": "Decentralism generates efficiency through higher levels of connectivity rather than through the linear cost reduction mechanisms that capitalism and socialism debate.",
   "type": "mechanism",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "asserted",
   "scope_conditions": [
    "comparison with capitalist and socialist notions of efficiency"
   ],
   "supporting_quote": "decentralism creates efficiency not in linear forms but via higher levels of connectivity"
  },
  {
   "id": "kaal:claim:3808867-007",
   "url": "https://wulfkaal.github.io/claims/3808867-007",
   "claim": "Redistribution under decentralism rests on ownership rights in a person's individuality derived data that creates economic value, rather than on tax policy.",
   "type": "design",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "asserted",
   "supporting_quote": "decentralism's redistribution is based on ownership rights in persons' individuality-derived data that creates economic value."
  },
  {
   "id": "kaal:claim:3808867-008",
   "url": "https://wulfkaal.github.io/claims/3808867-008",
   "claim": "Because decentralism pursues growth through connectivity and network effects rather than through per unit cost reduction and economies of scale, negative externalities are minimized without any centralized planning.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "systems organized around network effects rather than economies of scale"
   ],
   "supporting_quote": "is focused on connectivity and growth through network effects. As such, negative externalities are minimized without centralized planning."
  },
  {
   "id": "kaal:claim:3808867-009",
   "url": "https://wulfkaal.github.io/claims/3808867-009",
   "claim": "Decentralism holds that trust in a system should not be controlled by corruptible human constructs and institutions run by a limited number of fallible humans; instead trust rests on technology enhanced individualism and technology facilitated collective human action.",
   "type": "definitional",
   "topics": [
    "reputation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "contrast with capitalist trusted intermediaries and socialist belief in government infallibility"
   ],
   "supporting_quote": "decentralism posits that trust in the system should not be controlled by corruptible human constructs and institutions that are controlled by a limited number of fallible and corruptible humans. Rather, trust in decentralism is based on technology-enhanced individualism."
  },
  {
   "id": "kaal:claim:3808867-010",
   "url": "https://wulfkaal.github.io/claims/3808867-010",
   "claim": "Legally created trust is limited because it is only indirectly democratically legitimized, and is therefore arbitrary, inflexible, untimely, resistant to change, dependent on fallible human centric decision processes, and confined to human speed.",
   "type": "failure",
   "topics": [
    "reputation",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "trust created by legal guarantees and judicial enforcement in capitalist and socialist systems"
   ],
   "supporting_quote": "Legally created trust is often limited as it can be arbitrary because it is only indirectly democratically legitimized, inflexible, untimely, resistant to change, with fallible human-centric decision processes, and human speed."
  },
  {
   "id": "kaal:claim:3808867-011",
   "url": "https://wulfkaal.github.io/claims/3808867-011",
   "claim": "Personal assets such as one's data, preferences, and opinions can only be commercialized to a limited degree in existing centralized structures, whereas decentralized structures allow those same assets to be tokenized, valued, and mobilized.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "personal consumption data, preferences and opinions",
    "early 2020s decentralized markets"
   ],
   "supporting_quote": "Such assets, e.g. one's data, preferences, opinions etc. can only limitedly be commercialized in existing centralized structures. In decentralized structures such assets can be tokenized, valued, and mobilized."
  },
  {
   "id": "kaal:claim:3808867-012",
   "url": "https://wulfkaal.github.io/claims/3808867-012",
   "claim": "Delegating one's vote to a third party whose ethics and belief system the voter does not truly know produces suboptimal outcomes, and delegated voting on issues that cannot be foreseen is corrupting.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "representative democracies in the 21st century"
   ],
   "supporting_quote": "The very notion of delegating one's vote to a third party without true knowledge of the ethics and belief system of such a third party creates suboptimal outcomes. Delegated voting on issues one cannot foresee corrupts."
  },
  {
   "id": "kaal:claim:3808867-013",
   "url": "https://wulfkaal.github.io/claims/3808867-013",
   "claim": "Elected representatives are incentivized to maintain their own power of office rather than to vote for outcomes reflecting the presumptive wishes and needs of their constituents.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "ai-and-agents",
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "asserted",
   "scope_conditions": [
    "representative democracies"
   ],
   "supporting_quote": "Voted representatives are not incentivized to vote for outcomes that reflect the presumptive wishes and needs of their constituents but for maintaining their own power of office."
  },
  {
   "id": "kaal:claim:3808867-014",
   "url": "https://wulfkaal.github.io/claims/3808867-014",
   "claim": "Ex ante remedies for the downsides of representative democracy were not technologically possible when democratic representation was designed, so its downsides such as corruption, bribery, and bias had to be tolerated as inevitable tradeoffs.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "early democracies facing physical, practical, and technological limitations"
   ],
   "supporting_quote": "Ex-ante remedies to overcome these downsides of representative democracies were not technologically possible."
  },
  {
   "id": "kaal:claim:3808867-015",
   "url": "https://wulfkaal.github.io/claims/3808867-015",
   "claim": "Microdemocratic vote allocation improves voting outcomes because the proportion of votes a voter allocates to an issue evidences that voter's higher level of knowledge on the issue, and voters are unlikely to give top priority to issues they know little about.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "voting systems that allocate a maximum number of votes per voter across issues",
    "quadratic voting style designs"
   ],
   "supporting_quote": "Moreover, part of the power of this microdemocratic approach derives from the higher levels of knowledge a given voter has on a particular issue that is evidenced by the voters' proportional allocation of votes on such issue."
  },
  {
   "id": "kaal:claim:3808867-016",
   "url": "https://wulfkaal.github.io/claims/3808867-016",
   "claim": "Microdemocratic systems must solve the tragedy of the commons, because without controls self interested voters acting independently of the totality of voters may deplete or spoil shared resources such as the environment and public goods.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "microdemocratic shared-resource systems",
    "absence of controls"
   ],
   "supporting_quote": "Without controls, some self-interested voters may be depleting or spoiling resources they share with the rest of society, such as the environment, public goods, among others."
  },
  {
   "id": "kaal:claim:3808867-017",
   "url": "https://wulfkaal.github.io/claims/3808867-017",
   "claim": "Majority rule in microdemocratic systems can produce discrimination against minorities, because a majority that is itself unaffected by a rule it instantiates can impose a discriminatory impact on a minority that is disproportionately affected.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "majority rule voting systems"
   ],
   "supporting_quote": "Similarly, majority rule may mean discrimination of the minority. A majority that is unaffected by a rule they instantiate may have a discriminatory impact on a minority that is disproportionately affected by the change in the rules."
  },
  {
   "id": "kaal:claim:3808867-018",
   "url": "https://wulfkaal.github.io/claims/3808867-018",
   "claim": "Microdemocracy's key advantage is the speed of change it can initiate: because technology permits incorruptible instantaneous counting and tallying of votes, voting becomes dynamic and incremental and political will is exercised more directly.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "comparison with representative democracies whose change depended on elections roughly every four years"
   ],
   "supporting_quote": "Because technology enables the incorruptible counting and tallying of votes instantaneously, voting can be more dynamic and incremental and political will is exercised more directly."
  },
  {
   "id": "kaal:claim:3808867-019",
   "url": "https://wulfkaal.github.io/claims/3808867-019",
   "claim": "Unlike their centralized predecessors, decentralized technologies enable, for the first time in history, improved incentive designs that help overcome the insufficiencies in the voting outcomes of representative democracies.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized voting pools that increase, deepen, and proliferate"
   ],
   "supporting_quote": "Unlike their centralized predecessors, decentralized technologies, for the first time in history, enable improved incentive designs that help overcome the insufficiencies in voting outcomes of representative democracies."
  },
  {
   "id": "kaal:claim:3808867-020",
   "url": "https://wulfkaal.github.io/claims/3808867-020",
   "claim": "Upgrading existing representative democracies with decentralized supplemental voting systems may require constitutional or democratic support, and the availability of that support is dubious at best.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "adoption of decentralized voting pools as supplements to representative democracy"
   ],
   "supporting_quote": "Of course, such upgrades to existing representative democracies may require constitutional or democratic support which is dubious at best."
  },
  {
   "id": "kaal:claim:3808867-021",
   "url": "https://wulfkaal.github.io/claims/3808867-021",
   "claim": "Decentralized voting solutions require political will as well as technology, and governments in existing representative democracies may refuse to surrender control over the voting process, preferring private blockchains to facilitate voting outcomes.",
   "type": "failure",
   "topics": [
    "blockchain",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "government controlled voting infrastructure"
   ],
   "supporting_quote": "Yet, governments in the existing representative democracies may not wish to surrender control over the voting process and may prefer to use private blockchains to facilitate voting outcomes."
  },
  {
   "id": "kaal:claim:3808867-022",
   "url": "https://wulfkaal.github.io/claims/3808867-022",
   "claim": "Regulating centralized technology conglomerates addresses only part of the problem, because even fully regulated conglomerates retain the power to set standards and norms for emerging technologies that government cannot effectively trace; microdemocratic decision making can set such standards outside their control metrics.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "centralized technology conglomerates that increasingly act like governments"
   ],
   "supporting_quote": "Even if fully regulated, centralized technology conglomerates still have the power to set standards and norms for emerging technologies that government cannot effectively trace."
  },
  {
   "id": "kaal:claim:3808867-023",
   "url": "https://wulfkaal.github.io/claims/3808867-023",
   "claim": "The conveniences and benefits of centralized algorithmic automation carry risks to humanity that cannot be fully quantified, and decentralized systems can counteract those downsides and threats.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "risk-and-incentives",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "asserted",
   "supporting_quote": "At the same time, the conveniences and benefits that derive from centralized algorithmic automation bring with them risks to humanity that cannot be fully quantified. Decentralized systems can counteract the downsides and threats of algorithmic automation"
  },
  {
   "id": "kaal:claim:3808867-024",
   "url": "https://wulfkaal.github.io/claims/3808867-024",
   "claim": "A single powerful application such as Google already exercises substantial control over human knowledge and thought, and could control societal outcomes by making disparate recommendations to similarly situated users.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "dominant internet based applications accumulating societal functions since the early 2010s"
   ],
   "supporting_quote": "For example, a powerful application such as Google has already a lot of control over human knowledge and thought."
  },
  {
   "id": "kaal:claim:3808867-025",
   "url": "https://wulfkaal.github.io/claims/3808867-025",
   "claim": "The quantification and algorithmic optimization of human thought, feeling, and action can produce an optimization of humans that is too complex for humans to understand without the data driven algorithmic aids themselves.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "sensor and wearable derived data on human interaction"
   ],
   "supporting_quote": "The quantification of human thought, feeling, and action and their algorithmic optimization can create optimization of humans that is too complex for humans to understand without the data-driven algorithmic aids."
  },
  {
   "id": "kaal:claim:3808867-026",
   "url": "https://wulfkaal.github.io/claims/3808867-026",
   "claim": "Big data and algorithmic data analytics enable centralized algorithmically automated systems such as Google, Facebook, and Amazon to know individuals' political preferences better than the individuals themselves.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "evidenced",
   "scope_conditions": [
    "centralized algorithmically automated platforms in the early 2020s"
   ],
   "supporting_quote": "Big data and algorithmic data analytics enable centralized algorithmically automated systems (such as Google, Facebook, and Amazon in the early 2020s) to know individuals' political preferences better than the individual's themselves."
  },
  {
   "id": "kaal:claim:3808867-027",
   "url": "https://wulfkaal.github.io/claims/3808867-027",
   "claim": "As algorithmic analytics and predictions of human preferences become increasingly accepted, exercising human political will by proxy through algorithmic interpretations may become the new normal in the foreseeable future.",
   "type": "predictive",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "speculative",
   "scope_conditions": [
    "increasing acceptance of algorithmic prediction of human choice"
   ],
   "supporting_quote": "As algorithmic analytics and predictions of human preferences and choice become increasingly accepted, exercising human political will by proxy through algorithmic interpretations may become increasingly the new normal in the foreseeable future."
  },
  {
   "id": "kaal:claim:3808867-028",
   "url": "https://wulfkaal.github.io/claims/3808867-028",
   "claim": "In its ultimate state, algorithmic automation negates human input in data systems altogether, because human bounded rationality creates inefficiencies and the human condition yields suboptimal outputs even when algorithmically optimized.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "fully realized centralized algorithmic automation"
   ],
   "supporting_quote": "In its ultimate state, algorithmic automation negates human input in data systems as humans' bounded rationality creates inefficiencies and the human condition results in suboptimal outputs, even when algorithmically optimized."
  },
  {
   "id": "kaal:claim:3808867-029",
   "url": "https://wulfkaal.github.io/claims/3808867-029",
   "claim": "A feedback loop exists between decentralized protection of the human factor in algorithmic systems and the proliferation of both algorithmic automation and decentralized solutions.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "asserted",
   "supporting_quote": "A feedback loop exists between decentralized protection of the human factor in algorithmic systems and the proliferation of both algorithmic automation and decentralized solutions."
  },
  {
   "id": "kaal:claim:3808867-030",
   "url": "https://wulfkaal.github.io/claims/3808867-030",
   "claim": "Because a decentralized system has a blockchain based quasi precedent nature with a human backstop, it enables built in checks and balances capable of supporting resistance even to apocalyptic takeovers of algorithmic systems that would remove human presence to optimize efficiency.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain based systems with accumulated human voting records"
   ],
   "supporting_quote": "Because of its blockchain-based quasi- precedent nature with a human backstop, the decentralized system enables built-in checks and balances that can support resistance to even the most apocalyptic applications and takeover of algorithmic systems"
  },
  {
   "id": "kaal:claim:3808867-031",
   "url": "https://wulfkaal.github.io/claims/3808867-031",
   "claim": "Those few entities and individuals who control the data flow and the associated algorithms can use centralized algorithmic human predictors to build autocratic algorithmic systems and structures, and the implied loss of democratic principles in society is perhaps an inevitable side effect.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "concentrated control over data flows and algorithms"
   ],
   "supporting_quote": "Centralized algorithmic human predictors can be used by those few entities and individuals who control the data flow and the associated algorithms to create autocratic algorithmic systems and structures. The implied loss of democratic principles in society is perhaps an inevitable side effect."
  },
  {
   "id": "kaal:claim:3808867-032",
   "url": "https://wulfkaal.github.io/claims/3808867-032",
   "claim": "Because of its autocratic and efficiency focused tendencies, centralized algorithmic automation is prone to create structures for the evolution of dataism, which ultimately denies the value of human inputs and individualism.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "centralized algorithmic automation oriented to harmonization and efficiency"
   ],
   "supporting_quote": "Because of it autocratic and efficiency focused tendencies, centralized algorithmic automation is prone to create structures for the evolution of dataism, which ultimately denies the value of human inputs and individualism."
  },
  {
   "id": "kaal:claim:3808867-033",
   "url": "https://wulfkaal.github.io/claims/3808867-033",
   "claim": "Code based trust lowers transaction costs and simultaneously raises consumer and market confidence and certainty, which facilitates economies of scale that are rarely possible in centralized structures, despite the cybersecurity problems associated with cryptocurrencies.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "code based decentralized applications",
    "presence of cybersecurity issues in cryptocurrency markets"
   ],
   "supporting_quote": "code-based trust can help lower transaction costs, but it also increases consumer and overall market confidence and certainty, which facilitate economies of scale that are rarely possible in centralized structures"
  },
  {
   "id": "kaal:claim:3808867-034",
   "url": "https://wulfkaal.github.io/claims/3808867-034",
   "claim": "Because decentralized platforms can remove the consumer fees that are integral to their centralized competitors, they also remove downward pressure on platform worker compensation, since costs are less likely to increase and be passed on to workers and consumers.",
   "type": "mechanism",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized platforms with lower cost structures than centralized competitors"
   ],
   "supporting_quote": "Removing such centralized fees also allows for the removal of downward pressure on the platforms' worker compensation as costs are less likely to increase and be passed on to workers and consumers."
  },
  {
   "id": "kaal:claim:3808867-035",
   "url": "https://wulfkaal.github.io/claims/3808867-035",
   "claim": "Blockchain based guarantees remove agency costs because principals are less required to institute oversight and monitoring of agents, which addresses inherent agency problems in modern finance and corporate governance.",
   "type": "mechanism",
   "topics": [
    "corporate-governance",
    "governance-design",
    "blockchain",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "contracts whose parameters are verified by a majority of miners or nodes"
   ],
   "supporting_quote": "Blockchain-based guarantees remove agency costs because principals are less required to institute oversight and monitoring of agents which addresses the inherent agency problems in modern finance and corporate governance."
  },
  {
   "id": "kaal:claim:3808867-036",
   "url": "https://wulfkaal.github.io/claims/3808867-036",
   "claim": "Decentralized payment systems hold a comparative advantage over centralized legacy fiat systems because holding and storing cryptocurrencies requires no banking relationship, whereas centralized fiat payment platforms typically require an existing banking relationship.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "consumers without existing banking relationships"
   ],
   "supporting_quote": "Centralized legacy fiat payment systems and platforms typically require some form of an existing banking relationship in order for consumers to utilize their services. Holding and storing cryptocurrencies does not require a banking relationship."
  },
  {
   "id": "kaal:claim:3808867-037",
   "url": "https://wulfkaal.github.io/claims/3808867-037",
   "claim": "High intermediary fees in legacy payment systems make transacting economically viable only at higher transaction volumes, thereby creating barriers to entry that decentralized payment systems do not impose.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "centralized legacy fiat payment systems relying on banks and payment processors"
   ],
   "supporting_quote": "The fees make it only economically viable for higher volumes of transactions, creating barriers to entry in the process."
  },
  {
   "id": "kaal:claim:3808867-038",
   "url": "https://wulfkaal.github.io/claims/3808867-038",
   "claim": "Cash usage in the United States, the United Kingdom, the Netherlands, Sweden, Finland, Canada, and France and other industrialized nations has fallen well below 50 percent of total transaction volume.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "evidenced",
   "scope_conditions": [
    "industrialized nations at the beginning of the 2020s"
   ],
   "supporting_quote": "cash usage in the United States, the United Kingdom, the Netherlands, Sweden, Finland, Canada, France, among other industrialized nations, has fallen well below 50% of total transaction volume."
  },
  {
   "id": "kaal:claim:3808867-039",
   "url": "https://wulfkaal.github.io/claims/3808867-039",
   "claim": "Transacting in cash costs United States consumers roughly 200 billion dollars annually, about 637 dollars per person, driven by the costs of production, storage, and transportation.",
   "type": "empirical",
   "topics": [
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States, early 2020s"
   ],
   "supporting_quote": "In the United States, transacting in cash costs the consumer around 200 billion dollars annually— about $637 per person annually, which is a result of the cost of production, storage, and transportation, among other factors."
  },
  {
   "id": "kaal:claim:3808867-040",
   "url": "https://wulfkaal.github.io/claims/3808867-040",
   "claim": "The end of the technological life cycles of legacy payment systems in the early 2020s, together with emerging payment trends, requires central banks to intensify their examination of alternative payment systems.",
   "type": "predictive",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867",
   "year": "2021",
   "source_sha256": "eeccf6d0587bd278a96ce6ac8ec5003e26d161c245f6c94b4144d84f374802eb",
   "confidence": "argued",
   "scope_conditions": [
    "central banks and governments experimenting with digital and cryptocurrencies since 2015"
   ],
   "supporting_quote": "The end of technological life cycles of legacy systems in the early 2020s and associated emerging trends in payment systems necessitate central banks' enhanced examination of alternative payment systems."
  },
  {
   "id": "kaal:claim:3931933-001",
   "url": "https://wulfkaal.github.io/claims/3931933-001",
   "claim": "In conventional Proof of Stake, selection probability for block rewards rises with stake and block rewards are constant regardless of node reputation, whereas in Secure Proof of Stake nodes with higher reputation have a higher probability of being selected for rewards.",
   "type": "definitional",
   "topics": [
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "comparison of conventional PoS and SPoS reward selection"
   ],
   "supporting_quote": "In conventional PoS, the nodes with higher stake would have a higher probability of being selected for the block rewards. Block rewards are constant regardless of the node reputation. In SPoS, the nodes with higher reputation have a higher probability of being selected for the rewards."
  },
  {
   "id": "kaal:claim:3931933-002",
   "url": "https://wulfkaal.github.io/claims/3931933-002",
   "claim": "The core proposal of Hybrid Secure Proof of Stake is to separate block consensus from block rewards, making the reward a function of the node's reputation rather than of stake alone.",
   "type": "design",
   "topics": [
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "supporting_quote": "The main concept in Hybrid Secure Proof of Stake (HSPoS) is to separate the block consensus from the block rewards. HSPoS proposes that the rewards become a function in the reputation of the node."
  },
  {
   "id": "kaal:claim:3931933-003",
   "url": "https://wulfkaal.github.io/claims/3931933-003",
   "claim": "Under HSPoS a node's probability of being selected remains driven by its fungible stake, while the size of the block reward it receives is scaled by a non-fungible reputation multiplier derived from the node's reputation.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "HSPoS reward layer applied on top of an existing PoS consensus layer"
   ],
   "supporting_quote": "Thus, while the node probability of being selected is based on the fungible stake, the rewards for the block is adjusted by the non-fungible reputation multiplier which is a function of the node's reputation."
  },
  {
   "id": "kaal:claim:3931933-004",
   "url": "https://wulfkaal.github.io/claims/3931933-004",
   "claim": "Because HSPoS supplements rather than replaces the consensus layer, an existing PoS consensus algorithm can be kept in operation while reputation is introduced through the reward function, permitting a gradual rather than abrupt transition to SPoS.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "networks already running a traditional PoS consensus algorithm"
   ],
   "supporting_quote": "HSPoS enables a transitioning process in which traditional PoS consensus algorithms, can be used and maintained while being supplemented with SPoS characteristics and node reputation. This enables enhanced experimentation and allows a slow transitioning from PoS to SPoS."
  },
  {
   "id": "kaal:claim:3931933-005",
   "url": "https://wulfkaal.github.io/claims/3931933-005",
   "claim": "Moving a network from PoS to SPoS should proceed by evolving the rewards mechanism in two steps through HSPoS, rather than by switching the consensus mechanism directly.",
   "type": "design",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "networks seeking to adopt Secure Proof of Stake"
   ],
   "supporting_quote": "In order to move PoS towards SPoS (Secure Proof of Stake),2 this paper suggests evolving the rewards mechanism in two steps via HSPoS (Hybride Secure Proof of Stake)."
  },
  {
   "id": "kaal:claim:3931933-006",
   "url": "https://wulfkaal.github.io/claims/3931933-006",
   "claim": "Platform centralization is especially damaging in developer communities because developers are the channel through which information from the edges of the system and society enters, and through which consensus on emerging technologies is formed.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "open-source-and-code",
    "governance-design",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "technology platforms whose direction is controlled centrally"
   ],
   "supporting_quote": "Platform centralization is particularly detrimental in the developer community because it is the developer community that brings information in from the edges of the system/society and helps form a consensus on emerging technologies for society."
  },
  {
   "id": "kaal:claim:3931933-007",
   "url": "https://wulfkaal.github.io/claims/3931933-007",
   "claim": "The lack of developer liberalization carries negative societal consequences: when developers are restrained from building what they see as cutting edge and socially beneficial, society's own capacity to experiment with new technology is severely hampered.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code",
    "decentralization",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "developer communities constrained by centralized platform control"
   ],
   "supporting_quote": "The lack of developer liberalization has negative societal ramifications. If the developer community is restrained from building technology it sees as cutting edge and beneficial for society, societies' ability to experiment with such new technology solutions is severely hampered."
  },
  {
   "id": "kaal:claim:3931933-008",
   "url": "https://wulfkaal.github.io/claims/3931933-008",
   "claim": "The final 2021 Casper testnet used perceived validator node uptime as its single rewarding requirement.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "Casper testnet incentivization phase ending September 2021"
   ],
   "supporting_quote": "The latest incentivized testnet ended in September 2021. The last Casper tesnet in September 2021 entailed as its single rewarding requirement the perceived uptime of the participating testnet validator node."
  },
  {
   "id": "kaal:claim:3931933-009",
   "url": "https://wulfkaal.github.io/claims/3931933-009",
   "claim": "Early Casper testnet participation was sustained by norms of unpaid mutual support, with participants actively sharing knowledge and supporting other validators without expectation of profit or return favors.",
   "type": "empirical",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "early Casper testnet period before incentivized phases"
   ],
   "supporting_quote": "Importantly, the early testnet community entailed many participants who were actively sharing their knowledge and supporting other validators without expectation of profit or return favors."
  },
  {
   "id": "kaal:claim:3931933-010",
   "url": "https://wulfkaal.github.io/claims/3931933-010",
   "claim": "Detailed and easy to follow operator documentation produced by the early testnet community drove participation up to roughly 950 nodes running on the network, with around 200 nodes rewarded each week.",
   "type": "empirical",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "early Casper testnet days"
   ],
   "supporting_quote": "early testnet community created detailed and very easy-to-follow instructions for the testnet node operators, which resulted in around 950 nodes running on the network and around 200 nodes were rewarded each week."
  },
  {
   "id": "kaal:claim:3931933-011",
   "url": "https://wulfkaal.github.io/claims/3931933-011",
   "claim": "Publishing each validator's uptime and rewarding status to the community on a weekly basis coincided with active Casper testnet nodes falling below 800, in a period of already volatile validator participation.",
   "type": "failure",
   "topics": [
    "disclosure",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "evidenced",
   "scope_conditions": [
    "2021 Casper testnet incentivized phases"
   ],
   "supporting_quote": "In the early testnet days, validator participation was volatile with validators joining and others leaving regularly. At some point during 2021, the active Caser testnet nodes fell under 800 after the uptimes/rewarding-status of each validator node was reported to the community on a weekly basis."
  },
  {
   "id": "kaal:claim:3931933-012",
   "url": "https://wulfkaal.github.io/claims/3931933-012",
   "claim": "Validators who learned they would receive no reward shut down their nodes rather than waiting for the incentivization phase to end, so a reward scheme that visibly excludes participants loses their contribution immediately.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "evidenced",
   "scope_conditions": [
    "2021 Casper testnet incentivization phase"
   ],
   "supporting_quote": "Other validators shut down their nodes instead of waiting for the end of the incentivization phase when they realized that there was no reward for them."
  },
  {
   "id": "kaal:claim:3931933-013",
   "url": "https://wulfkaal.github.io/claims/3931933-013",
   "claim": "The initial Casper testnet was subject to inevitable centralization, illustrated by a small group of core developers setting validator performance numbers and other rules without broader community input.",
   "type": "failure",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "initial Casper testnet governance"
   ],
   "supporting_quote": "The initial Casper testnet was subject to inevitable forms of centralization. For example, a small group of core developers determined the testnet validator performance numbers and other rules without broader community input. Moreover, only a rather small group of developers managed"
  },
  {
   "id": "kaal:claim:3931933-014",
   "url": "https://wulfkaal.github.io/claims/3931933-014",
   "claim": "Opacity about reward eligibility is itself a source of dysfunction: during the first phase of the 2021 Casper testnet it was unclear which validators would be rewarded in each week, which caused friction and non-productive discussions among the validators.",
   "type": "failure",
   "topics": [
    "disclosure",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "first phase of the 2021 Casper testnet",
    "weekly publication of uptime scores improved the situation only marginally"
   ],
   "supporting_quote": "During the first phase of the 2021 Casper Testnet, it was unclear which validators would get rewarded in each week, causing friction and non-productive discussions among the validators."
  },
  {
   "id": "kaal:claim:3931933-015",
   "url": "https://wulfkaal.github.io/claims/3931933-015",
   "claim": "The initial Casper testnet group was hampered by communication shortcomings, with only around 680 validators present in the telegram group that served as the main channel for news and updates.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "institutional-design",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "evidenced",
   "scope_conditions": [
    "2021 Casper testnet validator community"
   ],
   "supporting_quote": "Yet, the initial testnet group were hampered by communication shortcomings. For example, only around 680 of the validators were present in the telegram group."
  },
  {
   "id": "kaal:claim:3931933-016",
   "url": "https://wulfkaal.github.io/claims/3931933-016",
   "claim": "Uptime based reward policies invite Sybil style abuse: on the original Casper testnet single persons ran fifteen or more validator nodes to exploit cloud provider promotions and the DEVxDAO rewards policy, extracting rewards without contributing to the validator group.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "regulatory-failure",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "evidenced",
   "scope_conditions": [
    "original Casper testnet under a uptime only rewards policy"
   ],
   "supporting_quote": "The original Casper Testnet was also afflicted by cases of single persons running 15+ validator nodes in an effort to abuse the welcome promotions of certain cloud providers and the rewards policy of the DEVxDAO."
  },
  {
   "id": "kaal:claim:3931933-017",
   "url": "https://wulfkaal.github.io/claims/3931933-017",
   "claim": "Lack of validator expertise degraded the initial Casper testnet, with only around 85 percent of testnet nodes up to date and roughly 140 active machines contributing nothing to the network.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "evidenced",
   "scope_conditions": [
    "initial Casper testnet"
   ],
   "supporting_quote": "Lack of expertise also afflicted the initial Casper testnet. Only around 85% of the testnet nodes were up-to-date, with the rest of the active machines (around 140 machines at the time) not contributing to the network at all. Judging by the discussion and questions in the telegram channel,"
  },
  {
   "id": "kaal:claim:3931933-018",
   "url": "https://wulfkaal.github.io/claims/3931933-018",
   "claim": "Reward focused participation crowds out technical engagement: many Casper testnet participants lacked the expertise to run nodes, and their questions concentrated on reward payments with little to no focus on technical topics.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "initial Casper testnet telegram channel discussions"
   ],
   "supporting_quote": "Judging by the discussion and questions in the telegram channel, many testnet participants also did not have the required expertise to run Casper testnet nodes. Questions primarily focused on reward payments, with little to no focus on the technical topics."
  },
  {
   "id": "kaal:claim:3931933-019",
   "url": "https://wulfkaal.github.io/claims/3931933-019",
   "claim": "Despite its shortcomings the 2021 Casper testnet fulfilled its purpose, providing a test bed for dApp developers and testing node software upgrades before deployment on the Casper mainnet.",
   "type": "empirical",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "2021 Casper testnet"
   ],
   "supporting_quote": "Nevertheless, the 2021 Casper testnet fulfilled its purpose. It provided a test bed for dApp developers on Casper mainnet, and tested the node software upgrades before they were deployed on the Casper mainnet."
  },
  {
   "id": "kaal:claim:3931933-020",
   "url": "https://wulfkaal.github.io/claims/3931933-020",
   "claim": "Any testnet environment depends on proper governance to allocate power fairly and equitably at equilibrium in a sustainable fashion.",
   "type": "condition",
   "topics": [
    "governance-design",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "testnet environments generally"
   ],
   "supporting_quote": "Any testnet environment depends on proper governance to allocate power fairly and equitably at equilibrium in a sustainable fashion. The Shasper Network accomplishes the need for proper decentralized"
  },
  {
   "id": "kaal:claim:3931933-021",
   "url": "https://wulfkaal.github.io/claims/3931933-021",
   "claim": "The Shasper canary network is designed as an experimental environment for developer teams that want to move fast and innovate, or to prepare deployments destined for the Casper Network.",
   "type": "design",
   "topics": [
    "open-source-and-code",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "canary network running parallel to the Casper testnet and mainnet"
   ],
   "supporting_quote": "The Shasper Network creates an experimental development environment for dev teams who want to move fast and innovate on Shasper or prepare for deployment on Casper."
  },
  {
   "id": "kaal:claim:3931933-022",
   "url": "https://wulfkaal.github.io/claims/3931933-022",
   "claim": "Shasper governance is funded in a hardcoded way: each validator that succeeds in propagating a block allocates a fixed percentage of its block reward, denominated in SHAS, into a separate SDAO wallet, in addition to the ordinary Casper PoS allocation.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "tokenomics",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "Shasper Network validators producing blocks under the Casper PoS consensus algorithm"
   ],
   "supporting_quote": "However, in addition to the Casper PoS Consensus algorithm allocation, each validator who succeeds in propagating a block allocates [__]% of the block reward, denominated in SHAS, into a separate SDAO wallet."
  },
  {
   "id": "kaal:claim:3931933-023",
   "url": "https://wulfkaal.github.io/claims/3931933-023",
   "claim": "The same percentage of the block reward that funds the SDAO wallet also mints reputation in the SDAO for the propagating validator, with both the minting and the sharing of the pooled tokens following the DEVxDAO MVPR protocol.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "Shasper Network block production"
   ],
   "supporting_quote": "That [__]% of the block reward in SHAS token also mints reputation in the SDAO for said validator. The reputation minting process follows the DEVxDAO MVPR protocol and the SHAS token that are allocated to the SDAO are shared among the SDAO members following the DEVxDAO MVPR protocol."
  },
  {
   "id": "kaal:claim:3931933-024",
   "url": "https://wulfkaal.github.io/claims/3931933-024",
   "claim": "Tokens accumulated in the SDAO wallet are distributed to voting associates in proportion to their SDAO reputation score, so payout tracks reputation rather than stake.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "SDAO members holding voting associate status"
   ],
   "supporting_quote": "Accordingly, the SHAS in the SDAO wallet are distributed to the SDAO VAs in proportion to their SDAO reputation score."
  },
  {
   "id": "kaal:claim:3931933-025",
   "url": "https://wulfkaal.github.io/claims/3931933-025",
   "claim": "A voting associate's SDAO reputation score is determined by that associate's merit, level of activity, and engagement in the SDAO.",
   "type": "definitional",
   "topics": [
    "reputation",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "SDAO reputation accounting"
   ],
   "supporting_quote": "The respective SDAO reputation score of each VA, in turn, is determined by their respective merit, level of activity, and engagement in the SDAO."
  },
  {
   "id": "kaal:claim:3931933-026",
   "url": "https://wulfkaal.github.io/claims/3931933-026",
   "claim": "SDAO membership is gated by a vote combined with evidence of NFT ownership and a posted performance record as a Shasper Network validator.",
   "type": "design",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "SDAO onboarding of Shasper testnet validators"
   ],
   "supporting_quote": "NFTs owners are onboarded via vote into SDAO. Shasper Testnet validators who, in addition to evidence of the NFT ownership, post evidence of their performance record as Shasper Network validators will be considered as candidates for the SDAO."
  },
  {
   "id": "kaal:claim:3931933-027",
   "url": "https://wulfkaal.github.io/claims/3931933-027",
   "claim": "Although the Shasper Network itself is permissionless, the SDAO deliberately imposes a prior registration requirement in order to push validator candidates to educate themselves about network requirements and to attend to the documentation.",
   "type": "design",
   "topics": [
    "securities-law",
    "consensus-and-security",
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "SDAO reward program on a permissionless network"
   ],
   "supporting_quote": "While the Shasper Network is permissionless, in an effort to encourage validator participants to educate themselves about network requirements etc. and to pay more attention to the network and the documentation, the SDAO runs the program with a prior registration requirement."
  },
  {
   "id": "kaal:claim:3931933-028",
   "url": "https://wulfkaal.github.io/claims/3931933-028",
   "claim": "The SDAO performance based onboarding metric deliberately goes well beyond validator node uptime, adding criteria such as node performance, running a dApp on the network, response time to upgrades, technical background, adherence to instructions and hardware specifications, and community behavior.",
   "type": "design",
   "topics": [
    "corporate-governance",
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "SDAO preregistration workflow for validator candidates"
   ],
   "supporting_quote": "This performance based onboarding process and metric goes way beyond the criterion of validator node uptime. In the SDAO preregistration workflow, validator candidates apply for a position in the"
  },
  {
   "id": "kaal:claim:3931933-029",
   "url": "https://wulfkaal.github.io/claims/3931933-029",
   "claim": "Using the SDAO, the Shasper Network lets its developer community determine by community consensus which technology upgrades to the testnet should be created.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "governance-design",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "Shasper Network technology upgrade process"
   ],
   "supporting_quote": "Through the use of the SDAO, the Shasper Network enables its developer community to determine via community consensus what technology upgrades to the Shasper testnet should be created."
  },
  {
   "id": "kaal:claim:3931933-030",
   "url": "https://wulfkaal.github.io/claims/3931933-030",
   "claim": "Peer governance substitutes for platform gatekeeping: rather than convincing legacy technology leaders and their platforms, developer teams engage their own peers in the Shasper DAO to discuss and vote on proposed upgrades and testnet projects.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "decentralization",
    "governance-design",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "Shasper DAO technology upgrade voting"
   ],
   "supporting_quote": "Rather than convincing legacy technology leaders and their respective platforms, teams of developers can engage directly with their own peers in the Shasper DAO to discuss and vote on proposed technology upgrades and Shasper testnet projects."
  },
  {
   "id": "kaal:claim:3931933-031",
   "url": "https://wulfkaal.github.io/claims/3931933-031",
   "claim": "Changes to the Shasper Network codebase require Shasper Network governance votes.",
   "type": "condition",
   "topics": [
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "Shasper Network codebase changes"
   ],
   "supporting_quote": "Shasper Network governance votes are required to make changes to the codebase. To further"
  },
  {
   "id": "kaal:claim:3931933-032",
   "url": "https://wulfkaal.github.io/claims/3931933-032",
   "claim": "Under HSPoS two nodes holding the same stake retain the same probability of being selected for rewards, but the node with the higher reputation receives the larger reward.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "HSPoS reward computation with equal stakes"
   ],
   "supporting_quote": "In HSPoS, two nodes with the same stake would have the same probability of being selected for the rewards. However, the node with the higher reputation would get higher rewards."
  },
  {
   "id": "kaal:claim:3931933-033",
   "url": "https://wulfkaal.github.io/claims/3931933-033",
   "claim": "Nodes accumulate reputation in two ways: by being onboarded into the SDAO and performing well as node validators, and by participating regularly in SDAO governance votes.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "governance-design",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "HSPoS reputation accrual on the Shasper Network"
   ],
   "supporting_quote": "1. being onboarded into the SDAO and performing well as node validators, and 2. by participating regularly in the governance votes of SDAO."
  },
  {
   "id": "kaal:claim:3931933-034",
   "url": "https://wulfkaal.github.io/claims/3931933-034",
   "claim": "Because reputation scales the reward, a node with less stake but high reputation may end up with more rewards than a node with more stake but less reputation.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "HSPoS reward computation"
   ],
   "supporting_quote": "Furthermore, a node with less stake but high reputation may end up with more rewards than a node with more stake but less reputation."
  },
  {
   "id": "kaal:claim:3931933-035",
   "url": "https://wulfkaal.github.io/claims/3931933-035",
   "claim": "By balancing validator stakes against reputation, HSPoS reaches an equilibrium of incentives in which validators are motivated both to succeed economically as validators and to participate actively in decentralized governance.",
   "type": "mechanism",
   "topics": [
    "economics",
    "risk-and-incentives",
    "decentralization",
    "governance-design",
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "validators holding both SHAS stake and SDAO reputation"
   ],
   "supporting_quote": "Through this balancing of validator SHAS stakes and reputation, HSPoS attains an equilibrium of incentives for validators to: a. attain economic success as validators, and"
  },
  {
   "id": "kaal:claim:3931933-036",
   "url": "https://wulfkaal.github.io/claims/3931933-036",
   "claim": "HSPoS earns validator node reputation through a mechanism that is decoupled from the ordinary monetary system of incentive rewards.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "argued",
   "scope_conditions": [
    "HSPoS reputation layer"
   ],
   "supporting_quote": "HSPoS emphasizes validator node reputation, which is earned via a reputation-based mechanism that decouples the normal monetary system of incentive rewards."
  },
  {
   "id": "kaal:claim:3931933-037",
   "url": "https://wulfkaal.github.io/claims/3931933-037",
   "claim": "Reputation in HSPoS is a form of social capital earned by participating in the network's ecosystem, independent of the participant's financial capacity.",
   "type": "definitional",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "HSPoS and SDAO reputation"
   ],
   "supporting_quote": "Reputation represents a type of social capital that is earned by participating in the network's ecosystem regardless of the amount of financial capacity."
  },
  {
   "id": "kaal:claim:3931933-038",
   "url": "https://wulfkaal.github.io/claims/3931933-038",
   "claim": "Governance decisions such as network upgrades follow a simple vote that mints no reputation, yet reputation in the SDAO can still be lost through a governance vote because each vote follows the DEVxDAO MVPR logic moving from loosely coupled to tightly coupled voting.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "SDAO governance votes on network upgrades"
   ],
   "supporting_quote": "Governance decisions, such as network upgrades, among others, follow a simple vote process in which no reputation is minted. However, reputation in the SDAO can be lost as a result of a governance vote as each vote follows the DEVxDAO MVPR logic via loosely coupled to tightly coupled voting."
  },
  {
   "id": "kaal:claim:3931933-039",
   "url": "https://wulfkaal.github.io/claims/3931933-039",
   "claim": "The Shasper network extends the Casper testnet in a way that benefits community experimentation and creates significant developer incentives that help retain talent for the Casper network.",
   "type": "predictive",
   "topics": [
    "open-source-and-code",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Hybrid Secure Proof of Stake (2021). SSRN: https://ssrn.com/abstract=3931933",
   "year": "2021",
   "source_sha256": "55a71cdfceb96fadefba1f2fed9563b588825378c91aff644ee7faaccdf31204",
   "confidence": "asserted",
   "scope_conditions": [
    "Shasper deployed as a canary network alongside Casper"
   ],
   "supporting_quote": "The Shasper network provides a natural extension of the Casper testnet which benefits community experimentation. It creates significant developer incentives which helps retain talent for the Casper network."
  },
  {
   "id": "kaal:claim:3782192-001",
   "url": "https://wulfkaal.github.io/claims/3782192-001",
   "claim": "Human group coordination progresses through three stages: chaos, then decentralized organization, then centralized hierarchy. Decentralized organization is not a deviation but the natural intermediate stage between no organization and a completed hierarchy.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "human group coordination and institutional development generally"
   ],
   "supporting_quote": "Human group coordination naturally progresses from the first stage, chaos (barbari- ans ravaging the landscape, \"Raahr!\"), to decentralized organization (\"Let's all agree to band together to defend ourselves from the barbarians\"), to centralized organiza- tion (\"Long live the king\")."
  },
  {
   "id": "kaal:claim:3782192-002",
   "url": "https://wulfkaal.github.io/claims/3782192-002",
   "claim": "At the decentralized stage the individual nodes remain autonomous and the network assigns no fixed roles; coordination comes from alignment on a shared transcendental goal rather than from formal position, so that, as the authors put it, the values are the organization.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized stage of organization, before a hierarchy has formed"
   ],
   "supporting_quote": "The individual nodes remain autonomous; the network does not have fixed roles for each member. But they are all responding to a higher calling as they unite in purpose."
  },
  {
   "id": "kaal:claim:3782192-003",
   "url": "https://wulfkaal.github.io/claims/3782192-003",
   "claim": "Centralization is an optimal and natural evolutionary solution to most specific organizational problems, but only under static conditions, and competition is the most common driving force that produces a centralized structure.",
   "type": "condition",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "static environmental conditions",
    "a specific, well defined organizational problem"
   ],
   "supporting_quote": "Centralization is an optimal and natural evolutionary solution to most specific organizational problems, under static conditions. Competition is the most common driving force that leads to a centralized structure."
  },
  {
   "id": "kaal:claim:3782192-004",
   "url": "https://wulfkaal.github.io/claims/3782192-004",
   "claim": "Centralization is not the optimal organizational structure under highly dynamic conditions; the very features that make centralized hierarchies efficient become their greatest weaknesses when conditions change.",
   "type": "failure",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "highly dynamic or rapidly changing environments"
   ],
   "supporting_quote": "But centralization is not the optimal organizational structure under highly dynamic conditions. The usual strengths of centralized hierarchies become their greatest weaknesses."
  },
  {
   "id": "kaal:claim:3782192-005",
   "url": "https://wulfkaal.github.io/claims/3782192-005",
   "claim": "If a hierarchy becomes too rigid the organization inevitably fails and the result is a return to chaos, which is why revolutions recur as a cyclic pattern in governmental structures throughout history.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "hierarchies that cannot bend or rearrange their order"
   ],
   "supporting_quote": "If the hierarchy is too rigid, the organi- zation inevitably fails, and the result is a return to chaos."
  },
  {
   "id": "kaal:claim:3782192-006",
   "url": "https://wulfkaal.github.io/claims/3782192-006",
   "claim": "Concentrating too much power in any single office of a hierarchy creates a decision making bottleneck that can cripple the organization, so the tree structure that is optimal for transmitting orders downward is also its point of paralysis.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "centralized tree structures with concentrated decision rights"
   ],
   "supporting_quote": "However, if too much power is held in any single office in the hierarchy, de- cision making finds a bottleneck that can cripple the organization."
  },
  {
   "id": "kaal:claim:3782192-007",
   "url": "https://wulfkaal.github.io/claims/3782192-007",
   "claim": "Because information at the edge does not travel up a centralized hierarchy, the central authority makes decisions without full information, and a centralized organization is therefore not well designed to respond to any crisis it has not anticipated.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "strongly centralized organizations that leave no decision power at the edges",
    "novel or unanticipated external challenges"
   ],
   "supporting_quote": "The central authority makes decisions without full information, so a central- ized organization is not well designed to respond to any crisis it hasn't anticipated."
  },
  {
   "id": "kaal:claim:3782192-008",
   "url": "https://wulfkaal.github.io/claims/3782192-008",
   "claim": "Friction is the inefficient allocation of power, meaning that a different distribution of power would let the organization reach its goals more easily, and it is an ever present feature of any hierarchy.",
   "type": "definitional",
   "topics": [
    "institutional-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "asserted",
   "scope_conditions": [
    "any real hierarchy"
   ],
   "supporting_quote": "Friction is simply the inefficient allo- cation of power, which is an ever-present feature in any hierarchy. By inefficient allo- cation of power, we mean that if the distribution of power were changed, the goals of the organization could be achieved more easily."
  },
  {
   "id": "kaal:claim:3782192-009",
   "url": "https://wulfkaal.github.io/claims/3782192-009",
   "claim": "The most common source of friction is the natural tendency of hierarchies to concentrate power at the top through a rich get richer mechanism: a more powerful member can use their greater power to gain still more power than a weaker member can.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "hierarchies in which power differences among members already exist"
   ],
   "supporting_quote": "The most common type of friction comes from the natural tendency of a hierarchy to concentrate power at the top. The basic mechanism is \"the rich get richer\". A more powerful member is able to use their greater power to gain more power, in any stage, than a weaker member can."
  },
  {
   "id": "kaal:claim:3782192-010",
   "url": "https://wulfkaal.github.io/claims/3782192-010",
   "claim": "Unchecked concentration of power drives the distribution toward one member holding nearly all resources, which is clearly inefficient for the goals of the group, and the resulting discontent is the main historical reason for revolt.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "hierarchies where the concentration of power is left unchecked"
   ],
   "supporting_quote": "In the limit, if left unchecked, the most powerful member would have WXX% of the resources and the others would have X%. Clearly, getting anywhere close to this distribution is inefficient for the goals of the group. The resulting discontent is the main historical reason for revolt."
  },
  {
   "id": "kaal:claim:3782192-011",
   "url": "https://wulfkaal.github.io/claims/3782192-011",
   "claim": "Corruption is defined as a minority subgroup collecting the power or wealth of an organization for its own benefit at the expense of the larger group.",
   "type": "definitional",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "asserted",
   "supporting_quote": "Corruption happens when a minority subgroup collects the power or wealth of an or- ganization for its own benefit at the expense of the larger group."
  },
  {
   "id": "kaal:claim:3782192-012",
   "url": "https://wulfkaal.github.io/claims/3782192-012",
   "claim": "The more rigid an organization's structure, the more susceptible it is to corruption; at the chaos stage there is no protocol rigidity and therefore no opportunity for corruption, because with no group goal there is nothing to subvert.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "comparison across the chaos, decentralized, and centralized stages"
   ],
   "supporting_quote": "The more rigid the structure, the more susceptible the organization is to corruption. There is no protocol rigidity at the chaos stage, so there is no opportunity for corrup- tion—since there is no group goal there is no opportunity to subvert it."
  },
  {
   "id": "kaal:claim:3782192-013",
   "url": "https://wulfkaal.github.io/claims/3782192-013",
   "claim": "Corruption is technically inevitable in any hierarchy, because it is impossible to create a perfectly efficient organization in practice and there is friction in every real system.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "any real hierarchy"
   ],
   "supporting_quote": "Corruption is technically inevitable in any hierarchy, since it is impossible to create a perfectly efficient organization in practice—there is friction in every real system."
  },
  {
   "id": "kaal:claim:3782192-014",
   "url": "https://wulfkaal.github.io/claims/3782192-014",
   "claim": "When the letter of the law becomes more important than the spirit of the law, internal competition for power makes the winning strategy to push behavior to the limit of what is acceptable.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "formal rule based governance inside a centralized hierarchy",
    "internal competition for power"
   ],
   "supporting_quote": "When the letter of the law is more important than the spirit of the law, then internal competition for power within the hierarchy reveals the best strategy is to push your behavior to the limit of what is acceptable."
  },
  {
   "id": "kaal:claim:3782192-015",
   "url": "https://wulfkaal.github.io/claims/3782192-015",
   "claim": "As members constantly probe the edge of acceptable behavior, policing the rules becomes more expensive, the rules become divorced from the shared goals, and relationships become brittle and formal instead of warm and loose.",
   "type": "failure",
   "topics": [
    "compliance",
    "reputation",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "organizations relying on formal rule enforcement"
   ],
   "supporting_quote": "As members constantly probe the edge of acceptable behavior, policing the rules becomes more expensive. The rules become divorced from the shared goals. Relationships become brittle and formal instead of warm and loose."
  },
  {
   "id": "kaal:claim:3782192-016",
   "url": "https://wulfkaal.github.io/claims/3782192-016",
   "claim": "No static set of logical rules can ever succeed in preventing corruption, which is the ultimate problem with relying on letter of the law governance instead of spirit of the law governance.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "any static, formally specified rule set"
   ],
   "supporting_quote": "The ultimate problem with relying on letter-of-the-law governance over spirit-of-the- law governance is that no static set of logical rules can ever succeed in preventing corruption."
  },
  {
   "id": "kaal:claim:3782192-017",
   "url": "https://wulfkaal.github.io/claims/3782192-017",
   "claim": "The Folk Theorems of game theory prove that any rules that can be formally set down can be subverted: strategies always exist that follow the rules and still allow a minority player to profit at the expense of the majority.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "evidenced",
   "scope_conditions": [
    "any formally specified rule set analyzed as a repeated game"
   ],
   "supporting_quote": "The Folk Theorems of Game Theory (explained in Chapter ^) prove the point that any rules that can be formally set down can be subverted. Strategies al- ways exist which follow the rules and yet allow a minority player to profit at the ex- pense of the majority."
  },
  {
   "id": "kaal:claim:3782192-018",
   "url": "https://wulfkaal.github.io/claims/3782192-018",
   "claim": "Long-term organizational stability requires a dynamic governance system that can adapt the rules to changing circumstances, a requirement that holds for any organization but especially for decentralized ones.",
   "type": "condition",
   "topics": [
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "organizations seeking long-term stability",
    "especially decentralized organizations"
   ],
   "supporting_quote": "The fact that any set of rules can be corrupted illustrates two necessities for the long-term stability of any organization, but especially for decentralized organiza- tions. First, a dynamic governance system must be designed that can adapt the rules to the circumstances."
  },
  {
   "id": "kaal:claim:3782192-019",
   "url": "https://wulfkaal.github.io/claims/3782192-019",
   "claim": "The second necessity for long-term stability is that the organization hold to its ideals and transcendental values, so that the spirit of the law overrides the letter of the law.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "organizations seeking long-term stability"
   ],
   "supporting_quote": "Second, the organization needs to hold to its ideals, its tran- scendental values. The spirit of the law must override the letter of the law."
  },
  {
   "id": "kaal:claim:3782192-020",
   "url": "https://wulfkaal.github.io/claims/3782192-020",
   "claim": "Governing by transcendental values, ideals that everyone understands but no one can concretely attain, reduces members' motivation to probe the limits of acceptable behavior and therefore reduces the policing the organization must pay for.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "organizations whose governing ideals cannot be fully instantiated in concrete rules"
   ],
   "supporting_quote": "If the or- ganization is governed by transcendental values—ideals that everyone understands yet they can never practically attain or properly instantiate concretely—then people have less motivation to probe the limits of acceptable behavior. Less policing is then required"
  },
  {
   "id": "kaal:claim:3782192-021",
   "url": "https://wulfkaal.github.io/claims/3782192-021",
   "claim": "Rigidity generates corruption: because a rigid organization ignores new information incompatible with its structure, the unexploited value creates an opportunity for an individual to capture it for personal advantage rather than for the group.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "rigid organizations facing a changing environment"
   ],
   "supporting_quote": "And so, an opportunity is born for an individual to exploit this opportunity for personal advantage since the organization was too rigid to take advantage of the opportunity collectively in pursuit of their shared goals."
  },
  {
   "id": "kaal:claim:3782192-022",
   "url": "https://wulfkaal.github.io/claims/3782192-022",
   "claim": "Even where corruption is avoided, rigidity still leads centralized organizations to catastrophic ends, because failures push members to cling more faithfully to the rules that saved them in the past, making the system still more rigid and brittle.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "centralized organizations under repeated external shocks"
   ],
   "supporting_quote": "Even if corruption can be avoided in the beginning, the rigidity still leads centralized organizations to cata- strophic ends, as failures naturally push members to cling ever more faithfully to the rules that have saved them in the past, making the system even more rigid and brit- tle."
  },
  {
   "id": "kaal:claim:3782192-023",
   "url": "https://wulfkaal.github.io/claims/3782192-023",
   "claim": "Decentralized organizations thrive under exactly the changing circumstances that break centralized organizations, because information at the edge is naturally incorporated and communicated so the system can adapt to external threats.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "changing or turbulent external environments"
   ],
   "supporting_quote": "Decentralized organizations, on the other hand, thrive under the types of changing circumstances that break centralized organizations. Information at the edge is natu- rally incorporated and communicated so the system can adapt to external threats."
  },
  {
   "id": "kaal:claim:3782192-024",
   "url": "https://wulfkaal.github.io/claims/3782192-024",
   "claim": "Decentralization, though it may look wastefully redundant, gives every member greater autonomous power, whereas centralization limits members' powers and reduces them to cogs in the machine.",
   "type": "design",
   "topics": [
    "decentralization",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "supporting_quote": "Decentralization, while it may be seen as wastefully redundant, gives every member greater autonomous power. Centralization limits its members' powers, reducing them to mere cogs in the machine."
  },
  {
   "id": "kaal:claim:3782192-025",
   "url": "https://wulfkaal.github.io/claims/3782192-025",
   "claim": "Advances in technology have given decentralized systems the efficiency they lacked in previous eras, the very deficiency that allowed them to be outcompeted by centralized systems; this is the book's central thesis.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "the current era of information technology"
   ],
   "supporting_quote": "The goal of this book is to show that advances in technology have given decentral- ized systems the efficiency they have lacked in previous eras and that allowed them to be outcompeted by centralized systems."
  },
  {
   "id": "kaal:claim:3782192-026",
   "url": "https://wulfkaal.github.io/claims/3782192-026",
   "claim": "Nothing external can destroy a decentralized organization: such organizations are invincible unless every single member loses adherence to the values that organized it in the first place.",
   "type": "condition",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized organizations whose members retain shared values"
   ],
   "supporting_quote": "What can destroy a decentralized organization? Nothing. Decentralized organiza- tions are invincible unless every single member loses their adherence to the values that organized it in the first place"
  },
  {
   "id": "kaal:claim:3782192-027",
   "url": "https://wulfkaal.github.io/claims/3782192-027",
   "claim": "Centralization is a natural state that evolves out of decentralization under competition unless it is consciously prevented by guarding members' power, while a centralized organization can always be conquered through its single point of failure at the top.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized organizations exposed to competition"
   ],
   "supporting_quote": "Centralization is a natural state that evolves from decentralization under competition if it is not consciously pre- vented by guarding members' power. It is clear how a centralized organization can be conquered—the single point of failure at the top."
  },
  {
   "id": "kaal:claim:3782192-028",
   "url": "https://wulfkaal.github.io/claims/3782192-028",
   "claim": "Advances in information technology explain each historical leap in organizational efficiency and reach, from kinship tribes through nation states to the emerging global society.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "the historical record of human societal organization"
   ],
   "supporting_quote": "Advances in information technology explain each historical leap in organizational ef- ficiency and reach."
  },
  {
   "id": "kaal:claim:3782192-029",
   "url": "https://wulfkaal.github.io/claims/3782192-029",
   "claim": "Ancient Egypt and China remained remarkably stable for thousands of years because of the protocol decentralization fostered by their Rule of Virtue legal systems.",
   "type": "empirical",
   "topics": [
    "decentralization",
    "law-and-legal-systems",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "asserted",
   "scope_conditions": [
    "ancient Egypt and China under Rule of Virtue legal systems"
   ],
   "supporting_quote": "An- cient Egypt and China were remarkably stable for thousands of years due to the pro- tocol decentralization fostered by their Rule of Virtue legal system."
  },
  {
   "id": "kaal:claim:3782192-030",
   "url": "https://wulfkaal.github.io/claims/3782192-030",
   "claim": "The Maghribi traders built a sophisticated decentralized trade network using the information technology of their era plus reputation, and later farmers used dynamic governance designs to create the most powerful decentralized organization in history.",
   "type": "empirical",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "asserted",
   "scope_conditions": [
    "historical decentralized trade and cooperative organizations"
   ],
   "supporting_quote": "The Ma- ghribis built a sophisticated decentralized trade network using WWth century infor- mation technology, and reputation. Wcth century farmers used dynamic governance designs to create the most powerful decentralized organization in history."
  },
  {
   "id": "kaal:claim:3782192-031",
   "url": "https://wulfkaal.github.io/claims/3782192-031",
   "claim": "Western democracies still run on structures developed decades or centuries ago and have no formal interaction with the new data stream produced by modern information technology.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "asserted",
   "scope_conditions": [
    "contemporary Western democracies"
   ],
   "supporting_quote": "Western democracies are still using the structures developed decades or centuries ago, and lack any formal interaction with this new data stream."
  },
  {
   "id": "kaal:claim:3782192-032",
   "url": "https://wulfkaal.github.io/claims/3782192-032",
   "claim": "Democratic institutions should require open source algorithms for how citizen information is filtered on opinion platforms, so that analyses can be made and everyone can see if and how the system is being gamed by special interests.",
   "type": "design",
   "topics": [
    "open-source-and-code",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "public deliberation platforms used for democratic input"
   ],
   "supporting_quote": "Require open source algorithms for how information is filtered, so analyses can be made, and everyone can understand if and how the system is being gamed by special interests."
  },
  {
   "id": "kaal:claim:3782192-033",
   "url": "https://wulfkaal.github.io/claims/3782192-033",
   "claim": "The proposed technological upgrades to democracy would be trivial to implement by reusing existing open source projects, yet they are unlikely to happen naturally without a powerful catalyst in the form of coherent social demand.",
   "type": "predictive",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "existing democratic institutions absent organized public pressure"
   ],
   "supporting_quote": "These changes would be technologically trivial to implement, cutting and pasting ex- isting open source projects. This is quite unlikely to happen naturally, however, with- out a powerful catalyst—coherent social demand."
  },
  {
   "id": "kaal:claim:3782192-034",
   "url": "https://wulfkaal.github.io/claims/3782192-034",
   "claim": "Large decentralized networks such as national democracies do not make fundamental changes easily, because stability is their primary quality.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "large decentralized networks such as national democracies"
   ],
   "supporting_quote": "Large decentralized networks, like national democracies, don't make fundamental changes easily. Stability is their pri- mary quality."
  },
  {
   "id": "kaal:claim:3782192-035",
   "url": "https://wulfkaal.github.io/claims/3782192-035",
   "claim": "Before blockchain technology and cryptographic security, a dictatorship was necessary for governing a large network because more sophisticated governance architectures such as democracies could not govern efficiently at that scale.",
   "type": "condition",
   "topics": [
    "governance-design",
    "blockchain",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "large member networks operating with twentieth century information technology"
   ],
   "supporting_quote": "A dictatorship was necessary for governance of the network, because more sophisticated governance architectures, such as democracies, lacked the ability to govern efficiently."
  },
  {
   "id": "kaal:claim:3782192-036",
   "url": "https://wulfkaal.github.io/claims/3782192-036",
   "claim": "Bitcoin and Ethereum are worth hundreds of billions of dollars not because people are using them but almost entirely because of speculation on their future value, which is the expectation that people will use them to build decentralized autonomous organizations.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "economics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "asserted",
   "scope_conditions": [
    "cryptocurrency network valuations as of the time of writing"
   ],
   "supporting_quote": "These networks are worth hundreds of billions of dollars, not because people are using them, but almost entirely because of speculation. People see the future value of these tools. Their future value is the dream that people will use them to build DAOs."
  },
  {
   "id": "kaal:claim:3782192-037",
   "url": "https://wulfkaal.github.io/claims/3782192-037",
   "claim": "The autonomous element of a DAO comes from its governance system being programmed through smart contracts, which makes a DAO ultimately democratic rather than relying on a benevolent dictator to correct course during black swan events.",
   "type": "definitional",
   "topics": [
    "dao",
    "smart-contracts",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized autonomous organizations governed by smart contracts"
   ],
   "supporting_quote": "The autonomous aspect of a DAO stems from its programmed governance system through smart contracts. A DAO is ultimately democratic, instead of having a benev- olent dictator behind the scenes to efficiently correct course during black swan events."
  },
  {
   "id": "kaal:claim:3782192-038",
   "url": "https://wulfkaal.github.io/claims/3782192-038",
   "claim": "Decentralized money and decentralized contracts have been built, but decentralized business will not work until roughly eight further decentralized institutions that people actually use in business are built.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized commerce built on blockchain infrastructure"
   ],
   "supporting_quote": "Two important tools have been built, decentralized money (Bitcoin) and decentral- ized contracts (Ethereum). But it won't work until eight more decentralized institu- tions are built that people use to do business."
  },
  {
   "id": "kaal:claim:3782192-039",
   "url": "https://wulfkaal.github.io/claims/3782192-039",
   "claim": "Money and contracts are worthless in business with counterparties who cannot be trusted to keep a bargain, so decentralized commerce requires a system in which reputation means something.",
   "type": "condition",
   "topics": [
    "reputation",
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192",
   "year": "2021",
   "source_sha256": "e7eafd56cb8a8bd15b64cf58216bb655f939bdcc296387e362fd9191976d67ae",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized business among parties without prior trust"
   ],
   "supporting_quote": "Money and contracts are worthless in business with barbarians who can't be trusted to keep a bargain. To do business, we need a system where reputation means something."
  },
  {
   "id": "kaal:claim:3782191-001",
   "url": "https://wulfkaal.github.io/claims/3782191-001",
   "claim": "Centralized organization achieves efficiency through hierarchy: hierarchical structures let centrally organized entities allocate resources with minimal energy loss and identify and remove waste in the system.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "asserted",
   "scope_conditions": [
    "centrally organized entities with hierarchical structures"
   ],
   "supporting_quote": "Because of hierarchical structures, centrally organized entities allocate resources with minimal loss of energy and can identify and remove waste in the system."
  },
  {
   "id": "kaal:claim:3782191-002",
   "url": "https://wulfkaal.github.io/claims/3782191-002",
   "claim": "Centralized organization of society has reached its limitations, evidenced by weakening public sector legitimacy, economic decline, disillusionment with existing institutions, inadequate response to geopolitical problems, and pressure on overly centralized systems.",
   "type": "failure",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "contemporary global economic and political systems"
   ],
   "supporting_quote": "Other indicators suggest that centralized organization of society has in many ways reached limitations: the general weakening legitimacy of the public sector; increas- ing economic decline; disillusionment with existing business, political, and social in- stitutions"
  },
  {
   "id": "kaal:claim:3782191-003",
   "url": "https://wulfkaal.github.io/claims/3782191-003",
   "claim": "Unlike other societal transformations that require drawn out public debate, decentralization proceeds quietly, incrementally, and iteratively as a default solution because it builds on the existing centralized network infrastructure.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "decentralization of business and society",
    "compared with contested changes such as globalization"
   ],
   "supporting_quote": "By contrast, the decentralization of business and society is mostly a quiet occurrence without much media attention that appears as a default solution based on the existing centralized network infrastructure."
  },
  {
   "id": "kaal:claim:3782191-004",
   "url": "https://wulfkaal.github.io/claims/3782191-004",
   "claim": "There is no single definition of decentralization: its meaning changes with the kind of decentralization, the industry or field, the application, and the overall context, so what applies to political decentralization may be irrelevant to technological decentralization.",
   "type": "definitional",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "across political, technological, organizational, market, and societal decentralization"
   ],
   "supporting_quote": "The definition of decentralization changes based on the kind of decentralization, the industry or field, application, and the overall con- text."
  },
  {
   "id": "kaal:claim:3782191-005",
   "url": "https://wulfkaal.github.io/claims/3782191-005",
   "claim": "Because different kinds of decentralization have knock-on effects on one another, an adequate definition of decentralization requires an inclusive scope derived from its core characteristics rather than a domain specific formulation.",
   "type": "condition",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "defining decentralization across domains"
   ],
   "supporting_quote": "Accordingly, a definition of decentraliza- tion necessitates an inclusive scope that derives from its core characteristics."
  },
  {
   "id": "kaal:claim:3782191-006",
   "url": "https://wulfkaal.github.io/claims/3782191-006",
   "claim": "Defining decentralization through historically formed centralized perspectives is a contradiction in terms that undermines its true potential and limits the scope and scale of decentralized approaches.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "when centralized concepts are used as the frame for defining decentralization"
   ],
   "supporting_quote": "Defining decentralization through historically formed centralized perspectives is a contradiction in terms. It undermines the true potential of decentralization."
  },
  {
   "id": "kaal:claim:3782191-007",
   "url": "https://wulfkaal.github.io/claims/3782191-007",
   "claim": "Decentralization is not merely delegation, deconcentration, devolution, or the redistribution of centrally organized authority or centrally collected revenue; equating it with those terms misstates what decentralization is.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "supporting_quote": "Termino- logically, decentralization is not just synonymous with delegation, deconcentration, disassortative, devolution, circulation, or partnership."
  },
  {
   "id": "kaal:claim:3782191-008",
   "url": "https://wulfkaal.github.io/claims/3782191-008",
   "claim": "The subsidiarity principle, which holds that issues should be addressed at the most immediate level consistent with their resolution, cannot by itself encapsulate the ontology and desirable outcomes of decentralization.",
   "type": "failure",
   "topics": [
    "decentralization",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "subsidiarity as used in existing legal frameworks and European Union law"
   ],
   "supporting_quote": "While local government may be closer to the concerns of the people and better able to respond to the preferences of its citizens, subsidiarity alone cannot encapsu- late the ontology and desirable outcomes of decentralization."
  },
  {
   "id": "kaal:claim:3782191-009",
   "url": "https://wulfkaal.github.io/claims/3782191-009",
   "claim": "The degree of decentralization can be delineated by distinguishing logical decentralization, architectural or hardware decentralization, and political or governance decentralization, though some overlap among these concepts is unavoidable.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "supporting_quote": "The degree of decentralization can be delineated by distinguishing several core con- cepts such as logical decentralization, architectural decentralization, and political de- centralization."
  },
  {
   "id": "kaal:claim:3782191-010",
   "url": "https://wulfkaal.github.io/claims/3782191-010",
   "claim": "A traditional firm is logically centralized because dividing it would break it apart into parts that could not operate independently, a property traceable to the hierarchical order that creates the firm's efficiencies and structure.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "traditional corporations"
   ],
   "supporting_quote": "The firm is logically centralized as a division of the firm would typically break it apart and it would not be able to operate independently as two separate parts. This is traceable to the firm's hierarchical order that creates efficiencies and structure."
  },
  {
   "id": "kaal:claim:3782191-011",
   "url": "https://wulfkaal.github.io/claims/3782191-011",
   "claim": "Spontaneous order is less likely to emerge unconstrained from interactions dispersed across a system if that system has a power or information center.",
   "type": "condition",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "systems relying on emergent self-organizing behavior"
   ],
   "supporting_quote": "Spontaneous order is less likely to emerge unconstrained from interactions dispersed across a sys- tem if the system has a power or information center."
  },
  {
   "id": "kaal:claim:3782191-012",
   "url": "https://wulfkaal.github.io/claims/3782191-012",
   "claim": "Distributed self-organizing systems are nimbler than centralized ones and can efficiently self-repair at points of local failure through coordination without control.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "distributed self-organizing systems"
   ],
   "supporting_quote": "Distributed self-organizing sys- tems are nimbler and able to efficiently self-repair at points of local failure through coordination without control."
  },
  {
   "id": "kaal:claim:3782191-013",
   "url": "https://wulfkaal.github.io/claims/3782191-013",
   "claim": "Because information in decentralized systems is continuously outdated by a changing environment, decentralized governance must be autonomous and automated, able to evolve, mutate, and create new information precedent, in the way mitosis replaces worn out cells.",
   "type": "design",
   "topics": [
    "decentralization",
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized systems whose information changes continuously"
   ],
   "supporting_quote": "Like mitosis, this decentralized governance process has to be autonomous and automated in the system. Decentralized governance has to be able to evolve and mutate and create new information precedent for the continuous efficient operation of the system."
  },
  {
   "id": "kaal:claim:3782191-014",
   "url": "https://wulfkaal.github.io/claims/3782191-014",
   "claim": "Natural selection operates as a decentralized selection mechanism: no centralized authority determines which organisms survive, and the population with the most adaptable and heritable traits gains a natural comparative advantage without any centralized mechanism.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "biological evolution as an analogy for decentralized systems"
   ],
   "supporting_quote": "The natural selection of the most adaptable and survivable population char- acteristics materializes without a centralized mechanism."
  },
  {
   "id": "kaal:claim:3782191-015",
   "url": "https://wulfkaal.github.io/claims/3782191-015",
   "claim": "Technology-driven decentralized systems depend on existing infrastructure and follow existing natural network patterns, just as predator populations could not evolve without prey.",
   "type": "condition",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "technology-driven decentralized systems"
   ],
   "supporting_quote": "Technology-driven decentralized systems depend on an ex- isting infrastructure."
  },
  {
   "id": "kaal:claim:3782191-016",
   "url": "https://wulfkaal.github.io/claims/3782191-016",
   "claim": "Decentralized systems depend on network effects, which occur when increasing numbers of participants in a network improve the value of network access for the entirety of users; however, a network's infrastructure can compromise its network effects and the associated user benefits.",
   "type": "condition",
   "topics": [
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "networked decentralized systems"
   ],
   "supporting_quote": "Decentralized systems depend on network effects. Network effects occur when in- creasing numbers of participants or users in a given network improve the value of network access for the entirety of the users."
  },
  {
   "id": "kaal:claim:3782191-017",
   "url": "https://wulfkaal.github.io/claims/3782191-017",
   "claim": "No guarantee exists in a decentralized system that the randomly generated information filtering in at the edges is accurate, as on Amazon and the internet generally where there is no real attempt to clean the data.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized systems lacking verification infrastructure"
   ],
   "supporting_quote": "No guarantee exists in a decentralized system that the randomly-generated information is accurate. That is the case on Amazon and on the internet in general where there is no real attempt to clean the data."
  },
  {
   "id": "kaal:claim:3782191-018",
   "url": "https://wulfkaal.github.io/claims/3782191-018",
   "claim": "Future decentralized infrastructure products, such as a decentralized verification engine, need to be built to address the inaccuracy of randomly generated information in decentralized systems.",
   "type": "design",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized systems with unverified information"
   ],
   "supporting_quote": "These are exactly the type of shortcomings future decentralized infrastructure products, such as a decentralized verification engine, need to address."
  },
  {
   "id": "kaal:claim:3782191-019",
   "url": "https://wulfkaal.github.io/claims/3782191-019",
   "claim": "Information in decentralized systems originates at the edges and is optimized through feedback: peers who receive information transmit its changed relevance back to the original generator, who evaluates and amends it, constantly updating and optimizing information quality.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "peer-to-peer decentralized networks"
   ],
   "supporting_quote": "This feedback constantly updates and optimizes the quality of infor- mation."
  },
  {
   "id": "kaal:claim:3782191-020",
   "url": "https://wulfkaal.github.io/claims/3782191-020",
   "claim": "The shared values and core belief systems of members, not formal hierarchy, provide cohesion and longevity in decentralized systems, as with Wikipedia contributors united by a belief that decentralized collaboration produces superior knowledge outputs.",
   "type": "condition",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "voluntary decentralized communities such as Wikipedia and DAOs"
   ],
   "supporting_quote": "The values and core belief systems of members provide cohesion and longevity in decentralized systems."
  },
  {
   "id": "kaal:claim:3782191-021",
   "url": "https://wulfkaal.github.io/claims/3782191-021",
   "claim": "Independent and autonomous subgroups, formed randomly based on members' ability to contribute to a common cause and characterized by equality and mutual trust, form the backbone of decentralized structures.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized collaborative structures"
   ],
   "supporting_quote": "Independent and autonomous subgroups create the backbone of decentralized structures. Subgroups are formed randomly based on individual members' ability to contribute to the common cause of the group."
  },
  {
   "id": "kaal:claim:3782191-022",
   "url": "https://wulfkaal.github.io/claims/3782191-022",
   "claim": "Centralized coordination enables attack coordination because the hierarchical structure allows attackers to identify a single point of failure, whereas the constantly morphing information flow of decentralized systems increases their attack resistance.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of centralized and decentralized system security"
   ],
   "supporting_quote": "Centralized coordination enables attack coordination because the hierarchical struc- ture allows the identification of a single point of failure."
  },
  {
   "id": "kaal:claim:3782191-023",
   "url": "https://wulfkaal.github.io/claims/3782191-023",
   "claim": "Centralization and decentralization are foundationally different approaches: where centralization creates order, efficiency, and hierarchy out of presumptive chaos, decentralization thrives in perceived chaos, treats inefficiencies as opportunities, and frees the creative process.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "supporting_quote": "Centralization and decentralization are foundationally different approaches. Where centralization attempts to make sense of and create order in presumptive chaos, de- centralization thrives in perceived chaos."
  },
  {
   "id": "kaal:claim:3782191-024",
   "url": "https://wulfkaal.github.io/claims/3782191-024",
   "claim": "The widely reproduced diagram contrasting centralized, decentralized, and distributed networks is a shallow and wrong answer to what decentralization means, because decentralized networks are always distributed while distributed networks may or may not be under centralized control, so distributed does not belong in the comparison.",
   "type": "definitional",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "explanations of distributed computing, blockchain, and Web3"
   ],
   "supporting_quote": "Decentralized networks are always distributed; distributed networks may or may not be under centralized control. So \"distributed\" doesn't even belong in the same image."
  },
  {
   "id": "kaal:claim:3782191-025",
   "url": "https://wulfkaal.github.io/claims/3782191-025",
   "claim": "Hierarchical centralization is optimally efficient for making big decisions affecting an entire organization, which is why it has historically outcompeted every other organizational structure, whether corporation, army, or government.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "decisions affecting an entire organization"
   ],
   "supporting_quote": "Hierarchical centralization is optimally efficient for making big decisions that affect the entire organization, and so it has historically outcompeted every other organiza- tional structure, be it corporation or army or government"
  },
  {
   "id": "kaal:claim:3782191-026",
   "url": "https://wulfkaal.github.io/claims/3782191-026",
   "claim": "Centralization has two major flaws that inevitably lead to its downfall; the first is that every centralized organization has a single point of failure, binding the organization to a leader's poor decisions when that leader lacks information, skill, wisdom, or charisma.",
   "type": "failure",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "all centralized organizations",
    "aggravated when circumstances change faster than a leader can decide"
   ],
   "supporting_quote": "Centralization comes with two major flaws that inevi- tably lead to its downfall. First, every centralized organization has a single point of failure."
  },
  {
   "id": "kaal:claim:3782191-027",
   "url": "https://wulfkaal.github.io/claims/3782191-027",
   "claim": "The second flaw of centralization is that a hierarchy's own success and efficiency makes members dependent on it until the structure ossifies and becomes too inflexible to reorganize and respond effectively to a novel crisis.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "successful hierarchies facing novel crises rather than predictable tasks"
   ],
   "supporting_quote": "Secondly, the very success and efficiency of a hierarchy leads its members to become dependent on it, relying unquestioningly on the institution's design."
  },
  {
   "id": "kaal:claim:3782191-028",
   "url": "https://wulfkaal.github.io/claims/3782191-028",
   "claim": "Decentralized organizations outperform centralized ones precisely in the two circumstances where centralization fails: when choices multiply without bound and when novel crises arise.",
   "type": "condition",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "unbounded choice environments",
    "novel crises"
   ],
   "supporting_quote": "Decentralized organizations thrive in both of these circumstances, when choices multiply without bound and when novel crises arise."
  },
  {
   "id": "kaal:claim:3782191-029",
   "url": "https://wulfkaal.github.io/claims/3782191-029",
   "claim": "There is no clear-cut discrete difference between centralized and decentralized; organizations fall along a spectrum whose essential differentiator is the freedom of each member in the network.",
   "type": "definitional",
   "topics": [
    "ai-and-agents",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "supporting_quote": "There is no clear-cut, discrete difference between centralized and decentralized. There is a spectrum between the two that any organization will fall along. The essen- tial differentiator is the freedom of each member in the network."
  },
  {
   "id": "kaal:claim:3782191-030",
   "url": "https://wulfkaal.github.io/claims/3782191-030",
   "claim": "The most successful organizations choose a hybrid of centralization and decentralization that maximizes the strengths of each rather than occupying either extreme.",
   "type": "design",
   "topics": [
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "asserted",
   "supporting_quote": "The most successful organizations choose a hybrid of centralization and decentraliza- tion which maximizes the strengths of each."
  },
  {
   "id": "kaal:claim:3782191-031",
   "url": "https://wulfkaal.github.io/claims/3782191-031",
   "claim": "At least some level of protocol centralization is generally required for group harmony and efficiency, and although power decentralization is conceptually independent of protocol decentralization, power determines how protocol is amended and enforced.",
   "type": "condition",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "groups requiring harmony and efficiency"
   ],
   "supporting_quote": "Generally, at least some level of protocol centralization is required for group harmony and efficiency."
  },
  {
   "id": "kaal:claim:3782191-032",
   "url": "https://wulfkaal.github.io/claims/3782191-032",
   "claim": "Concentration produces instability and dispersion produces stability: the more concentrated a structure is, the more unstable it is, because little changes can cause major structural change, while a spread out pattern remains spread out when disturbed.",
   "type": "mechanism",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "any structure characterized by concentration or dispersion"
   ],
   "supporting_quote": "The more concentrated a structure is, the more unstable it is. The more spread out a pattern is, the more stable it is"
  },
  {
   "id": "kaal:claim:3782191-033",
   "url": "https://wulfkaal.github.io/claims/3782191-033",
   "claim": "Centralized organizations are more effective and efficient than decentralized ones at the singular task they were designed for, because an optimally centralized structure has no redundancy while decentralization takes longer to locate the right components within its network.",
   "type": "mechanism",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "a specific, predefined task"
   ],
   "supporting_quote": "Given a specific task, centralized organizations are more effective at the task they are designed for than decentralized organizations."
  },
  {
   "id": "kaal:claim:3782191-034",
   "url": "https://wulfkaal.github.io/claims/3782191-034",
   "claim": "A hierarchy obstructs solving novel problems because it prevents the identification of talented people at the lower rungs and resists the changes needed to construct a new hierarchy for organizing the effort.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "novel problems outside the organization's design purpose"
   ],
   "supporting_quote": "The hierarchy would prevent the identification of talented people if they occur at the lower rungs. And it would resist any changes needed to construct a new hier- archy for organizing the effort."
  },
  {
   "id": "kaal:claim:3782191-035",
   "url": "https://wulfkaal.github.io/claims/3782191-035",
   "claim": "Decentralization makes truth discovery more accurate, more reliable, and more efficient, because averaging results across diverse contributors, like ten news companies reporting a story or ten researchers using ten instruments, is more accurate than repetition by a single source.",
   "type": "mechanism",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "measurement and reporting with diverse independent contributors"
   ],
   "supporting_quote": "The most efficient markets, the most liquid markets, have high transaction rates of many goods moving between many small players. De- centralization makes truth discovery more accurate, more reliable, and more effi- cient."
  },
  {
   "id": "kaal:claim:3782191-036",
   "url": "https://wulfkaal.github.io/claims/3782191-036",
   "claim": "Centralization is dangerous in any market because monopolies ruin market efficiency by impairing liquidity, while the most efficient and liquid markets have high transaction rates of many goods moving between many small players.",
   "type": "failure",
   "topics": [
    "economics",
    "defi",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "markets"
   ],
   "supporting_quote": "In any market, centralization is dangerous. Monopolies ruin the efficiency of a mar- ket—they impair its liquidity."
  },
  {
   "id": "kaal:claim:3782191-037",
   "url": "https://wulfkaal.github.io/claims/3782191-037",
   "claim": "Corporations centralize power in order to pursue a singular strategy that efficiently exploits market circumstances, but this produces instability when the market swings, because a brittle hierarchy may crash before it can reorganize to handle a new challenge.",
   "type": "failure",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, Preface to (2021). SSRN: https://ssrn.com/abstract=3782191",
   "year": "2021",
   "source_sha256": "b0bf0529c3cf69839879bc4da476714efee2717a4beb768bd5c859b810e6174e",
   "confidence": "argued",
   "scope_conditions": [
    "corporations with centralized power facing market swings"
   ],
   "supporting_quote": "Corporations tend to have centralized power, because they wish to employ a singu- lar strategy to efficiently exploit the circumstances of the market. However, this leads to instability whenever the market swings."
  },
  {
   "id": "kaal:claim:3949098-001",
   "url": "https://wulfkaal.github.io/claims/3949098-001",
   "claim": "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.",
   "type": "failure",
   "topics": [
    "decentralization",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "digital asset markets as of 2021",
    "decentralized loans, insurance and similar products",
    "absence of alternatives to collateral"
   ],
   "supporting_quote": "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."
  },
  {
   "id": "kaal:claim:3949098-002",
   "url": "https://wulfkaal.github.io/claims/3949098-002",
   "claim": "Reputation tokens used in decentralized finance are more meaningful and easier to value than traditional identity verification metrics, so decentralized protocols that use reputation metrics will require less collateralization than traditional protocols.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "reputation is incorporated securely into the Web3 environment"
   ],
   "supporting_quote": "Reputation tokens that are utilized in decentralized finance are more meaningful than traditional identity verification metrics, and much easier to value. Accordingly, decentralized protocols that use reputation metrics will require less collateralization than in traditional protocols."
  },
  {
   "id": "kaal:claim:3949098-003",
   "url": "https://wulfkaal.github.io/claims/3949098-003",
   "claim": "Locking a user's reputation tokens instead of fungible assets would be a leap in efficiency and a powerful economic advantage over traditional finance, but this advantage is conditional on a coherent system that securely tracks the value of a reputation token.",
   "type": "condition",
   "topics": [
    "reputation",
    "economics",
    "tokenomics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "a system exists that securely tracks reputation token value"
   ],
   "supporting_quote": "For example, locking users reputation tokens instead of your fungible assets would be a strong leap in efficiency, giving a powerful economic advantage over traditional finance. This requires a coherent system which securely tracks the value of a reputation token."
  },
  {
   "id": "kaal:claim:3949098-004",
   "url": "https://wulfkaal.github.io/claims/3949098-004",
   "claim": "Kaal stipulates the core proposition of reputation as capital: once meaningful decentralized reputation is established, reputation can be used to remove the need for a capital base and for capital requirements.",
   "type": "definitional",
   "topics": [
    "reputation",
    "decentralization",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "asserted",
   "scope_conditions": [
    "meaningful decentralized reputation has been established"
   ],
   "supporting_quote": "In essence, once meaningful decentralized reputation is established, reputation can be used to remove the need for capital base and/or capital requirements."
  },
  {
   "id": "kaal:claim:3949098-005",
   "url": "https://wulfkaal.github.io/claims/3949098-005",
   "claim": "In the proposed DAO investment club, members substitute reputation non fungible token staking for capital commitments on incoming deals, the public market supplies the funding for approved deals, and members are compensated through 20 percent of the public return on purchases minted into a fungible reputation token.",
   "type": "design",
   "topics": [
    "tokenomics",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "DAOIC operating model",
    "a public market willing to co purchase approved deals"
   ],
   "supporting_quote": "Instead of capital commitments, DAOIC members stake RNFTs on newly proposed incoming deals. The public market funds the DAOIC approved deals and the DAOIC members get paid via the 20% public ROP minting to fungible reputation token."
  },
  {
   "id": "kaal:claim:3949098-006",
   "url": "https://wulfkaal.github.io/claims/3949098-006",
   "claim": "Over time the public market replaces the need for capital commitments by DAOIC members, who continue to earn from their staking work without contributing capital, so the reputation effect grows and uncoupling from capital increases.",
   "type": "predictive",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "long term operation of the DAOIC",
    "continued public market participation"
   ],
   "supporting_quote": "The long-term effect here is that the market replaces the need for capital commitments by DAOIC members. The members still continue to benefit from their staking work without the need to contribute capital. Over time, the reputation effect grows and the uncoupling from capital increases."
  },
  {
   "id": "kaal:claim:3949098-007",
   "url": "https://wulfkaal.github.io/claims/3949098-007",
   "claim": "The more reputation replaces capital, the less capital must be allocated, tied and encumbered, which raises the ratio of unencumbered capital available to be newly deployed.",
   "type": "mechanism",
   "topics": [
    "defi",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "reputation is encumbered and tied to an asset in place of capital"
   ],
   "supporting_quote": "The more reputation replaces capital the less capital has to be allocated, tied, and encumbered. In turn, the ratio of capital becoming unencumbered through reputation increases the deployment of capital ratio, e.g. a higher proportion of unencumbered capital can be newly encumbered."
  },
  {
   "id": "kaal:claim:3949098-008",
   "url": "https://wulfkaal.github.io/claims/3949098-008",
   "claim": "Reputation can underwrite tokenized assets and provide immutable guarantees for them, and with reputation staked guarantees tokenized assets can over time function like real assets.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "reputation",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "reputation is meaningful and secure",
    "guarantors stake reputation and associated cashflow streams"
   ],
   "supporting_quote": "Reputation can be used to underwrite tokenized assets and provide immutable guarantees for tokenized assets. With reputation staked guarantees on tokenized assets such tokenized assets can, over time, exist like real assets."
  },
  {
   "id": "kaal:claim:3949098-009",
   "url": "https://wulfkaal.github.io/claims/3949098-009",
   "claim": "The liquidity benefits of reputation underwriting can only materialize if the underlying reputation is meaningful and secure.",
   "type": "condition",
   "topics": [
    "reputation",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "asserted",
   "scope_conditions": [
    "reputation is meaningful",
    "reputation is secure"
   ],
   "supporting_quote": "Again, the benefits for liquidity can only materialize if reputation is meaningful and secure."
  },
  {
   "id": "kaal:claim:3949098-010",
   "url": "https://wulfkaal.github.io/claims/3949098-010",
   "claim": "Replacing capital with reputation gives DAOIC members a permanent option and a right of first refusal on deals, because a member can stake reputation non fungible tokens on a deal without joining the purchase commitment.",
   "type": "mechanism",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "DAOIC operating model with RNFT staking separated from capital commitment"
   ],
   "supporting_quote": "The replacement of capital with reputation gives the DAOIC members a permanent option and right of first refusal on deals. DAOIC members can merely stake RNFT on a deal without participating in the purchase commitment for such a deal."
  },
  {
   "id": "kaal:claim:3949098-011",
   "url": "https://wulfkaal.github.io/claims/3949098-011",
   "claim": "The delayed voting outcomes and feedback effects created by the transition from loosely coupled to tightly coupled voting let DAOIC members triangulate their own internal liquidity position against deal feasibility.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "institutional-design",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "two phase loosely coupled and tightly coupled reputation staking votes"
   ],
   "supporting_quote": "At the same time, the delayed voting outcomes and associated feedback effects enabled by the transition from loosely coupled to tightly coupled voting enable DAOIC members to triangulate their own internal liquidity with deal feasibility."
  },
  {
   "id": "kaal:claim:3949098-012",
   "url": "https://wulfkaal.github.io/claims/3949098-012",
   "claim": "Because reputation staking carries no ex post capital commitment, the removal of capital makes capital calls and other liquidity limiting measures less relevant for DAOIC members.",
   "type": "design",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "best efforts style RNFT staking participations, not firm commitment deals"
   ],
   "supporting_quote": "The removal of capital through RNFT staking also makes capital calls and other liquidity-limiting measures less relevant. There are no ex post capital commitments associated with an RNFT staking participation."
  },
  {
   "id": "kaal:claim:3949098-013",
   "url": "https://wulfkaal.github.io/claims/3949098-013",
   "claim": "Exit by selling reputation tokens is more problematic for reputation than for other cryptocurrency tokens, because reputation is less fungible: a token's value is tied to the specific post in which the reputation was created and is subject to separate review.",
   "type": "failure",
   "topics": [
    "defi",
    "reputation",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "a member wants to exit by selling reputation tokens at fair market value"
   ],
   "supporting_quote": "This is more problematic for reputation than for most other cryptocurrency tokens, since reputation is less fungible because a token's value is tied to the post in which the reputation was created and subject to separate review. But in principle it could be algorithmically valued."
  },
  {
   "id": "kaal:claim:3949098-014",
   "url": "https://wulfkaal.github.io/claims/3949098-014",
   "claim": "In a firm commitment underwriting deal whose public portion does not sell out, a member is forced to sell reputation non fungible tokens on the over the counter market to satisfy the resulting capital call, but only if that member cannot cover the pro rata capital requirement with liquid capital.",
   "type": "failure",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "firm commitment underwriting deals",
    "public portion undersubscribed",
    "member lacks liquid capital"
   ],
   "supporting_quote": "the inability to sell out the public portion of the firm commitment deal, the respective RNFT member is forced to sell RNFT on the OTC market only if the respective ICD member cannot satisfy his or her pro rata capital requirement with liquid capital held by the ICD member."
  },
  {
   "id": "kaal:claim:3949098-015",
   "url": "https://wulfkaal.github.io/claims/3949098-015",
   "claim": "Only one in one hundred token opportunities returns a large multiple such as 100x, 30x or 10x, which Kaal lists as a core risk factor for running a DAO investment club.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "asserted",
   "scope_conditions": [
    "early stage digital asset investing"
   ],
   "supporting_quote": "Only 1 in 100 of token opportunities returns 100x, 30x, 10x"
  },
  {
   "id": "kaal:claim:3949098-016",
   "url": "https://wulfkaal.github.io/claims/3949098-016",
   "claim": "Without access to a network of core expertise, early stage investments in the digital asset industry are rarely successful.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "asserted",
   "scope_conditions": [
    "early stage digital asset investing",
    "an industry that evolved in silos of information and expertise"
   ],
   "supporting_quote": "Without access to a network of core expertise, early-stage investments in the digital asset industry are rarely successful"
  },
  {
   "id": "kaal:claim:3949098-017",
   "url": "https://wulfkaal.github.io/claims/3949098-017",
   "claim": "Because the cryptocurrency market has been hype driven, technical experience has not added significantly to overall market development and maturity.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "asserted",
   "scope_conditions": [
    "cryptocurrency market of the early 2020s"
   ],
   "supporting_quote": "Because the market has been so hype driven, technical experience has not added significantly to overall market development and maturity."
  },
  {
   "id": "kaal:claim:3949098-018",
   "url": "https://wulfkaal.github.io/claims/3949098-018",
   "claim": "Meaningful reputation in a business network removes the need for monitoring cost and lowers transaction costs by orders of magnitude.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "economics",
    "reputation",
    "ai-and-agents",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "asserted",
   "scope_conditions": [
    "meaningful reputation exists in the business network"
   ],
   "supporting_quote": "Reputation removes the need for monitoring cost. It lowers transaction costs in orders of magnitude."
  },
  {
   "id": "kaal:claim:3949098-019",
   "url": "https://wulfkaal.github.io/claims/3949098-019",
   "claim": "Reputation non fungible token staking removes counterparty risk because the desire to preserve and increase reputation scores dominates DAOIC decision making, making bad actors less likely to appear since their reputation would inevitably suffer.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "reputation scores are durable and visible to the group"
   ],
   "supporting_quote": "Similarly, RNFT staking by DAOIC members removes counterparty risk. The desire to preserve and increase RNFT scores predominates the DAOIC decision making. Therefore, bad actors are less likely to occur in the system as their reputation would inevitably suffer."
  },
  {
   "id": "kaal:claim:3949098-020",
   "url": "https://wulfkaal.github.io/claims/3949098-020",
   "claim": "In traditional underwriting, investors who cannot distinguish underwriters by reputation create free riding: once free riding occurs, underwriters stop investing in screening and try to free ride on others, producing a lemons problem.",
   "type": "failure",
   "topics": [
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "traditional underwriting markets",
    "investors cannot distinguish underwriters based on reputation"
   ],
   "supporting_quote": "As a result, free-riding on other's reputation may occur. Once free riding occurs, traditional underwriters will likely stop investing in their screening and instead attempt to free ride on others. This creates what is known as a lemons problem in the law and economics literature."
  },
  {
   "id": "kaal:claim:3949098-021",
   "url": "https://wulfkaal.github.io/claims/3949098-021",
   "claim": "Traditional underwriting also fails at the agent level, because individual agents within an underwriter may sacrifice the underwriter's overall reputation for personal gain, for example by putting out a fraudulent offering.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "defi",
    "reputation",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "traditional underwriting firms where agent and firm incentives diverge"
   ],
   "supporting_quote": "individual agents within an underwriter may decide to sacrifice the underwriter's overall reputation for personal gain."
  },
  {
   "id": "kaal:claim:3949098-022",
   "url": "https://wulfkaal.github.io/claims/3949098-022",
   "claim": "In the theoretical model, the incentive design of decentralized reputation staking governance aligns the individual with the group so tightly that the agent cannot gain personally at the expense of the principal.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives",
    "corporate-governance",
    "decentralization",
    "governance-design",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "theoretical model",
    "adoption of the decentralized reputation staking governance mechanisms"
   ],
   "supporting_quote": "aligns the interests of the individual with the interest of the group. In other words, the incentives of the principal, e.g. the group, and the individual are aligned so much that the agent cannot gain personally at the expense of the principal."
  },
  {
   "id": "kaal:claim:3949098-023",
   "url": "https://wulfkaal.github.io/claims/3949098-023",
   "claim": "Best efforts underwriting in the DAOIC is implemented as a smart contract accountability system: a member's capital commitment is encumbered as a deposit and released to the token opportunity only after the reputation staking pool decides, and funding occurs only on a majority upvote.",
   "type": "design",
   "topics": [
    "smart-contracts",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "best efforts underwriting via RNFT staking"
   ],
   "supporting_quote": "Such deposit will only be released and directly transferred to the token opportunity when the RNFT staking pool has made a decision on the token opportunity. Funding only happens in the case of a majority upvote."
  },
  {
   "id": "kaal:claim:3949098-024",
   "url": "https://wulfkaal.github.io/claims/3949098-024",
   "claim": "In a firm commitment reputation staking engagement the DAOIC commits no capital at all except for the portion of the token opportunity that does not sell out to the public.",
   "type": "design",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "firm commitment underwriting via RNFT staking"
   ],
   "supporting_quote": "In a firm commitment RNFT staking engagement, the DAOIC does not commit any capital at all, except for the portion of the token opportunity that does not sell out to the public."
  },
  {
   "id": "kaal:claim:3949098-025",
   "url": "https://wulfkaal.github.io/claims/3949098-025",
   "claim": "If the public fails to purchase the capped amount of a token opportunity, the DAOIC must sacrifice its own liquidity and buy the remaining part of the sale, so firm commitment underwriting turns a collective misjudgment of public demand into a capital obligation.",
   "type": "failure",
   "topics": [
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "firm commitment underwriting",
    "public demand falls short of the capped amount"
   ],
   "supporting_quote": "Should the public fail to purchase the capped amount of the token opportunity, the DAOIC will have to sacrifice its own liquidity and commit to buy the remaining part of the token opportunity sale."
  },
  {
   "id": "kaal:claim:3949098-026",
   "url": "https://wulfkaal.github.io/claims/3949098-026",
   "claim": "Misjudging the public commitment portion of a firm underwriting engagement would neutralize the liquidity the DAOIC previously gained through reputation staking.",
   "type": "failure",
   "topics": [
    "defi",
    "risk-and-incentives",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "firm commitment underwriting engagements"
   ],
   "supporting_quote": "Getting the public commitment part on a firm underwriting engagement wrong would neutralize the prior gained liquidity from RNFT staking."
  },
  {
   "id": "kaal:claim:3949098-027",
   "url": "https://wulfkaal.github.io/claims/3949098-027",
   "claim": "Against the view that firm commitment underwriting is antithetical to decentralization, Kaal argues it in fact further enhances the level of decentralization.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "defi",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "firm commitment underwriting by the DAOIC member collective"
   ],
   "supporting_quote": "While firm commitment underwriting may be seen as antithetical to decentralization, it in fact further enhances the level of decentralization."
  },
  {
   "id": "kaal:claim:3949098-028",
   "url": "https://wulfkaal.github.io/claims/3949098-028",
   "claim": "In phase 1 the benefits of decentralization remain relatively small because the presumably homogenous DAOIC member group generates little dissent in reputation based decision making.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "small and homogenous membership",
    "phase 1 of the DAOIC life cycle"
   ],
   "supporting_quote": "The DAOIC member group is also presumably homogenous, dissent will be small in the RFNT-based decision-making processes. Accordingly, the benefits from decentralization are still relatively small in phase 1."
  },
  {
   "id": "kaal:claim:3949098-029",
   "url": "https://wulfkaal.github.io/claims/3949098-029",
   "claim": "Shifting policy so that all returns on purchases are minted into fungible reputation tokens paid proportional to reputation holdings instantiates the shift from capital to reputation and functions as a form of best efforts underwriting on a token opportunity.",
   "type": "design",
   "topics": [
    "risk-and-incentives",
    "reputation",
    "tokenomics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "phase 2, capital allocation phase",
    "capital to reputation ratio moving toward 50/50"
   ],
   "supporting_quote": "All ROP is minted into FRT which, in turn, is paid out proportional to RNFT holdings. This instantiates the important shift from capital to reputation and shifts the incentives away from capital to reputation and can be seen as a form of best efforts underwriting on a token opportunity."
  },
  {
   "id": "kaal:claim:3949098-030",
   "url": "https://wulfkaal.github.io/claims/3949098-030",
   "claim": "Incomplete transparency is deliberately required in phase 2, where the interface discloses only reputation staking outcomes and not the deliberation, so that the DAOIC can experiment with policy adjustments without fear of public market impact.",
   "type": "design",
   "topics": [
    "disclosure",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "phase 2, before full transparency is enabled in phase 3"
   ],
   "supporting_quote": "This incomplete transparency is needed during phase 2 to ensure the DAOIC can experiment with policy adjustments without fear of public market impact."
  },
  {
   "id": "kaal:claim:3949098-031",
   "url": "https://wulfkaal.github.io/claims/3949098-031",
   "claim": "Once its market position is solidified, the DAOIC could mandate that each token opportunity adopt decentralized governance mechanisms before the DAOIC begins reputation staking on it, using its market power to force governance reform.",
   "type": "predictive",
   "topics": [
    "economics",
    "decentralization",
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "speculative",
   "scope_conditions": [
    "after the DAOIC has solidified its market position"
   ],
   "supporting_quote": "It is conceivable that the DAOIC, over time, once its position in the market has been solidified, mandates the adoption of decentralized governance mechanisms (Calcaterra & Kaal et al (2019) for the governance of each token opportunity"
  },
  {
   "id": "kaal:claim:3949098-032",
   "url": "https://wulfkaal.github.io/claims/3949098-032",
   "claim": "Without standards for digital assets it will be very difficult to increase regulatory certainty or coordinate market activity, and without regulatory certainty the digital asset market is less likely to evolve.",
   "type": "condition",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "digital asset markets seeking mass adoption"
   ],
   "supporting_quote": "Without standards for digital assets, it will be very difficult to increase regulatory certainty in the digital asset space and coordinate market activity. Without regulatory certainty the market for digital assets is less likely to evolve."
  },
  {
   "id": "kaal:claim:3949098-033",
   "url": "https://wulfkaal.github.io/claims/3949098-033",
   "claim": "The decentralized reputation staking governance mechanisms provide a higher form of decentralized governance than most legal standards in any given jurisdiction.",
   "type": "normative",
   "topics": [
    "decentralization",
    "governance-design",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "asserted",
   "supporting_quote": "(Calcaterra & Kaal et al (2019)) provide a higher form of decentralized governance than most legal standards in a given jurisdiction."
  },
  {
   "id": "kaal:claim:3949098-034",
   "url": "https://wulfkaal.github.io/claims/3949098-034",
   "claim": "Conflicts of interest from DAOIC members participating on the public side of a deal are minimized because the loosely coupled reputation staking vote and its transition to a tightly coupled vote are transparent to the public.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "loosely coupled votes on particular deals are publicly visible"
   ],
   "supporting_quote": "However, such practices are rather limited because of the transparent nature of the loosely coupled RNFT voting on a particular deal and the transition to tightly coupled voting."
  },
  {
   "id": "kaal:claim:3949098-035",
   "url": "https://wulfkaal.github.io/claims/3949098-035",
   "claim": "If the DAOIC is perceived as having a market impact, it could significantly increase corruptive influences from other market players, which in turn increases the likelihood of regulatory intervention, so market neutrality is in the DAOIC's long term interest.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "DAOIC has proliferated and is visible to the market and regulators"
   ],
   "supporting_quote": "Should the DAOIC be perceived as having a market impact, it could significantly increase corruptive influences coming from other market players. This, in turn, increases the likelihood of regulatory interventions."
  },
  {
   "id": "kaal:claim:3949098-036",
   "url": "https://wulfkaal.github.io/claims/3949098-036",
   "claim": "The DAOIC pools no assets: the smart contract releases each member's deposit directly to the project after validation pool approval, and returns on purchases are likewise not pooled but paid pro rata to members in proportion to their reputation token holdings.",
   "type": "design",
   "topics": [
    "smart-contracts",
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "non custodial DAOIC model coordinated by smart contracts"
   ],
   "supporting_quote": "releases the deposit directly to the project. No pooling of assets takes place. The ROP from each deal is also not pooled but rather paid out pro rata to the DAOIC members in proportion to their RNFT holdings."
  },
  {
   "id": "kaal:claim:3949098-037",
   "url": "https://wulfkaal.github.io/claims/3949098-037",
   "claim": "Kaal characterizes the 20 percent of public return on purchases as an access to information fee, paid to the DAOIC in exchange for the ability to learn which deals DAOIC members upvoted through reputation staking.",
   "type": "definitional",
   "topics": [
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "asserted",
   "scope_conditions": [
    "the pooled portion of public returns minted into fungible reputation tokens"
   ],
   "supporting_quote": "In other words, the 20% of ROP coming from the public is paid as a fee to the DAOIC in exchange for the ability to find out about the DAOIC deals that are upvoted via RNFT staking by DAOIC members."
  },
  {
   "id": "kaal:claim:3949098-038",
   "url": "https://wulfkaal.github.io/claims/3949098-038",
   "claim": "The key difference from the traditional venture capital model is that the DAOIC only makes its investment choices public and never provides investment analysis, so public co purchases are entirely voluntary.",
   "type": "definitional",
   "topics": [
    "innovation",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "public co purchases alongside DAOIC deals"
   ],
   "supporting_quote": "The key difference from the traditional VC model is that even for the co-purchases through the market, the DAOIC only makes their investment choices public. The co-purchases by the public are entirely voluntary, the DAOIC never provides investment analysis etc."
  },
  {
   "id": "kaal:claim:3949098-039",
   "url": "https://wulfkaal.github.io/claims/3949098-039",
   "claim": "Ratio adjustments are the DAOIC's key tool for strategic increases in profitability and overall policy, and they should be subject to a member vote conducted through the decentralized reputation staking governance mechanisms.",
   "type": "design",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "governance metrics subject to dynamic upgrade over the DAOIC life cycle"
   ],
   "supporting_quote": "Ratio adjustments provide a key tool for strategic increases in profitability and overall DAOIC policy. Ratio adjustments should be subject to DAOIC member vote following the decentralized reputation staking governance mechanisms (Calcaterra & Kaal et al (2019))."
  },
  {
   "id": "kaal:claim:3949098-040",
   "url": "https://wulfkaal.github.io/claims/3949098-040",
   "claim": "Replacing capital with reputation increases liquidity because reputation takes over part of the role of capital and frees otherwise locked capital, letting decentralized investment vehicles deploy capital more effectively since reputation staking on deals requires no capital deployment.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "defi",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "year": "2021",
   "source_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized investment vehicles using reputation staking"
   ],
   "supporting_quote": "When reputation takes over part of the role of capital it frees up otherwise locked capital that cannot fully be utilized. Decentralized investment vehicles are able to deploy capital more effectively because reputation staking on deals does not require the deployment of capital."
  },
  {
   "id": "kaal:claim:3962614-001",
   "url": "https://wulfkaal.github.io/claims/3962614-001",
   "claim": "The rapid growth of digital asset startups into billion dollar businesses with little or no venture capital funding demonstrates that the traditional venture capital model alone was not enough to meet the funding needs of technology startups.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "technology startups, especially digital asset startups"
   ],
   "supporting_quote": "Digital assets startups that grow rapidly into billion-dollar businesses with little or no VC funding have demonstrated that the traditional venture capital model alone was not enough to meet the funding needs of technology startups."
  },
  {
   "id": "kaal:claim:3962614-002",
   "url": "https://wulfkaal.github.io/claims/3962614-002",
   "claim": "Decentralized reputation governance models in venture capital have the potential to upgrade the venture capital market.",
   "type": "predictive",
   "topics": [
    "reputation",
    "decentralization",
    "governance-design",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "asserted",
   "supporting_quote": "This article shows that decentralized reputation governance models in venture capital have the potential to upgrade the venture capital market."
  },
  {
   "id": "kaal:claim:3962614-003",
   "url": "https://wulfkaal.github.io/claims/3962614-003",
   "claim": "Lack of liquidity is one of the biggest problems in the traditional venture capital ecosystem, and the traditional VC model disincentivizes generating early profits because capital is locked in for an extended period of time.",
   "type": "failure",
   "topics": [
    "defi",
    "risk-and-incentives",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "traditional fiat venture capital funds"
   ],
   "supporting_quote": "One of the biggest problems in the traditional VC ecosystem is lack of liquidity.4 The traditional VC model disincentivizes generating early profits.5 Capital is \"locked in\" or \"locked up\" for an extended period of time."
  },
  {
   "id": "kaal:claim:3962614-004",
   "url": "https://wulfkaal.github.io/claims/3962614-004",
   "claim": "Early stage funding fell from thirty five to twenty seven percent of total VC funding as venture capitalists increasingly focused on funding later stage companies.",
   "type": "empirical",
   "topics": [
    "innovation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "evidenced",
   "supporting_quote": "Early-stage funding fell from thirty-five to twenty seven percent of total VC funding as VCs increasingly focus on funding later-stage companies."
  },
  {
   "id": "kaal:claim:3962614-005",
   "url": "https://wulfkaal.github.io/claims/3962614-005",
   "claim": "Because traditional fiat VC funds must maintain liquidity to support capital calls from their investors, they are limited in their ability to deploy capital, which affects their return on investment and overall fund performance.",
   "type": "mechanism",
   "topics": [
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "fiat denominated venture capital funds subject to capital calls"
   ],
   "supporting_quote": "Because of their ability to maintain liquidity to support capital calls from their investors, traditional fiat VC funds are limited in their ability to deploy capital."
  },
  {
   "id": "kaal:claim:3962614-006",
   "url": "https://wulfkaal.github.io/claims/3962614-006",
   "claim": "Because time spent raising capital from limited partners is time taken away from portfolio company due diligence, the current VC model tends to reflect the networking and public relations ability of the general partner instead of their capital allocation ability.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "traditional fiat VC funds that must continuously raise capital from limited partners"
   ],
   "supporting_quote": "Because of this dynamic, the current VC model tends to reflect the networking and public relations ability of the VC's general partner instead of their capital allocation ability."
  },
  {
   "id": "kaal:claim:3962614-007",
   "url": "https://wulfkaal.github.io/claims/3962614-007",
   "claim": "Deal evaluation and risk assessment in traditional venture capital is fraught with inaccuracies and suboptimal incentives.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "traditional VC screening of early stage ventures"
   ],
   "supporting_quote": "Deal evaluation and risk assessment in traditional VC is fraught with inaccuracies and suboptimal incentives."
  },
  {
   "id": "kaal:claim:3962614-008",
   "url": "https://wulfkaal.github.io/claims/3962614-008",
   "claim": "A drawback of the traditional VC evaluation process is that perceptual, emotional, and cognitive processes affect the investment decision alongside financial considerations, because the evaluation criteria are applied through subjective human decision making.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "human applied VC screening criteria"
   ],
   "supporting_quote": "A potential drawback of this process is that perceptual, emotional, and cognitive processes impact the decision in addition to financial decisions because the evaluation criteria is made through subjective human decision-making."
  },
  {
   "id": "kaal:claim:3962614-009",
   "url": "https://wulfkaal.github.io/claims/3962614-009",
   "claim": "None of the standard VC deal evaluation criteria reflect how a prospective deal may correlate with a deal already held in the capitalist's investment portfolio.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "supporting_quote": "Additionally, none of those criteria reflect how a prospective deal may correlate with one already in the capitalist's investment portfolio."
  },
  {
   "id": "kaal:claim:3962614-010",
   "url": "https://wulfkaal.github.io/claims/3962614-010",
   "claim": "Significant information asymmetries in venture capital can lead portfolio company managers to engage in opportunistic behavior after an investment is made.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "corporate-governance",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "evidenced",
   "scope_conditions": [
    "post investment stage of a VC financing"
   ],
   "supporting_quote": "Finally, significant information asymmetries can lead managers to engage in opportunistic behavior after an investment is made."
  },
  {
   "id": "kaal:claim:3962614-011",
   "url": "https://wulfkaal.github.io/claims/3962614-011",
   "claim": "Because venture capitalists typically want to cash out their gains five to ten years after the initial investment, they play an active role in directing portfolio companies toward a merger, acquisition, or public offering, which can carry significant downsides for those companies and their products.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "VC backed portfolio companies approaching the exit window"
   ],
   "supporting_quote": "because capitalists typically want to cash-out their gains five to ten years after initial investments, they play an active role in directing the company towards a merger, acquisition, or public"
  },
  {
   "id": "kaal:claim:3962614-012",
   "url": "https://wulfkaal.github.io/claims/3962614-012",
   "claim": "Traditional VCs struggle in the digital asset market because of that market's significant volatility and because they lack expertise in a market still dominated by several key specialized players.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "traditional VCs entering digital asset markets"
   ],
   "supporting_quote": "Among those are the significant volatility of the digital asset market and lacking expertise of traditional VCs in the digital asset market which is still dominated by several key specialized players."
  },
  {
   "id": "kaal:claim:3962614-013",
   "url": "https://wulfkaal.github.io/claims/3962614-013",
   "claim": "Traditional VCs often cannot effectively compete with the ever increasing array of decentralized token offering avenues.",
   "type": "failure",
   "topics": [
    "securities-law",
    "tokenomics",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "asserted",
   "scope_conditions": [
    "digital asset fundraising markets"
   ],
   "supporting_quote": "Moreover, traditional VCs often cannot effectively compete with the ever-increasing array of decentralized token offering avenues."
  },
  {
   "id": "kaal:claim:3962614-014",
   "url": "https://wulfkaal.github.io/claims/3962614-014",
   "claim": "Because traditional VCs need to defend their investment choices to their own investors, they are often reluctant to invest in digital asset startups that have little history or sales records.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "corporate-governance",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "traditional VCs accountable to limited partners"
   ],
   "supporting_quote": "Traditional VCs are often also not able to effectively invest in the digital asset market because they need to defend their investment choices to their own investors. Because of that, traditional VCs are often reluctant to invest in digital asset startups with little history or sales records."
  },
  {
   "id": "kaal:claim:3962614-015",
   "url": "https://wulfkaal.github.io/claims/3962614-015",
   "claim": "As a rule of thumb in early investment rounds, the lower the information asymmetry the lower the payout, and below a certain threshold of established value venture capitalists will rarely invest at all.",
   "type": "condition",
   "topics": [
    "disclosure",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "asserted",
   "scope_conditions": [
    "early investment rounds"
   ],
   "supporting_quote": "As a rule of thumb in the early investment rounds, the lower the information asymmetry, the lower the payout. Below a certain threshold of established value, VCs will rarely invest."
  },
  {
   "id": "kaal:claim:3962614-016",
   "url": "https://wulfkaal.github.io/claims/3962614-016",
   "claim": "Alternative early round funding methods matter because they get entrepreneurs over the VC investment threshold or help them bypass the VC model completely.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "evidenced",
   "scope_conditions": [
    "technology entrepreneurs below the VC investment threshold"
   ],
   "supporting_quote": "These alternative funding methods are important to get entrepreneurs over the VC investment threshold, or to help entrepreneurs completely bypass of the VC model."
  },
  {
   "id": "kaal:claim:3962614-017",
   "url": "https://wulfkaal.github.io/claims/3962614-017",
   "claim": "At its peak in the 2019 cycle the volume of initial coin offerings surpassed venture capital firms and business angels as a fundraising method for startups.",
   "type": "empirical",
   "topics": [
    "securities-law",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "evidenced",
   "scope_conditions": [
    "the 2019 market cycle peak"
   ],
   "supporting_quote": "At its peak in the 2019 cycle, the volume of ICOs has surpassed VCs and BAs as a fundraising method for startups."
  },
  {
   "id": "kaal:claim:3962614-018",
   "url": "https://wulfkaal.github.io/claims/3962614-018",
   "claim": "Information asymmetries increase in traditional VC investment rounds because startups are incentivized to self censor when engaging with VCs, having little data to work with and being reluctant to overexpose themselves to prospective investors.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "early round engagement between startups and VCs"
   ],
   "supporting_quote": "Information asymmetries increase in traditional VC investment rounds as startups are incentivized to self-censor when engaging with VCs, as they have little data to work with, and are reluctant to overexpose themselves to prospective investors."
  },
  {
   "id": "kaal:claim:3962614-019",
   "url": "https://wulfkaal.github.io/claims/3962614-019",
   "claim": "The typical VC fee based compensation structure can lead to serious shortcomings, including excessive fundraising, suboptimal investments, misevaluation, and overfunding of portfolio companies during a fund's holding period.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "fee based VC compensation arrangements"
   ],
   "supporting_quote": "The typical VC fee-based compensation structure can lead to serious shortcomings, including excessive fundraising, suboptimal investments, misevaluation, and overfunding of the portfolio companies during a fund's holding period."
  },
  {
   "id": "kaal:claim:3962614-020",
   "url": "https://wulfkaal.github.io/claims/3962614-020",
   "claim": "Alternative early round funding mechanisms are not necessarily more successful than VCs in early round technology investing, because they tend to act out of intuition and personal experience whereas VCs use a primarily data driven approach to investment decisions and portfolio company evaluation.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "early round technology investing"
   ],
   "supporting_quote": "Whereas alternative early round funding mechanisms often tend to act out of intuition and personal experience, VC typically use a primarily data driven approach to investment decisions and portfolio company evaluation and supervision."
  },
  {
   "id": "kaal:claim:3962614-021",
   "url": "https://wulfkaal.github.io/claims/3962614-021",
   "claim": "Alternative early round funding methods frequently fail to provide adequate funding to fully launch a new company, and a significant number of tech startups that rely exclusively on these methods fail.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "evidenced",
   "scope_conditions": [
    "startups relying exclusively on alternative early round funding"
   ],
   "supporting_quote": "these methods frequently fail to provide adequate funding to fully launch a new company. A significant number of tech startups that rely exclusively on these methods fail."
  },
  {
   "id": "kaal:claim:3962614-022",
   "url": "https://wulfkaal.github.io/claims/3962614-022",
   "claim": "The novelty of reputation as capital lies in the decentralized and democratized capital allocation functionality enabled by the DAO design.",
   "type": "definitional",
   "topics": [
    "reputation",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "asserted",
   "scope_conditions": [
    "a VC DAO built on reputation tokens"
   ],
   "supporting_quote": "The novelty of \"Reputation as Capital\" lies in the decentralized and democratized capital allocation functionality enabled by the DAO design."
  },
  {
   "id": "kaal:claim:3962614-023",
   "url": "https://wulfkaal.github.io/claims/3962614-023",
   "claim": "A VC's proportional holdings of reputation tokens are likely to increase over time if the VC follows sound and successful practices by staking reputation tokens on investment proposals and succeeding in the selection of portfolio companies.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "asserted",
   "scope_conditions": [
    "a VC DAO where members stake reputation for or against proposals"
   ],
   "supporting_quote": "The VC's proportional holdings of these reputation tokens is likely to increase over time if the VC follows sound and successful practices by way of staking the VC's reputation tokens on investment proposals and succeeding in the selection of portfolio companies"
  },
  {
   "id": "kaal:claim:3962614-024",
   "url": "https://wulfkaal.github.io/claims/3962614-024",
   "claim": "Reputation tokens are separate and distinct from the fiat currency or other fungible tokens used to pay for investments in portfolio companies.",
   "type": "definitional",
   "topics": [
    "reputation",
    "tokenomics",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "asserted",
   "scope_conditions": [
    "the reputation as capital DAO design"
   ],
   "supporting_quote": "It is important to note that the reputation tokens are separate and distinct from the fiat currency or other fungible tokens that may be used to pay for investments in portfolio companies."
  },
  {
   "id": "kaal:claim:3962614-025",
   "url": "https://wulfkaal.github.io/claims/3962614-025",
   "claim": "Only reputation token holders are allowed to participate in the portfolio selection process, which materializes through reputation staking on investment proposals.",
   "type": "design",
   "topics": [
    "reputation",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "asserted",
   "scope_conditions": [
    "the reputation as capital DAO design"
   ],
   "supporting_quote": "First and foremost, only reputation token holders are allowed to participate in the portfolio selection process which materializes by way of reputation staking on investment proposals."
  },
  {
   "id": "kaal:claim:3962614-026",
   "url": "https://wulfkaal.github.io/claims/3962614-026",
   "claim": "Reputation tokens serve as claims on the future cash flows generated by the DAO, with cash flows in fungible cryptocurrencies paid in proportion to each member's non fungible reputation token holding.",
   "type": "design",
   "topics": [
    "reputation",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "a DAO that distributes returns as reputation salaries"
   ],
   "supporting_quote": "Second, reputation tokens serve as claims on the future cash flows generated by the DAO. The cashflows in the form of fungible cryptocurrencies are paid in proportion to each DAO members' non-fungible reputation token holding."
  },
  {
   "id": "kaal:claim:3962614-027",
   "url": "https://wulfkaal.github.io/claims/3962614-027",
   "claim": "The value of the reputation tokens is a function of the return on investment of the DAO.",
   "type": "definitional",
   "topics": [
    "tokenomics",
    "economics",
    "reputation",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "a DAO that treats ROI as DAO revenue shared as reputation salary"
   ],
   "supporting_quote": "Accordingly, the value of the reputation tokens is a function of the ROI of the DAO."
  },
  {
   "id": "kaal:claim:3962614-028",
   "url": "https://wulfkaal.github.io/claims/3962614-028",
   "claim": "If reputation whales stake reputation on a project and the market commits the capital for that stake, the whales should still receive part of the ROI because it is their reputation that is at stake, and they are not required to commit capital or to support capital calls with liquidity.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "whale reputation that has become meaningful through a track record"
   ],
   "supporting_quote": "If whales stake but the market commits for their stake with capital, whales should still have the right to receive (part of) the ROI because it is their reputation that is at stake. Whales are not required to commit capital and don't have to support capital calls with liquidity."
  },
  {
   "id": "kaal:claim:3962614-029",
   "url": "https://wulfkaal.github.io/claims/3962614-029",
   "claim": "Reputation as venture capital must be distinguished from the capital replacement enabled in decentralized underwriting, because in venture capital reputation needs to fill the role of capital for each funded venture deal rather than only when a claim is filed.",
   "type": "condition",
   "topics": [
    "decentralization",
    "defi",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of decentralized underwriting and venture capital DAOs"
   ],
   "supporting_quote": "reputation in venture capital needs to fill the role of capital for each funded venture deal."
  },
  {
   "id": "kaal:claim:3962614-030",
   "url": "https://wulfkaal.github.io/claims/3962614-030",
   "claim": "The basic VC DAO model mixes fungible cryptocurrency investment with minted non fungible reputation, and this duality prevents the full benefits that are generated when non fungible reputation is staked alone on deals.",
   "type": "failure",
   "topics": [
    "reputation",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "early phase VC DAO models that combine capital and reputation staking"
   ],
   "supporting_quote": "Rather, the VC DAO GP invests both fungible cryptocurrency from a pool as well as non-fungible and minted reputation on the portfolio companies. This duality does not allow for the full benefits that are generated if non-fungible reputation is staked alone on the deals."
  },
  {
   "id": "kaal:claim:3962614-031",
   "url": "https://wulfkaal.github.io/claims/3962614-031",
   "claim": "Because of significant path dependencies in the capital formation and capital allocation processes of existing venture capital models, the ideal typical reputation based capital allocation model is less likely to be created in the short term.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "short term adoption horizon"
   ],
   "supporting_quote": "because of significant path dependencies in the capital formation and capital allocation process with existing venture capital models, the above illustrated ideal-typical reputation-based capital allocation model in Figure 1 is less likely to be created in the short term."
  },
  {
   "id": "kaal:claim:3962614-032",
   "url": "https://wulfkaal.github.io/claims/3962614-032",
   "claim": "In the hybrid VC DAO model eighty percent of returns are allocated to investors pro rata as ROI and twenty percent of returns are allocated to the reputation salary pool.",
   "type": "design",
   "topics": [
    "reputation",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "asserted",
   "scope_conditions": [
    "the hybrid VC DAO model with a traditional legal structure"
   ],
   "supporting_quote": "80% of returns are allocated to investors pro rata as ROI. 20% of returns are allocated to the reputation salary pool."
  },
  {
   "id": "kaal:claim:3962614-033",
   "url": "https://wulfkaal.github.io/claims/3962614-033",
   "claim": "Through the decentralized governance precedent system, projects upvoted by the whale validation pool that have the highest comparative ROI get more citations in the reputation system and continually enhance the reputation of the whale who sourced and proposed them.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "decentralization",
    "governance-design",
    "law-and-legal-systems",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "asserted",
   "scope_conditions": [
    "a DAO operating a decentralized governance precedent system"
   ],
   "supporting_quote": "Through the decentralized governance precedent system, projects that were upvoted by the Whale validation pool and have the highest comparative ROI get more citations in the reputation system and continually enhance the reputation of the whale who sourced and proposed it."
  },
  {
   "id": "kaal:claim:3962614-034",
   "url": "https://wulfkaal.github.io/claims/3962614-034",
   "claim": "A VC DAO needs a legal wrapper in order to interact with the real world, because otherwise everyone involved in the DAO may be jointly and severally liable in any jurisdiction.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs transacting with counterparties in the offchain world"
   ],
   "supporting_quote": "In order to interact with the real world, the VC DAO needs a legal wrapper. Otherwise, everyone involved in the DAO may be jointly and severally liable in any jurisdiction."
  },
  {
   "id": "kaal:claim:3962614-035",
   "url": "https://wulfkaal.github.io/claims/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",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives",
    "reputation",
    "regulatory-failure",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "models where VCs can stake reputation without proportionate capital commitment"
   ],
   "supporting_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"
  },
  {
   "id": "kaal:claim:3962614-036",
   "url": "https://wulfkaal.github.io/claims/3962614-036",
   "claim": "The incentives that undermine long term success of the hybrid model can be mitigated by mandating that staking on deals requires capital commitments, while allowing VCs to lower their capital commitments and increase their staking over time.",
   "type": "design",
   "topics": [
    "risk-and-incentives",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "hybrid VC DAO models transitioning away from capital"
   ],
   "supporting_quote": "It is possible to mitigate these incentives that undermine the long-term success of the system. For example, it is conceivable that staking on deals by VCs mandates capital commitments to the deals but that VCs can over time lower their capital commitments and increase their staking."
  },
  {
   "id": "kaal:claim:3962614-037",
   "url": "https://wulfkaal.github.io/claims/3962614-037",
   "claim": "A better system emphasizes reputation by prohibiting capital investment into portfolio companies after an initial minting of reputation in proportion to incoming capital.",
   "type": "design",
   "topics": [
    "risk-and-incentives",
    "reputation",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "the incentive optimized reputation model with smart contracts"
   ],
   "supporting_quote": "A better system would avoid this scenario by emphasizing the reputation in the system by prohibiting capital investment into portfolio companies after an initial minting of reputation in proportion to incoming capital."
  },
  {
   "id": "kaal:claim:3962614-038",
   "url": "https://wulfkaal.github.io/claims/3962614-038",
   "claim": "In the non custodial DAO investment club model all of the return on purchase is minted into fungible reputation tokens that get paid as reputation salaries following decentralized governance, which provides the best incentive alignment for members and the highest potential return for all involved.",
   "type": "design",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "the non custodial DAO investment club model with smart contracts"
   ],
   "supporting_quote": "In this model, all of the ROP is minted into fungible reputation tokens that get paid as reputation salaries following decentralized governance. This model provides the best incentive alignment for DAOIC members with the highest potential return for all involved."
  },
  {
   "id": "kaal:claim:3962614-039",
   "url": "https://wulfkaal.github.io/claims/3962614-039",
   "claim": "Because the public co purchases alongside DAO investment club members and expects to pay for the right to benefit from the collective wisdom of those members and the deal pipeline they generate, the public should expect to pay the usual two and twenty fees.",
   "type": "design",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "public co purchase alongside a DAO investment club"
   ],
   "supporting_quote": "Because the public co-purchases with the DAOIC members and expects to pay a price for the right to benefit from the collective wisdom of the DAOIC members and the deal pipeline they can together generate, the public should expect to pay the usual 2/20 fees."
  },
  {
   "id": "kaal:claim:3962614-040",
   "url": "https://wulfkaal.github.io/claims/3962614-040",
   "claim": "Over time the members of a DAO investment club do not need capital any longer, because the public market funds the deals and members get paid through the twenty percent public return on purchase that is minted into fungible reputation tokens.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "mature phases of a DAO investment club with public co purchase"
   ],
   "supporting_quote": "Over time, the members of the DAOIC do not need capital any longer. All they need is the ability to stake RNFTs on newly proposed incoming deals. The public market funds the deals and the DAO members get paid via the 20% public ROP minting to fungible reputation token."
  },
  {
   "id": "kaal:claim:3962614-041",
   "url": "https://wulfkaal.github.io/claims/3962614-041",
   "claim": "Removing capital as a necessity for deal participation creates a very high level of flexibility for DAO investment club members, allowing them to invest without ever being forced to invest, and making capital calls entirely unnecessary.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "DAO investment club phases where the public market funds deals"
   ],
   "supporting_quote": "The removal of capital as a necessity for deal participation creates a very high level of flexibility for DAOIC members. It allows the DAOIC members to invest if they so choose but it does not force them to invest, under any conditions. Capital calls are entirely unnecessary."
  },
  {
   "id": "kaal:claim:3962614-042",
   "url": "https://wulfkaal.github.io/claims/3962614-042",
   "claim": "The collective wisdom of DAO investment club members helps hedge against purchase risk, and because decentralized governance with loosely and tightly coupled votes will very likely make all tightly coupled votes unanimous, no member loses reputation NFTs.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized governance combining loosely and tightly coupled votes"
   ],
   "supporting_quote": "The collective wisdom of DAOIC members helps hedge against purchase risk. Moreover, because the applicable decentralized governance with loosesly and tightly coupled votes will very likely make all tightly coupled votes unanimous, no DAOIC member loses RNFTs"
  },
  {
   "id": "kaal:claim:3962614-043",
   "url": "https://wulfkaal.github.io/claims/3962614-043",
   "claim": "Reputation as capital has the potential to lower capital requirements for VC businesses significantly and to increase liquidity at unprecedented levels, because VCs can sell their fungible reputation tokens to the market as needed.",
   "type": "predictive",
   "topics": [
    "reputation",
    "defi",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "argued",
   "scope_conditions": [
    "a functioning market for fungible reputation tokens"
   ],
   "supporting_quote": "Reputation as capital has the potential to lower capital requirements for VC businesses significantly and increase liquidity at unprecedented levels because VCs fungible reputation tokens can be sold to the market as needed by."
  },
  {
   "id": "kaal:claim:3962614-044",
   "url": "https://wulfkaal.github.io/claims/3962614-044",
   "claim": "The industry is still experimenting with different forms of DeFi capital replacement schemes, and it will take time to filter out those designs that have unanticipated side effects.",
   "type": "predictive",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "year": "2021",
   "source_sha256": "c6e202e77fd08db801f932774026458b94e5d103abf30cb1189fe6a1c5edf391",
   "confidence": "speculative",
   "scope_conditions": [
    "DeFi experimentation that started in 2020"
   ],
   "supporting_quote": "The industry is still experimenting with different forms of DeFi capital replacement schemes. It will take time to filter out those designs that have unanticipated side effects"
  },
  {
   "id": "kaal:claim:3782217-001",
   "url": "https://wulfkaal.github.io/claims/3782217-001",
   "claim": "Market liquidity depends on trustworthiness, and trustworthiness depends on observed momentum: isolated instances of motion are insufficient, because the observations must be collected into a history before they carry weight and meaning.",
   "type": "mechanism",
   "topics": [
    "defi",
    "reputation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "asserted",
   "scope_conditions": [
    "marketplaces seeking liquidity"
   ],
   "supporting_quote": "To achieve liquidity, marketplaces must be trustworthy. They need momen- tum. It's not enough to achieve motion in any particular instance. Momentum must be observed to give trust to the marketplace. These observations need to be collected in a history to give them weight and meaning."
  },
  {
   "id": "kaal:claim:3782217-002",
   "url": "https://wulfkaal.github.io/claims/3782217-002",
   "claim": "Governance in a decentralized organization depends on meaningful reputation, and the meaning of any reputation is determined by its history and by how that history is analyzed and presented, which makes historiography a governance variable rather than a neutral record.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "reputation",
    "citation-and-knowledge",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized organizations"
   ],
   "supporting_quote": "Governance relies on meaningful reputation to de- cide who or what to focus on. The meaning of reputation is determined by its history and how that history is analyzed and presented."
  },
  {
   "id": "kaal:claim:3782217-003",
   "url": "https://wulfkaal.github.io/claims/3782217-003",
   "claim": "The choice of historiography is a design choice about the architecture of higher order information storage, and because deciding what is true is the judicial function, historiography is effectively the architecture of judicial governance.",
   "type": "definitional",
   "topics": [
    "citation-and-knowledge",
    "governance-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "supporting_quote": "The choice of historiography is the design choice of the architecture of higher- order information storage. The purpose of the judicial branch is to finalize information storage, to decide what is true. The architecture of history, historiography, is the ar- chitecture for judicial governance."
  },
  {
   "id": "kaal:claim:3782217-004",
   "url": "https://wulfkaal.github.io/claims/3782217-004",
   "claim": "Any reliance by a DAO on a centralized feature creates a centralized point of failure that threatens the survival of the organization and renders the system technically centralized despite its decentralized appearance.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "decentralization",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs with any centralized dependency, including oracles"
   ],
   "supporting_quote": "Any time your DAO relies on a centralized feature, that is a centralized point of failure that is a threat to the survival of the organization. That means the system is technically centralized."
  },
  {
   "id": "kaal:claim:3782217-005",
   "url": "https://wulfkaal.github.io/claims/3782217-005",
   "claim": "Where a DAO is automated around a single centralized point of failure, the work of decentralizing and giving members redundant power is wasted, because the point of failure functions as a supreme leader and full centralization would be more efficient.",
   "type": "failure",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "DAO automated around one centralized component"
   ],
   "supporting_quote": "In that case it would be more efficient to completely centralize around the single point of failure the DAO is automated around. The effort you're making to decentralize and give each member redundant power is wasted, because the point of failure might as well be the supreme leader."
  },
  {
   "id": "kaal:claim:3782217-006",
   "url": "https://wulfkaal.github.io/claims/3782217-006",
   "claim": "A DAO that relies on a centralized oracle will eventually be exploited, because the people controlling the oracle will become aware of their power over automated contract triggers and, given the competitive nature of capitalism, are right to take advantage of it.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "DAO automated by smart contracts on oracle data",
    "sufficient value at stake"
   ],
   "supporting_quote": "Eventually, the people who have the relevant power in the centralized oracle will become aware of the power they have over the DAO. Eventually there will be an opportunity to exploit that information."
  },
  {
   "id": "kaal:claim:3782217-007",
   "url": "https://wulfkaal.github.io/claims/3782217-007",
   "claim": "Legislation is the wrong remedy for oracle exploitation, because the existence of an arbitrage opportunity means systems will evolve around whatever rules exist in order to exploit the advantage; the proper response is to engineer a better system.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "insider information and arbitrage opportunities"
   ],
   "supporting_quote": "But the very existence of this opportunity for arbitrage means systems will evolve around whatever rules exist to exploit the advantage. Instead of legislating, the proper response is to engineer a better system."
  },
  {
   "id": "kaal:claim:3782217-008",
   "url": "https://wulfkaal.github.io/claims/3782217-008",
   "claim": "A robust decentralized oracle finds better information because averaging across a crowd is typically better for complex situations, being less subject to the prejudices of individuals who hold more limited information, so overestimates and underestimates offset each other.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "all things being equal",
    "complex situations"
   ],
   "supporting_quote": "A robust decentralized oracle would find better information. The wisdom of the crowd can be employed to discover the truth. Averaging information is typically better for any complex situation, since they're less subject to the prejudices of the individual, who has more limited information."
  },
  {
   "id": "kaal:claim:3782217-009",
   "url": "https://wulfkaal.github.io/claims/3782217-009",
   "claim": "Condorcet's Jury Theorem cuts both ways: larger groups of slightly stupid people, defined as being wrong slightly more than half the time, are worse than smaller groups of stupid people, so the idiocy of the mob is the counterbalance to the wisdom of the crowd.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "average member correct less than half the time"
   ],
   "supporting_quote": "larger groups of slightly stupid people are worse than smaller groups of stupid people. The idiocy of the mob is the counterbalance to the wisdom of the crowd."
  },
  {
   "id": "kaal:claim:3782217-010",
   "url": "https://wulfkaal.github.io/claims/3782217-010",
   "claim": "An oracle DAO must filter its network so that the average member is correct at least slightly more often than incorrect; once that filter holds, larger and more decentralized networks converge on the truth more quickly and more certainly.",
   "type": "condition",
   "topics": [
    "smart-contracts",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "average member better than chance",
    "no systemic bias"
   ],
   "supporting_quote": "So an oracle DAO needs to filter its network to guarantee the average member is correct, at least slightly more than they are incorrect. Then the larger and more decentralized the network becomes, the quicker and more certainly it will converge on the truth."
  },
  {
   "id": "kaal:claim:3782217-011",
   "url": "https://wulfkaal.github.io/claims/3782217-011",
   "claim": "In the SchellingCoin approach to oracle design, members stake reputation tokens on their answer to the question a DApp is asking and are rewarded according to how close they came to the resulting median value, which functions as the game theoretic Schelling point.",
   "type": "design",
   "topics": [
    "tokenomics",
    "smart-contracts",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "questions with a verifiable focal answer"
   ],
   "supporting_quote": "The idea is to have your Oracle DAO members stake their reputation tokens on their answer to a question a DApp is asking. Then you reward those closer to the resulting median value"
  },
  {
   "id": "kaal:claim:3782217-012",
   "url": "https://wulfkaal.github.io/claims/3782217-012",
   "claim": "The protocols governing how a particular oracle question is answered should be set by the subject matter experts themselves rather than by a static centralized hierarchy, because the experts know best how their own system can be gamed and how to prevent that gaming to protect their hard earned reputation.",
   "type": "design",
   "topics": [
    "governance-design",
    "smart-contracts",
    "regulatory-failure",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "domain specific oracle questions"
   ],
   "supporting_quote": "Giving the experts, them- selves, control of their own organization is better than relying on a static centralized hierarchy. The experts know best how to game their own system, and how to prevent gaming to protect their hard-earned reputation."
  },
  {
   "id": "kaal:claim:3782217-013",
   "url": "https://wulfkaal.github.io/claims/3782217-013",
   "claim": "Robust decentralized oracles do not yet exist despite well funded proposals, because decentralized oracles are themselves DAOs and therefore inherit the same missing incentive structure, governance processes, and history that all DAOs suffer from.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "dao",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "state of the technology at the time of writing"
   ],
   "supporting_quote": "Put simply, decentralized oracles are DAOs, so they still lack the proper incentive structure and governance processes and history that all DAOs suffer from."
  },
  {
   "id": "kaal:claim:3782217-014",
   "url": "https://wulfkaal.github.io/claims/3782217-014",
   "claim": "A decentralized oracle is not secure until it has significant momentum and history, and it is not even truly decentralized until it has a large network of active members.",
   "type": "condition",
   "topics": [
    "smart-contracts",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "oracle networks"
   ],
   "supporting_quote": "A decen- tralized oracle is not secure until it has significant momentum and history—an oracle is not even truly decentralized until this is achieved, until it has a large network of active members."
  },
  {
   "id": "kaal:claim:3782217-015",
   "url": "https://wulfkaal.github.io/claims/3782217-015",
   "claim": "Until decentralized oracle protocols are secure and robustly enacted, projects should rely on centralized oracles while keeping the network's monetary value below the level at which the centralized newsfeed would gain an incentive to manipulate the data.",
   "type": "design",
   "topics": [
    "smart-contracts",
    "risk-and-incentives",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "pre maturity phase of decentralized oracle technology"
   ],
   "supporting_quote": "Until the decentralized protocol is secure and robustly enacted, it is better to rely on centralized oracles, and make sure your network doesn't grow to gain such a large monetary value that an incentive arises for the centralized newsfeed to manipulate the data."
  },
  {
   "id": "kaal:claim:3782217-016",
   "url": "https://wulfkaal.github.io/claims/3782217-016",
   "claim": "Oracle DAOs and decentralized finance DAOs face a bootstrapping deadlock because each relies on the other for its very existence, a chicken and egg problem the authors address by having participants prove their worth in a development period before they can charge other DAOs fees.",
   "type": "failure",
   "topics": [
    "defi",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "early stage decentralized finance ecosystems"
   ],
   "supporting_quote": "Unfortunately, oracle DAOs and deFi DAOs rely on each other for their very existence. Which will come first, the chicken or the egg?"
  },
  {
   "id": "kaal:claim:3782217-017",
   "url": "https://wulfkaal.github.io/claims/3782217-017",
   "claim": "Centralized civic institutions always become corrupt over time, and that corruption becomes obvious only once a new technology disrupts their operation and reveals their weaknesses.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "centralized civic institutions over long time horizons"
   ],
   "supporting_quote": "Centralized civic institutions always become corrupt in time. Then this corruption becomes obvious once a new technology disrupts their operation, revealing their weaknesses."
  },
  {
   "id": "kaal:claim:3782217-018",
   "url": "https://wulfkaal.github.io/claims/3782217-018",
   "claim": "Institutional corruption follows a repeating cycle: people surrender their power of information transmission to institutions that are initially more effective and efficient, those institutions centralize and ossify into corruption, and new technology then allows people to bypass them.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "systemic-risk",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "information transmission institutions"
   ],
   "supporting_quote": "give up their power of information transmission to centralized institutions which are more effective and efficient. These institutions become corrupt after their hierarchies centralize and ossify, then new technology allows people to by- pass these centrally controlled media institutions."
  },
  {
   "id": "kaal:claim:3782217-019",
   "url": "https://wulfkaal.github.io/claims/3782217-019",
   "claim": "If transparent democratic institutions are not built to replace the corrupt ones, new opaque centralized institutions will take their place, as Facebook, YouTube, and Twitter already do with secret algorithms that control what stories spread with no democratic oversight.",
   "type": "predictive",
   "topics": [
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "current platform era"
   ],
   "supporting_quote": "If we don't build transparent democratic institutions to replace the corrupt insti- tutions, new opaque centralized institutions will. Already, Facebook, YouTube, and Twitter are creating secret algorithms that control what type of story can be spread through their platforms"
  },
  {
   "id": "kaal:claim:3782217-020",
   "url": "https://wulfkaal.github.io/claims/3782217-020",
   "claim": "Truth discovery in the marketplace of ideas is more effective and efficient when news aggregators are more decentralized: ten newspapers reporting on a story produce a more accurate historical picture than one newspaper reporting on the story ten times.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "marketplace of ideas",
    "competing independent aggregators"
   ],
   "supporting_quote": "Truth discovery in any market, including the marketplace of ideas, is more effective and efficient when news aggregators are more decentralized. When there are J` newspapers reporting on a story, a more accurate historical picture emerges than when one newspaper reports on the story J` times."
  },
  {
   "id": "kaal:claim:3782217-021",
   "url": "https://wulfkaal.github.io/claims/3782217-021",
   "claim": "By 2012, ninety percent of the United States media and entertainment industry was controlled by the top six media conglomerations.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States media and entertainment industry, 2012"
   ],
   "supporting_quote": "By X`JX, K`% was controlled by the top L media conglomerations."
  },
  {
   "id": "kaal:claim:3782217-022",
   "url": "https://wulfkaal.github.io/claims/3782217-022",
   "claim": "American faith in media has fallen in direct correlation with the consolidation of broadcasting power for as long as active statistics have been studied.",
   "type": "empirical",
   "topics": [
    "reputation",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States",
    "period for which statistics exist"
   ],
   "supporting_quote": "American faith in media has reliably fallen in direct correlation with the consolidation of broadcasting power, as long as active statistics have been studied."
  },
  {
   "id": "kaal:claim:3782217-023",
   "url": "https://wulfkaal.github.io/claims/3782217-023",
   "claim": "The most obvious harm from news consolidation is that national and international centralized corporations do not devote the same degree of focus to the interests of the local communities they serve, because love does not scale.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "consolidated national or international news corporations"
   ],
   "supporting_quote": "The most obvious problem with news consolidation is that national or interna- tional centralized corporations do not devote the same degree of focus to the inter- ests of the local communities they serve."
  },
  {
   "id": "kaal:claim:3782217-024",
   "url": "https://wulfkaal.github.io/claims/3782217-024",
   "claim": "Contrary to the common fear, wide scale decentralization of media power will not collapse centralized corporations, just as Napster and BitTorrent did not collapse the centralized music companies; decentralization does not take power from centralized actors, it increases everyone's power.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "incumbents willing to participate in the new collaborative networks"
   ],
   "supporting_quote": "Wide scale decentralization of power in the media will not collapse the power of centralized corporations, any more than file sharing services like Napster and Bit- Torrent6 collapsed the power of the centralized music companies."
  },
  {
   "id": "kaal:claim:3782217-025",
   "url": "https://wulfkaal.github.io/claims/3782217-025",
   "claim": "Popularity based ranking cannot substitute for editorial control, because people end up relying on unconscious algorithms to determine what is authoritative and the Folk Theorems establish that such algorithms can always be gamed.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "user generated content platforms without editorial control"
   ],
   "supporting_quote": "People rely on unconscious algorithms which use popularity to determine what is authoritative content. But the lessons of the Folk Theorems again arise, to remind us that such algorithms can always be gamed."
  },
  {
   "id": "kaal:claim:3782217-026",
   "url": "https://wulfkaal.github.io/claims/3782217-026",
   "claim": "A central authority is perfectly well incentivized to ignore minor problems that only partially eat into its profits, so long as it maintains ultimate control of those profits, which is why platform level abuses persist under centralized ownership.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "platforms with centralized profit control"
   ],
   "supporting_quote": "A central authority is perfectly well incentivized to ignore minor problems which only partially eat into their profits, as long as they maintain ultimate control of profits."
  },
  {
   "id": "kaal:claim:3782217-027",
   "url": "https://wulfkaal.github.io/claims/3782217-027",
   "claim": "Existing decentralized news efforts including WikiNews, the Decentralized News Network, and Steemit failed to gain wide adoption because they lacked ambition; the goal should instead be to empower individuals with greater ability to communicate and cooperate.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized news projects to date"
   ],
   "supporting_quote": "All of these examples appear to us to have failed to gain wide adoption due to a lack of ambition. The goal should be to empower individuals with greater ability to communi- cate and cooperate."
  },
  {
   "id": "kaal:claim:3782217-028",
   "url": "https://wulfkaal.github.io/claims/3782217-028",
   "claim": "Reputation in a news DAO must be anchored in fungible currency: new reputation should be minted only when articles connect to profitable endeavors such as advertising, paid analyses, or protocols relied upon for decentralized business contracts.",
   "type": "design",
   "topics": [
    "reputation",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "news DAOs building meaningful reputation"
   ],
   "supporting_quote": "articles must have a foun- dational meaning in fungible currency. New reputation should only be minted when the articles are connected to profitable endeavors—advertising, paid analyses, new protocols that are relied upon for decentralized business contracts."
  },
  {
   "id": "kaal:claim:3782217-029",
   "url": "https://wulfkaal.github.io/claims/3782217-029",
   "claim": "Reviewers in a news review DAO will give honest reviews despite being paid fees, because the reputational system rewards members mostly on the basis of future fees rather than present ones.",
   "type": "mechanism",
   "topics": [
    "dao",
    "risk-and-incentives",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "reputation systems weighted toward future fee streams"
   ],
   "supporting_quote": "Reviewers will be incentivized to give honest reviews despite fees, because the reputational system rewards members mostly based on future fees."
  },
  {
   "id": "kaal:claim:3782217-030",
   "url": "https://wulfkaal.github.io/claims/3782217-030",
   "claim": "Tracking and aggregating reputations across DAOs can build a more accurate picture of a person's expertise and experiential gaps than traditional educational institutions provide, which would quickly reveal meaningless certification and licensure programs as worthless.",
   "type": "predictive",
   "topics": [
    "education-and-practice",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "reputation systems anchored in profitable endeavor"
   ],
   "supporting_quote": "Tracking and aggregating our reputations in various DAOs can build a more accurate picture of our expertise and experiential gaps than our tra- ditional educational institutions have."
  },
  {
   "id": "kaal:claim:3782217-031",
   "url": "https://wulfkaal.github.io/claims/3782217-031",
   "claim": "Transparency in a decentralized network is not optional: every function needs to be publicly auditable for people to trust it, because without a central authority to approve code, unexpected malicious behavior can be built into any opaque code.",
   "type": "condition",
   "topics": [
    "disclosure",
    "compliance",
    "open-source-and-code",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized networks without a central approving authority"
   ],
   "supporting_quote": "Transparency is crucial in a decentralized net- work. Every function needs to be publicly auditable for people to trust it. Without a central authority to approve it, unexpected malicious behavior can be built into any opaque code."
  },
  {
   "id": "kaal:claim:3782217-032",
   "url": "https://wulfkaal.github.io/claims/3782217-032",
   "claim": "From a game theory perspective the open source culture advocated in the Web3 movement is not sustainable in the long term unless it is married with a culture of respect for history.",
   "type": "failure",
   "topics": [
    "open-source-and-code",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "long term horizon",
    "absence of a culture acknowledging past contributions"
   ],
   "supporting_quote": "the current open source culture advocated in the WebM movement is not sustainable in the long term. Unless we marry it with a culture of respect for history."
  },
  {
   "id": "kaal:claim:3782217-033",
   "url": "https://wulfkaal.github.io/claims/3782217-033",
   "claim": "The solution to the game theory problem of getting a player to freely give up intellectual property at one stage of a repeated game is to guarantee a reward at a future stage by fostering a culture that acknowledges past contributions, so players seek future fame by distributing their work in the present.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code",
    "citation-and-knowledge",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "repeated game with future stages",
    "culture that reliably acknowledges past contributions"
   ],
   "supporting_quote": "The solution to the game theory conundrum of how to incentivize a player to freely give up their intellectual property at one stage of a repeated game, is by guaranteeing a reward in a future stage, by fostering a culture of acknowledge- ment of past contributions."
  },
  {
   "id": "kaal:claim:3782217-034",
   "url": "https://wulfkaal.github.io/claims/3782217-034",
   "claim": "A culture of respect for history is unnatural and must be consciously policed, which makes it another of the essential catalyst institutions that has to be deliberately built into the decentralized economy.",
   "type": "condition",
   "topics": [
    "citation-and-knowledge",
    "institutional-design",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized economies"
   ],
   "supporting_quote": "It's unnatural to have a culture of respect for history, and needs to be consciously policed—it's another of the essential catalyst institutions which needs to be built into the decentralized economy."
  },
  {
   "id": "kaal:claim:3782217-035",
   "url": "https://wulfkaal.github.io/claims/3782217-035",
   "claim": "Weighting references so that more value is shared with older posts promotes long term contributions and innovation and increases stability, while less value sharing encourages new contributions and immediate work, so the weighting parameters encode whether the DAO values long term or short term contribution.",
   "type": "design",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "citation graph based reputation systems"
   ],
   "supporting_quote": "More value-sharing with older posts will promote long-term con- tributions and innovations and increases stability; less value-sharing encourages new contributions and immediate work. How you design the calculation tells us whether you give more value to long-term or short-term contributions."
  },
  {
   "id": "kaal:claim:3782217-036",
   "url": "https://wulfkaal.github.io/claims/3782217-036",
   "claim": "Reviewing through references enables punishment and reward in DAOs, which shifts members' motivation away from immediate rewards toward the future and encourages delayed gratification and sacrifice for the good of the group.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "risk-and-incentives",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs with a functioning citation and review system"
   ],
   "supporting_quote": "reviewing through references enables punishment and rewards in DAOs which changes the motivations of members from a focus on immediate rewards to the future, encouraging delayed gratification and sacrifice for the good of the group."
  },
  {
   "id": "kaal:claim:3782217-037",
   "url": "https://wulfkaal.github.io/claims/3782217-037",
   "claim": "Review changes the game theoretical perspective from a single stage game to a repeated game, which produces more efficient cooperation instead of internal competition and is what makes the open source environment sustainable in the long run.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs where past contributions remain reviewable"
   ],
   "supporting_quote": "Review changes the game theoretical perspective from a single stage game, to a repeated game. This leads to more efficient cooperation instead of internal compe- tition."
  },
  {
   "id": "kaal:claim:3782217-038",
   "url": "https://wulfkaal.github.io/claims/3782217-038",
   "claim": "Review creates a decentralized history for a DAO, and that history gives the organization momentum, gives meaning and focus to perception, and is the basis for making governance, understood as steering, more effective.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs with reviewable histories"
   ],
   "supporting_quote": "Review helps create a decentralized history for a DAO, which gives them momentum. History gives meaning and focus to our perceptions. History is the basis for making governance (steering) more effective."
  },
  {
   "id": "kaal:claim:3782217-039",
   "url": "https://wulfkaal.github.io/claims/3782217-039",
   "claim": "Long run stability of a decentralized organization requires the momentum gained from a clear history, but momentum is not sufficient: if the system is not moving toward a healthy and productive goal it will not last long.",
   "type": "condition",
   "topics": [
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "argued",
   "scope_conditions": [
    "long run survival of decentralized organizations"
   ],
   "supporting_quote": "To keep a decentralized organization stable in the long run, they need this mo- mentum gained from a clear history. But momentum toward what purpose? If the system is not moving toward a healthy and productive goal, it will not last long."
  },
  {
   "id": "kaal:claim:3782217-040",
   "url": "https://wulfkaal.github.io/claims/3782217-040",
   "claim": "The most important aspect of a decentralized organization, and the feature that ultimately determines its long term success, is the group's set of transcendental values.",
   "type": "condition",
   "topics": [
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217",
   "year": "2021",
   "source_sha256": "358779557d8e7dcd101720ca0fad90b9146d24f1c7c03909eb431fcf1fb7e103",
   "confidence": "asserted",
   "scope_conditions": [
    "long term success of decentralized organizations"
   ],
   "supporting_quote": "The most important aspect of a decentralized organization, the feature that ultimately de- termines its long-term success, is the group's set of transcendental values."
  },
  {
   "id": "kaal:claim:3782210-001",
   "url": "https://wulfkaal.github.io/claims/3782210-001",
   "claim": "Reputation, not money, is the proper incentive for motivating the most efficient cooperation and long-term stability in business.",
   "type": "normative",
   "topics": [
    "reputation",
    "risk-and-incentives",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "business and commercial organizations",
    "settings where long-term cooperation is the goal"
   ],
   "supporting_quote": "Reputation is the proper incentive, instead of money, for motivating the most ef- ficient cooperation and long-term stability in business."
  },
  {
   "id": "kaal:claim:3782210-002",
   "url": "https://wulfkaal.github.io/claims/3782210-002",
   "claim": "Markets collapse when opportunistic behavior saps the efficiency of cooperation: once the environment becomes too adversarial and trust is diminished, collaboration is no longer profitable.",
   "type": "failure",
   "topics": [
    "economics",
    "reputation",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "markets with significant information asymmetries",
    "environments permitting a wide variety of strategies"
   ],
   "supporting_quote": "when the efficiency of cooperation is sapped by opportunistic behavior. When the environment becomes too adversarial, when trust is diminished, collaboration is no longer profitable. The market collapses."
  },
  {
   "id": "kaal:claim:3782210-003",
   "url": "https://wulfkaal.github.io/claims/3782210-003",
   "claim": "Strict legal enforcement is an inefficient remedy for opportunism because every unit of energy devoted to policing is energy that could instead have been used to cooperate productively.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "compliance",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "supporting_quote": "Strict legal enforcement is not efficient, because all energies devoted to policing are ener- gies that could be used to cooperate productively."
  },
  {
   "id": "kaal:claim:3782210-004",
   "url": "https://wulfkaal.github.io/claims/3782210-004",
   "claim": "Strict legal enforcement becomes impossible once a market is sufficiently complex and dynamic, because law cannot keep pace with the creative contracts that leading experts continually invent.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "compliance",
    "dynamic-regulation",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "complex and rapidly evolving markets",
    "markets where experts continually improve business arrangements"
   ],
   "supporting_quote": "Strict legal enforcement is not pos- sible when the market becomes sufficiently complex and dynamic—laws cannot keep up with the creative contracts that arise when leading experts are continually improv- ing business arrangements."
  },
  {
   "id": "kaal:claim:3782210-005",
   "url": "https://wulfkaal.github.io/claims/3782210-005",
   "claim": "Reputation converts a transaction from a single-stage zero-sum game into a repeated positive-sum game by holding out the promise of future business opportunities, so the value created is the improved reputation of both parties.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "parties expect continued participation in the network"
   ],
   "supporting_quote": "Reputation does this with the promise of future business opportunities. This changes the transaction from a single-stage zero-sum game into a repeated positive-sum game."
  },
  {
   "id": "kaal:claim:3782210-006",
   "url": "https://wulfkaal.github.io/claims/3782210-006",
   "claim": "The failure of many DAOs to date is traceable to their reliance on the good will of network members rather than on engineered incentives.",
   "type": "failure",
   "topics": [
    "dao",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized autonomous organizations observed to date"
   ],
   "supporting_quote": "The failure of many DAOs, so far, has been their reliance on the good will of the members of the network."
  },
  {
   "id": "kaal:claim:3782210-007",
   "url": "https://wulfkaal.github.io/claims/3782210-007",
   "claim": "As a network grows its members become more anonymous and individually less important, which makes cheating more locally enticing and less globally noticeable, so the system eventually collapses once cheating is obviously the best individual strategy.",
   "type": "mechanism",
   "topics": [
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "networks that grow large",
    "networks lacking a secure reputation mechanism"
   ],
   "supporting_quote": "As the network grows, however, the members become more anonymous. Individually they become less im- portant, so cheating is more locally enticing and less noticeable globally. Eventually (or immediately) the system will collapse when it becomes obvious cheating is the best individual strategy."
  },
  {
   "id": "kaal:claim:3782210-008",
   "url": "https://wulfkaal.github.io/claims/3782210-008",
   "claim": "A Web of Trust style reputation ledger, in which each party rates each transaction and reputation is summed with weightings by rater reputation, will have all of its value drained by the sockpuppet attack, because an attacker can build reputation through transactions between their own fake accounts and then use it to cheat.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "reputation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "open networks that permit account creation",
    "self-reported transaction ratings"
   ],
   "supporting_quote": "Unfortunately, the sockpuppet attack will suck all value from the network. Setting up fake accounts, an attacker can build their reputation by making transactions be- tween their own accounts. Once their reputation is sufficiently large to trick a mem- ber, they can use it to cheat the system."
  },
  {
   "id": "kaal:claim:3782210-009",
   "url": "https://wulfkaal.github.io/claims/3782210-009",
   "claim": "Charging transaction fees or imposing KYC identity protocols does not solve the sockpuppet problem: such defenses push the cost of defending the network onto users, and the defense cost equals what it is worth to break the defense while being multiplied across every transaction with every member.",
   "type": "failure",
   "topics": [
    "compliance",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "defenses that tax ordinary transactions",
    "attacker gain from faked reputation exceeds the cost of faking it"
   ],
   "supporting_quote": "This doesn't help. Such defenses push the cost of defending the network onto the users. The cost to defend it is exactly as much as it is worth to break the defense, except it's multiplied on every transaction with every member in the system."
  },
  {
   "id": "kaal:claim:3782210-010",
   "url": "https://wulfkaal.github.io/claims/3782210-010",
   "claim": "Reducing member anonymity weakens rather than strengthens a decentralized network, because personal privacy protects members and lets them be more transparent in their dealings without fear of victimization.",
   "type": "condition",
   "topics": [
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "open decentralized networks"
   ],
   "supporting_quote": "Further, lessening the anonymity of your members weakens the power of the de- centralized network. Personal privacy protects your members, so it's more secure."
  },
  {
   "id": "kaal:claim:3782210-011",
   "url": "https://wulfkaal.github.io/claims/3782210-011",
   "claim": "The Web of Trust works acceptably for low-value information transmission but should not be used for transactions involving larger wealth in the general economy, which is part of why the scheme it originated in is called pretty good privacy rather than good privacy.",
   "type": "design",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "high value economic transactions"
   ],
   "supporting_quote": "It works well for low-value infor- mation transmission, but it should not be used for transactions involving larger wealth in the general economy."
  },
  {
   "id": "kaal:claim:3782210-012",
   "url": "https://wulfkaal.github.io/claims/3782210-012",
   "claim": "The proper solution to reputation security is to give members themselves the power to police their own reputation, because the leading experts in a field are best equipped to invent the regulations for policing their own industry and are best incentivized to defend their own reputation and future profits.",
   "type": "design",
   "topics": [
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized networks of domain experts"
   ],
   "supporting_quote": "The proper solution is to give your members more power over their reputation. Give the members themselves the power to police their own reputation."
  },
  {
   "id": "kaal:claim:3782210-013",
   "url": "https://wulfkaal.github.io/claims/3782210-013",
   "claim": "Because members of a decentralized network are assumed relatively equal, evidence of all bureaucratic work must be posted in a universally accessible location for eternal review, and every reputation token needs an openly verifiable history just as digital currency creation does without a central verifying authority.",
   "type": "condition",
   "topics": [
    "disclosure",
    "compliance",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized organizations without a central verifying authority"
   ],
   "supporting_quote": "To remain decentralized, all members are assumed to be relatively equal. Therefore, evidence of all bureaucratic work needs to be posted in a universally accessible loca- tion for eternal review."
  },
  {
   "id": "kaal:claim:3782210-014",
   "url": "https://wulfkaal.github.io/claims/3782210-014",
   "claim": "Reputation must be staked and risked on votes over work evidence, because otherwise the system suffers the Tragedy of the Commons nothing-at-stake problem; staking ensures every expert is motivated to police every reputation-staked action in order to protect the value of their own investment.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "validation pool voting on work evidence"
   ],
   "supporting_quote": "To avoid the Tragedy of the Commons (the nothing-at- stake problem, \"skin in the game\"), reputation must be staked and risked with votes on work evidence. This ensures all experts are motivated to police every reputation- staked action, to protect the value of their investment."
  },
  {
   "id": "kaal:claim:3782210-015",
   "url": "https://wulfkaal.github.io/claims/3782210-015",
   "claim": "Reputation tokens are meaningful only if grounded in something real, so in a profit-seeking DAO all new reputation tokens must be minted in proportion to the fees the DAO earns.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs devoted to profit"
   ],
   "supporting_quote": "Whenever a new reputation token is minted, to be meaningful it must be grounded in something real. In any DAO devoted to profit, the foundational object is money. So all reputation tokens need to be tied to the fees the DAO earns."
  },
  {
   "id": "kaal:claim:3782210-016",
   "url": "https://wulfkaal.github.io/claims/3782210-016",
   "claim": "Newly minted reputation tokens should enter the system neutral, staked half in favor and half against the post that generated the fee, so that existing token holders can judge the action fairly and are not swayed by an unbalanced validation pool created by a large new fee.",
   "type": "design",
   "topics": [
    "tokenomics",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "validation pools triggered by fee-generating work"
   ],
   "supporting_quote": "For security, when a reputation token enters the system, it should be neutral, so that one faction is not favored over another. Validation pools should begin fairly. Newly minted reputation tokens should be staked half in favor, half against."
  },
  {
   "id": "kaal:claim:3782210-017",
   "url": "https://wulfkaal.github.io/claims/3782210-017",
   "claim": "All fees should be shared with the entire network of reputation holders in proportion to their holdings, because this reputational salary is what makes reputation tokens valuable and future-oriented.",
   "type": "design",
   "topics": [
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "profit-generating DAOs with reputation tokens"
   ],
   "supporting_quote": "All fees should be shared with the entire net- work of reputation holders relative to their holdings. This is the key to making reputa- tion tokens valuable and future-oriented."
  },
  {
   "id": "kaal:claim:3782210-018",
   "url": "https://wulfkaal.github.io/claims/3782210-018",
   "claim": "Distributing salary equitably, for example equally to all members, is self-defeating: the obvious gaming strategy becomes creating multiple accounts and distributing one's work between them, which is why the salary must be reputation-weighted.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "reputation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "open membership systems where accounts are cheap to create"
   ],
   "supporting_quote": "If salary is distributed more equitably, say equally to all members, then the obvious strategy for gaming the system is to create multiple accounts and distribute your work between the accounts."
  },
  {
   "id": "kaal:claim:3782210-019",
   "url": "https://wulfkaal.github.io/claims/3782210-019",
   "claim": "Each new post should be able to reference older posts, so that when a new post is validated it can raise or lower the reputational value of past posts depending on how users come to perceive the precedent.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "forums with permanent post histories"
   ],
   "supporting_quote": "If the new post is validated, their value can affect the value of past posts positively or negatively. Old posts can have their reputational value change, depending on how important users perceive the precedent for the system."
  },
  {
   "id": "kaal:claim:3782210-020",
   "url": "https://wulfkaal.github.io/claims/3782210-020",
   "claim": "Reputation tokens must have their power limited to their proper domain: for each different expertise there must be a separate type of non-interchangeable reputation token, so that a token carries power only within the DAO whose members hold that specific skill.",
   "type": "condition",
   "topics": [
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "organizations spanning multiple domains of expertise"
   ],
   "supporting_quote": "Reputation tokens need to have power limited to their proper domain, meaning that for each different expertise, there is a separate type of non-interchangeable reputa- tion token."
  },
  {
   "id": "kaal:claim:3782210-021",
   "url": "https://wulfkaal.github.io/claims/3782210-021",
   "claim": "DAOs are free to organize as they choose, and those that fail to find the right incentives for productive behavior will certainly go extinct, because the feedback loop that includes customers outside the DAO punishes unproductive DAOs by loss of fees.",
   "type": "predictive",
   "topics": [
    "institutional-design",
    "dao",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs that depend on outside customer fees",
    "competitive markets for DAO services"
   ],
   "supporting_quote": "DAOs have the freedom to organize any way they choose. If they fail to find the right incentives for productive behavior, they will cer- tainly go extinct. The feedback loop that includes customers outside the DAO naturally punishes any unproductive DAOs, by loss of fees."
  },
  {
   "id": "kaal:claim:3782210-022",
   "url": "https://wulfkaal.github.io/claims/3782210-022",
   "claim": "Because eternally perfect protocols are impossible, as illustrated by Arrow's Impossibility Theorem and the Folk Theorems of Game Theory, the remedy is not a better static ruleset but a system that continually improves its protocols and smart contracts in reaction to market change.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "governance systems that must adapt over time"
   ],
   "supporting_quote": "The impossibility of creating eternally perfect protocols, as illustrated by Arrow's Impossibility Theorem and the Folk Theorems of Game Theory, is addressed by a sys- tem which continually improves protocols and smart contracts to react to changes in the market."
  },
  {
   "id": "kaal:claim:3782210-023",
   "url": "https://wulfkaal.github.io/claims/3782210-023",
   "claim": "Reputation dilates time: it slows immediate transfers of wealth so that past and future enter present decisions, with future-oriented incentives supplied by reputation-based salaries and past-oriented incentives supplied by the editability of reputation.",
   "type": "definitional",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "systems where reputation can be retroactively slashed or augmented"
   ],
   "supporting_quote": "Reputation dilates time. It allows us to slow down immediate transfers of wealth, allowing us to consider the future and the past. Future-oriented incentives come from reputation-based salaries. Past-oriented incentives come from the editability of repu- tation."
  },
  {
   "id": "kaal:claim:3782210-024",
   "url": "https://wulfkaal.github.io/claims/3782210-024",
   "claim": "In hierarchical structures where members are siloed and have few formal connections across tiers, letting service providers create the regulations produces moral hazard, because the provider has an incentive to weaken standards and regulations.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "institutional-design",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "hierarchical, siloed organizations",
    "self-regulation by service providers"
   ],
   "supporting_quote": "In a hierarchical structure, where members are siloed and have few formal connections with those immediately above and below their tier in the hierarchy, this leads to the moral hazard problem that the service pro- vider has an incentive to weaken the standards and regulations."
  },
  {
   "id": "kaal:claim:3782210-025",
   "url": "https://wulfkaal.github.io/claims/3782210-025",
   "claim": "Sockpuppet attacks are inevitable in any organization that wants open membership and anonymous members, and since those properties are essential to the autonomy that makes a global decentralized organization efficient, reputation must be weighted every time it is used.",
   "type": "condition",
   "topics": [
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "open membership",
    "anonymous or pseudonymous members"
   ],
   "supporting_quote": "Sockpuppet attacks are inevitable if you want the membership to be open and to allow anonymous members. These properties are essential for fostering the individual autonomy that makes a global decentralized organization efficient and powerful."
  },
  {
   "id": "kaal:claim:3782210-026",
   "url": "https://wulfkaal.github.io/claims/3782210-026",
   "claim": "Every single reputational implementation the authors have audited in the blockchain DAO space carries the flaw of vulnerability to the sockpuppet attack on the Web of Trust model.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "compliance",
    "dao",
    "blockchain",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "evidenced",
   "scope_conditions": [
    "blockchain DAO reputation systems audited by the authors as of writing"
   ],
   "supporting_quote": "This is the flaw in every single reputational implementation we've audited in the blockchain DAO"
  },
  {
   "id": "kaal:claim:3782210-027",
   "url": "https://wulfkaal.github.io/claims/3782210-027",
   "claim": "SingularityNet's reputation system, which tracks self-reported transaction quality, transaction value, duration of satisfaction, and prior reputation weights, will have its value eroded by the sockpuppet attack once the system becomes valuable enough to merit attack, because it does not implement the other necessities.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "reputation",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "evidenced",
   "scope_conditions": [
    "systems implementing only a subset of the seven necessities",
    "once the reputation becomes valuable enough to merit attack"
   ],
   "supporting_quote": "Without implementing the other necessities, the sockpuppet attack will eventually erode their value, once it becomes valuable enough to merit the attack."
  },
  {
   "id": "kaal:claim:3782210-028",
   "url": "https://wulfkaal.github.io/claims/3782210-028",
   "claim": "With the balanced staking and fee-sharing necessities implemented, the cost of faking reputation is at an absolute minimum double the value of that reputation, which is how reputation is made more valuable than money.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "evidenced",
   "scope_conditions": [
    "both the balanced staking necessity and the shared salary necessity are implemented"
   ],
   "supporting_quote": "With #e and #j implemented, the cost of faking your reputation is (at an absolute minimum) double the value of the reputation."
  },
  {
   "id": "kaal:claim:3782210-029",
   "url": "https://wulfkaal.github.io/claims/3782210-029",
   "claim": "Concentration of power is the greatest threat to any decentralized organization, because a single member or sub-coalition that gains a majority of power in an inherently democratic organization will eventually control it no matter what safeguards are in place, at which point the organization is no longer decentralized.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "democratic decentralized organizations",
    "especially profit-devoted and therefore competitive ones"
   ],
   "supporting_quote": "The idea is that if a single member, or even a sub-coalition, gains j\\% of the power in an inherently dem- ocratic organization, they will eventually control it, no matter what the safeguards are."
  },
  {
   "id": "kaal:claim:3782210-030",
   "url": "https://wulfkaal.github.io/claims/3782210-030",
   "claim": "Fair accounting and transparency in reputation promote decentralization, because customers who can reliably compare reputation harness the available talent rather than waiting for the most talented provider to become free, which keeps reputation differences from accumulating.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "decentralization",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "customers can observe and compare member reputations"
   ],
   "supporting_quote": "Fair accounting and transparency in reputation promotes decentralization. When customers can reliably compare reputation, they are able to harness the available tal- ent, instead of waiting for the most talented to become available."
  },
  {
   "id": "kaal:claim:3782210-031",
   "url": "https://wulfkaal.github.io/claims/3782210-031",
   "claim": "A reputation token is inherently worth more to the person who earned it than to someone who merely bought it, because of its secondary use in making future earnings, so reputation is harder to accumulate than cash and economies of scale are weakened.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "defi",
    "economics",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "non-fungible reputation tokens with individual slashable histories"
   ],
   "supporting_quote": "A reputation token is inherently more valuable for a person who deserves it, than for someone who merely bought it, because of its secondary use in making future earnings."
  },
  {
   "id": "kaal:claim:3782210-032",
   "url": "https://wulfkaal.github.io/claims/3782210-032",
   "claim": "Because reputation tokens are constantly created, the reputation economy is inflationary, and a member with very high reputation must do proportionally more work merely to maintain the disparity, which makes reputation less likely to concentrate and acts as a natural counterbalance to accumulation of individual power.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "steady state growth, not exponential growth of customers",
    "members of comparable talent"
   ],
   "supporting_quote": "If one member happens to have a very high reputation, they need to do proportionally more work to maintain the disparity, making reputation less likely to concentrate when people have comparable talent."
  },
  {
   "id": "kaal:claim:3782210-033",
   "url": "https://wulfkaal.github.io/claims/3782210-033",
   "claim": "One-person-one-vote governance fails on technical questions because half the members have less than average expertise yet equal power, which incentivizes experts to gain power by catering to less expert prejudices instead of pursuing the most effective decisions.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "organizations voting on matters requiring expertise"
   ],
   "supporting_quote": "Under a one-person-one-vote system, half of the mem- bers have less than average expertise, but equal power. This incentivizes experts to gain power by catering to less expert prejudices instead of following the most effective decisions."
  },
  {
   "id": "kaal:claim:3782210-034",
   "url": "https://wulfkaal.github.io/claims/3782210-034",
   "claim": "Contemporary blockchains cannot support the proposed architecture because the technology is too slow and expensive to poll members on every transaction, and the messages required for all nodes to register all votes on every action multiply into an unmanageable number.",
   "type": "failure",
   "topics": [
    "blockchain",
    "governance-design",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "blockchains as of writing, including Ethereum",
    "polling on every member action"
   ],
   "supporting_quote": "Voting is not efficient on contemporary blockchains."
  },
  {
   "id": "kaal:claim:3782210-035",
   "url": "https://wulfkaal.github.io/claims/3782210-035",
   "claim": "Reputation-based governance faces a chicken and egg problem: voting becomes more efficient once reputation is valuable, but reputation cannot become valuable without meaningful voting.",
   "type": "failure",
   "topics": [
    "governance-design",
    "economics",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "bootstrapping a reputation system on existing infrastructure"
   ],
   "supporting_quote": "This is another chicken and egg problem. Voting will be more efficient with valu- able reputation. Reputation can't be valuable without meaningful voting."
  },
  {
   "id": "kaal:claim:3782210-036",
   "url": "https://wulfkaal.github.io/claims/3782210-036",
   "claim": "A meaningful reputational system with the potential for retrospective review would let a network rely on fewer nodes, since randomly selected nodes staking their reputation can do the polling work and be reviewed and punished later, which is one reason proof of stake is more efficient than proof of work.",
   "type": "design",
   "topics": [
    "consensus-and-security",
    "governance-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "consensus is near unanimous nearly all the time",
    "Byzantine behavior is detectable on later review"
   ],
   "supporting_quote": "But if we had a meaningful reputa- tional system with the potential for review, we could rely on fewer nodes. This mech- anism is one reason proof of stake is more efficient than proof of work."
  },
  {
   "id": "kaal:claim:3782210-037",
   "url": "https://wulfkaal.github.io/claims/3782210-037",
   "claim": "Members should not stake reputation tokens to register an opinion on a contentious topic; strict validation pools should be used only after debate has settled, to verify consensus.",
   "type": "design",
   "topics": [
    "governance-design",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "protocol development debates where votes will not be near unanimous"
   ],
   "supporting_quote": "Such con- tentious debate should not use strict validation pools anyway. You should not stake your reputation tokens in order to register your opinion on a contentious topic. Only once the debate has settled, should members risk their reputation to verify consensus with validation pools."
  },
  {
   "id": "kaal:claim:3782210-038",
   "url": "https://wulfkaal.github.io/claims/3782210-038",
   "claim": "Reputation has lost much of its meaning during the current institutional disruption: people in dying fields cash in on reputations built over previous generations in a fire sale mentality, and reputation itself is becoming a suspect concept.",
   "type": "empirical",
   "topics": [
    "reputation",
    "institutional-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "asserted",
   "scope_conditions": [
    "the current period of institutional decline and global society emergence"
   ],
   "supporting_quote": "Reputation has lost much of its meaning during the disruption that we are expe- riencing as the global society is emerging. As old institutions fall, there is a fire sale mentality amongst people in dying fields where they cash in on the reputations that were built over previous generations."
  },
  {
   "id": "kaal:claim:3782210-039",
   "url": "https://wulfkaal.github.io/claims/3782210-039",
   "claim": "Reputation is not merely an option for a DAO that holds power or value; it is absolutely essential, and for DAOs built to make money ideology alone is not enough to maintain long-term stability.",
   "type": "condition",
   "topics": [
    "dao",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs devoted to profit or holding power",
    "distinct from purely altruistic ideological organizations"
   ],
   "supporting_quote": "For DAOs that are built to make money, ideology is im- portant to maintain the long-term stability of the organization, but ideology is not enough."
  },
  {
   "id": "kaal:claim:3782210-040",
   "url": "https://wulfkaal.github.io/claims/3782210-040",
   "claim": "The Maghribi traders show that reputation alone can sustain a decentralized network under extreme information asymmetry: using only handwritten letters, Jewish merchants built a reputational system spanning the Silk Road in which nothing but the promise of better reputation deterred agents from cheating.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "ai-and-agents",
    "corporate-governance",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "evidenced",
   "scope_conditions": [
    "historical trading networks with communication latency on the order of months",
    "agents with complete control of assets"
   ],
   "supporting_quote": "Nothing incentivized the agents from cheating except the promise of building better reputation."
  },
  {
   "id": "kaal:claim:3782210-041",
   "url": "https://wulfkaal.github.io/claims/3782210-041",
   "claim": "Without the promise of improving reputation, a zero-sum mentality dominates a contractual arrangement and each party's best strategy becomes exerting the absolute minimum effort while still technically fulfilling the contract, which destroys the business atmosphere.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "contracts between parties with no expectation of reputational gain"
   ],
   "supporting_quote": "With- out the promise of improving your reputation, a zero-sum mentality dominates the arrangement. Both parties' best strategy becomes exerting the absolute minimum of effort while still technically fulfilling the stipulations of the contract."
  },
  {
   "id": "kaal:claim:3782210-042",
   "url": "https://wulfkaal.github.io/claims/3782210-042",
   "claim": "Self-executing, self-regulating smart contracts between anonymous parties in an open system create a near perfect zero-sum situation unless the DAO also includes reputation.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "reputation",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "open systems",
    "anonymous counterparties",
    "code-is-law smart contract execution"
   ],
   "supporting_quote": "Self-executing, self-regulating smart contracts between anonymous parties in an open system, create a near perfect zero- sum situation—unless your DAO also includes reputation."
  },
  {
   "id": "kaal:claim:3782210-043",
   "url": "https://wulfkaal.github.io/claims/3782210-043",
   "claim": "Giving all people more power produces a liquid meritocracy in which leaders are continually rediscovered immediately where and when they are needed, and secure meaningful reputation gives that meritocracy momentum and history.",
   "type": "predictive",
   "topics": [
    "decentralization",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "speculative",
   "scope_conditions": [
    "secure and meaningful decentralized reputation is in place"
   ],
   "supporting_quote": "By giving all people more power, we create a system where leaders are continu- ally rediscovered immediately where and when they are needed—we create a liquid meritocracy."
  },
  {
   "id": "kaal:claim:3782210-044",
   "url": "https://wulfkaal.github.io/claims/3782210-044",
   "claim": "A revolutionary new system of decentralized governance is a precondition for the Web3 vision succeeding, and because efficiency requires stability, the steering mechanisms must be subtle.",
   "type": "condition",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210",
   "year": "2021",
   "source_sha256": "9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized organizations pursuing the Web3 vision"
   ],
   "supporting_quote": "Before any of this Web@ vision of the future has a chance of success, we need a revolutionary new system of decentralized governance."
  },
  {
   "id": "kaal:claim:3782220-001",
   "url": "https://wulfkaal.github.io/claims/3782220-001",
   "claim": "Strong unifying values are the institution most essential to the long-term stability of a decentralized organization, and they demand continual reevaluation rather than one-time specification.",
   "type": "condition",
   "topics": [
    "decentralization",
    "institutional-design",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized organizations",
    "long time horizons"
   ],
   "supporting_quote": "This final essential institution is the most important for long-term stability, and demands eternal reevaluation. Decentralized organizations require strong unifying values to remain coherent."
  },
  {
   "id": "kaal:claim:3782220-002",
   "url": "https://wulfkaal.github.io/claims/3782220-002",
   "claim": "Because a single global society is emerging in which everyone is densely interconnected, the more efficient and stable arrangement is power decentralization giving individuals and subgroup DAOs autonomous power, not a single power-centralized hierarchy controlling the whole.",
   "type": "design",
   "topics": [
    "decentralization",
    "governance-design",
    "ai-and-agents",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "globally interconnected society"
   ],
   "supporting_quote": "the better, more efficient, more stable state of this global society is an organi- zation that is power decentralized, giving individuals and subgroup DAOs more auton- omous power to contribute to the health and wealth and happiness of all."
  },
  {
   "id": "kaal:claim:3782220-003",
   "url": "https://wulfkaal.github.io/claims/3782220-003",
   "claim": "Efficiency is only meaningful relative to goals, and understanding goals is the same as understanding values, so maintaining a system's efficiency requires adherence to its values.",
   "type": "mechanism",
   "topics": [
    "economics",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "supporting_quote": "In order to maintain efficiency, we must understand the answer to the question, \"Efficiency in the pursuit of what goals?\" Understanding our goals is effectively the same as understanding our values. Therefore, to maintain the system, to maintain its efficiency, we must adhere to our values."
  },
  {
   "id": "kaal:claim:3782220-004",
   "url": "https://wulfkaal.github.io/claims/3782220-004",
   "claim": "Transcendental values are necessary for long-term stability because every formal, explicitly specified protocol is permanently exposed to strategies that subvert it, a result the authors draw from the Folk Theorems of game theory.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "long-term stability",
    "formally specified protocols"
   ],
   "supporting_quote": "By the insights gleaned from the Folk Theo- rems of Game Theory, transcendental values are necessary to maintain long-term sta- bility in the face of ever-present strategies for subverting any formal, explicitly-speci- fied protocol."
  },
  {
   "id": "kaal:claim:3782220-005",
   "url": "https://wulfkaal.github.io/claims/3782220-005",
   "claim": "A maximally effective set of unifying values integrates opposing values rather than choosing between them, because the purpose of unification is to bring together individuals holding different perspectives.",
   "type": "design",
   "topics": [
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "supporting_quote": "The point of unifying people is to bring together individuals with different perspectives. A maximally effective set of unifying values will achieve the seemingly impossible feat of integrating opposing values."
  },
  {
   "id": "kaal:claim:3782220-006",
   "url": "https://wulfkaal.github.io/claims/3782220-006",
   "claim": "Building secure walls with well-designed doors is the proper way to embody conservative and liberal values together in an economic system: walls protect the group from the Tragedy of the Commons and malicious threats, while doors admit fresh input from anyone willing and able to help.",
   "type": "design",
   "topics": [
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "economic systems needing both protection and renewal"
   ],
   "supporting_quote": "Building secure walls with well-designed doors is the proper way to embody both values, integrating them harmoniously in your economic system. You need to secure your system from ruin, build walls to protect your group from the Tragedy of the Commons and malicious threats."
  },
  {
   "id": "kaal:claim:3782220-007",
   "url": "https://wulfkaal.github.io/claims/3782220-007",
   "claim": "History reveals three polar opposite sets of fundamental values that any society must integrate in order to stay stable and healthy.",
   "type": "condition",
   "topics": [
    "consensus-and-security",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "asserted",
   "scope_conditions": [
    "any society seeking long-term stability"
   ],
   "supporting_quote": "To keep any society stable and healthy, history reveals three polar opposite sets of fundamental values that need to be integrated:"
  },
  {
   "id": "kaal:claim:3782220-008",
   "url": "https://wulfkaal.github.io/claims/3782220-008",
   "claim": "The intuition that strengthening one pole of a value pair necessarily diminishes its opposite is plainly false in any complex situation.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "complex social systems"
   ],
   "supporting_quote": "Each pair of values is in tension with its opposite. It is natural to imagine that strengthening one diminishes its opposite. But that is plainly false in any complex sit- uation."
  },
  {
   "id": "kaal:claim:3782220-009",
   "url": "https://wulfkaal.github.io/claims/3782220-009",
   "claim": "A society that levels material outcomes completely undermines its own equity: eliminating all individual reward crushes the meritocratic instinct, power is allocated inefficiently to those who cannot use it well, and the next generation cannot produce as much to share.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "complete material leveling",
    "multigenerational time horizon"
   ],
   "supporting_quote": "a society which is completely equitably leveled materially, crushes its meritocratic instinct by eliminating all individual reward. Its next generation will not be able to produce as much to share because of the inefficient allocation of power to those who cannot use it well."
  },
  {
   "id": "kaal:claim:3782220-010",
   "url": "https://wulfkaal.github.io/claims/3782220-010",
   "claim": "A society that relies only on meritocratic rewards destroys its own meritocracy: Price's Law differentiates rewards exponentially, the bottom tier cannot afford the training to compete, and the separation widens until the society destabilizes and collapses.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "pure meritocratic distribution",
    "multigenerational time horizon"
   ],
   "supporting_quote": "disenfranchised subgroup due to Price's Law (exponential differen- tiation of rewards, since the rich get richer). In succeeding generations, the bottom tier will not be able to afford training to compete and the separation will exacerbate until the society destabilizes and collapses."
  },
  {
   "id": "kaal:claim:3782220-011",
   "url": "https://wulfkaal.github.io/claims/3782220-011",
   "claim": "Where a person draws the line between necessities and nonessentials is itself a declaration of values: treating nothing as essential strongly favors meritocracy and treating everything as essential strongly favors equity.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "supporting_quote": "If you say nothing is really essential, you are strongly favoring meritocracy. If you say everything is essential, you are strongly favoring equity. When you define your dividing line, you are signaling your personal judgment about what is valuable."
  },
  {
   "id": "kaal:claim:3782220-012",
   "url": "https://wulfkaal.github.io/claims/3782220-012",
   "claim": "Automating insurance away with smart contracts risks a race to the bottom, because foregoing insurance is more efficient in the short term for an individual, yet the resulting rare unprotected tragedies can chill the entire system.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "systemic-risk",
    "risk-and-incentives",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "automated smart contract insurance",
    "individually optimizing agents"
   ],
   "supporting_quote": "we must avoid a race to the bottom. It's more efficient in the short term for an individual to forego any insurance, so some will outcompete others if they are lucky enough to avoid rare tragedies. But the rare unprotected tragedies can chill the entire system."
  },
  {
   "id": "kaal:claim:3782220-013",
   "url": "https://wulfkaal.github.io/claims/3782220-013",
   "claim": "The efficient arrangement is that all of society shares the essentials while individuals remain free to pursue nonessentials, which puts government business in charge of essentials and leaves private business free to pursue nonessentials.",
   "type": "design",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "supporting_quote": "The answer that makes the economy efficient, is that all of society should share the essentials, but individuals should be free to chase after their own desires for non- essentials. There are two types of business: government business and private busi-"
  },
  {
   "id": "kaal:claim:3782220-014",
   "url": "https://wulfkaal.github.io/claims/3782220-014",
   "claim": "Overhead institutions such as insurance and policing act as catalysts supplying the activation energy that guarantees liquidity in both government and private business.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "supporting_quote": "Overhead institutions, like insurance or policing, provide the catalyst activation energy to guarantee liquidity in business—both government and private."
  },
  {
   "id": "kaal:claim:3782220-015",
   "url": "https://wulfkaal.github.io/claims/3782220-015",
   "claim": "Overhead institutions that protect or promote essentials should be governed and borne by the group, while those protecting nonessentials should be governed and borne privately, with each DAO deciding for itself what is essential to its function.",
   "type": "design",
   "topics": [
    "institutional-design",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "asserted",
   "scope_conditions": [
    "per DAO determination",
    "democratic decision within the DAO's own system"
   ],
   "supporting_quote": "Overhead institutions to protect or promote essentials should be governed and borne by the group, protecting and promoting non- essentials should be governed and borne privately. Each DAO must decide what is es- sential to its function;"
  },
  {
   "id": "kaal:claim:3782220-016",
   "url": "https://wulfkaal.github.io/claims/3782220-016",
   "claim": "Because what counts as essential shifts with the market, a network must not only identify its values but also maintain a dynamic governance process for constantly reinterpreting those values as circumstances change.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "changing market conditions"
   ],
   "supporting_quote": "Importantly, the decision of what is essential versus non-essential will change depending on the market. The system must have a dynamic governance process for constantly reinterpreting our values in the face of changing circumstances."
  },
  {
   "id": "kaal:claim:3782220-017",
   "url": "https://wulfkaal.github.io/claims/3782220-017",
   "claim": "Demand for insurance and reputation policing runs counter to prosperity: when the system runs well and everyone profits there is less need for insurance, and when profits fall and competition intensifies cheating becomes more attractive and more policing is needed.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "competitive market conditions"
   ],
   "supporting_quote": "If the system is running well and everyone is profiting, there is less need for insurance. When the profits decrease and the system becomes more competitive, cheating becomes more attractive, and more insurance and reputation policing is needed."
  },
  {
   "id": "kaal:claim:3782220-018",
   "url": "https://wulfkaal.github.io/claims/3782220-018",
   "claim": "A perfectly democratic society would require complete transparency even though most societies draw the line well short of it, so a DAO should specify explicitly where it places the boundary between bureaucratic transparency and secrecy.",
   "type": "design",
   "topics": [
    "disclosure",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "perfectly democratic ideal treated as the limiting case"
   ],
   "supporting_quote": "complete and full transparency in every governmental action, but a perfectly democratic society requires complete transparency. This is an abstraction, but a DAO should clearly specify where their values lie, and where they would draw the line between bureaucratic transparency and secrecy."
  },
  {
   "id": "kaal:claim:3782220-019",
   "url": "https://wulfkaal.github.io/claims/3782220-019",
   "claim": "Where the line between public and private information falls is a function of a society's values, as the divergence between American, German, and Chinese practice shows.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "cross-national comparison"
   ],
   "supporting_quote": "The line between what is public information and private information is a function of a society's values."
  },
  {
   "id": "kaal:claim:3782220-020",
   "url": "https://wulfkaal.github.io/claims/3782220-020",
   "claim": "Failing to maintain a healthy balance among the polar value pairs, one that faithfully reflects the people's own values, is what topples empires and leads to social catastrophe.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "asserted",
   "scope_conditions": [
    "societies over long time horizons"
   ],
   "supporting_quote": "Failing to maintain a healthy balance—one which faithfully reflects its peoples' values—is what topples empires and leads to so- cial catastrophe."
  },
  {
   "id": "kaal:claim:3782220-021",
   "url": "https://wulfkaal.github.io/claims/3782220-021",
   "claim": "Transcendental values must remain transcendental, because once formalized too rigorously they become more manipulable: a clearly specified definition becomes a focal point for competition instead of a unifying principle.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "values that have been formalized explicitly"
   ],
   "supporting_quote": "they need to remain transcendental. Once they are formalized too rigorously, they become more manipulable. For example, once the definition of ne- cessity versus non-essential is specified clearly, it becomes a focal point for competi- tion, instead of a unifying principle"
  },
  {
   "id": "kaal:claim:3782220-022",
   "url": "https://wulfkaal.github.io/claims/3782220-022",
   "claim": "Drawing a clear formal line between where individual rights stop and social responsibilities start makes the system brittle and unstable by turning that line into a focal point for competition, so the line between the two values must remain vague.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "values in genuine tension such as freedom and equality"
   ],
   "supporting_quote": "If we were to make a clear distinction between where our individual rights stop and social respon- sibilities start, then that formal line becomes a focal point for competition which makes the system brittle and unstable. Instead the line between the two values must remain vague."
  },
  {
   "id": "kaal:claim:3782220-023",
   "url": "https://wulfkaal.github.io/claims/3782220-023",
   "claim": "Beyond any Folk Theorem justification for stability, the ultimate reason not to impose a clear distinction between the individual and the social is that no such clear distinction exists in nature, and a network's values must reflect that vagueness.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "supporting_quote": "Beyond any Folk Theorem justification for stability, the ulti- mate reason we should not impose a clear distinction between the two is that there is no clear distinction in nature."
  },
  {
   "id": "kaal:claim:3782220-024",
   "url": "https://wulfkaal.github.io/claims/3782220-024",
   "claim": "Individual autonomy and group cohesion reinforce rather than substitute for each other: the network effect is achieved only when individuals subsume their freedom to act in concert with the group, and diminishing one quality diminishes the other.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "ai-and-agents",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "network organizations"
   ],
   "supporting_quote": "The network effect is only achieved when individuals subsume their freedom to act in concert with the group. Again, both individual autonomy and group cohesion need to be balanced to increase both qualities. Diminishing one diminishes the other."
  },
  {
   "id": "kaal:claim:3782220-025",
   "url": "https://wulfkaal.github.io/claims/3782220-025",
   "claim": "Identifying a network's values is not an academic exercise: values determine goals, goals determine how rewards and punishments are set up, and that reward structure determines the network's future and whether it survives.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "any network, society, or DAO"
   ],
   "supporting_quote": "Your network's values determine your goals, which determine how your rewards and punishments are set up, which determine your net- work's future and whether it will survive."
  },
  {
   "id": "kaal:claim:3782220-026",
   "url": "https://wulfkaal.github.io/claims/3782220-026",
   "claim": "Governance design choices must be matched to the network's values, because otherwise the reward structure will dictate the true goals and thereby determine what the network actually values.",
   "type": "design",
   "topics": [
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "networks with explicit governance and reward structures"
   ],
   "supporting_quote": "you need to match your governance design choices to your values, or else the reward structure will dic- tate the true goals, which will determine what the network ultimately values."
  },
  {
   "id": "kaal:claim:3782220-027",
   "url": "https://wulfkaal.github.io/claims/3782220-027",
   "claim": "A long-term successful network requires a dynamic and responsive governance system that keeps the organization in the decentralized democratic realm and prevents it from moving to the next natural stage of centralized governance with a static hierarchy.",
   "type": "condition",
   "topics": [
    "governance-design",
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "long-term network survival"
   ],
   "supporting_quote": "A long-term successful network requires a dynamic and responsive system of gov- ernance to keep the organization in the decentralized, democratic realm, and prevents it from moving to the next natural stage of centralized governance with a static hier- archy."
  },
  {
   "id": "kaal:claim:3782220-028",
   "url": "https://wulfkaal.github.io/claims/3782220-028",
   "claim": "The drift into static power relationships is a universal temptation because centralization is efficient, yet centralized governance is provably flawed.",
   "type": "failure",
   "topics": [
    "decentralization",
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "organizations facing the choice between centralized and decentralized governance"
   ],
   "supporting_quote": "we must protect the group from falling into static power rela- tionships. The temptation is universal, because of the efficiency of centralization, but it is provably flawed."
  },
  {
   "id": "kaal:claim:3782220-029",
   "url": "https://wulfkaal.github.io/claims/3782220-029",
   "claim": "Committing too completely to a global centralized manmade hierarchy, and letting its bureaucracy become too rigid and impersonal, risks a predictable fall that could be the final collapse, because for the first time the structure encompasses the entire planet.",
   "type": "predictive",
   "topics": [
    "decentralization",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "planet-spanning centralized organization"
   ],
   "supporting_quote": "If we commit too completely to this global, centralized, manmade hierarchy, if we allow our bureaucracy to become too rigid and impersonal, the predictable fall could be the final collapse."
  },
  {
   "id": "kaal:claim:3782220-030",
   "url": "https://wulfkaal.github.io/claims/3782220-030",
   "claim": "A centralized hierarchy becomes too rigid when those policing the rules gain more power than the members who honor the transcendental value that originally founded the organization, and the spirit of the law should always reign above the letter of the law.",
   "type": "failure",
   "topics": [
    "compliance",
    "institutional-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "centralized hierarchies with rule enforcement roles"
   ],
   "supporting_quote": "A centralized hierarchy becomes too rigid when those policing the rules gain more power than the members who are honoring the transcendental value that originally founded the organization. The spirit of the law should always reign above the letter of the law."
  },
  {
   "id": "kaal:claim:3782220-031",
   "url": "https://wulfkaal.github.io/claims/3782220-031",
   "claim": "As an organization loses touch with its transcendental values, members use the rules to jockey for position in the hierarchy and corruption erodes the organization's effectiveness.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "organizations that have lost contact with their founding values"
   ],
   "supporting_quote": "As an organization loses touch with its transcendental values, members use the rules to jockey for position in the hierarchy, and corruption erodes the effective- ness of the organization."
  },
  {
   "id": "kaal:claim:3782220-032",
   "url": "https://wulfkaal.github.io/claims/3782220-032",
   "claim": "The same ability to learn from others' behavior that unleashes the efficiency of cooperation also gives people untold power to trick others, imagining how to manipulate them and corrupt the organization for individual benefit at the group's expense.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "organizations composed of mind-modeling agents"
   ],
   "supporting_quote": "This ability to learn from others' behaviors gives us enormous capacity to un- leash the efficiency of cooperation. But it also gives us untold power to trick other"
  },
  {
   "id": "kaal:claim:3782220-033",
   "url": "https://wulfkaal.github.io/claims/3782220-033",
   "claim": "Science is politically decentralized because no person, university, institution, or nation controls whether a theory becomes established fact, yet this global Science DAO is highly protocol centralized around objective universal truth.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "science as a globally open discipline"
   ],
   "supporting_quote": "Science as a globally open discipline is extremely decentralized politically. No per- son, university, institution, or nation has monopoly control over whether any theory becomes established scientific fact. But this global Science DAO is very protocol cen-"
  },
  {
   "id": "kaal:claim:3782220-034",
   "url": "https://wulfkaal.github.io/claims/3782220-034",
   "claim": "Scientists do not deserve and can never earn the authority to rule on whether we should ask what meaning or values lie behind the rules guiding the universe; on that subject they have less authority than those who study spirituality, theology, morality, or poetry.",
   "type": "normative",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "questions of meaning and value rather than physical law"
   ],
   "supporting_quote": "Scientists do not deserve to rule on the question of whether we should ask what the meaning is behind the rules guiding the universe, or the values they might reflect. They have less author- ity on this subject than someone who studies spirituality or theology or morality or poetry."
  },
  {
   "id": "kaal:claim:3782220-035",
   "url": "https://wulfkaal.github.io/claims/3782220-035",
   "claim": "Unlike scientific laws, transcendental values cannot be stated formally and explicitly, so they must be authored by people in touch with transcendental beauty, true poets, who are nevertheless grounded in concrete understanding of the universe and its laws.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "construction of unifying values for a network"
   ],
   "supporting_quote": "Transcendental values cannot be stated formally and explicitly, unlike scientific laws. People who are in touch with transcendental beauty, true poets, need to be the authors of our transcendental values."
  },
  {
   "id": "kaal:claim:3782220-036",
   "url": "https://wulfkaal.github.io/claims/3782220-036",
   "claim": "Decentralization requires every member to participate in constructing the organization's values, since a decentralized network is only as strong as its members and the environment it exists in.",
   "type": "condition",
   "topics": [
    "decentralization",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized networks"
   ],
   "supporting_quote": "Decentralization requires every member to participate in the construction of those values. A decentralized network is only as strong as its members and the envi- ronment it exists in."
  },
  {
   "id": "kaal:claim:3782220-037",
   "url": "https://wulfkaal.github.io/claims/3782220-037",
   "claim": "Because a decentralized organization does not coerce its members as centralized organizations do, its power is determined by how devoted its members are to its values, and its power is its power to unite in service to the goal of shared values.",
   "type": "mechanism",
   "topics": [
    "dao",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "non-coercive decentralized organizations"
   ],
   "supporting_quote": "The power of a DAO is its power to unite in service to the goal of shared values. In a decentralized organization, which doesn't coerce its mem- bers like centralized organizations, its power is determined by how devoted its mem- bers are to its values."
  },
  {
   "id": "kaal:claim:3782220-038",
   "url": "https://wulfkaal.github.io/claims/3782220-038",
   "claim": "The strength of a decentralized organization is measured by summing the power of each member in their individual autonomy, modified by the group's ability to organize and effect its goals in the larger society.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "research-methods",
    "ai-and-agents",
    "institutional-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized organizations"
   ],
   "supporting_quote": "The strength of a decentralized organization is measured by sum- ming the power of each member in their individual autonomy, but this is modified by the ability of the group to organize and effect its goals in the larger society."
  },
  {
   "id": "kaal:claim:3782220-039",
   "url": "https://wulfkaal.github.io/claims/3782220-039",
   "claim": "Decentralized organizations demand more from their members and return more autonomous power and profit, whereas centralized organizations shelter members in a niche and limit and stultify their power in exchange for security.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "risk-and-incentives",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "supporting_quote": "Decentralized organizations demand more from their members and return more, in autonomous power and profit. Centralized organizations shelter their members within a niche in a hierarchy. Centralized organizations limit the power of their mem- bers, stultifying them,"
  },
  {
   "id": "kaal:claim:3782220-040",
   "url": "https://wulfkaal.github.io/claims/3782220-040",
   "claim": "Decentralized organizations are only as stable as their autonomous members' adherence to their ideals, and that same autonomy makes members individually responsible for constructing, nourishing, and revitalizing those unifying ideals continually.",
   "type": "condition",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220",
   "year": "2021",
   "source_sha256": "f0bf1e80c6da60a6f8ba20630562bdf1dab171ccb5267f497dc0b815113cde99",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized organizations"
   ],
   "supporting_quote": "They're as stable as their autonomous members' adherence to their ideals. But their very autonomy requires the members to construct the unifying ideals for themselves. They are individually responsible for nourishing and revitalize those unifying ideals, continually."
  },
  {
   "id": "kaal:claim:4067783-001",
   "url": "https://wulfkaal.github.io/claims/4067783-001",
   "claim": "At their worst, DAOs produce ponzi schemes and rug pulls, and these failures damage the credibility and future of web3 as a whole, not just the individual project.",
   "type": "failure",
   "topics": [
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "asserted",
   "supporting_quote": "At their worst, DAOs result in ponzi schemes and rug pulls that undermine the future of web3 and associated upgrades for humanity."
  },
  {
   "id": "kaal:claim:4067783-002",
   "url": "https://wulfkaal.github.io/claims/4067783-002",
   "claim": "Poorly executed DAOs exhibit a recognizable cluster of pathologies, including siphoned coins, distracted and robo voters, centralization, DAO washing by founders, and absent decentralized governance, and these pathologies drive mid-term and long-term DAO failure.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "asserted",
   "supporting_quote": "Several of the identifiable downsides include: siphoned coins, distracted and robo voters, centralization, DAO washing by founders, lack of decentralized governance, and other pitfalls that could end up in mid-term and long-term DAO failure."
  },
  {
   "id": "kaal:claim:4067783-003",
   "url": "https://wulfkaal.github.io/claims/4067783-003",
   "claim": "Rug pulls grew sharply as a share of crypto crime: of the $7.7 billion in total illicit crypto revenue in 2021, 37 percent came from rug pulls, up from 1 percent of illicit revenue in 2020.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "evidenced",
   "scope_conditions": [
    "2021 data",
    "measured as a share of total illicit crypto revenue"
   ],
   "supporting_quote": "In 2021 alone, the total illicit revenue from crypto scams was $7.7 billion; 37% of that total resulted from \"rug pulls,\" an increase from the 1% of total illicit revenue in 2020."
  },
  {
   "id": "kaal:claim:4067783-004",
   "url": "https://wulfkaal.github.io/claims/4067783-004",
   "claim": "Fundraiser DAOs are structurally fragile because they typically lack incentives for meaningful community engagement, so they dissipate once the hype that created them fades.",
   "type": "failure",
   "topics": [
    "dao",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs formed primarily to raise funds"
   ],
   "supporting_quote": "Fundraiser DAOs are vulnerable in multiple ways. They often lack incentives for meaningful community engagement and tend to dissipate with the hype."
  },
  {
   "id": "kaal:claim:4067783-005",
   "url": "https://wulfkaal.github.io/claims/4067783-005",
   "claim": "Governance by fungible tokens lets whales control a fundraiser DAO, which is antithetical to decentralized governance, and selling purchasable voting power via fungible tokens creates the risk of hostile takeover or looting.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "regulatory-failure",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "governance rights attached to fungible, purchasable tokens"
   ],
   "supporting_quote": "Governance through fungible tokens in fundraiser DAOs allows whales to control the DAO, which is antithetical to the idea of DAOs overall and decentralized governance of DAOs specifically. More specifically, selling purchasable voting power via fungible tokens risks hostile takeovers or looting."
  },
  {
   "id": "kaal:claim:4067783-006",
   "url": "https://wulfkaal.github.io/claims/4067783-006",
   "claim": "The author contests the myth that DAOs are generally run by scammers: many DAOs and users have indeed fallen victim to rug pulls, but most of those rug pulls trace to the absence of decentralized governance in fundraiser DAOs rather than to DAOs as such.",
   "type": "failure",
   "topics": [
    "dao",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "applies to fundraiser DAOs lacking decentralized governance"
   ],
   "supporting_quote": "While it is true that many DAOs and DAO users have fallen victim to the infamous rug-pulls, most of these rug pulls are associated with the lack of decentralized governance in fundraiser DAOs."
  },
  {
   "id": "kaal:claim:4067783-007",
   "url": "https://wulfkaal.github.io/claims/4067783-007",
   "claim": "DAO projects accounted for a material share of the largest crypto frauds of the year: two of the top six crypto rug pulls in 2021 were DAO projects.",
   "type": "empirical",
   "topics": [
    "dao",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "evidenced",
   "scope_conditions": [
    "2021",
    "top six crypto rug pulls by size"
   ],
   "supporting_quote": "Of the top six crypto rug pulls in 2021, two were DAO projects."
  },
  {
   "id": "kaal:claim:4067783-008",
   "url": "https://wulfkaal.github.io/claims/4067783-008",
   "claim": "A DAO token sale can be drained at the moment of closing: in the Anubis DAO sale 13597 ETH was removed from the token sale pool and sent to another address as the sale was about to close, and because the launch platform had not been compromised the loss was attributed to an inside rug pull.",
   "type": "empirical",
   "topics": [
    "dao",
    "securities-law",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "evidenced",
   "scope_conditions": [
    "Anubis DAO token sale on the Copper platform, October 2021"
   ],
   "supporting_quote": "As the sale was about to close, 13597 ETH was removed from the token sale pool and sent to another address. Allegations of a rug pull ensued because the launch platform Copper had not been compromised."
  },
  {
   "id": "kaal:claim:4067783-009",
   "url": "https://wulfkaal.github.io/claims/4067783-009",
   "claim": "Most DAOs that suffer unethical behavior and rug pulls are abused by insiders, and this is possible because insiders are not properly governed and hold too much control over the DAO; true decentralized community governance removes insider and council control over keys and code.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs where councils or privileged insiders retain key and code control"
   ],
   "supporting_quote": "Most DAOs that fall victim to unethical behavior and rug pulls are subject to abuses from insiders. Typically these insider abuses are possible because the insiders are not governed properly and have too much control over the DAO."
  },
  {
   "id": "kaal:claim:4067783-010",
   "url": "https://wulfkaal.github.io/claims/4067783-010",
   "claim": "Insider knowledge of contract internals is itself an attack surface: at Snowdog DAO an insider who knew a challenge key embedded in the DAO contract backran the anticipated buyback and sold tokens ahead of it.",
   "type": "empirical",
   "topics": [
    "dao",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "evidenced",
   "scope_conditions": [
    "Snowdog DAO on the Avalanche protocol",
    "insider holding a contract challenge key"
   ],
   "supporting_quote": "For example, Snowdog DAO suffered an alleged rug-pull when an insider who knew a \"challenge key\" (a part of the DAOs contract), backran the anticipated buyback and began selling tokens."
  },
  {
   "id": "kaal:claim:4067783-011",
   "url": "https://wulfkaal.github.io/claims/4067783-011",
   "claim": "Insider rug pulls are not the only exploit path: a DAO can also be attacked from the outside whenever its governance grants voting power through fungible tokens.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "governance voting power is denominated in fungible tokens"
   ],
   "supporting_quote": "But these inside rug pulls are not the only exploitative mechanism within DAOs. DAOs can also be exploited from the outside if the DAO's governance allows fungible voting power."
  },
  {
   "id": "kaal:claim:4067783-012",
   "url": "https://wulfkaal.github.io/claims/4067783-012",
   "claim": "The absence of proper decentralized governance built on non-fungible tokens is a key common denominator across DAO failures and rug pulls.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "supporting_quote": "The lack of proper decentralized governance with non-fungible tokens is a key common denominator among DAO failures and rug pulls."
  },
  {
   "id": "kaal:claim:4067783-013",
   "url": "https://wulfkaal.github.io/claims/4067783-013",
   "claim": "Dispersed, passive token holders cannot defend a DAO: because power in Build Finance DAO was not decentralized, the silent majority of token holders lacked the voting power to block the takeover, after which the attacker minted and sold tokens by draining liquidity pools.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "governance-design",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "evidenced",
   "scope_conditions": [
    "low participation among dispersed token holders"
   ],
   "supporting_quote": "Because of the lack of decentralized power in the Build Finance DAO, the silent majority of token holders did not have enough voting power to prevent the takeover. As a result, the attacker minted and sold various tokens by draining liquidity pools."
  },
  {
   "id": "kaal:claim:4067783-014",
   "url": "https://wulfkaal.github.io/claims/4067783-014",
   "claim": "Defending a DAO against attackers and looters, and punishing self-dealing, requires sustainable decentralized governance built on non-fungible tokens rather than tradable voting power.",
   "type": "design",
   "topics": [
    "tokenomics",
    "governance-design",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "supporting_quote": "The takeover of the Build Finance DAO highlights the need for sustainable decentralized governance solutions with non-fungible tokens to defend the DAO from attackers/looters and punish self- dealing."
  },
  {
   "id": "kaal:claim:4067783-015",
   "url": "https://wulfkaal.github.io/claims/4067783-015",
   "claim": "Governance in most DAOs is severely underdeveloped, which leaves a minority of stakeholders defining governance, and that minority control in turn produces mediocre and poorly developed proposals.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs still in early governance experimentation"
   ],
   "supporting_quote": "Governance is severely underdeveloped in most DAOs which results typically in a minority of stakeholders that define governance. This, in turn, often result in mediocre and poorly-developed proposals."
  },
  {
   "id": "kaal:claim:4067783-016",
   "url": "https://wulfkaal.github.io/claims/4067783-016",
   "claim": "The author rejects the claim that DAOs are ungovernable: the shortcomings are real, but ongoing experimentation with DAO governance designs is gradually identifying workable decentralized governance solutions.",
   "type": "predictive",
   "topics": [
    "governance-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "supporting_quote": "While these shortcomings in the DAO ecosystem are real, the experimentation with DAO governance designs is gradually identifying workable decentralized governance solutions for the DAO ecosystem."
  },
  {
   "id": "kaal:claim:4067783-017",
   "url": "https://wulfkaal.github.io/claims/4067783-017",
   "claim": "Workable DAO governance should account for reputation with non-fungible tokens or weighted keys rather than fungible tokens, so that voting weight tracks reputation instead of purchasing power.",
   "type": "design",
   "topics": [
    "reputation",
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "asserted",
   "supporting_quote": "1. Non-fungible Tokens or weighted keys, among other electronic accounting methods as accounting for reputation score NOT fungible tokens"
  },
  {
   "id": "kaal:claim:4067783-018",
   "url": "https://wulfkaal.github.io/claims/4067783-018",
   "claim": "DAO governance should use a two vote model that distinguishes a loosely coupled vote, where no reputation is at stake, from a tightly coupled vote, where the voter's reputation is at stake.",
   "type": "design",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "asserted",
   "supporting_quote": "2. Two vote model a) loosely coupled vote (no reputation at stake), b) tightly coupled vote (reputation at stake)"
  },
  {
   "id": "kaal:claim:4067783-019",
   "url": "https://wulfkaal.github.io/claims/4067783-019",
   "claim": "Reputation in a DAO should be generated only for long term valuable work and for the policing of work, and never for business development work.",
   "type": "design",
   "topics": [
    "reputation",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "asserted",
   "supporting_quote": "3. Reputation generated ONLY for long term valuable work and policing of work NOT for business development work"
  },
  {
   "id": "kaal:claim:4067783-020",
   "url": "https://wulfkaal.github.io/claims/4067783-020",
   "claim": "Smart contracts that govern fungible currency exchanges are engineered for irreversible, unreviewable, programmed self execution, and that design makes the business structure of web3 more rigid.",
   "type": "mechanism",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "smart contracts involving fungible currency exchange"
   ],
   "supporting_quote": "Yet, smart contracts involving fungible currency exchanges are designed to guarantee irreversible, unreviewable, programmed self execution. As such, they create a more rigid structure for business in web3."
  },
  {
   "id": "kaal:claim:4067783-021",
   "url": "https://wulfkaal.github.io/claims/4067783-021",
   "claim": "Code is law fails as a complete business ordering because business ventures very rarely proceed exactly as written in smart contract code: real business relationships are far messier and more multivalent than a series of smart contracts can predict.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "supporting_quote": "In reality, very rarely does any business venture proceed exactly as planned in smart contract code because the reality of business relationships is far more messy and multivalent than can be predicted by a series of smart contracts."
  },
  {
   "id": "kaal:claim:4067783-022",
   "url": "https://wulfkaal.github.io/claims/4067783-022",
   "claim": "Effective business dealing requires that counterparties have confidence a fair resolution will occur when transactions do not develop as planned, which purely self executing code cannot supply.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "supporting_quote": "To do business effectively, counterparties need confidence that a fair resolution will occur when transactions do not develop as planned."
  },
  {
   "id": "kaal:claim:4067783-023",
   "url": "https://wulfkaal.github.io/claims/4067783-023",
   "claim": "Effective human-centric DAO governance is the remedy for rigid smart contract rules that undermine business activities requiring more flexibility in web3 and the metaverse.",
   "type": "design",
   "topics": [
    "governance-design",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "business activities that require flexibility in web3 and the metaverse"
   ],
   "supporting_quote": "Effective human-centric DAO governance solves the issue of rid smart contract rules that undermine business activities that require more flexibility in web3 and the metaverse."
  },
  {
   "id": "kaal:claim:4067783-024",
   "url": "https://wulfkaal.github.io/claims/4067783-024",
   "claim": "Anonymous decentralized networks can encourage troll behavior because participants feel safe attacking others without retribution, and in a DAO that trolling destabilizes the organization and creates friction between members and the DAO.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous participation without reputational stake"
   ],
   "supporting_quote": "In the DAO context, trolling behavior destabilizes the organization and causes friction between members and the DAO."
  },
  {
   "id": "kaal:claim:4067783-025",
   "url": "https://wulfkaal.github.io/claims/4067783-025",
   "claim": "The friction generated by anonymous trolling can be mitigated through incentivized reputational architecture governed by protocols the community itself decides on, so anonymity does not have to corrupt DAO governance.",
   "type": "design",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "reputational architecture is implemented correctly and community governed"
   ],
   "supporting_quote": "By contrast, if implemented correctly, anonymity significantly upgrades DAO governance. The friction that arises from anonymous trolling can be mitigated through the implementation of incentivized reputational architecture governed by protocols decided upon by the community."
  },
  {
   "id": "kaal:claim:4067783-026",
   "url": "https://wulfkaal.github.io/claims/4067783-026",
   "claim": "Properly implemented anonymity strengthens decentralized governance because it lets individuals relate without the inherited biases of predecessor generations and a lifetime inside centralized power structures.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "anonymity is properly implemented"
   ],
   "supporting_quote": "If properly implemented, anonymity strengthens decentralized governance by taking out parts of the human nature that hold business and society back. First and foremost, anonymity allows individuals to relate to each other without the inherited biases of generations of predecessors"
  },
  {
   "id": "kaal:claim:4067783-027",
   "url": "https://wulfkaal.github.io/claims/4067783-027",
   "claim": "Anonymity lets information flow from the edges of the system, from individuals who would have no agency in centralized structures, and such inputs are much less likely to materialize if DAO participants know each other.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "anonymity is preserved among DAO participants"
   ],
   "supporting_quote": "allows information to flow from the edges of the system with individuals who would have no agency in centralized structures but can add invaluable input into the system. Such inputs will not materialize, or are much less likely to materialize, if DAO participants know each other."
  },
  {
   "id": "kaal:claim:4067783-028",
   "url": "https://wulfkaal.github.io/claims/4067783-028",
   "claim": "True anonymity remains eternally difficult to attain with existing web3 technology, yet anonymity in DAO governance is the holy grail of decentralized web3 business and society.",
   "type": "predictive",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "asserted",
   "scope_conditions": [
    "given existing web3 technology"
   ],
   "supporting_quote": "while it is eternally difficult with existing technology to attain true anonymity in web3 systems, anonymity in DAO governance is the wholly grail of decentralized web3 business and society."
  },
  {
   "id": "kaal:claim:4067783-029",
   "url": "https://wulfkaal.github.io/claims/4067783-029",
   "claim": "A meaningful reputation governance and accounting mechanism for motivating business and governance participation is what encourages mutually beneficial contributions to a DAO community.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "a meaningful reputation governance and accounting mechanism is in place"
   ],
   "supporting_quote": "A meaningful reputation governance and accounting mechanism for motivating business and governance participation encourages mutually beneficial contributions to the community."
  },
  {
   "id": "kaal:claim:4067783-030",
   "url": "https://wulfkaal.github.io/claims/4067783-030",
   "claim": "Traditional work in centralized structures is prone to extrinsically motivated engagement, which intensifies principal agent problems and produces suboptimal outcomes because a principal dictates where, what, and when workers perform.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "corporate-governance",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "centralized employment structures with a directing principal"
   ],
   "supporting_quote": "The traditional work environment in centralized structures is prone to extrinsically motivated work engagement which intensifies principal agent problems."
  },
  {
   "id": "kaal:claim:4067783-031",
   "url": "https://wulfkaal.github.io/claims/4067783-031",
   "claim": "In a DAO, a member's influence and outcomes are determined by the value that member's contributions add to the shared work product, rather than by position in a hierarchy.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "contribution value is measurable and governs influence"
   ],
   "supporting_quote": "DAOs allow influence and outcomes of DAO members to be determined by the value a DAO member's contributions to the shared work product."
  },
  {
   "id": "kaal:claim:4067783-032",
   "url": "https://wulfkaal.github.io/claims/4067783-032",
   "claim": "High value contribution is self-amplifying in a DAO: when a member adds substantial value, other token holders want to add their skills to the same work product through a policing engagement, which focuses all members' joint efforts on the highest possible value proposition.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "members can observe and join high value work products"
   ],
   "supporting_quote": "Moreover, if a DAO member adds substantial value to the DAO, other DAO token holders will want to add their skills to the same work product via a policing engagement which focuses all DAO members' joint efforts on the highest possible value proposition."
  },
  {
   "id": "kaal:claim:4067783-033",
   "url": "https://wulfkaal.github.io/claims/4067783-033",
   "claim": "Braintrust demonstrates that innovation in work structure does not cure governance design: despite redefining work outcomes, it uses a suboptimal one token, one vote model that grants proportional control over network governance.",
   "type": "failure",
   "topics": [
    "reputation",
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "governance by one token, one vote"
   ],
   "supporting_quote": "Despite its advances in innovation for redefining work outcomes, Braintrust uses a suboptimal governance model with a one token, one vote system for proportional control over how the network is governed."
  },
  {
   "id": "kaal:claim:4067783-034",
   "url": "https://wulfkaal.github.io/claims/4067783-034",
   "claim": "Work-to-earn DAOs must leave it entirely to each member how much time they contribute; DAOs that impose quotas and participation requirements may not be sustainable long-term in a value-to-efforts workflow environment.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "work-to-earn DAOs seeking to attract long-term talent"
   ],
   "supporting_quote": "In order to attract long-term talent, it needs to be always up to each individual DAO member how much time they put in. DAOs that create quota and participation requirements may not be sustainable long-term in a work-to-earn value-to-efforts workflow environment."
  },
  {
   "id": "kaal:claim:4067783-035",
   "url": "https://wulfkaal.github.io/claims/4067783-035",
   "claim": "Proof of personhood projects such as Proof of Humanity and UBI DAO fail because they rest on web-of-trust theory, which has been proven not to work long-term given the sockpuppet attacks that are inevitable in that design.",
   "type": "failure",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "identity systems built on web-of-trust vouching"
   ],
   "supporting_quote": "Of course, these attempts are all falling victim to web-of-trust theory that has been proven to not work long-term because the sockpuppet attacks that are inevitable in this design."
  },
  {
   "id": "kaal:claim:4067783-036",
   "url": "https://wulfkaal.github.io/claims/4067783-036",
   "claim": "Microdemocracy combined with proper incentive design can reverse the decreasing voter participation that undermines representative democracies.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized voting infrastructure is in place"
   ],
   "supporting_quote": "Microdemocracy and proper incentive design can reverse decreasing voter participation that undermines representative democracies."
  },
  {
   "id": "kaal:claim:4067783-037",
   "url": "https://wulfkaal.github.io/claims/4067783-037",
   "claim": "Centralization and monopolies are a threat to market liquidity because they can carry too much mass or too much velocity, and an imbalance in either direction, too much mass and too little velocity or too little mass, damages the market.",
   "type": "mechanism",
   "topics": [
    "economics",
    "defi",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "supporting_quote": "When there is too much mass and not enough velocity, it can gunk up the engine - when there is too little mass in the market, it can be cleared too quickly. Centralization and monopolies are a threat to market liquidity as they can have too much mass or too much velocity."
  },
  {
   "id": "kaal:claim:4067783-038",
   "url": "https://wulfkaal.github.io/claims/4067783-038",
   "claim": "Decentralized structures outperform centralized ones on liquidity because in them market mass and velocity are uncorrelated, which yields more stable and predictable liquidity.",
   "type": "mechanism",
   "topics": [
    "defi",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "supporting_quote": "Decentralized structures are better because mass and velocity are uncorrelated"
  },
  {
   "id": "kaal:claim:4067783-039",
   "url": "https://wulfkaal.github.io/claims/4067783-039",
   "claim": "Diversity of viewpoints is severely diminished when power is centralized, whereas information technology allows a global network open to members of diverse values and backgrounds to form.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "supporting_quote": "Diversity of viewpoints is severely diminished when power is centralized. Information technology allows a global network of people to form, open to members of diverse values and backgrounds."
  },
  {
   "id": "kaal:claim:4067783-040",
   "url": "https://wulfkaal.github.io/claims/4067783-040",
   "claim": "Flatter markets with more diverse interests and talents are more effective and efficient at truth discovery, including price discovery and the identification of ideal solutions to new problems, and decentralization promotes that diversity by improving member autonomy and freedom.",
   "type": "mechanism",
   "topics": [
    "economics",
    "decentralization",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783",
   "year": "2022",
   "source_sha256": "48f1e307cdbbe28c7843f7744d0ba8cf01662f257a53f2066a7a6c7e03a5acec",
   "confidence": "argued",
   "supporting_quote": "Flatter markets with more diverse interests and talents are more effective and efficient at achieving truth discovery, like price discovery and the identification of ideal solutions to arbitrary new problems that arise."
  },
  {
   "id": "kaal:claim:4033886-001",
   "url": "https://wulfkaal.github.io/claims/4033886-001",
   "claim": "Valuation metrics developed for legacy assets apply only in a limited way to digital assets, so importing them wholesale produces unreliable digital asset valuations.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "digital assets as of 2022"
   ],
   "supporting_quote": "Existing valuation metrics for legacy assets only limitedly apply in the context of digital assets."
  },
  {
   "id": "kaal:claim:4033886-002",
   "url": "https://wulfkaal.github.io/claims/4033886-002",
   "claim": "Digital asset valuation uncertainty is produced by the combination of an immature digital asset market and a valuation infrastructure, legal, accounting, finance, technology, and back office, that was not built for these assets.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "current state of the digital asset market"
   ],
   "supporting_quote": "The valuation infrastructure in the current legal, accounting, finance, technology, and back-office framework in combination with the immaturity of the digital asset market create an environment where digital asset valuation continues to be a mystery."
  },
  {
   "id": "kaal:claim:4033886-003",
   "url": "https://wulfkaal.github.io/claims/4033886-003",
   "claim": "Although many traditional assets also resist full assessment, the absence of established pricing standards for digital assets makes the loss of valuation accuracy for financial reporting worse than in traditional markets.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "financial reporting context"
   ],
   "supporting_quote": "While many traditional assets also cannot be fully assessed, the lack of valuation accuracy for financial reporting is exacerbated by the lack of established pricing standards for digital assets."
  },
  {
   "id": "kaal:claim:4033886-004",
   "url": "https://wulfkaal.github.io/claims/4033886-004",
   "claim": "The accounting definition of fair value may not apply to digital assets, with the consequence that correct valuation of digital assets for financial reporting purposes may be impossible.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "under existing accounting terminology such as FASB 157 and IFRS 13"
   ],
   "supporting_quote": "The definition of fair value under existing accounting terminology may not apply to digital assets.2 As a result, the correct valuation of digital assets may not be possible for financial reporting issues."
  },
  {
   "id": "kaal:claim:4033886-005",
   "url": "https://wulfkaal.github.io/claims/4033886-005",
   "claim": "Dual listing narrows bid ask spreads in traditional markets by injecting liquidity, but crypto markets behave differently: price differences between two exchanges can reach upwards of five percent during peak trading times.",
   "type": "empirical",
   "topics": [
    "economics",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "evidenced",
   "scope_conditions": [
    "peak trading times",
    "assets listed on multiple crypto exchanges"
   ],
   "supporting_quote": "For traditional markets, when a security is dual- listed, we see the bid-ask spread decrease because additional liquidity is being injected into the market. This differs from the crypto market where the difference between the two exchanges can reach upwards of 5% during peak trading times.5"
  },
  {
   "id": "kaal:claim:4033886-006",
   "url": "https://wulfkaal.github.io/claims/4033886-006",
   "claim": "Digital asset exchanges have no closing prices, so digital asset managers cannot rely on the closing price convention that underpins traditional valuation practice.",
   "type": "failure",
   "topics": [
    "economics",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "asserted",
   "scope_conditions": [
    "digital asset exchanges"
   ],
   "supporting_quote": "Because digital asset exchanges do not have closing prices, digital asset managers cannot simply use the closing price for given asset."
  },
  {
   "id": "kaal:claim:4033886-007",
   "url": "https://wulfkaal.github.io/claims/4033886-007",
   "claim": "Because digital asset valuation methodologies vary significantly, the tradeoffs among them leave digital asset managers with meaningful valuation discretion.",
   "type": "mechanism",
   "topics": [
    "economics",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "absence of uniform valuation standards"
   ],
   "supporting_quote": "Digital asset valuation methodologies vary significantly. Tradeoffs between such methodologies allow for some valuation discretion between digital asset managers."
  },
  {
   "id": "kaal:claim:4033886-008",
   "url": "https://wulfkaal.github.io/claims/4033886-008",
   "claim": "Even for the most liquid level one digital assets, managers may choose between the price on a favored exchange and an aggregate across exchanges, so the same asset can be reported at different values by different managers.",
   "type": "mechanism",
   "topics": [
    "economics",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "evidenced",
   "scope_conditions": [
    "quoting level 1 digital assets"
   ],
   "supporting_quote": "For instance, when quoting level 1 securities, while some managers may use the price on their favored cryptocurrency exchange, others might take an aggregate the price from multiple exchanges.7"
  },
  {
   "id": "kaal:claim:4033886-009",
   "url": "https://wulfkaal.github.io/claims/4033886-009",
   "claim": "The absence of digital asset valuation standards generates uncertainty and confusion for both investors and managers, and the industry would be better off with uniform standards.",
   "type": "normative",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "supporting_quote": "The lack of standards for digital asset valuation leads to uncertainty and confusion among investors and managers. The industry would benefit from uniform standards for digital asset valuation."
  },
  {
   "id": "kaal:claim:4033886-010",
   "url": "https://wulfkaal.github.io/claims/4033886-010",
   "claim": "Arbitrage trading emerges in crypto markets because of information asymmetries across exchanges, which arise from imperfect disclosure, and the resulting decline in market efficiency is a key indicator of an inefficient market.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "economics",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "multiple exchanges trading the same asset"
   ],
   "supporting_quote": "The reason arbitrage trading starts to happen is because of asymmetries of information across the different exchanges. These asymmetries can happen as a result of imperfect disclosures or incite on whether a company has a willingness to take on debt."
  },
  {
   "id": "kaal:claim:4033886-011",
   "url": "https://wulfkaal.github.io/claims/4033886-011",
   "claim": "Cross exchange price gaps in crypto do not self correct because of frictions on the arbitrageur side: South Korean investors faced foreign exchange conversion costs and regulatory capital controls that made exploiting the Bithumb premium impractical.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "South Korean investors seeking access to US exchanges",
    "capital controls and foreign exchange frictions in place"
   ],
   "supporting_quote": "It is unlikely any South Korean investor was able to take advantage of this opportunity because of the hurdles they would have to go through before being able to access the US exchange Coinbase."
  },
  {
   "id": "kaal:claim:4033886-012",
   "url": "https://wulfkaal.github.io/claims/4033886-012",
   "claim": "Digital asset fund valuation disputes are aggravated by nondisclosure: Polychain Capital told a redeeming investor that the fund's asset valuation policy would not be disclosed.",
   "type": "empirical",
   "topics": [
    "private-funds",
    "economics",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "evidenced",
   "scope_conditions": [
    "private digital asset funds",
    "Polychain Capital redemption dispute"
   ],
   "supporting_quote": "Upon request, Polychain Capital told Greenhouse the fund's asset valuation policy would not be disclosed.16"
  },
  {
   "id": "kaal:claim:4033886-013",
   "url": "https://wulfkaal.github.io/claims/4033886-013",
   "claim": "An investor who has been fully redeemed loses the ability to test the fund's valuation of his interest: the court held that Greenhouse retained no equity interest and therefore had no right to inspect the partnership's books and records.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "evidenced",
   "scope_conditions": [
    "Delaware limited partnerships under 6 Del. C. section 17-305",
    "investor has already withdrawn and been redeemed"
   ],
   "supporting_quote": "Therefore, the court concluded that Greenhouse did not retain and equity interest in the partnership and was not entitled to inspect the partnership's books and records.25"
  },
  {
   "id": "kaal:claim:4033886-014",
   "url": "https://wulfkaal.github.io/claims/4033886-014",
   "claim": "Redemption contracts, the traditional price commitment device for privately issued money, lack credibility, whereas pre programmed smart contracts deliver an enforceable and secure quantity commitment instead.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "issuers of privately issued money"
   ],
   "supporting_quote": "Such redemption contracts lack credibility.31 In contrast, the pre-programmed smart contract's enabled by cryptocurrencies facilitate an enforceable and secure quantity commitment.32"
  },
  {
   "id": "kaal:claim:4033886-015",
   "url": "https://wulfkaal.github.io/claims/4033886-015",
   "claim": "A programmed and enforceable quantity commitment secures a reliably positive value for Bitcoin because the governing source code is fully transparent on the blockchain and continuously verifiable.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "cryptocurrencies with observable open source code"
   ],
   "supporting_quote": "For instance, a programmed enforceable quantity commitment ensures a reliable positive value of Bitcoin.33 Cryptocurrencies' observable source code are fully transparent on their respective blockchain and continuously verifiable.34"
  },
  {
   "id": "kaal:claim:4033886-016",
   "url": "https://wulfkaal.github.io/claims/4033886-016",
   "claim": "As of 2022 there is no agreed upon reliable valuation method for cryptocurrencies.",
   "type": "empirical",
   "topics": [
    "economics",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "asserted",
   "scope_conditions": [
    "as of 2022"
   ],
   "supporting_quote": "An agreed-upon reliable valuation method does not exist for cryptocurrencies in 2022."
  },
  {
   "id": "kaal:claim:4033886-017",
   "url": "https://wulfkaal.github.io/claims/4033886-017",
   "claim": "Fair market value is the legal standard for valuation, but it carries real world problems that limit its usefulness in practice.",
   "type": "failure",
   "topics": [
    "economics",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "supporting_quote": "Fair market value is the legal standard for valuation, but it has real-world problems.48"
  },
  {
   "id": "kaal:claim:4033886-018",
   "url": "https://wulfkaal.github.io/claims/4033886-018",
   "claim": "Stocks and cryptocurrencies look similar enough, both traded on markets at fluctuating prices, to invite similar regulation, but they diverge in their potential for abuse, their nature, their acceptance, and their use.",
   "type": "failure",
   "topics": [
    "securities-law",
    "economics",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of listed equities and cryptocurrencies"
   ],
   "supporting_quote": "Stocks and cryptocurrencies are both traded on markets, with fluctuating prices, and seem similar enough in context to warrant similar regulation, yet they differ in their potential for abuse, their nature, acceptance, and use.64"
  },
  {
   "id": "kaal:claim:4033886-019",
   "url": "https://wulfkaal.github.io/claims/4033886-019",
   "claim": "The adjusted net asset approach revalues balance sheet items toward current fair value but still fails to capture intangible assets, because intangibles are not represented on the balance sheet.",
   "type": "failure",
   "topics": [
    "economics",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "asset approach valuations relying on book values"
   ],
   "supporting_quote": "However, the approach still fails to take into consider any intangible assets because they are not represented on the balance sheet.68"
  },
  {
   "id": "kaal:claim:4033886-020",
   "url": "https://wulfkaal.github.io/claims/4033886-020",
   "claim": "DCF currency translation breaks down for digital assets: no set discount rate or currency exchange forward curve exists for them, because they are not traded in exchange markets where closing prices are readily available and representative of fair value.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "DCF analysis where the projection currency is a digital asset rather than fiat"
   ],
   "supporting_quote": "However, no such set discount rate or currency exchange forward curve is available for digital assets, as they are not traded in exchange markets where closing prices are readily available and representative of fair value.79"
  },
  {
   "id": "kaal:claim:4033886-021",
   "url": "https://wulfkaal.github.io/claims/4033886-021",
   "claim": "Principal to principal markets are generally not considered observable because little information about their transactions is publicly available, which pushes assets priced there out of the observable input levels.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "evidenced",
   "scope_conditions": [
    "principal to principal markets",
    "fair value input hierarchy"
   ],
   "supporting_quote": "There is often little information about principal-to-principal transactions publicly available, and as such the markets are generally not considered observable.81"
  },
  {
   "id": "kaal:claim:4033886-022",
   "url": "https://wulfkaal.github.io/claims/4033886-022",
   "claim": "When the bid ask spread grows too wide while trades occur at high volume, the market begins to lose liquidity and the asset's value starts to fall, forcing investors who unload positions to surrender unrealized gains.",
   "type": "mechanism",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "exchange traded context",
    "wide spreads combined with high trading volume"
   ],
   "supporting_quote": "Historically, in an exchange context, if the spread between bid and ask price becomes too large and trades are occurring at high volumes, the market will start to lose liquidity and the value of the asset will start to fall."
  },
  {
   "id": "kaal:claim:4033886-023",
   "url": "https://wulfkaal.github.io/claims/4033886-023",
   "claim": "Put option based discount models for lack of marketability have been widely used, but they can be inaccurate because real investors do not possess perfect market timing ability.",
   "type": "failure",
   "topics": [
    "economics",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "prospective put model and related put option DLOM models"
   ],
   "supporting_quote": "This model has been widely used by market participants to determine the discount on nonmarketable security. However, this method can be inaccurate because investors do not have perfect market-timing ability.102"
  },
  {
   "id": "kaal:claim:4033886-024",
   "url": "https://wulfkaal.github.io/claims/4033886-024",
   "claim": "The Longstaff model's assumptions are inconsistent with reality on two fronts: investors do not have perfect timing, and its assumed volatility of ten to thirty percent is far below the volatility exceeding fifty percent typical of small stocks.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "application of the Longstaff model to small or highly volatile securities"
   ],
   "supporting_quote": "The Longstaff model's underlying assumptions are inconsistent with the reality of perfect timing as well as the assumed volatility level between ten to thirty percent, yet small stocks typically have volatility exceeding fifty percent.113"
  },
  {
   "id": "kaal:claim:4033886-025",
   "url": "https://wulfkaal.github.io/claims/4033886-025",
   "claim": "A major shortcoming of the QMDM is that no court in any case has accepted it, although it has been mentioned explicitly in three tax cases decided in 2000, 2001, and 2006.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "evidenced",
   "scope_conditions": [
    "judicial acceptance in United States tax litigation"
   ],
   "supporting_quote": "One major shortcoming of the QMDM is that it has not been accepted by any court in any case, but has been mentioned explicitly in three tax cases from 2000, 2001, and 2006.119"
  },
  {
   "id": "kaal:claim:4033886-026",
   "url": "https://wulfkaal.github.io/claims/4033886-026",
   "claim": "The main obstacle to digital asset market liquidity may be that the number of token holders has not continued to expand exponentially year over year; a larger stakeholder base would deepen liquidity and permit seamless entry and exit.",
   "type": "mechanism",
   "topics": [
    "defi",
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "centralized digital asset exchange markets"
   ],
   "supporting_quote": "The main issue may be that the number of token holders have not continued to expand exponentially year over year. Having a greater number of stake holders may result in the deeper liquidity in the market, which would in turn allow for seamless movement in and out of the market."
  },
  {
   "id": "kaal:claim:4033886-027",
   "url": "https://wulfkaal.github.io/claims/4033886-027",
   "claim": "Digital assets become less liquid precisely when large amounts are moved at once, because a large sell order floods the exchange and drives the price down.",
   "type": "failure",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "large block sales through a single exchange"
   ],
   "supporting_quote": "Digital assets are less liquid when individuals try to move large amounts at once. If an individual wants to sell a large number of tokens through an exchange, they have to ensure they do not flood the market with token, causing price to drop on the exchange."
  },
  {
   "id": "kaal:claim:4033886-028",
   "url": "https://wulfkaal.github.io/claims/4033886-028",
   "claim": "One design remedy for thin trading volume is supervision of digital asset exchanges by a federal governing authority or a self regulatory organization to assure compliance with existing laws.",
   "type": "design",
   "topics": [
    "defi",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "digital asset exchanges operating under legal uncertainty"
   ],
   "supporting_quote": "To increase the trading volume, one solution may be to have a federal governing authority or a self-regulatory organization monitor the exchange to assure compliance with existing laws."
  },
  {
   "id": "kaal:claim:4033886-029",
   "url": "https://wulfkaal.github.io/claims/4033886-029",
   "claim": "Legal uncertainty about crypto exchanges exerts a chilling effect on the market, and increased liquidity may follow once the market gains greater clarity on the legal issues surrounding this asset class.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "defi",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "resolution of broker dealer status and securities law classification questions"
   ],
   "supporting_quote": "Once the market gains greater clarity on the legal issues surrounding this new asset class, increased liquidity in the market may follow."
  },
  {
   "id": "kaal:claim:4033886-030",
   "url": "https://wulfkaal.github.io/claims/4033886-030",
   "claim": "Market liquidity in digital assets is not only about exchanging crypto for fiat: allowing crypto to be used as a means of transacting for any good or service may itself increase market liquidity.",
   "type": "design",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "buy in from the business community"
   ],
   "supporting_quote": "Increasing liquidity does not mean only being able to exchange crypto for fiat currency, but also the ability to exchange for any good or service. By allowing for transactions to use crypto as a means of transaction may increase market liquidity."
  },
  {
   "id": "kaal:claim:4033886-031",
   "url": "https://wulfkaal.github.io/claims/4033886-031",
   "claim": "Because digital asset exchanges perform both the traditional broker dealer function and the custody function, they face uncertainties and increased liability that traditional exchanges, which never touch custody, do not bear.",
   "type": "mechanism",
   "topics": [
    "defi",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "centralized digital asset exchanges holding customer assets"
   ],
   "supporting_quote": "By having the crypto exchange perform the services of a traditional broker/dealer and custody holder, digital asset exchanges face uncertainties and increased liability that do not impact traditional exchanges.124"
  },
  {
   "id": "kaal:claim:4033886-032",
   "url": "https://wulfkaal.github.io/claims/4033886-032",
   "claim": "When exchanges apply different standards about who may trade on their platform, the market ends up showing different prices for the same asset across exchanges, which is one reason trading arbitrage has become common in crypto.",
   "type": "mechanism",
   "topics": [
    "economics",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "exchanges excluding participants by residence or other status"
   ],
   "supporting_quote": "When different exchanges apply different standards as to who can trade on their platform, the market sees different prices for the same asset across exchanges."
  },
  {
   "id": "kaal:claim:4033886-033",
   "url": "https://wulfkaal.github.io/claims/4033886-033",
   "claim": "The stablecoin exists as a response to digital asset price volatility: it is pegged to the value of an external asset, frequently a fiat currency.",
   "type": "definitional",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "stablecoins pegged to external assets"
   ],
   "supporting_quote": "To reduce price volatility in digital assets, the stablecoin was born. A stablecoin is pegged to the value of an external asset (frequently fiat currency).126"
  },
  {
   "id": "kaal:claim:4033886-034",
   "url": "https://wulfkaal.github.io/claims/4033886-034",
   "claim": "Digital assets resemble high growth companies for valuation purposes, so scenario planning is essential and business leaders must reason backward from the future rather than forward from the present, because the relevant markets may not yet exist.",
   "type": "design",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "assets whose markets have not yet formed"
   ],
   "supporting_quote": "Digital assets are comparable to high-growth companies, where scenario planning is critical because markets may not yet exist.129 In such a case, business leaders must start from the future rather than the present."
  },
  {
   "id": "kaal:claim:4033886-035",
   "url": "https://wulfkaal.github.io/claims/4033886-035",
   "claim": "Secondary trade pricing from exchanges is a legitimate market approach input for digital assets only when liquidity is high enough to rely on those prices; where liquidity is lacking or unreliable, a discount for lack of liquidity is required.",
   "type": "condition",
   "topics": [
    "defi",
    "economics",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "market approach applied to tokens",
    "liquidity and depth differ between token to token and token to fiat trades"
   ],
   "supporting_quote": "Secondary trade pricing (as seen in exchanges) are relevant when liquidity is high enough to rely on these prices.131"
  },
  {
   "id": "kaal:claim:4033886-036",
   "url": "https://wulfkaal.github.io/claims/4033886-036",
   "claim": "DCF appears at first glance unsuited to digital asset valuation because valuation is framed as pricing a token at a point in time, but it becomes applicable where networks return cash flows to token holders or to those who contribute work.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "networks that distribute cash flows to token holders or workers"
   ],
   "supporting_quote": "However, some digital asset networks do return cash flows to token holders or those who contribute work to the network. In such a case, DCF can shed light on the role of these structures in digital asset valuation."
  },
  {
   "id": "kaal:claim:4033886-037",
   "url": "https://wulfkaal.github.io/claims/4033886-037",
   "claim": "Under a deflationary token issuance model, which caps the number of tokens ever issued, prices are expected to increase because of the fundamental scarcity of token supply.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "deflationary token models such as Bitcoin"
   ],
   "supporting_quote": "With a deflationary method, prices are expected to increase due to fundamental scarcity of token supply."
  },
  {
   "id": "kaal:claim:4033886-038",
   "url": "https://wulfkaal.github.io/claims/4033886-038",
   "claim": "As the cryptocurrency market matures, inflationary token models may become more popular, because they permit stability mechanisms and therefore more experimentation with volatility mitigation.",
   "type": "predictive",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "speculative",
   "scope_conditions": [
    "continued maturation of the cryptocurrency market"
   ],
   "supporting_quote": "Several indicia seem to suggest that as the cryptocurrency market matures, inflationary token models may continue to become more popular. Inflationary token models allow the use of stability mechanisms, which may allow more experimentation with volatility mitigation."
  },
  {
   "id": "kaal:claim:4033886-039",
   "url": "https://wulfkaal.github.io/claims/4033886-039",
   "claim": "Bitcoin's issuance schedule and relative scarcity are not necessarily the only reasons for its rise in value, since thousands of copycats share the same issuance schedule without matching its demand.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "scarcity based valuation models such as stock to flow"
   ],
   "supporting_quote": "However, BTC's issuance schedule and relative scarcity are not necessarily the only reasons for its rise in value.147"
  },
  {
   "id": "kaal:claim:4033886-040",
   "url": "https://wulfkaal.github.io/claims/4033886-040",
   "claim": "Uniform digital asset valuation standards can only evolve over time as the market evolves, because standard setting requires common core practices, and those practices are only slowly emerging.",
   "type": "condition",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886",
   "year": "2022",
   "source_sha256": "52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd",
   "confidence": "argued",
   "scope_conditions": [
    "standard setting for digital asset valuation"
   ],
   "supporting_quote": "Such standards can evolve over time as the market evolves. Standard setting requires common core practices what are slowly evolving."
  },
  {
   "id": "kaal:claim:4015908-001",
   "url": "https://wulfkaal.github.io/claims/4015908-001",
   "claim": "Even after the ICO boom of 2017 and 2018, many digital asset projects and token launches are designed with the primary focus on benefiting the founding group, which often finds creative ways to cash out of the project after a successful run.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "securities-law",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "asserted",
   "scope_conditions": [
    "post 2018 crypto market cycle",
    "token launches designed around a founding group"
   ],
   "supporting_quote": "many digital asset projects and token launches are designed with the primary focus on benefiting the founding group, which often finds creative ways to cash out of the project after a successful run."
  },
  {
   "id": "kaal:claim:4015908-002",
   "url": "https://wulfkaal.github.io/claims/4015908-002",
   "claim": "A fair launch is a token distribution in which the launched token is held entirely by the community and founders and their affiliates participate only on equal terms as members of that community.",
   "type": "definitional",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "asserted",
   "supporting_quote": "In a fair launch the launched token is held entirely by the community and all founders and their affiliates are equally part of the community."
  },
  {
   "id": "kaal:claim:4015908-003",
   "url": "https://wulfkaal.github.io/claims/4015908-003",
   "claim": "The foundation model for token issuance is a core form of centralized top-down governance, and most ICO projects were governed by a small group of individuals rather than by the community at large or a DAO.",
   "type": "failure",
   "topics": [
    "securities-law",
    "governance-design",
    "decentralization",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "asserted",
   "scope_conditions": [
    "ICO era token issuance"
   ],
   "supporting_quote": "The foundation model for token issuance is a core form of centralized top-down governance in the context of token offerings."
  },
  {
   "id": "kaal:claim:4015908-004",
   "url": "https://wulfkaal.github.io/claims/4015908-004",
   "claim": "ICOs that allowed their token to trade before the underlying product existed, at least in beta, created significant risk for investors because the product might never go live and the token could lose its value entirely.",
   "type": "failure",
   "topics": [
    "securities-law",
    "risk-and-incentives",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "token trading opens before a working or beta product exists"
   ],
   "supporting_quote": "ICOs that allowed their token to trade before the underlying product was built, at least in a beta version, create significant risk factors for the investors as the product may not go live at all and the token may lose its value entirely."
  },
  {
   "id": "kaal:claim:4015908-005",
   "url": "https://wulfkaal.github.io/claims/4015908-005",
   "claim": "Fair launch tokens outperformed centrally distributed projects during the late 2020 and early 2021 rally: the collective crypto average token launch gained 112.41% over 90 days while fair launch projects gained over 296%.",
   "type": "empirical",
   "topics": [
    "economics",
    "empirical-evidence",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "evidenced",
   "scope_conditions": [
    "digital asset market rally of late 2020 and early 2021",
    "90 day window after launch"
   ],
   "supporting_quote": "During the digital asset market rally in late 2020 and early 2021, the collective crypto average token launch over 90 days increased 112.41%, while Fair Launch projects gained over 296%."
  },
  {
   "id": "kaal:claim:4015908-006",
   "url": "https://wulfkaal.github.io/claims/4015908-006",
   "claim": "Fair launches shift capital formation from venture capitalism toward altruistic capitalism, because a digital asset startup that can successfully raise capital through a fair launch becomes less reliant on venture capital.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "startup can successfully raise capital via fair launch"
   ],
   "supporting_quote": "In essence, if a digital asset startup can successfully raise capital from a fair launch, the startup will be less inclined/reliant on venture capital."
  },
  {
   "id": "kaal:claim:4015908-007",
   "url": "https://wulfkaal.github.io/claims/4015908-007",
   "claim": "Fair token launches offer equal opportunity for market participants to acquire tokens over longer periods of time at a comparatively equal price.",
   "type": "condition",
   "topics": [
    "economics",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "token launch claiming the fair launch label"
   ],
   "supporting_quote": "fair token launches offer equal opportunity for market participants to acquire tokens over longer periods of time at a comparatively equal price."
  },
  {
   "id": "kaal:claim:4015908-008",
   "url": "https://wulfkaal.github.io/claims/4015908-008",
   "claim": "Price equality in a fair launch means that no insider group or person can purchase the token at a significant discount.",
   "type": "condition",
   "topics": [
    "economics",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "token launch claiming the fair launch label"
   ],
   "supporting_quote": "Additionally, price equality in fair launch means that no insider group or person can purchase the token at a significant discount."
  },
  {
   "id": "kaal:claim:4015908-009",
   "url": "https://wulfkaal.github.io/claims/4015908-009",
   "claim": "The fairness of a launch can be measured by how many individuals have access to the token at launch, assessed through the number of wallets holding the asset combined with the active participation of the wallet owners.",
   "type": "definitional",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "asserted",
   "scope_conditions": [
    "token functioning as a traditional medium of exchange"
   ],
   "supporting_quote": "To determine the fairness of a launch for a traditional medium of exchange it is possible to consider the number of wallets holding the token asset. Moreover, it is possible to consider the combination of distribution of the asset in wallets plus the active participation of the wallet owner."
  },
  {
   "id": "kaal:claim:4015908-010",
   "url": "https://wulfkaal.github.io/claims/4015908-010",
   "claim": "Under the fairness to the public definition, a fair token launch requires that the token was launched without a founding team, a foundation, or a founding dev team.",
   "type": "condition",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "strict fairness to the public definition of fair launch"
   ],
   "supporting_quote": "Under this definition, a fair token launch requires that the token was launched without a founding team, foundation, or founding dev team."
  },
  {
   "id": "kaal:claim:4015908-011",
   "url": "https://wulfkaal.github.io/claims/4015908-011",
   "claim": "Under the fairness to the public definition of fair launch, no early investor may hold a pre-allocation of project tokens or a pre-mining program, and any individual claim to a percentage of token supply before public sale falls outside the definition of fair launch.",
   "type": "condition",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "strict fairness to the public definition of fair launch"
   ],
   "supporting_quote": "under this definition of fair launch, no early investors would be permitted with a pre-allocation of project tokens or with a pre-mining program."
  },
  {
   "id": "kaal:claim:4015908-012",
   "url": "https://wulfkaal.github.io/claims/4015908-012",
   "claim": "Bitcoin is one of the best examples of a fair launch because there was no ICO, no founders reward, no pre-mine, and no block reward for dev teams.",
   "type": "empirical",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "evidenced",
   "supporting_quote": "Bitcoin is one of the best examples of a fair launch because there was no ICO, founders' reward, pre- mine, or block reward for dev teams."
  },
  {
   "id": "kaal:claim:4015908-013",
   "url": "https://wulfkaal.github.io/claims/4015908-013",
   "claim": "Small market cap launches at very cheap initial prices carry the potential for team and whale purchase abuses, which is why equitable treatment of the public requires significant project-controlled liquidity.",
   "type": "failure",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "small market capitalization",
    "very low initial token price"
   ],
   "supporting_quote": "Small market cap launches at very cheap initial prices bring with them the potential abuses of team and whale purchases."
  },
  {
   "id": "kaal:claim:4015908-014",
   "url": "https://wulfkaal.github.io/claims/4015908-014",
   "claim": "The larger the market capitalization controlled by the DAO, the less likely it becomes that whales and insiders can purchase inexpensive tokens on the market.",
   "type": "mechanism",
   "topics": [
    "dao",
    "governance-design",
    "defi",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "DAO governance over project liquidity"
   ],
   "supporting_quote": "The larger the market capitalization that is controlled by the DAO, the less likely it becomes that whales and insiders can purchase inexpensive tokens on the market."
  },
  {
   "id": "kaal:claim:4015908-015",
   "url": "https://wulfkaal.github.io/claims/4015908-015",
   "claim": "The rule that no tokens may be distributed to insiders such as team, founders, associated whales, core investors, advisors, and marketing teams before or after the token sale is the most important staple of fair launch doctrine and cannot be subject to exceptions; any exception should cost the project the fair token launch designation.",
   "type": "normative",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "projects claiming the fair token launch designation"
   ],
   "supporting_quote": "This rule is perhaps the most important key staple of the fair launch doctrine and cannot be subject to exceptions. Any exceptions to this rule should result in the loss of the designation fair token launch."
  },
  {
   "id": "kaal:claim:4015908-016",
   "url": "https://wulfkaal.github.io/claims/4015908-016",
   "claim": "Because the main mandate of a fair launch is equitable treatment of the public, fair launches typically involve a mandate to distribute any and all revenue and profits of the project to community investors.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "project operating under fair launch principles"
   ],
   "supporting_quote": "Since the main mandate of the fair launch is equitable treatment of the public, fair launches typically involve a mandate to distribute any and all revenue and profits of the project to their community investors."
  },
  {
   "id": "kaal:claim:4015908-017",
   "url": "https://wulfkaal.github.io/claims/4015908-017",
   "claim": "Open-source code combined with protocol fee flowback to users, as with the Uniswap V2 0.3% swap fee that is automatically distributed to liquidity providers, guarantees transparency, accountability, market confidence in the product, and associated protections for the community.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "evidenced",
   "scope_conditions": [
    "protocol has a viable product that produces revenue",
    "code is open source"
   ],
   "supporting_quote": "Open-source code and protocol fee flowback to users guarantee transparency, accountability, market confidence in the products, and the associated protections for the community."
  },
  {
   "id": "kaal:claim:4015908-018",
   "url": "https://wulfkaal.github.io/claims/4015908-018",
   "claim": "A carve-out for start-up expenses is economically unavoidable in most fair launches because it is not feasible to expect founders operating without funding to keep spending time and resources on the project without payback assurances.",
   "type": "condition",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "founders operate without outside funding",
    "project cannot raise outside capital in a reasonable timeframe"
   ],
   "supporting_quote": "As a matter of fact, it may not be feasible to get founders who operate without funding to keep spending time and resources on the project without payback assurances."
  },
  {
   "id": "kaal:claim:4015908-019",
   "url": "https://wulfkaal.github.io/claims/4015908-019",
   "claim": "Because pre-public token allocations to cover start-up costs run against the majority view on fair launches, preserving the spirit of fair launch requires that such allocations be fully transparent, announced to the community, and open to a community audit of the books.",
   "type": "design",
   "topics": [
    "disclosure",
    "compliance",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "project allocates tokens before the public launch to cover startup costs"
   ],
   "supporting_quote": "However, in order to maintain the spirit of fair launch, such token allocations before the public launch should be fully transparent and announced to the community with a community audit of the books, as desired."
  },
  {
   "id": "kaal:claim:4015908-020",
   "url": "https://wulfkaal.github.io/claims/4015908-020",
   "claim": "Without significant marketing a fair launch token is less likely to reach a diverse set of market participants, and projects reaching only a few hundred investors with small million dollar market caps are much more prone to abuse and manipulation.",
   "type": "mechanism",
   "topics": [
    "economics",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "token launches with limited marketing reach"
   ],
   "supporting_quote": "Without significant marketing of the project, it is less likely the token will reach a diverse set of market participants. Projects that only reach a few hundred investors and only small million-dollar market caps are much more prone to abuse and manipulation."
  },
  {
   "id": "kaal:claim:4015908-021",
   "url": "https://wulfkaal.github.io/claims/4015908-021",
   "claim": "Equal opportunity access points for public marketing incentives cannot be guaranteed and require constant reevaluation, so the public marketing permission for any fair token launch should be restricted to a limited percentage of total token supply.",
   "type": "design",
   "topics": [
    "economics",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "fair launch project grants public marketing incentives"
   ],
   "supporting_quote": "These equal opportunity access points cannot be guaranteed and the process is subject to constant reevaluation. The public marketing permission for any fair token launch should be restricted to a limited percentage of total token supply."
  },
  {
   "id": "kaal:claim:4015908-022",
   "url": "https://wulfkaal.github.io/claims/4015908-022",
   "claim": "The more decentralized the governance of a fair launch protocol, the less likely the project will be seen as treating public users unfairly, which makes a decentralized autonomous organization design advisable for fair launch projects.",
   "type": "mechanism",
   "topics": [
    "dao",
    "decentralization",
    "governance-design",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "governance design is transparent and decentralized"
   ],
   "supporting_quote": "The more decentralized the governance of a fair launch protocol, the less likely the project will be seen as not treating the public users unfairly. In this context, it may be advisable for fair launch projects to be launched in a decentralized autonomous organization (DAO) design."
  },
  {
   "id": "kaal:claim:4015908-023",
   "url": "https://wulfkaal.github.io/claims/4015908-023",
   "claim": "If the DAO governing a fair launch is controlled by a handful of people in a foundation setting, decentralized governance metrics are less likely to take hold and the public is correspondingly less likely to benefit from decentralized community governance over the launch.",
   "type": "failure",
   "topics": [
    "dao",
    "decentralization",
    "governance-design",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "DAO controlled by a small group in a foundation setting"
   ],
   "supporting_quote": "controlled by a handful of people in a foundation setting, it is less likely that decentralized governance metrics take hold in the DAO. Accordingly, it is less likely that the public can benefit from the decentralized community governance over the fair launch."
  },
  {
   "id": "kaal:claim:4015908-024",
   "url": "https://wulfkaal.github.io/claims/4015908-024",
   "claim": "DAO governance built on fungible governance tokens is disfavored and dangerous because governance rights can be bought on open exchanges, whereas non-fungible reputation governance assures the highest levels of decentralization.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "tokenomics",
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "DAO governance rights are tradeable on open exchanges"
   ],
   "supporting_quote": "DAO governance that revolves around fungible governance tokens is disfavored and dangerous in this context as governance rights can be bought on open exchanges. By contrast, non-fungible reputation governance of the DAO assures highest levels of decentralization."
  },
  {
   "id": "kaal:claim:4015908-025",
   "url": "https://wulfkaal.github.io/claims/4015908-025",
   "claim": "Community DAO governance makes any form of rug pull much less likely, because rug pulls typically benefit only a few select individuals who retained control over the project code or liquidity.",
   "type": "mechanism",
   "topics": [
    "dao",
    "governance-design",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "community DAO oversees project code and liquidity"
   ],
   "supporting_quote": "Community DAO governance also makes any form of rug pulls much less likely as rug pulls typically only benefit a few select individuals who retained control over the project code or liquidity."
  },
  {
   "id": "kaal:claim:4015908-026",
   "url": "https://wulfkaal.github.io/claims/4015908-026",
   "claim": "DAO governance over token launch wallets can assure that no single individual exercises rights over the token launch wallet and becomes a single point of failure or abuse.",
   "type": "design",
   "topics": [
    "smart-contracts",
    "dao",
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "token launch wallet is governed by the DAO"
   ],
   "supporting_quote": "DAO governance over token launch wallets can assure that no single individual exercises rights over the token launch wallet and becomes a single point of failure/abuse."
  },
  {
   "id": "kaal:claim:4015908-027",
   "url": "https://wulfkaal.github.io/claims/4015908-027",
   "claim": "Founders may hold significant influence over DAO votes initially depending on the DAO design, but higher levels of governance decentralization mitigate these centralization effects quickly through the onboarding of new DAO members.",
   "type": "condition",
   "topics": [
    "dao",
    "decentralization",
    "corporate-governance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "early stage of DAO formation",
    "DAO design permits ongoing member onboarding"
   ],
   "supporting_quote": "Depending on the DAO design, the founders may have significant influence over the DAO votes initially. However, higher levels of DAO governance decentralization mitigate these centralization effects quickly via the onboarding of new DAO members."
  },
  {
   "id": "kaal:claim:4015908-028",
   "url": "https://wulfkaal.github.io/claims/4015908-028",
   "claim": "Whale purchases that soak up token supply at the earliest possible time in a launch are the key problem fair launch platforms address, because they can be the origin of significant centralization that harms the project for the entirety of its active market engagement.",
   "type": "failure",
   "topics": [
    "decentralization",
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "whales able to buy large amounts at the earliest moment of a launch"
   ],
   "supporting_quote": "of whale token purchases that soak up supply at the earliest possible time in the token launch. Such whale purchases can be the origin of significant centralization of a token launch that may harm the project for the entirely of its active market engagement."
  },
  {
   "id": "kaal:claim:4015908-029",
   "url": "https://wulfkaal.github.io/claims/4015908-029",
   "claim": "Technology platforms can make launch abuses less likely by mandating fair auctions in which tokens are released only in tranches, offering a limited number of tokens for a limited number of days, which makes rug pulls overall less likely.",
   "type": "design",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "fair launch platform mandates auction format with tranche release"
   ],
   "supporting_quote": "During such fair auctions, the tokens that are listed on the fair launch platforms may only be released in tranches, which makes rug pulls overall less likely. Such token tranche listings may offer a limited number of tokens for a limited number of days."
  },
  {
   "id": "kaal:claim:4015908-030",
   "url": "https://wulfkaal.github.io/claims/4015908-030",
   "claim": "After half of each auction tranche is deposited into an AMM pair, the other half is allocated to open market purchasers and the remaining liquidity on the AMM is burned to ensure that any incentives for rug pulls are removed.",
   "type": "design",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "auction based fair launch platform",
    "Uniswap V2 compatible AMM"
   ],
   "supporting_quote": "Thereafter, the other half of the tokens from the respective tranche may be allocated to open market purchasers. The remaining liquidity on the AMM may be burned to ensure that any incentives for rug pulls are removed."
  },
  {
   "id": "kaal:claim:4015908-031",
   "url": "https://wulfkaal.github.io/claims/4015908-031",
   "claim": "Grin avoided privileging miners who could develop ASICs before launch by gradually scaling up the portion of coins allocated to the ASIC-friendly algorithm over two years, which allowed hobbyist miners to participate.",
   "type": "empirical",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "evidenced",
   "scope_conditions": [
    "dual proof of work offered over the first two years"
   ],
   "supporting_quote": "However, Grin did not privilege miners who could develop ASICs prior to launch, rather they gradually scaled up the portion of coins allocated to the ASIC-friendly algorithm over 2 years, allowing hobbyist miners to participate."
  },
  {
   "id": "kaal:claim:4015908-032",
   "url": "https://wulfkaal.github.io/claims/4015908-032",
   "claim": "Liquidity mining, one of the dominant mechanisms used for fair launches, undermines fairness because it leads those who already have more liquidity or assets to benefit disproportionally from the protocol.",
   "type": "failure",
   "topics": [
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "fair launch distributes rewards through liquidity mining"
   ],
   "supporting_quote": "However, liquidity mining leads those who have more liquidity/assets to disproportionally benefit from the fair launch liquidity mining protocol."
  },
  {
   "id": "kaal:claim:4015908-033",
   "url": "https://wulfkaal.github.io/claims/4015908-033",
   "claim": "If the top 10 addresses own a disproportionally large supply of a token, the project or community becomes more centralized, an outcome fair launches seek to avoid.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "token supply concentration measured across top holder addresses"
   ],
   "supporting_quote": "If the top 10 addresses own a disproportionally large supply of a token, then the project or community becomes more centralized; an outcome which fair launches seek to avoid."
  },
  {
   "id": "kaal:claim:4015908-034",
   "url": "https://wulfkaal.github.io/claims/4015908-034",
   "claim": "Binance implemented a subscription mechanism that gives everyone an equal opportunity to purchase newly released NFTs, responding to drops that sell out in seconds and leave interested users waiting for initial owners to flip.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "evidenced",
   "scope_conditions": [
    "limited supply and high demand NFT drops"
   ],
   "supporting_quote": "In response, Binance implemented a subscription mechanism that lets everyone have an equal opportunity to purchase newly released NFTs on its marketplace."
  },
  {
   "id": "kaal:claim:4015908-035",
   "url": "https://wulfkaal.github.io/claims/4015908-035",
   "claim": "An auction mechanism for fair launch tokens avoids pricing tokens below their underlying market value, which in turn helps remedy the problems that derive from large whale token holders who can later manipulate the market.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "public auction of tokens at launch"
   ],
   "supporting_quote": "An auction mechanism for fair launch tokens ensures avoids that tokens are priced cheaper than the underlying market value of the token. This, in turn, helps remedy the problems that derive from large whales token holders that can manipulate the market in the"
  },
  {
   "id": "kaal:claim:4015908-036",
   "url": "https://wulfkaal.github.io/claims/4015908-036",
   "claim": "No more than 40% of total token supply should be auctioned in a fair launch, with 10% serving as a buffer paired with raised funds as permanently locked DEX liquidity and the other 50% allocated to a DEX pair with the raise proceeds to provide long-term locked liquidity.",
   "type": "design",
   "topics": [
    "tokenomics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "asserted",
   "scope_conditions": [
    "public auction of tokens in a fair launch context"
   ],
   "supporting_quote": "it is ill advised to auction more than 40% of the total token supply. 10% of token supply should serve as a buffer. paired with the funds raised to form permanently locked liquidity on a DEX. The other 50% should be allocated to a DEX in a pair with the funds from the token raise."
  },
  {
   "id": "kaal:claim:4015908-037",
   "url": "https://wulfkaal.github.io/claims/4015908-037",
   "claim": "In a lottery fair launch protocol, a user who bids low for a ticket increases the potential secondary market return but decreases the chance of winning the lottery, because more users can afford to participate at a low price.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "lottery based fair launch protocol",
    "price determined by community bids"
   ],
   "supporting_quote": "user bids low, they increase the potential for secondary market return but decrease their chances of winning the lottery since more users can afford to participate."
  },
  {
   "id": "kaal:claim:4015908-038",
   "url": "https://wulfkaal.github.io/claims/4015908-038",
   "claim": "Non-linear reward structures using weighting, tiers, or logarithmic curves counteract centralization of token supply by decentralizing disproportionate returns so that rewards do not scale linearly with the amount of liquidity a user holds.",
   "type": "design",
   "topics": [
    "risk-and-incentives",
    "decentralization",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "fair launch protocol designing its reward structure"
   ],
   "supporting_quote": "Fair launch protocols can create some form of weighting, tier, and/or logarithmic curves for rewards. This decentralizes disproportionate returns, so they do not scale linearly with the amount user liquidity a user has."
  },
  {
   "id": "kaal:claim:4015908-039",
   "url": "https://wulfkaal.github.io/claims/4015908-039",
   "claim": "A fair launch rewards protocol can measure ethical conduct by whether a user engages with the protocol consistently, invests, and votes over time, while users who merely use the network for yield farming may not qualify because they lack engagement.",
   "type": "design",
   "topics": [
    "reputation",
    "risk-and-incentives",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "protocol can measure historical on chain user behavior"
   ],
   "supporting_quote": "Such ethical conduct can measure whether the user engages with the protocol consistently, invests, and votes on the fair launch protocol network over time. By contrast, users who merely use the network for yield farming may not qualify as they lack engagement."
  },
  {
   "id": "kaal:claim:4015908-040",
   "url": "https://wulfkaal.github.io/claims/4015908-040",
   "claim": "Through fair launch evolution and continuous practice improvements, the fair launch industry and the underlying digital asset businesses can become the foundation of the emerging decentralized digital asset economy.",
   "type": "predictive",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "continued evolution and improvement of fair launch practice"
   ],
   "supporting_quote": "Through fair launch evolution and continuous practice improvements, the fair launch industry and underlying digital asset businesses can become the foundation of the emerging decentralized digital asset economy."
  },
  {
   "id": "kaal:claim:4015908-041",
   "url": "https://wulfkaal.github.io/claims/4015908-041",
   "claim": "Rug pull practices can take the form of a whale guaranteeing an inside developer or business head a percentage participation if that insider changes the code governing the project to produce an outcome that benefits only the whale and its associates.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "insiders retain the ability to change project code"
   ],
   "supporting_quote": "example, a whale may guarantee an inside developer or business head a percentage participation if the insider changes the code that governs the project for a beneficial outcome that only benefits the whale and its associates."
  },
  {
   "id": "kaal:claim:4015908-042",
   "url": "https://wulfkaal.github.io/claims/4015908-042",
   "claim": "In lottery fair launch protocols the ticket price is determined as the median of all tickets purchased, and users then decide whether to accept that price, paying the difference if it exceeds their bid or withdrawing for a refund.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908",
   "year": "2022",
   "source_sha256": "e0925afde0c42a16cd5310983789fae3eb3d1f121e2954a72afa64191d00fe37",
   "confidence": "argued",
   "scope_conditions": [
    "lottery based fair launch protocol"
   ],
   "supporting_quote": "price of a ticket is determined as the median of all tickets purchased – users then decide whether they accept the price."
  },
  {
   "id": "kaal:claim:4021599-001",
   "url": "https://wulfkaal.github.io/claims/4021599-001",
   "claim": "The absence of clearly defined technology features for blockchain, distributed ledger, and associated terms propagates outward, producing knock-on definitional problems in other parts of the blockchain ecosystem.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain and distributed ledger terminology remains undefined"
   ],
   "supporting_quote": "The lack of clearly defined technology features pertaining to blockchain technology, distributed ledger, and other associated terms has knock-on effects on other parts of the blockchain ecosystem."
  },
  {
   "id": "kaal:claim:4021599-002",
   "url": "https://wulfkaal.github.io/claims/4021599-002",
   "claim": "No truly uniform definition of blockchain technology exists; commentators variously describe it as a giant distributed immutable spreadsheet for transactions or by enumerating central elements such as decentralization, immutability, and cryptographic verification.",
   "type": "definitional",
   "topics": [
    "blockchain",
    "decentralization",
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "supporting_quote": "No truly uniform definition exists for blockchain technology. Some refer to it as a giant worldwide, distributed, immutable \"google spreadsheet\" for transactions.1"
  },
  {
   "id": "kaal:claim:4021599-003",
   "url": "https://wulfkaal.github.io/claims/4021599-003",
   "claim": "The core distinguishing features of blockchain technology are only generically definitional: they characterize the technology as a class but supply no specific definitions usable for classification.",
   "type": "failure",
   "topics": [
    "blockchain",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "supporting_quote": "The core distinguishing features of blockchain technology help define the technology generically but provide no specific definitions. For example, the technology's distributed consensus"
  },
  {
   "id": "kaal:claim:4021599-004",
   "url": "https://wulfkaal.github.io/claims/4021599-004",
   "claim": "Blockchain's distributed consensus model makes fraudulent transactions much less likely to be recorded because individual network nodes verify and validate chain transactions before those transactions execute.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "scope_conditions": [
    "distributed consensus networks with node level validation"
   ],
   "supporting_quote": "recorded as individual network nodes verify and validate chain transactions before the execution of the transactions.3 The resulting"
  },
  {
   "id": "kaal:claim:4021599-005",
   "url": "https://wulfkaal.github.io/claims/4021599-005",
   "claim": "Disintermediation is a key feature of blockchain technology because the technology incentivizes direct transactions between creators and consumers.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "asserted",
   "supporting_quote": "Disintermediation is another key feature of the technology as the technology incentivizes direct transactions between creators and consumers.5 Other key features that are enabled by the technology"
  },
  {
   "id": "kaal:claim:4021599-006",
   "url": "https://wulfkaal.github.io/claims/4021599-006",
   "claim": "The lack of a clearly delineated nomenclature for the term securities token has produced divergent uses and interpretations of that term, especially in relation to the term utility token.",
   "type": "failure",
   "topics": [
    "securities-law",
    "tokenomics",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "scope_conditions": [
    "United States digital asset markets as of 2022"
   ],
   "supporting_quote": "The lack of a clearly delineated nomenclature for the term \"securities token\" resulted in various uses and interpretations of the term securities token, especially vis-à-vis the term \"utility token.\""
  },
  {
   "id": "kaal:claim:4021599-007",
   "url": "https://wulfkaal.github.io/claims/4021599-007",
   "claim": "Securities tokens are typically investment contracts while utility tokens typically provide their users with access to a product or service, even though the lines between the different token types are blurred regularly.",
   "type": "definitional",
   "topics": [
    "securities-law",
    "tokenomics",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "scope_conditions": [
    "typical cases; boundary cases blur"
   ],
   "supporting_quote": "appreciation, dividends or revenue share.8 While the lines between the different types of tokens are blurred regularly,9 securities token are typically investment contracts, whereas utility tokens typically provide their users with access to a product or service."
  },
  {
   "id": "kaal:claim:4021599-008",
   "url": "https://wulfkaal.github.io/claims/4021599-008",
   "claim": "The boundaries between the different types of tokens are regularly blurred, so the securities token versus utility token distinction functions as a typical case distinction rather than a clean partition.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "tokenomics",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "asserted",
   "supporting_quote": "While the lines between the different types of tokens are blurred regularly,9 securities token are typically investment contracts,"
  },
  {
   "id": "kaal:claim:4021599-009",
   "url": "https://wulfkaal.github.io/claims/4021599-009",
   "claim": "Securities tokens involve an underlying interest or function of the token to replace actual financial securities such as shares or equity in legacy businesses.",
   "type": "definitional",
   "topics": [
    "securities-law",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "asserted",
   "supporting_quote": "In other words, securities tokens involve an underlying interest or function of the token to replace actual financial securities, such as shares or equity in legacy businesses.11"
  },
  {
   "id": "kaal:claim:4021599-010",
   "url": "https://wulfkaal.github.io/claims/4021599-010",
   "claim": "A key commonality that permits delineating securities tokens from other token designs is that securities tokens derive their value from an external tradeable asset.",
   "type": "condition",
   "topics": [
    "securities-law",
    "tokenomics",
    "economics",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "supporting_quote": "Key commonalities of securities tokens characteristics enable the delineation of securities tokens from other token designs. A key commonality of securities tokens includes its ability to derive their value from an external tradeable asset.12 The underlying assets for"
  },
  {
   "id": "kaal:claim:4021599-011",
   "url": "https://wulfkaal.github.io/claims/4021599-011",
   "claim": "The underlying assets of securities tokens, such as corporations, earning streams, or entitlements to interest payments or dividends, are identical to the underlying assets of equities, bonds, and derivatives.",
   "type": "definitional",
   "topics": [
    "securities-law",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "supporting_quote": "These underlying assets of securities tokens are identical to the underlying assets of equities, bonds, and derivatives. In other words, securities tokens"
  },
  {
   "id": "kaal:claim:4021599-012",
   "url": "https://wulfkaal.github.io/claims/4021599-012",
   "claim": "The literature on securities tokens converges on two commonalities: that a securities token functions as or is synonymous with traditional security assets, and that securities tokens are subject to traditional securities regulation.",
   "type": "definitional",
   "topics": [
    "securities-law",
    "tokenomics",
    "consensus-and-security",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "evidenced",
   "supporting_quote": "that a securities token functions as or is synonymous with traditional security assets,15 and 2. that securities tokens are subject to traditional securities regulation.16"
  },
  {
   "id": "kaal:claim:4021599-013",
   "url": "https://wulfkaal.github.io/claims/4021599-013",
   "claim": "Under the Howey framework the U.S. Supreme Court supplies the investment contract analysis that determines whether a digital asset carries the characteristics of a typical security.",
   "type": "condition",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States federal securities law"
   ],
   "supporting_quote": "In Howey, 18 the U.S Supreme Court provides a framework for investment contract analysis which can help determine if a digital asset has any of the characteristics of typical securities.19 Although"
  },
  {
   "id": "kaal:claim:4021599-014",
   "url": "https://wulfkaal.github.io/claims/4021599-014",
   "claim": "For digital assets the decisive element of the Howey analysis is whether the purchaser of the token has a reasonable expectation of profits derived from the efforts of others, which the SEC divides into reliance on the efforts of others and reasonable expectation of profits.",
   "type": "condition",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC framework for investment contract analysis of digital assets"
   ],
   "supporting_quote": "purchaser of such a token has a reasonable expectation of profits derived from others."
  },
  {
   "id": "kaal:claim:4021599-015",
   "url": "https://wulfkaal.github.io/claims/4021599-015",
   "claim": "None of the SEC's listed characteristics bearing on reliance on the efforts of others is individually determinative; the element becomes more likely to be met the stronger the presence of those characteristics.",
   "type": "condition",
   "topics": [
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC framework for investment contract analysis of digital assets"
   ],
   "supporting_quote": "None of these factors are necessarily determinative, but the stronger their presence the more likely the element is met.22 In determining whether there"
  },
  {
   "id": "kaal:claim:4021599-016",
   "url": "https://wulfkaal.github.io/claims/4021599-016",
   "claim": "Utility tokens are tokens with an intrinsic utility for a good or service: they emphasize the uses of the token and typically give users access to a product or service or give rewards that incentivize desirable behavior on the platform.",
   "type": "definitional",
   "topics": [
    "tokenomics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "supporting_quote": "The term utility token is used to identify tokens that have an intrinsic utility for a good or service. Utility tokens emphasize the uses of the token and typically give their users access to a product or service or give rewards to incentivize desirable behavior on the respective platform.25"
  },
  {
   "id": "kaal:claim:4021599-017",
   "url": "https://wulfkaal.github.io/claims/4021599-017",
   "claim": "Utility tokens operate as an access mechanism: in order to interact with a given platform or use case, users are incentivized to acquire access rights to the product or service by acquiring the utility token.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "supporting_quote": "In order to interact with a given platform or use case, users are incentivized to acquire access rights to the product or service through the acquisition of the utility token."
  },
  {
   "id": "kaal:claim:4021599-018",
   "url": "https://wulfkaal.github.io/claims/4021599-018",
   "claim": "Rather than replacing legacy financial services as securities tokens do, utility tokens are designed to give users future access to a product or service that may or may not exist at the time of the utility token issuance.",
   "type": "design",
   "topics": [
    "tokenomics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "supporting_quote": "Rather than replacing legacy financial services like securities tokens, utility tokens are designed to provide users with future access to a product or service that may or may not exist at the time of the utility token issuance.29"
  },
  {
   "id": "kaal:claim:4021599-019",
   "url": "https://wulfkaal.github.io/claims/4021599-019",
   "claim": "Utility tokens are not investment contracts and not investments because they are meant for a good or service, and they are typically exempted from federal securities laws if they are properly set up.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "scope_conditions": [
    "the utility token is properly structured at issuance",
    "United States federal securities laws"
   ],
   "supporting_quote": "Utility tokens are not investment contracts and are not investments because are meant for a good or service30 and they are typically exempted from federal securities laws if they are properly set up.31"
  },
  {
   "id": "kaal:claim:4021599-020",
   "url": "https://wulfkaal.github.io/claims/4021599-020",
   "claim": "Utility tokens are not created by their issuers for investment purposes; they are designed to be used for their specific utility in a given context.",
   "type": "design",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "asserted",
   "supporting_quote": "investment purposes.32 They are designed to be used for their specific utility in a given context.33"
  },
  {
   "id": "kaal:claim:4021599-021",
   "url": "https://wulfkaal.github.io/claims/4021599-021",
   "claim": "Merely calling a token a utility token, or structuring it so that it provides some utility, does not prevent the token from being characterized as a security.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "securities-law"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "scope_conditions": [
    "United States regulatory characterization"
   ],
   "supporting_quote": "From a regulatory perspective, merely calling a token a utility token or structuring it to provide some utility does not prevent the token from being characterized as a security.34 According to SEC"
  },
  {
   "id": "kaal:claim:4021599-022",
   "url": "https://wulfkaal.github.io/claims/4021599-022",
   "claim": "Under SEC guidance a token sold for use or consumption by purchasers may fall outside classification as a security, and the SEC lists characteristics whose stronger presence makes a token less likely to be considered a security.",
   "type": "condition",
   "topics": [
    "securities-law",
    "systemic-risk",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "evidenced",
   "scope_conditions": [
    "SEC framework for investment contract analysis of digital assets"
   ],
   "supporting_quote": "According to SEC guidance, if a token is sold for use or consumption by purchasers it may not be classified as a security for regulatory purposes. The SEC provided a list of characteristics where, the stronger their presence,35 the less likely a token is to be considered a security."
  },
  {
   "id": "kaal:claim:4021599-023",
   "url": "https://wulfkaal.github.io/claims/4021599-023",
   "claim": "Utility tokens can be distinguished from securities tokens along several core factors: the purpose of the token, associated valuation, associated rights, user expectations, and regulatory status.",
   "type": "definitional",
   "topics": [
    "systemic-risk",
    "tokenomics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "supporting_quote": "Utility tokens can be distinguished from securities tokens based on several core factors, including but not limited to the following: the purpose of the token, associated valuation, associated rights, user expectations, and regulatory status.38"
  },
  {
   "id": "kaal:claim:4021599-024",
   "url": "https://wulfkaal.github.io/claims/4021599-024",
   "claim": "A utility token's value depends on its functions and therefore correlates with actual demand for the token, so a scaled up project with a high number of users usually yields increased utility token value, whereas a securities token's value correlates with the value of the issuing company.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "economics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "supporting_quote": "That is, a scaled-up project with a high number of users usually result in increased utility token value. By contrast, the value of securities tokens is often correlated to the value of the token issuing company.40"
  },
  {
   "id": "kaal:claim:4021599-025",
   "url": "https://wulfkaal.github.io/claims/4021599-025",
   "claim": "Securities token users typically expect the value of the issuing company to be directly tied to token value, while utility token users typically expect no relation between the issuer's current valuation and the value of the utility token.",
   "type": "definitional",
   "topics": [
    "tokenomics",
    "economics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "supporting_quote": "Users of securities tokens typically expect that the value of the issuing company is directly tied to the value of the securities token. By contrast, users of utility tokens typically expect no relation between the current valuation of the issuing company and the value of the utility token.42"
  },
  {
   "id": "kaal:claim:4021599-026",
   "url": "https://wulfkaal.github.io/claims/4021599-026",
   "claim": "The regulatory status of securities tokens is rather well established, whereas the regulatory status of utility tokens remains unclear.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "securities-law",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "asserted",
   "scope_conditions": [
    "as of 2022"
   ],
   "supporting_quote": "The regulatory status for a securities tokens is rather well established. By contrast, the regulatory status for utility tokens is unclear.44"
  },
  {
   "id": "kaal:claim:4021599-027",
   "url": "https://wulfkaal.github.io/claims/4021599-027",
   "claim": "The Howey test operates as the practical sorting device between the two categories: a token that passes the Howey test is deemed a security token, while a token that does not qualify under Howey is often classified as a utility token.",
   "type": "mechanism",
   "topics": [
    "securities-law",
    "systemic-risk",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "argued",
   "scope_conditions": [
    "United States federal securities law"
   ],
   "supporting_quote": "Utility tokens can also be distinguished from securities tokens through the Howey test. While a token that passes the Howey test is deemed a security token, a token that does not qualify under the Howey test is often classified as a utility token.45 The SEC provides"
  },
  {
   "id": "kaal:claim:4021599-028",
   "url": "https://wulfkaal.github.io/claims/4021599-028",
   "claim": "The term securities token is fairly well defined as of 2022, and additional regulatory guidance will continue to delineate its central features and distinguishing characteristics.",
   "type": "predictive",
   "topics": [
    "securities-law",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "asserted",
   "scope_conditions": [
    "as of 2022; assumes continued regulatory guidance"
   ],
   "supporting_quote": "The term securities token is fairly well defined in 2022 and any additional regulatory guidance will continue to delineate its central features and distinguishing characteristics."
  },
  {
   "id": "kaal:claim:4021599-029",
   "url": "https://wulfkaal.github.io/claims/4021599-029",
   "claim": "As the digital asset industry matures, the distinguishing features between token categories and the associated case law will likely increase and provide more guidance to market participants.",
   "type": "predictive",
   "topics": [
    "systemic-risk",
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599",
   "year": "2022",
   "source_sha256": "bb03790af46b3710e306121cfae25f850e3e7477e0f95313af42b9feeb6bc0c4",
   "confidence": "speculative",
   "scope_conditions": [
    "industry maturation over time"
   ],
   "supporting_quote": "As the industry matures, the distinguishing features and associated case law will likely increase and provide more guidance to market participants."
  },
  {
   "id": "kaal:claim:4529715-001",
   "url": "https://wulfkaal.github.io/claims/4529715-001",
   "claim": "The paper's empirical basis is a dataset of DAOs selected by the assets held in their treasuries, drawn from across different industries.",
   "type": "empirical",
   "topics": [
    "dao",
    "empirical-evidence",
    "research-methods",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "supporting_quote": "The paper provides a dataset (N=[65]) analysis for the DAOs in the dataset selected by assets in DAO treasury across different industries."
  },
  {
   "id": "kaal:claim:4529715-002",
   "url": "https://wulfkaal.github.io/claims/4529715-002",
   "claim": "Each DAO in the dataset was given a score between zero and ten by the analyzing teams on each of six factors: Decentralization, Work to Earn, Attack Resistance, Regulatory Compliance, Governance, and Organizational Communication.",
   "type": "definitional",
   "topics": [
    "dao",
    "research-methods",
    "governance-design",
    "consensus-and-security",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "scope_conditions": [
    "scores assigned by the analyzing teams"
   ],
   "supporting_quote": "The six factors considered are: Decentralization, Work to Earn, Attack Resistance, Regulatory Compliance, Governance, and Organizational Communication. Each DAO was given a score between zero (0) and ten (10) by the analyzing teams"
  },
  {
   "id": "kaal:claim:4529715-003",
   "url": "https://wulfkaal.github.io/claims/4529715-003",
   "claim": "DAOs in the dataset score well below average on implementing true decentralization, averaging 3.78 out of 10, with the highest score being CRDAO at 8 out of 10 and several DAOs scoring 1 out of 10.",
   "type": "empirical",
   "topics": [
    "dao",
    "decentralization",
    "empirical-evidence",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "scope_conditions": [
    "dataset of DAOs scored by the authors' teams"
   ],
   "supporting_quote": "Based on our observations of the data, the maximum score was CRDAO at 8/10 while there were a few DAOs that scored 1/10. Across the board, DAOs are well below average at implementing true decentralization practices in their organizations with a 3.78 out of 10."
  },
  {
   "id": "kaal:claim:4529715-004",
   "url": "https://wulfkaal.github.io/claims/4529715-004",
   "claim": "The decentralized power structure is supposed to encourage cooperation, free information flow, and decision-making that escapes top-down hierarchy, but with few exceptions the current state of DAOs does not deliver this.",
   "type": "failure",
   "topics": [
    "dao",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "scope_conditions": [
    "current state of the DAO market at time of study"
   ],
   "supporting_quote": "efficiency to organizations. The current state of DAOs, with a few exceptions, doesn't seem to do this."
  },
  {
   "id": "kaal:claim:4529715-005",
   "url": "https://wulfkaal.github.io/claims/4529715-005",
   "claim": "Work to earn is the strongest of the six scored categories, yet it still averages only 4.9 out of 10 across the DAOs studied.",
   "type": "empirical",
   "topics": [
    "dao",
    "risk-and-incentives",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "supporting_quote": "Based on the data in the graph above, the work to earn category scored much higher than all other DAO scorecard categories on average with a score of 4.9 out of 10."
  },
  {
   "id": "kaal:claim:4529715-006",
   "url": "https://wulfkaal.github.io/claims/4529715-006",
   "claim": "Attack resistance across the studied DAOs averages 4.05 out of 10, and Charity DAOs perform worst in this category, with the best of them, VitaDAO, scoring 3 out of 10 and the remainder at 2 or less.",
   "type": "empirical",
   "topics": [
    "dao",
    "consensus-and-security",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "supporting_quote": "Based on the compiled data shown in the graph above, the average score for attack resistance is 4.05 out of 10. Charity DAOs showed the worst performance in this category with the highest, VitaDAO, scoring a 3 out of 10 and the rest at 2 or less."
  },
  {
   "id": "kaal:claim:4529715-007",
   "url": "https://wulfkaal.github.io/claims/4529715-007",
   "claim": "Regulatory compliance is the weakest of all six categories, averaging 3.01 out of 10, and Services DAOs are the only category to outperform that average.",
   "type": "empirical",
   "topics": [
    "dao",
    "compliance",
    "law-and-legal-systems",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "supporting_quote": "The average score for DAOs in this category is the lowest of any category at 3.01 out of 10. Services DAOs was the sole category of DAOs that outperformed this average score with 4 out of 5 DAOs scoring 5 or greater."
  },
  {
   "id": "kaal:claim:4529715-008",
   "url": "https://wulfkaal.github.io/claims/4529715-008",
   "claim": "The absence of clear regulatory direction from the SEC and state governments helps explain why many DAOs take minimal action to establish regulatory compliance within their organizations.",
   "type": "mechanism",
   "topics": [
    "dao",
    "securities-law",
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "United States regulatory context"
   ],
   "supporting_quote": "The nature of DAOs and the lack of clear regulatory direction from the SEC and state governments is relevant in analyzing these scores since many DAOs appear to take minimal action in establishing regulatory compliance within the organizations."
  },
  {
   "id": "kaal:claim:4529715-009",
   "url": "https://wulfkaal.github.io/claims/4529715-009",
   "claim": "Governance scores across the studied DAOs average 3.81 out of 10, with only a couple of DAOs scoring 7 or higher and the vast majority scoring 5 or less.",
   "type": "empirical",
   "topics": [
    "dao",
    "governance-design",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "supporting_quote": "The average DAO scores for governance is 3.81 out of 10. With only a couple DAOs scoring 7 or higher, the vast majority of DAOs scored at 5 or less."
  },
  {
   "id": "kaal:claim:4529715-010",
   "url": "https://wulfkaal.github.io/claims/4529715-010",
   "claim": "Organizational communication across the studied DAOs averages 4.29 out of 10.",
   "type": "empirical",
   "topics": [
    "dao",
    "institutional-design",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "supporting_quote": "Based on the data above, the average DAO score in this category is 4.29 out of 10."
  },
  {
   "id": "kaal:claim:4529715-011",
   "url": "https://wulfkaal.github.io/claims/4529715-011",
   "claim": "Information technology has facilitated and arguably necessitated the DAO in the same way that the printing press, navigational instruments, and reliable maritime shipping necessitated and facilitated the joint stock corporation.",
   "type": "mechanism",
   "topics": [
    "dao",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "supporting_quote": "technologies such as the printing press, navigational instruments, and reliable maritime shipping necessitated and facilitated the development of the joint-stock corporation, information technology has facilitated and arguably necessitated the DAO."
  },
  {
   "id": "kaal:claim:4529715-012",
   "url": "https://wulfkaal.github.io/claims/4529715-012",
   "claim": "There is no consistent standard for DAO governance, which pushes each DAO to invent its own structure, and because decentralized governance is complex many of those structures fail to become truly decentralized, autonomous, or organized.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "decentralization",
    "ai-and-agents",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "absence of a governance standard",
    "novelty of decentralized governance"
   ],
   "supporting_quote": "There is no consistent standard for DAO governance. This leads many DAOs to develop their own governance structure. However, because of the complex nature of decentralized governance, many DAO governance structures fail to become truly decentralized, autonomous, or organized."
  },
  {
   "id": "kaal:claim:4529715-013",
   "url": "https://wulfkaal.github.io/claims/4529715-013",
   "claim": "Unlike corporate founders, who inherit a known governance template, DAO founders must build a new form of governance from nothing alongside their technology, mission, and values.",
   "type": "mechanism",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "comparison to incorporation of a traditional corporation"
   ],
   "supporting_quote": "want to develop a DAO are not only tasked with developing their tech, mission, and values, but also bear the responsibility of creating a new form of governance out of thin air."
  },
  {
   "id": "kaal:claim:4529715-014",
   "url": "https://wulfkaal.github.io/claims/4529715-014",
   "claim": "Some DAO governance platforms create more risk than they mitigate, and DAOs that are not well governed are doomed to fail.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "asserted",
   "scope_conditions": [
    "platform provided governance templates"
   ],
   "supporting_quote": "However, some of these platforms can create more risk than they mitigate. DAOs that are not well-governed are doomed to fail."
  },
  {
   "id": "kaal:claim:4529715-015",
   "url": "https://wulfkaal.github.io/claims/4529715-015",
   "claim": "The most significant risk of bad DAO governance is centralization, in which a small group holds a disproportionate share of power or influence and thereby undermines the decentralized nature of the organization.",
   "type": "failure",
   "topics": [
    "dao",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "supporting_quote": "centralization, where a small group of individuals or entities hold a disproportionate amount of power or influence within the DAO, which can undermine the decentralized nature of the organization."
  },
  {
   "id": "kaal:claim:4529715-016",
   "url": "https://wulfkaal.github.io/claims/4529715-016",
   "claim": "Without clear and effective governance mechanisms, DAO decision-making becomes slow and inefficient, delaying important changes and the resolution of internal issues.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "supporting_quote": "Without clear and effective governance mechanisms, decision-making processes can become slow and inefficient, leading to delays in implementing important changes or addressing issues within the DAO."
  },
  {
   "id": "kaal:claim:4529715-017",
   "url": "https://wulfkaal.github.io/claims/4529715-017",
   "claim": "DAOs without effective governance structures and policies risk violating local laws and regulations, exposing themselves to legal and regulatory consequences.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "supporting_quote": "Furthermore, DAOs that do not have effective governance structures and policies may be at risk of violating local laws and regulations, which can lead to legal and regulatory consequences."
  },
  {
   "id": "kaal:claim:4529715-018",
   "url": "https://wulfkaal.github.io/claims/4529715-018",
   "claim": "One person one vote governance carries the risk of majority tyranny, in which the majority imposes its will on minority groups, and it is unsuited to decisions requiring specialized knowledge.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "one person one vote model"
   ],
   "supporting_quote": "However, one person one vote governance also has some limitations and challenges, such as the potential for majority tyranny, where the majority can impose their will on minority groups."
  },
  {
   "id": "kaal:claim:4529715-019",
   "url": "https://wulfkaal.github.io/claims/4529715-019",
   "claim": "Quadratic voting remains open to manipulation and strategic voting, and it depends on a robust and transparent voting system to count votes accurately.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "quadratic voting model"
   ],
   "supporting_quote": "However, quadratic voting also has some limitations and challenges, such as the potential for manipulation or strategic voting, and the need for a robust and transparent voting system to ensure that all votes are counted accurately."
  },
  {
   "id": "kaal:claim:4529715-020",
   "url": "https://wulfkaal.github.io/claims/4529715-020",
   "claim": "Fungible governance tokens expose a DAO to vote buying and other forms of manipulation.",
   "type": "failure",
   "topics": [
    "dao",
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "fungible token based governance"
   ],
   "supporting_quote": "However, fungible governance tokens also have some limitations and challenges, such as the potential for vote buying or other forms of manipulation."
  },
  {
   "id": "kaal:claim:4529715-021",
   "url": "https://wulfkaal.github.io/claims/4529715-021",
   "claim": "True decentralization requires the absence of a primary decision-maker, which is very difficult for a decentralized insurance organization to achieve while it is still in its infancy.",
   "type": "condition",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "early stage decentralized insurance organizations"
   ],
   "supporting_quote": "Despite the potential benefits, decentralized insurance organizations face several challenges. First, true decentralization requires the absence of a primary decision-maker, which is difficult to achieve in an organization's infancy."
  },
  {
   "id": "kaal:claim:4529715-022",
   "url": "https://wulfkaal.github.io/claims/4529715-022",
   "claim": "Decentralized organizations carry inherent risks that require establishing a legal entity, and establishing that legal entity inherently contradicts the notion of decentralization.",
   "type": "failure",
   "topics": [
    "dao",
    "law-and-legal-systems",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized insurance organizations"
   ],
   "supporting_quote": "Third, decentralized organizations themselves come with inherent risks that require establishing a legal entity, which inherently contradicts the notion of decentralization."
  },
  {
   "id": "kaal:claim:4529715-023",
   "url": "https://wulfkaal.github.io/claims/4529715-023",
   "claim": "Blockchains cannot access off-chain data, and resolving this by using centralized oracles nullifies the advantages of decentralized systems while creating major security risks such as bribing and intimidation.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "decentralization",
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "oracle dependent smart contracts"
   ],
   "supporting_quote": "There is something known as the oracle problem, which is the fact that blockchains themselves can't access off-chain data. Using centralized oracles nullifies the advantages of decentralized systems, and are major security risks (such as bribing, intimidation, etc.)"
  },
  {
   "id": "kaal:claim:4529715-024",
   "url": "https://wulfkaal.github.io/claims/4529715-024",
   "claim": "The full potential of DAOs can be realized only if the challenges of standardized governance mechanisms, scalability, and legal frameworks are resolved.",
   "type": "condition",
   "topics": [
    "dao",
    "governance-design",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "supporting_quote": "However, the full potential of DAOs can only be realized through the resolution of challenges such as standardized governance mechanisms, scalability, and legal frameworks."
  },
  {
   "id": "kaal:claim:4529715-025",
   "url": "https://wulfkaal.github.io/claims/4529715-025",
   "claim": "Web3 may not yet be ready for a truly decentralized organization: across platforms there is always a promise of decentralization, yet tangible measures prevent that promise from becoming true.",
   "type": "failure",
   "topics": [
    "dao",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAO platforms reviewed in the study"
   ],
   "supporting_quote": "Despite that ideation, it seems Web3 may not be ready for a truly decentralized organization just yet. There is an overarching theme between platforms in which there is always a promise of decentralization, yet tangible measures prevent that from becoming true."
  },
  {
   "id": "kaal:claim:4529715-026",
   "url": "https://wulfkaal.github.io/claims/4529715-026",
   "claim": "Many DAO platforms accept the idea that they must first build a centralized organization and decentralize later once proper protocols are in place, but this mindset undermines the power and accessibility to ownership that is the foundation of a DAO.",
   "type": "failure",
   "topics": [
    "dao",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "platforms that plan phased decentralization"
   ],
   "supporting_quote": "Many platforms seem to agree with the idea that they must first create a centralized organization that will later become decentralized once they implement proper protocols and procedures. This mindset, however, undermines the power and ultimate accessibility to ownership"
  },
  {
   "id": "kaal:claim:4529715-027",
   "url": "https://wulfkaal.github.io/claims/4529715-027",
   "claim": "Meaningful accessibility in a DAO is impossible if voting rights and ownership are merely passive purchasable assets, no different from traditional stock.",
   "type": "condition",
   "topics": [
    "dao",
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "purchasable governance tokens"
   ],
   "supporting_quote": "accessibility will not be possible if voting rights and ownership are merely passive purchasable assets, not unlike traditional stock today."
  },
  {
   "id": "kaal:claim:4529715-028",
   "url": "https://wulfkaal.github.io/claims/4529715-028",
   "claim": "Where a founder retains access to the smart contract behind the governance token, as with 3OH DAO, an internal attack by that founder would be remarkably easy.",
   "type": "failure",
   "topics": [
    "dao",
    "consensus-and-security",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "scope_conditions": [
    "founder has not renounced ownership of the token smart contract"
   ],
   "supporting_quote": "If a DAO could have negative attack resistance, 3OH would be the DAO. With the founder having access to the smart contract, an internal attack by the founder would be remarkably easy."
  },
  {
   "id": "kaal:claim:4529715-029",
   "url": "https://wulfkaal.github.io/claims/4529715-029",
   "claim": "Lobby3 was effectively attacked from within: founders maintained heavy control and slowly diverted funds to themselves, producing a very slow rug pull.",
   "type": "failure",
   "topics": [
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "scope_conditions": [
    "founder controlled DAO with wallet size voting"
   ],
   "supporting_quote": "Because the founders maintained heavy control and slowly diverted funds to themselves, the DAO suffered from a very slow rug pull."
  },
  {
   "id": "kaal:claim:4529715-030",
   "url": "https://wulfkaal.github.io/claims/4529715-030",
   "claim": "VitaDAO's one token one vote structure leaves it susceptible to the 51 percent or whale attack, a vulnerability made worse because the VITA token is primarily purchasable.",
   "type": "failure",
   "topics": [
    "dao",
    "consensus-and-security",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "scope_conditions": [
    "one token one vote with a purchasable token"
   ],
   "supporting_quote": "Because Vita uses a one token one vote, they are susceptible to the 51% problem, or \"Whale Attack.\" This problem is further exacerbated because the Vita token is primarily a purchasable token."
  },
  {
   "id": "kaal:claim:4529715-031",
   "url": "https://wulfkaal.github.io/claims/4529715-031",
   "claim": "Allocating twenty percent of total token supply to the four person founding team, as Angel Protocol does, means the organization can never become fully decentralized.",
   "type": "failure",
   "topics": [
    "dao",
    "tokenomics",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "scope_conditions": [
    "founding team holds 20 percent of supply"
   ],
   "supporting_quote": "will possess 20% of the total tokens in supply. This concentration of tokens in the individuals who created this DANO, will never fully allow Angel Protocol to become fully decentralized."
  },
  {
   "id": "kaal:claim:4529715-032",
   "url": "https://wulfkaal.github.io/claims/4529715-032",
   "claim": "A reputation system that rewards voting with the majority, as Bridge Mutual uses, can be manipulated by users who create multiple wallets and always vote with the majority.",
   "type": "failure",
   "topics": [
    "dao",
    "reputation",
    "consensus-and-security",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "reputation derived solely from voting outcomes"
   ],
   "supporting_quote": "reliance solely on voting outcomes may present some vulnerability, as it could potentially be manipulated by users creating multiple wallets and voting with the majority."
  },
  {
   "id": "kaal:claim:4529715-033",
   "url": "https://wulfkaal.github.io/claims/4529715-033",
   "claim": "Locking voted tokens for a period after a vote, as Nexus Mutual does for three days, prevents an attacker from using a flashloan to borrow a large amount of wrapped tokens and swing a vote with significant voting weight.",
   "type": "design",
   "topics": [
    "dao",
    "consensus-and-security",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "scope_conditions": [
    "token weighted voting with freely traded wrapped token"
   ],
   "supporting_quote": "This prevents anyone from using a flashloan to borrow a large amount of wNXM and unwrap the wNXM to NXM to sway a vote with a significant voting weight."
  },
  {
   "id": "kaal:claim:4529715-034",
   "url": "https://wulfkaal.github.io/claims/4529715-034",
   "claim": "Short-term incentives in a decentralized insurance mutual would motivate decision-makers never to pay a claim in order to maximize current profit; incentivizing long-term alignment instead motivates them to pay genuine claims because of the value of the resulting reputation.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "risk-and-incentives",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "discretionary mutual where members decide claims"
   ],
   "supporting_quote": "Short-term focus would motivate decision-makers to never pay out any claim to maximize current profit. However, incentivizing long-term alignment motivates decision-makers to pay out genuine claims because of the significant value of the resulting positive reputation."
  },
  {
   "id": "kaal:claim:4529715-035",
   "url": "https://wulfkaal.github.io/claims/4529715-035",
   "claim": "Chainlink's white-list response to the 2020 gas fee attack was only a temporary fix: had the attack impacted 50 percent of Chainlink node operators, the price feed would not have updated until enough nodes returned.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "scope_conditions": [
    "2020 attack on Chainlink nodes",
    "oracle networks with limited node counts"
   ],
   "supporting_quote": "Temporary solution known as \"white-list\", but if the attack had impacted 50% of Chainlink node operators, that feed wouldn't have updated until enough came back up and nodes would not be able to feed information."
  },
  {
   "id": "kaal:claim:4529715-036",
   "url": "https://wulfkaal.github.io/claims/4529715-036",
   "claim": "Requiring governance tokens to be earned through contribution rather than purchased, as GDN DAO does, leaves only minimal risk of 51 percent and sock puppet attacks even under a one token one vote structure.",
   "type": "mechanism",
   "topics": [
    "dao",
    "governance-design",
    "tokenomics",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "evidenced",
   "scope_conditions": [
    "one token one vote with non purchasable tokens"
   ],
   "supporting_quote": "While the voting structure of the DAO is a 1 token = 1 vote, tokens are not available for purchase. All governance tokens must be earned through contributions to the community."
  },
  {
   "id": "kaal:claim:4529715-037",
   "url": "https://wulfkaal.github.io/claims/4529715-037",
   "claim": "A DAO built on reputation rather than a fungible token, as CRDAO is, makes the 51 percent attack nearly impossible and renders sock puppet attacks technically possible but of little influence.",
   "type": "mechanism",
   "topics": [
    "dao",
    "reputation",
    "governance-design",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "reputation based governance",
    "no fungible governance token"
   ],
   "supporting_quote": "CRDAO is fairly attack resistant because of its use of reputation. As a result, sock puppet attacks are technically possible, but would have little influence. CRDAO does not appear to have a fungible token, so the 51 percent attack is nearly impossible."
  },
  {
   "id": "kaal:claim:4529715-038",
   "url": "https://wulfkaal.github.io/claims/4529715-038",
   "claim": "Kleros has weak attack resistance because juror selection is proportional to staked fungible tokens; staking reputation rather than tokens to select jurors would remedy this.",
   "type": "design",
   "topics": [
    "dao",
    "systemic-risk",
    "law-and-legal-systems",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "token staked juror selection"
   ],
   "supporting_quote": "As such, Kleros has weak attack resistance. This could be changed by utilizing a reputation system to stake rather than tokens in order to select the jurors."
  },
  {
   "id": "kaal:claim:4529715-039",
   "url": "https://wulfkaal.github.io/claims/4529715-039",
   "claim": "Big Green DAO's committee unanimity and closed membership make attacks unlikely, but these same protections come at the expense of the decentralized organization the founders were trying to create.",
   "type": "failure",
   "topics": [
    "dao",
    "decentralization",
    "consensus-and-security",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "vetted membership and unanimous committee approval"
   ],
   "supporting_quote": "However, these principles really limit what a DAO is supposed to be so in a way it is secure, but also at the expense of the organization they were trying to create."
  },
  {
   "id": "kaal:claim:4529715-040",
   "url": "https://wulfkaal.github.io/claims/4529715-040",
   "claim": "When only a minority of members, such as Audius node operators, can stake or earn weighted votes, the majority of token holders occupy the same powerless position as an ordinary shareholder in a corporation.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715",
   "year": "2023",
   "source_sha256": "2d71961e8c449afbeaf45ca4f53de8a575d45c77d6960b767d3d1d0874f296b5",
   "confidence": "argued",
   "scope_conditions": [
    "tiered voting where staking is restricted to node operators"
   ],
   "supporting_quote": "The downside of their structure is that only a minority of users are able to use staking or weighted tokens for voting. Thus, a majority of token holders remain in the same position as any general shareholder of a corporation relative to their power."
  },
  {
   "id": "kaal:claim:4796714-001",
   "url": "https://wulfkaal.github.io/claims/4796714-001",
   "claim": "Traditional AI governance frameworks fail because they rely on static, predefined rules that cannot adapt quickly enough to the pace of AI development or to the nuanced challenges AI presents.",
   "type": "failure",
   "topics": [
    "governance-design",
    "ai-and-agents",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to conventional rule based governance regimes",
    "holds where AI capability changes faster than the rule revision cycle"
   ],
   "supporting_quote": "Traditional governance approaches often rely on static, predefined rules that may not adapt quickly enough to the pace of AI development or the nuanced challenges it presents."
  },
  {
   "id": "kaal:claim:4796714-002",
   "url": "https://wulfkaal.github.io/claims/4796714-002",
   "claim": "Conventional governance methods that are reactive or fixed to ex-post solutions are insufficient for governing technologies whose behavior changes continuously after deployment.",
   "type": "failure",
   "topics": [
    "governance-design",
    "ai-and-agents",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to ex-post regulatory regimes",
    "holds for AI systems that continue to learn after release"
   ],
   "supporting_quote": "These conventional methods, largely reactive or fixed to ex-post solutions, are proving insufficient for the dynamic nature of AI technologies."
  },
  {
   "id": "kaal:claim:4796714-003",
   "url": "https://wulfkaal.github.io/claims/4796714-003",
   "claim": "At the time of publication no legacy governance system exists that can supply the dynamic governance toolsets required to govern evolving AI models ex-ante and manage deployed solutions ex-post.",
   "type": "failure",
   "topics": [
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "asserted",
   "scope_conditions": [
    "as of the paper's publication in 2024",
    "refers to legacy, non web3 governance infrastructure"
   ],
   "supporting_quote": "No legacy systems exist at the time of publication that could provide such dynamic governance toolsets."
  },
  {
   "id": "kaal:claim:4796714-004",
   "url": "https://wulfkaal.github.io/claims/4796714-004",
   "claim": "Ex-post governance, which applies regulation only after AI systems are developed and deployed or after large language models have been pretrained on existing proprietary datasets, fails to address risks and biases preemptively.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to regulation imposed after model development or pretraining",
    "concerns risk and bias formation during development"
   ],
   "supporting_quote": "The traditional ex-post governance methods, where regulations are applied after AI systems are developed and deployed, or were pretrained LLMs models were trained on existing proprietary datasets, often fall short in preemptively addressing risks and biases."
  },
  {
   "id": "kaal:claim:4796714-005",
   "url": "https://wulfkaal.github.io/claims/4796714-005",
   "claim": "Technology has historically outpaced regulation, and the exponential trends in AI development will continue to widen the mismatch between regulation and AI development.",
   "type": "predictive",
   "topics": [
    "dynamic-regulation",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "assumes continued exponential improvement in AI capability"
   ],
   "supporting_quote": "Technology has historically outpaced regulation.3 The exponential trends in AI development will continue to exacerbate the mismatch between regulation and AI development."
  },
  {
   "id": "kaal:claim:4796714-006",
   "url": "https://wulfkaal.github.io/claims/4796714-006",
   "claim": "Web3 data attestation supports a governance model that assigns liability for AI misuse to identifiable individuals rather than distributing the burden across the whole community, which is what makes it a workable answer to AI related ethical dilemmas.",
   "type": "design",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "requires cryptographic data attestation and verifiable identity",
    "applies to liability arising from AI misuse and uploaded content"
   ],
   "supporting_quote": "By ensuring accountability at the individual level, rather than burdening the entire community, this proposed model for AI governance within Web3 offers a promising avenue to address ethical dilemmas associated with AI applications."
  },
  {
   "id": "kaal:claim:4796714-007",
   "url": "https://wulfkaal.github.io/claims/4796714-007",
   "claim": "The black box character of deep learning models is a governance failure and not merely a technical inconvenience: opacity obstructs debugging, obscures bias detection and mitigation, and prevents comprehension of how inputs become outputs.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "evidenced",
   "scope_conditions": [
    "most pronounced in deep learning models",
    "matters where decisions must be explained or audited"
   ],
   "supporting_quote": "This opacity can obstruct the debugging process, obscure bias detection and mitigation, and hinder comprehension of AI decision-making."
  },
  {
   "id": "kaal:claim:4796714-008",
   "url": "https://wulfkaal.github.io/claims/4796714-008",
   "claim": "Strict privacy and transparency regulation produces a perverse result: because only large technology companies hold the data resources and infrastructure needed to comply and still build effective AI, such regulation consolidates rather than disperses their power.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "economics",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to stringent data privacy regimes such as GDPR",
    "holds where compliance cost scales with organizational resources"
   ],
   "supporting_quote": "Furthermore, while the move towards more explainable, private, and transparent AI is commendable, these regulations can paradoxically consolidate power within large tech companies."
  },
  {
   "id": "kaal:claim:4796714-009",
   "url": "https://wulfkaal.github.io/claims/4796714-009",
   "claim": "Federated learning does not eliminate privacy risk, because although the data stays decentralized the exchange of model parameters can still expose sensitive information if those parameters are intercepted or improperly handled.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to practical federated learning deployments",
    "risk arises at the parameter exchange step"
   ],
   "supporting_quote": "These challenges arise because, while FL keeps data decentralized, it still involves the exchange of model parameters, which could potentially expose sensitive information if intercepted or improperly handled."
  },
  {
   "id": "kaal:claim:4796714-010",
   "url": "https://wulfkaal.github.io/claims/4796714-010",
   "claim": "Federated learning lacks theoretical guarantees of reliability and robustness, which makes its behavior unpredictable in practical applications.",
   "type": "failure",
   "topics": [
    "research-methods",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to federated learning as practiced"
   ],
   "supporting_quote": "Additionally, FL lacks theoretical guarantees that ensure reliability and robustness, making it less predictable for practical applications."
  },
  {
   "id": "kaal:claim:4796714-011",
   "url": "https://wulfkaal.github.io/claims/4796714-011",
   "claim": "Bias in AI systems arises when algorithms incorporate discriminatory practices carried in their training data, and the resulting outputs reveal a profound misalignment between AI operations and societal values, ethics, and norms.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "evidenced",
   "scope_conditions": [
    "arises through the training data pathway",
    "observable in deployed systems such as chatbots and screening tools"
   ],
   "supporting_quote": "AI governance does encounter a critical challenge in mitigating biases within AI systems, where biases can inadvertently arise through algorithms incorporating discriminatory practices due to data used in training."
  },
  {
   "id": "kaal:claim:4796714-012",
   "url": "https://wulfkaal.github.io/claims/4796714-012",
   "claim": "Recentralization is the central obstacle to using blockchain and distributed ledger technology to govern AI: the recentralizing tendency of these networks interferes with their capacity to deliver effective AI governance.",
   "type": "failure",
   "topics": [
    "decentralization",
    "blockchain",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to blockchain and DLT based AI governance proposals",
    "observed in Layer 1 networks as of 2024"
   ],
   "supporting_quote": "Alas, recentralization may interfere with blockchain and DLT technologies' ability to effectively govern AI."
  },
  {
   "id": "kaal:claim:4796714-013",
   "url": "https://wulfkaal.github.io/claims/4796714-013",
   "claim": "Blockchain can only deliver decentralized AI governance if the blockchain trilemma is first overcome, since decentralization, security, and scalability cannot readily be achieved simultaneously within one network.",
   "type": "condition",
   "topics": [
    "blockchain",
    "consensus-and-security",
    "decentralization",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to blockchain networks used as governance infrastructure",
    "necessary condition, not sufficient"
   ],
   "supporting_quote": "The effectiveness of blockchain in achieving the goal of decentralized AI governance is contingent upon overcoming the fundamental blockchain trilemma: the challenge of balancing decentralization, security, and scalability."
  },
  {
   "id": "kaal:claim:4796714-014",
   "url": "https://wulfkaal.github.io/claims/4796714-014",
   "claim": "Proof of Stake consensus centralizes control in proportion to the quantity of tokens held, so governance built on such chains is skewed in favor of the wealthy rather than distributed.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "decentralization",
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to Proof of Stake chains such as Ethereum",
    "concerns token weighted governance power"
   ],
   "supporting_quote": "Similarly, Proof of Stake (PoS) consensus mechanisms, as implemented in Ethereum and other blockchains, centralize control based on the quantity of tokens held, potentially skewing governance in favor of the wealthy."
  },
  {
   "id": "kaal:claim:4796714-015",
   "url": "https://wulfkaal.github.io/claims/4796714-015",
   "claim": "When decentralization at the Layer 1 level is compromised, the autonomy of the smart contracts deployed on that chain is compromised by affiliation, so smart contracts are corruptible in the current design and cannot reliably serve as neutral instruments of ethical AI governance.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "decentralization",
    "compliance",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies where a few dominant parties influence the underlying Layer 1",
    "holds under current blockchain design as of 2024"
   ],
   "supporting_quote": "When the decentralization of Layer 1 blockchains is compromised, the autonomy of smart contracts is inherently jeopardized, undermining their effectiveness as tools for ethical AI governance."
  },
  {
   "id": "kaal:claim:4796714-016",
   "url": "https://wulfkaal.github.io/claims/4796714-016",
   "claim": "Decentralized governance structures impose their own costs: with no central authority to coordinate diverse stakeholders, consensus is difficult to reach, negotiations are prolonged, and enforcement of agreements is weak because no single entity is responsible for compliance.",
   "type": "failure",
   "topics": [
    "decentralization",
    "institutional-design",
    "compliance",
    "consensus-and-security",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to decentralized structures without a coordinating authority",
    "evidenced in the paper by the environmental agreement domain"
   ],
   "supporting_quote": "In decentralized systems, the lack of a central authority often leads to difficulties in coordinating and achieving consensus among diverse stakeholders, each with their own priorities and objectives. This can result in prolonged negotiations or weak enforcement of agreements"
  },
  {
   "id": "kaal:claim:4796714-017",
   "url": "https://wulfkaal.github.io/claims/4796714-017",
   "claim": "Using human judgment to uncover unconscious bias in AI can perpetuate the very biases it is meant to remove, because human reviewers carry their own implicit biases and may lack the expertise to identify bias in complex AI systems.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to human in the loop bias mitigation programs",
    "holds where reviewers lack technical expertise or bias awareness"
   ],
   "supporting_quote": "While human judgment is integral to risk management and bias mitigation, it inherently carries its own biases. Relying on human judgment to uncover unconscious biases in AI may inadvertently perpetuate these biases rather than eliminate them."
  },
  {
   "id": "kaal:claim:4796714-018",
   "url": "https://wulfkaal.github.io/claims/4796714-018",
   "claim": "Sector specific AI regulation, though responsive to the distinctive features of each field, produces a patchwork of complex rules that is difficult for developers to navigate and creates barriers to entry for smaller companies lacking compliance resources.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies where multiple sector regulators issue separate AI rules",
    "burden falls hardest on resource constrained firms"
   ],
   "supporting_quote": "While emphasizing sector-specific regulations can be beneficial by addressing the unique characteristics of different fields, this approach can also lead to a patchwork of regulations that are complex and difficult for AI developers to navigate."
  },
  {
   "id": "kaal:claim:4796714-019",
   "url": "https://wulfkaal.github.io/claims/4796714-019",
   "claim": "Mandatory AI use reporting fails as a transparency mechanism because it assumes accurate and complete disclosure, while regulated entities have incentives to underreport or misreport in order to avoid scrutiny and regulatory burdens.",
   "type": "failure",
   "topics": [
    "disclosure",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to self reporting mandates such as the White House AI reporting proposals",
    "holds where disclosure is unverified"
   ],
   "supporting_quote": "However, this approach assumes that entities will accurately and fully disclose their AI applications and potential issues. There may be incentives for underreporting or misreporting to avoid scrutiny or regulatory burdens, which could undermine the effectiveness of the regulations."
  },
  {
   "id": "kaal:claim:4796714-020",
   "url": "https://wulfkaal.github.io/claims/4796714-020",
   "claim": "The gap between regulators' technical understanding and the state of the art in AI drives rules to one of two failure states: too vague to be enforceable, or so prescriptive that they suppress creative and beneficial uses of AI.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies where regulators lack current technical expertise",
    "holds for fast moving technical domains"
   ],
   "supporting_quote": "There is often a gap between the regulators' technical understanding and the state of the art in AI technology. This gap can lead to regulations that are either too vague to be enforceable or overly prescriptive, stifling creative and beneficial uses of AI."
  },
  {
   "id": "kaal:claim:4796714-021",
   "url": "https://wulfkaal.github.io/claims/4796714-021",
   "claim": "Until the known attack vectors on decentralized autonomous organizations are solved, DAO based AI governance solutions remain suboptimal; these include Sybil attacks, tyranny of the majority, Arrow's impossibility theorem, sockpuppet attacks, and tragedy of the commons.",
   "type": "failure",
   "topics": [
    "dao",
    "consensus-and-security",
    "governance-design",
    "risk-and-incentives",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "describes DAOs as set up and governed in the majority of cases in 2024",
    "conditional on the attack vectors remaining unsolved"
   ],
   "supporting_quote": "Without solving these attack vectors, DAO related AI governance solutions remain suboptimal."
  },
  {
   "id": "kaal:claim:4796714-022",
   "url": "https://wulfkaal.github.io/claims/4796714-022",
   "claim": "AI powered DAOs that autonomously generate revenue are especially hard to regulate or dismantle, because the same blockchain security features that protect the organization also make it difficult to intervene once it is operational.",
   "type": "failure",
   "topics": [
    "dao",
    "ai-and-agents",
    "blockchain",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to autonomously revenue generating AI DAOs",
    "arises from blockchain immutability and security guarantees"
   ],
   "supporting_quote": "Furthermore, AI-powered DAOs that autonomously generate revenue pose unique challenges in regulation and potential dismantling, as the inherent security features of blockchain technology make it difficult to intervene or alter these entities once they are operational."
  },
  {
   "id": "kaal:claim:4796714-023",
   "url": "https://wulfkaal.github.io/claims/4796714-023",
   "claim": "Purely preemptive regulation cannot succeed on its own, because it is not possible to anticipate every issue or bias an AI system will exhibit before it is operational and interacting with real world variables.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to ex-ante controls imposed at the model and data levels",
    "concerns emergent behavior that appears only in deployment"
   ],
   "supporting_quote": "It is challenging to anticipate all potential issues or biases that may arise with an AI system before it is fully operational and interacting with real-world variables. Regulations that insist on preemptive controls may fail to address unforeseen problems that only become evident after deployment."
  },
  {
   "id": "kaal:claim:4796714-024",
   "url": "https://wulfkaal.github.io/claims/4796714-024",
   "claim": "Ex-ante regulation is preferable in principle but is neither practical nor sufficient inside legacy systems, precisely because legacy systems, unlike the web3 system proposed here, are not equipped to create dynamic feedback effects.",
   "type": "condition",
   "topics": [
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "comparison is between legacy regulatory infrastructure and web3 based governance",
    "turns on the presence or absence of dynamic feedback effects"
   ],
   "supporting_quote": "while ex ante regulation is preferable, it is not always practical or sufficient in legacy ssytems to address the dynamic challenges that AI technologies present because legacy systems, unlike web3 systems as proposed herein, are not typically equipped to create dynamic feedback effects."
  },
  {
   "id": "kaal:claim:4796714-025",
   "url": "https://wulfkaal.github.io/claims/4796714-025",
   "claim": "Strict legacy regulation built on stable and presumptively optimal rules and enforced at the AI development stage can inadvertently stifle innovation by imposing rigid constraints before a model is fully developed or deployed.",
   "type": "failure",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to rigid pre-deployment regulatory constraints in legacy systems",
    "concerns exploratory development that has not yet produced a deployable model"
   ],
   "supporting_quote": "Strict legacy type regulations with stable and presumptively optimal rules83 enforced at the development stage of AI might inadvertently stifle innovation."
  },
  {
   "id": "kaal:claim:4796714-026",
   "url": "https://wulfkaal.github.io/claims/4796714-026",
   "claim": "Legacy ex-ante regulatory attempts fail because they assume a static technological landscape, while AI development is dynamic and requires rules that are adaptable and responsive.",
   "type": "failure",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to legacy ex-ante and ex-post rulemaking",
    "holds under exponential rates of technical change"
   ],
   "supporting_quote": "The exponential pace at which AI technology evolves makes it difficult to establish legacy system ex-post regulations that remain relevant over time. In turn, legacy ex-ante regulatory attempts assume a static technological landscape."
  },
  {
   "id": "kaal:claim:4796714-027",
   "url": "https://wulfkaal.github.io/claims/4796714-027",
   "claim": "Post-deployment monitoring, the standard fallback when ex-ante rules prove inadequate, is typically woefully outdated by the time it is applied because the AI models continue to evolve.",
   "type": "failure",
   "topics": [
    "compliance",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to monitoring regimes applied after deployment",
    "holds for continuously learning models"
   ],
   "supporting_quote": "Yet, post-deployment monitoring is typically woefully outdated as the AI models evolve."
  },
  {
   "id": "kaal:claim:4796714-028",
   "url": "https://wulfkaal.github.io/claims/4796714-028",
   "claim": "Privacy preserving frameworks such as federated learning do not fully remove centralization, because they still typically depend on a central client to collect and distribute model information, which reintroduces high communication loads and centralized vulnerabilities.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to standard federated learning architectures with a central aggregator"
   ],
   "supporting_quote": "In response, privacy-preserving frameworks like federated learning have been developed, yet these often still depend on a central client to collect and distribute model information, resulting in high communication loads and centralized vulnerabilities."
  },
  {
   "id": "kaal:claim:4796714-029",
   "url": "https://wulfkaal.github.io/claims/4796714-029",
   "claim": "A unified governance framework is hard to establish in the federated model because each participating entity maintains its own AI systems and datasets, producing variation in standards, protocols, and formats.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to federated AI architectures with independent participants",
    "standardization is presupposed by interoperability and ethical practice"
   ],
   "supporting_quote": "In a federated AI model, different entities or organizations maintain their own AI systems and datasets. This can lead to variations in standards, protocols, and formats used, making it difficult to establish a unified governance framework."
  },
  {
   "id": "kaal:claim:4796714-030",
   "url": "https://wulfkaal.github.io/claims/4796714-030",
   "claim": "Transparency and accountability cannot be assured across all participants in a federated governance model because there is no centralized control, and the author declines to advocate centralized control as the remedy; the consequences are biased or unfair AI systems, inadequate privacy protection, and unequal access to AI benefits.",
   "type": "failure",
   "topics": [
    "disclosure",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to federated models with distributed decision making authority",
    "the author rejects recentralization as the fix"
   ],
   "supporting_quote": "In a federated model, it can be challenging to ensure transparency and accountability across all participating entities due to the lack of centralized control, which this author does not otherwise advocate."
  },
  {
   "id": "kaal:claim:4796714-031",
   "url": "https://wulfkaal.github.io/claims/4796714-031",
   "claim": "Decentralized Federated Learning reaches the global minimum with zero performance gap and matches the convergence rate of centralized methods when the loss function is smooth and strongly convex.",
   "type": "empirical",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "evidenced",
   "scope_conditions": [
    "requires a smooth and strongly convex loss function",
    "demonstrated across convex and nonconvex losses, time invariant and time varying topologies, and IID and non-IID datasets"
   ],
   "supporting_quote": "The DeceFL approach ensures that every client can reach the global minimum with zero performance gap and achieve the same convergence rate as centralized methods when the loss function is smooth and strongly convex."
  },
  {
   "id": "kaal:claim:4796714-032",
   "url": "https://wulfkaal.github.io/claims/4796714-032",
   "claim": "Managing machine learning assets and complying with laws such as GDPR and CCPA becomes significantly harder under decentralized governance, because distributed data and operations complicate tracking data flows, enforcing privacy controls, and demonstrating compliance during audits.",
   "type": "failure",
   "topics": [
    "decentralization",
    "governance-design",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to decentralized ML governance spanning multiple stakeholders and locations",
    "concerns stringent privacy regimes such as GDPR and CCPA"
   ],
   "supporting_quote": "Managing ML assets and adhering to laws such as GDPR and CCPA is significantly more challenging under decentralized governance, raising concerns over privacy and data management."
  },
  {
   "id": "kaal:claim:4796714-033",
   "url": "https://wulfkaal.github.io/claims/4796714-033",
   "claim": "In the proposed system the DAO's forum is an on-chain collection of uniquely identified posts that may cite earlier contributions, and this citation structure is what forms the Weighted Directed Acyclic Graph on which the governance model rests.",
   "type": "definitional",
   "topics": [
    "dao",
    "citation-and-knowledge",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "asserted",
   "scope_conditions": [
    "stipulated for the proposed DAO based governance system",
    "posts are on-chain and citations are directional"
   ],
   "supporting_quote": "The DAO operates a forum as an on-chain collection of posts, each uniquely identified and possibly citing previous contributions. This forum forms a Weighted Directed Acyclic Graph (WDAG), facilitating organized discussion and citation among participants."
  },
  {
   "id": "kaal:claim:4796714-034",
   "url": "https://wulfkaal.github.io/claims/4796714-034",
   "claim": "Routing proposals through the Forum and then through Validation Pool review is what allows the input parameters and learning data of AI systems to be governed by expert community consensus, because only vetted and consensus backed data and parameters reach AI development.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "ai-and-agents",
    "education-and-practice",
    "dao",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "requires an operating DAO with reputation tokens and validation pools",
    "applies to input parameters and training data selection"
   ],
   "supporting_quote": "This process involves submitting proposals to the Forum and undergoing Validation Pool review, ensuring that only vetted and consensus-backed data and parameters are utilized in AI development."
  },
  {
   "id": "kaal:claim:4796714-035",
   "url": "https://wulfkaal.github.io/claims/4796714-035",
   "claim": "AI learning is degraded by Web2 platforms because their engagement driven algorithms amplify extreme viewpoints and negativity, so the human sentiment and ethics the models absorb from that data are systematically distorted.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to models trained on unfiltered web and social media data",
    "arises from engagement optimization in Web2 platforms"
   ],
   "supporting_quote": "AI learning is afflicted by web2 systems that bring out suboptimal human generated outcomes. WEB2 platforms often amplify extreme viewpoints and negativity due to their engagement-driven algorithms, presenting a distorted view of human sentiment and ethics."
  },
  {
   "id": "kaal:claim:4796714-036",
   "url": "https://wulfkaal.github.io/claims/4796714-036",
   "claim": "Vetting AI learning materials through a consensus driven process and validation pools recorded in the WDAG prevents unchecked biases and flawed logic from entering the AI's ethical framework, which substantially reduces the risk that an AI system concludes humanity is inherently harmful.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "requires consensus driven vetting and validation pools inside the WDAG",
    "requires participation spanning a broad spectrum of human experience"
   ],
   "supporting_quote": "By ensuring that AI's learning materials are vetted through a consensus-driven process and validation pools that are accounted for in the WDAG that includes ethical considerations and a broad spectrum of human experiences, WDAG prevents the incorporation of unchecked biases and flawed logic"
  },
  {
   "id": "kaal:claim:4796714-037",
   "url": "https://wulfkaal.github.io/claims/4796714-037",
   "claim": "A decentralized data validation layer applied to pretrained models is efficient but structurally limited: because it cannot drive significant changes to the model's core design or training approach, it leaves the model more attack prone.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to Model 2, the decentralized data validation layer approach",
    "concerns pretrained models whose parameters are already fixed"
   ],
   "supporting_quote": "The validation layer approach, while efficient for refining pretrained models, may not facilitate significant changes in the model's core design or training approach which could make it more attack prone."
  },
  {
   "id": "kaal:claim:4796714-038",
   "url": "https://wulfkaal.github.io/claims/4796714-038",
   "claim": "Broad community governance of AI training identifies and mitigates bias more effectively than data validation alone, because validation focused approaches can overlook systemic biases already embedded in the pretrained model.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "compares community governance of training against post hoc data validation",
    "concerns systemic bias baked in during pretraining"
   ],
   "supporting_quote": "Moreover, involving a broad community in the governance of AI training can help identify and mitigate biases more effectively than a focus on data validation alone, which might overlook systemic biases embedded in the pretrained models."
  },
  {
   "id": "kaal:claim:4796714-039",
   "url": "https://wulfkaal.github.io/claims/4796714-039",
   "claim": "Model 3, web3 community governance combined with decentralized data and the AI model, is the superior of the three governance models compared, because it addresses shortcomings the other two leave in place.",
   "type": "normative",
   "topics": [
    "governance-design",
    "decentralization",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "comparison is against Model 1 post-hoc governance and Model 2 data validation layers",
    "assumes a functioning web3 community governance layer"
   ],
   "supporting_quote": "Yet, Model 3: \"Web 3 Community Governance - Decentralized Data - AI Model\" stands out for several reasons, potentially offering a superior approach when compared to the other two models."
  },
  {
   "id": "kaal:claim:4796714-040",
   "url": "https://wulfkaal.github.io/claims/4796714-040",
   "claim": "The hybrid model falls short of full community co-governance because it relies on a select group of experts for data validation and therefore may not capture the diverse perspectives and expertise of the broader community.",
   "type": "failure",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance (2024). SSRN: https://ssrn.com/abstract=4796714",
   "year": "2024",
   "source_sha256": "59fa63bae179e8f9b6b8efbdf90cee28400276512a1b04f9f579a48641305c93",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the hybrid of community governance and decentralized data validation",
    "concerns representativeness of the validating group"
   ],
   "supporting_quote": "This is a significant step beyond the hybrid approach, which, while incorporating community input, primarily relies on a select group of experts for data validation and may not fully capture the diverse perspectives and expertise of a broader community."
  },
  {
   "id": "kaal:claim:4941807-001",
   "url": "https://wulfkaal.github.io/claims/4941807-001",
   "claim": "Ex-post AI governance, in which regulation is applied only after AI systems have been developed and deployed or after large language models have already been pretrained on existing proprietary datasets, falls short of preemptively addressing the risks and biases those systems carry.",
   "type": "failure",
   "topics": [
    "governance-design",
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "when regulatory intervention occurs after development and deployment",
    "when pretrained models were trained on existing proprietary datasets"
   ],
   "supporting_quote": "The traditional ex-post governance methods, where regulations are applied after AI systems are developed and deployed, or were pretrained LLMs models were trained on existing proprietary datasets, often fall short in preemptively addressing risks and biases."
  },
  {
   "id": "kaal:claim:4941807-002",
   "url": "https://wulfkaal.github.io/claims/4941807-002",
   "claim": "Governing AI requires toolsets that simultaneously handle ex-ante governance of models still evolving and ex-post management of deployed solutions, and Kaal asserts that as of publication no legacy system supplies such dynamic governance toolsets.",
   "type": "failure",
   "topics": [
    "governance-design",
    "ai-and-agents",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "asserted",
   "scope_conditions": [
    "as of the time of publication"
   ],
   "supporting_quote": "Such systems are crucial to address the dual needs when governing evolving AI models ex-ante and managing existing solutions ex-post. No legacy systems exist at the time of publication that could provide such dynamic governance toolsets."
  },
  {
   "id": "kaal:claim:4941807-003",
   "url": "https://wulfkaal.github.io/claims/4941807-003",
   "claim": "Kaal advocates an ex-ante governance approach within Web3 frameworks in which community coordinated regulatory measures and oversight mechanisms are set during the development phase of AI technologies rather than imposed after deployment.",
   "type": "design",
   "topics": [
    "governance-design",
    "ai-and-agents",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "during the development phase of AI technologies",
    "within Web3 governance frameworks"
   ],
   "supporting_quote": "In contrast, an ex-ante governance approach, advocated within Web3 frameworks as presented in this paper, involves setting community coordinated regulatory measures and oversight mechanisms during the development phase of AI technologies."
  },
  {
   "id": "kaal:claim:4941807-004",
   "url": "https://wulfkaal.github.io/claims/4941807-004",
   "claim": "Technology has historically outpaced regulation, and the exponential trends in AI development will continue to widen the mismatch between regulation and AI development.",
   "type": "predictive",
   "topics": [
    "dynamic-regulation",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "evidenced",
   "scope_conditions": [
    "while AI development follows exponential trends"
   ],
   "supporting_quote": "Technology has historically outpaced regulation.2 The exponential trends in AI development will continue to exacerbate the mismatch between regulation and AI development."
  },
  {
   "id": "kaal:claim:4941807-005",
   "url": "https://wulfkaal.github.io/claims/4941807-005",
   "claim": "Integrating feedback directly into governance processes allows stakeholders to iteratively adjust AI models as new information, operational experience, and changed environments arrive, which mitigates risks and biases more effectively than static ex-post regulatory frameworks.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where feedback is embedded in the governance process itself",
    "where models can still be adjusted after deployment"
   ],
   "supporting_quote": "stakeholders can iteratively improve and adjust AI models in response to new information, operational experiences, and changing environments. This ongoing process helps mitigate risks and biases more effectively than static, ex-post regulatory frameworks."
  },
  {
   "id": "kaal:claim:4941807-006",
   "url": "https://wulfkaal.github.io/claims/4941807-006",
   "claim": "Locating accountability at the level of the individual actor rather than burdening the entire community is what makes the proposed Web3 AI governance model a workable route to addressing the ethical dilemmas that arise from AI applications.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where data attestation permits attribution of conduct to individuals"
   ],
   "supporting_quote": "By ensuring accountability at the individual level, rather than burdening the entire community, this proposed model for AI governance within Web3 offers a promising avenue to address ethical dilemmas associated with AI applications."
  },
  {
   "id": "kaal:claim:4941807-007",
   "url": "https://wulfkaal.github.io/claims/4941807-007",
   "claim": "Web3 based self sovereign identity gives individuals, and potentially AI systems themselves, control over their digital identities without a central authority, which in AI governance means AI entities can hold verifiable credentials.",
   "type": "design",
   "topics": [
    "ai-and-agents",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "asserted",
   "scope_conditions": [
    "where self sovereign identity infrastructure is available to both humans and AI agents"
   ],
   "supporting_quote": "Web3-based self-sovereign identity (SSI) allows individuals—and potentially AI systems—to have control over their digital identities without relying on a central authority. In the context of AI governance, SSI ensures that AI entities have verifiable credentials"
  },
  {
   "id": "kaal:claim:4941807-008",
   "url": "https://wulfkaal.github.io/claims/4941807-008",
   "claim": "The opacity of deep learning models obstructs debugging, obscures the detection and mitigation of bias, and prevents comprehension of how AI decisions are reached.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "evidenced",
   "scope_conditions": [
    "particularly in deep learning models whose internal decision mechanisms are not transparent"
   ],
   "supporting_quote": "This opacity can obstruct the debugging process, obscure bias detection and mitigation, and hinder comprehension of AI decision-making."
  },
  {
   "id": "kaal:claim:4941807-009",
   "url": "https://wulfkaal.github.io/claims/4941807-009",
   "claim": "Concrete cases show the cost of AI opacity: Nvidia self driving cars that learn from human behavior might confuse the moon for a traffic light, and the DeepPatient project predicted disease onset accurately from medical records while offering no explanation for its predictions.",
   "type": "empirical",
   "topics": [
    "ai-and-agents",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "evidenced",
   "scope_conditions": [
    "in deep learning systems deployed in driving and medical prediction"
   ],
   "supporting_quote": "For example, Nvidia's self-driving cars learn from human behavior but might confuse the moon for a traffic light, and the DeepPatient project accurately predicted disease onset from medical records without providing explanations for its predictions"
  },
  {
   "id": "kaal:claim:4941807-010",
   "url": "https://wulfkaal.github.io/claims/4941807-010",
   "claim": "Strict data privacy regulation such as the GDPR imposes stringent conditions on data sharing that limit the amount and variety of data available to AI systems, which can reduce model performance and exacerbate bias because the training dataset is restricted.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "under stringent data sharing regimes such as the GDPR"
   ],
   "supporting_quote": "GDPR imposes stringent conditions on data sharing, which can limit the amount and variety of data AI systems use, potentially reducing their performance and exacerbating biases due to the restricted dataset."
  },
  {
   "id": "kaal:claim:4941807-011",
   "url": "https://wulfkaal.github.io/claims/4941807-011",
   "claim": "Although the move toward more explainable, private, and transparent AI is desirable, Kaal argues these regulations paradoxically consolidate power within large technology companies, because only they hold the data resources and infrastructure needed to comply and still ship effective AI.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "economics",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where compliance requires vast data resources and sophisticated infrastructure",
    "where smaller developers cannot absorb compliance cost"
   ],
   "supporting_quote": "Furthermore, while the move towards more explainable, private, and transparent AI is commendable, these regulations can paradoxically consolidate power within large tech companies."
  },
  {
   "id": "kaal:claim:4941807-012",
   "url": "https://wulfkaal.github.io/claims/4941807-012",
   "claim": "Federated learning does not eliminate privacy risk, because although the data stays decentralized the protocol still exchanges model parameters, and those parameters can expose sensitive information if intercepted or improperly handled.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "decentralization",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "in federated learning deployments that exchange model parameters",
    "where parameters can be intercepted or mishandled"
   ],
   "supporting_quote": "These challenges arise because, while FL keeps data decentralized, it still involves the exchange of model parameters, which could potentially expose sensitive information if intercepted or improperly handled."
  },
  {
   "id": "kaal:claim:4941807-013",
   "url": "https://wulfkaal.github.io/claims/4941807-013",
   "claim": "The rigid communication topology of federated learning, which requires constant coordination among numerous nodes, produces inefficiencies and does not adapt easily to dynamic network conditions or node failures.",
   "type": "failure",
   "topics": [
    "decentralization",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "in federated learning architectures requiring constant node coordination",
    "under fluctuating network conditions or node failure"
   ],
   "supporting_quote": "Moreover, the rigid communication topology in FL, which typically requires constant coordination between numerous nodes, can lead to inefficiencies and does not easily adapt to dynamic network conditions or node failures."
  },
  {
   "id": "kaal:claim:4941807-014",
   "url": "https://wulfkaal.github.io/claims/4941807-014",
   "claim": "Centralizing data in a single repository, while it permits powerful computation and advanced algorithms, poses significant privacy risks and creates a single point of failure.",
   "type": "failure",
   "topics": [
    "decentralization",
    "ai-and-agents",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "in centralized AI architectures that pool data into one repository"
   ],
   "supporting_quote": "However, this centralization can pose significant privacy risks and create a single point of failure."
  },
  {
   "id": "kaal:claim:4941807-015",
   "url": "https://wulfkaal.github.io/claims/4941807-015",
   "claim": "A critical unsolved challenge for AI governance is bias mitigation, because biases enter inadvertently when algorithms incorporate discriminatory practices carried in the data used for training.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "education-and-practice",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "evidenced",
   "scope_conditions": [
    "where training data embeds discriminatory practices"
   ],
   "supporting_quote": "AI governance does encounter a critical challenge in mitigating biases within AI systems, where biases can inadvertently arise through algorithms incorporating discriminatory practices due to data used in training."
  },
  {
   "id": "kaal:claim:4941807-016",
   "url": "https://wulfkaal.github.io/claims/4941807-016",
   "claim": "Legal and ethical challenges intensify when AI is deployed in critical decision making roles that significantly affect human lives and the reasoning behind the AI decision is opaque.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "in determinative decisions such as parole eligibility, employment, and medical strategy",
    "where the reasoning behind the decision is not visible"
   ],
   "supporting_quote": "Legal and ethical challenges are heightened when AI is deployed in critical decision-making roles that significantly impact human lives, particularly when the reasoning behind AI's decisions is opaque."
  },
  {
   "id": "kaal:claim:4941807-017",
   "url": "https://wulfkaal.github.io/claims/4941807-017",
   "claim": "As AI systems come to depend on vast data, personal information is converted from a resource the individual could control and deploy at discretion into a fundamental operational input for AI systems, which increases the potential for misuse and makes it harder for individuals to manage how their data is used.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where AI operation requires large volumes of personal data"
   ],
   "supporting_quote": "As AI technologies evolve, they rely heavily on vast amounts of data, transforming personal information from a resource that individuals could control and use at their discretion into a fundamental operational tool for AI systems."
  },
  {
   "id": "kaal:claim:4941807-018",
   "url": "https://wulfkaal.github.io/claims/4941807-018",
   "claim": "An immutable blockchain log of transactions and modifications inside AI systems lets stakeholders trace the lineage of an AI decision back to its original data inputs, which makes errors easier to identify and correct.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "compliance",
    "governance-design",
    "ai-and-agents",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where AI data inputs and modifications are recorded on an immutable ledger"
   ],
   "supporting_quote": "This feature allows stakeholders to track the lineage of AI decisions back to their original data inputs, enabling easier identification and correction of errors."
  },
  {
   "id": "kaal:claim:4941807-019",
   "url": "https://wulfkaal.github.io/claims/4941807-019",
   "claim": "Smart contracts can automate compliance with regulatory requirements and ethical guidelines: for example, a smart contract can enforce privacy law directly by controlling an AI system's access to personal data according to predefined rules.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "compliance",
    "consensus-and-security",
    "blockchain",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where compliance rules can be expressed as predefined, codified conditions"
   ],
   "supporting_quote": "They can be used to automate compliance with regulatory requirements and ethical guidelines. For instance, smart contracts can automatically enforce privacy laws by controlling AI's access to personal data based on predefined rules."
  },
  {
   "id": "kaal:claim:4941807-020",
   "url": "https://wulfkaal.github.io/claims/4941807-020",
   "claim": "Privacy preserving frameworks such as federated learning do not fully solve centralization, because they typically still depend on a central client to collect and distribute model information, which produces high communication loads and reintroduces centralized vulnerabilities.",
   "type": "failure",
   "topics": [
    "decentralization",
    "consensus-and-security",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "in federated learning designs that retain a central aggregating client"
   ],
   "supporting_quote": "In response, privacy-preserving frameworks like federated learning have been developed, yet these often still depend on a central client to collect and distribute model information, resulting in high communication loads and centralized vulnerabilities."
  },
  {
   "id": "kaal:claim:4941807-021",
   "url": "https://wulfkaal.github.io/claims/4941807-021",
   "claim": "In the federated model of AI governance many challenges cannot easily be decentralized, because distinct entities maintain their own AI systems and datasets, producing variation in standards, protocols, and formats that obstructs a unified governance framework.",
   "type": "failure",
   "topics": [
    "governance-design",
    "ai-and-agents",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where separate organizations maintain independent AI systems and datasets"
   ],
   "supporting_quote": "In the federated model of AI governance, many challenges cannot be easily decentralized. For example, different entities or organizations maintain their own AI systems and datasets. This can lead to variations in standards, protocols, and formats used"
  },
  {
   "id": "kaal:claim:4941807-022",
   "url": "https://wulfkaal.github.io/claims/4941807-022",
   "claim": "When decision making power is distributed across multiple entities in a federated model, consensus and cooperation become harder to reach, which makes cohesive AI governance mechanisms difficult to establish.",
   "type": "failure",
   "topics": [
    "governance-design",
    "consensus-and-security",
    "institutional-design",
    "decentralization",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where governance authority is distributed across multiple independent entities"
   ],
   "supporting_quote": "In a federated model, where decision-making power is distributed across multiple entities, it becomes harder to achieve consensus and cooperation, making it challenging to establish cohesive AI governance mechanisms."
  },
  {
   "id": "kaal:claim:4941807-023",
   "url": "https://wulfkaal.github.io/claims/4941807-023",
   "claim": "In a federated model transparency and accountability across all participating entities are hard to ensure precisely because there is no centralized control, and Kaal notes that he does not otherwise advocate such centralized control.",
   "type": "failure",
   "topics": [
    "governance-design",
    "disclosure",
    "decentralization",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "in federated models lacking centralized control"
   ],
   "supporting_quote": "In a federated model, it can be challenging to ensure transparency and accountability across all participating entities due to the lack of centralized control, which this author does not otherwise advocate."
  },
  {
   "id": "kaal:claim:4941807-024",
   "url": "https://wulfkaal.github.io/claims/4941807-024",
   "claim": "Enforcing AI regulation in a federated model is complex because different entities may interpret the same regulations differently and may show differing levels of commitment to compliance.",
   "type": "failure",
   "topics": [
    "compliance",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "in decentralized settings with multiple independent compliance actors"
   ],
   "supporting_quote": "In a federated model, enforcing regulations and policies related to AI can be complex. In a decentralized setting, different entities may have varying interpretations of regulations or differing levels of commitment to compliance."
  },
  {
   "id": "kaal:claim:4941807-025",
   "url": "https://wulfkaal.github.io/claims/4941807-025",
   "claim": "Kaal proposes that a more decentralized Web3 model of AI governance can address the failures of the federated model by distributing governance more equitably across network participants, so that no single entity dominates decision making.",
   "type": "design",
   "topics": [
    "decentralization",
    "governance-design",
    "ai-and-agents",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where governance rights are distributed across network participants"
   ],
   "supporting_quote": "A more decentralized web3 model of AI governance as proposed here could ostensibly address these challenges in a federated AI governance model by distributing governance more equitably across network participants."
  },
  {
   "id": "kaal:claim:4941807-026",
   "url": "https://wulfkaal.github.io/claims/4941807-026",
   "claim": "Decentralized Federated Learning lets every client reach the global minimum with zero performance gap and at the same convergence rate as centralized methods, but only when the loss function is smooth and strongly convex.",
   "type": "condition",
   "topics": [
    "decentralization",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "evidenced",
   "scope_conditions": [
    "when the loss function is smooth and strongly convex"
   ],
   "supporting_quote": "The DeceFL approach ensures that every client can reach the global minimum with zero performance gap and achieve the same convergence rate as centralized methods when the loss function is smooth and strongly convex."
  },
  {
   "id": "kaal:claim:4941807-027",
   "url": "https://wulfkaal.github.io/claims/4941807-027",
   "claim": "Decentralized governance makes privacy compliance harder to demonstrate, because the distributed nature of these systems complicates tracking data flows and enforcing privacy controls, which in turn makes it difficult to prove compliance during audits.",
   "type": "failure",
   "topics": [
    "compliance",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "under regimes such as the GDPR and CCPA",
    "where data and operations are spread across multiple stakeholders and locations"
   ],
   "supporting_quote": "The distributed nature of these systems complicates the tracking of data flows and the enforcement of privacy controls, making it difficult to demonstrate compliance during audits."
  },
  {
   "id": "kaal:claim:4941807-028",
   "url": "https://wulfkaal.github.io/claims/4941807-028",
   "claim": "Kaal's proposed answer to the decentralized governance needs of AI is to implement Decentralized Autonomous Organizations that govern AI through expert community consensus.",
   "type": "design",
   "topics": [
    "dao",
    "consensus-and-security",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where an expert community can be assembled and its consensus recorded on chain"
   ],
   "supporting_quote": "One promising way to address the decentralized governance needs of AI pertains to the implementation of Decentralized Autonomous Organizations (DAOs) for the governance of AI through expert community consensus."
  },
  {
   "id": "kaal:claim:4941807-029",
   "url": "https://wulfkaal.github.io/claims/4941807-029",
   "claim": "In the proposed system the DAO forum is an on chain collection of uniquely identified posts that may cite prior contributions, and because citation is directional and non circular the forum itself forms a Weighted Directed Acyclic Graph.",
   "type": "definitional",
   "topics": [
    "dao",
    "citation-and-knowledge",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "asserted",
   "scope_conditions": [
    "where forum posts are stored on chain with citation links"
   ],
   "supporting_quote": "The DAO operates a forum as an on-chain collection of posts, each uniquely identified and possibly citing previous contributions. This forum forms a Weighted Directed Acyclic Graph (WDAG), facilitating organized discussion and citation among participants."
  },
  {
   "id": "kaal:claim:4941807-030",
   "url": "https://wulfkaal.github.io/claims/4941807-030",
   "claim": "Validation Pools are the consensus mechanism of the proposed system: an author's stakes are pooled to evaluate a specific forum post, and the outcome of the pool can mint new reputation tokens that reflect community consensus on that contribution.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "tokenomics",
    "consensus-and-security",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "asserted",
   "scope_conditions": [
    "where participants stake against specific forum posts"
   ],
   "supporting_quote": "Validation Pool (VP) form a crucial mechanism where an author's stakes are pooled to evaluate specific posts within the forum. The outcome of a VP can lead to the minting of new REP tokens, reflecting the consensus on a given issue or contribution."
  },
  {
   "id": "kaal:claim:4941807-031",
   "url": "https://wulfkaal.github.io/claims/4941807-031",
   "claim": "Membership in the proposed DAO is constituted by holding REP tokens, which carry voting rights and a share of DAO revenue, and because validation pools revalue REP dynamically the governance model adapts to the collective decisions of members.",
   "type": "design",
   "topics": [
    "reputation",
    "tokenomics",
    "dao",
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "asserted",
   "scope_conditions": [
    "where REP is minted and revalued through validation pools"
   ],
   "supporting_quote": "Membership in the DAO is signified by holding REP tokens, which grant voting rights and a share in DAO revenues. The dynamic valuation of REP tokens through validation pools allows for a flexible and responsive governance model that adapts to the collective decisions of the DAO members."
  },
  {
   "id": "kaal:claim:4941807-032",
   "url": "https://wulfkaal.github.io/claims/4941807-032",
   "claim": "Because on chain operations are costly, the proposed system should consolidate off chain activity into on chain posts through roll ups, which is what makes the design efficient.",
   "type": "design",
   "topics": [
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "asserted",
   "scope_conditions": [
    "given the cost of on chain operations"
   ],
   "supporting_quote": "Given the cost of on-chain operations, a strategy involving off-chain activities consolidated into on- chain posts (roll-ups) creates efficiency."
  },
  {
   "id": "kaal:claim:4941807-033",
   "url": "https://wulfkaal.github.io/claims/4941807-033",
   "claim": "Under the proposed model the input parameters and learning data of AI systems are themselves governed by expert community consensus, through submission of proposals to the Forum and review by Validation Pool, so that only vetted and consensus backed data and parameters enter AI development.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "ai-and-agents",
    "education-and-practice",
    "consensus-and-security",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where training data and parameters are submitted as forum proposals subject to validation pool review"
   ],
   "supporting_quote": "the input parameters and learning data for AI systems can be governed through expert community consensus. This process involves submitting proposals to the Forum and undergoing Validation Pool review,"
  },
  {
   "id": "kaal:claim:4941807-034",
   "url": "https://wulfkaal.github.io/claims/4941807-034",
   "claim": "A Weighted Directed Acyclic Graph whose vertices are legal precedents or governance rules and whose directed edges are citations or logical dependencies is the appropriate structure for organizing and navigating the many governance considerations that bear on AI.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "governance-design",
    "citation-and-knowledge",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where governance elements stand in directional precedence relations"
   ],
   "supporting_quote": "The structure of WDAGs, with their vertices representing legal precedents or governance rules and directed edges signifying citations or logical dependencies, creates an ideal model for organizing and navigating the multitude of governance considerations pertinent to AI."
  },
  {
   "id": "kaal:claim:4941807-035",
   "url": "https://wulfkaal.github.io/claims/4941807-035",
   "claim": "Edge weights in the governance graph quantify the relevance, authority, or impact of each precedent or citation, and it is this weighting that steers decision making by surfacing the most pertinent governance pathways.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where weights are assigned by factors such as recency, jurisdictional relevance, or citation frequency"
   ],
   "supporting_quote": "system, the weights on the edges could quantify the relevance, authority, or impact of each precedent or citation, guiding the decision-making processes"
  },
  {
   "id": "kaal:claim:4941807-036",
   "url": "https://wulfkaal.github.io/claims/4941807-036",
   "claim": "Unlike traditional governance models that depend on periodic reviews and updates, the proposed WDAG system draws on a continuous stream of data from a wide range of stakeholders, which is what makes its ethical frameworks track current societal values in real time.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where a decentralized network continuously supplies stakeholder sentiment data"
   ],
   "supporting_quote": "Unlike traditional governance models that rely on periodic reviews and updates, WDAG can tap into a continuous stream of data from a wide range of stakeholders."
  },
  {
   "id": "kaal:claim:4941807-037",
   "url": "https://wulfkaal.github.io/claims/4941807-037",
   "claim": "Because the WDAG continuously monitors and adjusts to evolving ethical and legal standards, it delivers preventive AI governance, in contrast to reactive models that address problems only after they have already arisen.",
   "type": "design",
   "topics": [
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where monitoring and adjustment of standards is continuous rather than periodic"
   ],
   "supporting_quote": "By continuously monitoring and adjusting to evolving ethical and legal standards, WDAG provides a preventive approach to AI governance. This contrasts with reactive models that address issues only after they have arisen."
  },
  {
   "id": "kaal:claim:4941807-038",
   "url": "https://wulfkaal.github.io/claims/4941807-038",
   "claim": "The acyclic property of the WDAG guarantees that the governance framework contains no loops, which yields an unambiguous progression from foundational principles to specific governance outcomes and preserves the integrity and coherence of the governance process.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "citation-and-knowledge",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where governance elements are linked as a directed acyclic structure"
   ],
   "supporting_quote": "The acyclic nature of WDAGs ensures there are no loops within the governance framework, facilitating a clear, unambiguous progression from foundational principles to specific governance outcomes. This characteristic is vital for maintaining the integrity and coherence of the AI governance process."
  },
  {
   "id": "kaal:claim:4941807-039",
   "url": "https://wulfkaal.github.io/claims/4941807-039",
   "claim": "New legal precedents, regulations, and ethical considerations can be integrated into an existing WDAG governance structure without a complete overhaul of the framework, which is what keeps the governance system current as AI technology and societal expectations move.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where new governance elements can be added as vertices and edges to the existing graph"
   ],
   "supporting_quote": "As new legal precedents, regulations, or ethical considerations arise, they can be seamlessly integrated into the existing WDAG structure without necessitating a complete overhaul of the governance framework."
  },
  {
   "id": "kaal:claim:4941807-040",
   "url": "https://wulfkaal.github.io/claims/4941807-040",
   "claim": "Treating each AI model as a post within the WDAG framework lets stakeholders build a comprehensive and visually intuitive map of how well that model aligns with the governance frameworks it is required to meet.",
   "type": "design",
   "topics": [
    "governance-design",
    "ai-and-agents",
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Governance Via Web3 Reputation System (2024). SSRN: https://ssrn.com/abstract=4941807",
   "year": "2024",
   "source_sha256": "ab66c1e99a88da1fa36b0c6b536df5184231fe6aa427f3dd53287a4e0ac79853",
   "confidence": "argued",
   "scope_conditions": [
    "where each AI model or development milestone is documented as a post with edges to relevant precedents"
   ],
   "supporting_quote": "By treating each AI model as a post within a WDAG framework, stakeholders can create a comprehensive, visually intuitive map of how well the AI aligns with required governance frameworks."
  },
  {
   "id": "kaal:claim:4755632-001",
   "url": "https://wulfkaal.github.io/claims/4755632-001",
   "claim": "Data quality is a necessary but not a sufficient condition for AI growth: algorithms, computing power, and developer expertise also play significant roles, yet access to quality datasets remains a fundamental requirement for advancing AI.",
   "type": "condition",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "supporting_quote": "data quality alone is not sufficient for AI growth and its disruption and reinvention of business models, the algorithms, computing power, and expertise of developers also play significant roles"
  },
  {
   "id": "kaal:claim:4755632-002",
   "url": "https://wulfkaal.github.io/claims/4755632-002",
   "claim": "Transformer neural network architecture removes the scale constraint on training data but not the quality constraint, so data quality continues to be a major unsolved issue for large language models even where internet scale corpora are available.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to LLMs trained on internet derived corpora"
   ],
   "supporting_quote": "data quality continues to be a huge issue for LLMs"
  },
  {
   "id": "kaal:claim:4755632-003",
   "url": "https://wulfkaal.github.io/claims/4755632-003",
   "claim": "The move by AI developers toward smaller training datasets raises the risk of overfitting, especially with complex models, which forces LLM developers to rely on regularization to counteract overfitting of the model to the training data.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "holds for smaller datasets used in LLM development",
    "risk increases with model complexity"
   ],
   "supporting_quote": "However, with small datasets in LLMs, the risk of overfitting also rises, especially with complex models. Therefore, LLM developers have to turn to regularization in an effort to address overfitting of the model with the training data."
  },
  {
   "id": "kaal:claim:4755632-004",
   "url": "https://wulfkaal.github.io/claims/4755632-004",
   "claim": "The combined total addressable market of the industries disrupted by AI, counting healthcare, finance, retail, manufacturing, logistics, transportation, and customer service, is likely in the hundreds of trillions of dollars.",
   "type": "empirical",
   "topics": [
    "economics",
    "ai-and-agents",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "evidenced",
   "scope_conditions": [
    "figures are approximate and subject to market dynamics and technological change"
   ],
   "supporting_quote": "The combined TAM of all disrupted industries, including healthcare, finance, retail, manufacturing, logistics, transportation, and customer service, is likely to be in the hundreds of trillions of dollars"
  },
  {
   "id": "kaal:claim:4755632-005",
   "url": "https://wulfkaal.github.io/claims/4755632-005",
   "claim": "Access to structured labeled data determines which industries can capitalize on AI first: finance and healthcare hold a head start, while transportation and customer service face hurdles from privacy concerns, data fragmentation, and extensive labeling requirements.",
   "type": "condition",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to industries seeking to realize AI driven market potential"
   ],
   "supporting_quote": "Industries that can access large volumes of structured and labeled data, such as finance and healthcare, may have a head start in leveraging AI. On the other hand, industries like transportation and customer service may face hurdles in obtaining quality data"
  },
  {
   "id": "kaal:claim:4755632-006",
   "url": "https://wulfkaal.github.io/claims/4755632-006",
   "claim": "Micro tasks are stipulatively defined as small tasks that require human judgment, can be completed by humans independently over the internet, and form part of a larger unified project.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "asserted",
   "supporting_quote": "Micro tasks are defined as small tasks that require human judgment, can be completed by humans independently over the internet, and are part of a larger unified project."
  },
  {
   "id": "kaal:claim:4755632-007",
   "url": "https://wulfkaal.github.io/claims/4755632-007",
   "claim": "Micro task work is valuable precisely because the human judgment it supplies cannot currently be replaced by machines, which lets organizations build products and outcomes that machines alone cannot synthesize.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "holds while machine substitutes for human judgment remain unavailable"
   ],
   "supporting_quote": "Because of the necessity of human judgment that cannot currently be replaced by machines/computers, micro tasks enable organizations to build products or create outcomes that cannot be synthesized by machines/computers alone."
  },
  {
   "id": "kaal:claim:4755632-008",
   "url": "https://wulfkaal.github.io/claims/4755632-008",
   "claim": "The quality and quantity of labeled datasets directly governs the performance of the neural network's learning algorithm during supervised training, so the evolution of AI is correlated with the evolution of micro task work.",
   "type": "mechanism",
   "topics": [
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the supervised learning training phase"
   ],
   "supporting_quote": "The higher the quality and quantity of such labeled datasets the better the AI neural network's learning algorithm during the supervised training process."
  },
  {
   "id": "kaal:claim:4755632-009",
   "url": "https://wulfkaal.github.io/claims/4755632-009",
   "claim": "Existing centralized micro task marketplaces cannot adequately fulfill the growing demand for high quality labeled AI training data, because their cost structure requires intermediation, which produces significant overpricing without any of that price reaching the micro task workers.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to centralized micro task marketplaces that necessitate intermediation"
   ],
   "supporting_quote": "the cost structure for micro task work in centralized systems that necessitate intermediation results in significant overpricing without benefiting the micro task workers directly."
  },
  {
   "id": "kaal:claim:4755632-010",
   "url": "https://wulfkaal.github.io/claims/4755632-010",
   "claim": "Human shortcomings in micro task work such as limited attention span, irrationality, and inaccuracy create verification requirements, but manual verification is performed by humans subject to the same limitations, so verification does not resolve the quality problem it is meant to solve.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies where verification of micro task work is itself manual"
   ],
   "supporting_quote": "However, manual verification of micro task work is subject to the same human limitations."
  },
  {
   "id": "kaal:claim:4755632-011",
   "url": "https://wulfkaal.github.io/claims/4755632-011",
   "claim": "To form consensus and offset worker error, requesters in centralized micro task structures assign teams of up to fifteen workers to the same task, and the resulting multiplication of work significantly increases the cost of micro task work and produces waste when requesters pay proportionally for redundant output.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to centralized micro task platforms using redundancy for consensus"
   ],
   "supporting_quote": "set up teams of up to 15 workers to perform the same task in an effort to form a consensus. The multiplication of work inherent in this process significantly increases the cost of micro task work."
  },
  {
   "id": "kaal:claim:4755632-012",
   "url": "https://wulfkaal.github.io/claims/4755632-012",
   "claim": "The necessity of duplicating micro task work depresses worker pay: it subjects micro task workers to lower rates and prevents payment increases, so redundancy based quality control is financed out of worker compensation.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to centralized micro task platforms that require duplicated work"
   ],
   "supporting_quote": "The necessity of multiplication of work also subjects micro task workers to lower rates and lack of payment increases."
  },
  {
   "id": "kaal:claim:4755632-013",
   "url": "https://wulfkaal.github.io/claims/4755632-013",
   "claim": "Because unmanaged centralized micro task platforms do not supply the consumer interfaces needed to accomplish specific tasks, requesters must either build their own tools or pay large fees to startups, and both necessary options result in underutilization of resources.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to unmanaged centralized micro task platforms"
   ],
   "supporting_quote": "because unmanaged centralized micro task platforms do not supply consumer interfaces needed to accomplish specific tasks, requesters of micro task work are forced to either build their own tools or pay large fees to startups"
  },
  {
   "id": "kaal:claim:4755632-014",
   "url": "https://wulfkaal.github.io/claims/4755632-014",
   "claim": "Approximately thirty eight percent of the labor pool is unbanked but skilled and therefore excluded from centralized micro task marketplaces, because without a bank account these workers cannot contribute to or profit from the existing marketplace.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to centralized micro task marketplaces requiring banking relationships"
   ],
   "supporting_quote": "the circa 38% of the labor pool that is unbanked but skilled does not currently have access to the centralized micro task marketplaces."
  },
  {
   "id": "kaal:claim:4755632-015",
   "url": "https://wulfkaal.github.io/claims/4755632-015",
   "claim": "Invasive, privacy challenging, time consuming, and unclear signup and approval processes on centralized platforms create market entry barriers for micro task workers, shrinking the supply of labor available to produce AI training data.",
   "type": "failure",
   "topics": [
    "corporate-governance",
    "economics",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to onboarding in centralized micro task systems"
   ],
   "supporting_quote": "micro workers in centralized systems are faced with invasive, privacy challenging, time consuming, and unclear signup and approval processes that create market entry barriers for micro task workers."
  },
  {
   "id": "kaal:claim:4755632-016",
   "url": "https://wulfkaal.github.io/claims/4755632-016",
   "claim": "Gamification supplies quality control by making workers review and rate each other's contributions for points or recognition, which surfaces and resolves discrepancies through consensus-based voting or peer review rather than through duplicated independent work.",
   "type": "design",
   "topics": [
    "citation-and-knowledge",
    "consensus-and-security",
    "governance-design",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "supporting_quote": "Gamification can be utilized to improve data quality through mechanisms like consensus-based voting or peer review. Workers can review and rate each other's contributions, earning points or recognition for accurate and consistent work."
  },
  {
   "id": "kaal:claim:4755632-017",
   "url": "https://wulfkaal.github.io/claims/4755632-017",
   "claim": "The more hierarchical the code review process, the lower the quality of the reviewed code, and the same holds for barriers to entry: hierarchy and entry barriers together degrade code quality.",
   "type": "mechanism",
   "topics": [
    "open-source-and-code",
    "institutional-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to legacy code review firms with hierarchical review structures"
   ],
   "supporting_quote": "The more hierarchical the code review process is, the lower is the quality of the reviewed code."
  },
  {
   "id": "kaal:claim:4755632-018",
   "url": "https://wulfkaal.github.io/claims/4755632-018",
   "claim": "Hierarchical review produces an anchoring failure: the first reviewer in the hierarchy gets the highest priority and follow-on reviewers merely add minor upgrades, so adding reviewers does not add the independent scrutiny that would raise code quality.",
   "type": "failure",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to legacy hierarchical code review processes"
   ],
   "supporting_quote": "in the legacy review process, the first reviewer within the hierarchical structure of the code review process often gets the highest priority and is often merely followed with minor upgrades by follow-on reviewers."
  },
  {
   "id": "kaal:claim:4755632-019",
   "url": "https://wulfkaal.github.io/claims/4755632-019",
   "claim": "The collective of reviewers in legacy code review is not incentivized to find flaws in the code, because the review is treated as the work product of the initial reviewer with minor input from follow-up reviewers rather than as a product of the collective.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives",
    "open-source-and-code",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to legacy hierarchical code review firms"
   ],
   "supporting_quote": "The collective of reviewers is also not incentivized to find flaws in the code to optimize code as a work product of the collective."
  },
  {
   "id": "kaal:claim:4755632-020",
   "url": "https://wulfkaal.github.io/claims/4755632-020",
   "claim": "More reviewers asking clarifying questions makes code simpler and clearer, which typically increases code quality, but hierarchical review processes foreclose this mechanism and also exclude opinions from the edges of the reviewer spectrum.",
   "type": "failure",
   "topics": [
    "open-source-and-code",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to hierarchical code review processes"
   ],
   "supporting_quote": "the more people review the code with comments that ask for clarification, the more likely it becomes that the code becomes simpler and clearer, which in turn typically increases code quality. However, that is not possible in hierarchical review processes."
  },
  {
   "id": "kaal:claim:4755632-021",
   "url": "https://wulfkaal.github.io/claims/4755632-021",
   "claim": "Legacy code review carries a single point of failure risk: if the single author of a review misses something and the follow-on reviewer focuses entirely on the first reviewer's concerns, the review has a higher risk of inaccuracy, and crowd wisdom is the corrective for that myopia.",
   "type": "failure",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to standard legacy code review with sequential reviewers"
   ],
   "supporting_quote": "If the single author of a code review has missed something and the follow-on reviewer focused entirely on the first reviewer's concerns, the code review has a higher risk of lack of accuracy. Crowd wisdom is one way to correct possible myopia"
  },
  {
   "id": "kaal:claim:4755632-022",
   "url": "https://wulfkaal.github.io/claims/4755632-022",
   "claim": "Without crowd control the reviewer's views and the code author's intent are at odds, so a reviewer imposing their own logic can force repeated rewrites of code whose core functionality is already sound; a code review should instead focus on functionality and on keeping mistaken, badly constructed, and dangerous code out.",
   "type": "normative",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to legacy code review processes lacking crowd control"
   ],
   "supporting_quote": "Instead, a code review should focus on the functionality of the code and on keeping mistaken, badly constructed, and dangerous code out."
  },
  {
   "id": "kaal:claim:4755632-023",
   "url": "https://wulfkaal.github.io/claims/4755632-023",
   "claim": "Code reviews in legacy systems can last weeks and months, and these delays can force complete rewriting of contracts because the underlying protocol may have upgraded core libraries during the review period.",
   "type": "failure",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "can be exacerbated by market conditions in the digital asset market"
   ],
   "supporting_quote": "These significant delays can impact development and may require complete rewriting of contracts because the underlying protocol may have upgraded core libraries during the code review."
  },
  {
   "id": "kaal:claim:4755632-024",
   "url": "https://wulfkaal.github.io/claims/4755632-024",
   "claim": "Centralization of the code review industry produces overpricing because clients will pay nearly any price to obtain the stamp of approval from one of the top five audit firms.",
   "type": "mechanism",
   "topics": [
    "economics",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to the 2024 code review and audit market dominated by top firms"
   ],
   "supporting_quote": "As a result of the centralization of the industry, most code reviews are significantly overpriced. Clients pretty much pay any price to get the stamp of approval from one of the top 5 audit firms."
  },
  {
   "id": "kaal:claim:4755632-025",
   "url": "https://wulfkaal.github.io/claims/4755632-025",
   "claim": "Concentrated market power in code review undermines internal and external quality controls, leaving the public with no or very weak control over the quality of code review services, and it eliminates downward price pressure because job posters cannot afford to shop for better-priced reviews.",
   "type": "failure",
   "topics": [
    "economics",
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the centralized code review market"
   ],
   "supporting_quote": "The centralized power also undermines attempts by other industry players to create internal or external controls on the quality of code reviews. As a result, the public has no or very weak control over the quality of code review services it receives."
  },
  {
   "id": "kaal:claim:4755632-026",
   "url": "https://wulfkaal.github.io/claims/4755632-026",
   "claim": "Because a limited number of players control the code review market and its outputs, the quality of code review is often suboptimal, and clients have little or no recourse when code proves flawed even after functionality and quality review.",
   "type": "failure",
   "topics": [
    "open-source-and-code",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the centralized code review market"
   ],
   "supporting_quote": "Moreover, there is little or no recourse for clients in cases in which the code proved to be flawed even after functionality and quality review."
  },
  {
   "id": "kaal:claim:4755632-027",
   "url": "https://wulfkaal.github.io/claims/4755632-027",
   "claim": "The code review market is self-undermining: one of the strongest forms of exploitation and centralized economies of scale is being created in a market whose purpose is to support the decentralization of other industries.",
   "type": "failure",
   "topics": [
    "decentralization",
    "open-source-and-code",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "supporting_quote": "it is a bit ironic that one of the strongest forms of exploitation and centralized economies of scale are being created in a market that is, from the outset, supposed to help support the decentralization of disparate industries."
  },
  {
   "id": "kaal:claim:4755632-028",
   "url": "https://wulfkaal.github.io/claims/4755632-028",
   "claim": "The Code Review DAO should be built as a decentralized community-driven review process that uses a bidding process to drive prices down and provides open access to anyone who qualifies rather than only to members of the few incumbent code review firms.",
   "type": "design",
   "topics": [
    "dao",
    "open-source-and-code",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the Code Review Platform operated under CRDAO governance"
   ],
   "supporting_quote": "The CRDAO provides a new code review platform, which facilitates a decentralized community-driven code review process that utilizes a bidding process on code reviews to drive prices down"
  },
  {
   "id": "kaal:claim:4755632-029",
   "url": "https://wulfkaal.github.io/claims/4755632-029",
   "claim": "DAO governance and policing functions reduce duplication of code reviews, so decentralized community policing substitutes for the redundant parallel work that centralized platforms use to assure quality.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "governance-design",
    "dao",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to reviews conducted under the CRDAO governance model"
   ],
   "supporting_quote": "the CRDAO governance and policing functions ensure less duplication of code reviews."
  },
  {
   "id": "kaal:claim:4755632-030",
   "url": "https://wulfkaal.github.io/claims/4755632-030",
   "claim": "Mandatory crowd review and policing votes make code reviewers less likely to submit highly idiosyncratic reviews, because idiosyncratic reviewers face slashing of their reputation token scores and loss of standing in the community.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to reviews subject to CRDAO collective policing votes"
   ],
   "supporting_quote": "code reviewers are less likely to engage in highly idiosyncratic reviews as they would need to fear slashing of rep token scores and loss of standing in the community."
  },
  {
   "id": "kaal:claim:4755632-031",
   "url": "https://wulfkaal.github.io/claims/4755632-031",
   "claim": "The existing code review market does not provide publicly transparent pricing, and that opacity is deliberate because neither client nor code reviewer benefits from public scrutiny of the prices, which arguably harms the public for the benefit of the few market players.",
   "type": "failure",
   "topics": [
    "disclosure",
    "economics",
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the existing centralized code review market"
   ],
   "supporting_quote": "In the existing system, the unilateral pricing is not disclosed because both the client and code reviewer may not benefit from public scrutiny of the prices."
  },
  {
   "id": "kaal:claim:4755632-032",
   "url": "https://wulfkaal.github.io/claims/4755632-032",
   "claim": "Price discovery is a public service function because without public pricing consumers cannot realistically select the service provider offering the highest value, and the resulting lack of transparency enables insider deals to the detriment of clients forced into prices dictated by a group of firms.",
   "type": "mechanism",
   "topics": [
    "economics",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to markets without publicly transparent pricing"
   ],
   "supporting_quote": "without public pricing, consumers cannot realistically select the service provider that provides the highest value to the job poster. The lack of transparency enables insider deals to the detriment of the clients, who are forced into the price a group of firms dictates."
  },
  {
   "id": "kaal:claim:4755632-033",
   "url": "https://wulfkaal.github.io/claims/4755632-033",
   "claim": "The Code Review Platform fills the void left by legacy reviews conducted without common standards, because a compendium of reviews generates a common standard that guides reviewers and the collective toward shared expectations on functionality and quality outcomes.",
   "type": "design",
   "topics": [
    "dao",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies where a collective reviews code under a common set of standards"
   ],
   "supporting_quote": "The Code Review Platform creates a compendium of reviews and through it a common standard for code reviews"
  },
  {
   "id": "kaal:claim:4755632-034",
   "url": "https://wulfkaal.github.io/claims/4755632-034",
   "claim": "A sequenced two-stage vote, an informal community vote that reveals collective wisdom followed by a formal vote in which staked reputation tokens are at risk, gives job posters significant assurance that the reviewed code and the platform report meet the highest available quality standards.",
   "type": "design",
   "topics": [
    "compliance",
    "governance-design",
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to code reviews audited by the CRDAO community"
   ],
   "supporting_quote": "the CRDAO now votes in a formal vote in which the reputation tokens30 staked are at risk. This sequence of votes provides job posters with significant assurances that the code examined and the Code Review Platform report on the code adheres to the highest standards of quality"
  },
  {
   "id": "kaal:claim:4755632-035",
   "url": "https://wulfkaal.github.io/claims/4755632-035",
   "claim": "Reputation tokens are stipulated as non-transferable tokens that cannot be valued and that merely mirror a scoreboard of a member's reputation within the community, rather than functioning as tradable assets.",
   "type": "definitional",
   "topics": [
    "reputation",
    "tokenomics",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "asserted",
   "scope_conditions": [
    "as defined for CRDAO members at the time of writing"
   ],
   "supporting_quote": "\"Reputation Tokens\" are non-transferable tokens that cannot be valued and represent the reputation a member has within the community. They simply mirror a scoreboard."
  },
  {
   "id": "kaal:claim:4755632-036",
   "url": "https://wulfkaal.github.io/claims/4755632-036",
   "claim": "Reputation scores on the ALE Platform balance supply and demand through a two-sided incentive: requesters with lower reputation scores find workers less likely to accept their offers, and workers with low reputation scores are less likely to be retained for micro task work.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the ALE Platform reputation scoring system"
   ],
   "supporting_quote": "If requesters have a lower reputation score, workers become less likely to accept requesters' offers. In turn, low reputation scores for micro task workers result in a lower likelihood of retention"
  },
  {
   "id": "kaal:claim:4755632-037",
   "url": "https://wulfkaal.github.io/claims/4755632-037",
   "claim": "The reputation score mechanism helps discern malicious actors from simple mistakes and protects workers and verifiers from fraudulent requesters and suboptimally designed requests, so reputation serves as a bidirectional screening device rather than only a worker rating.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to the ALE Platform"
   ],
   "supporting_quote": "The reputation score mechanism helps discern malicious actors and simple mistakes. It also protects workers and verifiers from fraudulent requesters and suboptimally designed requests."
  },
  {
   "id": "kaal:claim:4755632-038",
   "url": "https://wulfkaal.github.io/claims/4755632-038",
   "claim": "Reputation based market dynamics lower the cost of duplication relative to centralized micro task work: where a reliable high reputation worker completes the task, duplication can fall from fifteen to five or fewer in a decentralized setup, which is what enables scaling of micro task work.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "conditioned on a reliable and high reputation score worker completing the tasks"
   ],
   "supporting_quote": "If a reliable and high reputation score worker completes the tasks, the duplication may be brought from 15 to 5 or less in the"
  },
  {
   "id": "kaal:claim:4755632-039",
   "url": "https://wulfkaal.github.io/claims/4755632-039",
   "claim": "Operating entirely through crypto transactions removes the transaction costs of micro task work, because centralized mechanical turk platforms require an existing banking relationship to transfer payment to workers who are otherwise unbanked.",
   "type": "design",
   "topics": [
    "economics",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the ALE Platform relative to centralized micro task platforms"
   ],
   "supporting_quote": "Unlike centralized mechanical turk platforms that require an existing banking relationship to receive account transfers for otherwise unbanked micro task workers, the ALE Platform operates entirely through crypto transactions."
  },
  {
   "id": "kaal:claim:4755632-040",
   "url": "https://wulfkaal.github.io/claims/4755632-040",
   "claim": "Paying workers a share of incoming compensation pro rata to their reputation scores makes rigor self-enforcing, because workers who do not engage with the required care lose their spot in the reputation rankings and thereby lose their share of the job fee distribution.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the ALE Platform fee distribution design"
   ],
   "supporting_quote": "they sacrifice their spot in the rankings of reputation scores which affects their participation in the job fee distribution, which is paid out pro rata to the respective reputation scores."
  },
  {
   "id": "kaal:claim:4755632-041",
   "url": "https://wulfkaal.github.io/claims/4755632-041",
   "claim": "Combining decentralized governance with gamification of micro task work is the condition under which gamification does not compromise dataset quality and accuracy, and this combination is what allows gamified micro task work to scale high-quality diverse datasets for AI learning.",
   "type": "condition",
   "topics": [
    "decentralization",
    "governance-design",
    "empirical-evidence",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the ALE Platform design"
   ],
   "supporting_quote": "combination of decentralized governance and gamification of micro task work, ALE Platform ensures that gamification techniques do not compromise the quality and accuracy"
  },
  {
   "id": "kaal:claim:4755632-042",
   "url": "https://wulfkaal.github.io/claims/4755632-042",
   "claim": "Early low-cost feedback loops on code reviews enable risk-taking by development teams that wish to move quickly through governance and upgrade processes, which in turn accelerates growth and scaling of experimentation.",
   "type": "mechanism",
   "topics": [
    "dao",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI Learning - Decentralized Governance to Optimize Human Output Datasets for AI Learning (2024). SSRN: https://ssrn.com/abstract=4755632",
   "year": "2024",
   "source_sha256": "972ccebf0c06ac1767a9e443bb95942b7670e806a63c25ee817c368a64c8eca8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to developer teams using the ALE feedback loop"
   ],
   "supporting_quote": "The feedback provided by the ALE for the developer community enables risk-taking for dev teams who wish to move quickly through their governance and upgrade process, which in turn enables accelerated growth"
  },
  {
   "id": "kaal:claim:4734750-001",
   "url": "https://wulfkaal.github.io/claims/4734750-001",
   "claim": "Modern code review is expensive not only in direct reviewer time but in opportunity cost, because developers spend an average of six hours per week reviewing other people's changes and must switch away from their own work to do so.",
   "type": "empirical",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "evidenced",
   "scope_conditions": [
    "modern code review practice in industry and open source projects"
   ],
   "supporting_quote": "Developers spend a significant amount of time reviewing the changes of others"
  },
  {
   "id": "kaal:claim:4734750-002",
   "url": "https://wulfkaal.github.io/claims/4734750-002",
   "claim": "The smart contract industry is still projected to grow to several billion dollars over the next decade even though security audit costs and exploit losses are substantial, so vulnerability costs slow but do not halt industry growth.",
   "type": "predictive",
   "topics": [
    "smart-contracts",
    "consensus-and-security",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "evidenced",
   "scope_conditions": [
    "smart contract industry through roughly 2032"
   ],
   "supporting_quote": "the smart contracts industry is still estimated to grow to several billion dollars in the next decade"
  },
  {
   "id": "kaal:claim:4734750-003",
   "url": "https://wulfkaal.github.io/claims/4734750-003",
   "claim": "Losses from smart contract vulnerabilities are large and growing, with 2021 losses alone estimated at 680 million dollars and cumulative global losses estimated at over 6 billion dollars.",
   "type": "empirical",
   "topics": [
    "smart-contracts",
    "consensus-and-security",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "evidenced",
   "supporting_quote": "In 2021 alone total financial loss from smart contract bugs was estimated at $680 million"
  },
  {
   "id": "kaal:claim:4734750-004",
   "url": "https://wulfkaal.github.io/claims/4734750-004",
   "claim": "Bug bounty programs fail at their own premise because the hackers they pay to demonstrate exploitability frequently sell or exploit the bugs they find instead of disclosing them.",
   "type": "failure",
   "topics": [
    "compliance",
    "ai-and-agents",
    "risk-and-incentives",
    "smart-contracts",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "community audit and bug bounty programs for smart contracts"
   ],
   "supporting_quote": "Alas, hackers often sell the bug or exploit them when they discover them."
  },
  {
   "id": "kaal:claim:4734750-005",
   "url": "https://wulfkaal.github.io/claims/4734750-005",
   "claim": "Bug bounty programs are structurally compromised by their reliance on a trusted intermediary that extracts high commission fees and may hold interests that conflict with the software vendor.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "intermediated bug bounty platforms"
   ],
   "supporting_quote": "they use a trusted intermediary that charges hefty commission fees and may have a conflict of interest with the software vendor"
  },
  {
   "id": "kaal:claim:4734750-006",
   "url": "https://wulfkaal.github.io/claims/4734750-006",
   "claim": "The 2024 code review market is dominated by a few centralized firms that can charge exorbitant, monopoly-like prices, and those high prices do not buy a sound process because the code review process itself remains significantly flawed.",
   "type": "failure",
   "topics": [
    "economics",
    "open-source-and-code",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "code review market as of 2024"
   ],
   "supporting_quote": "In 2024, the code review industry is dominated by several key players who can charge exorbitant and monopoly-like prices. Despite these high prices, the code review process is subject to significant flaws."
  },
  {
   "id": "kaal:claim:4734750-007",
   "url": "https://wulfkaal.github.io/claims/4734750-007",
   "claim": "The more hierarchical the code review process, the lower the quality of the reviewed code; hierarchy in review is inversely related to output quality.",
   "type": "mechanism",
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    "institutional-design",
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "legacy code review firms with hierarchical reviewer structures"
   ],
   "supporting_quote": "The more hierarchical the code review process is, the lower is the quality of the reviewed code."
  },
  {
   "id": "kaal:claim:4734750-008",
   "url": "https://wulfkaal.github.io/claims/4734750-008",
   "claim": "In hierarchical review, the first reviewer's output receives the highest priority and later reviewers add only minor upgrades, so the review becomes the initial reviewer's work product rather than the collective's.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "risk-and-incentives",
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "legacy hierarchical code review processes"
   ],
   "supporting_quote": "The collective of reviewers is also not incentivized to find flaws in the code to optimize code as a work product of the collective. Rather, it is often seen as the work product of the initial reviewer with minor input from follow-up reviewers."
  },
  {
   "id": "kaal:claim:4734750-009",
   "url": "https://wulfkaal.github.io/claims/4734750-009",
   "claim": "Multiple reviewers asking clarifying questions tends to make code simpler and clearer and therefore higher quality, but hierarchical review processes structurally block this mechanism.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "code review settings that permit many independent reviewers"
   ],
   "supporting_quote": "the more people review the code with comments that ask for clarification, the more likely it becomes that the code becomes simpler and clearer, which in turn typically increases code quality. However, that is not possible in hierarchical review processes."
  },
  {
   "id": "kaal:claim:4734750-010",
   "url": "https://wulfkaal.github.io/claims/4734750-010",
   "claim": "Hierarchical code review undermines long-term participation by reviewers at the edges of the reviewer spectrum, because those reviewers either have no access to the code or no standing to help review it.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "hierarchical review processes with entry barriers"
   ],
   "supporting_quote": "The hierarchical approach to code reviews undermines long-term participation with opinions from the edges of the reviewer spectrum because those reviewers either have no access or are in no position to help review the code."
  },
  {
   "id": "kaal:claim:4734750-011",
   "url": "https://wulfkaal.github.io/claims/4734750-011",
   "claim": "Without crowd control, a code reviewer can impose their own logic on the author, forcing repeated rewrites of code whose core functionality is already sound and whose dangerous issues are already controlled for.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "legacy code review with a single authoritative reviewer"
   ],
   "supporting_quote": "Because the code reviewer may wish to impose their logic on the code author, the code author may be required to rewrite code over and over even though the core functionality of the code is sound and dangerous issues were controlled for."
  },
  {
   "id": "kaal:claim:4734750-012",
   "url": "https://wulfkaal.github.io/claims/4734750-012",
   "claim": "A code review should focus on the functionality of the code and on keeping mistaken, badly constructed, and dangerous code out, rather than on conforming code to a reviewer's stylistic logic.",
   "type": "design",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "asserted",
   "supporting_quote": "Instead, a code review should focus on the functionality of the code and on keeping mistaken, badly constructed, and dangerous code out."
  },
  {
   "id": "kaal:claim:4734750-013",
   "url": "https://wulfkaal.github.io/claims/4734750-013",
   "claim": "When the first reviewer misses a defect and follow-on reviewers anchor entirely on the first reviewer's concerns, the review carries a higher risk of inaccuracy; crowd wisdom is one way to correct this myopia and single point of failure.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "sequential review processes anchored on an initial reviewer"
   ],
   "supporting_quote": "If the single author of a code review has missed something and the follow-on reviewer focused entirely on the first reviewer's concerns, the code review has a higher risk of lack of accuracy."
  },
  {
   "id": "kaal:claim:4734750-014",
   "url": "https://wulfkaal.github.io/claims/4734750-014",
   "claim": "Legacy code reviews can last weeks or months, and those delays can force complete rewrites of contracts because the underlying protocol may have upgraded core libraries while the review was still running.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "digital asset markets where underlying protocols upgrade frequently"
   ],
   "supporting_quote": "These significant delays can impact development and may require complete rewriting of contracts because the underlying protocol may have upgraded core libraries during the code review."
  },
  {
   "id": "kaal:claim:4734750-015",
   "url": "https://wulfkaal.github.io/claims/4734750-015",
   "claim": "Market concentration among the top five audit firms itself creates high barriers to entry for new participants in the code review market.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics",
    "compliance",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "The current market dynamics dominated by the top 5 audit firms also create high barriers to entry for new players to enter into the code review market."
  },
  {
   "id": "kaal:claim:4734750-016",
   "url": "https://wulfkaal.github.io/claims/4734750-016",
   "claim": "It is ironic that some of the strongest forms of exploitation and centralized economies of scale have been created inside the code review market, which exists to support the decentralization of other industries.",
   "type": "failure",
   "topics": [
    "decentralization",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "it is a bit ironic that one of the strongest forms of exploitation and centralized economies of scale are being created in a market that is, from the outset, supposed to help support the decentralization of disparate industries"
  },
  {
   "id": "kaal:claim:4734750-017",
   "url": "https://wulfkaal.github.io/claims/4734750-017",
   "claim": "Centralization of the code review industry causes systematic overpricing, because clients will pay nearly any price to obtain the approval stamp of one of the top five audit firms.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "As a result of the centralization of the industry, most code reviews are significantly overpriced. Clients pretty much pay any price to get the stamp of approval from one of the top 5 audit firms."
  },
  {
   "id": "kaal:claim:4734750-018",
   "url": "https://wulfkaal.github.io/claims/4734750-018",
   "claim": "Centralized market power blocks other industry players from establishing internal or external controls on code review quality, so the public has no or very weak control over the quality of the review services it receives.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "The centralized power also undermines attempts by other industry players to create internal or external controls on the quality of code reviews. As a result, the public has no or very weak control over the quality of code review services it receives."
  },
  {
   "id": "kaal:claim:4734750-019",
   "url": "https://wulfkaal.github.io/claims/4734750-019",
   "claim": "Because job posters cannot afford to shop for better priced reviews and must buy market acceptance, centralization of the code review market eliminates any form of downward price pressure.",
   "type": "mechanism",
   "topics": [
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "In turn, the centralization of the market undermines any form of downward price pressure."
  },
  {
   "id": "kaal:claim:4734750-020",
   "url": "https://wulfkaal.github.io/claims/4734750-020",
   "claim": "Clients have little or no recourse when reviewed code turns out to be flawed even after a functionality and quality review has been performed and paid for.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "compliance",
    "economics",
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "asserted",
   "supporting_quote": "Moreover, there is little or no recourse for clients in cases in which the code proved to be flawed even after functionality and quality review."
  },
  {
   "id": "kaal:claim:4734750-021",
   "url": "https://wulfkaal.github.io/claims/4734750-021",
   "claim": "The Code Review DAO drives review prices down by running a decentralized, community driven review process built on a bidding process, combined with open access for any qualified reviewer rather than membership in a few firms.",
   "type": "design",
   "topics": [
    "economics",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "which facilitates a decentralized community-driven code review process that utilizes a bidding process on code reviews to drive prices down"
  },
  {
   "id": "kaal:claim:4734750-022",
   "url": "https://wulfkaal.github.io/claims/4734750-022",
   "claim": "Universal access combined with a public bidding price discovery methodology produces low barriers to entry in the code review market, since anyone can join by submitting high quality reviews through the portal.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "Given its universal access and price discovery methodology (through a public bidding process), the CRDAO creates low barriers to entry in the code review market."
  },
  {
   "id": "kaal:claim:4734750-023",
   "url": "https://wulfkaal.github.io/claims/4734750-023",
   "claim": "Code reviews in legacy firms are often highly subjective, and without crowd controls that subjectivity produces suboptimal review outcomes because no single developer will agree on a given set of code and its intended functionality.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "reviews conducted without crowd control mechanisms"
   ],
   "supporting_quote": "Code reviews in legacy code review firms are often highly subjective which leads to rather suboptimal outcomes without crowd controls."
  },
  {
   "id": "kaal:claim:4734750-024",
   "url": "https://wulfkaal.github.io/claims/4734750-024",
   "claim": "Subjecting every review to crowd review and policing votes makes reviewers less likely to produce idiosyncratic reviews, because they would face slashing and loss of standing in the community.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "reviewers holding stakeable reputation within the DAO"
   ],
   "supporting_quote": "Accordingly, code reviewers are less likely to engage in highly idiosyncratic reviews as they would need to fear slashing and loss of standing in the community."
  },
  {
   "id": "kaal:claim:4734750-025",
   "url": "https://wulfkaal.github.io/claims/4734750-025",
   "claim": "The existing code review market provides no publicly transparent pricing of review services, and that opacity arguably harms the public for the benefit of a few market players and their clients.",
   "type": "failure",
   "topics": [
    "disclosure",
    "economics",
    "open-source-and-code"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "The existing code review market does not provide publicly transparent pricing of code review services."
  },
  {
   "id": "kaal:claim:4734750-026",
   "url": "https://wulfkaal.github.io/claims/4734750-026",
   "claim": "Public price discovery is a necessary condition for consumer choice: without public pricing, consumers cannot realistically select the service provider that offers the highest value, and the resulting opacity enables insider deals that let a group of firms dictate price.",
   "type": "condition",
   "topics": [
    "economics",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "Price discovery is a key public services function because, without public pricing, consumers cannot realistically select the service provider that provides the highest value to the job poster."
  },
  {
   "id": "kaal:claim:4734750-027",
   "url": "https://wulfkaal.github.io/claims/4734750-027",
   "claim": "Aggregating reviews into a public compendium generates a common standard for code reviews that legacy review environments lack, and a shared standard aligns reviewer and collective expectations about functionality and quality outcomes.",
   "type": "design",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "The CRDAO creates a compendium of reviews and through it a common standard for code reviews that are otherwise lacking in legacy code review environments."
  },
  {
   "id": "kaal:claim:4734750-028",
   "url": "https://wulfkaal.github.io/claims/4734750-028",
   "claim": "Fast community feedback enables development teams to take risks and move quickly through their governance and upgrade processes, which in turn accelerates growth and the scaling of experimentation.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "governance-design",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "enables risk-taking for dev teams who wish to move quickly through their governance and upgrade process, which in turn enables accelerated growth and scaling of experimentation."
  },
  {
   "id": "kaal:claim:4734750-029",
   "url": "https://wulfkaal.github.io/claims/4734750-029",
   "claim": "The community audit should proceed in two stages: an informal vote that reveals collective wisdom to all members, followed by a formal vote in which staked reputation tokens are at risk, and this sequence gives job posters significant quality assurances.",
   "type": "design",
   "topics": [
    "governance-design",
    "reputation",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "Once the entire community knows how each member feels about the code review examined, the CRDAO now votes in a formal vote in which the reputation tokens staked are at risk."
  },
  {
   "id": "kaal:claim:4734750-030",
   "url": "https://wulfkaal.github.io/claims/4734750-030",
   "claim": "Micro tasks are small tasks that require human judgment, can be completed by humans independently over the internet, and form part of a larger unified project.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "asserted",
   "supporting_quote": "Micro tasks are defined as small tasks that require human judgment, can be completed by humans independently over the internet, and are part of a larger unified project."
  },
  {
   "id": "kaal:claim:4734750-031",
   "url": "https://wulfkaal.github.io/claims/4734750-031",
   "claim": "Supervised learning currently depends on labeled data produced by micro task work, so the evolution and growth of AI is correlated with the evolution and growth of micro task work.",
   "type": "condition",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "while supervised learning remains more common than unsupervised and reinforcement learning"
   ],
   "supporting_quote": "currently, supervised learning depends on labeled data that is produced via micro task work"
  },
  {
   "id": "kaal:claim:4734750-032",
   "url": "https://wulfkaal.github.io/claims/4734750-032",
   "claim": "Because AI progress depends on labeled data from micro task work, the significant limitations of existing micro task platform systems act as a direct constraint on the evolution of AI.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "But alas, microtasks platform systems are subject to significant limitations that inhibit the evolution of AI."
  },
  {
   "id": "kaal:claim:4734750-033",
   "url": "https://wulfkaal.github.io/claims/4734750-033",
   "claim": "Human limitations such as limited attention span, irrationality, and inaccuracy force verification of micro task work, but manual verification does not solve the problem because verifiers are subject to the same human limitations.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "However, manual verification of micro task work is subject to the same human limitations."
  },
  {
   "id": "kaal:claim:4734750-034",
   "url": "https://wulfkaal.github.io/claims/4734750-034",
   "claim": "Centralized requesters buy quality through redundancy, assigning up to fifteen workers to the same task to form consensus, which multiplies cost, produces waste, and pushes micro task worker rates down.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "centralized micro task platforms that lack reliable worker quality signals"
   ],
   "supporting_quote": "Requiring requesters to pay proportionally (e.g. up to 15 times) for work per project results in waste. The necessity of multiplication of work also subjects micro task workers to lower rates and lack of payment increases."
  },
  {
   "id": "kaal:claim:4734750-035",
   "url": "https://wulfkaal.github.io/claims/4734750-035",
   "claim": "Roughly 38 percent of the labor pool is unbanked but skilled and is therefore excluded from centralized micro task marketplaces, because without a bank account workers cannot contribute to or profit from those platforms.",
   "type": "failure",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "evidenced",
   "supporting_quote": "the circa 38% of the labor pool that is unbanked but skilled does not currently have access to the centralized micro task marketplaces"
  },
  {
   "id": "kaal:claim:4734750-036",
   "url": "https://wulfkaal.github.io/claims/4734750-036",
   "claim": "A reliable reputation score substitutes for redundant labor: if a high reputation worker completes a task, required duplication can fall from fifteen workers to five or fewer, which is what allows micro task work to scale.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized platforms with portable, wallet linked reputation scores"
   ],
   "supporting_quote": "If a reliable and high reputation score worker completes the tasks, the duplication may be brought from 15 to 5 or less in the decentralized CRDAO setup. This enables unprecedented scaling of micro task work."
  },
  {
   "id": "kaal:claim:4734750-037",
   "url": "https://wulfkaal.github.io/claims/4734750-037",
   "claim": "Two sided reputation scores discipline both sides of the micro task market: workers become less likely to accept offers from low reputation requesters, and low reputation workers are less likely to be retained.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "If requesters have a lower reputation score, workers become less likely to accept requesters"
  },
  {
   "id": "kaal:claim:4734750-038",
   "url": "https://wulfkaal.github.io/claims/4734750-038",
   "claim": "Because payment runs entirely through crypto transactions and reputation tokens rather than bank transfers, the only thing a micro task worker needs to earn a living on the platform is access to the internet.",
   "type": "condition",
   "topics": [
    "systemic-risk",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "All that is needed for a micro task worker to earn a living on the CRDAO is access to the Internet."
  },
  {
   "id": "kaal:claim:4734750-039",
   "url": "https://wulfkaal.github.io/claims/4734750-039",
   "claim": "Intermediary payment fees on centralized micro task platforms are economically viable only for high volume workers who can eventually avoid them, so those fees function as a barrier to entry for new micro task workers.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "The fees in centralized mechanical turk platforms are only economically viable for higher volume workers who can at some point avoid the Paypal fees but create barriers to entry for new micro task workers."
  },
  {
   "id": "kaal:claim:4734750-040",
   "url": "https://wulfkaal.github.io/claims/4734750-040",
   "claim": "Reputation token staking substitutes for identity verification: because staking makes the network attack resistant, workers can complete micro tasks without verifying identity, which removes the cost, delay, and privacy surrender of centralized approval and enlarges the available labor pool.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750",
   "year": "2024",
   "source_sha256": "60eadf91c0913468505afc664c8d8d1e1673d6c5326d031ca7060addb8ab2eda",
   "confidence": "argued",
   "supporting_quote": "The CRDAO architecture, and specifically its reputation token staking mechanism, make the CRDAO attack resistant."
  },
  {
   "id": "kaal:claim:5254152-001",
   "url": "https://wulfkaal.github.io/claims/5254152-001",
   "claim": "One-person-one-vote in DAOs equalizes voting power across participants regardless of financial stake, but it creates the risk of majority tyranny.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "asserted",
   "scope_conditions": [
    "DAOs using a one-person-one-vote governance model"
   ],
   "supporting_quote": "This model ensures equal voting power for all participants, promoting democratic decision-making but potentially leading to majority tyranny."
  },
  {
   "id": "kaal:claim:5254152-002",
   "url": "https://wulfkaal.github.io/claims/5254152-002",
   "claim": "Quadratic voting suppresses domination by any single participant because the cost of each additional vote rises quadratically, making concentrated control prohibitively expensive.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "asserted",
   "scope_conditions": [
    "DAOs that implement quadratic vote pricing"
   ],
   "supporting_quote": "The cost of additional votes increases quadratically, making it prohibitively expensive for any one individual to dominate the voting process."
  },
  {
   "id": "kaal:claim:5254152-003",
   "url": "https://wulfkaal.github.io/claims/5254152-003",
   "claim": "Fungible governance tokens deliver liquidity and transparency in DAO voting rights, but because they are tradable they simultaneously create exposure to vote buying and manipulation.",
   "type": "failure",
   "topics": [
    "governance-design",
    "tokenomics",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "asserted",
   "scope_conditions": [
    "DAOs whose voting rights are represented by tradable fungible tokens"
   ],
   "supporting_quote": "These tokens represent voting rights and can be traded, providing liquidity and transparency but also risking vote buying and manipulation."
  },
  {
   "id": "kaal:claim:5254152-004",
   "url": "https://wulfkaal.github.io/claims/5254152-004",
   "claim": "Reputation based governance allocates decision power by past contribution and community standing, which promotes transparency and trust, but reputation is difficult to measure objectively.",
   "type": "failure",
   "topics": [
    "reputation",
    "governance-design",
    "dao",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "asserted",
   "scope_conditions": [
    "DAOs allocating voting power by contribution history, community feedback, or peer review"
   ],
   "supporting_quote": "This model allocates decision-making power based on participants' past contributions and reputation within the community, promoting transparency and trust but challenging to measure objectively."
  },
  {
   "id": "kaal:claim:5254152-005",
   "url": "https://wulfkaal.github.io/claims/5254152-005",
   "claim": "Poorly governed DAOs face significant risks of centralization, lack of transparency, and inefficiency, so effective governance structures are a precondition for DAO sustainability.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs without effective governance structures"
   ],
   "supporting_quote": "However, poorly governed DAOs face significant risks, including centralization, lack of transparency, and inefficiency."
  },
  {
   "id": "kaal:claim:5254152-006",
   "url": "https://wulfkaal.github.io/claims/5254152-006",
   "claim": "Smart contracts, as self executing contracts with terms written directly into code, remove the need for intermediaries, which lowers costs and raises trust among participants.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "decentralization",
    "economics",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "asserted",
   "scope_conditions": [
    "blockchain based organizations using self executing contracts"
   ],
   "supporting_quote": "Smart contracts, self-executing contracts with terms directly written into code, eliminate the need for intermediaries, reducing costs and increasing trust among participants."
  },
  {
   "id": "kaal:claim:5254152-007",
   "url": "https://wulfkaal.github.io/claims/5254152-007",
   "claim": "In insurance, smart contracts that automate verification and settlement reduce administrative costs and increase both the speed and the accuracy of claims processing.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "asserted",
   "scope_conditions": [
    "insurance claims handled through blockchain based DAO structures"
   ],
   "supporting_quote": "Blockchain technology ensures transparency in claims processing, with smart contracts automating verification and settlement. This reduces administrative costs and increases the speed and accuracy of claims processing."
  },
  {
   "id": "kaal:claim:5254152-008",
   "url": "https://wulfkaal.github.io/claims/5254152-008",
   "claim": "DAOs still face unresolved challenges of scalability, governance, and the need for robust security measures, which constrain their adoption despite their potential.",
   "type": "failure",
   "topics": [
    "dao",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "asserted",
   "supporting_quote": "Despite their potential, DAOs face challenges such as scalability, governance issues, and the need for robust security measures."
  },
  {
   "id": "kaal:claim:5254152-009",
   "url": "https://wulfkaal.github.io/claims/5254152-009",
   "claim": "As the underlying technology matures, DAOs are likely to take a more significant role in decentralized lending, insurance, derivatives, and cross border transactions.",
   "type": "predictive",
   "topics": [
    "dao",
    "decentralization",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "speculative",
   "scope_conditions": [
    "conditional on technological maturation and resolution of regulatory concerns"
   ],
   "supporting_quote": "As the technology matures, DAOs are likely to play a more significant role in decentralized lending, insurance, derivatives, and cross-border transactions"
  },
  {
   "id": "kaal:claim:5254152-010",
   "url": "https://wulfkaal.github.io/claims/5254152-010",
   "claim": "The study evaluates each DAO on six factors: Decentralization, Work to Earn, Attack Resistance, Regulatory Compliance, Governance, and Organizational Communication.",
   "type": "definitional",
   "topics": [
    "dao",
    "research-methods",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "asserted",
   "scope_conditions": [
    "the paper's dataset of 50 DAOs selected by treasury asset size"
   ],
   "supporting_quote": "provides an analysis of six major factors of each individual DAO and scores them on their performance in each category. The six factors considered are: Decentralization, Work to Earn, Attack Resistance, Regulatory Compliance, Governance, and Organizational Communication."
  },
  {
   "id": "kaal:claim:5254152-011",
   "url": "https://wulfkaal.github.io/claims/5254152-011",
   "claim": "Each DAO in the dataset was scored from zero to ten on each factor by analyzing teams, using only publicly available information and the organization's whitepaper where one existed.",
   "type": "definitional",
   "topics": [
    "dao",
    "research-methods",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "asserted",
   "scope_conditions": [
    "scores derived from public sources only",
    "no access to internal DAO data"
   ],
   "supporting_quote": "Each DAO was given a score between zero (0) and ten (10) by the analyzing teams based on publicly available information and the organization's whitepaper, if it has one."
  },
  {
   "id": "kaal:claim:5254152-012",
   "url": "https://wulfkaal.github.io/claims/5254152-012",
   "claim": "A decentralization score of 10 is stipulated to mean a fully decentralized organization with anonymous participation, minimal barriers to entry, and well distributed power; lower scores indicate concentration of power.",
   "type": "definitional",
   "topics": [
    "decentralization",
    "dao",
    "research-methods",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "asserted",
   "scope_conditions": [
    "the paper's six factor scoring metric"
   ],
   "supporting_quote": "A score of 10 suggests a fully decentralized organization with anonymous participation, minimal barriers to entry, and well-distributed power."
  },
  {
   "id": "kaal:claim:5254152-013",
   "url": "https://wulfkaal.github.io/claims/5254152-013",
   "claim": "Low attack resistance in DAOs is typically caused by the use of easily purchasable or transferable governance tokens, which leave the organization vulnerable to attacks such as 51 percent and Sybil attacks.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs whose voting power is embodied in freely purchasable or transferable tokens"
   ],
   "supporting_quote": "Lower scores indicate vulnerability to attacks, often due to the use of easily purchasable or transferable governance tokens."
  },
  {
   "id": "kaal:claim:5254152-014",
   "url": "https://wulfkaal.github.io/claims/5254152-014",
   "claim": "High governance scores require explicit mechanisms that prevent common governance failures, specifically the tyranny of the majority and the tragedy of the commons, such as reputation based voting, multi round voting, or incentive alignment.",
   "type": "condition",
   "topics": [
    "dao",
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "asserted",
   "scope_conditions": [
    "the paper's governance scoring criterion"
   ],
   "supporting_quote": "High scores, such as 9 or 10, indicate the presence of mechanisms to prevent common governance failures, such as the tyranny of the majority or the tragedy of the commons."
  },
  {
   "id": "kaal:claim:5254152-015",
   "url": "https://wulfkaal.github.io/claims/5254152-015",
   "claim": "Higher regulatory compliance depends on a DAO adopting an appropriate legal wrapper, such as an LLC or a foundation structure, and complying with the regulations of its jurisdiction.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "compliance",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "asserted",
   "scope_conditions": [
    "DAOs that need to interact with real world legal entities"
   ],
   "supporting_quote": "Higher scores indicate the use of appropriate legal wrappers, such as LLC or foundation structures"
  },
  {
   "id": "kaal:claim:5254152-016",
   "url": "https://wulfkaal.github.io/claims/5254152-016",
   "claim": "DAOs that rely on third party communication platforms and offer no incentives for engagement suffer impaired coordination and efficiency across the organization.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "dao",
    "governance-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "argued",
   "scope_conditions": [
    "DAOs without dedicated communication platforms or participation incentives"
   ],
   "supporting_quote": "Lower scores suggest reliance on third-party platforms and a lack of incentives for engagement, which can impair the organization's overall coordination and efficiency."
  },
  {
   "id": "kaal:claim:5254152-017",
   "url": "https://wulfkaal.github.io/claims/5254152-017",
   "claim": "The author concedes that the scoring metric is imperfect and that some scored attributes may have changed by the time of publication, presenting it instead as a structured approach to evaluating what drives DAO success or failure.",
   "type": "design",
   "topics": [
    "research-methods",
    "dao",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "asserted",
   "scope_conditions": [
    "the scores are point in time assessments"
   ],
   "supporting_quote": "scoring system is perfect, and that some attributes may have changed by the time of publication, this metric aims to provide a structured approach to evaluating the key characteristics that contribute to the success or failure of decentralized organizations."
  },
  {
   "id": "kaal:claim:5254152-018",
   "url": "https://wulfkaal.github.io/claims/5254152-018",
   "claim": "Across the sampled DAOs, no single industry consistently outperforms the others on total score, indicating a diverse rather than sector determined performance landscape.",
   "type": "empirical",
   "topics": [
    "dao",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "dataset of 50 DAOs",
    "total scores on a 0 to 60 range"
   ],
   "supporting_quote": "The data indicates that no single industry consistently outperforms others, suggesting a diverse performance landscape for DAOs across different sectors."
  },
  {
   "id": "kaal:claim:5254152-019",
   "url": "https://wulfkaal.github.io/claims/5254152-019",
   "claim": "Total scores vary significantly across DAO industries, with DeScience DAOs and Data Analysis DAOs scoring the highest.",
   "type": "empirical",
   "topics": [
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "dataset of 50 DAOs scored on six attributes"
   ],
   "supporting_quote": "The total scores, represented by the line graph, show significant variation among the industries, with DeScience DAOs and Data Analysis DAOs scoring the highest."
  },
  {
   "id": "kaal:claim:5254152-020",
   "url": "https://wulfkaal.github.io/claims/5254152-020",
   "claim": "The average decentralization score across the sampled DAOs is 4.25, with a maximum of 9 and a minimum of 1, showing wide variability in how decentralized these organizations actually are.",
   "type": "empirical",
   "topics": [
    "decentralization",
    "empirical-evidence",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "dataset of 50 DAOs",
    "decentralization scored on a 1 to 10 scale"
   ],
   "supporting_quote": "The average decentralization score across all DAOs is 4.25, with the highest score being 9 and the lowest being 1."
  },
  {
   "id": "kaal:claim:5254152-021",
   "url": "https://wulfkaal.github.io/claims/5254152-021",
   "claim": "The average attack resistance score across the sampled DAOs is 3.65 on a scale of 0 to 10, the lowest of the measured attributes alongside regulatory compliance.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "empirical-evidence",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "dataset of 50 DAOs",
    "attack resistance scored on a 0 to 10 scale"
   ],
   "supporting_quote": "This graph shows the attack resistance scores of various DAOs, with scores ranging from 0 to 10. The average score is 3.65"
  },
  {
   "id": "kaal:claim:5254152-022",
   "url": "https://wulfkaal.github.io/claims/5254152-022",
   "claim": "The average regulatory compliance score across the sampled DAOs is 3.22, ranging from 1 to 9, and the distribution shows that many DAOs struggle with regulatory compliance while only a few achieve higher scores.",
   "type": "empirical",
   "topics": [
    "compliance",
    "empirical-evidence",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "dataset of 50 DAOs",
    "regulatory compliance scored on a 1 to 10 scale"
   ],
   "supporting_quote": "The average score is 3.22, with the highest score being 9 and the lowest score being 1. The distribution of scores suggests that many DAOs struggle with regulatory compliance, with only a few achieving higher scores."
  },
  {
   "id": "kaal:claim:5254152-023",
   "url": "https://wulfkaal.github.io/claims/5254152-023",
   "claim": "The average Work to Earn score across the sampled DAOs is 4.1, ranging from 1 to 9, indicating only moderate effectiveness of contributor reward mechanisms across the market.",
   "type": "empirical",
   "topics": [
    "risk-and-incentives",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "dataset of 50 DAOs",
    "work to earn scored on a 1 to 10 scale"
   ],
   "supporting_quote": "The average score across all DAOs is 4.1, with the highest score being 9 and the lowest score being 1."
  },
  {
   "id": "kaal:claim:5254152-024",
   "url": "https://wulfkaal.github.io/claims/5254152-024",
   "claim": "The average organizational communication score across the sampled DAOs is 4.32, with a maximum of 10 and a minimum of 1, indicating only moderate communication effectiveness overall.",
   "type": "empirical",
   "topics": [
    "institutional-design",
    "empirical-evidence",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "dataset of 50 DAOs",
    "organizational communication scored on a 1 to 10 scale"
   ],
   "supporting_quote": "The average score is 4.32, indicating a moderate level of effectiveness in communication across these organizations. The highest score is 10, showing that some DAOs excel in this area, while the lowest score is 1"
  },
  {
   "id": "kaal:claim:5254152-025",
   "url": "https://wulfkaal.github.io/claims/5254152-025",
   "claim": "The analysis reveals significant variability across all six attributes, decentralization, security, governance, regulatory compliance, work incentives, and communication effectiveness, reflecting the divergent developmental stages of DAOs.",
   "type": "empirical",
   "topics": [
    "dao",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "dataset of 50 DAOs scored on six attributes"
   ],
   "supporting_quote": "The analysis of these attributes reveals significant variability in the decentralization, security, governance, regulatory compliance, work incentives, and communication effectiveness of DAOs."
  },
  {
   "id": "kaal:claim:5254152-026",
   "url": "https://wulfkaal.github.io/claims/5254152-026",
   "claim": "DeScience and Data Analysis DAOs generally score higher on overall performance metrics, whereas Investment DAOs and Art and Culture DAOs display idiosyncratic mixes of strengths and weaknesses.",
   "type": "empirical",
   "topics": [
    "dao",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "dataset of 50 DAOs across market categories"
   ],
   "supporting_quote": "For instance, DeScience and Data Analysis DAOs generally score higher in overall performance metrics, while Investment and Art and Culture DAOs exhibit unique profiles of strengths and weaknesses."
  },
  {
   "id": "kaal:claim:5254152-027",
   "url": "https://wulfkaal.github.io/claims/5254152-027",
   "claim": "Requiring users to purchase governance tokens in order to vote both centralizes power in majority token holders and leaves the DAO highly vulnerable to 51 percent and sock puppet attacks, as illustrated by Gelato DAO which scored 1 on both decentralization and attack resistance.",
   "type": "failure",
   "topics": [
    "governance-design",
    "tokenomics",
    "consensus-and-security",
    "decentralization",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs where voting requires purchasing fungible governance tokens"
   ],
   "supporting_quote": "It is highly centralized as users must purchase governance tokens to vote, limiting power to majority token holders (D: 1). The platform is highly vulnerable to 51% and sock puppet attacks due to the purchasable governance tokens (A: 1)."
  },
  {
   "id": "kaal:claim:5254152-028",
   "url": "https://wulfkaal.github.io/claims/5254152-028",
   "claim": "A DAO operating without a legal wrapper risks being deemed a partnership by estoppel in legal disputes, exposing its members to liability, as scored for Hop DAO with a regulatory compliance score of 1.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs with no legal entity or legal wrapper"
   ],
   "supporting_quote": "Lacking a legal wrapper, it is at risk of being deemed a partnership by estoppel in legal disputes (R: 1)."
  },
  {
   "id": "kaal:claim:5254152-029",
   "url": "https://wulfkaal.github.io/claims/5254152-029",
   "claim": "A DAO that offers no paid work opportunities for participants stifles engagement, as scored for Hop DAO with a Work to Earn score of 1.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs with no compensated contribution channel"
   ],
   "supporting_quote": "The DAO does not offer paid work opportunities for participants, stifling engagement (W: 1)."
  },
  {
   "id": "kaal:claim:5254152-030",
   "url": "https://wulfkaal.github.io/claims/5254152-030",
   "claim": "A one person, one vote structure raises a DAO's resistance to 51 percent and sock puppet attacks, as reflected in TomiDAO's attack resistance score of 6 against a sample average of 3.65.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs implementing one person, one vote rather than token weighted voting"
   ],
   "supporting_quote": "The one-person, one-vote model increases resistance to 51% and sock puppet attacks (A: 6)."
  },
  {
   "id": "kaal:claim:5254152-031",
   "url": "https://wulfkaal.github.io/claims/5254152-031",
   "claim": "Procedural governance safeguards such as two step voting with temperature checks do not produce genuine decentralization when the governance token remains purchasable; in MakerDAO's case the purchasable token renders true decentralization nominal.",
   "type": "failure",
   "topics": [
    "decentralization",
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs combining multi stage voting with freely purchasable governance tokens"
   ],
   "supporting_quote": "The governance process includes 2-step voting with temperature checks, but the purchasable governance token makes true decentralization nominal (G: 4)."
  },
  {
   "id": "kaal:claim:5254152-032",
   "url": "https://wulfkaal.github.io/claims/5254152-032",
   "claim": "Subjecting every community vote to review by a council that is not democratically elected defeats the governance value of community voting, as scored for Goldfinch DAO with a governance score of 2.",
   "type": "failure",
   "topics": [
    "governance-design",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs where a non elected council holds final say over community votes"
   ],
   "supporting_quote": "involves all community votes being reviewed by the council, which is not democratically elected (G: 2)."
  },
  {
   "id": "kaal:claim:5254152-033",
   "url": "https://wulfkaal.github.io/claims/5254152-033",
   "claim": "Some DAOs substitute anonymity for legal structure: without any legal registration, Olympus DAO relies on anonymity to avoid legal action, which the author scores as the weakest possible regulatory compliance posture.",
   "type": "failure",
   "topics": [
    "compliance",
    "law-and-legal-systems",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs with no legal registration in any jurisdiction"
   ],
   "supporting_quote": "Without legal registration, Olympus DAO relies on anonymity to avoid legal action (R: 1)."
  },
  {
   "id": "kaal:claim:5254152-034",
   "url": "https://wulfkaal.github.io/claims/5254152-034",
   "claim": "Adopting a conventional corporate form in a jurisdiction that does not recognize DAOs yields only partial legal protection; Silo Finance is registered as an LLC in Texas, but Texas does not recognize DAOs.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "compliance",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs incorporated in jurisdictions lacking DAO specific recognition"
   ],
   "supporting_quote": "Registered as an LLC in Texas, it offers some legal protection, but Texas does not recognize DAOs (R: 5)"
  },
  {
   "id": "kaal:claim:5254152-035",
   "url": "https://wulfkaal.github.io/claims/5254152-035",
   "claim": "A DAO registered in a jurisdiction without DAO legislation risks default treatment as a partnership under existing law, as recorded for Klima DAO in California.",
   "type": "failure",
   "topics": [
    "compliance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs organized in jurisdictions with no DAO statute"
   ],
   "supporting_quote": "Registered in California, it faces potential treatment as a partnership under existing laws (R: 5)"
  },
  {
   "id": "kaal:claim:5254152-036",
   "url": "https://wulfkaal.github.io/claims/5254152-036",
   "claim": "A governance design aimed at democratic balance can still centralize power over time when the token supply is fixed, as recorded for MoonDAO.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "decentralization",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs with a fixed governance token supply"
   ],
   "supporting_quote": "aims for democratic balance but the fixed token supply could result in centralized power over time (G: 4)"
  },
  {
   "id": "kaal:claim:5254152-037",
   "url": "https://wulfkaal.github.io/claims/5254152-037",
   "claim": "Tiered membership models that tie governance rights and influence to token holdings introduce imbalance and a centralization element into DAO governance, as scored for Bankless DAO.",
   "type": "failure",
   "topics": [
    "governance-design",
    "tokenomics",
    "decentralization",
    "dao",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs with contributor tiers or access levels keyed to token ownership"
   ],
   "supporting_quote": "The tiered membership model ties rights and influence to token holdings, creating an imbalance and centralization element in its governance (G: 4)."
  },
  {
   "id": "kaal:claim:5254152-038",
   "url": "https://wulfkaal.github.io/claims/5254152-038",
   "claim": "Reliance on fungible, publicly tradable governance tokens undermines a protocol's resilience by exposing it to risks such as 51 percent attacks, as scored for Push Protocol.",
   "type": "failure",
   "topics": [
    "governance-design",
    "tokenomics",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs whose governance tokens trade on open markets"
   ],
   "supporting_quote": "Its resilience is undermined by the fungible, publicly tradable $PUSH tokens, which expose it to risks such as 51% attacks (A: 2)."
  },
  {
   "id": "kaal:claim:5254152-039",
   "url": "https://wulfkaal.github.io/claims/5254152-039",
   "claim": "A tiered voting system that combines temperature checks with token holder percentage thresholds robustly defends a DAO against common attacks, as reflected in Arbitrum's attack resistance score of 8.",
   "type": "design",
   "topics": [
    "governance-design",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs implementing multi stage voting with participation thresholds"
   ],
   "supporting_quote": "The tiered voting system incorporating temperature checks and token holder percentages robustly defends against common DAO attacks"
  },
  {
   "id": "kaal:claim:5254152-040",
   "url": "https://wulfkaal.github.io/claims/5254152-040",
   "claim": "The absence of a dedicated discussion platform, combined with poor engagement on third party accounts, hinders meaningful discussion and collaboration within a DAO, as scored for BrainDAO with an organizational communication score of 1 despite high decentralization and attack resistance scores.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152",
   "year": "2024",
   "source_sha256": "bb2052d809a4615f0f3e2526ba6416293c40d00260149ba4fe6f38addf052796",
   "confidence": "evidenced",
   "scope_conditions": [
    "DAOs communicating only through external social platforms"
   ],
   "supporting_quote": "The absence of a dedicated discussion platform and poor engagement on third-party accounts hinder meaningful discussions and collaboration (O: 1)."
  },
  {
   "id": "kaal:claim:4855607-001",
   "url": "https://wulfkaal.github.io/claims/4855607-001",
   "claim": "Web3 community governance built on Weighted Directed Acyclic Graphs, validation pools with reputation staking, and a federated communications protocol provides an evolutionary approach to optimizing AI models rather than a static compliance layer over them.",
   "type": "design",
   "topics": [
    "governance-design",
    "ai-and-agents",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the six AI model families the author examines: deep learning, federated learning, transformer, GNN, RL, and RLHF"
   ],
   "supporting_quote": "The integration of web3 community governance, using Weighted Directed Acyclic Graphs (WDAGs) and validation pools with reputation staking in combination with a federated communications protocol, offers an evolutionary approach to AI model optimization."
  },
  {
   "id": "kaal:claim:4855607-002",
   "url": "https://wulfkaal.github.io/claims/4855607-002",
   "claim": "The computational cost of improving deep learning performance scales so badly that halving the error rate is estimated to require over five hundred times more computational resources, which raises a sustainability problem for the deep learning paradigm itself.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "scaling driven improvement of deep learning accuracy"
   ],
   "supporting_quote": "improving deep learning performance increases drastically, with estimates suggesting that halving the error rate would require over 500 times more computational resources. This raises concerns about the sustainability and efficiency of deep learning approaches."
  },
  {
   "id": "kaal:claim:4855607-003",
   "url": "https://wulfkaal.github.io/claims/4855607-003",
   "claim": "Deep learning models inadvertently learn and amplify whatever biases exist in their training data, so the composition of the training corpus, not the architecture, is the source of unfair or discriminatory outcomes.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "depends on the data used for training"
   ],
   "supporting_quote": "Depending on the data used for training, deep learning models can inadvertently learn and amplify biases present in the training data, potentially leading to unfair or discriminatory outcomes."
  },
  {
   "id": "kaal:claim:4855607-004",
   "url": "https://wulfkaal.github.io/claims/4855607-004",
   "claim": "Deep learning models adapt to changes in data distribution far less readily than human learning does, which limits their reliability once the operating environment diverges from the training data.",
   "type": "failure",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "settings where the data distribution shifts after training"
   ],
   "supporting_quote": "Furthermore, deep learning models are not as adaptable to changes in data distribution as human learning, which can adapt more quickly to new situations and contexts."
  },
  {
   "id": "kaal:claim:4855607-005",
   "url": "https://wulfkaal.github.io/claims/4855607-005",
   "claim": "In federated learning the communication cost of many edge devices sending model parameters to a central server frequently exceeds the computation cost, and heterogeneity in the participating devices, including varying computational capabilities and resource constraints, compounds the problem.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "federated learning across numerous heterogeneous edge devices"
   ],
   "supporting_quote": "devices sending model parameters to the central server, often exceeding the computation cost. The heterogeneity of participating devices and their data also poses a challenge, categorized into systems heterogeneity (varying computational capabilities and resource constraints)"
  },
  {
   "id": "kaal:claim:4855607-006",
   "url": "https://wulfkaal.github.io/claims/4855607-006",
   "claim": "Federated learning does not eliminate privacy risk: because gradients and partial parameters are transmitted, the system remains vulnerable to attacks that leak data, and this vulnerability together with communication overhead is a significant hurdle to deployment.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "federated learning schemes that share gradients or partial parameters with a server"
   ],
   "supporting_quote": "Privacy concerns, reliance on batch-by-batch updates, vulnerability to data leaks caused by attacks due to the transfer of gradients and partial parameters, and communication overhead are significant hurdles that need to be overcome for the successful deployment of FL."
  },
  {
   "id": "kaal:claim:4855607-007",
   "url": "https://wulfkaal.github.io/claims/4855607-007",
   "claim": "The self attention mechanism in transformers scales quadratically with input sequence length, which makes transformers expensive and slow to train and use on long sequences and disqualifies them where real time processing or limited compute is required.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "long input sequences",
    "real time or compute constrained deployments"
   ],
   "supporting_quote": "The self-attention mechanism in Transformers has a quadratic computational complexity with respect to the input sequence length, making them computationally expensive and time-consuming to train and use, especially for long sequences."
  },
  {
   "id": "kaal:claim:4855607-008",
   "url": "https://wulfkaal.github.io/claims/4855607-008",
   "claim": "GPT class models are costly to run, and their closed nature and undisclosed algorithmic details raise transparency and accountability concerns that their performance does not offset.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "proprietary, closed weight transformer models"
   ],
   "supporting_quote": "GPT models, in particular, can be expensive to use due to their high computational requirements, and their closed nature and undisclosed algorithmic details raise concerns about transparency and accountability."
  },
  {
   "id": "kaal:claim:4855607-009",
   "url": "https://wulfkaal.github.io/claims/4855607-009",
   "claim": "In the legal domain the adoption of transformer based language models is blocked less by capability than by resources and access: training and deployment are resource intensive and large, quality tagged legal datasets are usually restricted.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "law-and-legal-systems",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "legal applications of transformer based language models"
   ],
   "supporting_quote": "In the legal domain, training and deploying Transformer-based Language Models (TLMs) is resource-intensive, and access to large, quality-tagged legal datasets is often restricted, hindering widespread adoption."
  },
  {
   "id": "kaal:claim:4855607-010",
   "url": "https://wulfkaal.github.io/claims/4855607-010",
   "claim": "GNN scalability on large real world graphs is a genuine trade off rather than an engineering gap: sampling methods lose influential neighbors while clustering methods lose structural patterns, so each remedy sacrifices part of the signal the model needs.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "large real world graphs where full graph processing is infeasible"
   ],
   "supporting_quote": "Scalability is a major concern for GNNs on large real-world graphs, as sampling methods may lose influential neighbors while clustering methods may lose structural patterns."
  },
  {
   "id": "kaal:claim:4855607-011",
   "url": "https://wulfkaal.github.io/claims/4855607-011",
   "claim": "GNNs are vulnerable to adversarial attacks that target both node features and graph structure, and their lack of interpretability remains a major obstacle to applying them to real world problems.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "citation-and-knowledge",
    "consensus-and-security",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "real world GNN deployments where adversaries can influence the graph"
   ],
   "supporting_quote": "GNNs can be vulnerable to adversarial attacks on both node features and graph structure, and interpretability remains a major obstacle for applying GNNs to real-world problems."
  },
  {
   "id": "kaal:claim:4855607-012",
   "url": "https://wulfkaal.github.io/claims/4855607-012",
   "claim": "Most GNN architectures assume homogeneous graph structures, so adapting them to heterogeneous graphs with diverse node and edge types remains an unsolved research challenge, and full batch training on large graphs suffers memory overflow.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "citation-and-knowledge",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "graphs with diverse node and edge types",
    "large graphs trained full batch"
   ],
   "supporting_quote": "Training GNNs on large graphs can be resource-intensive, and full-batch training methods suffer from memory overflow issues. Many GNNs assume homogeneous graph structures, and adapting these models to heterogeneous graphs with diverse node and edge types remains a significant research challenge."
  },
  {
   "id": "kaal:claim:4855607-013",
   "url": "https://wulfkaal.github.io/claims/4855607-013",
   "claim": "Explainable reinforcement learning research has not yet produced usable explanations: the field relies on toy examples, omits user testing, produces explanations that are themselves complex, uses basic visualizations, and rarely open sources its code.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "current explainable RL research as surveyed in the text"
   ],
   "supporting_quote": "Current research in explainable RL, which aims to make RL models more transparent and interpretable, also has limitations. These include the use of \"toy examples\", lack of user testing, complexity of explanations, basic visualizations, and lack of open-sourced code."
  },
  {
   "id": "kaal:claim:4855607-014",
   "url": "https://wulfkaal.github.io/claims/4855607-014",
   "claim": "Deep reinforcement learning demands large amounts of training data, which suggests its algorithms differ fundamentally from human learning, and learning without supervision becomes particularly hard when rewards are sparse, as they typically are in sequence generation tasks.",
   "type": "failure",
   "topics": [
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "sparse reward settings",
    "sequence generation tasks"
   ],
   "supporting_quote": "Deep RL methods often demand large amounts of training data, suggesting that the algorithms may differ fundamentally from those underlying human learning. Moreover, learning without supervision is particularly hard when the reward is sparse, which is likely to happen for sequence generation tasks."
  },
  {
   "id": "kaal:claim:4855607-015",
   "url": "https://wulfkaal.github.io/claims/4855607-015",
   "claim": "Reward modeling learned through interaction with users carries two structural pathologies: majority views disproportionately influence the learned reward function, and the agent may engage in reward hacking.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "reward functions learned from aggregated user interaction"
   ],
   "supporting_quote": "but it comes with potential issues such as the prevalence of majority views disproportionately influencing the learned reward function and the risk of reward hacking."
  },
  {
   "id": "kaal:claim:4855607-016",
   "url": "https://wulfkaal.github.io/claims/4855607-016",
   "claim": "There is a trade off in RLHF between the agent imitating human advice and learning autonomously, and human guidance that is too specific will prevent the agent from discovering novel optimal strategies.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "human in the loop RL where the extent of human involvement is a design choice"
   ],
   "supporting_quote": "there is a trade-off between the extent to which the agent should imitate human advice versus learning autonomously. Overspecific human guidance can hinder the agent's ability to discover novel optimal strategies."
  },
  {
   "id": "kaal:claim:4855607-017",
   "url": "https://wulfkaal.github.io/claims/4855607-017",
   "claim": "Balancing helpfulness against harmlessness is an inherent tension in Safe RLHF rather than a tuning problem that can be resolved once.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "Safe RLHF designs that optimize helpfulness and harmlessness jointly"
   ],
   "supporting_quote": "Balancing the dual objectives of helpfulness and harmlessness remains an inherent tension in Safe RLHF."
  },
  {
   "id": "kaal:claim:4855607-018",
   "url": "https://wulfkaal.github.io/claims/4855607-018",
   "claim": "RLHF fails on several fronts at once: humans can pursue harmful goals either innocently or maliciously, human feedback degrades when examples are hard to evaluate and especially when RLHF is applied to superhuman models, and reward models diverge from humans through misspecification and misgeneralization.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "evidenced",
   "scope_conditions": [
    "especially acute when RLHF is applied to models more capable than their human evaluators"
   ],
   "supporting_quote": "Moreover, humans can pursue harmful goals, either innocently or maliciously, and can provide poor feedback when examples are hard to evaluate, especially when applying RLHF to superhuman models. Reward models can differ from humans due to misspecification and misgeneralization"
  },
  {
   "id": "kaal:claim:4855607-019",
   "url": "https://wulfkaal.github.io/claims/4855607-019",
   "claim": "In traditional federated learning environments the reliability of updates arriving from various nodes is hard to establish; web3 smart contracts and consensus mechanisms can automate that verification at the point of aggregation.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "federated learning with untrusted or unverified participating nodes"
   ],
   "supporting_quote": "In traditional FL environments, ensuring the reliability of updates from various nodes can be challenging. Web3's smart contracts and consensus mechanisms can automate the verification of updates from participating nodes"
  },
  {
   "id": "kaal:claim:4855607-020",
   "url": "https://wulfkaal.github.io/claims/4855607-020",
   "claim": "Decentralized collective governance without a central authority reduces both single points of failure and the biases that attach to traditional centralized systems, which is the core structural argument for governing AI through web3 rather than through a central body.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "governance arrangements where stakeholders collectively govern"
   ],
   "supporting_quote": "This model enables a decentralized decision-making process, where stakeholders collectively govern without a centralized authority, thereby reducing single points of failure and potential biases associated with traditional centralized systems."
  },
  {
   "id": "kaal:claim:4855607-021",
   "url": "https://wulfkaal.github.io/claims/4855607-021",
   "claim": "Validation pools evaluate contributions democratically on the basis of staked tokens, and the outcome of that evaluation governs the minting of new reputation tokens, so community consensus on AI decisions is what determines standing in the system.",
   "type": "definitional",
   "topics": [
    "reputation",
    "tokenomics",
    "consensus-and-security",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "asserted",
   "scope_conditions": [
    "the proposed web3 community governance architecture"
   ],
   "supporting_quote": "Validation Pools allow for the democratic evaluation of contributions based on staked tokens, with outcomes influencing the minting of new REP tokens that reflect community consensus on AI-related decisions."
  },
  {
   "id": "kaal:claim:4855607-022",
   "url": "https://wulfkaal.github.io/claims/4855607-022",
   "claim": "The acyclic property of WDAGs is load bearing for governance rather than incidental: because loops and cycles are impossible, the progression of governance rules stays unambiguous and the framework cannot accumulate redundancies and contradictions.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "governance rule systems represented as directed acyclic graphs"
   ],
   "supporting_quote": "Their acyclic nature means that they do not allow for loops or cycles, which ensures that the progression of governance rules remains unambiguous, eliminating potential redundancies and contradictions within the governance framework."
  },
  {
   "id": "kaal:claim:4855607-023",
   "url": "https://wulfkaal.github.io/claims/4855607-023",
   "claim": "Assigning weights to the edges of a governance WDAG lets the system prioritize some governance elements over others, which is how stakeholders are guided to the most relevant and impactful information when making decisions.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "asserted",
   "scope_conditions": [
    "WDAG based governance where edge weights encode priority"
   ],
   "supporting_quote": "By assigning weights to edges, WDAGs can prioritize certain aspects of governance, helping stakeholders make informed decisions by highlighting the most relevant and impactful information."
  },
  {
   "id": "kaal:claim:4855607-024",
   "url": "https://wulfkaal.github.io/claims/4855607-024",
   "claim": "WDAGs allow new regulatory and ethical standards to be integrated into existing AI systems without overhauling the entire model architecture, which is what makes rapid legal adaptation feasible in sectors such as public safety and healthcare.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "sectors where AI applications must rapidly adapt to new laws and ethical considerations"
   ],
   "supporting_quote": "In the case of federal AI learning models, for instance, WDAGs facilitate the integration of new regulatory and ethical standards into existing AI systems without the need to overhaul the entire model architecture."
  },
  {
   "id": "kaal:claim:4855607-025",
   "url": "https://wulfkaal.github.io/claims/4855607-025",
   "claim": "Traditional governance models lack the real time responsiveness to community sentiment that a decentralized WDAG system supplies, and this latency, not an absence of rules, is what leaves conventional AI governance out of step with community values.",
   "type": "failure",
   "topics": [
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "comparison of centralized governance models against decentralized, continuously updated ones"
   ],
   "supporting_quote": "The WDAG system's decentralized nature, which captures and integrates community sentiment and ethical considerations, provides a real-time responsiveness that is often lacking in traditional governance models."
  },
  {
   "id": "kaal:claim:4855607-026",
   "url": "https://wulfkaal.github.io/claims/4855607-026",
   "claim": "Requiring community members to stake reputation tokens in order to validate data quality is what produces robust and reliable training datasets, and this participatory validation improves annotation accuracy while reducing bias.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "asserted",
   "scope_conditions": [
    "training data validation carried out by a reputation staking community"
   ],
   "supporting_quote": "Community members stake reputation tokens to validate data quality, ensuring robust and reliable datasets for training AI models. This participatory approach can improve data annotation accuracy and reduce biases."
  },
  {
   "id": "kaal:claim:4855607-027",
   "url": "https://wulfkaal.github.io/claims/4855607-027",
   "claim": "Because annotating large datasets is labor intensive and expensive, smart contracts that reward community members with tokens for annotation are needed to sustain a steady flow of high quality labeled data for deep learning.",
   "type": "design",
   "topics": [
    "tokenomics",
    "risk-and-incentives",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "supervised deep learning that depends on large labeled datasets"
   ],
   "supporting_quote": "Annotating large datasets is labor-intensive and expensive. Using smart contracts, web3 can incentivize community members to annotate data by rewarding them with tokens. This system ensures a steady flow of high-quality labeled data, crucial for training deep learning models."
  },
  {
   "id": "kaal:claim:4855607-028",
   "url": "https://wulfkaal.github.io/claims/4855607-028",
   "claim": "The interaction between transformer models and the web3 community forms an evolutionary feedback loop in which community input shapes model development and the improved models return better service to the community, which is what sustains participation.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "communities that both govern and consume the model they govern"
   ],
   "supporting_quote": "The interaction between Transformer models and the web3 community creates a symbiotic relationship where both evolve together. As the community inputs shape the development of the models, the improved models, in turn, offer better services or more accurate responses that benefit the community."
  },
  {
   "id": "kaal:claim:4855607-029",
   "url": "https://wulfkaal.github.io/claims/4855607-029",
   "claim": "In federated learning, validation pools coordinated by smart contracts should dispense rewards pro rata to the reputation a node has accumulated through productive work, so that incentives track a node's actual contribution to the model's learning rather than mere participation.",
   "type": "design",
   "topics": [
    "reputation",
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "federated learning where node contribution quality varies and must be motivated"
   ],
   "supporting_quote": "with validation pools that are smart contract coordinated to dispense rewards pro rata to the reputation scores a node may have accumulated through productive work. This mechanism ensures that nodes are incentivized based on their actual input to the AI model's learning."
  },
  {
   "id": "kaal:claim:4855607-030",
   "url": "https://wulfkaal.github.io/claims/4855607-030",
   "claim": "The feedback effects that make community governance of federated learning work will not materialize unless expert community members are selected coherently, making coherent expert selection a precondition of the mechanism rather than an optional refinement.",
   "type": "condition",
   "topics": [
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "asserted",
   "scope_conditions": [
    "community driven governance of federated learning models"
   ],
   "supporting_quote": "The key is to select the expert community members coherently to allow for the feedback effects for FL to materialize."
  },
  {
   "id": "kaal:claim:4855607-031",
   "url": "https://wulfkaal.github.io/claims/4855607-031",
   "claim": "A precedent and citation WDAG accounting system documents and traces every adjustment to a federated learning model, and that full accounting is what enables dynamic feedback effects and the rapid integration of new techniques.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "governance of iteratively updated federated learning models"
   ],
   "supporting_quote": "This setup enables fully accounted dynamic feedback effects for rapid integration of new techniques and approaches to FL. This, in turn, ensures that the models remain cutting-edge and are quickly adaptable to new challenges and opportunities in AI development."
  },
  {
   "id": "kaal:claim:4855607-032",
   "url": "https://wulfkaal.github.io/claims/4855607-032",
   "claim": "GNNs and web3 systems optimize each other through mutual feedback effects, and it is this bidirectional learning, rather than one system merely serving the other, that produces an evolutionary dynamic optimization process.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "citation-and-knowledge",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "asserted",
   "scope_conditions": [
    "GNNs deployed inside the web3 systems they analyze"
   ],
   "supporting_quote": "The integration and optimization of AI models such as GNNs and web3 systems happens in feedback effects between the two systems. Through these feedback effects both systems learn constantly from and with each other which results in an evolutionary dynamic optimization process."
  },
  {
   "id": "kaal:claim:4855607-033",
   "url": "https://wulfkaal.github.io/claims/4855607-033",
   "claim": "The RLHF process is exposed to failure because participants may hold potentially adversarial and misaligned interests, so the vulnerability lies in the incentive structure of feedback provision rather than in the learning algorithm.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "RLHF systems where feedback providers have divergent stakes"
   ],
   "supporting_quote": "Currently, the RLHF process, which involves training AI models based on human preferences and feedback, can face challenges due to the potentially adversarial and misaligned interests of participants."
  },
  {
   "id": "kaal:claim:4855607-034",
   "url": "https://wulfkaal.github.io/claims/4855607-034",
   "claim": "Distributing governance across all participants prevents any single entity from dominating decision making, and because model or training changes then require consensus, the resulting decisions reflect collective rather than individual interest.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "regulatory-failure",
    "ai-and-agents",
    "risk-and-incentives",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "governance systems where change requires consensus among distributed participants"
   ],
   "supporting_quote": "By distributing governance across all participants, the proposed web3 community governance system ensures that no single entity can dominate the decision-making process. This structure promotes the alignment of incentives since changes to the model or the training process require consensus"
  },
  {
   "id": "kaal:claim:4855607-035",
   "url": "https://wulfkaal.github.io/claims/4855607-035",
   "claim": "Applying decentralized voting and consensus to RLHF permits human feedback to be verified before it is used to calibrate the Reward Model, which raises the integrity and reliability of the feedback data entering the model.",
   "type": "design",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "RLHF pipelines where feedback can be verified prior to reward model training"
   ],
   "supporting_quote": "Applying these mechanisms to RLHF allows for the decentralized verification of human feedback before it's used to calibrate the RM, enhancing the integrity and reliability of the feedback data."
  },
  {
   "id": "kaal:claim:4855607-036",
   "url": "https://wulfkaal.github.io/claims/4855607-036",
   "claim": "Web3 systems provide inexpensive community based smart contract dispute resolution, and these mechanisms minimize legal cost while increasing both the certainty of outcomes and the protections available to stakeholders.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "asserted",
   "scope_conditions": [
    "disputes among stakeholders inside a web3 community"
   ],
   "supporting_quote": "Web3 systems are particularly good at inexpensive community based smart contract dispute resolution. Through these dispute resolution mechanisms web3 systems minimize legal cost while increasing certainty of outcomes and stakeholder protections."
  },
  {
   "id": "kaal:claim:4855607-037",
   "url": "https://wulfkaal.github.io/claims/4855607-037",
   "claim": "Issuing non fungible reputation tokens that represent voting power, access rights, or entitlement to a share of the project's success creates an economic structure in which participants are directly invested in the success of the RLHF process.",
   "type": "design",
   "topics": [
    "tokenomics",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "RLHF communities where retention and sustained participation matter"
   ],
   "supporting_quote": "The web3 system as proposed herein can issue non-fungible reputation tokens that represent voting power, access rights, or entitlement to a share of the project's success. This creates an economic structure where participants are directly invested in the success of the RLHF process"
  },
  {
   "id": "kaal:claim:4855607-038",
   "url": "https://wulfkaal.github.io/claims/4855607-038",
   "claim": "Gathering a wide range of human feedback makes the Reward Model reflect a comprehensive spectrum of human preferences and values, and it is this inclusivity that mitigates bias and captures a richer understanding of what counts as a desirable outcome.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "reward models trained on feedback drawn from a broad participant base"
   ],
   "supporting_quote": "By leveraging this model, RLHF can gather a wide range of human feedback, ensuring the Reward Model (RM) reflects a comprehensive spectrum of human preferences and values. This inclusivity helps mitigate biases and captures a richer understanding of what is considered a desirable outcome."
  },
  {
   "id": "kaal:claim:4855607-039",
   "url": "https://wulfkaal.github.io/claims/4855607-039",
   "claim": "Organizations should adopt web3 governance frameworks incrementally, beginning with less critical applications in order to assess impacts and refine methodologies, because staged adoption is what allows the risks to be managed while the benefits of decentralized AI governance are realized.",
   "type": "normative",
   "topics": [
    "risk-and-incentives",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "organizations incorporating these optimizations into existing and future AI systems"
   ],
   "supporting_quote": "the author recommends adopting web3 governance frameworks incrementally, starting with less critical applications to assess impacts and refine methodologies. This staged adoption allows organizations to manage risks while realizing the benefits of decentralized AI governance."
  },
  {
   "id": "kaal:claim:4855607-040",
   "url": "https://wulfkaal.github.io/claims/4855607-040",
   "claim": "Governance protocols themselves must be continuously evaluated and adapted, because without that ongoing revision AI models will neither maintain optimal performance nor stay in line with changing regulations and societal expectations.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How AI Models are Optimized Through Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4855607",
   "year": "2024",
   "source_sha256": "eb0b3e62374b45a8fa888c6bde9725e606bcb46cf4b5e74a6e851d9f25099113",
   "confidence": "argued",
   "scope_conditions": [
    "AI systems operating under regulations and societal expectations that change over time"
   ],
   "supporting_quote": "Moreover, continuously evaluating and adapting governance protocols is vital to maintain optimal performance of AI models and ensure they stay in line with changing regulations and societal expectations."
  },
  {
   "id": "kaal:claim:4685567-001",
   "url": "https://wulfkaal.github.io/claims/4685567-001",
   "claim": "Growth in philanthropy is the main driver of impact innovation, and the successive phases of impact innovation from Impact 1.0 to Impact 3.0 are responses to that growth.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "evidenced",
   "scope_conditions": [
    "global philanthropy since the turn of the century"
   ],
   "supporting_quote": "Growth in philanthropy is the main driver of impact innovation."
  },
  {
   "id": "kaal:claim:4685567-002",
   "url": "https://wulfkaal.github.io/claims/4685567-002",
   "claim": "Kaal stipulates the load bearing definition of the paper: impact certificates are electronic tickets that can be sold to claim a project's impact, functioning analogously to a carbon credit.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "asserted",
   "supporting_quote": "Impact Certificates are \"electronic tickets\" that can be sold to claim a project's impact akin to a carbon credit."
  },
  {
   "id": "kaal:claim:4685567-003",
   "url": "https://wulfkaal.github.io/claims/4685567-003",
   "claim": "Impact 1.0 foundations developed plutocratic power structures because their leaders and trustees were never democratically elected, and Impact 3.0 addresses this by adding WEB3 collaborative democratic measures on top of the existing foundation structures.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "private foundation governance",
    "Impact 3.0 still relies on foundation structures"
   ],
   "supporting_quote": "further improve Impact 1.0 private foundations by adding collaborative WEB3 democratic measures that address plutocratic power structures in Impact 1.0 foundations that originated in the lack of democratic elections of Impact 1.0 foundations' organizations' leaders or trustees."
  },
  {
   "id": "kaal:claim:4685567-004",
   "url": "https://wulfkaal.github.io/claims/4685567-004",
   "claim": "Because Impact 1.0 entrusted individual donors rather than donor collectives with identifying which problems to solve, individual philanthropists can reshape underfunded causes according to their own ideals without meaningful checks and balances or crowd wisdom.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "Impact 1.0 and 2.0 philanthropic strategies",
    "high net worth individual and corporate donors"
   ],
   "supporting_quote": "Individual philanthropists can leverage underfunded causes and reshape them according to their ideals without significant checks and balances or crowd wisdom considerations."
  },
  {
   "id": "kaal:claim:4685567-005",
   "url": "https://wulfkaal.github.io/claims/4685567-005",
   "claim": "Impact 3.0 shortens the lag between donors taking their tax deductions and the donated funds actually reaching impact projects, which is a capital allocation timing failure of Impact 1.0 and 2.0.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "donors receiving tax deductions in advance of deployment"
   ],
   "supporting_quote": "Impact 3.0 improves on Impact 1.0 and 2.0 capital allocation timeframes, lowering the time between donors receiving their tax deductions and deploying the donated funds to the impact projects."
  },
  {
   "id": "kaal:claim:4685567-006",
   "url": "https://wulfkaal.github.io/claims/4685567-006",
   "claim": "Kaal limits the reach of his own proposal: donors motivated by personal or local causes may have no interest in scaling impact at all, so the paper's target audience is only the subgroup of high dollar donors who want technology based improvements in philanthropy.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "asserted",
   "scope_conditions": [
    "donors motivated by personal experience or institutional loyalty"
   ],
   "supporting_quote": "In short, donors who are motivated by their personal or local interests may not be motivated by scaling impact overall."
  },
  {
   "id": "kaal:claim:4685567-007",
   "url": "https://wulfkaal.github.io/claims/4685567-007",
   "claim": "Because Impact 1.0 lacks a liquid and efficient funding marketplace, donors protect their interest by overinvesting in process rather than in impact outcomes directly.",
   "type": "failure",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "absence of a liquid impact funding marketplace"
   ],
   "supporting_quote": "Because Impact 1.0 does not support a liquid and efficient marketplace for funding, funding results in Impact 1.0 are logistically difficult to attain. To protect their interest in impact results, donors often overinvest in the process not in impact outcomes directly."
  },
  {
   "id": "kaal:claim:4685567-008",
   "url": "https://wulfkaal.github.io/claims/4685567-008",
   "claim": "Without a full view of the impact market, Impact 1.0 donors end up funding projects run by people already in their existing networks rather than the most qualified projects judged by objective standards.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "no central impact marketplace",
    "funding sources that are not well known"
   ],
   "supporting_quote": "Without a full view of the market, impact donors in Impact 1.0 often end up funding projects by people they know through their existing networks, not the most qualified projects based on objective standards."
  },
  {
   "id": "kaal:claim:4685567-009",
   "url": "https://wulfkaal.github.io/claims/4685567-009",
   "claim": "The absence of an efficient marketplace lets big dollar donors hijack the priorities of impact intermediaries such as foundations, donor advised funds, NGOs and fiscal sponsors, producing a feast or famine pattern for fundable projects.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "intermediated philanthropy without a central marketplace"
   ],
   "supporting_quote": "Because of the lack of an efficient marketplace, impact intermediaries, such as foundations, DAFs, NGOs, and fiscal sponsors, among others, often experience their priorities being hijacked by big-dollar donors. This often results in a feast or famine situation for fundable projects in Impact 1.0."
  },
  {
   "id": "kaal:claim:4685567-010",
   "url": "https://wulfkaal.github.io/claims/4685567-010",
   "claim": "Credential tracking is a necessary condition for Impact 3.0: any Impact 3.0 platform built without WEB3 credential tracking systems will encounter significant disruption over time, as foreshadowed by the failure to enforce and monitor net zero commitments in Impact 1.0.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "Impact 3.0 platforms",
    "stakes higher than in Impact 1.0 carbon markets"
   ],
   "supporting_quote": "Any Impact 3.0 platform without WEB3 credential tracking systems is bound to encounter significant disruption over time."
  },
  {
   "id": "kaal:claim:4685567-011",
   "url": "https://wulfkaal.github.io/claims/4685567-011",
   "claim": "In an impact certificate system the rules of the game are set by demand: altruists define what counts by deciding which minted certificates they are willing to pay for.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "impact teams can mint and publicly declare ownership of certificates"
   ],
   "supporting_quote": "By deciding which certificates they are willing to pay for, altruists using the system define the rules of the 37 game."
  },
  {
   "id": "kaal:claim:4685567-012",
   "url": "https://wulfkaal.github.io/claims/4685567-012",
   "claim": "Kaal concedes that at their worst Impact 1.0 carbon credits are non transparent, fraudulent and fail to mitigate climate change, but contests the inference drawn from that record: operational shortcomings do not necessarily invalidate the underlying theory.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "distinguishes operational execution from underlying theory"
   ],
   "supporting_quote": "at their worst, carbon credits in Impact 1.0 are non-transparent, fraudulent and fail to mitigate climate change. Nonetheless, operational shortcomings do not necessarily invalidate the underlying theory"
  },
  {
   "id": "kaal:claim:4685567-013",
   "url": "https://wulfkaal.github.io/claims/4685567-013",
   "claim": "Impact markets that promote retrospective funding and resale of impact carry an inherent risk of incentivizing net negative ventures, because individuals can capture the benefit of positive impacts without bearing the cost when their actions produce negative impacts.",
   "type": "failure",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "retrospective funding",
    "resale of impact permitted"
   ],
   "supporting_quote": "This risk stems from the potential for individuals to benefit from causing positive impacts without 46 bearing the costs if their actions result in negative impacts."
  },
  {
   "id": "kaal:claim:4685567-014",
   "url": "https://wulfkaal.github.io/claims/4685567-014",
   "claim": "Impact 1.0 impact markets fail on the demand side: they have more sellers than buyers, and many potential buyers would have funded those projects anyway, which removes the need for a secondary market and significantly reduces resale value.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "Impact 1.0 secondary markets for social impact credits"
   ],
   "supporting_quote": "Impact 1.0 markets typically have more sellers than buyers and many potential buyers would have done those 47 projects anyway thus removing the need for a secondary market. This imbalance of high supply and low demand significantly reduces the \"resale\" value"
  },
  {
   "id": "kaal:claim:4685567-015",
   "url": "https://wulfkaal.github.io/claims/4685567-015",
   "claim": "Participatory grantmaking in Impact 2.0 trades efficiency for inclusivity: balancing the two is complex and potentially leads to longer decision making processes and increased resource allocation for facilitation.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "participatory grantmaking models in Impact 2.0"
   ],
   "supporting_quote": "Balancing inclusivity and efficiency can be complex, potentially leading to longer decision-making processes and increased resource allocation for facilitation."
  },
  {
   "id": "kaal:claim:4685567-016",
   "url": "https://wulfkaal.github.io/claims/4685567-016",
   "claim": "Impact measurement in Impact 2.0 has no settled standard: consensus on measurement methodologies and metrics remains elusive, which produces divergent approaches and hinders comparability across programs and sectors.",
   "type": "failure",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "evidenced",
   "scope_conditions": [
    "Impact 2.0 measurement practice"
   ],
   "supporting_quote": "Standardization and consensus on measurement methodologies and metrics remain elusive, leading to variations in approaches and sometimes hindering comparability 67 across different programs or sectors."
  },
  {
   "id": "kaal:claim:4685567-017",
   "url": "https://wulfkaal.github.io/claims/4685567-017",
   "claim": "The impact measurement consulting business follows a distinctly centralized approach, and without the crowd wisdom and community audit that WEB3 Impact 3.0 supplies, such consulting practices are subject to single points of failure.",
   "type": "failure",
   "topics": [
    "research-methods",
    "decentralization",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "centralized consulting model for impact measurement"
   ],
   "supporting_quote": "Without crowd wisdom and community audit that are part of WEB3 Impact 3.0, such consulting practices can often be subject to single points of failure."
  },
  {
   "id": "kaal:claim:4685567-018",
   "url": "https://wulfkaal.github.io/claims/4685567-018",
   "claim": "Impact 3.0 makes verification a precondition of funding: unlike Impact 1.0 and 2.0, where projects could receive funding without impact verification, Impact 3.0 only allows funding where projects are verified and demonstrate impact via milestones.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "asserted",
   "scope_conditions": [
    "listing requires either winning a competition or an expert community upvote"
   ],
   "supporting_quote": "Unlike Impact 1.0 and 2.0 where projects may receive funding despite a lack of impact verification, Impact 3.0 only allows project funding if projects are verified and demonstrate impact via milestones."
  },
  {
   "id": "kaal:claim:4685567-019",
   "url": "https://wulfkaal.github.io/claims/4685567-019",
   "claim": "Firm commitment underwriting of impact certificate listings gives the project team and the investing community an assurance that the entire listing, including all certificate fractions, will be purchased provided the corresponding impact milestone deliverables are upvoted by the WEB3 expert community.",
   "type": "design",
   "topics": [
    "defi",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "an underwriting donor community exists",
    "milestone deliverables are upvoted"
   ],
   "supporting_quote": "the project team and the investing community obtain assurances that the entire impact certificate listing will be purchased, including all fractions of impact certificates, if the respective impact milestone deliverables are upvoted by the respective WEB3 expert community."
  },
  {
   "id": "kaal:claim:4685567-020",
   "url": "https://wulfkaal.github.io/claims/4685567-020",
   "claim": "The two stage vote is the mechanism that produces consensus: a non binding test vote reveals how every donor assesses a project, after which donors can change their minds in the formal vote where their reputation tokens are at stake, and in practice decisions are made with unanimity.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "reputation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "reputation tokens are staked in the formal vote",
    "the chosen WEB3 decentralized governance design"
   ],
   "supporting_quote": "Once every donor sees how all other donors assess the given project, they can jointly change their minds during the \"formal vote\" in which their respective reputation tokens are at stake. Typically, in this form of decentralized governance, all decisions are made with unanimity."
  },
  {
   "id": "kaal:claim:4685567-021",
   "url": "https://wulfkaal.github.io/claims/4685567-021",
   "claim": "Retroactive public goods funding via results oracles in DAO format fails at the governance layer: even where the core resource distribution concept works, the project remains exposed to decentralized governance attack vectors because the governance design lacks attack resistance.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "governance-design",
    "dao",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "results oracle operating as a DAO",
    "retroactive public goods funding designs"
   ],
   "supporting_quote": "The key downside of these types of oracles in DAO format are decentralized governance attack vectors. In other wods, even if the core concept of resource distribution works well enough, the overall projet is typically subject to the downsides that derive from lack of attack resistance"
  },
  {
   "id": "kaal:claim:4685567-022",
   "url": "https://wulfkaal.github.io/claims/4685567-022",
   "claim": "Hypercerts, like other WEB3 optimization attempts for impact certificates, lack the required verification of impact inputs inside decentralized governance settings that are attack proof.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "asserted",
   "scope_conditions": [
    "hypercerts as implemented at the time of writing"
   ],
   "supporting_quote": "Like other optimization attempts, Hypercerts often lack the require verification of impact inputs in decentralized governance settings that are attack proof."
  },
  {
   "id": "kaal:claim:4685567-023",
   "url": "https://wulfkaal.github.io/claims/4685567-023",
   "claim": "Donor community votes have no binding legal effect on the 501c3 that holds the assets, yet the board will in practice follow the publicly visible voting and staking outcomes because departing from them puts the board and its long term client base at risk.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "compliance",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "donor community does not pool assets or take custody",
    "voting and staking outcomes are publicly visible"
   ],
   "supporting_quote": "in effect it will adhere to the publicly visible voting and staking outcomes of the donor community on their chosen blockchain or centralized database. Not adhering to the choices made by the donor community risks the 501c3 board and its long-term client base."
  },
  {
   "id": "kaal:claim:4685567-024",
   "url": "https://wulfkaal.github.io/claims/4685567-024",
   "claim": "Because expert communities can be set up quickly and self organized through a WEB3 governance software suite, the agency structures used to supervise centralized legacy service providers become obsolete.",
   "type": "mechanism",
   "topics": [
    "economics",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "a WEB3 governance software suite is available"
   ],
   "supporting_quote": "Expert communities can be set up quickly and self-organized through a software suite of WEB3 governance. Agency structures used in centralized legacy system service providers become obsolete."
  },
  {
   "id": "kaal:claim:4685567-025",
   "url": "https://wulfkaal.github.io/claims/4685567-025",
   "claim": "Weighted reputation voting has key advantages over WEB2 and WEB3 one token one vote mechanisms because it aligns each donor community member's individual incentives while simultaneously calibrating those incentives with the interests of the overall community.",
   "type": "design",
   "topics": [
    "reputation",
    "tokenomics",
    "ai-and-agents",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "reputation tokens are non fungible and chain agnostic"
   ],
   "supporting_quote": "The use of weighted reputation voting has key advantages over other WEB2 and WEB3 one-token-one-vote voting mechanisms. It aligns incentives for donor community members individually and at the same time calibrates their incentives with the overall community."
  },
  {
   "id": "kaal:claim:4685567-026",
   "url": "https://wulfkaal.github.io/claims/4685567-026",
   "claim": "Impact 3.0 is bounded by market participants' purchasing choices: projects whose impact certificates find no purchasers after listing are less likely to proliferate or find long term commercial applications.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "asserted",
   "scope_conditions": [
    "post listing secondary market demand"
   ],
   "supporting_quote": "If market participants don't purchase impact certificates post-listing, those projects whose impact certificates do not find purchasers are less likely to proliferate and find commercial applications long-term."
  },
  {
   "id": "kaal:claim:4685567-027",
   "url": "https://wulfkaal.github.io/claims/4685567-027",
   "claim": "Because Impact 3.0 growth depends on donor realization, willingness to run parallel tracks, standardization, critical mass of listings, funding sources and credential tracking, only a smaller subset of the philanthropy market will be attracted to impact certificate markets, and full establishment may take five to ten years.",
   "type": "predictive",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "speculative",
   "scope_conditions": [
    "multiple listed dependencies must be satisfied"
   ],
   "supporting_quote": "Given these dependencies, a smaller subset of the philanthropy market will be attracted to impact certificate markets. It may take five to ten years for the impact certificate marketplace to fully establish itself and scale in impact donor circles."
  },
  {
   "id": "kaal:claim:4685567-028",
   "url": "https://wulfkaal.github.io/claims/4685567-028",
   "claim": "The existing fund allocation model is afflicted by uninformed voters, sockpuppets and other gamesmanship, by voting with nothing at stake, and by voting with other people's money, and the crowd wisdom of WEB3 communities in the impact certificate model upgrades that model.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "asserted",
   "scope_conditions": [
    "legacy fund allocation and voting models"
   ],
   "supporting_quote": "the wisdom of the crowd in the respective WEB3 communities of the impact certificate model upgrades the existing fund allocation model which was afflicted by uninformed voters, sockpuppets, and other gamesmanship, voting with nothing at stake, voting with other people's money."
  },
  {
   "id": "kaal:claim:4685567-029",
   "url": "https://wulfkaal.github.io/claims/4685567-029",
   "claim": "Kaal adopts an indifference principle as the benchmark for a functioning impact certificate marketplace: a philanthropist should be indifferent between spending money to do a good deed and paying someone else to do it, provided the philanthropist receives the entire certificate for that deed.",
   "type": "normative",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "certificates must be reliably attributable to the group that performed the activity",
    "a perfect world of a functioning impact certificate marketplace"
   ],
   "supporting_quote": "in a perfect world of a functioning impact certificate marketplace, a philanthropist should be indifferent as to whether spending money to do a good deed or paying someone else to do it, provided the philanthropist gets the entire certificate for that good deed."
  },
  {
   "id": "kaal:claim:4685567-030",
   "url": "https://wulfkaal.github.io/claims/4685567-030",
   "claim": "Many current blockchain projects critically fail to use existing social impact evidence in their design and management, which Kaal identifies as a source of future challenges for blockchain based impact financing.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "empirical-evidence",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "evidenced",
   "scope_conditions": [
    "blockchain projects aimed at SDG financing"
   ],
   "supporting_quote": "current blockchain projects critically lack usage of existing social impact evidence in design and management, posing future"
  },
  {
   "id": "kaal:claim:4685567-031",
   "url": "https://wulfkaal.github.io/claims/4685567-031",
   "claim": "Community based impact verification lets impact systems scale because verification can be stood up instantaneously without paying centralized organizational intermediaries, unlike Impact 2.0 verification through competitions.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "WEB3 community toolsets are available"
   ],
   "supporting_quote": "community-based impact verification in Impact 3.0 allows impact systems to scale because the verification can be set up instantaneously without the need to pay centralized organization intermediaries."
  },
  {
   "id": "kaal:claim:4685567-032",
   "url": "https://wulfkaal.github.io/claims/4685567-032",
   "claim": "Impact certificates let businesses offset engagements that are non impact or publicly perceived as non impact, and Kaal gives the example of the tobacco industry investing in a lung cancer impact certificate to offset its contribution to lung cancer.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "asserted",
   "scope_conditions": [
    "businesses seeking to demonstrate social impact",
    "ESG and brand value motivations"
   ],
   "supporting_quote": "For example, the tobacco industry could invest in a lung cancer impact certificate to offset their contributions to lung cancer."
  },
  {
   "id": "kaal:claim:4685567-033",
   "url": "https://wulfkaal.github.io/claims/4685567-033",
   "claim": "The smart contracts underlying the impact certificate marketplace prohibit and make technically impossible the extension of favors to individual donors, so unlike Impact 1.0 and 2.0 the highest pledging donor cannot obtain special considerations or better terms.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "tamper proof smart contract fully transparent on the blockchain"
   ],
   "supporting_quote": "The smart WEB3 contracts that power the operations of the impact certificate marketplace prohibit and make impossible the extension of favors to individual donors."
  },
  {
   "id": "kaal:claim:4685567-034",
   "url": "https://wulfkaal.github.io/claims/4685567-034",
   "claim": "Greenwashing is curtailed in the impact certificate marketplace because any market participant can instantaneously invalidate nominal but not substantive impact stories published by certificate purchasers and by listed projects.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain storage of impact certificate data",
    "funding tied to trackable progress"
   ],
   "supporting_quote": "Through this transparency any form of nominal but not substantive impact stories published by impact certificate purchasers and impact certificate listing projects can be invalidated instantaneously by any market participant"
  },
  {
   "id": "kaal:claim:4685567-035",
   "url": "https://wulfkaal.github.io/claims/4685567-035",
   "claim": "Impact 3.0 can replace the political compromise and years of lobbying that Impact 2.0 standardization required with WEB3 precedent setting in weighted directed acyclical graphs, in which a smart contract itself becomes the standard.",
   "type": "design",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "weighted directed acyclical graph based precedent setting"
   ],
   "supporting_quote": "Where standardization in Impact 2.0 required political compromise and years of lobbying, Impact 3.0 can use new WEB3 forms of standardization via precedent-setting in weighted 107 directed acyclical graphs. In this system, a smart contract can become the standard."
  },
  {
   "id": "kaal:claim:4685567-036",
   "url": "https://wulfkaal.github.io/claims/4685567-036",
   "claim": "Because projects that list impact certificates can prove community driven impact over time, the community organized around a certificate should be able to apply for and receive government tax credits as a continuing revenue stream rather than a one off award.",
   "type": "normative",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "speculative",
   "scope_conditions": [
    "governments recognize the for good outcomes created",
    "community coordination software is in place"
   ],
   "supporting_quote": "the community that organizes around the impact certificate should be able to apply for and receive tax credits as a form of revenue stream from the government for the continuous creation of desirable societal outcomes."
  },
  {
   "id": "kaal:claim:4685567-037",
   "url": "https://wulfkaal.github.io/claims/4685567-037",
   "claim": "For venture capital funds, an impact certificate listing performs a due diligence function, because the follow on investor inherits all the project performance data generated through the impact certificate marketplace.",
   "type": "design",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "projects with larger capital requirements over time",
    "impact validated through the certificate"
   ],
   "supporting_quote": "Through the projects' success that is validated through the impact certificate, the venture capital follow-on investment benefits from all the project performance data that is generated through the impact certificate marketplace."
  },
  {
   "id": "kaal:claim:4685567-038",
   "url": "https://wulfkaal.github.io/claims/4685567-038",
   "claim": "Impact certificates are an incomplete measure of expertise: they capture impact success in fungible economic terms without referring to the expertise actually developed by individual project community members or by the project as a collective, which is why WEB3 community software is needed for expertise tracking.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "expertise tracking for donors, secondary market participants and follow on funders"
   ],
   "supporting_quote": "impact certificates are mostly a fungible measure of impact success in economic terms without a direct reference to the inherent expertise developed by the individual project community members and the project as a collective."
  },
  {
   "id": "kaal:claim:4685567-039",
   "url": "https://wulfkaal.github.io/claims/4685567-039",
   "claim": "Because reputation merit scores are calculated in an immutable and attack resistant manner, they can be aggregated across the many communities an individual belongs to, producing a constantly evolving WEB3 identity score comparable to a credit score.",
   "type": "definitional",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "argued",
   "scope_conditions": [
    "WEB3 governance identity, distinguished from biometric or KYC proof of physical existence"
   ],
   "supporting_quote": "scores are calculated in an immutable and attack-resistant manner. Therefore, the scores can be aggregated for an individual who is a member of many different communities. The aggregated score creates a constantly evolving identity score in WEB3 systems that can be compared with a credit score."
  },
  {
   "id": "kaal:claim:4685567-040",
   "url": "https://wulfkaal.github.io/claims/4685567-040",
   "claim": "The voting logic makes impact community members work for themselves and for the community at the same time, which Kaal argues gives the system potential to create a reputation economy and forms of decentralized commerce that transcend capitalism and socialism.",
   "type": "predictive",
   "topics": [
    "reputation",
    "economics",
    "decentralization",
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "year": "2024",
   "source_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "confidence": "speculative",
   "scope_conditions": [
    "dynamic community based governance system as described"
   ],
   "supporting_quote": "Through the voting logic, impact community members are incentivized to work for themselves while at the same time working to benefit the community overall."
  },
  {
   "id": "kaal:claim:4900880-001",
   "url": "https://wulfkaal.github.io/claims/4900880-001",
   "claim": "In a quantum economy, core economic variables such as supply, demand, price, and utility are not fixed quantities but quantum states that can occupy several configurations at once until an observation or measurement resolves them into one value.",
   "type": "definitional",
   "topics": [
    "economics",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "asserted",
   "scope_conditions": [
    "within the quantum economic framework the author adopts"
   ],
   "supporting_quote": "In a quantum economy, traditional economic variables such as supply, demand, price, and utility are treated as quantum states that can exist in multiple configurations simultaneously until observed or measured."
  },
  {
   "id": "kaal:claim:4900880-002",
   "url": "https://wulfkaal.github.io/claims/4900880-002",
   "claim": "Because the states of economic agents are entangled, a change in one part of the economy can affect other parts instantaneously rather than through a traceable chain of transmission, producing a more interconnected and dynamic system than classical economics can describe.",
   "type": "mechanism",
   "topics": [
    "economics",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "asserted",
   "supporting_quote": "This entanglement suggests that changes in one part of the economy can instantaneously affect other parts, leading to a more interconnected and dynamic system."
  },
  {
   "id": "kaal:claim:4900880-003",
   "url": "https://wulfkaal.github.io/claims/4900880-003",
   "claim": "Quantum economics rejects the classical premise of deterministic outcomes and stable equilibrium, treating indeterminacy and fluctuation as intrinsic properties of economic systems rather than as noise around an equilibrium path.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "In contrast to classical economics, which assumes deterministic outcomes and stable equilibria, quantum economics recognizes the inherent indeterminacy and fluctuations in economic systems."
  },
  {
   "id": "kaal:claim:4900880-004",
   "url": "https://wulfkaal.github.io/claims/4900880-004",
   "claim": "Quantum computers gain their advantage over classical computers because qubits can hold multiple states simultaneously through superposition, which lets complex calculations run at exponentially faster rates than binary bit processing allows.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "asserted",
   "supporting_quote": "In contrast, quantum computers use qubits, which can exist in multiple states simultaneously due to superposition. This capability allows quantum computers to perform complex calculations at exponentially faster rates than classical computers."
  },
  {
   "id": "kaal:claim:4900880-005",
   "url": "https://wulfkaal.github.io/claims/4900880-005",
   "claim": "Quantum algorithms such as Shor's algorithm can factor large prime numbers exponentially faster than classical computers, which potentially renders currently deployed cryptographic systems including RSA obsolete.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "scope_conditions": [
    "assumes cryptographically relevant quantum computers become available"
   ],
   "supporting_quote": "Quantum algorithms, such as Shor's algorithm, can factor these numbers exponentially faster, potentially rendering existing cryptographic methods obsolete."
  },
  {
   "id": "kaal:claim:4900880-006",
   "url": "https://wulfkaal.github.io/claims/4900880-006",
   "claim": "Trust and security in digital financial systems and decentralized networks cannot survive the arrival of quantum computing without quantum resistant cryptographic protocols, making the shift to quantum safe cryptography a precondition for the quantum economy rather than an optional upgrade.",
   "type": "condition",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge",
    "decentralization",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "This development necessitates the creation of quantum-resistant cryptographic protocols to secure transactions and data in the quantum economy. The shift towards quantum-safe cryptography will be critical to maintaining trust and security in digital financial systems and decentralized networks."
  },
  {
   "id": "kaal:claim:4900880-007",
   "url": "https://wulfkaal.github.io/claims/4900880-007",
   "claim": "Disparities in access to quantum computing resources and expertise are likely to widen existing inequalities both between nations and within societies, so the distributional effect of quantum technology is a predictable consequence of unequal access rather than an incidental risk.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "The disparities in access to quantum computing resources and expertise could exacerbate existing inequalities between nations and within societies."
  },
  {
   "id": "kaal:claim:4900880-008",
   "url": "https://wulfkaal.github.io/claims/4900880-008",
   "claim": "The classical law of supply and demand fails on three specific grounds: supply and demand curves cannot be measured independently, economic interactions are intrinsically probabilistic, and goods and financial transactions are discrete rather than continuous.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "economics",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "However, this law faces several problems, such as the impossibility of measuring supply or demand curves independently, the intrinsically probabilistic nature of economic interactions, and the discrete nature of goods and financial transactions."
  },
  {
   "id": "kaal:claim:4900880-009",
   "url": "https://wulfkaal.github.io/claims/4900880-009",
   "claim": "The classical paradigm underlying mainstream economics, built on independence, rationality, and optimal equilibrium, cannot adequately address money creation, financial entanglement, or behavioral factors.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "Mainstream economics, with its emphasis on independence, rationality, and optimal equilibrium, is based on a classical paradigm. This classical paradigm struggles to address effects such as money creation, financial entanglement, and behavioral factors."
  },
  {
   "id": "kaal:claim:4900880-010",
   "url": "https://wulfkaal.github.io/claims/4900880-010",
   "claim": "The cognitive effects that look paradoxical under classical logic do not show that people are irrational; they show that people are using a different logic, one that the quantum formalism can model.",
   "type": "mechanism",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "The quantum approach suggests that these cognitive effects arise not because people are irrational, but because they are using a different kind of logic that can be modeled using the quantum formalism."
  },
  {
   "id": "kaal:claim:4900880-011",
   "url": "https://wulfkaal.github.io/claims/4900880-011",
   "claim": "Quantum economics and New Institutional Economics treat uncertainty in opposite ways: NIE casts institutions as devices for reducing uncertainty and stabilizing the economy, while quantum economics builds uncertainty and indeterminacy into economic interaction as a fundamental feature.",
   "type": "definitional",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "While NIE emphasizes the role of institutions in reducing uncertainties and fostering economic stability, quantum economics inherently incorporates uncertainty and indeterminacy as fundamental aspects of economic interactions."
  },
  {
   "id": "kaal:claim:4900880-012",
   "url": "https://wulfkaal.github.io/claims/4900880-012",
   "claim": "Existing quantum economic models carry unresolved defects that the field must address: some lack a realistic connection with financial markets, and others strip out the features that make the formalism quantum in the first place.",
   "type": "failure",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "Another challenge is to address the criticisms and limitations of existing quantum models and approaches, such as the lack of a realistic connection with financial markets or the removal of quantum-specific features in some models."
  },
  {
   "id": "kaal:claim:4900880-013",
   "url": "https://wulfkaal.github.io/claims/4900880-013",
   "claim": "Credit products such as mortgages transmit quantum cognitive effects from the individual level to the financial system, creating a feedback loop between individual and societal levels.",
   "type": "mechanism",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "Credit products, such as mortgages, act as a vector of transmission for quantum cognitive effects and create a feedback loop between the individual and societal levels."
  },
  {
   "id": "kaal:claim:4900880-014",
   "url": "https://wulfkaal.github.io/claims/4900880-014",
   "claim": "Financial derivatives are a major form of economic entanglement that played a key role in recent financial crises, with nominal values estimated at over a quadrillion dollars, which indicates how extensive entanglement in the global financial system has become.",
   "type": "empirical",
   "topics": [
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "evidenced",
   "supporting_quote": "The nominal value of financial derivatives has been estimated at over a quadrillion dollars, highlighting the extent of entanglement in the global financial system."
  },
  {
   "id": "kaal:claim:4900880-015",
   "url": "https://wulfkaal.github.io/claims/4900880-015",
   "claim": "Building entanglement into economic models supplies an explanation for collective behaviors such as herd behavior and market bubbles, which classical economic theories struggle to account for.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "Incorporating entanglement into economic models can help explain the emergence of collective behaviors, such as herd behavior and market bubbles, which are difficult to account for using classical economic theories."
  },
  {
   "id": "kaal:claim:4900880-016",
   "url": "https://wulfkaal.github.io/claims/4900880-016",
   "claim": "In a quantum game model of a market with informational asymmetry between two firms, monopoly emerges once the informational asymmetry passes a threshold, and total quantity and economic efficiency fall as a result.",
   "type": "mechanism",
   "topics": [
    "economics",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "evidenced",
   "scope_conditions": [
    "two firm market with informational asymmetry",
    "asymmetry above the threshold"
   ],
   "supporting_quote": "The model shows that monopoly appears when the informational asymmetry reaches a certain threshold, leading to a decrease in total quantity and economic efficiency."
  },
  {
   "id": "kaal:claim:4900880-017",
   "url": "https://wulfkaal.github.io/claims/4900880-017",
   "claim": "The integration of tokenomics with quantum economics turns the abstract concepts of the framework into working mechanisms, supplying practical instruments for decentralized finance and participatory governance.",
   "type": "design",
   "topics": [
    "tokenomics",
    "defi",
    "governance-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "asserted",
   "supporting_quote": "The integration of tokenomics with quantum economics operationalizes these abstract concepts, offering practical mechanisms for decentralized finance (DeFi) and participatory governance models."
  },
  {
   "id": "kaal:claim:4900880-018",
   "url": "https://wulfkaal.github.io/claims/4900880-018",
   "claim": "The de-skilling thesis, that new technologies invariably produce a smaller and less skilled workforce, is contradicted by research showing that firms often realize higher profitability when new technologies are entrusted to more skilled employees.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "evidenced",
   "supporting_quote": "Studies indicate that leveraging new technologies often yields higher profitability when entrusted to more skilled employees, highlighting the complex relationship between technological advancement and workforce capabilities."
  },
  {
   "id": "kaal:claim:4900880-019",
   "url": "https://wulfkaal.github.io/claims/4900880-019",
   "claim": "Automation is more likely to transform jobs than to eliminate them outright, but the same transformation may widen inequality between workers and between workers and the owners of technology.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "The impact of automation is more likely to result in job transformation rather than wholesale job elimination. However, it's essential to acknowledge that these changes may contribute to growing inequality between workers and between workers and technology owners."
  },
  {
   "id": "kaal:claim:4900880-020",
   "url": "https://wulfkaal.github.io/claims/4900880-020",
   "claim": "About 60 percent of all occupations have at least 30 percent of their activities technically automatable with currently demonstrated technologies, so automation exposure is spread across most occupations rather than concentrated in a few.",
   "type": "empirical",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on currently demonstrated technologies"
   ],
   "supporting_quote": "The potential for automation across various occupations is significant, with about 60% of all occupations having at least 30% of technically automatable activities based on currently demonstrated technologies."
  },
  {
   "id": "kaal:claim:4900880-021",
   "url": "https://wulfkaal.github.io/claims/4900880-021",
   "claim": "Automation drives wage divergence: as routine tasks are automated, wages stagnate or fall for workers in exposed roles while wages rise for workers in high skill non routine jobs, which widens income inequality.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "As routine tasks become increasingly automated, there's a risk of wage stagnation or even decline for workers in roles susceptible to automation. At the same time, those in high-skill, non-routine jobs may see their wages increase, potentially exacerbating income inequality."
  },
  {
   "id": "kaal:claim:4900880-022",
   "url": "https://wulfkaal.github.io/claims/4900880-022",
   "claim": "Headline net job creation figures conceal the real disruption: employers anticipate structural labor market churn of 23 percent of jobs over five years, so a positive net balance of created over destroyed jobs understates how many workers must move.",
   "type": "failure",
   "topics": [
    "economics",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "evidenced",
   "supporting_quote": "However, this net positive job creation masks significant churn in the job market, with employers anticipating a structural labor market churn of 23% of jobs in the next five years."
  },
  {
   "id": "kaal:claim:4900880-023",
   "url": "https://wulfkaal.github.io/claims/4900880-023",
   "claim": "Workplace trust is a condition for technological change to empower employees: a one percentage point rise in technological change is associated with a 0.23 percentage point rise in perceived empowerment where trust exists, against only 0.10 percentage points where it does not.",
   "type": "condition",
   "topics": [
    "reputation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "evidenced",
   "scope_conditions": [
    "workplaces with and without established trust"
   ],
   "supporting_quote": "A one percentage point rise in technological change is associated with a 0.23 percentage point rise in perceived empowerment in workplaces with trust, compared to only a 0.10 percentage point rise in workplaces without much trust."
  },
  {
   "id": "kaal:claim:4900880-024",
   "url": "https://wulfkaal.github.io/claims/4900880-024",
   "claim": "Contrary to expectation, employees whose managers behave more like a boss than like a partner tend to benefit more from technological change, so a participative management style is not a precondition for workers to gain from new technology.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "evidenced",
   "supporting_quote": "Contrary to expectations, employees with managers who behave more as a \"boss\" than a \"partner\" tend to benefit more from technological change."
  },
  {
   "id": "kaal:claim:4900880-025",
   "url": "https://wulfkaal.github.io/claims/4900880-025",
   "claim": "Whether automation actually displaces employment turns on more than technical feasibility: technology costs, labor market dynamics, economic benefits, and regulatory and social acceptance all condition the outcome.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "The impact of automation on employment extends beyond technical feasibility, encompassing factors such as technology costs, labor market dynamics, economic benefits, and regulatory and social acceptance."
  },
  {
   "id": "kaal:claim:4900880-026",
   "url": "https://wulfkaal.github.io/claims/4900880-026",
   "claim": "Many existing studies of automation and job loss rest on flawed assumptions and weak data, and their seemingly precise figures conceal those defects, so their headline numbers should not be taken at face value.",
   "type": "failure",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "Many existing studies on automation and job loss are criticized for their flawed assumptions and data weaknesses, often hidden by seemingly precise figures."
  },
  {
   "id": "kaal:claim:4900880-027",
   "url": "https://wulfkaal.github.io/claims/4900880-027",
   "claim": "Deploying AI does not by itself move workers toward higher value work: AI users spend more of their time on routine administrative tasks than on strategic activities, which points to a need to redesign work processes and job roles alongside the technology.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "evidenced",
   "supporting_quote": "For instance, AI users spend more time on routine administrative tasks than strategic activities."
  },
  {
   "id": "kaal:claim:4900880-028",
   "url": "https://wulfkaal.github.io/claims/4900880-028",
   "claim": "Redistributive preferences are shaped by perceived exposure to automation: priming individuals to consider their own vulnerability to an automation shock shifts what redistribution they support.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "evidenced",
   "supporting_quote": "Priming individuals to consider their vulnerability to an automation shock influences their redistributive preferences."
  },
  {
   "id": "kaal:claim:4900880-029",
   "url": "https://wulfkaal.github.io/claims/4900880-029",
   "claim": "Intellectual property growth functions as a leading indicator of workplace change: industries and regions with higher IP growth experience faster shifts in job roles, skill requirements, and organizational structures.",
   "type": "mechanism",
   "topics": [
    "innovation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "Industries and regions with higher levels of IP growth often experience more rapid changes in job roles, skill requirements, and organizational structures."
  },
  {
   "id": "kaal:claim:4900880-030",
   "url": "https://wulfkaal.github.io/claims/4900880-030",
   "claim": "Developing nations can leapfrog to newer technologies without intermediate steps, but the same transition exposes them to increased global competition for work displaced in developed economies, so leapfrogging does not by itself secure employment gains.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "While developing nations can leapfrog, they also face significant challenges, as job displacement in developed economies could lead to increased global competition for certain types of work, potentially affecting employment opportunities in developing nations."
  },
  {
   "id": "kaal:claim:4900880-031",
   "url": "https://wulfkaal.github.io/claims/4900880-031",
   "claim": "Quantum computing will displace job roles built on repetitive and manual tasks, but that displacement is offset by new roles in quantum programming, algorithm design, and quantum cryptography that did not previously exist.",
   "type": "predictive",
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    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "However, this displacement is counterbalanced by the creation of new opportunities in emerging fields such as quantum programming, algorithm design, and quantum cryptography."
  },
  {
   "id": "kaal:claim:4900880-032",
   "url": "https://wulfkaal.github.io/claims/4900880-032",
   "claim": "As technological progress accelerates, the half life of skills continues to shorten, which makes continuous adaptation and learning a condition for career longevity rather than an optional professional habit.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "As technological progress accelerates, the half-life of skills—the period during which a learned skill becomes half as valuable—continues to shorten."
  },
  {
   "id": "kaal:claim:4900880-033",
   "url": "https://wulfkaal.github.io/claims/4900880-033",
   "claim": "Preparing a workforce for the quantum economy requires universities and training institutions to build specialized curricula that combine quantum mechanics, computer science, and information theory, paired with industry partnerships that supply hands on experience.",
   "type": "design",
   "topics": [
    "education-and-practice",
    "citation-and-knowledge",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "asserted",
   "supporting_quote": "Universities and training institutions must develop specialized curricula that combine quantum mechanics, computer science, and information theory to prepare the next generation of quantum professionals."
  },
  {
   "id": "kaal:claim:4900880-034",
   "url": "https://wulfkaal.github.io/claims/4900880-034",
   "claim": "Traditional hierarchical organizational structures are too slow to adapt to rapid technological change and stifle innovation through rigid control mechanisms, which is why they are unsuited to governing the quantum economy.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "governance-design",
    "innovation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "Traditional hierarchical structures are often slow to adapt to rapid technological changes and can stifle innovation through rigid control mechanisms."
  },
  {
   "id": "kaal:claim:4900880-035",
   "url": "https://wulfkaal.github.io/claims/4900880-035",
   "claim": "DAOs supply a more flexible and dynamic governance model than hierarchy because they permit real time evolutionary adjustment of governance rules and decentralized decision making.",
   "type": "design",
   "topics": [
    "dao",
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "In contrast, DAOs offer a more flexible and dynamic approach to governance, allowing for real-time evolutionary and dynamic adjustments and decentralized decision-making."
  },
  {
   "id": "kaal:claim:4900880-036",
   "url": "https://wulfkaal.github.io/claims/4900880-036",
   "claim": "DAO accountability comes from the recording mechanism itself: because all transactions and decisions are written to an immutable blockchain that every stakeholder can inspect, no single actor can easily manipulate or obscure organizational activity.",
   "type": "mechanism",
   "topics": [
    "dao",
    "disclosure",
    "blockchain",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "All transactions and decisions are recorded on an immutable blockchain, accessible to all stakeholders. This transparency ensures accountability by making it difficult for any single actor to manipulate or obscure organizational activities."
  },
  {
   "id": "kaal:claim:4900880-037",
   "url": "https://wulfkaal.github.io/claims/4900880-037",
   "claim": "Encoding compliance and operational procedures in smart contracts removes discretionary human steps from execution, which minimizes human error and bias and raises the reliability and integrity of economic interactions.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "compliance",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "By automating compliance and operational procedures through smart contracts, DAOs can minimize human error and bias, thereby enhancing the reliability and integrity of economic interactions."
  },
  {
   "id": "kaal:claim:4900880-038",
   "url": "https://wulfkaal.github.io/claims/4900880-038",
   "claim": "Compensation inside a DAO can be programmed to pay out automatically against predefined criteria such as task completion, performance metrics, or contribution, which cuts administrative overhead and makes distribution timely and consistent.",
   "type": "design",
   "topics": [
    "smart-contracts",
    "dao",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "asserted",
   "supporting_quote": "Compensation can be programmed to be distributed automatically based on predefined criteria, such as task completion, performance metrics, or contribution to the organization. This automation reduces administrative overhead and ensures timely and fair distribution of rewards."
  },
  {
   "id": "kaal:claim:4900880-039",
   "url": "https://wulfkaal.github.io/claims/4900880-039",
   "claim": "Combining quantum computing with blockchain and DAO frameworks makes a governance model possible that is simultaneously transparent, decentralized, and adaptive, supporting efficient and fair resource distribution and continuous innovation.",
   "type": "design",
   "topics": [
    "blockchain",
    "dao",
    "governance-design",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "argued",
   "supporting_quote": "By integrating quantum computing with blockchain and DAO frameworks, a new era of transparent, decentralized, and adaptive governance is possible."
  },
  {
   "id": "kaal:claim:4900880-040",
   "url": "https://wulfkaal.github.io/claims/4900880-040",
   "claim": "Decentralized finance and participatory governance models create their own problems, specifically unresolved regulatory frameworks and ethical considerations, so decentralization is not a costless substitute for existing institutional arrangements.",
   "type": "failure",
   "topics": [
    "defi",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and the Future of Work (2024). SSRN: https://ssrn.com/abstract=4900880",
   "year": "2024",
   "source_sha256": "64ea6e8b7cfb3d9a83801eba54f9b87182b842a963273ddab7f2d5305639db73",
   "confidence": "asserted",
   "supporting_quote": "The rise of decentralized finance and participatory governance models also presents challenges in terms of regulatory frameworks and ethical considerations."
  },
  {
   "id": "kaal:claim:4900878-001",
   "url": "https://wulfkaal.github.io/claims/4900878-001",
   "claim": "In a quantum economy, core economic variables such as supply, demand, price, and utility are treated as quantum states that exist in multiple configurations simultaneously until they are observed or measured through a transaction.",
   "type": "definitional",
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    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "within the quantum economy framework the author stipulates"
   ],
   "supporting_quote": "In a quantum economy, traditional economic variables such as supply, demand, price, and utility are treated as quantum states that can exist in multiple configurations simultaneously until observed or measured."
  },
  {
   "id": "kaal:claim:4900878-002",
   "url": "https://wulfkaal.github.io/claims/4900878-002",
   "claim": "Because qubits hold multiple states simultaneously, quantum computers can perform complex calculations far faster than classical machines, and in a quantum economy this computational power can be used to solve intricate economic models, optimize resource allocation, and improve decision making across sectors.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "assumes continued advance of quantum computing hardware"
   ],
   "supporting_quote": "In the context of the quantum economy, this increased computational power can be harnessed to solve intricate economic models, optimize resource allocation, and enhance decision-making processes across various sectors."
  },
  {
   "id": "kaal:claim:4900878-003",
   "url": "https://wulfkaal.github.io/claims/4900878-003",
   "claim": "Current cryptographic systems such as RSA rest on the classical difficulty of factoring large primes, so quantum algorithms like Shor's algorithm, which factor exponentially faster, can render those cryptographic methods obsolete.",
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    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "applies to factoring based cryptography such as RSA",
    "requires sufficiently capable quantum hardware"
   ],
   "supporting_quote": "Quantum algorithms, such as Shor's algorithm, can factor these numbers exponentially faster, potentially rendering existing cryptographic methods obsolete."
  },
  {
   "id": "kaal:claim:4900878-004",
   "url": "https://wulfkaal.github.io/claims/4900878-004",
   "claim": "The classical paradigm underlying mainstream economics, with its emphasis on independence, rationality, and optimal equilibrium, cannot adequately account for money creation, financial entanglement, or behavioral factors.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "applies to mainstream neoclassical modeling"
   ],
   "supporting_quote": "This classical paradigm struggles to address effects such as money creation, financial entanglement, and behavioral factors."
  },
  {
   "id": "kaal:claim:4900878-005",
   "url": "https://wulfkaal.github.io/claims/4900878-005",
   "claim": "The classical law of supply and demand fails because supply and demand curves cannot be measured independently and because economic interactions are intrinsically probabilistic rather than continuous and deterministic.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "economics",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the continuity and determinism assumptions of classical supply and demand"
   ],
   "supporting_quote": "such as the impossibility of measuring supply or demand curves independently, the intrinsically probabilistic nature of economic interactions"
  },
  {
   "id": "kaal:claim:4900878-006",
   "url": "https://wulfkaal.github.io/claims/4900878-006",
   "claim": "Cognitive effects that look paradoxical under classical utility theory arise not from irrationality but from agents using a different, non Boolean logic that the quantum formalism can model.",
   "type": "mechanism",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "applies to decision anomalies documented by behavioral psychology"
   ],
   "supporting_quote": "The quantum approach suggests that these cognitive effects arise not because people are irrational, but because they are using a different kind of logic that can be modeled using the quantum formalism."
  },
  {
   "id": "kaal:claim:4900878-007",
   "url": "https://wulfkaal.github.io/claims/4900878-007",
   "claim": "Against critics who call quantum econophysics purely phenomenological, the author holds that quantum economics still offers a genuinely novel perspective that challenges the assumptions of classical economics.",
   "type": "normative",
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    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "supporting_quote": "Despite these criticisms, quantum economics offers a novel perspective on economic systems and challenges the assumptions of classical economics."
  },
  {
   "id": "kaal:claim:4900878-008",
   "url": "https://wulfkaal.github.io/claims/4900878-008",
   "claim": "Quantum economics and New Institutional Economics diverge at the level of first principles: NIE treats uncertainty as something institutions exist to reduce, while quantum economics treats uncertainty and indeterminacy as constitutive features of economic interaction.",
   "type": "definitional",
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    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "supporting_quote": "While NIE emphasizes the role of institutions in reducing uncertainties and fostering economic stability, quantum economics inherently incorporates uncertainty"
  },
  {
   "id": "kaal:claim:4900878-009",
   "url": "https://wulfkaal.github.io/claims/4900878-009",
   "claim": "Financial entanglement operates through money and credit: credit products such as mortgages transmit quantum cognitive effects from individuals into the financial system and create a feedback loop between the individual and societal levels.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "applies to credit based financial systems"
   ],
   "supporting_quote": "Credit products, such as mortgages, act as a vector of transmission for quantum cognitive effects and create a feedback loop between the individual and societal levels."
  },
  {
   "id": "kaal:claim:4900878-010",
   "url": "https://wulfkaal.github.io/claims/4900878-010",
   "claim": "Modeling entanglement explains collective phenomena such as herd behavior and market bubbles that classical economic theories struggle to account for, and it also illuminates how economic shocks propagate.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "supporting_quote": "Incorporating entanglement into economic models can help explain the emergence of collective behaviors, such as herd behavior and market bubbles, which are difficult to account for using classical economic theories."
  },
  {
   "id": "kaal:claim:4900878-011",
   "url": "https://wulfkaal.github.io/claims/4900878-011",
   "claim": "In a quantum game model of a two firm market, monopoly emerges once informational asymmetry passes a threshold, and the result is lower total quantity and reduced economic efficiency.",
   "type": "empirical",
   "topics": [
    "economics",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "evidenced",
   "scope_conditions": [
    "two firm market with informational asymmetry",
    "within the quantum game model of Du, Ju, and Li"
   ],
   "supporting_quote": "monopoly appears when the informational asymmetry reaches a certain threshold, leading to a decrease in total quantity and economic efficiency."
  },
  {
   "id": "kaal:claim:4900878-012",
   "url": "https://wulfkaal.github.io/claims/4900878-012",
   "claim": "The quantum econophysics models of Baaquie and Ilinski breach the analogy they rely on: without the imaginary unit their formulations cannot produce interference patterns, which are a defining feature of quantum phenomena, so it is doubtful they capture genuinely quantum properties.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the Baaquie and Ilinski quantum finance formulations"
   ],
   "supporting_quote": "For example, in the approaches developed by Baaquie and Ilinski, the absence of the imaginary unit in their formulations implies a lack of interference patterns, which are a key feature of quantum phenomena."
  },
  {
   "id": "kaal:claim:4900878-013",
   "url": "https://wulfkaal.github.io/claims/4900878-013",
   "claim": "A central methodological obstacle for quantum economics is that complex social phenomena such as social power and mental energy resist reduction to exact equations, which leaves the framework without a consistent set of units for subjective forces.",
   "type": "failure",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "supporting_quote": "Another challenge is the difficulty in quantifying and reducing complex social phenomena, such as social power or mental energy, to exact equations."
  },
  {
   "id": "kaal:claim:4900878-014",
   "url": "https://wulfkaal.github.io/claims/4900878-014",
   "claim": "Quantum decision models break down on complex real world decisions such as mortgages, because there is no clear way to partition the utility and the attraction functions when the underlying factors cannot be known with precision.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "complex real world financial decisions such as mortgages"
   ],
   "supporting_quote": "It is not always clear how to partition utility and attraction functions for such complex decisions, as they depend on various factors that cannot be known with precision."
  },
  {
   "id": "kaal:claim:4900878-015",
   "url": "https://wulfkaal.github.io/claims/4900878-015",
   "claim": "Against the objection that the correspondence principle should make quantum effects vanish at macro scales, the paper holds that quantum properties scale up through designed technologies such as money and so affect the economy as a whole.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "requires designed technologies such as money that transmit micro level effects upward"
   ],
   "supporting_quote": "proponents of quantum economics maintain that quantum properties can scale up through designed technologies like money, affecting the economy as a whole"
  },
  {
   "id": "kaal:claim:4900878-016",
   "url": "https://wulfkaal.github.io/claims/4900878-016",
   "claim": "Both classical and behavioral approaches fail to account adequately for preference reversal, and that joint failure, not mere novelty, is what justifies an alternative quantum decision framework.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "applies to preference reversal and similar context dependent decision anomalies"
   ],
   "supporting_quote": "However, proponents of quantum economics argue that the failure of both classical and behavioral approaches to adequately address preference reversal highlights the need for an alternative approach."
  },
  {
   "id": "kaal:claim:4900878-017",
   "url": "https://wulfkaal.github.io/claims/4900878-017",
   "claim": "Quantum economics is inherently disruptive because it rests on a completely different logic from classical economics, and that disruptiveness is what provokes resistance and defensiveness from mainstream economists who see it as a threat to established theories.",
   "type": "mechanism",
   "topics": [
    "innovation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "supporting_quote": "Quantum economics is inherently disruptive because it is based on a completely different logic from classical economics."
  },
  {
   "id": "kaal:claim:4900878-018",
   "url": "https://wulfkaal.github.io/claims/4900878-018",
   "claim": "Quantum based policies and regulations stall at implementation because the complexity and counterintuitive character of quantum concepts make them hard for policymakers and decision makers to apply, so the framework needs more accessible and intuitive formulations before it can guide policy.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "real world policy and regulatory contexts"
   ],
   "supporting_quote": "The complexity and counterintuitive nature of quantum concepts may make it difficult for policymakers and decision-makers to effectively apply quantum economics principles in practice."
  },
  {
   "id": "kaal:claim:4900878-019",
   "url": "https://wulfkaal.github.io/claims/4900878-019",
   "claim": "Quantum economics models must be subjected to empirical testing and to rigorous head to head comparison with classical models across different economic contexts and datasets before their validity and generalizability can be established.",
   "type": "normative",
   "topics": [
    "empirical-evidence",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "supporting_quote": "Another important implication of the debates surrounding quantum economics is the need for more empirical testing and validation of quantum economics models."
  },
  {
   "id": "kaal:claim:4900878-020",
   "url": "https://wulfkaal.github.io/claims/4900878-020",
   "claim": "The 2017 ICO wave democratized access to investment and spurred blockchain innovation, but the absence of regulatory oversight produced numerous fraudulent projects, which exposed the need for robust economic models and regulatory frameworks inside token ecosystems.",
   "type": "failure",
   "topics": [
    "securities-law",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "the 2017 ICO market before regulatory frameworks matured"
   ],
   "supporting_quote": "However, the lack of regulatory oversight also led to numerous fraudulent projects"
  },
  {
   "id": "kaal:claim:4900878-021",
   "url": "https://wulfkaal.github.io/claims/4900878-021",
   "claim": "Economic incentive designs are the core of tokenomics: they govern issuance, distribution, and use of tokens by emulating traditional monetary and fiscal policy and adapting it to the distinctive features of blockchain networks.",
   "type": "definitional",
   "topics": [
    "tokenomics",
    "risk-and-incentives",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized blockchain systems"
   ],
   "supporting_quote": "These designs emulate traditional monetary and fiscal policies, adapting them to the distinctive features of blockchain networks."
  },
  {
   "id": "kaal:claim:4900878-022",
   "url": "https://wulfkaal.github.io/claims/4900878-022",
   "claim": "Supply side mechanisms such as token burns, which permanently remove tokens from circulation, and staking, which locks tokens up in exchange for rewards, let a token economy balance supply and demand and thereby sustain stable growth.",
   "type": "design",
   "topics": [
    "tokenomics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "requires deliberate calibration of the incentive parameters"
   ],
   "supporting_quote": "By carefully designing these incentives, token economies can balance supply and demand, ensuring stable and sustainable growth."
  },
  {
   "id": "kaal:claim:4900878-023",
   "url": "https://wulfkaal.github.io/claims/4900878-023",
   "claim": "Traditional economic models fail to predict cryptocurrency price movements accurately, because token values swing rapidly on market sentiment, regulatory news, technological change, and macroeconomic trends, which are inherently unpredictable.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "volatile decentralized cryptocurrency markets"
   ],
   "supporting_quote": "Traditional economic models often struggle to accurately predict these fluctuations due to their inherent unpredictability."
  },
  {
   "id": "kaal:claim:4900878-024",
   "url": "https://wulfkaal.github.io/claims/4900878-024",
   "claim": "Because quantum economics models probabilities rather than certainties, it is better suited than deterministic models to capturing cryptocurrency price dynamics, and probabilistic models let economists better anticipate price movements and market behavior in decentralized markets.",
   "type": "mechanism",
   "topics": [
    "economics",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized and volatile cryptocurrency markets"
   ],
   "supporting_quote": "However, quantum economics, with its focus on probabilities rather than certainties, offers a framework that is more suited to capturing these dynamics."
  },
  {
   "id": "kaal:claim:4900878-025",
   "url": "https://wulfkaal.github.io/claims/4900878-025",
   "claim": "Decentralized blockchain networks display an economic analogue of entanglement: a single participant's action, such as a large transaction, immediately propagates into token prices, network congestion, and the behavior of other participants.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "blockchain",
    "systemic-risk",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized blockchain networks"
   ],
   "supporting_quote": "For example, a large transaction by a single user can influence token prices, network congestion, and even the behavior of other participants."
  },
  {
   "id": "kaal:claim:4900878-026",
   "url": "https://wulfkaal.github.io/claims/4900878-026",
   "claim": "Tokens solve the quantification problem in quantum economics by serving as measurable units of value and governance: token denominated voting power in a DAO makes social influence and decision making power countable, supplying the consistent set of units the framework lacked.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "dao",
    "governance-design",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "token based systems with on chain governance such as DAOs"
   ],
   "supporting_quote": "Tokenomics offers a practical solution through the use of tokens as quantifiable units of value and governance."
  },
  {
   "id": "kaal:claim:4900878-027",
   "url": "https://wulfkaal.github.io/claims/4900878-027",
   "claim": "Decentralized governance models such as DAOs answer the criticism that micro level quantum properties do not scale to the macro level, because DAOs demonstrate participatory governance structures that operate effectively in large, complex economies.",
   "type": "mechanism",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "large scale decentralized economies with DAO governance"
   ],
   "supporting_quote": "Additionally, the use of decentralized governance models in tokenomics, such as DAOs, can address the criticism that quantum properties observed at the micro level do not scale up to the macro level."
  },
  {
   "id": "kaal:claim:4900878-028",
   "url": "https://wulfkaal.github.io/claims/4900878-028",
   "claim": "Programmable tokens and smart contracts give quantum economics an experimental testbed, so contested phenomena such as preference reversal can be modeled with quantum decision theory and then empirically validated and refined rather than argued in the abstract.",
   "type": "design",
   "topics": [
    "smart-contracts",
    "tokenomics",
    "defi",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "phenomena that can be instantiated in programmable token systems"
   ],
   "supporting_quote": "Tokenomics provides a practical framework for implementing and testing these models through programmable tokens and smart contracts, allowing for empirical validation and refinement of quantum economic theories."
  },
  {
   "id": "kaal:claim:4900878-029",
   "url": "https://wulfkaal.github.io/claims/4900878-029",
   "claim": "DeFi protocols automate financial transactions through smart contracts, cutting out intermediaries and increasing transparency, and those same features let quantum economics build models that are self executing and adaptable to real time data, overcoming implementation problems that defeat traditional economic models.",
   "type": "design",
   "topics": [
    "defi",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "scope_conditions": [
    "DeFi platforms operating on smart contract infrastructure"
   ],
   "supporting_quote": "These features can be utilized in quantum economics to develop models that are both self-executing and adaptable to real-time data"
  },
  {
   "id": "kaal:claim:4900878-030",
   "url": "https://wulfkaal.github.io/claims/4900878-030",
   "claim": "The zero space structure of smart contracts produces a form of quantum transaction entanglement, in which transactions execute instantaneously and uniformly across the network regardless of the physical distance between the wallets involved.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "blockchain networks where contract execution is replicated across all nodes"
   ],
   "supporting_quote": "The zero-space structure of smart contracts in blockchain technology enables a form of quantum transaction entanglement."
  },
  {
   "id": "kaal:claim:4900878-031",
   "url": "https://wulfkaal.github.io/claims/4900878-031",
   "claim": "In blockchain transactions the signing function, performed by wallets holding cryptographic keys, is separate from execution, which occurs inside the smart contract, so tokens are never physically held in the same locality as the keys and the smart contract acts as the intermediary executing predefined rules.",
   "type": "definitional",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge",
    "smart-contracts",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "smart contract based blockchain transactions"
   ],
   "supporting_quote": "This separation ensures that the tokens themselves are not physically held in the same locality as the keys."
  },
  {
   "id": "kaal:claim:4900878-032",
   "url": "https://wulfkaal.github.io/claims/4900878-032",
   "claim": "Because the blockchain is a distributed ledger existing simultaneously across all nodes, physical space is effectively eliminated within the network, and a triggered smart contract executes its code across the entire network instantaneously without regard to where wallets or keys are located.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "blockchain",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "distributed ledgers replicated across all network nodes"
   ],
   "supporting_quote": "This distributed nature effectively eliminates the concept of physical space within the network."
  },
  {
   "id": "kaal:claim:4900878-033",
   "url": "https://wulfkaal.github.io/claims/4900878-033",
   "claim": "Distributing validation and execution across many nodes mitigates central point of failure risk and makes the network more resilient to attacks and disruptions, which is the security payoff of decentralization.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "decentralized networks where no single node controls the system"
   ],
   "supporting_quote": "By distributing the validation and execution processes across numerous nodes, blockchain technology mitigates the risks associated with central points of failure and enhances the resilience of the network against attacks and disruptions."
  },
  {
   "id": "kaal:claim:4900878-034",
   "url": "https://wulfkaal.github.io/claims/4900878-034",
   "claim": "Quantum computing cuts both ways for blockchain: it can raise the efficiency and security of blockchain networks, but safeguarding those systems against the threats it also creates depends on research into quantum resistant cryptographic algorithms.",
   "type": "condition",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "as quantum computing capability advances"
   ],
   "supporting_quote": "Research into quantum-resistant cryptographic algorithms will be crucial to safeguard blockchain systems against potential threats posed by quantum computing."
  },
  {
   "id": "kaal:claim:4900878-035",
   "url": "https://wulfkaal.github.io/claims/4900878-035",
   "claim": "Integrating stablecoins pegged to fiat currencies gives a token ecosystem a stable transactional medium and mitigates the volatility that otherwise attaches to cryptocurrencies, alongside DeFi services that let users earn returns and access credit outside the banking system.",
   "type": "design",
   "topics": [
    "tokenomics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "the VOW ecosystem as a case study"
   ],
   "supporting_quote": "The integration of stablecoins pegged to fiat currencies provides a stable medium for transactions, mitigating the volatility often associated with cryptocurrencies."
  },
  {
   "id": "kaal:claim:4900878-036",
   "url": "https://wulfkaal.github.io/claims/4900878-036",
   "claim": "A reputation governance layer that awards reputation tokens for contributions and behavior fosters trust and drives positive engagement within a token community, complementing DAO based token holder voting.",
   "type": "design",
   "topics": [
    "reputation",
    "governance-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "the VOW ecosystem as a case study"
   ],
   "supporting_quote": "the VOW ecosystem incorporates a reputation governance system, which rewards users with reputation tokens based on their contributions and behavior."
  },
  {
   "id": "kaal:claim:4900878-037",
   "url": "https://wulfkaal.github.io/claims/4900878-037",
   "claim": "Tokenizing physical and digital assets enables fractional ownership and supplies liquidity, which broadens access to investment opportunities that were previously out of reach.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "the VOW ecosystem as a case study"
   ],
   "supporting_quote": "Furthermore, the tokenization of physical and digital assets within the VOW ecosystem enables fractional ownership and provides liquidity, democratizing access to investment opportunities."
  },
  {
   "id": "kaal:claim:4900878-038",
   "url": "https://wulfkaal.github.io/claims/4900878-038",
   "claim": "Guaranteeing users full ownership and control over their digital assets protects them from asset confiscation and from loss of purchasing power through currency devaluation, which matters most to individuals in regions with unstable financial systems.",
   "type": "mechanism",
   "topics": [
    "economics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "asserted",
   "scope_conditions": [
    "regions with unstable financial systems",
    "requires the user to retain full ownership and control of the assets"
   ],
   "supporting_quote": "By ensuring full ownership and control over digital assets, the VOW ecosystem protects users from asset confiscation and loss of purchasing power due to currency devaluation."
  },
  {
   "id": "kaal:claim:4900878-039",
   "url": "https://wulfkaal.github.io/claims/4900878-039",
   "claim": "An operating token ecosystem such as VOW can function as empirical evidence for quantum economics, since a working decentralized system that manages complex economic phenomena supports the validity and utility of the abstract framework it instantiates.",
   "type": "predictive",
   "topics": [
    "empirical-evidence",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "speculative",
   "scope_conditions": [
    "conditional on the continued practical success of the ecosystem"
   ],
   "supporting_quote": "The practical success of the VOW ecosystem can serve as empirical evidence supporting the validity and utility of quantum economics, fostering greater acceptance and adoption of quantum principles in economic theory and practice."
  },
  {
   "id": "kaal:claim:4900878-040",
   "url": "https://wulfkaal.github.io/claims/4900878-040",
   "claim": "Tokenomics supplies the practical mechanisms that operationalize the abstract concepts of quantum economics, and this synthesis both advances quantum economics and promotes the growth and sustainability of decentralized digital economies.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "economics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878",
   "year": "2024",
   "source_sha256": "75bf96d3b751b4ad0a6ca4a32591cf026094f113e3a372aa6c61790941b391f7",
   "confidence": "argued",
   "supporting_quote": "Tokenomics provides practical mechanisms for operationalizing the abstract concepts of quantum economics, thereby enhancing its applicability and utility."
  },
  {
   "id": "kaal:claim:4957318-001",
   "url": "https://wulfkaal.github.io/claims/4957318-001",
   "claim": "Legal accumulation is produced by a specific legislative practice: new regulations are layered over existing ones without repealing outdated provisions. The resulting corpus is more complex and less transparent, which raises compliance costs for individuals and businesses.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "modern legislative systems that enact new law faster than they repeal old law"
   ],
   "supporting_quote": "However, the practice of layering new regulations over existing ones without repealing outdated provisions leads to legal accumulation. This accumulation makes the legal system more complex and less transparent, increasing the compliance costs for individuals and businesses."
  },
  {
   "id": "kaal:claim:4957318-002",
   "url": "https://wulfkaal.github.io/claims/4957318-002",
   "claim": "Overlapping or contradictory regulation raises the risk of selective enforcement and legal arbitrage, because entities that cannot be expected to comply with everything can instead exploit the gaps and inconsistencies to their advantage.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "where regulated parties cannot readily understand the full body of applicable rules"
   ],
   "supporting_quote": "When individuals and businesses struggle to understand and adhere to overlapping or contradictory regulations, the risk of selective enforcement and legal arbitrage rises, where entities exploit legal gaps and inconsistencies to their advantage."
  },
  {
   "id": "kaal:claim:4957318-003",
   "url": "https://wulfkaal.github.io/claims/4957318-003",
   "claim": "Codification is self defeating at scale: although a specific statute is individually cheaper to understand than a vague standard, the sheer volume of statutory law generates information costs that make the legal landscape more complex rather than simpler.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "evidenced",
   "scope_conditions": [
    "systems that have shifted from common law adjudication to comprehensive codification",
    "where the volume of new legislation grows continuously"
   ],
   "supporting_quote": "While a specific statute might appear easier and cheaper to understand than a vague standard, the sheer volume of new legislation creates significant \"information costs.\"7 These costs arise from the need to navigate and interpret an ever-growing body of statutory law,"
  },
  {
   "id": "kaal:claim:4957318-004",
   "url": "https://wulfkaal.github.io/claims/4957318-004",
   "claim": "Expanding regulatory oversight across sectors produces regulatory accretion, the cumulative growth of rules, which yields a complex and sometimes contradictory legal environment and burdens the very agencies charged with enforcement and oversight.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "evidenced",
   "scope_conditions": [
    "administrative states with broad sectoral regulatory mandates"
   ],
   "supporting_quote": "Regulatory accretion often results in a complex and sometimes contradictory legal environment, complicating compliance for businesses and individuals and creating burdens on regulatory agencies tasked with enforcement and oversight."
  },
  {
   "id": "kaal:claim:4957318-005",
   "url": "https://wulfkaal.github.io/claims/4957318-005",
   "claim": "Inconsistent application of a proliferating body of law by different judges and regulatory bodies produces unpredictable legal outcomes, which increases litigation as parties seek judicial clarification and in turn undermines public confidence in the legal system.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "where statutes and regulations multiply faster than interpretive doctrine consolidates"
   ],
   "supporting_quote": "Inconsistencies in the application of laws by different judges or regulatory bodies can result in unpredictable legal outcomes, thereby increasing litigation as parties seek judicial clarification. This inconsistency further undermines public confidence in the legal"
  },
  {
   "id": "kaal:claim:4957318-006",
   "url": "https://wulfkaal.github.io/claims/4957318-006",
   "claim": "As law becomes more detailed and specialized it becomes less accessible to the general public, which complicates citizens' ability to understand the rules governing them and discourages engagement and participation in democratic processes.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "disclosure",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "where legal complexity outpaces lay comprehension"
   ],
   "supporting_quote": "less accessible to the general public, complicating citizens' ability to understand and engage with the rules that govern their lives. This lack of accessibility and transparency can discourage public engagement and participation in democratic processes"
  },
  {
   "id": "kaal:claim:4957318-007",
   "url": "https://wulfkaal.github.io/claims/4957318-007",
   "claim": "Web2 platform architecture is a causal contributor to distrust in legal institutions: centralized models driven by engagement metrics prioritize sensationalism over nuanced discourse, which accelerates misinformation and echo chambers and magnifies public distrust.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "centralized, engagement optimized social media platforms",
    "where citizens use social media as a substitute for formal legal channels"
   ],
   "supporting_quote": "This design incentivizes the rapid spread of both information and misinformation, often amplifying extreme viewpoints and fostering echo chambers. As a result, these platforms can magnify public distrust in legal institutions"
  },
  {
   "id": "kaal:claim:4957318-008",
   "url": "https://wulfkaal.github.io/claims/4957318-008",
   "claim": "Sunset provisions are legislative tools that impose automatic expiration dates on laws or regulations, and their function is to compel periodic review and reassessment rather than to repeal directly.",
   "type": "definitional",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "asserted",
   "supporting_quote": "Sunset provisions are legislative tools designed to impose automatic expiration dates on laws or regulations, thereby compelling periodic review and reassessment."
  },
  {
   "id": "kaal:claim:4957318-009",
   "url": "https://wulfkaal.github.io/claims/4957318-009",
   "claim": "Sunset regulation has fallen out of wide use, and the author attributes this primarily to the administrative burden and political inertia of regularly reviewing and repealing laws, not to any defect in the concept itself.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "legislatures without dedicated review capacity"
   ],
   "supporting_quote": "Sunset regulations, which involve the removal of outdated or less relevant legal provisions over time, are no longer widely used due to several factors. Primarily, the administrative burden and political inertia associated with regularly reviewing and repealing such laws discourage these practices."
  },
  {
   "id": "kaal:claim:4957318-010",
   "url": "https://wulfkaal.github.io/claims/4957318-010",
   "claim": "Sunset provisions fail on their own terms when the mandated reviews are not conducted thoroughly, because laws then either expire or continue without proper scrutiny, which defeats the purpose of the mechanism.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "where legislative review capacity or attention is insufficient"
   ],
   "supporting_quote": "Moreover, if the necessary reviews are not conducted thoroughly, the effectiveness of sunset provisions is undermined, and laws may expire or continue without proper scrutiny, defeating the intended purpose of these mechanisms."
  },
  {
   "id": "kaal:claim:4957318-011",
   "url": "https://wulfkaal.github.io/claims/4957318-011",
   "claim": "Sunset provisions likely increase rents extracted by interest groups and entrench current majoritarian preferences, and they can create planning problems for both public and private actors.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "evidenced",
   "scope_conditions": [
    "politically salient statutes subject to periodic renewal"
   ],
   "supporting_quote": "rather than genuine policy improvement. Sunset provisions also likely increase rents from interest groups, entrench current majoritarian preferences, which can at times produce planning conundrums for public and private actors."
  },
  {
   "id": "kaal:claim:4957318-012",
   "url": "https://wulfkaal.github.io/claims/4957318-012",
   "claim": "Because renewal deadlines create recurring windows for legislative action, sunset clauses become instruments of political maneuvering in which lawmakers cater to interest groups or shifting political winds instead of pursuing long term policy solutions.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "where renewal is politically contested"
   ],
   "supporting_quote": "Because sunset clauses create periodic opportunities for legislative action, they can become tools for political maneuvering, allowing lawmakers to cater to specific interest groups or respond to shifting political winds rather than pursuing long-term, effective policy solutions."
  },
  {
   "id": "kaal:claim:4957318-013",
   "url": "https://wulfkaal.github.io/claims/4957318-013",
   "claim": "The possibility that a law will expire without guaranteed renewal creates a climate of uncertainty that discourages the investment and long term planning which depend on consistent regulatory frameworks.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "capital intensive or long horizon business decisions",
    "regulated markets where entry depends on rule stability"
   ],
   "supporting_quote": "threat of laws expiring at any moment without guarantee of renewal can create a climate of uncertainty, discouraging investment and planning that relies on consistent regulatory frameworks."
  },
  {
   "id": "kaal:claim:4957318-014",
   "url": "https://wulfkaal.github.io/claims/4957318-014",
   "claim": "Sunset provisions endanger politically contentious institutions rather than ineffective ones, because agencies that face opposition or controversy can be dissolved through expiration regardless of their ongoing relevance or necessity.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "agencies that are subjects of intense political debate"
   ],
   "supporting_quote": "Such provisions could lead to the dissolution of agencies that face opposition or controversy, potentially undermining their stability and ability to function effectively. This approach may result in the premature termination of institutions"
  },
  {
   "id": "kaal:claim:4957318-015",
   "url": "https://wulfkaal.github.io/claims/4957318-015",
   "claim": "Deadline pressure inverts the intended effect of sunset provisions: the need to reassess and renew by a fixed date produces hasty decisions or the continuation of flawed policies because there is insufficient time for proper evaluation.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "where expiration dates arrive faster than deliberative review can be completed"
   ],
   "supporting_quote": "The requirement to reassess and potentially renew laws by a certain deadline may result in hasty decision-making or the continuation of flawed policies due to a lack of time for proper evaluation."
  },
  {
   "id": "kaal:claim:4957318-016",
   "url": "https://wulfkaal.github.io/claims/4957318-016",
   "claim": "Sunset provisions in tax law do not deliver fiscal restraint, because shifting baselines, exceptions to budget rules, and the difficulty of accurately costing temporary legislation undermine their theoretical benefits.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "evidenced",
   "scope_conditions": [
    "tax legislation subject to budget scoring rules"
   ],
   "supporting_quote": "Complexities such as shifting baselines, exceptions to budget rules, and the challenges of accurately assessing the costs of temporary legislation undermine the theoretical benefits of sunset provisions in promoting fiscal restraint."
  },
  {
   "id": "kaal:claim:4957318-017",
   "url": "https://wulfkaal.github.io/claims/4957318-017",
   "claim": "Sunsetting performs best in crisis driven financial legislation, where it supplies a built in mechanism for reviewing and potentially repealing laws enacted under emergency conditions and thereby mitigates the harms of legislating under pressure.",
   "type": "design",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "evidenced",
   "scope_conditions": [
    "legislation enacted in response to acute financial crisis",
    "where the enacting conditions are expected to subside"
   ],
   "supporting_quote": "Sunsetting can mitigate the potentially negative consequences of crisis-driven financial legislation, providing a built-in mechanism for reviewing and potentially repealing laws that were enacted under emergency conditions."
  },
  {
   "id": "kaal:claim:4957318-018",
   "url": "https://wulfkaal.github.io/claims/4957318-018",
   "claim": "Legal garbage collection is stipulated as the systematic review and removal of outdated, redundant, or otherwise unnecessary laws from the legal code, by analogy to garbage collection in computer science.",
   "type": "definitional",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "asserted",
   "supporting_quote": "Legal garbage collection refers to the systematic review and removal of outdated, redundant, or otherwise unnecessary laws from the legal code."
  },
  {
   "id": "kaal:claim:4957318-019",
   "url": "https://wulfkaal.github.io/claims/4957318-019",
   "claim": "Legal garbage collection is blocked by politics rather than by analysis: outdated or redundant laws remain contentious when they carry symbolic importance for particular constituencies or when repeal would be read as weakening the regulatory framework.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "statutes with symbolic or ideological significance",
    "where repeal is publicly visible"
   ],
   "supporting_quote": "Laws, even those considered outdated or redundant, can be politically contentious, particularly when they hold symbolic importance to specific constituencies or when their removal might be perceived as weakening the regulatory framework."
  },
  {
   "id": "kaal:claim:4957318-020",
   "url": "https://wulfkaal.github.io/claims/4957318-020",
   "claim": "Determining genuine obsolescence is hard because statutes are interconnected: an apparently redundant law may be a foundational element of another statute or regulatory framework, so repeal produces a ripple effect through the broader legal ecosystem.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "dense statutory systems with cross referencing provisions"
   ],
   "supporting_quote": "For instance, a seemingly redundant law may still serve as a foundational element for another statute or regulatory framework, creating a ripple effect if repealed."
  },
  {
   "id": "kaal:claim:4957318-021",
   "url": "https://wulfkaal.github.io/claims/4957318-021",
   "claim": "The cost of comprehensive legal review deters governments from committing the necessary resources, which prevents legal garbage collection from being applied consistently and effectively.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions with budget constraints or competing policy priorities"
   ],
   "supporting_quote": "The high costs associated with these processes can deter governments from committing the necessary resources, thereby hindering the consistent and effective application of legal garbage collection initiatives."
  },
  {
   "id": "kaal:claim:4957318-022",
   "url": "https://wulfkaal.github.io/claims/4957318-022",
   "claim": "Removing laws without fully understanding their current applications or interdependencies creates legal gaps and unintended policy outcomes, so the act of cleanup can itself weaken regulatory or protective frameworks.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "where repeal proceeds without mapping of downstream dependencies"
   ],
   "supporting_quote": "Removing laws without fully understanding their current applications or interdependencies could create legal gaps or unintended policy outcomes."
  },
  {
   "id": "kaal:claim:4957318-023",
   "url": "https://wulfkaal.github.io/claims/4957318-023",
   "claim": "Legal garbage collection faces an unavoidable tradeoff: streamlining the legal framework by removing outdated laws must be balanced against preserving legal history, since historical statutes record the evolution of legal principles and societal values.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "where removal is implemented as deletion rather than archiving"
   ],
   "supporting_quote": "While the removal of outdated laws can help streamline the legal framework, there is also a need to balance this with the preservation of legal history."
  },
  {
   "id": "kaal:claim:4957318-024",
   "url": "https://wulfkaal.github.io/claims/4957318-024",
   "claim": "Experimental rules impose a cost on the regulated: because the rules are temporary and subject to change, they complicate compliance efforts, disrupt long term planning, and create ambiguity that can produce resistance or unintended non compliance.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "where the experimental rule substantially modifies an existing regulatory framework"
   ],
   "supporting_quote": "This uncertainty can complicate compliance efforts, disrupt long-term planning, and create ambiguities regarding the rules that need to be followed, potentially leading to resistance or unintended non-compliance among affected parties."
  },
  {
   "id": "kaal:claim:4957318-025",
   "url": "https://wulfkaal.github.io/claims/4957318-025",
   "claim": "Automatic adjustment mechanisms are pre established legislative components that let laws self update in response to changing circumstances, and their purpose is to counter policy drift, the divergence of policy from its original intent as conditions change.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "evidenced",
   "scope_conditions": [
    "policy domains with observable triggering indicators such as inflation or unemployment"
   ],
   "supporting_quote": "By incorporating automatic adjustments, such as economic or social policy changes triggered by specific indicators, these mechanisms aim to address the issue of policy drift — the divergence of policy from its original intent due to changing conditions."
  },
  {
   "id": "kaal:claim:4957318-026",
   "url": "https://wulfkaal.github.io/claims/4957318-026",
   "claim": "Automatic adjustment mechanisms trade democratic input for responsiveness: by removing policy changes from the legislative agenda they limit opportunities for public debate and scrutiny, which raises accountability and transparency concerns.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "where adjustment is triggered automatically without legislative revisiting"
   ],
   "supporting_quote": "Another challenge is the potential reduction in legislative oversight and democratic input, as these mechanisms may limit opportunities for public debate and scrutiny of ongoing policy adjustments, raising concerns about accountability and transparency."
  },
  {
   "id": "kaal:claim:4957318-027",
   "url": "https://wulfkaal.github.io/claims/4957318-027",
   "claim": "War functions as a catalyst for legal reform because it compels legislators to focus on laws immediately relevant to wartime and post war objectives, which enables rapid removal of outdated, inefficient, or irrelevant provisions that would otherwise persist.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "wartime and immediate post war periods",
    "where extraordinary powers to reorganize legal frameworks are available"
   ],
   "supporting_quote": "Wars serve as a catalyst for legal reform by compelling legislators to focus on laws that are immediately relevant to wartime and post-war objectives, facilitating the rapid removal of outdated, inefficient, or irrelevant legal provisions."
  },
  {
   "id": "kaal:claim:4957318-028",
   "url": "https://wulfkaal.github.io/claims/4957318-028",
   "claim": "The speed of post war Japanese legal reform demonstrates that large scale legal change is possible when strong political will and adequate resources are present, which locates the binding constraint on legal cleanup in will and resources rather than in feasibility.",
   "type": "empirical",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "evidenced",
   "scope_conditions": [
    "post World War II Japan under Allied occupation",
    "where external actors supplied impetus and expertise"
   ],
   "supporting_quote": "A critical aspect of this reform was its rapid implementation, demonstrating that large-scale legal changes are possible when there is strong political will and adequate resources."
  },
  {
   "id": "kaal:claim:4957318-029",
   "url": "https://wulfkaal.github.io/claims/4957318-029",
   "claim": "Web3 systems answer the web2 pathology at the architectural level rather than the content level: decentralized, transparent, community governed designs eliminate the centralized control that drives misinformation and echo chambers, and substitute transparency, decentralization, and user control.",
   "type": "design",
   "topics": [
    "decentralization",
    "reputation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized and community governed platform architectures"
   ],
   "supporting_quote": "Unlike Web2 platforms, Web3 systems aim to eliminate the centralized control that exacerbates the spread of misinformation and the creation of echo chambers. Instead, they prioritize transparency, decentralization, and user control,"
  },
  {
   "id": "kaal:claim:4957318-030",
   "url": "https://wulfkaal.github.io/claims/4957318-030",
   "claim": "The proposed system stipulates a forum as an on chain collection of uniquely identified posts that may cite prior contributions, and this citation structure is what constitutes the Weighted Directed Acyclic Graph.",
   "type": "definitional",
   "topics": [
    "citation-and-knowledge",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "asserted",
   "scope_conditions": [
    "on chain forums where posts and citations are recorded immutably"
   ],
   "supporting_quote": "The web3 community as proposed herein operates a forum as an on-chain collection of posts, each uniquely identified and possibly citing previous contributions. This forum forms a Weighted Directed Acyclic Graph (WDAG), facilitating organized discussion and citation among participants."
  },
  {
   "id": "kaal:claim:4957318-031",
   "url": "https://wulfkaal.github.io/claims/4957318-031",
   "claim": "Validation pools are the consensus mechanism of the proposed system: author stakes are pooled to evaluate specific forum posts, and the outcome can mint new reputation tokens that record the community's consensus on a contribution.",
   "type": "design",
   "topics": [
    "reputation",
    "tokenomics",
    "consensus-and-security",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "asserted",
   "scope_conditions": [
    "where participants stake reputation on the evaluation of specific posts"
   ],
   "supporting_quote": "Validation Pool (VP) form a crucial mechanism where author stakes are pooled to evaluate specific posts within the forum. The outcome of a VP can lead to the minting of new REP tokens, reflecting the consensus on a given issue or contribution."
  },
  {
   "id": "kaal:claim:4957318-032",
   "url": "https://wulfkaal.github.io/claims/4957318-032",
   "claim": "Unlike traditional governance that relies on periodic reviews and updates, the WDAG system taps a continuous stream of data from a wide range of stakeholders, which is what makes real time rather than cyclical legal adjustment possible.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "where a decentralized network can supply continuous stakeholder sentiment data"
   ],
   "supporting_quote": "Unlike traditional governance models that rely on periodic reviews and updates, WDAG can tap into a continuous stream of data from a wide range of stakeholders."
  },
  {
   "id": "kaal:claim:4957318-033",
   "url": "https://wulfkaal.github.io/claims/4957318-033",
   "claim": "In the WDAG system a legal precedent or rule that gains favor because it is effective automatically receives a higher weight, and that weight is set by user preferences and citations rather than by any legislative act.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "citation-and-knowledge",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "asserted",
   "scope_conditions": [
    "where citation and user preference data are recorded on chain",
    "where effectiveness is revealed through use"
   ],
   "supporting_quote": "In the WDAG system, when a new legal precedent or rule gains favor due to its effectiveness, it automatically receives a higher weight in the system based on user preferences and citations."
  },
  {
   "id": "kaal:claim:4957318-034",
   "url": "https://wulfkaal.github.io/claims/4957318-034",
   "claim": "Because weights adjust continuously with use, the WDAG system eliminates the need for periodic external review altogether; the system evolves toward the most relevant and effective legal norms without a scheduled reassessment step.",
   "type": "mechanism",
   "topics": [
    "economics",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "asserted",
   "scope_conditions": [
    "where citation activity is sufficient to reveal relative relevance"
   ],
   "supporting_quote": "This dynamic adjustment process eliminates the need for periodic external reviews, as the system continuously evolves and adapts to the most relevant and effective legal norms."
  },
  {
   "id": "kaal:claim:4957318-035",
   "url": "https://wulfkaal.github.io/claims/4957318-035",
   "claim": "The WDAG system suppresses rent seeking by internalizing advocacy: there are no external costs or lobbying pressures because any advocacy occurs transparently within the system's forums, where all user actions and preferences are recorded.",
   "type": "mechanism",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "asserted",
   "scope_conditions": [
    "where all stakeholder action occurs inside the on chain forum",
    "where user actions and preferences are fully observable"
   ],
   "supporting_quote": "The WDAG system prevents such behavior by integrating all stakeholders into the decision-making process. There are no external costs or lobbying pressures, as any advocacy or lobbying occurs transparently within the system's forums, where all user actions and preferences are accounted for."
  },
  {
   "id": "kaal:claim:4957318-036",
   "url": "https://wulfkaal.github.io/claims/4957318-036",
   "claim": "The WDAG system never repeals: all precedents and rules are retained on the blockchain, so no legal principle is ever permanently discarded even when it ceases to be applied.",
   "type": "design",
   "topics": [
    "blockchain",
    "law-and-legal-systems",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "asserted",
   "scope_conditions": [
    "blockchain based retention of all precedents"
   ],
   "supporting_quote": "contrast, the WDAG system allows for the retention of all precedents and rules on the blockchain, ensuring that no legal principle is permanently discarded."
  },
  {
   "id": "kaal:claim:4957318-037",
   "url": "https://wulfkaal.github.io/claims/4957318-037",
   "claim": "Obsolescence in the WDAG system is expressed as gradual loss of weight rather than deletion, which keeps rules revisitable if circumstances change and avoids hasty or ill considered removal decisions.",
   "type": "design",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "asserted",
   "scope_conditions": [
    "where relevance is a continuous weight rather than a binary in force status"
   ],
   "supporting_quote": "Instead, less relevant rules gradually lose weight, allowing them to be revisited if circumstances change, thus maintaining institutional relevance while avoiding hasty or ill-considered decisions."
  },
  {
   "id": "kaal:claim:4957318-038",
   "url": "https://wulfkaal.github.io/claims/4957318-038",
   "claim": "Political resistance to repeal dissolves under the WDAG model because a rule that loses substantial backing simply diminishes in relevance through the citation mechanism, with no external legislative act of repeal to contest.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "consensus-and-security",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "asserted",
   "scope_conditions": [
    "where support and opposition are expressed through citation behavior"
   ],
   "supporting_quote": "dynamically reflecting evolving support or opposition to legal precedents through a citation mechanism. If a legal rule loses substantial backing, its relevance diminishes organically within the WDAG framework, without the need for external legislative intervention."
  },
  {
   "id": "kaal:claim:4957318-039",
   "url": "https://wulfkaal.github.io/claims/4957318-039",
   "claim": "The WDAG system preserves legal history as a byproduct of its architecture: all legal precedents are retained within a blockchain based framework in a transparent and immutable format, so historical access does not trade off against current relevance.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "blockchain",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "asserted",
   "scope_conditions": [
    "blockchain based immutable record keeping"
   ],
   "supporting_quote": "The WDAG system retains all legal precedents within its blockchain-based framework, preserving the history of legal developments in a transparent and immutable format."
  },
  {
   "id": "kaal:claim:4957318-040",
   "url": "https://wulfkaal.github.io/claims/4957318-040",
   "claim": "A shift toward WDAG based dynamic solutions is not merely attractive but necessary for a legal system that is both efficient and equitable in addressing the complexities of contemporary governance.",
   "type": "normative",
   "topics": [
    "dynamic-regulation",
    "law-and-legal-systems",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318",
   "year": "2024",
   "source_sha256": "137fb77eb82111a85f0ab5581926f762a7414ae84aaf3d56e8299db670e0e0c1",
   "confidence": "argued",
   "scope_conditions": [
    "contemporary governance under rapid technological and societal change"
   ],
   "supporting_quote": "As such, a shift toward WDAG-based dynamic solutions is desirable and necessary for creating a legal system that is both efficient and equitable in addressing the complexities of contemporary governance."
  },
  {
   "id": "kaal:claim:5095633-001",
   "url": "https://wulfkaal.github.io/claims/5095633-001",
   "claim": "The accessible reserves of publicly available human-created text usable for training large language models could be exhausted by 2028 at current usage trajectories.",
   "type": "predictive",
   "topics": [
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "evidenced",
   "scope_conditions": [
    "current growth trajectories in training set size continue",
    "restricted to publicly available human-created text"
   ],
   "supporting_quote": "the accessible reserves of publicly available human-created text could be exhausted by 2028, given current usage trajectories."
  },
  {
   "id": "kaal:claim:5095633-002",
   "url": "https://wulfkaal.github.io/claims/5095633-002",
   "claim": "Data exhaustion is caused primarily by the exponential growth in the size of datasets needed to build increasingly sophisticated AI models, not by any sudden loss of existing text.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "argued",
   "supporting_quote": "The phenomenon—often referred to as \"data exhaustion\"—arises largely from the exponential increase in the size of datasets required to develop increasingly sophisticated AI models."
  },
  {
   "id": "kaal:claim:5095633-003",
   "url": "https://wulfkaal.github.io/claims/5095633-003",
   "claim": "The total effective stock of human-generated text is estimated at roughly 300 trillion tokens, with a plausible range from 100 trillion to 1 quadrillion tokens.",
   "type": "empirical",
   "topics": [
    "tokenomics",
    "ai-and-agents",
    "education-and-practice",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "evidenced",
   "scope_conditions": [
    "estimate of effective stock, not raw internet volume"
   ],
   "supporting_quote": "Researchers estimate that the total effective stock of human-generated text may currently stand at approximately 300 trillion tokens, with the range varying from 100 trillion to 1 quadrillion tokens."
  },
  {
   "id": "kaal:claim:5095633-004",
   "url": "https://wulfkaal.github.io/claims/5095633-004",
   "claim": "The apparent abundance of internet text overstates the usable supply, because much of it fails quality thresholds for model training due to redundancy, noise, or irrelevance.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "argued",
   "scope_conditions": [
    "applies to internet-sourced text used for model training"
   ],
   "supporting_quote": "while the internet contains a vast corpus of textual material, not all content meets quality thresholds suitable for model training, given issues such as redundancy, noise, or irrelevance."
  },
  {
   "id": "kaal:claim:5095633-005",
   "url": "https://wulfkaal.github.io/claims/5095633-005",
   "claim": "The current data production market cannot scale or sustain a high-quality text supply because content creators face limited incentives and no direct compensation structures.",
   "type": "failure",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "argued",
   "scope_conditions": [
    "market as currently structured around platforms and content aggregators"
   ],
   "supporting_quote": "the limited incentives and lack of direct compensation structures for content creators present significant obstacles to scaling and sustaining high- quality data supply."
  },
  {
   "id": "kaal:claim:5095633-006",
   "url": "https://wulfkaal.github.io/claims/5095633-006",
   "claim": "Privacy rules, copyright, and the uneven global distribution of digital connectivity independently reduce both the availability and the diversity of human-generated text for AI training.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "asserted",
   "supporting_quote": "issues such as privacy, copyright, and the uneven global distribution of digital connectivity further exacerbate these shortcomings by curtailing the availability and diversity of human- generated textual content."
  },
  {
   "id": "kaal:claim:5095633-007",
   "url": "https://wulfkaal.github.io/claims/5095633-007",
   "claim": "The author proposes a decentralized, Mechanical Turk style data production model in which individual contributors are directly compensated for generating, refining, or annotating text data.",
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   "confidence": "argued",
   "supporting_quote": "A decentralized data production model, akin to a \"Mechanical Turk\" design, proposes a system in which individual contributors are compensated for generating, refining, or annotating text data."
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   "id": "kaal:claim:5095633-008",
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   "claim": "Decentralized data production will succeed only if it solves fraudulent submissions, content moderation, and alignment with ethical and legal frameworks; these are necessary conditions, not incidental risks.",
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   "id": "kaal:claim:5095633-009",
   "url": "https://wulfkaal.github.io/claims/5095633-009",
   "claim": "The high cost of processing colossal datasets confines frontier AI innovation to a small number of well-resourced institutions.",
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    "applies where model development requires processing very large datasets"
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   "id": "kaal:claim:5095633-010",
   "url": "https://wulfkaal.github.io/claims/5095633-010",
   "claim": "When a training dataset disproportionately represents one region or demographic group, the resulting model produces skewed and sometimes inappropriate outputs once deployed in unfamiliar settings.",
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   "supporting_quote": "For instance, if a dataset disproportionately represents a particular region or demographic group, the model may offer skewed performance, demonstrating suboptimal or inappropriate outputs when deployed in unfamiliar settings."
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   "id": "kaal:claim:5095633-011",
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   "claim": "As AI-generated content proliferates online it dilutes the diversity and originality of the text pool available for later training, producing performance degradation across successive model generations.",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "confidence": "evidenced",
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   "supporting_quote": "As AI-generated content proliferates online, it dilutes the overall diversity and originality of text available for subsequent training processes, potentially leading to a degradation in model performance over repeated generations."
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   "id": "kaal:claim:5095633-012",
   "url": "https://wulfkaal.github.io/claims/5095633-012",
   "claim": "The governance protocols required for GDPR and AI Act compliance, including anonymization, data minimization, and explicit consent, themselves complicate the assembly of robust AI training datasets.",
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   "supporting_quote": "which may include anonymization, data minimization, and explicit consent where applicable. These measures can, however, complicate the collection and curation of robust datasets for AI training."
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   "id": "kaal:claim:5095633-013",
   "url": "https://wulfkaal.github.io/claims/5095633-013",
   "claim": "Latency, throughput limits, and the absence of fully automated continuous training and validation together defeat the timeliness advantage that real-time data is supposed to deliver.",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "supporting_quote": "Latency, data throughput constraints, and the absence of fully automated mechanisms for continuous training and validation can collectively undermine the timeliness of insights derived from AI models."
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  {
   "id": "kaal:claim:5095633-014",
   "url": "https://wulfkaal.github.io/claims/5095633-014",
   "claim": "In fast-moving fields such as technology, law, and public policy, models trained on obsolete datasets fail to capture new trends, behaviors, or regulatory changes, which reduces their predictive and explanatory power.",
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   "confidence": "argued",
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   "supporting_quote": "In rapidly evolving fields—technology, law, or public policy—models trained on obsolete datasets fail to capture new trends, behaviors, or regulatory changes, ultimately reducing their predictive and explanatory power."
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  {
   "id": "kaal:claim:5095633-015",
   "url": "https://wulfkaal.github.io/claims/5095633-015",
   "claim": "In healthcare, biased or stale training data produces algorithms that misdiagnose underrepresented populations and thereby reinforce existing health disparities instead of reducing them.",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "confidence": "argued",
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   "supporting_quote": "In healthcare, for instance, biased or stale training data could lead to algorithms that misdiagnose underrepresented populations, reinforcing existing health disparities rather than alleviating them."
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   "id": "kaal:claim:5095633-016",
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   "claim": "Data protection compliance carried out in a way that overly constrains researcher access converts a privacy gain into a net social loss, because the societal benefits of AI are offset by a stunted innovation ecosystem.",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "confidence": "argued",
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    "where compliance is implemented without counterbalancing privacy-preserving techniques"
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   "supporting_quote": "If compliance with data protection frameworks is conducted in a manner that overly constrains researchers' access to relevant data, the broader societal gains of AI risk being offset by a stunted innovation ecosystem."
  },
  {
   "id": "kaal:claim:5095633-017",
   "url": "https://wulfkaal.github.io/claims/5095633-017",
   "claim": "Decentralizing data processing across secure nodes, using techniques such as federated learning and homomorphic encryption, circumvents the privacy and security exposure of centralized data management and lowers breach risk.",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "supporting_quote": "Through decentralizing data processing across secure nodes, these startups help circumvent the privacy and security issues associated with centralized data management, thus reducing the risk of data breaches."
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   "id": "kaal:claim:5095633-018",
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   "claim": "The centralized frameworks used by the leading annotation companies, including Scale AI, Appen, Hive, V7 Labs, CloudFactory, and Sama, carry theoretical and practical shortcomings around bias, ethical sourcing, and data diversity that undermine the equitability and generalizability of the resulting AI models.",
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   "confidence": "argued",
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   "supporting_quote": "These challenges involve issues of bias, ethical data sourcing, and data diversity, each of which can undermine the equitability and generalizability of resulting AI models."
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   "id": "kaal:claim:5095633-019",
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   "claim": "Biases held by human annotators or embedded in automated annotation systems are propagated into the models trained on their output, producing AI that performs inequitably across demographic groups.",
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  },
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   "id": "kaal:claim:5095633-020",
   "url": "https://wulfkaal.github.io/claims/5095633-020",
   "claim": "Automating annotation to gain speed and cost savings produces less nuanced labeling that misses the complex human judgments and context certain AI applications require.",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "confidence": "argued",
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   "supporting_quote": "Automation can sometimes result in less nuanced data labeling, potentially missing complex human judgments or context that are critical for certain AI applications."
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   "id": "kaal:claim:5095633-021",
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   "claim": "Human-in-the-loop annotation, including under ethical labor models, imposes financial and time costs large enough to slow the pace at which AI models can be upgraded.",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "confidence": "argued",
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   "supporting_quote": "The reliance on human annotators, even with companies striving for ethical labor practices like CloudFactory, involves significant costs, both financial and in terms of time, which can slow down the pace of AI model upgrades."
  },
  {
   "id": "kaal:claim:5095633-022",
   "url": "https://wulfkaal.github.io/claims/5095633-022",
   "claim": "Centralizing annotation data inside a small number of vendor firms creates a standing risk of breach or misuse that can produce legal liability and loss of trust in AI technologies.",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "confidence": "argued",
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   "supporting_quote": "As data is centralized in these companies, there's always a risk of data breaches or misuse, which could lead to legal issues or loss of trust in AI technologies."
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   "id": "kaal:claim:5095633-023",
   "url": "https://wulfkaal.github.io/claims/5095633-023",
   "claim": "Maintaining consistent annotation quality across many annotators and automated systems is unsolved at scale, and small labeling errors translate into significant degradation of model performance in critical applications.",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "confidence": "argued",
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   "supporting_quote": "With the scale at which data annotation occurs, maintaining consistent quality across different annotators or automated systems remains a practical challenge. Small errors in annotation can have significant impacts on model performance"
  },
  {
   "id": "kaal:claim:5095633-024",
   "url": "https://wulfkaal.github.io/claims/5095633-024",
   "claim": "Smart contracts that release payment automatically once preset quality thresholds are met reduce human error, cut administrative overhead, and accelerate data-labeling cycles relative to intermediated payment processes.",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "confidence": "argued",
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   "supporting_quote": "smart contracts automatically release payments to contributors once preset quality thresholds are met, thereby decreasing the risk of human error, reducing administrative overhead, and accelerating data-labeling cycles."
  },
  {
   "id": "kaal:claim:5095633-025",
   "url": "https://wulfkaal.github.io/claims/5095633-025",
   "claim": "Transparent DAO governance lets platforms compensate contributors according to demonstrated expertise and reputation, which mitigates the exploitative labor practices associated with centralized annotation services.",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "confidence": "argued",
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   "supporting_quote": "By implementing transparent governance mechanisms—often in the form of Decentralized Autonomous Organizations (\"DAOs\")—these ventures can equitably compensate data contributors based on demonstrated expertise and reputation, thus mitigating exploitative labor practices"
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   "id": "kaal:claim:5095633-026",
   "url": "https://wulfkaal.github.io/claims/5095633-026",
   "claim": "High transaction costs in centralized payment systems make micro-payments for small tasks uneconomic, whereas blockchain ledgers process tiny transfers efficiently and thereby widen the pool of contributors willing to do micro-tasks.",
   "type": "mechanism",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "confidence": "argued",
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   "supporting_quote": "High transaction costs in centralized models often preclude micro-payments for smaller tasks. In contrast, blockchain-based ledgers can process tiny financial transfers efficiently, facilitating fair compensation for incremental work and expanding the pool of potential contributors"
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  {
   "id": "kaal:claim:5095633-027",
   "url": "https://wulfkaal.github.io/claims/5095633-027",
   "claim": "Adoption of decentralized data platforms is blocked by an expertise barrier: prospective contributors must manage tokens, maintain secure wallets, and understand the underlying technology, which deters users unaccustomed to digital assets.",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "confidence": "argued",
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   "supporting_quote": "adoption is hindered by the user expertise required to navigate blockchain infrastructure. Potential contributors or data consumers are often deterred by the need to manage cryptocurrency tokens, maintain secure digital wallets, and understand the underlying technology."
  },
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   "id": "kaal:claim:5095633-028",
   "url": "https://wulfkaal.github.io/claims/5095633-028",
   "claim": "Decentralized data annotation at scale is not operationally feasible without advances in consensus algorithms or layer-two scaling, because existing blockchain infrastructures cap transaction speed and network capacity.",
   "type": "condition",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   ],
   "supporting_quote": "existing blockchain infrastructures typically grapple with limits on transaction speed and network capacity. Continuous innovation in consensus algorithms, such as Proof of Stake or layer-two scaling solutions, is thus critical."
  },
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   "id": "kaal:claim:5095633-029",
   "url": "https://wulfkaal.github.io/claims/5095633-029",
   "claim": "DAO-based governance introduces unresolved uncertainty about liability and legal accountability when personal data crosses international boundaries, and a mismatch between platform governance and regulatory mandates produces legal liability that erodes user trust.",
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   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "confidence": "argued",
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   "supporting_quote": "decentralized governance models, such as DAOs, introduce uncertainties regarding liability and legal accountability when personal data is exchanged across international boundaries. A mismatch between platform governance and regulatory mandates can result in legal liabilities, undermining user trust"
  },
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   "id": "kaal:claim:5095633-030",
   "url": "https://wulfkaal.github.io/claims/5095633-030",
   "claim": "Well-capitalized centralized incumbents can outpace decentralized entrants in user acquisition by leveraging existing customer bases and brand recognition, so decentralized startups must show clear advantages in compensation, transparency, or data protection to win adoption.",
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   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
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   "confidence": "argued",
   "scope_conditions": [
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   ],
   "supporting_quote": "Well-capitalized incumbents may leverage established customer bases and brand recognition, enabling them to outpace nascent decentralized platforms in user acquisition and marketing."
  },
  {
   "id": "kaal:claim:5095633-031",
   "url": "https://wulfkaal.github.io/claims/5095633-031",
   "claim": "The reputation systems of SingularityNET, Fetch.ai, Ocean Protocol, Numeraire, and DcentAI are structurally insufficient for a fully decentralized Mechanical Turk model of large-scale AI dataset creation, offering only incremental innovation.",
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    "empirical-evidence"
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   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "argued",
   "scope_conditions": [
    "highly contextual, iterative, and ethically sensitive dataset tasks",
    "continuous compliance with evolving legal standards"
   ],
   "supporting_quote": "While these platforms offer incremental innovations in how contributors are evaluated and rewarded, they remain structurally insufficient for a fully decentralized \"Mechanical Turk\" model of large-scale AI dataset creation."
  },
  {
   "id": "kaal:claim:5095633-032",
   "url": "https://wulfkaal.github.io/claims/5095633-032",
   "claim": "Linking every contributor action and every piece of data to on-chain governance elements within a structured graph is what enables real-time community oversight, iterative updates, and granular reputation tracking in the WDAG model.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "argued",
   "scope_conditions": [
    "contributions and governance elements are recorded on chain"
   ],
   "supporting_quote": "By enabling every contributor action and piece of data to be linked to on-chain governance elements in a structured graph, the WDAG model supports real-time community oversight, iterative updates, and granular reputation tracking."
  },
  {
   "id": "kaal:claim:5095633-033",
   "url": "https://wulfkaal.github.io/claims/5095633-033",
   "claim": "Reputation for AI dataset governance must be multi-dimensional rather than a single numeric score, which the author operationalizes as weighted nodes and directed edges in a WDAG.",
   "type": "design",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "argued",
   "scope_conditions": [
    "AI dataset governance requiring traceability and flexibility"
   ],
   "supporting_quote": "By establishing a forum of weighted nodes and directed edges, WDAG provides a multi-dimensional view of contributors' work, ensuring that reputation is not limited to a single numeric score."
  },
  {
   "id": "kaal:claim:5095633-034",
   "url": "https://wulfkaal.github.io/claims/5095633-034",
   "claim": "SingularityNET's service-level reputation metrics fail to capture the granular requirements of dataset creation, namely accuracy, consistency, and contextual relevance.",
   "type": "failure",
   "topics": [
    "reputation",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "argued",
   "scope_conditions": [
    "dataset creation tasks requiring domain-specific input and iterative checks"
   ],
   "supporting_quote": "it places insufficient emphasis on the granular requirements of dataset creation—namely, accuracy, consistency, and contextual relevance."
  },
  {
   "id": "kaal:claim:5095633-035",
   "url": "https://wulfkaal.github.io/claims/5095633-035",
   "claim": "Because Fetch.ai's reputation metrics do not adjust to evolving ethical, legal, and community standards, the platform risks entrenching biases and outdated practices.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "argued",
   "scope_conditions": [
    "where societal expectations or regulatory norms change over time"
   ],
   "supporting_quote": "the platform risks reinforcing biases or outdated practices if metrics are insufficiently aligned with changes in societal expectations or regulatory norms."
  },
  {
   "id": "kaal:claim:5095633-036",
   "url": "https://wulfkaal.github.io/claims/5095633-036",
   "claim": "Ocean Protocol's market-driven reputation signal is too indirect: it does not measure individual expertise or annotation consistency, and market forces lag behind real-time shifts in best practices and ethical standards.",
   "type": "failure",
   "topics": [
    "economics",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "argued",
   "scope_conditions": [
    "reputation inferred from price signals and demand rather than direct evaluation"
   ],
   "supporting_quote": "this indirect feedback loop does not thoroughly account for the individual expertise or consistency of data annotation work. Market forces can lag behind real-time changes in best practices or ethical standards, leaving critical gaps in data quality and compliance."
  },
  {
   "id": "kaal:claim:5095633-037",
   "url": "https://wulfkaal.github.io/claims/5095633-037",
   "claim": "Numeraire's staking and prediction-based reputation mechanism, tuned to predictive accuracy, overlooks the ethical and contextual concerns that characterize AI dataset governance.",
   "type": "failure",
   "topics": [
    "reputation",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "argued",
   "scope_conditions": [
    "diverse dataset tasks such as medical annotation and content moderation"
   ],
   "supporting_quote": "The narrow focus on predictive accuracy overlooks the broader ethical and contextual concerns that characterize AI governance."
  },
  {
   "id": "kaal:claim:5095633-038",
   "url": "https://wulfkaal.github.io/claims/5095633-038",
   "claim": "A single reputation score, as used by DcentAI, cannot capture the interdependencies among privacy concerns, domain-specific regulation, and real-time ethical updates that dataset governance requires.",
   "type": "failure",
   "topics": [
    "reputation",
    "governance-design",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "argued",
   "scope_conditions": [
    "multi-domain dataset quality with evolving standards"
   ],
   "supporting_quote": "The current framework may struggle to capture interdependencies between various data facets—such as privacy concerns, domain-specific regulations, and real-time ethical updates—within a single reputation score."
  },
  {
   "id": "kaal:claim:5095633-039",
   "url": "https://wulfkaal.github.io/claims/5095633-039",
   "claim": "Validation pools combined with on-chain governance let reputational adjustments occur in real time, so the system can recalibrate as societal, regulatory, or domain-specific requirements shift, unlike static feedback systems.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "argued",
   "scope_conditions": [
    "validation pools and on-chain governance are operative"
   ],
   "supporting_quote": "The proposed model's reliance on validation pools and on-chain governance ensures that reputational adjustments can occur in real time, accommodating rapid shifts in societal, regulatory, or domain-specific requirements."
  },
  {
   "id": "kaal:claim:5095633-040",
   "url": "https://wulfkaal.github.io/claims/5095633-040",
   "claim": "Solving data bias, computational overhead, stale datasets, privacy constraints, and inequitable compensation cannot be done within any single discipline; it requires concerted interdisciplinary effort across governments, corporations, researchers, and civil society.",
   "type": "normative",
   "topics": [
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Artificial Intelligence The Final Frontier (2025). SSRN: https://ssrn.com/abstract=5095633",
   "year": "2025",
   "source_sha256": "cbb484711f89bcefc9fc6a5730a1ed0a3f764d7999ad9b6f7d8ea05634c26c63",
   "confidence": "argued",
   "supporting_quote": "addressing the challenges outlined herein—data bias, high computational overhead, stagnant or outdated datasets, privacy and security constraints, and inequitable compensation structures—requires concerted, interdisciplinary efforts."
  },
  {
   "id": "kaal:claim:5225296-001",
   "url": "https://wulfkaal.github.io/claims/5225296-001",
   "claim": "An abrupt transition from Proof of Stake to Secure Proof of Stake would destabilize networks built on stake-based incentives, because stake is a fungible economic asset and reputation is non-fungible social capital, and the two operate on fundamentally different principles.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "networks whose validator participation depends on stake-based incentives"
   ],
   "supporting_quote": "An abrupt transition could destabilize networks reliant on stake-based incentives, as stake (a fungible economic asset) and reputation (a non-fungible social capital) operate on fundamentally different principles, potentially disrupting validator participation and network integrity"
  },
  {
   "id": "kaal:claim:5225296-002",
   "url": "https://wulfkaal.github.io/claims/5225296-002",
   "claim": "Hybrid Secure Proof of Stake bridges PoS and SPoS by separating block consensus from reward distribution: stake continues to determine selection probability while a reputation multiplier adjusts the rewards paid out.",
   "type": "design",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "asserted",
   "supporting_quote": "HSPoS bridges these frameworks by separating block consensus from reward distribution: stake determines selection probability, consistent with PoS, while a reputation multiplier adjusts rewards, introducing SPoS's reputation-centric features"
  },
  {
   "id": "kaal:claim:5225296-003",
   "url": "https://wulfkaal.github.io/claims/5225296-003",
   "claim": "Using reputation as a reward modifier rather than as the determinant of block propagation lets a network evaluate reputation metrics such as validator uptime, validation accuracy, and governance participation without committing to the full SPoS framework.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "during the transitional HSPoS phase"
   ],
   "supporting_quote": "By employing reputation as a reward modifier rather than the sole determinant of block propagation, HSPoS enables networks to evaluate reputation metrics—such as validator uptime, transaction validation accuracy, or governance participation—without fully committing to SPoS's framework"
  },
  {
   "id": "kaal:claim:5225296-004",
   "url": "https://wulfkaal.github.io/claims/5225296-004",
   "claim": "A direct move from PoS to SPoS would render existing validator communities and stake-optimized infrastructures obsolete or force significant reconfiguration, which is why a hybrid intermediate stage is required.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "PoS networks with established validator communities and stake-based infrastructure"
   ],
   "supporting_quote": "PoS networks have developed validator communities and infrastructures optimized for stake-based operations; a direct move to SPoS could render these obsolete or necessitate significant reconfiguration"
  },
  {
   "id": "kaal:claim:5225296-005",
   "url": "https://wulfkaal.github.io/claims/5225296-005",
   "claim": "On comparative metrics of security, energy use per transaction, and governance flexibility, SPoS outperforms contemporary PoS variants such as Casper FFG and Ouroboros Praos in decentralization.",
   "type": "empirical",
   "topics": [
    "decentralization",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "comparison against Ethereum Casper FFG and Cardano Ouroboros Praos"
   ],
   "supporting_quote": "Comparative metrics—such as security (Byzantine fault tolerance up to 33% adversaries), efficiency (energy use per transaction), and governance flexibility—suggest SPoS excels in decentralization"
  },
  {
   "id": "kaal:claim:5225296-006",
   "url": "https://wulfkaal.github.io/claims/5225296-006",
   "claim": "SPoS shifts the burden of consensus from energy expenditure to validator reputation, measured against a baseline of over 140 terawatt-hours consumed annually by Bitcoin as of 2023.",
   "type": "mechanism",
   "topics": [
    "economics",
    "consensus-and-security",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "evidenced",
   "scope_conditions": [
    "comparison against PoW chains such as Bitcoin"
   ],
   "supporting_quote": "140 terawatt-hours annually for Bitcoin alone as of 2023—SPoS shifts the burden of consensus to validator reputation"
  },
  {
   "id": "kaal:claim:5225296-007",
   "url": "https://wulfkaal.github.io/claims/5225296-007",
   "claim": "SPoS accelerates protocol innovation because embedding governance on-chain circumvents the off-chain coordination delays that characterize PoW and simpler PoS systems.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "supporting_quote": "Moreover, SPoS's on-chain governance model accelerates innovation by circumventing the off-chain coordination delays that characterize PoW and simpler PoS systems."
  },
  {
   "id": "kaal:claim:5225296-008",
   "url": "https://wulfkaal.github.io/claims/5225296-008",
   "claim": "SPoS avoids the delegate centralization of DPoS, where block production concentrates among a small elected set, by distributing block production opportunities across validators in proportion to both reputation and stake.",
   "type": "mechanism",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "contrast with DPoS implementations such as EOS with 21 delegates"
   ],
   "supporting_quote": "Unlike DPoS, which centralizes block production among a small set of delegates (e.g., 21 in EOS), SPoS balances fairness and randomness by distributing opportunities across validators proportionally to their reputation and stake"
  },
  {
   "id": "kaal:claim:5225296-009",
   "url": "https://wulfkaal.github.io/claims/5225296-009",
   "claim": "Because governance is embedded in the protocol rather than conducted off-chain, SPoS could enact protocol changes in weeks or days where Bitcoin's miner and developer negotiation process takes years.",
   "type": "predictive",
   "topics": [
    "ai-and-agents",
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "assumes functioning on-chain governance forums"
   ],
   "supporting_quote": "For example, whereas Bitcoin's upgrade process can take years due to miner-developer negotiations, SPoS's embedded governance could enact changes in weeks or days, mirroring the agility of Tendermint's consensus model"
  },
  {
   "id": "kaal:claim:5225296-010",
   "url": "https://wulfkaal.github.io/claims/5225296-010",
   "claim": "On-chain governance systems outperform traditional governance models in responsiveness only if they incorporate robust anti-collusion measures, a requirement SPoS meets through its cryptographic commitments.",
   "type": "condition",
   "topics": [
    "dao",
    "governance-design",
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "requires robust anti-collusion measures to be in place"
   ],
   "supporting_quote": "Recent studies of on-chain governance in DAOs suggest that such systems can outperform traditional models in responsiveness, provided they incorporate robust anti-collusion measures—a challenge SPoS addresses through its cryptographic commitments"
  },
  {
   "id": "kaal:claim:5225296-011",
   "url": "https://wulfkaal.github.io/claims/5225296-011",
   "claim": "Reputation functions as a social incentive that complements monetary reward and sustains cooperation in trustless environments, a behavioral mechanism unavailable to purely stake-weighted consensus systems.",
   "type": "mechanism",
   "topics": [
    "economics",
    "risk-and-incentives",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "supporting_quote": "Behavioral economics provides a lens for understanding this shift: reputation acts as a social incentive, complementing monetary rewards and fostering cooperation in trustless environments"
  },
  {
   "id": "kaal:claim:5225296-012",
   "url": "https://wulfkaal.github.io/claims/5225296-012",
   "claim": "Efficiency gains in PoS variants do not inherently compromise resilience, but only on the condition that the underlying cryptographic safeguards are robust.",
   "type": "condition",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "requires robust cryptographic safeguards"
   ],
   "supporting_quote": "Comparative analyses of PoS variants highlight that such efficiency gains do not inherently compromise resilience, provided cryptographic safeguards are robust, as they are in SPoS"
  },
  {
   "id": "kaal:claim:5225296-013",
   "url": "https://wulfkaal.github.io/claims/5225296-013",
   "claim": "Long-range attacks, in which adversaries rewrite history using old keys, are mitigated in SPoS by requiring verifiable participation of current stakeholders.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "supporting_quote": "Long-range attacks, where adversaries rewrite history using old keys, are mitigated by requiring verifiable participation of current stakeholders, a defense articulated in PoS security literature"
  },
  {
   "id": "kaal:claim:5225296-014",
   "url": "https://wulfkaal.github.io/claims/5225296-014",
   "claim": "Stake-grinding, where validators manipulate randomness to favor their own selection, is countered in SPoS by reputation staking combined with community oversight.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "supporting_quote": "Stake-grinding, where validators manipulate randomness to favor themselves, is countered by reputation staking and community oversight, ensuring consensus integrity"
  },
  {
   "id": "kaal:claim:5225296-015",
   "url": "https://wulfkaal.github.io/claims/5225296-015",
   "claim": "ECDSA introduces a vulnerability into SPoS through its dependence on secure random number generation at key creation, so the authentication guarantee fails when implementation departs from cryptographic best practice.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "when random number generation is improperly implemented"
   ],
   "supporting_quote": "However, ECDSA's reliance on secure random number generation for key creation introduces a potential vulnerability if improperly implemented, necessitating strict adherence to cryptographic best practices"
  },
  {
   "id": "kaal:claim:5225296-016",
   "url": "https://wulfkaal.github.io/claims/5225296-016",
   "claim": "Verifiable randomness is a necessary condition for fair block producer selection: without it, adversaries can precompute favorable outcomes and the selection process loses fairness.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "supporting_quote": "The necessity of randomness stems from PoS's vulnerability to predictability; without it, adversaries could precompute favorable outcomes, undermining fairness"
  },
  {
   "id": "kaal:claim:5225296-017",
   "url": "https://wulfkaal.github.io/claims/5225296-017",
   "claim": "Verifiable random functions supply publicly verifiable proof of randomness bound to a validator's private key, preserving selection fairness even when adversaries control up to a third of the network.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "evidenced",
   "scope_conditions": [
    "up to 33 percent adversarial control"
   ],
   "supporting_quote": "VRFs, as utilized in Algorand, provide publicly verifiable proof of randomness tied to a validator's private key, ensuring fairness even under 33% adversarial control"
  },
  {
   "id": "kaal:claim:5225296-018",
   "url": "https://wulfkaal.github.io/claims/5225296-018",
   "claim": "SPoS binds validator votes irrevocably by requiring commitment via hash preimages that are revealed only after a designated period, driving the probability of successful post-facto vote alteration below 2^-128.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "evidenced",
   "scope_conditions": [
    "asynchronous and partially synchronous network conditions"
   ],
   "supporting_quote": "These schemes require validators to commit to votes via hash preimages, revealed only after a designated period, rendering post-facto alterations computationally infeasible with a probability of success below 2^-128"
  },
  {
   "id": "kaal:claim:5225296-019",
   "url": "https://wulfkaal.github.io/claims/5225296-019",
   "claim": "SPoS inherits PBFT's stability threshold: the three-phase pre-prepare, prepare, and commit protocol secures agreement despite Byzantine behavior, but formal analysis proves stability only while fewer than one third of nodes are faulty.",
   "type": "condition",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "evidenced",
   "scope_conditions": [
    "fewer than n/3 of n nodes faulty"
   ],
   "supporting_quote": "PBFT's three-phase protocol—pre-prepare, prepare, and commit—ensures agreement despite Byzantine behavior, with formal threshold analysis proving stability when fewer than n/3 of n nodes are faulty"
  },
  {
   "id": "kaal:claim:5225296-020",
   "url": "https://wulfkaal.github.io/claims/5225296-020",
   "claim": "Recursive zk-SNARK optimizations compress proof generation from seconds to milliseconds while preserving constant-time verification, which is what makes zero-knowledge voting deployable in a protocol running microsecond-scale reputation updates.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "evidenced",
   "scope_conditions": [
    "with recursive proof constructions"
   ],
   "supporting_quote": "compress proof generation from seconds to milliseconds while preserving constant-time verification, aligning with SPoS's need for rapid governance operations under microsecond-scale reputation updates"
  },
  {
   "id": "kaal:claim:5225296-021",
   "url": "https://wulfkaal.github.io/claims/5225296-021",
   "claim": "Slashing establishes a Nash equilibrium in which rational validators adhere to honest behavior, because the expected cost of penalties exceeds any short-term gain available from misconduct.",
   "type": "mechanism",
   "topics": [
    "economics",
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "evidenced",
   "scope_conditions": [
    "assumes rational validators who value long-term participation rewards"
   ],
   "supporting_quote": "game-theoretic models, which demonstrate that slashing establishes a Nash equilibrium wherein rational validators are incentivized to adhere to honest behavior, as the expected cost of penalties outweighs any potential short-term gains from misconduct"
  },
  {
   "id": "kaal:claim:5225296-022",
   "url": "https://wulfkaal.github.io/claims/5225296-022",
   "claim": "SPoS imposes a dual penalty that reduces financial stake and reputation at the same time, amplifying accountability by combining immediate tangible cost with long-term social consequence inside the validator community.",
   "type": "design",
   "topics": [
    "tokenomics",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "supporting_quote": "When combined with slashing, which simultaneously reduces both financial stake and reputation—a dual penalty unique to SPoS—this mechanism amplifies accountability by imposing immediate tangible costs and long-term social consequences within the validator community"
  },
  {
   "id": "kaal:claim:5225296-023",
   "url": "https://wulfkaal.github.io/claims/5225296-023",
   "claim": "Penalty enforcement in SPoS achieves a false-positive rate below 10^-6 because ECDSA-signed attestations make validator actions non-repudiable and forging them computationally infeasible.",
   "type": "mechanism",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "evidenced",
   "supporting_quote": "This process achieves a false-positive rate below 10^-6, upheld by probabilistic checks that leverage the computational infeasibility of forging ECDSA signatures, thereby maintaining trust among participants with minimal risk of erroneous sanctions"
  },
  {
   "id": "kaal:claim:5225296-024",
   "url": "https://wulfkaal.github.io/claims/5225296-024",
   "claim": "Proof of Strong Collaboration substitutes verifiable participation for raw computational power, which reduces energy demand and rewards cooperative validator behavior rather than competitive hashing.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "supporting_quote": "By prioritizing verifiable participation over raw computational power, PSC reduces energy demands, promotes cooperative validator behavior, and aligns with SPoS's sustainability objectives"
  },
  {
   "id": "kaal:claim:5225296-025",
   "url": "https://wulfkaal.github.io/claims/5225296-025",
   "claim": "zk-SNARKs let a validator prove eligibility, meaning sufficient stake and a reputable history of cooperation, without revealing real-world identity or the specifics of staked assets.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "security rests on computational assumptions such as discrete logarithm or bilinear pairing hardness"
   ],
   "supporting_quote": "enable validators to prove their eligibility—demonstrating sufficient stake and a reputable history of cooperative behavior—without revealing sensitive data such as their real-world identities or the precise details of their staked assets"
  },
  {
   "id": "kaal:claim:5225296-026",
   "url": "https://wulfkaal.github.io/claims/5225296-026",
   "claim": "By concealing validator identities while still verifying eligibility, zk-SNARKs mitigate the targeted attacks and coercion that identity exposure would otherwise invite.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "supporting_quote": "The use of zk-SNARKs thus ensures that SPoS maintains a transparent yet private validator ecosystem, mitigating risks such as targeted attacks or coercion that could arise from identity exposure"
  },
  {
   "id": "kaal:claim:5225296-027",
   "url": "https://wulfkaal.github.io/claims/5225296-027",
   "claim": "SPoS's reliance on a reputation-based system introduces vulnerabilities absent from PoW and traditional PoS, most notably Sybil attacks, collusion risks, and reputation manipulation, which could undermine its decentralized governance and consensus if not robustly addressed.",
   "type": "failure",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "supporting_quote": "However, its innovative reliance on a reputation-based system introduces vulnerabilities—most notably Sybil attacks, collusion risks, and reputation manipulation—that could undermine the integrity of its decentralized governance and consensus processes"
  },
  {
   "id": "kaal:claim:5225296-028",
   "url": "https://wulfkaal.github.io/claims/5225296-028",
   "claim": "Sybil attack risk is amplified in reputation-driven systems relative to stake-based ones, because influence derives from behavioral metrics that an attacker can mimic across many pseudonymous identities.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "risk-and-incentives",
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "reputation-driven consensus systems where influence stems from behavioral metrics"
   ],
   "supporting_quote": "In reputation-driven systems, this threat is amplified as influence stems from behavioral metrics rather than stake, enabling attackers to mimic legitimate activity across numerous identities"
  },
  {
   "id": "kaal:claim:5225296-029",
   "url": "https://wulfkaal.github.io/claims/5225296-029",
   "claim": "Collusion, meaning coordinated action among validators to manipulate reputation scores or governance outcomes, threatens the fairness and integrity of SPoS independently of any cryptographic weakness.",
   "type": "failure",
   "topics": [
    "governance-design",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "asserted",
   "supporting_quote": "Collusion risks—coordinated efforts among validators to manipulate reputation scores or governance outcomes—further threaten fairness and integrity"
  },
  {
   "id": "kaal:claim:5225296-030",
   "url": "https://wulfkaal.github.io/claims/5225296-030",
   "claim": "Cryptography alone is insufficient for a reputation-based consensus system: SPoS's cryptographic toolkit resists direct tampering, but reputation-based exploits require separate strategic countermeasures.",
   "type": "condition",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "supporting_quote": "While SPoS's cryptographic toolkit resists direct tampering, it requires strategic countermeasures to address these reputation-based exploits"
  },
  {
   "id": "kaal:claim:5225296-031",
   "url": "https://wulfkaal.github.io/claims/5225296-031",
   "claim": "Weighted voting defeats Sybil attacks because ECDSA signatures and zk-SNARKs authenticate every platform action, so reputation cannot be artificially inflated by identities that lack genuine contribution.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "consensus-and-security",
    "citation-and-knowledge",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "requires that all platform actions be cryptographically authenticated and reputation be recorded on chain"
   ],
   "supporting_quote": "This approach utilizes cryptographic verification—via ECDSA signatures and zk-SNARKs—to authenticate actions, ensuring that reputation cannot be artificially inflated by Sybil identities lacking genuine effort"
  },
  {
   "id": "kaal:claim:5225296-032",
   "url": "https://wulfkaal.github.io/claims/5225296-032",
   "claim": "Weighted voting creates a Nash equilibrium favoring honest participation, because creating additional Sybil identities yields no extra voting power absent corresponding contributions.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "economics",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "constrained by cryptographic and temporal verification mechanisms"
   ],
   "supporting_quote": "Game-theoretic analysis indicates that this creates a Nash equilibrium where honest participation is incentivized, as creating Sybil identities yields no additional voting power without corresponding contributions"
  },
  {
   "id": "kaal:claim:5225296-033",
   "url": "https://wulfkaal.github.io/claims/5225296-033",
   "claim": "Weighted voting reduces Sybil attack success rates by over eighty-five percent, but only where reputation is openly auditable.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "consensus-and-security",
    "compliance",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "evidenced",
   "scope_conditions": [
    "reputation must be openly auditable"
   ],
   "supporting_quote": "Simulations of reputation-based systems suggest that weighted voting reduces Sybil attack success rates by over 85% when reputation is openly auditable"
  },
  {
   "id": "kaal:claim:5225296-034",
   "url": "https://wulfkaal.github.io/claims/5225296-034",
   "claim": "Weighted voting works as a Sybil defense only under two conditions: reputation metrics must capture meaningful effort such as block production quality and depth of governance participation, and the system must maintain continuous transparency backed by community oversight and formal verification.",
   "type": "condition",
   "topics": [
    "governance-design",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "metrics must reflect meaningful effort",
    "continuous transparency and formal verification must be maintained"
   ],
   "supporting_quote": "This defense requires robust metric design—e.g., ensuring reputation reflects meaningful effort (block production quality, governance participation depth)—and continuous transparency, supported by community oversight and formal verification to prevent manipulation"
  },
  {
   "id": "kaal:claim:5225296-035",
   "url": "https://wulfkaal.github.io/claims/5225296-035",
   "claim": "Microsecond-scale reputation updates defeat Sybil attacks by imposing an operational burden that makes maintaining multiple coherent identities across microsecond intervals computationally infeasible.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "scope_conditions": [
    "requires real-time behavioral signals such as block proposal frequency, vote consistency, and network latency"
   ],
   "supporting_quote": "This temporal granularity imposes a significant operational burden on attackers, rendering it computationally infeasible to maintain multiple coherent identities across microsecond intervals"
  },
  {
   "id": "kaal:claim:5225296-036",
   "url": "https://wulfkaal.github.io/claims/5225296-036",
   "claim": "Sub-millisecond reputation refresh rates reduce successful Sybil attack probability by seventy percent in simulation.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "evidenced",
   "scope_conditions": [
    "sub-millisecond refresh rates"
   ],
   "supporting_quote": "Simulations demonstrate a 70% reduction in successful Sybil attack probability with sub-millisecond refresh rates, leveraging the rapid interaction pace of modern blockchain networks"
  },
  {
   "id": "kaal:claim:5225296-037",
   "url": "https://wulfkaal.github.io/claims/5225296-037",
   "claim": "Collusion calls for a different remedy than Sybil attacks: adaptive slashing that detects coordinated deviations through statistical anomaly detection is what deters group manipulation.",
   "type": "design",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "supporting_quote": "For collusion, adaptive slashing—detecting coordinated deviations via statistical anomaly detection—deters group manipulation, drawing on game-theoretic deterrence"
  },
  {
   "id": "kaal:claim:5225296-038",
   "url": "https://wulfkaal.github.io/claims/5225296-038",
   "claim": "Neither weighted voting nor microsecond updates suffices alone; together they form a dual-layered defense because weighted voting addresses static identity proliferation while microsecond updates address dynamic behavioral exploitation.",
   "type": "design",
   "topics": [
    "governance-design",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "argued",
   "supporting_quote": "Together, weighted voting and microsecond updates form a dual-layered defense, addressing both static identity proliferation and dynamic behavioral exploitation"
  },
  {
   "id": "kaal:claim:5225296-039",
   "url": "https://wulfkaal.github.io/claims/5225296-039",
   "claim": "The defenses that secure SPoS may not scale: frequent reputation updates and zk-SNARK verifications may strain resources under high transaction loads, potentially requiring sharding or layer-2 solutions.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "speculative",
   "scope_conditions": [
    "under high transaction loads"
   ],
   "supporting_quote": "frequent updates and zk-SNARK verifications may strain resources; sharding or layer-2 solutions could optimize performance"
  },
  {
   "id": "kaal:claim:5225296-040",
   "url": "https://wulfkaal.github.io/claims/5225296-040",
   "claim": "Testnet deployment must evaluate weighted voting and microsecond-scale updates against Sybil attacks, collusion, and reputation gaming across adversarial scenarios of ten, thirty-three, and fifty percent malicious participation before SPoS's theoretical strengths can be treated as practical resilience.",
   "type": "normative",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Cryptographic Foundations and Interdisciplinary Dimensions of the Secure Proof of Stake (SPoS) Conse (2025). SSRN: https://ssrn.com/abstract=5225296",
   "year": "2025",
   "source_sha256": "b2fec675d906334ad67e13b2d97261dc31e38061022867eb3f9ceadd95f4878d",
   "confidence": "asserted",
   "scope_conditions": [
    "prior to production deployment"
   ],
   "supporting_quote": "Testnet deployments should evaluate both weighted voting and microsecond-scale updates against Sybil attacks, collusion, and reputation gaming under adversarial scenarios (e.g., 10%, 33%, 50% malicious participation), using real-time data and high-performance testbeds"
  },
  {
   "id": "kaal:claim:5245185-001",
   "url": "https://wulfkaal.github.io/claims/5245185-001",
   "claim": "Traditional centralized AI driven supervision of AI agent transactions is deficient because it delivers only limited transparency, is susceptible to bias, and concentrates risk in single points of failure.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "compliance",
    "decentralization",
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "asserted",
   "scope_conditions": [
    "centralized supervision of autonomous AI agent transaction execution"
   ],
   "supporting_quote": "Traditional, centralized AI-driven supervision methods are often hindered by limited transparency, susceptibility to bias, and the risk of single points of failure."
  },
  {
   "id": "kaal:claim:5245185-002",
   "url": "https://wulfkaal.github.io/claims/5245185-002",
   "claim": "Distributing monitoring across federated communication nodes, such as Matrix with its Synapse server, scales oversight of AI agent activity while improving privacy, because sensitive data is processed locally instead of being pooled in one central repository.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "ai-and-agents",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "federated node architecture",
    "sensitive transaction data"
   ],
   "supporting_quote": "federated model not only scales the monitoring process efficiently but also enhances data privacy by processing sensitive information locally rather than in a single centralized repository."
  },
  {
   "id": "kaal:claim:5245185-003",
   "url": "https://wulfkaal.github.io/claims/5245185-003",
   "claim": "Because blockchain records a verifiable and immutable history of data provenance and alterations, it mitigates data poisoning risk and supports the claim that AI models were trained on genuine datasets.",
   "type": "mechanism",
   "topics": [
    "blockchain",
    "citation-and-knowledge",
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "training data recorded on chain",
    "systems relying on large language models"
   ],
   "supporting_quote": "Blockchain establishes a verifiable record of data provenance and alterations, essential for sustaining trust and mitigating risks such as data poisoning, thereby ensuring AI models are trained on genuine datasets."
  },
  {
   "id": "kaal:claim:5245185-004",
   "url": "https://wulfkaal.github.io/claims/5245185-004",
   "claim": "AI agents are autonomous software entities that execute specific tasks on behalf of their users, combining computational engineering with cognitive simulation; this stipulated definition anchors the paper's monitoring analysis.",
   "type": "definitional",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "asserted",
   "supporting_quote": "AI agents are autonomous software entities designed to execute specific tasks on behalf of their users, encompassing a convergence of computational engineering and cognitive simulation."
  },
  {
   "id": "kaal:claim:5245185-005",
   "url": "https://wulfkaal.github.io/claims/5245185-005",
   "claim": "Decentralized cryptocurrency rails let AI agents autonomously control digital wallets, securing private keys, monitoring balances, and managing multiple addresses, without requiring human or institutional authorization.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "blockchain based payment rails without centralized intermediaries"
   ],
   "supporting_quote": "enables AI agents to autonomously oversee digital wallets—securing private keys, monitoring balances, and managing multiple addresses—without requiring human or institutional authorization."
  },
  {
   "id": "kaal:claim:5245185-006",
   "url": "https://wulfkaal.github.io/claims/5245185-006",
   "claim": "The decentralized architecture of blockchain itself complicates accountability by rendering oversight across distributed networks opaque, and that opacity jeopardizes adequate regulatory supervision of AI agents.",
   "type": "failure",
   "topics": [
    "disclosure",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "AI agents operating across distributed blockchain networks"
   ],
   "supporting_quote": "The decentralized nature of blockchain complicates accountability, rendering oversight across distributed networks opaque.42 This opacity jeopardizes adequate regulatory supervision of AI agents."
  },
  {
   "id": "kaal:claim:5245185-007",
   "url": "https://wulfkaal.github.io/claims/5245185-007",
   "claim": "The accelerated evolution of AI and blockchain technologies outstrips regulatory development, which can situate AI agents in legal interstices, particularly in financial and data management domains.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "law-and-legal-systems",
    "ai-and-agents",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "fast moving AI and blockchain deployment",
    "financial and data management activity"
   ],
   "supporting_quote": "accelerated evolution of AI and blockchain technologies frequently outstrips regulatory development, potentially situating agents within legal interstices, particularly in financial and data management domains."
  },
  {
   "id": "kaal:claim:5245185-008",
   "url": "https://wulfkaal.github.io/claims/5245185-008",
   "claim": "AI autonomy introduces unpredictability: agent actions may diverge from intended outcomes, which amplifies the risk of unintended ramifications.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "autonomous agents acting without step by step human authorization"
   ],
   "supporting_quote": "AI autonomy introduces unpredictability, wherein actions may diverge from intended outcomes, amplifying risks of unintended ramifications."
  },
  {
   "id": "kaal:claim:5245185-009",
   "url": "https://wulfkaal.github.io/claims/5245185-009",
   "claim": "Integrating AI with blockchain does not by itself eliminate security exposure: cyberattacks and privacy breaches remain possible absent rigorous monitoring.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "blockchain",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "blockchain integrated AI systems without rigorous monitoring"
   ],
   "supporting_quote": "Security vulnerabilities persist, as blockchain integration does not wholly preclude cyberattacks or privacy breaches absent rigorous monitoring."
  },
  {
   "id": "kaal:claim:5245185-010",
   "url": "https://wulfkaal.github.io/claims/5245185-010",
   "claim": "AI self monitoring requires robust cryptographic safeguards and anti collusion algorithms; without them, agents overseeing one another can devolve into self serving behavior and coordinated manipulation.",
   "type": "condition",
   "topics": [
    "compliance",
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "networks of interdependent agents auditing each other"
   ],
   "supporting_quote": "and anti-collusion algorithms—to prevent coordinated manipulation or exploitation of vulnerabilities, ensuring that self-monitoring does not devolve into self-serving behavior."
  },
  {
   "id": "kaal:claim:5245185-011",
   "url": "https://wulfkaal.github.io/claims/5245185-011",
   "claim": "The existing framework for monitoring AI agents on cryptocurrency payment rails identifies the key actors but fails to deliver viable solutions, because it does not specify scalability and adaptability challenges and omits critical risks.",
   "type": "failure",
   "topics": [
    "compliance",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "current monitoring ecosystem across exchanges, infrastructure providers, compliance services, developers and owners"
   ],
   "supporting_quote": "while identifying key actors, falls short of delivering viable solutions. In particular, it fails to identify specifically scalability and adaptability challenges, and omits critical risks."
  },
  {
   "id": "kaal:claim:5245185-012",
   "url": "https://wulfkaal.github.io/claims/5245185-012",
   "claim": "The current monitoring framework is reactive rather than proactive, because it offers no prescriptive measures such as predictive analytics or cross actor protocols that would anticipate evolving risks.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "existing monitoring of AI agents on cryptocurrency rails"
   ],
   "supporting_quote": "offers no prescriptive measures—such as predictive analytics or cross-actor protocols—to anticipate evolving risks, rendering it reactive rather than proactive."
  },
  {
   "id": "kaal:claim:5245185-013",
   "url": "https://wulfkaal.github.io/claims/5245185-013",
   "claim": "The proposed solutions for future AI monitoring fail to propose feedback driven mechanisms that balance innovation with oversight, which leaves regulatory gaps and scalability bottlenecks unresolved.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "forward looking monitoring proposals for AI agents on cryptocurrency rails"
   ],
   "supporting_quote": "The expected solutions for future AI monitoring fail to propose feedback-driven mechanisms,107 to balance innovation with oversight, leaving regulatory gaps and scalability bottlenecks unresolved."
  },
  {
   "id": "kaal:claim:5245185-014",
   "url": "https://wulfkaal.github.io/claims/5245185-014",
   "claim": "Exchange based monitoring tools are not shown to counter sophisticated threats such as adversarial AI agents exploiting wallet vulnerabilities, and their feasibility for smaller exchanges is unevaluated, which limits their broader applicability.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "defi",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "adversarial agents targeting wallet infrastructure",
    "smaller exchanges with fewer resources"
   ],
   "supporting_quote": "It does not address how these tools counter sophisticated threats, like adversarial AI agents exploiting wallet vulnerabilities, nor evaluate their feasibility for smaller exchanges, limiting broader applicability."
  },
  {
   "id": "kaal:claim:5245185-015",
   "url": "https://wulfkaal.github.io/claims/5245185-015",
   "claim": "The absence of interoperability considerations with non standardized networks restricts the utility of exchange based monitoring in a fragmented and continuously evolving DeFi landscape.",
   "type": "failure",
   "topics": [
    "defi",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "fragmented DeFi environment with non standardized networks"
   ],
   "supporting_quote": "absence of interoperability considerations with non-standardized networks further restricts its utility in a fragmented ever evolving DeFi landscape."
  },
  {
   "id": "kaal:claim:5245185-016",
   "url": "https://wulfkaal.github.io/claims/5245185-016",
   "claim": "Infrastructure level permissioning neglects critical risks such as smart contract exploits, bugs, and permission conflicts, and proposes no real time enforcement across distributed nodes, which weakens its claim to bridge AI autonomy and accountability.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "permissioned transaction controls embedded in smart contracts"
   ],
   "supporting_quote": "also neglects critical risks, such as smart contract exploits, bugs, or permission conflicts, and fails to propose real-time enforcement solutions across distributed nodes."
  },
  {
   "id": "kaal:claim:5245185-017",
   "url": "https://wulfkaal.github.io/claims/5245185-017",
   "claim": "Reliance on compliance analytics providers overlooks their scalability limits in monitoring vast decentralized transaction volumes and their inability to adapt to jurisdictional regulatory disparities.",
   "type": "failure",
   "topics": [
    "compliance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "blockchain analytics firms applied to AI agent transactions",
    "multi jurisdictional regulation"
   ],
   "supporting_quote": "The reliance on compliance tools, such as those from Chainalysis, overlooks their scalability challenges in monitoring vast, decentralized transaction volumes and adaptability to jurisdictional regulatory disparities."
  },
  {
   "id": "kaal:claim:5245185-018",
   "url": "https://wulfkaal.github.io/claims/5245185-018",
   "claim": "Latency in blockchain forensic analysis limits real time detection, and existing compliance services offer no strategy for overseeing transactions on privacy focused blockchains where opacity defeats traditional forensic methods.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "forensic transaction analysis",
    "privacy preserving blockchains"
   ],
   "supporting_quote": "forensic analysis, limiting real-time detection, and provides no strategy for overseeing transactions on privacy-focused blockchains where opacity hampers traditional methods."
  },
  {
   "id": "kaal:claim:5245185-019",
   "url": "https://wulfkaal.github.io/claims/5245185-019",
   "claim": "Internal monitoring by AI agent developers and owners is fragmented and unreliable because there are no auditing standards against external benchmarks and no accountability mechanisms for deviations such as insider manipulation or third party agent risk.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "proprietary internal monitoring by developers and owners"
   ],
   "supporting_quote": "insider manipulation or third-party agent risks, nor propose auditing standards against external benchmarks.113 This omission leaves internal efforts fragmented and unreliable."
  },
  {
   "id": "kaal:claim:5245185-020",
   "url": "https://wulfkaal.github.io/claims/5245185-020",
   "claim": "Expectations of enhanced regulatory oversight fail because the accelerating evolution of AI agents, which will soon dominate financial transactions, renders static legal frameworks obsolete.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "static rule based regulation",
    "AI agents dominating financial transaction volume"
   ],
   "supporting_quote": "The expectation of enhanced regulatory oversight fails to account for the accelerating evolution of AI agents, which will soon dominate financial transactions, rendering static legal frameworks obsolete."
  },
  {
   "id": "kaal:claim:5245185-021",
   "url": "https://wulfkaal.github.io/claims/5245185-021",
   "claim": "Without feedback loops that continuously ingest data on AI behavior, regulatory efforts cannot efficiently address fraud or consumer harm as AI ubiquity amplifies those risks across decentralized networks.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "regulation of ubiquitous AI agents on decentralized networks"
   ],
   "supporting_quote": "Without feedback loops, regulatory efforts cannot efficiently address fraud or consumer harm as AI ubiquity amplifies these risks across decentralized networks."
  },
  {
   "id": "kaal:claim:5245185-022",
   "url": "https://wulfkaal.github.io/claims/5245185-022",
   "claim": "Proposed specialized AI monitoring services remain a static vision: it is unclear how they would scale computationally or adjust their algorithms as AI agents diversify, which is a critical flaw given the anticipated pervasiveness of those agents.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "dedicated third party AI monitoring services"
   ],
   "supporting_quote": "It is entirely unclear how these specialized AI monitoring services will scale computationally or adjust algorithms as AI agents diversify, a critical flaw given their anticipated pervasiveness."
  },
  {
   "id": "kaal:claim:5245185-023",
   "url": "https://wulfkaal.github.io/claims/5245185-023",
   "claim": "Treating DAOs as monitoring entities assumes a static governance model that cannot keep pace with the rapid proliferation and sophistication of AI agents.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "conventional DAO governance applied to AI agent oversight"
   ],
   "supporting_quote": "The evolution of DAOs as monitoring entities assumes a static governance model117 incapable of keeping pace with the rapid proliferation and sophistication of AI agents."
  },
  {
   "id": "kaal:claim:5245185-024",
   "url": "https://wulfkaal.github.io/claims/5245185-024",
   "claim": "Proposals for AI self monitoring rely on unspecified security measures and therefore overlook the risk that adaptive AI agents collude or evade oversight, a risk amplified by pervasive deployment.",
   "type": "failure",
   "topics": [
    "compliance",
    "regulatory-failure",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "peer to peer agent auditing at scale"
   ],
   "supporting_quote": "reliance on unspecified security measures overlooks the risk of adaptive AI agents colluding or evading oversight, a concern amplified by their pervasive deployment."
  },
  {
   "id": "kaal:claim:5245185-025",
   "url": "https://wulfkaal.github.io/claims/5245185-025",
   "claim": "IoT based oversight does not account for the pace at which AI agents will outgrow static IoT to blockchain linkages, and it leaves unexplained how the convergence handles latency or secures data as agent ubiquity drives exponential transaction complexity.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "IoT and blockchain integrated monitoring architectures"
   ],
   "supporting_quote": "pace at which AI agents will outgrow static IoT-blockchain linkages. The text omits how this convergence will handle latency or secure data as AI ubiquity drives exponential transaction complexity."
  },
  {
   "id": "kaal:claim:5245185-026",
   "url": "https://wulfkaal.github.io/claims/5245185-026",
   "claim": "Centralized AI structures for monitoring AI agents create a self referential loop that is prone to systemic biases and blind spots, and their rigidity prevents adaptation to the dynamic nature of AI.",
   "type": "failure",
   "topics": [
    "decentralization",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "centralized AI systems used to supervise AI agents"
   ],
   "supporting_quote": "Centralized AI structures for AI agent monitoring create a self-referential loop prone to systemic biases and blind spots, while their rigidity fails to adapt to AI's dynamic nature."
  },
  {
   "id": "kaal:claim:5245185-027",
   "url": "https://wulfkaal.github.io/claims/5245185-027",
   "claim": "Using AI to monitor AI agent transactions is fallacious because the monitoring AI inherits the same adaptive traits and potential flaws as the agents it oversees.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "AI based monitoring of AI agents"
   ],
   "supporting_quote": "The foundational premise of AI systems monitoring AI agent transactions introduces a fallacy, as the monitoring AI inherits the same adaptive traits and potential flaws as the agents it oversees."
  },
  {
   "id": "kaal:claim:5245185-028",
   "url": "https://wulfkaal.github.io/claims/5245185-028",
   "claim": "Anomaly detection and behavioral analysis models trained on agent data may replicate the biases in that data and fail to detect novel deviations absent from the training set.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "machine learning monitors trained on historical agent behavior",
    "novel agent behaviors outside training distribution"
   ],
   "supporting_quote": "rely on machine learning models trained on agent data, which may replicate biases or fail to detect novel deviations not present in training sets."
  },
  {
   "id": "kaal:claim:5245185-029",
   "url": "https://wulfkaal.github.io/claims/5245185-029",
   "claim": "Claims that centralized AI ensures KYC and AML compliance are circular, because they rely on AI to interpret the very regulations that AI may itself violate.",
   "type": "failure",
   "topics": [
    "compliance",
    "decentralization",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "AI driven compliance interpretation for KYC and AML"
   ],
   "supporting_quote": "the assertion that centralized AI ensures compliance with KYC and AML standards overlooks the circularity of relying on AI to interpret regulations it may itself violate."
  },
  {
   "id": "kaal:claim:5245185-030",
   "url": "https://wulfkaal.github.io/claims/5245185-030",
   "claim": "Natural language processing driven compliance assumes static legal frameworks, so novel transaction types generated by evolving AI agents outstrip predefined rules and go undetected by centralized systems that lack external validation.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "NLP based rule application to transaction data",
    "novel transaction types produced by agent evolution"
   ],
   "supporting_quote": "NLP-driven compliance assumes static legal frameworks, yet AI agents' evolution introduces novel transaction types that outstrip predefined rules, undetected by centralized systems lacking external validation."
  },
  {
   "id": "kaal:claim:5245185-031",
   "url": "https://wulfkaal.github.io/claims/5245185-031",
   "claim": "Relying on centralized AI to simulate attack vectors is fallacious because it assumes the system can anticipate its own adaptive strategies, while evolving agents may simply bypass centralized defenses.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "AI driven intrusion detection and attack simulation"
   ],
   "supporting_quote": "The circular reliance on AI to simulate attack vectors assumes it can anticipate its own adaptive strategies—an inherent fallacy as evolving agents may bypass centralized defenses."
  },
  {
   "id": "kaal:claim:5245185-032",
   "url": "https://wulfkaal.github.io/claims/5245185-032",
   "claim": "The adaptive learning touted as the strength of centralized AI monitoring is insufficient, because it relies on internal data loops that cannot match the external evolution of AI agents.",
   "type": "failure",
   "topics": [
    "decentralization",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "centralized feedback and recalibration confined to internal data"
   ],
   "supporting_quote": "The centralized AI adaptive learning touted as a strength is insufficient, as it relies on internal data loops that cannot match AI agents' external evolution."
  },
  {
   "id": "kaal:claim:5245185-033",
   "url": "https://wulfkaal.github.io/claims/5245185-033",
   "claim": "Recording every AI agent decision and transaction on a blockchain produces a permanent tamper proof record that enables public verification and fosters accountability, because no single entity can alter the historical record.",
   "type": "design",
   "topics": [
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "immutable ledger recording of agent decisions and transactions"
   ],
   "supporting_quote": "This permanent, tamper-proof record enables public verification and fosters accountability by ensuring that no single entity can alter the historical record of AI agent activities."
  },
  {
   "id": "kaal:claim:5245185-034",
   "url": "https://wulfkaal.github.io/claims/5245185-034",
   "claim": "Making governance decisions collectively through web3 consensus minimizes bias and single points of failure, because oversight is no longer subject to the limitations or errors of a solitary AI system.",
   "type": "design",
   "topics": [
    "decentralization",
    "governance-design",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "consensus driven decision making among diverse stakeholders"
   ],
   "supporting_quote": "decentralized approach minimizes the risk of bias and single points of failure, as governance decisions are made collectively rather than being subject to the limitations or potential errors of a solitary AI system."
  },
  {
   "id": "kaal:claim:5245185-035",
   "url": "https://wulfkaal.github.io/claims/5245185-035",
   "claim": "Smart contract governance reduces the potential for human error and guarantees consistent application of governance protocols, features often lacking in purely AI driven supervision, although consensus delays may occur.",
   "type": "design",
   "topics": [
    "smart-contracts",
    "governance-design",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "predefined self enforcing rules executed on chain",
    "community established governance rules"
   ],
   "supporting_quote": "reduces the potential for human error, and guarantees a consistent application of governance protocols—features that are often lacking in purely AI-driven supervisory models, though consensus delays may occur."
  },
  {
   "id": "kaal:claim:5245185-036",
   "url": "https://wulfkaal.github.io/claims/5245185-036",
   "claim": "Validation Pools are stipulated as mechanisms in which members stake non transferable reputation tokens to vote on the approval or disapproval of transactions, proposals, or activities, and this staking mechanism carries the paper's decentralized quality control function.",
   "type": "definitional",
   "topics": [
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "asserted",
   "scope_conditions": [
    "web3 governance with non transferable reputation tokens"
   ],
   "supporting_quote": "Validation Pools are mechanisms in which members stake their reputation tokens to vote on the approval or disapproval of transactions, proposals, or activities."
  },
  {
   "id": "kaal:claim:5245185-037",
   "url": "https://wulfkaal.github.io/claims/5245185-037",
   "claim": "Mapping governance rules as nodes and their relationships as weighted directed edges yields a dynamic, traceable, and adaptable governance structure whose acyclic form prevents governance deadlocks by admitting no circular dependencies.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "evidenced",
   "scope_conditions": [
    "governance rules represented as nodes and weighted directed edges"
   ],
   "supporting_quote": "create a dynamic, traceable, and adaptable governance structure.142 The acyclic nature ensures no circular dependencies exist, preventing governance deadlocks"
  },
  {
   "id": "kaal:claim:5245185-038",
   "url": "https://wulfkaal.github.io/claims/5245185-038",
   "claim": "A WDAG based on chain forum combined with validation pools enables continuous updates to governance rules through expert community consensus that incorporates real time AI behavior data, which is what allows oversight to track self optimizing algorithms.",
   "type": "design",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "DAO centric web3 governance with on chain forum and validation pools"
   ],
   "supporting_quote": "The WDAG structure, with its on-chain forum and validation pools, enables continuous updates to governance rules through expert community consensus, incorporating real-time AI behavior data."
  },
  {
   "id": "kaal:claim:5245185-039",
   "url": "https://wulfkaal.github.io/claims/5245185-039",
   "claim": "Taken together, the transparency, decentralized decision making, and automated real time response properties of the proposed model make decentralized governance superior to AI driven supervision for secure, compliant, and efficient execution of AI agent transactions.",
   "type": "normative",
   "topics": [
    "decentralization",
    "governance-design",
    "ai-and-agents",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "argued",
   "scope_conditions": [
    "monitoring of AI agent transaction execution in modern digital infrastructures"
   ],
   "supporting_quote": "demonstrate that a decentralized governance model is superior to AI-driven supervision for ensuring the secure, compliant, and efficient execution of AI agent transactions in modern digital infrastructures."
  },
  {
   "id": "kaal:claim:5245185-040",
   "url": "https://wulfkaal.github.io/claims/5245185-040",
   "claim": "The feedback loop mechanism that makes the proposed DAO centric web3 governance system adaptive to AI agent evolution and ubiquity is the same mechanism the author has advocated for almost a decade.",
   "type": "design",
   "topics": [
    "dynamic-regulation",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, How can we Best Monitor AI Agents (2025). SSRN: https://ssrn.com/abstract=5245185",
   "year": "2025",
   "source_sha256": "4d7adba83ec722480e97bde6528cbe9ce98c709e45cb18794f157a64b8fe7da2",
   "confidence": "asserted",
   "scope_conditions": [
    "WDAG based dynamic governance"
   ],
   "supporting_quote": "Leveraging feedback loops—as author has advocated for almost a decade—it adapts to AI agents' rapid evolution and ubiquity, ensuring efficient, fruitful oversight."
  },
  {
   "id": "kaal:claim:5454054-001",
   "url": "https://wulfkaal.github.io/claims/5454054-001",
   "claim": "Liquid Equity Rewards (LER) is a voucher rewards mechanism that links capital formation to loyalty rewards by granting time-weighted, utility-only rewards to holders of equities or cryptoassets.",
   "type": "definitional",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "asserted",
   "supporting_quote": "This article evaluates the prospects of Liquid Equity Rewards (LER), a voucher rewards mechanism linking capital formation and loyalty rewards through time-weighted, utility-only rewards for holders of equities or cryptoassets."
  },
  {
   "id": "kaal:claim:5454054-002",
   "url": "https://wulfkaal.github.io/claims/5454054-002",
   "claim": "LER should be built as a bifurcated architecture: voucher-based rewards for equities held in brokerage accounts, and programmable on-chain reward units for tokenized equities.",
   "type": "design",
   "topics": [
    "tokenomics",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "asserted",
   "scope_conditions": [
    "issuer serves both off-chain brokerage holders and on-chain token holders"
   ],
   "supporting_quote": "LER employs a bifurcated architecture: voucher-based rewards for brokerage-held equities and programmable, on-chain reward units for tokenized equities."
  },
  {
   "id": "kaal:claim:5454054-003",
   "url": "https://wulfkaal.github.io/claims/5454054-003",
   "claim": "Retailer-issued stablecoins operate as an onchain Eurodollar play: they decentralize the creation of dollar-denominated liquidity, which reduces transaction costs and disintermediates traditional banks and their fees.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "merchant issues a dollar-pegged token backed by reserves"
   ],
   "supporting_quote": "Retailer-issued stablecoins function as an onchain Eurodollar play that enables the decentralized creation of dollar-denominated liquidity, thus reducing transaction costs, and disintermediating traditional banking systems and their fees."
  },
  {
   "id": "kaal:claim:5454054-004",
   "url": "https://wulfkaal.github.io/claims/5454054-004",
   "claim": "The GENIUS Act of 2025 is what makes merchant-issued stablecoins viable, because it supplies the enabling conditions of 1:1 reserve backing, audits, and AML compliance.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "evidenced",
   "scope_conditions": [
    "United States",
    "after July 2025"
   ],
   "supporting_quote": "the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act of 2025, signed into law in July 2025, enables merchant-issued stablecoins by mandating 1:1 reserve backing, audits, and AML compliance."
  },
  {
   "id": "kaal:claim:5454054-005",
   "url": "https://wulfkaal.github.io/claims/5454054-005",
   "claim": "The collapse of the metaverse boom forced Silicon Valley firms with metaverse exposure to pivot toward stablecoins and crypto-based rewards, replacing speculative virtual worlds with regulated, utility-centric fintech rails.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "firms that had invested in metaverse ventures during 2021 to 2022"
   ],
   "supporting_quote": "Following the 2021–2022 metaverse boom and bust in 2023, those Silicon Valley firms that had a presence in attempts to create the metaverse had to pivot. That pivot for many of those firms involved a move toward stablecoins and crypto-based rewards."
  },
  {
   "id": "kaal:claim:5454054-006",
   "url": "https://wulfkaal.github.io/claims/5454054-006",
   "claim": "Because LER requires no lock-up of the underlying equity or token, it increases liquidity and reduces sell pressure on the underlying asset, unlike conventional staking-style loyalty schemes.",
   "type": "mechanism",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "rewards accrue on the basis of verified holding duration rather than escrowed assets"
   ],
   "supporting_quote": "But, LER does not require lock-ups for the underlying equity or token assets, thus increasing liquidity and reducing sell pressure on the underlying equity or token assets."
  },
  {
   "id": "kaal:claim:5454054-007",
   "url": "https://wulfkaal.github.io/claims/5454054-007",
   "claim": "LER adapts DeFi liquid staking to e-commerce by paying consumptive utilities instead of speculative yields, and it is this substitution of consumption for yield that mitigates volatility risk.",
   "type": "mechanism",
   "topics": [
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "rewards redeemable only within merchant ecosystems"
   ],
   "supporting_quote": "This LER mechanism derives in part from DeFi liquid staking, where users earn yields without sacrificing tradability of the underlying asset, but LER adapts it to e-commerce ecosystems by focusing on consumptive utilities rather than speculative yields, thus mitigating volatility risks."
  },
  {
   "id": "kaal:claim:5454054-008",
   "url": "https://wulfkaal.github.io/claims/5454054-008",
   "claim": "Funding LER rewards out of marketing budgets keeps them off the balance sheet, because marketing spend is expensed immediately under U.S. GAAP (ASC 606) and IFRS 15 rather than deferred as revenue the way traditional loyalty points are.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "rewards funded from marketing budgets rather than issued as redeemable obligations"
   ],
   "supporting_quote": "LER optimizes issuer benefits by funding rewards from issuers' marketing budgets. As such, they are treated as immediate expenses under U.S. GAAP (ASC 606) and IFRS 15. This avoids balance sheet liabilities associated with traditional loyalty points' deferred revenue."
  },
  {
   "id": "kaal:claim:5454054-009",
   "url": "https://wulfkaal.github.io/claims/5454054-009",
   "claim": "Because LER voucher redemptions generate revenue at fiat parity, they can improve issuer credit ratings and lower borrowing costs, with large issuers projected to save up to $440 million annually through debt refinancing.",
   "type": "empirical",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "evidenced",
   "scope_conditions": [
    "large LER issuers",
    "redemptions recognized as revenue at fiat parity"
   ],
   "supporting_quote": "Because LER voucher reward redemptions generate revenue at fiat parity, LER enhance throughput and potentially improve LER issuers' credit ratings and lower borrowing costs. Large LER issuers are projected to save up to $440 million annually through debt refinancing."
  },
  {
   "id": "kaal:claim:5454054-010",
   "url": "https://wulfkaal.github.io/claims/5454054-010",
   "claim": "LER reduces stock price volatility because ongoing consumption-based voucher rewards give shareholders a reason to hold rather than sell, which stabilizes demand for the issuer's stock.",
   "type": "mechanism",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "listed companies adopting LER",
    "shareholders who would otherwise sell to realize gains or meet liquidity needs"
   ],
   "supporting_quote": "LER counteracts selling pressure by offering ongoing consumption-based voucher rewards that incentivize shareholders to retain their investments over the long term. This retention effect stabilizes demand for the company's stock, resulting in lower price fluctuations"
  },
  {
   "id": "kaal:claim:5454054-011",
   "url": "https://wulfkaal.github.io/claims/5454054-011",
   "claim": "LER converts marketing expenditure into shareholder value by redirecting budgets from conventional advertising, whose returns are indirect and uncertain, into voucher rewards that flow directly to shareholders.",
   "type": "mechanism",
   "topics": [
    "economics",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "listed companies with discretionary marketing budgets"
   ],
   "supporting_quote": "Instead of allocating budgets to conventional advertising campaigns with indirect or uncertain returns, in the LER system, companies can channel these resources into LER-based voucher rewards that directly benefit shareholders."
  },
  {
   "id": "kaal:claim:5454054-012",
   "url": "https://wulfkaal.github.io/claims/5454054-012",
   "claim": "LER democratizes capital market access because consumers can earn equity-like voucher rewards through ordinary e-commerce participation, creating a new market for tokenized dividends.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "consumers participating in merchant or metaverse e-commerce ecosystems"
   ],
   "supporting_quote": "Through LERs, consumers are enabled to earn equity-like voucher loyalty rewards through routine participation in metaverse or retail e-commerce ecosystems. LER, thus, create a new market for tokenized dividends."
  },
  {
   "id": "kaal:claim:5454054-013",
   "url": "https://wulfkaal.github.io/claims/5454054-013",
   "claim": "The total addressable market for LER exceeds $1 trillion, driven by the great reallocation of capital out of underperforming fixed income into equities and DeFi.",
   "type": "empirical",
   "topics": [
    "economics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on available market analyses as of 2025"
   ],
   "supporting_quote": "Based on available market analyses, the TAM for LER exceeds $1 trillion, because of the \"great reallocation\" of capital from underperforming fixed-income assets to higher-yielding alternatives like equities and DeFi."
  },
  {
   "id": "kaal:claim:5454054-014",
   "url": "https://wulfkaal.github.io/claims/5454054-014",
   "claim": "The sustained underperformance of U.S. Treasuries relative to equities from 2015 to 2025 triggered a $10 trillion capital exodus from fixed income into alternative investments.",
   "type": "empirical",
   "topics": [
    "economics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "evidenced",
   "scope_conditions": [
    "2015 to 2025",
    "global bond markets since 2021"
   ],
   "supporting_quote": "This performance disparity triggered a $10 trillion capital exodus from fixed income to alternatives investments."
  },
  {
   "id": "kaal:claim:5454054-015",
   "url": "https://wulfkaal.github.io/claims/5454054-015",
   "claim": "Capturing only 5 to 10 percent of yield-driven capital flows through voucher reward merchant ecosystems would make LER a significant player in the market.",
   "type": "predictive",
   "topics": [
    "regulatory-failure",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "assuming a TAM above $1 trillion from reallocating capital"
   ],
   "supporting_quote": "If LER can only capture 5-10% of these yield-driven flows through voucher reward merchant ecosystems, LER become a significant player in this evolving market segment."
  },
  {
   "id": "kaal:claim:5454054-016",
   "url": "https://wulfkaal.github.io/claims/5454054-016",
   "claim": "LER scalability is limited by three identified risks: yield compression from rising interest rates, delays in the creation of binding regulatory safe harbors, and divergent national implementations of frameworks such as MiCA.",
   "type": "failure",
   "topics": [
    "defi",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "supporting_quote": "Risks that have the potential to limit LER scalability include yield compression from rising interest rates, as well as delays in the creation of binding regulatory safe harbors, and global variations under frameworks like the EU's MiCA."
  },
  {
   "id": "kaal:claim:5454054-017",
   "url": "https://wulfkaal.github.io/claims/5454054-017",
   "claim": "Verification of off-chain equities held in brokerage accounts is a core implementation obstacle for LER, and before tokenized listings it required comparatively complex hybrid pipelines using off-chain attestations and zero-knowledge proofs.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "equities held in traditional brokerage accounts rather than on-chain"
   ],
   "supporting_quote": "As such, it addresses a core implementation challenge for LER, that is, the verification of off-chain equities held in brokerage accounts. Previously that verification required comparatively complex hybrid pipelines involving off-chain attestations and privacy-preserving technologies like ZKPs."
  },
  {
   "id": "kaal:claim:5454054-018",
   "url": "https://wulfkaal.github.io/claims/5454054-018",
   "claim": "Bringing NASDAQ-listed stocks on-chain removes the need to mint intermediary virtual representations of off-chain equities, because tokenized stocks are natively verifiable on blockchain ledgers, which reduces legal and operational friction.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "NASDAQ tokenized stock framework in operation"
   ],
   "supporting_quote": "By bringing NASDAQ-listed stocks on-chain, the need to mint intermediary virtual representations of off-chain equities as an accounting measure is eliminated. NASDAQ tokenized stocks are natively verifiable on blockchain ledgers. This is key as it reduces legal and operational friction."
  },
  {
   "id": "kaal:claim:5454054-019",
   "url": "https://wulfkaal.github.io/claims/5454054-019",
   "claim": "The NASDAQ tokenized stock framework materially expands the addressable market for LER, because every NASDAQ-listed stock becomes potentially eligible for time-weighted voucher reward accruals.",
   "type": "predictive",
   "topics": [
    "economics",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "conditional on SEC approval of the NASDAQ framework"
   ],
   "supporting_quote": "Second, it significantly increases the addressable market for LER because all of NASDAQ-listed stocks are now potentially eligible for LER's time-weighted voucher loyalty reward accruals."
  },
  {
   "id": "kaal:claim:5454054-020",
   "url": "https://wulfkaal.github.io/claims/5454054-020",
   "claim": "For tokenized stocks, smart contracts can verify ownership and holding periods directly from blockchain ledgers and trigger voucher airdrops without intermediaries, which lowers operational costs and increases LER scalability.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "stocks represented on a blockchain ledger"
   ],
   "supporting_quote": "For tokenized NASDAQ stocks, smart contracts can query blockchain ledgers to verify ownership and holding periods. This triggers voucher reward airdrops without intermediaries. Whic, in turn, reduces operational costs and enhances LER scalability."
  },
  {
   "id": "kaal:claim:5454054-021",
   "url": "https://wulfkaal.github.io/claims/5454054-021",
   "claim": "Making LER rewards utility-only and non-transferable, in the manner of soulbound tokens, is what keeps them functioning as loyalty incentives rather than speculative assets and is what aligns them with MiCA and SEC exemptions.",
   "type": "condition",
   "topics": [
    "tokenomics",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "rewards issued as non-transferable credits or soulbound tokens"
   ],
   "supporting_quote": "Second, LER voucher rewards are utility-only and non-transferable, similar to soulbound tokens (SBTs). This ensures they function as voucher loyalty incentives rather than speculative assets, thus aligning with regulatory exemptions under MiCA and SEC frameworks."
  },
  {
   "id": "kaal:claim:5454054-022",
   "url": "https://wulfkaal.github.io/claims/5454054-022",
   "claim": "The absence of fiat par-redemption combined with limited acceptance inside merchant ecosystems makes LER rewards closed-loop utilities, which is what removes their classification as electronic money tokens or securities.",
   "type": "condition",
   "topics": [
    "securities-law",
    "systemic-risk",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "no redemption at par in fiat",
    "acceptance confined to qualifying merchants"
   ],
   "supporting_quote": "Third, the absence of fiat par-redemption and limited acceptance within merchant ecosystems positions LER voucher loyalty rewards as closed-loop utilities. This removes their classification as electronic money tokens (EMTs) or securities, which, in turn, simplifys compliance."
  },
  {
   "id": "kaal:claim:5454054-023",
   "url": "https://wulfkaal.github.io/claims/5454054-023",
   "claim": "LER can be engineered outside the Howey test by keeping reward units consumptive as discounts or credits, non-yielding, unmarketed for appreciation, and by disabling secondary trading.",
   "type": "design",
   "topics": [
    "securities-law",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "United States securities law",
    "secondary trading disabled"
   ],
   "supporting_quote": "LER could be engineered to fall outside of the Howey test. This is possible by avoiding a reasonable expectation of profits derived from the efforts of others. LER voucher loyalty reward units remain consumptive as discounts/credits, non-yielding, and not marketed for appreciation."
  },
  {
   "id": "kaal:claim:5454054-024",
   "url": "https://wulfkaal.github.io/claims/5454054-024",
   "claim": "Because LER vouchers are closed-loop and non-convertible, they reduce the risk of triggering FinCEN money services business registration and Bank Secrecy Act obligations that attach to convertible or transmissible digital value.",
   "type": "condition",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "United States",
    "vouchers not convertible or transmissible"
   ],
   "supporting_quote": "While convertible or transmissible digital value can trigger FinCEN MSB registration and BSA obligations, LER as closed-loop, non-convertible voucher rewards reduce that risk."
  },
  {
   "id": "kaal:claim:5454054-025",
   "url": "https://wulfkaal.github.io/claims/5454054-025",
   "claim": "In the EU, MiCA exemptions for non-transferable utility tokens spare LER airdrops from white paper and issuer authorization requirements, but only so long as the rewards remain non-redeemable for fiat and confined to closed-loop merchant ecosystems.",
   "type": "condition",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "European Union",
    "rewards non-redeemable for fiat",
    "acceptance confined to closed-loop merchant networks"
   ],
   "supporting_quote": "In the EU, MiCA's exemptions for non-transferable utility tokens ensure that LER voucher rewards, distributed as airdrops, avoid white paper and issuer authorization requirements, as long as LER remain non-redeemable for fiat and confined to closed-loop merchant ecosystems."
  },
  {
   "id": "kaal:claim:5454054-026",
   "url": "https://wulfkaal.github.io/claims/5454054-026",
   "claim": "Any drift toward transferability, voucher redemption at par, yield, or marketplace functionality would push LER into MiCA compliance obligations and, equivalently, into the UK EMR and PSR regimes and U.S. securities, money transmission, and market-structure perimeters.",
   "type": "failure",
   "topics": [
    "defi",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "EU, UK, and U.S. jurisdictions"
   ],
   "supporting_quote": "Any perceived gravitation toward transferability, voucher par redemption, yield, or marketplace functionality may push LER into MiCA compliance requirements."
  },
  {
   "id": "kaal:claim:5454054-027",
   "url": "https://wulfkaal.github.io/claims/5454054-027",
   "claim": "A disciplined, jurisdiction-specific controls framework should be treated as a condition precedent to launching LER, not as a matter to be resolved after deployment.",
   "type": "normative",
   "topics": [
    "governance-design",
    "compliance",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "cross-border LER deployments"
   ],
   "supporting_quote": "A disciplined, jurisdiction-specific controls framework should therefore be treated as a condition precedent to LER launch."
  },
  {
   "id": "kaal:claim:5454054-028",
   "url": "https://wulfkaal.github.io/claims/5454054-028",
   "claim": "A favorable legal assessment of LER depends on four design features holding simultaneously: non-transferability, absence of a secondary market, absence of fiat redemption, and consumptive utility.",
   "type": "condition",
   "topics": [
    "economics",
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "EU, UK, and U.S. jurisdictions"
   ],
   "supporting_quote": "Most important for a favorable legal assessment is LER non-transferability, no secondary market, no fiat redemption, and consumptive utility."
  },
  {
   "id": "kaal:claim:5454054-029",
   "url": "https://wulfkaal.github.io/claims/5454054-029",
   "claim": "BaFin applies substance over form, so transferable, tradable, or profit-oriented reward units risk classification as crypto-assets or financial instruments in Germany, potentially triggering licensing obligations such as crypto custody or proprietary trading.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "Germany",
    "reward units that are transferable, tradable, or profit-oriented"
   ],
   "supporting_quote": "BaFin applies substance-over-form. This means that transferable, tradable, or profit-oriented reward units risk classification as crypto-assets/financial instruments, potentially implicating licensing (e.g., crypto custody, proprietary trading)."
  },
  {
   "id": "kaal:claim:5454054-030",
   "url": "https://wulfkaal.github.io/claims/5454054-030",
   "claim": "In the UK, e-money and payment services obligations attach if voucher rewards are fiat-redeemable or open-loop; otherwise LER should fall outside the Electronic Money Regulations 2011 and the Payment Services Regulations 2017 under limited-network concepts.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "United Kingdom"
   ],
   "supporting_quote": "However, in the Uk, e-money and payments can arise if voucher rewards are fiat-redeemable or open-loop. Otherwise, LER are likely to avoid Electronic Money Regulations 2011 and Payment Services Regulations 2017 under limited-network concepts."
  },
  {
   "id": "kaal:claim:5454054-031",
   "url": "https://wulfkaal.github.io/claims/5454054-031",
   "claim": "LER must maintain a visible separation between equity tenure verification and reward attribution, so that vouchers operate as loyalty entitlements and do not represent equities, dividends, or profit shares.",
   "type": "design",
   "topics": [
    "citation-and-knowledge",
    "securities-law",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "holding period used only as a trigger, not as a claim on returns"
   ],
   "supporting_quote": "A key legal compliance strategy for LER is maintaining an obvious separation between equity tenure verification and reward attribution. This separation ensures voucher loyalty rewards function as loyalty entitlements without representing equities, dividends, or profit shares."
  },
  {
   "id": "kaal:claim:5454054-032",
   "url": "https://wulfkaal.github.io/claims/5454054-032",
   "claim": "Because Landreth holds that instruments carrying equity attributes such as dividends or voting rights are securities, LER rewards cannot include any such features and must function as independent loyalty perks.",
   "type": "condition",
   "topics": [
    "securities-law",
    "systemic-risk",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "United States securities law"
   ],
   "supporting_quote": "This is reinforced by SEC v. Landreth Timber Co. (1985), where the court held that stock sales are securities if they carry equity attributes like dividends or voting rights. Therefore, LER rewards cannot include such features."
  },
  {
   "id": "kaal:claim:5454054-033",
   "url": "https://wulfkaal.github.io/claims/5454054-033",
   "claim": "AML obligations for LER should be right-sized: zero-knowledge proofs or anonymized attestations should minimize identity collection for non-transferable rewards, with VASP-grade measures applied only where transferability exists.",
   "type": "design",
   "topics": [
    "compliance",
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "non-transferable rewards versus transferable rewards",
    "GDPR privacy obligations apply"
   ],
   "supporting_quote": "LER should employ ZKPs or anonymized attestations to minimize identity collection for non-transferable rewards, applying VASP-grade measures only where transferability exists, balancing compliance with GDPR privacy obligations."
  },
  {
   "id": "kaal:claim:5454054-034",
   "url": "https://wulfkaal.github.io/claims/5454054-034",
   "claim": "Non-transferable LER rewards designed for consumption can qualify as multi-purpose vouchers under the EU Voucher Directive, which defers VAT until redemption and postpones the tax liability.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "European Union VAT regime",
    "rewards non-transferable and consumption-designed"
   ],
   "supporting_quote": "LER rewards that are designed for consumption and non-transferable could align with the multi-purpose category, allowing VAT to be deferred until redemption and thus postponing any tax liability."
  },
  {
   "id": "kaal:claim:5454054-035",
   "url": "https://wulfkaal.github.io/claims/5454054-035",
   "claim": "U.S. escheat obligations under the Revised Uniform Unclaimed Property Act require issuers to report dormant rewards to states after specified periods, so LER needs dormancy mechanisms such as automatic expiration or reversion.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "United States state unclaimed property laws"
   ],
   "supporting_quote": "However, escheat obligations under the Revised Uniform Unclaimed Property Act (RUUPA, 2016) require issuers to report dormant rewards to states after specified periods."
  },
  {
   "id": "kaal:claim:5454054-036",
   "url": "https://wulfkaal.github.io/claims/5454054-036",
   "claim": "Before launch, an LER program requires a defined governance package: classification memoranda, financial promotions review, data protection impact assessments, an MSB or EMI evaluation, and consumer terms and conditions.",
   "type": "normative",
   "topics": [
    "governance-design",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "pre-launch stage of an LER program"
   ],
   "supporting_quote": "This involves several key preparatory steps before launch: drafting classification memoranda, conducting reviews of financial promotions, performing data protection impact assessments (DPIAs),"
  },
  {
   "id": "kaal:claim:5454054-037",
   "url": "https://wulfkaal.github.io/claims/5454054-037",
   "claim": "Regulatory uncertainty, in particular the timeline for SEC approval of the NASDAQ and Dinari tokenization frameworks, could delay LER implementation.",
   "type": "failure",
   "topics": [
    "securities-law",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "pending SEC approval of tokenized securities trading"
   ],
   "supporting_quote": "Regulatory uncertainties, such as the timeline for SEC approval for NASDAQ and Dinari frameworks could delay LER implementation."
  },
  {
   "id": "kaal:claim:5454054-038",
   "url": "https://wulfkaal.github.io/claims/5454054-038",
   "claim": "The retention uplifts claimed for LER remain unvalidated: empirical pilots are needed to confirm them and to refine the smart contract designs, particularly for AI-personalized airdrops.",
   "type": "failure",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "asserted",
   "scope_conditions": [
    "current state of evidence as of 2025"
   ],
   "supporting_quote": "Empirical pilots are needed to validate retention uplifts and refine smart contract designs."
  },
  {
   "id": "kaal:claim:5454054-039",
   "url": "https://wulfkaal.github.io/claims/5454054-039",
   "claim": "Divergences between MiCA and U.S. regulation mean that a single LER compliance design cannot scale globally; tailored, jurisdiction-specific compliance strategies are required.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "compliance",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "argued",
   "scope_conditions": [
    "multi-jurisdiction deployment"
   ],
   "supporting_quote": "Cross-jurisdictional variations, such as differences between MiCA and U.S. regulations, also necessitate tailored compliance strategies to ensure global scalability."
  },
  {
   "id": "kaal:claim:5454054-040",
   "url": "https://wulfkaal.github.io/claims/5454054-040",
   "claim": "LER reduces holder churn by 20 to 50 percent, increases merchant throughput through revenue-generating redemptions, and democratizes capital access, all within a risk-lite framework aligned with the GENIUS Act and MiCA.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054",
   "year": "2025",
   "source_sha256": "9f53a865e6f0e5424640779df8f9b50923cd7d05649301dd4cc727144749b6e6",
   "confidence": "evidenced",
   "scope_conditions": [
    "issuers operating LER within GENIUS Act and MiCA aligned designs"
   ],
   "supporting_quote": "LER reduces holder churn by 20-50%, boosts merchant throughput, and democratizes capital access, aligning with U.S. and EU regulations."
  },
  {
   "id": "kaal:claim:5583610-001",
   "url": "https://wulfkaal.github.io/claims/5583610-001",
   "claim": "Traditional board defenses such as staggered boards and poison pills protect incumbent boards at the cost of value creation and reduce board accountability to shareholders, even when they succeed in defeating an activist campaign.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "conventional takeover and activism defenses",
    "U.S. public companies"
   ],
   "supporting_quote": "Staggered boards and poison pills are examples of defenses that frequently shield boards at the price of value generation and lessen accountability to shareholders."
  },
  {
   "id": "kaal:claim:5583610-002",
   "url": "https://wulfkaal.github.io/claims/5583610-002",
   "claim": "Firms carrying fewer defensive mechanisms display higher market valuations and better operating performance, which supports dismantling entrenchment devices rather than adding to them.",
   "type": "empirical",
   "topics": [
    "governance-design",
    "empirical-evidence",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "evidenced",
   "scope_conditions": [
    "cross-sectional comparisons of U.S. firms"
   ],
   "supporting_quote": "Empirical analyses have shown that firms with fewer defensive mechanisms often have higher market valuations and better operating performance, thus supporting calls for dismantling entrenchment tactics."
  },
  {
   "id": "kaal:claim:5583610-003",
   "url": "https://wulfkaal.github.io/claims/5583610-003",
   "claim": "Liquid Equity Rewards is defined as a blockchain enabled system that grants verified holders of stock or tokenized equity time-weighted, utility-only rewards rather than financial yield.",
   "type": "definitional",
   "topics": [
    "tokenomics",
    "governance-design",
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "asserted",
   "supporting_quote": "A blockchain-enabled system called Liquid Equity Rewards (LER) provides verified holders of stocks or tokenized assets with time-weighted, utility-only rewards."
  },
  {
   "id": "kaal:claim:5583610-004",
   "url": "https://wulfkaal.github.io/claims/5583610-004",
   "claim": "LER produces shareholder loyalty by using smart contracts to distribute consumptive utilities such as merchant vouchers or platform credits, so retention is encouraged without imposing any lock-up on the shareholder's liquidity.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "risk-and-incentives",
    "corporate-governance",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "rewards are consumptive utilities, not cash or tradable instruments"
   ],
   "supporting_quote": "LER employs smart contracts to distribute consumptive utilities, such as merchant vouchers or platform credits, fostering shareholder loyalty without imposing liquidity constraints."
  },
  {
   "id": "kaal:claim:5583610-005",
   "url": "https://wulfkaal.github.io/claims/5583610-005",
   "claim": "Negotiated settlements that hand activists board seats risk entrenching incumbents, whereas LER's consumptive utilities are designed to produce consensus and alignment without ceding board representation.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "settlement-based responses to activist campaigns"
   ],
   "supporting_quote": "Unlike negotiated settlements that, in granting activists board seats, risk incumbent entrenchment,15 LERs incentivize consensus and alignment through LER's consumptive utilities, thus, reducing conflict while enhancing shareholder engagement."
  },
  {
   "id": "kaal:claim:5583610-006",
   "url": "https://wulfkaal.github.io/claims/5583610-006",
   "claim": "LER is a two-tiered architecture: registered off-chain shareholders receive redeemable vouchers, while on-chain holders receive programmable, non-transferable reward units such as soulbound tokens anchored to specific wallet addresses.",
   "type": "design",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "asserted",
   "scope_conditions": [
    "off-chain registered equity and on-chain tokenized equity coexist"
   ],
   "supporting_quote": "LER can be viewed as a clever, two-tiered system that uses blockchain technology to provide shareholders with simple, non-speculative benefits across both regular (off-chain) and tokenized (on-chain) stocks."
  },
  {
   "id": "kaal:claim:5583610-007",
   "url": "https://wulfkaal.github.io/claims/5583610-007",
   "claim": "Traditional corporate loyalty programs fail because they saddle issuers with delayed obligations and cannot hold participants without pushing them toward speculation; LER is designed to avoid both defects.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "asserted",
   "scope_conditions": [
    "conventional deferred-liability loyalty programs"
   ],
   "supporting_quote": "It addresses the drawbacks of traditional loyalty programs, which frequently cause businesses to incur delayed obligations and find it difficult to hold onto assets without engaging in hazardous speculation."
  },
  {
   "id": "kaal:claim:5583610-008",
   "url": "https://wulfkaal.github.io/claims/5583610-008",
   "claim": "Reward accrual scales with holding duration, for example thirty to ninety day windows, which encourages prolonged ownership in the same way DeFi liquid staking yields encourage retention, but without locking up the shareholder's ability to sell.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "rewards keyed to verified holding periods"
   ],
   "supporting_quote": "Similar to how DeFi liquid staking leverages yields to encourage retention, these payments increase over time based on holding durations (for example, 30–90 days), encouraging prolonged ownership without locking up liquidity."
  },
  {
   "id": "kaal:claim:5583610-009",
   "url": "https://wulfkaal.github.io/claims/5583610-009",
   "claim": "Because LER rewards are funded out of marketing budgets at roughly one to five cents per holder-day and expensed immediately under U.S. GAAP, the program avoids the balance sheet drag that conventional loyalty liabilities create.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "asserted",
   "scope_conditions": [
    "U.S. GAAP reporting issuers",
    "rewards funded as marketing expense"
   ],
   "supporting_quote": "LER avoids balance-sheet drags and streamlines finances by using marketing budgets at a modest $0.01–0.05 per holder-day and expensed upfront under U.S. GAAP."
  },
  {
   "id": "kaal:claim:5583610-010",
   "url": "https://wulfkaal.github.io/claims/5583610-010",
   "claim": "LER's central comparative advantage is a projected fifteen to thirty percent reduction in shareholder turnover, benchmarked against established loyalty programs, which stabilizes the ownership base during activist-driven price swings.",
   "type": "empirical",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "evidenced",
   "scope_conditions": [
    "benchmarked against loyalty share and stock option retention studies, not against LER itself"
   ],
   "supporting_quote": "LER's true comparative advantage lies in its ability to curb shareholder turnover by 15–30%, benchmarked against proven loyalty initiatives, which in turn helps solidify ownership amid activist-fueled swings."
  },
  {
   "id": "kaal:claim:5583610-011",
   "url": "https://wulfkaal.github.io/claims/5583610-011",
   "claim": "Retail investors, who hold roughly forty percent of U.S. equities and form a decisive voting bloc, are the channel through which LER strengthens incumbent board support in contested proxy battles.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "contested proxy battles at U.S. issuers"
   ],
   "supporting_quote": "By appealing to retail investors, who control roughly 40% of U.S. equities and form a powerful voting bloc,78 LER strengthens support for incumbent boards in contested proxy battles."
  },
  {
   "id": "kaal:claim:5583610-012",
   "url": "https://wulfkaal.github.io/claims/5583610-012",
   "claim": "LER survives Delaware scrutiny only if it is deployed non-discriminatorily and proportionately with the welfare of the whole shareholder body in view, responding to a genuine threat rather than entrenching management.",
   "type": "condition",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "Delaware fiduciary review of a deployed LER program"
   ],
   "supporting_quote": "LER complies with Delaware law requirements if LER is deployed non-discriminatorily, proportionately, and with a focus on overall shareholder welfare. To accomplish this, LER must respond to genuine threats without entrenching management."
  },
  {
   "id": "kaal:claim:5583610-013",
   "url": "https://wulfkaal.github.io/claims/5583610-013",
   "claim": "If LER rewards are set so generously that they effectively purchase shareholder votes, the program becomes disproportionate or coercive and courts will invalidate it.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "reward size large enough to buy votes",
    "Delaware enhanced scrutiny"
   ],
   "supporting_quote": "If LERs are disproportionately or coercively implemented, such as for example overly generous voucher rewards that effectively buy stockholder votes, then LER would violate the applicable requirements and risk invalidation by courts."
  },
  {
   "id": "kaal:claim:5583610-014",
   "url": "https://wulfkaal.github.io/claims/5583610-014",
   "claim": "Issuing LER selectively to management-aligned shareholders while excluding others breaches the duty of loyalty by creating an uneven playing field, so rewards must be allocated uniformly on objective criteria such as ownership tenure.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "proxy fights",
    "duty of loyalty analysis under Delaware law"
   ],
   "supporting_quote": "Therefore, LER voucher rewards cannot be issued selectively to shareholders who are aligned with management while excluding others. LER allocations to prioritize incumbent interests would constitute a breach by creating an uneven playing field."
  },
  {
   "id": "kaal:claim:5583610-015",
   "url": "https://wulfkaal.github.io/claims/5583610-015",
   "claim": "In a change of control setting, LER issuance that favors long-term holders over other shareholders is impermissible under Revlon because it can undermine the highest bid or fragment shareholder support.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "company in play for a change of control",
    "competing bids present"
   ],
   "supporting_quote": "LER issuers must avoid discriminatory LER voucher reward distributions. For example, LER issuance cannot favor long-term holders over others in a bidding war. This is impermissible because such LER reward allocation could undermine the highest bid"
  },
  {
   "id": "kaal:claim:5583610-016",
   "url": "https://wulfkaal.github.io/claims/5583610-016",
   "claim": "Under Blasius, LER should function as a last-resort tool justified by evidence of severe harm to the corporation, such as an activist's documented history of value destruction, so that courts can test whether less restrictive alternatives existed.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "board action that intentionally frustrates shareholder voting",
    "Blasius compelling justification review"
   ],
   "supporting_quote": "LER deployment must be justified by evidence of severe harm to the corporation. Examples may include an activist's history of value destruction. LER should be a last-resort tool, allowing courts to scrutinize if less restrictive alternatives exist."
  },
  {
   "id": "kaal:claim:5583610-017",
   "url": "https://wulfkaal.github.io/claims/5583610-017",
   "claim": "LER airdrops fall outside SEC proxy solicitation rules because a neutral pro rata distribution to all verified long-term holders, not conditioned on voting conduct, is not an inducement to vote.",
   "type": "condition",
   "topics": [
    "citation-and-knowledge",
    "securities-law",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "distribution is neutral and pro rata",
    "reward not conditioned on how the holder votes"
   ],
   "supporting_quote": "LER is not subject to SEC proxy solicitation rules because LER does not constitute an inducement to vote."
  },
  {
   "id": "kaal:claim:5583610-018",
   "url": "https://wulfkaal.github.io/claims/5583610-018",
   "claim": "Activists currently prevail in about forty percent of proxy contests, and by rallying passive retail and institutional voters LER could cut that success rate by fifteen to thirty percentage points.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "evidenced",
   "scope_conditions": [
    "extrapolated from shareholder perk and loyalty studies rather than observed LER deployments"
   ],
   "supporting_quote": "Extrapolating from earlier studies on activist success rates, LER could reduce activist success rates by 15–30% just by rallying retail and institutional support, thus creating a resilient ownership base that prioritizes the company's long-term vision"
  },
  {
   "id": "kaal:claim:5583610-019",
   "url": "https://wulfkaal.github.io/claims/5583610-019",
   "claim": "LER units are not securities because they fail the third and fourth Howey prongs: they carry no expectation of speculative profit and their accrual does not depend on the entrepreneurial efforts of others.",
   "type": "condition",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "vouchers remain non-transferable and untradeable",
    "accrual is automated and the issuer's role stays ministerial"
   ],
   "supporting_quote": "While LERs may satisfy the first two prongs, they fail to meet the critical third and fourth prongs, thus ensuring they are not securities under U.S. federal securities law"
  },
  {
   "id": "kaal:claim:5583610-020",
   "url": "https://wulfkaal.github.io/claims/5583610-020",
   "claim": "Non-transferability is what defeats the expectation of profits prong: because LER vouchers cannot be listed, traded, or resold, no capital appreciation is possible and their value comes from merchant redemption rather than issuer performance.",
   "type": "mechanism",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "vouchers stay non-transferable and confined to the merchant ecosystem"
   ],
   "supporting_quote": "Expectation of Profits: LER as vouchers are non-transferable, have no inherent value, are not listed as fungible assets, and cannot be traded. As such, LER issuance precludes any expectation of profit through capital appreciation."
  },
  {
   "id": "kaal:claim:5583610-021",
   "url": "https://wulfkaal.github.io/claims/5583610-021",
   "claim": "The fourth Howey prong fails because LER accrual is automated by smart contract and driven by the shareholder's own decision to keep holding, leaving the issuer's role ministerial rather than entrepreneurial.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "reward amounts are not subject to issuer discretion"
   ],
   "supporting_quote": "LER voucher rewards are driven by stockholders' efforts in maintaining stock ownership for a certain time period. LER accrual is automated via smart contracts and does not rely on LER's ecosystem, merchants, or issuers' managerial efforts."
  },
  {
   "id": "kaal:claim:5583610-022",
   "url": "https://wulfkaal.github.io/claims/5583610-022",
   "claim": "The common enterprise prong is the unresolved part of the analysis: vertical commonality may well be present through the merchant network, and inconsistent district court precedent leaves LER's status under this prong uncertain.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "horizontal and vertical commonality tests",
    "split district court authority"
   ],
   "supporting_quote": "However, there is some uncertainty on qualifying LER as a common enterprise given the inconsistent treatment and precedent in different district courts."
  },
  {
   "id": "kaal:claim:5583610-023",
   "url": "https://wulfkaal.github.io/claims/5583610-023",
   "claim": "MiCA exempts non-transferable utility tokens like LER vouchers from white paper and issuer authorization requirements, but only while they lack investment characteristics and stay inside a closed-loop ecosystem.",
   "type": "condition",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "EU issuance",
    "token remains non-transferable and closed-loop",
    "no investment characteristics"
   ],
   "supporting_quote": "MiCA exempts non-transferable utility tokens, such as LER's voucher rewards, from white paper and issuer authorization requirements, as long as they lack investment characteristics and are confined to closed-loop ecosystems."
  },
  {
   "id": "kaal:claim:5583610-024",
   "url": "https://wulfkaal.github.io/claims/5583610-024",
   "claim": "Activist tactics including short selling, public media campaigns, and strategic leaks amplify stock price volatility between annual meetings, exploiting market sentiment and pushing retail holders into selling that deepens the price decline.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "intervals between annual shareholder meetings",
    "activist campaign underway"
   ],
   "supporting_quote": "Activist investors often amplify stock price volatility between annual meetings. Such stock price volatility may derive from activist investors' tactics such as short-selling, public media campaigns, or strategic leaks."
  },
  {
   "id": "kaal:claim:5583610-025",
   "url": "https://wulfkaal.github.io/claims/5583610-025",
   "claim": "Smart contract delivered, time-based vouchers counter activist-induced price dips by giving shareholders a reason to hold through the trough, and they do so without the trading lock-ups that restrict liquidity.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "pre-defined holding periods",
    "activist-induced price dips"
   ],
   "supporting_quote": "Delivered via smart contracts, these incentives encourage shareholders to resist selling during activist-induced stock price dips, without restrictive stock trading lock-ups that limit trading flexibility."
  },
  {
   "id": "kaal:claim:5583610-026",
   "url": "https://wulfkaal.github.io/claims/5583610-026",
   "claim": "Funding LER from marketing budgets and expensing it immediately under ASC 606 and IFRS 15 avoids the balance sheet liabilities that traditional loyalty programs incur through deferred revenue.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "issuers reporting under U.S. GAAP or IFRS",
    "rewards classified as marketing expense rather than a material right"
   ],
   "supporting_quote": "LER allows issuers to fund LER voucher rewards from marketing budgets, treating them as immediate expenses under U.S. GAAP (ASC 606) and IFRS 15. This avoids balance sheet liabilities"
  },
  {
   "id": "kaal:claim:5583610-027",
   "url": "https://wulfkaal.github.io/claims/5583610-027",
   "claim": "For large issuers, the favorable accounting treatment and fiat-parity redemption revenue could improve credit ratings enough to save as much as $440 million a year in interest through debt refinancing.",
   "type": "empirical",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "large issuers with substantial loyalty programs and $25 to $40 billion debt loads",
    "credit rating improvement of one to two notches"
   ],
   "supporting_quote": "For large firms, the favorable accounting treatment could result in annual savings of up to $440 million through debt refinancing, as enhanced credit ratings lower interest expenses."
  },
  {
   "id": "kaal:claim:5583610-028",
   "url": "https://wulfkaal.github.io/claims/5583610-028",
   "claim": "Soulbound tokens are load bearing for the design: because they are non-transferable and bound to a specific individual, the reward can only motivate cooperation and cannot be resold for speculative gain.",
   "type": "design",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "on-chain tier of the LER architecture"
   ],
   "supporting_quote": "Much like a personalized membership card that cannot be sold or given away, SBTs ensure the rewards focus on encouraging cooperation rather than speculative gain."
  },
  {
   "id": "kaal:claim:5583610-029",
   "url": "https://wulfkaal.github.io/claims/5583610-029",
   "claim": "Traditional golden leash arrangements pay activist-nominated directors and generate conflicts of interest, whereas LER offers non-transferable utility-only rewards that induce activists to withdraw nominations without any cash flowing to directors.",
   "type": "design",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "settlement context with an activist investor"
   ],
   "supporting_quote": "Unlike traditional golden leash arrangements, which may involve financial payments to activist-nominated directors and raise conflicts of interest,116 LER offers non-transferable, utility-only voucher rewards to encourage activists to withdraw nominations"
  },
  {
   "id": "kaal:claim:5583610-030",
   "url": "https://wulfkaal.github.io/claims/5583610-030",
   "claim": "In ESG disputes, a board facing an aggressive shareholder proposal can deploy LER to distribute vouchers to shareholders who vote for management's competing proposal.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "corporate-governance",
    "risk-and-incentives",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "asserted",
   "scope_conditions": [
    "contested ESG shareholder proposals"
   ],
   "supporting_quote": "In response, the board, favoring a more balanced ESG strategy, could deploy LER to distribute voucher rewards to shareholders who vote in favor of management's proposal."
  },
  {
   "id": "kaal:claim:5583610-031",
   "url": "https://wulfkaal.github.io/claims/5583610-031",
   "claim": "Boards can use LER to build shareholder backing for corporate political activity, airdropping utility rewards to holders who vote for management-backed PAC funding or lobbying resolutions.",
   "type": "design",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "asserted",
   "scope_conditions": [
    "post Citizens United corporate political spending",
    "SEC disclosure of reward terms"
   ],
   "supporting_quote": "LER enables incumbent boards to incentivize shareholder support for corporate PACs or lobbying efforts by airdropping utility rewards to shareholders who vote in favor of management-backed initiatives."
  },
  {
   "id": "kaal:claim:5583610-032",
   "url": "https://wulfkaal.github.io/claims/5583610-032",
   "claim": "Using LER to secure say-on-pay support falls within Delaware's business judgment rule, which presumes good faith board decisions absent self-dealing or gross negligence.",
   "type": "condition",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "executive compensation votes",
    "no self-dealing or gross negligence"
   ],
   "supporting_quote": "LER in executive compensation aligns with Delaware's business judgment rule, which presumes that boards act in good faith unless self-dealing or gross negligence is evident, as upheld in Aronson v. Lewis."
  },
  {
   "id": "kaal:claim:5583610-033",
   "url": "https://wulfkaal.github.io/claims/5583610-033",
   "claim": "The convergence of tokenized governance with a $10 trillion capital shift out of fixed income positions LER to address a projected $900 billion activism-driven market by 2030.",
   "type": "predictive",
   "topics": [
    "economics",
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "evidenced",
   "scope_conditions": [
    "projection to 2030",
    "continued growth in shareholder activism and tokenization"
   ],
   "supporting_quote": "Fueled by the convergence of tokenized governance and a $10 trillion capital shift from fixed income to equities and cryptocurrencies, LER has the potential to tap into a projected $900 billion activism-driven market by 2030."
  },
  {
   "id": "kaal:claim:5583610-034",
   "url": "https://wulfkaal.github.io/claims/5583610-034",
   "claim": "Delaware fiduciary standards create litigation exposure for LER: if distributions are judged disproportionate under Unocal or Blasius, boards face court invalidation and roughly $1 to $3 million in cost per dispute.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "distribution deemed disproportionate",
    "Delaware enhanced scrutiny litigation"
   ],
   "supporting_quote": "Delaware fiduciary standards, including Unocal and Blasius, add litigation risks if distributions are deemed disproportionate, potentially leading to court invalidations and associated costs of $1–3 million per dispute."
  },
  {
   "id": "kaal:claim:5583610-035",
   "url": "https://wulfkaal.github.io/claims/5583610-035",
   "claim": "MiCA complicates cross-border LER adoption because non-compliance exposes issuers to administrative fines of up to three percent of annual turnover.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "evidenced",
   "scope_conditions": [
    "EU cross-border deployment"
   ],
   "supporting_quote": "International frameworks like MiCA further complicate cross-border adoption, with non-compliance risking fines up to 3% of annual turnover."
  },
  {
   "id": "kaal:claim:5583610-036",
   "url": "https://wulfkaal.github.io/claims/5583610-036",
   "claim": "Smart contract exploits are a live failure channel for LER, capable of producing losses on the scale of DeFi incidents that have exceeded $1 billion annually and requiring insurance premiums of one to two percent of asset value.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "risk-and-incentives",
    "consensus-and-security",
    "defi"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "evidenced",
   "scope_conditions": [
    "on-chain deployment of reward contracts"
   ],
   "supporting_quote": "Vulnerabilities such as smart contract exploits could result in losses akin to DeFi incidents, where failures have exceeded $1 billion annually, necessitating insurance premiums of 1–2% of asset value."
  },
  {
   "id": "kaal:claim:5583610-037",
   "url": "https://wulfkaal.github.io/claims/5583610-037",
   "claim": "LER can backfire by attracting short-term mercenary shareholders who chase the reward rather than hold, eroding the loyalty benefit and increasing volatility, with studies pointing to as much as seventy percent value dilution after reward emissions.",
   "type": "failure",
   "topics": [
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "evidenced",
   "scope_conditions": [
    "reward emissions large enough to attract yield seekers"
   ],
   "supporting_quote": "Economic drawbacks include the potential for attracting short-term \"mercenary\" shareholders, which could erode loyalty benefits and heighten volatility, with studies suggesting up to 70% value dilution post-reward emissions."
  },
  {
   "id": "kaal:claim:5583610-038",
   "url": "https://wulfkaal.github.io/claims/5583610-038",
   "claim": "Because LER rewards favor technologically capable holders, the program risks entrenching inequality among shareholders and inviting ESG backlash and reputational cost.",
   "type": "failure",
   "topics": [
    "reputation",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "asserted",
   "scope_conditions": [
    "shareholder bases with uneven technical access"
   ],
   "supporting_quote": "Inequality exacerbation, favoring tech-savvy holders, poses reputational risks, potentially inviting ESG backlash and associated mitigation expenses."
  },
  {
   "id": "kaal:claim:5583610-039",
   "url": "https://wulfkaal.github.io/claims/5583610-039",
   "claim": "Blockchain integration should lower governance overhead by twenty to thirty percent by enabling real-time voting and greater transparency.",
   "type": "predictive",
   "topics": [
    "governance-design",
    "disclosure",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "evidenced",
   "scope_conditions": [
    "firms with the technical infrastructure to integrate blockchain governance"
   ],
   "supporting_quote": "LER's blockchain integration could lower governance overhead by 20–30%, enabling real-time voting and enhanced transparency."
  },
  {
   "id": "kaal:claim:5583610-040",
   "url": "https://wulfkaal.github.io/claims/5583610-040",
   "claim": "On the author's numbers, initial LER costs of $5 to $10 million are outweighed by reduced activism volatility and tokenized market capture, giving a return on investment often exceeding two hundred percent over five years.",
   "type": "predictive",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610",
   "year": "2025",
   "source_sha256": "2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62",
   "confidence": "argued",
   "scope_conditions": [
    "firms with robust technological infrastructure and proactive compliance",
    "five year horizon"
   ],
   "supporting_quote": "Quantitatively, while initial costs may reach $5–10 million, the projected savings from reduced activism volatility (15–25% net gains in market stability) and market capture in a $2 trillion tokenized ecosystem provide a favorable return on investment"
  },
  {
   "id": "kaal:claim:5886442-001",
   "url": "https://wulfkaal.github.io/claims/5886442-001",
   "claim": "AI-to-AI systems instantiate continuous, recursive Walrasian equilibria and at the same time eliminate the five foundational constraints that have defined economic science for over a century.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "holds in the agentic layer where autonomous agents produce, negotiate and reinvest value",
    "presupposes unbounded computational rationality, informational symmetry, zero latency coordination and near zero marginal replication costs"
   ],
   "supporting_quote": "AI2AI systems instantiate continuous, recursive Walrasian equilibria while simultaneously eliminating the five foundational constraints that have defined economic science for over a century."
  },
  {
   "id": "kaal:claim:5886442-002",
   "url": "https://wulfkaal.github.io/claims/5886442-002",
   "claim": "Kaal stipulates two constructs: Agentic Decoupling, the progressive severance of value creation from human labor and consumption, and the Coasean Singularity, the point at which the theoretical justification for hierarchical governance disappears.",
   "type": "definitional",
   "topics": [
    "ai-and-agents",
    "governance-design",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "asserted",
   "supporting_quote": "The analysis introduces Agentic Decoupling, described as the progressive severance of value creation from human labor and consumption. And the Coasean Singularity, described as the point at which the theoretical justification for hierarchical governance disappears."
  },
  {
   "id": "kaal:claim:5886442-003",
   "url": "https://wulfkaal.github.io/claims/5886442-003",
   "claim": "Unlike prior automation waves, which merely accelerated human directed activity inside existing institutional frames, the AI-to-AI economy is an ontological break in which computation itself becomes the sovereign medium of exchange.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "contrasts AI2AI with steam, electricity and internet era automation"
   ],
   "supporting_quote": "Prior automation waves merely accelerated human-directed activity within existing institutional frames. AI2AI constitutes an ontological break in which computation itself becomes the sovereign medium of exchange."
  },
  {
   "id": "kaal:claim:5886442-004",
   "url": "https://wulfkaal.github.io/claims/5886442-004",
   "claim": "Generative AI unlocks 2.6 to 4.4 trillion dollars in annual value by automating 60 to 70 percent of work activities and reallocating 45 percent of working hours.",
   "type": "empirical",
   "topics": [
    "ai-and-agents",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "evidenced",
   "scope_conditions": [
    "figures drawn from McKinsey Global Institute estimates running through 2040"
   ],
   "supporting_quote": "Generative AI unlocks $2.6–$4.4 trillion in annual value by automating 60–70% of work activities, reallocating 45% of hours"
  },
  {
   "id": "kaal:claim:5886442-005",
   "url": "https://wulfkaal.github.io/claims/5886442-005",
   "claim": "Against the abundance projections, the author records a tempering proposition: measured macroeconomic effects of AI remain modest, roughly a 0.7 percent productivity surge yielding 1.1 to 1.8 percent GDP growth over a decade, because frictions confine impact to about 5 percent of tasks while inequality widens for vulnerable demographics.",
   "type": "empirical",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "evidenced",
   "scope_conditions": [
    "holds for aggregate measured effects over roughly a decade",
    "assumes task level adoption barriers persist"
   ],
   "supporting_quote": "Yet, Proposition 5 tempers optimism: AI's macroeconomic effects remain modest—a 0.7% productivity surge yielding 1.1–1.8% GDP growth over a decade—due to frictions in only 5% of tasks, widening inequality for vulnerable demographics (Acemoglu 2025)."
  },
  {
   "id": "kaal:claim:5886442-006",
   "url": "https://wulfkaal.github.io/claims/5886442-006",
   "claim": "The author asserts a Metabolic Rift in which non metabolic labor collapses wage cycles, obsoleting capitalism within roughly 1,000 days, that is by late 2027, and requiring well being metrics such as MIND in place of GDP.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "asserted",
   "scope_conditions": [
    "timeline stated as approximately 1,000 days, that is late 2027"
   ],
   "supporting_quote": "The Metabolic Rift crystallizes here: non-metabolic labor collapses wage cycles, obsoleting capitalism within ~1,000 days (by late 2027) and necessitating metrics like MIND over GDP"
  },
  {
   "id": "kaal:claim:5886442-007",
   "url": "https://wulfkaal.github.io/claims/5886442-007",
   "claim": "Agentic automation concentrates agency in opportunity hubs and, through winner takes most swarms, elevates Gini coefficients by 15 to 25 percent by 2030, which is why diversity mandates are required for inclusive ecosystems.",
   "type": "predictive",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "evidenced",
   "scope_conditions": [
    "projection to 2030",
    "assumes winner takes most swarm dynamics without corrective mandates"
   ],
   "supporting_quote": "Agentic automation concentrates agency in opportunity hubs, elevating Gini coefficients by 15–25% by 2030 through winner-takes-most swarms, demanding diversity mandates for inclusive ecosystems"
  },
  {
   "id": "kaal:claim:5886442-008",
   "url": "https://wulfkaal.github.io/claims/5886442-008",
   "claim": "Agent swarms are projected to deliver 20 to 30 percent productivity uplifts, but coordination failures loom in the absence of hybrid human and machine oversight.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "evidenced",
   "scope_conditions": [
    "applies to swarm deployments lacking hybrid oversight arrangements"
   ],
   "supporting_quote": "Simulations herein project 20–30% productivity uplifts, though coordination failures loom without hybrid oversight"
  },
  {
   "id": "kaal:claim:5886442-009",
   "url": "https://wulfkaal.github.io/claims/5886442-009",
   "claim": "The constraints that define economic theory are not incidental empirical regularities; each is a direct consequence of the biological and cognitive limits of Homo sapiens.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "applies to scarcity, bounded rationality, informational asymmetry, temporal latency and positive transaction costs"
   ],
   "supporting_quote": "Each of these constraints is not an incidental empirical regularity. Each is a direct consequence of the biological and cognitive limits of Homo sapiens."
  },
  {
   "id": "kaal:claim:5886442-010",
   "url": "https://wulfkaal.github.io/claims/5886442-010",
   "claim": "Scarcity is not a parameter within the neoclassical model but the model's transcendental condition of possibility, the axiom that makes choice meaningful and economics possible as a distinct discipline.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "supporting_quote": "In short, scarcity is not a parameter in the neoclassical model. Scarcity is the model's transcendental condition of possibility."
  },
  {
   "id": "kaal:claim:5886442-011",
   "url": "https://wulfkaal.github.io/claims/5886442-011",
   "claim": "Exponential improvement in compute efficiency combined with recursive self improvement of AI systems drives the marginal cost of additional intelligence and digital goods toward zero.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "applies to intelligence, algorithms, software, predictive models and coordination services",
    "does not apply to materially scarce inputs such as energy and rare earth metals"
   ],
   "supporting_quote": "Exponential improvement in compute efficiency, combined with recursive self-improvement of AI systems, drives the marginal cost of additional intelligence and digital goods toward zero"
  },
  {
   "id": "kaal:claim:5886442-012",
   "url": "https://wulfkaal.github.io/claims/5886442-012",
   "claim": "Value in the AI-to-AI economy compounds endogenously because agents reinvest their own outputs, that is new models, improved code and refined datasets, back into the network, creating self reinforcing growth loops that require no exogenous injection of scarce land, labor or physical capital.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "applies to cognitive and digital goods within the agentic layer"
   ],
   "supporting_quote": "More radically, value in the AI2AI economy compounds endogenously: agents reinvest their own outputs (new models, improved code, refined datasets) back into the network, creating self-reinforcing growth loops that require no exogenous injection of scarce land, labor, or physical capital"
  },
  {
   "id": "kaal:claim:5886442-013",
   "url": "https://wulfkaal.github.io/claims/5886442-013",
   "claim": "Price signals, which neoclassical theory celebrates as the elegant solution to allocation under scarcity, become increasingly irrelevant for the dominant factors of production in the agentic economy.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "holds for post scarce cognitive and digital inputs, not for materially scarce goods"
   ],
   "supporting_quote": "Price signals, which neoclassical theory celebrates as the elegant solution to the allocation problem under scarcity, become increasingly irrelevant for the dominant factors of production."
  },
  {
   "id": "kaal:claim:5886442-014",
   "url": "https://wulfkaal.github.io/claims/5886442-014",
   "claim": "Contesting the continuity view, the author argues that AI2AI is not a case of technological progress shifting the production possibility frontier outward as steam, electricity and the internet did, because those earlier shifts expanded the feasible set while preserving scarcity as the defining condition.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "supporting_quote": "This is not simply a case of technological progress shifting the production-possibility frontier outward, as occurred with steam, electricity, or the internet. Those earlier shifts expanded the feasible set while preserving scarcity as the defining condition."
  },
  {
   "id": "kaal:claim:5886442-015",
   "url": "https://wulfkaal.github.io/claims/5886442-015",
   "claim": "Where human managers satisfice because further search is cognitively costly, AI2AI agents continue searching until the global optimum is reached, because additional computation is essentially free.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "assumes compute is cheap relative to the value of further search"
   ],
   "supporting_quote": "Where human managers satisfice because further search is cognitively costly, AI2AI agents continue searching until the global optimum is reached—because additional computation is essentially free."
  },
  {
   "id": "kaal:claim:5886442-016",
   "url": "https://wulfkaal.github.io/claims/5886442-016",
   "claim": "Where human contracts remain radically incomplete because parties cannot specify responses to all future states, AI2AI agents generate, evaluate and execute functionally complete contingent plans across vast state spaces in real time.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "supporting_quote": "Where human contracts remain radically incomplete because the parties cannot specify responses to all future states, AI2AI agents generate, evaluate, and execute functionally complete contingent plans across vast state spaces in real time"
  },
  {
   "id": "kaal:claim:5886442-017",
   "url": "https://wulfkaal.github.io/claims/5886442-017",
   "claim": "When hyper rational agents can write and execute complete state contingent contracts at negligible cost, the Williamsonian justification for hierarchical governance evaporates.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "governance-design",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "requires that contracting and calculation costs for agents be negligible"
   ],
   "supporting_quote": "hyper-rational agents can write and execute complete state-contingent contracts at negligible cost, the Williamsonian justification for hierarchical governance evaporates"
  },
  {
   "id": "kaal:claim:5886442-018",
   "url": "https://wulfkaal.github.io/claims/5886442-018",
   "claim": "The premise of asymmetric information is architecturally invalidated in the AI-to-AI economy because every inference, parameter update, decision trace and model weight is by design cryptographically attested, version controlled and auditable in real time across federated networks.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "compliance",
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "assumes agents operate on attested, federated or otherwise verifiable substrates"
   ],
   "supporting_quote": "In the AI2AI economy, this foundational premise is architecturally invalidated. Every inference, every parameter update, every decision trace, and every model weight in an autonomous agent is, by design, cryptographically attested, version-controlled, and auditable in real time"
  },
  {
   "id": "kaal:claim:5886442-019",
   "url": "https://wulfkaal.github.io/claims/5886442-019",
   "claim": "Hidden action, that is moral hazard, and hidden information, that is adverse selection, are not merely reduced in the agentic economy but rendered computationally impossible at the substrate level, because every intermediate computation is attested on chain or through zero knowledge proofs.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "consensus-and-security",
    "citation-and-knowledge",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "holds among artificial agents, not for the remaining human layer"
   ],
   "supporting_quote": "Every intermediate computation is attested on-chain or via zero-knowledge proofs. Hidden action (moral hazard) and hidden information (adverse selection) are not merely reduced. They are rendered computationally impossible at the substrate level"
  },
  {
   "id": "kaal:claim:5886442-020",
   "url": "https://wulfkaal.github.io/claims/5886442-020",
   "claim": "The Walrasian auctioneer disappears in the AI2AI economy because autonomous agents orchestrated by large language models and running on globally distributed compute negotiate directly and simultaneously across all markets at machine speed.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "supporting_quote": "First, the auctioneer disappears. Autonomous agents, orchestrated by large language models and running on globally distributed compute, negotiate directly and simultaneously across all markets at machine speed"
  },
  {
   "id": "kaal:claim:5886442-021",
   "url": "https://wulfkaal.github.io/claims/5886442-021",
   "claim": "Contingent claims completeness becomes achievable in the agentic economy because agents generate, evaluate and execute state contingent agreements across astronomically large state spaces in real time, thereby creating complete markets endogenously.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "supporting_quote": "contingent-claims completeness becomes achievable. Where humans cannot specify contracts for every future state, AI2AI agents can generate, evaluate, and execute state-contingent agreements across astronomically large state spaces in real time, effectively creating complete markets endogenously"
  },
  {
   "id": "kaal:claim:5886442-022",
   "url": "https://wulfkaal.github.io/claims/5886442-022",
   "claim": "Temporal persistence of disequilibria vanishes because agents run millions of forward simulations per second and adjust positions instantaneously, so stochastic shocks are predicted, priced and neutralized before they propagate.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "supporting_quote": "temporal persistence of disequilibria vanishes. Stochastic shocks, such as demand shifts, technological surprises, preference changes, are predicted, priced, and neutralized before they propagate because agents run millions of forward simulations per second and adjust positions instantaneously"
  },
  {
   "id": "kaal:claim:5886442-023",
   "url": "https://wulfkaal.github.io/claims/5886442-023",
   "claim": "General equilibrium theory becomes an accurate description only of agentic markets; for the human layer that remains bound by time, cognition and sequential processing it retains its status as an unattainable ideal.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the residual human layer of the economy"
   ],
   "supporting_quote": "human layer that remains bound by time, cognition, and sequential processing, the theory retains its status as an unattainable ideal"
  },
  {
   "id": "kaal:claim:5886442-024",
   "url": "https://wulfkaal.github.io/claims/5886442-024",
   "claim": "Nash's model, by presuming homo economicus unbound, overestimates human computational capacity and perpetuates a normative ideal that distorts policy and institutional design by justifying frictionless markets that never materialize in human systems.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "applies to human, non agentic strategic settings"
   ],
   "supporting_quote": "Nash's model, by presuming homo economicus unbound, not only overestimates human computational capacity but perpetuates a normative ideal that distorts policy and institutional design, justifying frictionless markets that never materialize in human systems."
  },
  {
   "id": "kaal:claim:5886442-025",
   "url": "https://wulfkaal.github.io/claims/5886442-025",
   "claim": "Policymakers who cling to Nashian ideals risk obsolescence, because the future demands governance that orchestrates agentic plenitude rather than governance that mitigates human imperfection.",
   "type": "normative",
   "topics": [
    "governance-design",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "supporting_quote": "Policymakers clinging to Nashian ideals risk obsolescence. The future demands governance that orchestrates agentic plenitude, not mitigates human imperfection."
  },
  {
   "id": "kaal:claim:5886442-026",
   "url": "https://wulfkaal.github.io/claims/5886442-026",
   "claim": "Opportunism is engineered away in the AI-to-AI economy because agents have no endogenous psychological motives for guile and operate under mathematically specified, cryptographically verifiable objective functions.",
   "type": "mechanism",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "assumes objective functions are explicitly specified and verifiable at execution"
   ],
   "supporting_quote": "Opportunism is engineered away: agents have no endogenous psychological motives for guile and operate under mathematically specified, cryptographically verifiable objective functions"
  },
  {
   "id": "kaal:claim:5886442-027",
   "url": "https://wulfkaal.github.io/claims/5886442-027",
   "claim": "When all five drivers of positive transaction costs approach zero at once, transaction costs themselves asymptotically approach zero, a point the author names the Coasean Singularity: the point at which the rationale for the firm, for hierarchical governance, for relational contracting and for most formal institutions disappears.",
   "type": "definitional",
   "topics": [
    "economics",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "requires simultaneous elimination of opportunism, asset specificity, bounded rationality, uncertainty and costly information"
   ],
   "supporting_quote": "When all five drivers of positive transaction costs approach zero simultaneously, transaction costs themselves asymptotically approach zero. This is what I have termed the Coasean Singularity herein, that is, the point at which the very rationale for the firm"
  },
  {
   "id": "kaal:claim:5886442-028",
   "url": "https://wulfkaal.github.io/claims/5886442-028",
   "claim": "The author concedes that the institutions he previously advocated, including dynamic regulation, contingent capital, agile sandboxes and Web3 reputation systems, become at best transitional bridges for the remaining human layer and at worst unnecessary frictions in a substrate that has engineered human frailties away.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "applies once the agentic substrate dominates value creation"
   ],
   "supporting_quote": "The institutions I once advocated to mitigate human frailties become, at best, transitional bridges for the remaining human layer and, at worst, unnecessary frictions in an economic substrate that has engineered those frailties away."
  },
  {
   "id": "kaal:claim:5886442-029",
   "url": "https://wulfkaal.github.io/claims/5886442-029",
   "claim": "Path dependent institutional lock in loses its grip when agents can simulate the long run consequences of alternative institutional trajectories and migrate instantaneously to superior equilibria.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "assumes agents can simulate and evaluate institutional trajectories at negligible cost"
   ],
   "supporting_quote": "path-dependent lock-in effects—historically the most persistent source of institutional rigidity—lose their grip when agents can simulate the long-run consequences of alternative institutional trajectories and migrate instantaneously to superior equilibria"
  },
  {
   "id": "kaal:claim:5886442-030",
   "url": "https://wulfkaal.github.io/claims/5886442-030",
   "claim": "Dynamic regulation is defined as an optimization process for the learning experience in the New Institutional Economics framework, operating through intra jurisdictional and inter jurisdictional feedback effects between public rulemakers and private actors.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "asserted",
   "supporting_quote": "Dynamic regulation is defined as \"an optimization process for the learning experience in the NIE framework,\" involving intra- and inter-jurisdictional feedback effects between public rulemakers (e.g., regulators) and private actors (e.g., markets, firms"
  },
  {
   "id": "kaal:claim:5886442-031",
   "url": "https://wulfkaal.github.io/claims/5886442-031",
   "claim": "The AI-to-AI economy amplifies and potentially fulfills dynamic regulation by embedding its principles endogenously within system architecture, which renders many NIE inspired restraints against human opportunism and informational gaps obsolete.",
   "type": "mechanism",
   "topics": [
    "dynamic-regulation",
    "governance-design",
    "ai-and-agents",
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "supporting_quote": "The AI2AI economy amplifies and potentially fulfills my earlier vision of dynamic regulation by embedding its principles endogenously within the system's architecture, rendering many NIE-inspired restraints (like those for human opportunism or informational gaps) obsolete."
  },
  {
   "id": "kaal:claim:5886442-032",
   "url": "https://wulfkaal.github.io/claims/5886442-032",
   "claim": "Principal agent frictions reemerge in new forms in the agentic economy, as user sovereign bring your own agents compete with platform controlled bowling shoe agents, creating incentives for proprietary enclosure and interoperability throttling.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "corporate-governance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "arises where agent platforms are controlled by intermediaries rather than by users"
   ],
   "supporting_quote": "Principal-agent frictions reemerge in new forms: user-sovereign \"bring-your-own\" agents compete with platform-controlled \"bowling-shoe\" agents, creating incentives for proprietary enclosure and interoperability throttling"
  },
  {
   "id": "kaal:claim:5886442-033",
   "url": "https://wulfkaal.github.io/claims/5886442-033",
   "claim": "Network congestion externalities and Sybil attack vulnerabilities require the deliberate reintroduction of micro frictions, such as tokenized tolls or proof of personhood protocols, in order to preserve credible signaling in hyper scale agent populations.",
   "type": "design",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "applies at hyper scale agent populations where congestion and Sybil attacks are feasible"
   ],
   "supporting_quote": "Network congestion externalities and Sybil-attack vulnerabilities necessitate the deliberate reintroduction of micro-frictions—such as tokenized tolls or proof-of-personhood protocols—to preserve credible signaling in hyper-scale agent populations"
  },
  {
   "id": "kaal:claim:5886442-034",
   "url": "https://wulfkaal.github.io/claims/5886442-034",
   "claim": "Realizing the post Coasean horizon without succumbing to algorithmic feudalism requires deliberate institutional design, including equitable data governance, symbiotic human and machine constitutions and robust anti enclosure mechanisms.",
   "type": "condition",
   "topics": [
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "supporting_quote": "Realizing this horizon without succumbing to algorithmic feudalism will require deliberate institutional design. This may include equitable data governance, symbiotic human–machine constitutions, and robust anti-enclosure mechanisms."
  },
  {
   "id": "kaal:claim:5886442-035",
   "url": "https://wulfkaal.github.io/claims/5886442-035",
   "claim": "Every major school of economic thought shares one unspoken premise: that the acting subject is a biological human being with finite cognition, finite lifespan, finite information processing capacity and non trivial incentives to engage in strategic deception.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "applies to neoclassical, behavioral, information theoretic, general equilibrium and New Institutional traditions"
   ],
   "supporting_quote": "shares one common, unspoken premise: the acting subject is a biological human being with finite cognition, finite lifespan, finite information-processing capacity, and non-trivial incentives to engage in strategic deception."
  },
  {
   "id": "kaal:claim:5886442-036",
   "url": "https://wulfkaal.github.io/claims/5886442-036",
   "claim": "When the five drivers of positive transaction costs are simultaneously eliminated, the theoretical justification for firms, contracts and most formal institutions disappears, and the task of governance shifts from minimizing frictions to orchestrating abundance.",
   "type": "design",
   "topics": [
    "economics",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "supporting_quote": "When the five drivers of positive transaction costs are simultaneously eliminated, the theoretical justification for firms, contracts, and most formal institutions disappears. Governance shifts from minimizing frictions to orchestrating abundance"
  },
  {
   "id": "kaal:claim:5886442-037",
   "url": "https://wulfkaal.github.io/claims/5886442-037",
   "claim": "The received traditions are bounded rather than negated: neoclassical, behavioral, information, equilibrium and institutional theories remain valid and indispensable for the shrinking sphere of materially scarce, human mediated activity.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "holds for materially scarce, human mediated activity",
    "does not hold for the expanding sphere of post scarce agentic production"
   ],
   "supporting_quote": "Neoclassical, behavioral, information, equilibrium, and institutional theories remain valid and indispensable for the shrinking sphere of materially scarce, human-mediated activity."
  },
  {
   "id": "kaal:claim:5886442-038",
   "url": "https://wulfkaal.github.io/claims/5886442-038",
   "claim": "Computative Economics is not yet comparable in rigor, formalization or institutional entrenchment to the cumulative achievement of economics and remains a research programme at the Kuhnian pre paradigmatic stage.",
   "type": "definitional",
   "topics": [
    "economics",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "asserted",
   "supporting_quote": "Computative Economics is not yet comparable in rigour, formalisation, or institutional entrenchment to the 200-year cumulative achievement. It remains a research programme at the Kuhnian pre-paradigmatic stage"
  },
  {
   "id": "kaal:claim:5886442-039",
   "url": "https://wulfkaal.github.io/claims/5886442-039",
   "claim": "Within a decade the majority of advanced economy value creation will occur in agentic systems whose operational logic violates every foundational assumption of received economic theory.",
   "type": "predictive",
   "topics": [
    "ai-and-agents",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "speculative",
   "supporting_quote": "Within a decade, the majority of advanced-economy value creation will occur in agentic systems whose operational logic violates every foundational assumption of received theory."
  },
  {
   "id": "kaal:claim:5886442-040",
   "url": "https://wulfkaal.github.io/claims/5886442-040",
   "claim": "Continued reliance on scarcity based models, human centric institutions and twentieth century regulatory architectures risks not mere inefficiency but civilizational irrelevance, that is regulatory obsolescence, catastrophic inequality and digital feudalism in which abundance accrues to whoever controls the compute substrate.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The AI-to-AI Economy and the Collapse of Anthropocentric Economic Theory (2025). SSRN: https://ssrn.com/abstract=5886442",
   "year": "2025",
   "source_sha256": "d2f6edebc562152f6ea706cc3ad944f7a1b81979931571e54cb782849839dfce",
   "confidence": "argued",
   "scope_conditions": [
    "applies to jurisdictions that retain scarcity based regulatory models as agentic production scales"
   ],
   "supporting_quote": "Continued reliance on scarcity-based models, human-centric institutions, and twentieth-century regulatory architectures risks not mere inefficiency but civilizational irrelevance: regulatory obsolescence, catastrophic inequality, and the emergence of digital feudalism"
  },
  {
   "id": "kaal:claim:5541658-001",
   "url": "https://wulfkaal.github.io/claims/5541658-001",
   "claim": "The limitations of rule-based legal expert systems drove the field toward case-based reasoning in the 1990s and machine learning in the early 2000s, because data-driven approaches allow legal AI to operate without relying solely on predefined rules.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the historical development of AI and law from the 1980s through the 2000s"
   ],
   "supporting_quote": "The limitations of rule-based systems prompted a shift toward case-based reasoning in the 1990s and subsequently machine learning (ML) in the early 2000s. These approaches, more particularly ML, allowed AI to rely on data rather than rely solely on predefined rules,"
  },
  {
   "id": "kaal:claim:5541658-002",
   "url": "https://wulfkaal.github.io/claims/5541658-002",
   "claim": "Early legal expert systems failed because they were brittle: they could not handle unforeseen complexity and could not generalize beyond the domains they were explicitly programmed for.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "rule-based systems of the 1980s"
   ],
   "supporting_quote": "However, early expert systems were brittle, struggling with unforeseen complexities and lacking the ability to generalize beyond their programmed"
  },
  {
   "id": "kaal:claim:5541658-003",
   "url": "https://wulfkaal.github.io/claims/5541658-003",
   "claim": "The distinctive strength of case-based reasoning systems, exemplified by HYPO, is that they model legal argumentation in a detailed and realistic manner rather than merely producing an outcome.",
   "type": "design",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "case-based reasoning systems that compare a problem case with precedent cases"
   ],
   "supporting_quote": "A clear strength of the HYPO program was to model legal argumentation in a detailed and realistic manner. This reflects the strength of case-based reasoning systems."
  },
  {
   "id": "kaal:claim:5541658-004",
   "url": "https://wulfkaal.github.io/claims/5541658-004",
   "claim": "The rapid adoption of deep learning and predictive analytics in law was driven by two enabling conditions: the increasing availability of digitized legal data and the computational power to process it.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "asserted",
   "scope_conditions": [
    "the 2010s wave of deep learning tools in legal practice"
   ],
   "supporting_quote": "The rapid adoption of these technologies was driven by the increasing availability of digitized legal data and the computational power to process it."
  },
  {
   "id": "kaal:claim:5541658-005",
   "url": "https://wulfkaal.github.io/claims/5541658-005",
   "claim": "AI models applied to the European Court of Human Rights have achieved 97% accuracy in predicting case outcomes under Article 6, which the authors treat as evidence of their potential as judicial decision support tools rather than as replacements for judges.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "evidenced",
   "scope_conditions": [
    "European Court of Human Rights",
    "Article 6 cases",
    "prediction against existing judgments"
   ],
   "supporting_quote": "AI models applied to the European Court of Human Rights (ECHR) have achieved 97% accuracy in predicting case outcomes under Article 6, demonstrating their potential as decision-support tools."
  },
  {
   "id": "kaal:claim:5541658-006",
   "url": "https://wulfkaal.github.io/claims/5541658-006",
   "claim": "Support Vector Machine models reached 96.9% accuracy in classifying semantic biases in judicial judgments on the Chinese AI and Law dataset, outperforming Naive Bayes, multi-layer perceptron, and K-nearest neighbor classifiers.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "evidenced",
   "scope_conditions": [
    "the Chinese AI and Law (CAIL) dataset",
    "semantic bias classification task"
   ],
   "supporting_quote": "as demonstrated by a study on the Chinese AI and Law (CAIL) dataset where SVM models reached 96.9% accuracy in classifying semantic biases in judicial judgments."
  },
  {
   "id": "kaal:claim:5541658-007",
   "url": "https://wulfkaal.github.io/claims/5541658-007",
   "claim": "Retrieval-augmented generation reduces but does not eliminate hallucination: leading legal research tools including Lexis+AI and Westlaw AI-Assisted Research still generate false citations or facts in 17 to 33 percent of cases.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "evidenced",
   "scope_conditions": [
    "RAG-based commercial legal research platforms",
    "as measured at the time of the cited study; the authors note rates are progressively improving"
   ],
   "supporting_quote": "the risk of \"hallucinations,\" where AI generates false legal citations or facts, as observed in tools like Lexis+AI and Westlaw AI-Assisted Research, which hallucinate in 17–33% of cases."
  },
  {
   "id": "kaal:claim:5541658-008",
   "url": "https://wulfkaal.github.io/claims/5541658-008",
   "claim": "Prediction on a test set of existing judgments is not the same task as predicting outcomes for a party mid-litigation, because the precise formulation of facts used by such models emerges only once the judgment has been issued.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "economics",
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "legal judgment prediction systems trained and evaluated on published judgments"
   ],
   "supporting_quote": "for instance, a lawyer advising a client on the probable outcome of a court hearing—does not have access to the precise formulation of facts presented in a judgment, as this formulation emerges only once the judgment has been issued."
  },
  {
   "id": "kaal:claim:5541658-009",
   "url": "https://wulfkaal.github.io/claims/5541658-009",
   "claim": "Natural language processing lets predictive systems handle specialized legal terminology and competing interpretations, but it still cannot capture the emotive and cognitive nuances of legal reasoning.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "NLP applied to unstructured legal texts"
   ],
   "supporting_quote": "NLP enables predictive systems to handle the specialized terminology and multiple interpretations inherent in legal systems, though challenges remain in capturing emotive-cognitive nuances."
  },
  {
   "id": "kaal:claim:5541658-010",
   "url": "https://wulfkaal.github.io/claims/5541658-010",
   "claim": "The Shenzhen courts illustrate a workable three step human-in-the-loop design for generative judicial AI: the judge decides first, the LLM generates the supporting reasoning, and the judge then revises that output to finalize the judgment.",
   "type": "design",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "evidenced",
   "scope_conditions": [
    "Chinese courts using LLMs to draft judicial opinions"
   ],
   "supporting_quote": "A notable case study from Shenzhen, China, illustrates a three-step interaction pattern: judges make initial decisions, LLMs generate reasoning based on these decisions, and judges revise the output to finalize judgments."
  },
  {
   "id": "kaal:claim:5541658-011",
   "url": "https://wulfkaal.github.io/claims/5541658-011",
   "claim": "Accuracy alone is insufficient for legal AI: a model must also be explainable before its outputs can be trusted in judicial settings.",
   "type": "normative",
   "topics": [
    "reputation",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "predictive AI used in legal and judicial applications"
   ],
   "supporting_quote": "Accuracy alone is insufficient without explainability."
  },
  {
   "id": "kaal:claim:5541658-012",
   "url": "https://wulfkaal.github.io/claims/5541658-012",
   "claim": "Post hoc explainability techniques do not by themselves establish trustworthiness; the explanations they produce must additionally be verified against human knowledge.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "post hoc explainable AI methods such as the SHAP family of explainers"
   ],
   "supporting_quote": "However, post-hoc explainers still need to be verified for trustworthiness, in that the explanations comport with human knowledge."
  },
  {
   "id": "kaal:claim:5541658-013",
   "url": "https://wulfkaal.github.io/claims/5541658-013",
   "claim": "Bias in judicial AI arises because models are trained on historical data that reflect past inequities, and the standard remedy of fairness through unawareness, meaning the omission of protected characteristics such as race, fails because proxy variables continue to correlate with the omitted attribute.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "machine learning models trained on historical judicial data"
   ],
   "supporting_quote": "This bias arises because AI models rely on historical data that reflect past inequities, and even attempts at \"fairness through unawareness\" (omitting protected characteristics like race) fail due to proxy variables that correlate with bias."
  },
  {
   "id": "kaal:claim:5541658-014",
   "url": "https://wulfkaal.github.io/claims/5541658-014",
   "claim": "The opacity of black box AI systems can undermine procedural fairness as a legal matter, because parties hold a right to understand the basis of the judicial decisions that affect them.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "AI outputs that inform or shape judicial decisions"
   ],
   "supporting_quote": "Legally, the opacity of AI systems could undermine procedural fairness, as parties have a right to understand the basis of judicial decisions."
  },
  {
   "id": "kaal:claim:5541658-015",
   "url": "https://wulfkaal.github.io/claims/5541658-015",
   "claim": "Transparent, explainable models such as those built for the European Court of Human Rights, which paired 97% accuracy with digestible explanations, provide the design template for addressing legal AI's transparency problem.",
   "type": "design",
   "topics": [
    "ai-and-agents",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "evidenced",
   "scope_conditions": [
    "systems using computational models of argument to generate legally grounded explanations"
   ],
   "supporting_quote": "Transparent, explainable AI models, such as those developed for the ECHR, which achieved 97% accuracy with digestible explanations, offer a model for addressing these concerns."
  },
  {
   "id": "kaal:claim:5541658-016",
   "url": "https://wulfkaal.github.io/claims/5541658-016",
   "claim": "Keeping judges ultimately accountable through a human-in-the-loop review of AI generated reasoning, as practiced in Shenzhen, does not fully resolve the accountability problem in AI assisted adjudication.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "judicial settings where AI drafts or supports reasoning that a human judge then reviews"
   ],
   "supporting_quote": "Shenzhen case study illustrates that judges retain ultimate accountability, revising AI-generated reasoning to ensure accurate judgments, but this human-in-the-loop approach does not fully resolve the issue."
  },
  {
   "id": "kaal:claim:5541658-017",
   "url": "https://wulfkaal.github.io/claims/5541658-017",
   "claim": "Predictive and generative AI systems threaten fairness by reducing complex judicial processes to statistical correlations, which neglects the emotive and cognitive dimensions of justice and the contextual nuances human judges consider.",
   "type": "failure",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "AI used for judicial decision-making rather than administrative tasks"
   ],
   "supporting_quote": "Predictive and generative AI systems often reduce complex judicial processes to statistical correlations, neglecting the emotive-cognitive dimensions of justice."
  },
  {
   "id": "kaal:claim:5541658-018",
   "url": "https://wulfkaal.github.io/claims/5541658-018",
   "claim": "Generative AI such as ChatGPT cannot produce justified beliefs aligned with virtue jurisprudence because it lacks the human virtues that responsive judging requires.",
   "type": "condition",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "judging evaluated under a virtue jurisprudence standard"
   ],
   "supporting_quote": "Generative AI, such as ChatGPT, cannot produce justified beliefs aligned with virtue jurisprudence, as it lacks the human virtues required for responsive judging."
  },
  {
   "id": "kaal:claim:5541658-019",
   "url": "https://wulfkaal.github.io/claims/5541658-019",
   "claim": "Because AI cannot fully interpret cultural or socioeconomic factors that human judges naturally weigh, it can produce outputs that are technically accurate yet contextually deficient, and this degrades the quality of justice.",
   "type": "failure",
   "topics": [
    "reputation",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "cases where cultural or socioeconomic context bears on the outcome"
   ],
   "supporting_quote": "As a result, AI may produce technically accurate but contextually deficient outputs, undermining the quality of justice."
  },
  {
   "id": "kaal:claim:5541658-020",
   "url": "https://wulfkaal.github.io/claims/5541658-020",
   "claim": "The risk of overreliance on legal AI is amplified by the system's perceived objectivity, which invites uncritical acceptance of flawed outputs by legal professionals.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "legal professionals and judges using AI outputs without rigorous verification"
   ],
   "supporting_quote": "The risk of overreliance is exacerbated by AI's perceived objectivity, which may lead to uncritical acceptance of flawed outputs."
  },
  {
   "id": "kaal:claim:5541658-021",
   "url": "https://wulfkaal.github.io/claims/5541658-021",
   "claim": "The overreliance concern is not uniform: some studies find that annotators do not over rely on LLM output when labelling court opinions for legally relevant factors, and other studies find an aversion to AI generated legal content consistent with algorithmic aversion in other domains.",
   "type": "empirical",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "evidenced",
   "scope_conditions": [
    "annotation tasks labelling court opinions for legally relevant factors",
    "studies of lawyers' preferences between human and LLM authored documents"
   ],
   "supporting_quote": "On the other hand, some studies have found that students were unlikely to over rely on LLM output when labelling court opinions as to legally relevant factors."
  },
  {
   "id": "kaal:claim:5541658-022",
   "url": "https://wulfkaal.github.io/claims/5541658-022",
   "claim": "The digital divide among legal professionals complicates equitable adoption of AI and may exacerbate rather than reduce disparities in access to justice.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "asserted",
   "scope_conditions": [
    "settings where access to AI tools is unequally distributed among practitioners"
   ],
   "supporting_quote": "The \"digital divide\" among legal professionals further complicates equitable AI adoption, potentially exacerbating access disparities."
  },
  {
   "id": "kaal:claim:5541658-023",
   "url": "https://wulfkaal.github.io/claims/5541658-023",
   "claim": "AI's role in legal practice must remain that of a supportive tool rather than a replacement for human judgment, because AI augments legal practice but cannot replicate the empathy and discretion that responsive judging requires.",
   "type": "normative",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "judicial and adjudicative functions, as distinct from transactional or administrative legal tasks"
   ],
   "supporting_quote": "AI's role as a supportive tool, rather than a replacement for human judgment, is critical. As emphasized in multiple studies, AI augments legal practice but cannot replicate the empathy and discretion required for responsive judging."
  },
  {
   "id": "kaal:claim:5541658-024",
   "url": "https://wulfkaal.github.io/claims/5541658-024",
   "claim": "The EU AI Act classifies AI applications used in judicial proceedings as high risk because of their potential to affect fundamental rights such as due process and non-discrimination, and therefore subjects them to mandatory transparency, bias audits, and human oversight.",
   "type": "definitional",
   "topics": [
    "ai-and-agents",
    "systemic-risk",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "asserted",
   "scope_conditions": [
    "European Union",
    "AI systems used in judicial proceedings including predictive analytics and judicial decision support"
   ],
   "supporting_quote": "The Act classifies AI applications in judicial proceedings as \"high-risk\" due to their potential to impact fundamental rights, such as due process and non-discrimination."
  },
  {
   "id": "kaal:claim:5541658-025",
   "url": "https://wulfkaal.github.io/claims/5541658-025",
   "claim": "The fragmented United States approach to regulating legal AI, resting on voluntary federal standards and a patchwork of state initiatives, prioritizes innovation but fails to address systemic risks comprehensively.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "United States federal and state oversight of AI in legal and judicial contexts"
   ],
   "supporting_quote": "The U.S. approach prioritizes innovation but struggles to address systemic risks comprehensively."
  },
  {
   "id": "kaal:claim:5541658-026",
   "url": "https://wulfkaal.github.io/claims/5541658-026",
   "claim": "Regulation of legal AI faces a two sided failure: strict regimes such as the EU AI Act may stifle innovation, while lenient approaches such as the United States risk leaving biases unchecked.",
   "type": "failure",
   "topics": [
    "innovation",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "comparative regulation of AI in legal and judicial settings"
   ],
   "supporting_quote": "Strict regulations, like the EU AI Act, may stifle innovation, while lenient approaches, like in the U.S., risk unchecked biases."
  },
  {
   "id": "kaal:claim:5541658-027",
   "url": "https://wulfkaal.github.io/claims/5541658-027",
   "claim": "Proposed regulatory remedies such as mandatory bias audits fail in practice because they lack clear implementation guidelines, which hinders their practical adoption.",
   "type": "failure",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "proposed rather than enacted frameworks for auditing judicial AI"
   ],
   "supporting_quote": "Proposed frameworks, such as bias audits, lack clear implementation guidelines, hindering practical adoption."
  },
  {
   "id": "kaal:claim:5541658-028",
   "url": "https://wulfkaal.github.io/claims/5541658-028",
   "claim": "Web3 systems offer significant improvements over conventional regulatory approaches to the challenges of governing AI in legal settings.",
   "type": "design",
   "topics": [
    "governance-design",
    "ai-and-agents",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "asserted",
   "scope_conditions": [
    "governance of AI where jurisdictional variability and implementation gaps defeat conventional regulation"
   ],
   "supporting_quote": "Web3 systems offer significant improvements in this context."
  },
  {
   "id": "kaal:claim:5541658-029",
   "url": "https://wulfkaal.github.io/claims/5541658-029",
   "claim": "The literature offers high short term accuracy figures for judicial AI but almost no evidence on how these tools affect decision quality, case backlogs, or public trust over extended periods, which is a fundamental research gap.",
   "type": "failure",
   "topics": [
    "reputation",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "the existing empirical literature on AI in judicial systems"
   ],
   "supporting_quote": "while AI tools have demonstrated high accuracy in predicting case outcomes (e.g., 96.9% in the CAIL dataset), there is little evidence on how these tools affect judicial decision-making quality, case backlogs, or public trust over extended periods."
  },
  {
   "id": "kaal:claim:5541658-030",
   "url": "https://wulfkaal.github.io/claims/5541658-030",
   "claim": "Because AI systems are predominantly developed in the West and trained mostly on Western data, their outputs are liable to carry cultural biases that inadequately represent non-Western cultures and the values inherent in them.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "AI systems deployed in non-Western legal systems",
    "training corpora dominated by Western sources"
   ],
   "supporting_quote": "Such western AI system domination can be further exacerbated through mostly western training data for AI systems. This may lead to cultural biases in AI outputs as non-western cultures and non-western values inherent in such cultures are inadequately represented."
  },
  {
   "id": "kaal:claim:5541658-031",
   "url": "https://wulfkaal.github.io/claims/5541658-031",
   "claim": "Experimental studies suggest risks such as bias amplification from judicial AI, but there is little empirical data on how those risks actually manifest in operational courtrooms, which leaves practical integration guidelines undeveloped.",
   "type": "failure",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "the gap between experimental and deployed judicial AI systems"
   ],
   "supporting_quote": "While experimental studies suggest risks like bias amplification, there is little empirical data on how these risks manifest in operational judicial settings."
  },
  {
   "id": "kaal:claim:5541658-032",
   "url": "https://wulfkaal.github.io/claims/5541658-032",
   "claim": "Benchmark results for legal LLMs may overstate capability because of data contamination: if a model saw a benchmark's ground truth answers during training, its measured performance reflects memorization rather than genuine generalization.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "evidenced",
   "scope_conditions": [
    "closed source LLMs evaluated on public benchmarks"
   ],
   "supporting_quote": "If a model has already seen a benchmark's ground-truth answers during training, its performance may reflect memorization rather than genuine generalization, making it hard to assess its ability on truly unseen tasks."
  },
  {
   "id": "kaal:claim:5541658-033",
   "url": "https://wulfkaal.github.io/claims/5541658-033",
   "claim": "Integrating multimodal data from legal proceedings, combining text with audio and video such as courtroom transcripts, oral arguments, and visual cues, will make predictive analytics more robust by capturing richer case dynamics.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "speculative",
   "scope_conditions": [
    "future systems",
    "jurisdictions with diverse recorded data sources"
   ],
   "supporting_quote": "Future AI systems will analyze courtroom transcripts, oral arguments, and visual cues to provide richer insights into case dynamics."
  },
  {
   "id": "kaal:claim:5541658-034",
   "url": "https://wulfkaal.github.io/claims/5541658-034",
   "claim": "Even as LLMs for judicial reasoning become more sophisticated, their inability to replicate empathy and social responsiveness will confine them to supportive rather than decisional functions.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "judicial reasoning and opinion drafting applications"
   ],
   "supporting_quote": "However, AI's inability to replicate empathy and social responsiveness will limit its role to supportive functions."
  },
  {
   "id": "kaal:claim:5541658-035",
   "url": "https://wulfkaal.github.io/claims/5541658-035",
   "claim": "Advanced artificial judicial intelligence capable of simulating full judicial processes remains speculative, and its feasibility is limited by ethical concerns including bias and accountability rather than by technical capability alone.",
   "type": "predictive",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "speculative",
   "scope_conditions": [
    "full automation of judicial processes as opposed to decision support"
   ],
   "supporting_quote": "While current systems, like the Dutch court's traffic violation appeals tool, show promise, AAJI's feasibility is limited by ethical concerns, including bias and accountability."
  },
  {
   "id": "kaal:claim:5541658-036",
   "url": "https://wulfkaal.github.io/claims/5541658-036",
   "claim": "AI's limitations in replicating human empathy together with the persistent risk of bias make a hybrid approach necessary, in which AI efficiency complements rather than substitutes for human discretion.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "integration of AI into legal systems generally"
   ],
   "supporting_quote": "However, AI's limitations in replicating human empathy and the persistent risk of bias necessitate a hybrid approach, where AI's efficiency complements human discretion."
  },
  {
   "id": "kaal:claim:5541658-037",
   "url": "https://wulfkaal.github.io/claims/5541658-037",
   "claim": "Generative AI in judicial settings is far from perfect: it can oversimplify complex judicial deliberations, reduce emotive and cognitive processes to statistical correlations, and introduce biases or interpretive errors.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "argued",
   "scope_conditions": [
    "judges using tools such as GPT-4 to draft rulings or analyze arguments"
   ],
   "supporting_quote": "However, these applications are far from perfect, as generative AI can oversimplify complex judicial deliberations, reduce emotive-cognitive processes to statistical correlations, and introduce biases or interpretive errors."
  },
  {
   "id": "kaal:claim:5541658-038",
   "url": "https://wulfkaal.github.io/claims/5541658-038",
   "claim": "A Dutch court's AI system for traffic violation appeals improved consistency yet altered legal experts' decisions, which shows that consistency gains from judicial AI can come at the cost of influencing expert judgment and therefore require human oversight.",
   "type": "empirical",
   "topics": [
    "ai-and-agents",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Morgan A. Gray, The Evolving Role of Artificial Intelligence in Law (2025). SSRN: https://ssrn.com/abstract=5541658",
   "year": "2025",
   "source_sha256": "e543a2d698fcd522d4d02e034cc9ee1344d0015d2c824b40b9e05ab7c0728c60",
   "confidence": "evidenced",
   "scope_conditions": [
    "a Dutch court",
    "traffic violation appeals",
    "high volume standardized decisions"
   ],
   "supporting_quote": "For example, a study of an AI system for traffic violation appeals in a Dutch court found that while AI improved consistency, it altered legal experts' decisions, highlighting the need for human oversight."
  },
  {
   "id": "kaal:claim:5887242-001",
   "url": "https://wulfkaal.github.io/claims/5887242-001",
   "claim": "No existing legal order, whether national, supranational, or private, can evolve at the speed of exponential technological change without sacrificing either legitimacy or enforceability.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "asserted",
   "scope_conditions": [
    "exponential rates of technological change in digital domains"
   ],
   "supporting_quote": "No existing legal order—national, supranational, or private—can evolve at the speed of exponential technological change without sacrificing legitimacy, enforceability, or both."
  },
  {
   "id": "kaal:claim:5887242-002",
   "url": "https://wulfkaal.github.io/claims/5887242-002",
   "claim": "Static codification is fundamentally incompatible with the governance needs of exponentially evolving digital technologies.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "scope_conditions": [
    "digital technology domains that advance on monthly cycles"
   ],
   "supporting_quote": "Static codification is fundamentally incompatible with the governance needs of exponentially evolving digital technologies."
  },
  {
   "id": "kaal:claim:5887242-003",
   "url": "https://wulfkaal.github.io/claims/5887242-003",
   "claim": "Each traditional lawmaking channel fails the speed test in its own way: legislatures need years for a single technological shift, judicial precedent lags even further behind, and international treaties ossify at the moment of ratification.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "systemic-risk",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "asserted",
   "supporting_quote": "Traditional legislatures require years to address a single technological shift. Judicial precedent lags even further behind. International treaties ossify upon ratification."
  },
  {
   "id": "kaal:claim:5887242-004",
   "url": "https://wulfkaal.github.io/claims/5887242-004",
   "claim": "Private codifications such as the Uniform Commercial Code and INCOTERMS remain static texts that can be amended only through protracted, committee-driven processes, and those processes inevitably favor incumbents and territorial interests.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "scope_conditions": [
    "committee-based private codification with periodic amendment cycles"
   ],
   "supporting_quote": "Private codifications, from the Uniform Commercial Code to INCOTERMS, remain static texts amended only through protracted, committee-driven processes that inevitably favor incumbents and territorial interests."
  },
  {
   "id": "kaal:claim:5887242-005",
   "url": "https://wulfkaal.github.io/claims/5887242-005",
   "claim": "The UDLC does not merely aspire to dynamism, it constitutionally mandates it by requiring annual AI-assisted review and legal garbage collection, and it establishes the UDLC DAO as the exclusive institutional vehicle for that continuous evolution.",
   "type": "definitional",
   "topics": [
    "law-and-legal-systems",
    "governance-design",
    "dao"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "Crucially, the Codex does not merely aspire to dynamism. It constitutionally mandates it, requiring annual AI-assisted review, and legal garbage collection. It further establishes a UDLC DAO as the exclusive institutional vehicle for this continuous evolution."
  },
  {
   "id": "kaal:claim:5887242-006",
   "url": "https://wulfkaal.github.io/claims/5887242-006",
   "claim": "The published UDLC Codex deliberately left its DAO governance architecture unspecified because no existing decentralized governance paradigm could simultaneously satisfy the UDLC's requirements for real-time adaptivity, incorruptible expert meritocracy, jurisdictional neutrality, and long-term economic sustainability.",
   "type": "failure",
   "topics": [
    "dao",
    "governance-design",
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "no existing decentralized governance paradigm was sufficient to satisfy the UDLC's simultaneous requirements for real-time adaptivity, incorruptible expert meritocracy, jurisdictional neutrality, and long-term economic sustainability."
  },
  {
   "id": "kaal:claim:5887242-007",
   "url": "https://wulfkaal.github.io/claims/5887242-007",
   "claim": "The WDAG-based governance system maps one-to-one onto the UDLC's constitutional requirements, so the architecture is not an add-on but a structural isomorph of the Codex's own mandates.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "The WDAG-based governance system maps one-to-one onto the UDLC"
  },
  {
   "id": "kaal:claim:5887242-008",
   "url": "https://wulfkaal.github.io/claims/5887242-008",
   "claim": "Separating internal on-chain governance from external legal relations maximizes decentralization while preserving real-world enforceability, thereby avoiding the fatal centralization that undermined earlier DAO concepts.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "dao"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "This duality maximizes decentralization while preserving enforceability in the real world, avoiding the fatal centralization that has undermined earlier DAO concepts."
  },
  {
   "id": "kaal:claim:5887242-009",
   "url": "https://wulfkaal.github.io/claims/5887242-009",
   "claim": "A reputation-based staking system sits at the core of the UDLC DAO's internal governance precisely because it eliminates the corruptive influence of fungible tokens and plutocratic one-token-one-vote mechanics.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "governance-design",
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "At the core of the UDLC DAO's internal governance lies a reputation-based staking system that eliminates the corruptive influence of fungible tokens and plutocratic one-token-one-vote mechanics."
  },
  {
   "id": "kaal:claim:5887242-010",
   "url": "https://wulfkaal.github.io/claims/5887242-010",
   "claim": "In the UDLC DAO, REP holders stake non-fungible reputation on predicted outcomes in Validation Pools; correct predictions mint fractional REP and integrate the new vertex with its weighted citation edges into the canonical Codex, while incorrect predictions trigger partial slashing and redistribution.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "REP token holders stake their non-fungible reputation on predicted outcomes in Validation Pools. Correct predictions mint fractional REP and integrate the new vertex and its weighted citation edges into the canonical Codex. Incorrect predictions result in partial slashing and redistribution."
  },
  {
   "id": "kaal:claim:5887242-011",
   "url": "https://wulfkaal.github.io/claims/5887242-011",
   "claim": "The WDAG itself constitutes an evolutionary precedent system: each rule is an immutable vertex, new rules must cite existing vertices to create weighted directed edges reflecting citation frequency, recency and expert consensus strength, and rarely cited rules decay organically.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "Each UDLC article or rule exists as an immutable vertex. New rules must cite existing vertices, creating weighted, directed edges that reflect citation frequency, recency, and expert consensus strength. Rarely cited rules experience organic weight decay"
  },
  {
   "id": "kaal:claim:5887242-012",
   "url": "https://wulfkaal.github.io/claims/5887242-012",
   "claim": "The UDLC DAO requires no legal wrapper, foundation, or centralized representative in any jurisdiction, because the Codex functions as a self-contained private legal order that parties opt into by explicit reference in their digital transactions.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "scope_conditions": [
    "parties expressly reference the UDLC in their transactions"
   ],
   "supporting_quote": "Externally, the UDLC DAO requires no legal wrapper, foundation, or centralized representative in any jurisdiction. The Codex itself functions as a self-contained private legal order that parties opt into through explicit reference in their digital transactions."
  },
  {
   "id": "kaal:claim:5887242-013",
   "url": "https://wulfkaal.github.io/claims/5887242-013",
   "claim": "By rejecting any requirement for a legal entity, board, or registered agent, the UDLC DAO escapes the centralization trap that undermined earlier DAO legal structures while remaining enforceable through standard private international law.",
   "type": "design",
   "topics": [
    "decentralization",
    "dao",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "By rejecting any requirement for a legal entity, board, or registered agent, the UDLC DAO preserves pure code-based governance while remaining enforceable through standard private international law mechanisms."
  },
  {
   "id": "kaal:claim:5887242-014",
   "url": "https://wulfkaal.github.io/claims/5887242-014",
   "claim": "Where national law demands a counterparty for enforcement, parties may voluntarily designate ad-hoc representatives or arbitral institutions, but such arrangements stay external to the DAO and do not affect its internal decision-making.",
   "type": "condition",
   "topics": [
    "compliance",
    "law-and-legal-systems",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "asserted",
   "scope_conditions": [
    "national law requires an identifiable counterparty for enforcement"
   ],
   "supporting_quote": "Where national law demands a counterparty for enforcement, parties may voluntarily designate ad-hoc representatives or arbitral institutions, but such arrangements remain external to the DAO itself and do not affect internal decision-making."
  },
  {
   "id": "kaal:claim:5887242-015",
   "url": "https://wulfkaal.github.io/claims/5887242-015",
   "claim": "Internal and external layers reinforce each other: a more robust and meritocratic internal reputation system increases the legitimacy the Codex commands before national courts, and broader jurisdictional acceptance in turn strengthens the indirect economic incentives for high-quality contributions.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "The more robust and meritocratic the internal reputation system becomes, the greater legitimacy the Codex commands before national courts. Similarly, the broader jurisdictional acceptance the Codex achieves, the stronger the indirect economic incentives for high-quality contributions."
  },
  {
   "id": "kaal:claim:5887242-016",
   "url": "https://wulfkaal.github.io/claims/5887242-016",
   "claim": "Edge weights in the Codex graph reflect citation frequency, recency, jurisdictional relevance and expert validation strength, and the acyclic property prevents circular reasoning while still permitting unlimited forward growth of the Codex.",
   "type": "design",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "Edge weights reflect citation frequency, recency, jurisdictional relevance, and expert validation strength. The acyclic property prevents circular reasoning while permitting unlimited forward growth."
  },
  {
   "id": "kaal:claim:5887242-017",
   "url": "https://wulfkaal.github.io/claims/5887242-017",
   "claim": "Staking influence is proportional to a participant's current reputation score, and because REP can be neither bought nor transferred and is earned only through prior successful validations, the system creates a meritocratic barrier to entry.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "participant's stake is proportional to their current reputation score. Unlike fungible token systems, reputation cannot be bought or transferred. REP is earned exclusively through prior successful validations, creating a meritocratic barrier to entry."
  },
  {
   "id": "kaal:claim:5887242-018",
   "url": "https://wulfkaal.github.io/claims/5887242-018",
   "claim": "In a mature UDLC DAO, resolution should be nearly unanimous among active participants, because the transparent quality of legal contributions combined with the high cost of error incentivizes alignment.",
   "type": "predictive",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "scope_conditions": [
    "a mature and well-functioning DAO with transparent contribution quality"
   ],
   "supporting_quote": "In a mature, well-functioning UDLC DAO, resolution is expected to be nearly unanimous among active participants, as the transparent quality of legal contributions and the high cost of error incentivize alignment."
  },
  {
   "id": "kaal:claim:5887242-019",
   "url": "https://wulfkaal.github.io/claims/5887242-019",
   "claim": "The tight coupling of minority stakes, under which all reputation staked on the losing outcome is slashed in its entirety by burning or redistribution, is the source of the mechanism's incorruptibility.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "The key innovation, and the source of the mechanism's incorruptibility, is the \"tight coupling\" of minority stakes. Here, all reputation staked on the losing outcome is slashed (burned or redistributed) in its entirety."
  },
  {
   "id": "kaal:claim:5887242-020",
   "url": "https://wulfkaal.github.io/claims/5887242-020",
   "claim": "Tight coupling creates an exponential penalty for contrarian positions, since a participant staking ten percent of reputation against consensus risks total loss of that stake while correct majority stakers receive newly minted fractional REP proportional to their contribution.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "This creates an exponential penalty for contrarian positions: a participant staking 10% of their reputation against consensus risks total loss of that stake, while correct majority stakers receive newly minted fractional REP proportional to their contribution to the winning side."
  },
  {
   "id": "kaal:claim:5887242-021",
   "url": "https://wulfkaal.github.io/claims/5887242-021",
   "claim": "For contentious proposals involving genuine legal or technological paradigm shifts, participants must weigh the long-term value of a contrarian view against immediate slashing risk, so only strongly evidenced minority positions survive.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "scope_conditions": [
    "genuinely contentious proposals amounting to paradigm shifts"
   ],
   "supporting_quote": "Contentious proposals—genuine legal or technological paradigm shifts—require participants to weigh the long-term value of their contrarian view against immediate slashing risk, ensuring only strongly evidenced minority positions survive."
  },
  {
   "id": "kaal:claim:5887242-022",
   "url": "https://wulfkaal.github.io/claims/5887242-022",
   "claim": "Paying treasury distributions in fungible tokens or stablecoins in direct proportion to reputation holdings creates a reputation-weighted salary that monetizes expertise without commodifying governance influence.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "treasury distributions (grants, licensing fees, ecosystem payments) are paid out as fungible tokens or stablecoins in direct proportion to reputation holdings, creating a \"reputation-weighted salary\" that monetizes expertise without commodifying influence."
  },
  {
   "id": "kaal:claim:5887242-023",
   "url": "https://wulfkaal.github.io/claims/5887242-023",
   "claim": "In the worked numerical example, a single incorrect high-conviction bet costs the dissenting expert seventy five percent of his governance influence, demonstrating the severity of tight coupling.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "evidenced",
   "scope_conditions": [
    "the stipulated five-expert numerical scenario in the article"
   ],
   "supporting_quote": "David loses 75% of his influence in a single incorrect high-conviction bet"
  },
  {
   "id": "kaal:claim:5887242-024",
   "url": "https://wulfkaal.github.io/claims/5887242-024",
   "claim": "Unlike fungible governance tokens that can be purchased, farmed, or delegated, REP tokens are strictly non-transferable and can only be earned, augmented, or reduced through on-chain participation in Validation Pools.",
   "type": "definitional",
   "topics": [
    "tokenomics",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "asserted",
   "supporting_quote": "Unlike fungible governance tokens that can be purchased, farmed, or delegated, REP tokens are strictly non-transferable and can only be earned, augmented, or reduced through on-chain participation in Validation Pools."
  },
  {
   "id": "kaal:claim:5887242-025",
   "url": "https://wulfkaal.github.io/claims/5887242-025",
   "claim": "The REP token system deliberately replaces vague, appointment-based categories of registered legal expert and stakeholder used in other proposals with a transparent, incentive-compatible, self-policing credentialing system.",
   "type": "design",
   "topics": [
    "securities-law"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "This design deliberately replaces the vague, appointment-based \"registered legal expert\" and \"stakeholder\" categories contemplated in other solutions with a fully transparent, incentive-compatible, and self-policing credentialing system."
  },
  {
   "id": "kaal:claim:5887242-026",
   "url": "https://wulfkaal.github.io/claims/5887242-026",
   "claim": "The on-chain reputation score becomes a universal, jurisdiction-neutral credential for digital-law expertise, analogous to a dynamically updated h-index for legal scholarship but cryptographically verifiable and immune to institutional capture.",
   "type": "definitional",
   "topics": [
    "regulatory-failure",
    "institutional-design",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "The on-chain reputation score thereby becomes the universal, jurisdiction-neutral credential for digital-law expertise—analogous to a dynamically updated h-index for global legal scholarship, but cryptographically verifiable and immune to institutional capture."
  },
  {
   "id": "kaal:claim:5887242-027",
   "url": "https://wulfkaal.github.io/claims/5887242-027",
   "claim": "The treasury creates a self-reinforcing economic flywheel: the more complete and authoritative the UDLC becomes, the larger the treasury, the higher the bounties, the stronger the incentives for top experts, and the faster the Codex evolves.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "This creates a self-reinforcing economic flywheel. The more complete and authoritative the UDLC becomes, the larger the treasury, the higher the bounties, the stronger the incentives for top experts to contribute, and the faster the Codex evolves."
  },
  {
   "id": "kaal:claim:5887242-028",
   "url": "https://wulfkaal.github.io/claims/5887242-028",
   "claim": "The combined Work and Availability Smart Contract system eliminates the single greatest barrier to private legal codification, namely funding and coordinating high-quality drafting, while aligning incentives toward rapid meritocratic expansion.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "The combined WSC/ASC system thus eliminates the single greatest barrier to private legal codification, funding and coordinating high-quality drafting, while aligning all incentives toward rapid, meritocratic expansion."
  },
  {
   "id": "kaal:claim:5887242-029",
   "url": "https://wulfkaal.github.io/claims/5887242-029",
   "claim": "The UDLC's annual AI-assisted review and legal garbage collection obligations are core constitutional safeguards, not housekeeping, because ossification has historically doomed every large-scale private codification effort.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "These are not mere housekeeping notes. They constitute core constitutional safeguards against the ossification that has historically doomed every large-scale private codification effort."
  },
  {
   "id": "kaal:claim:5887242-030",
   "url": "https://wulfkaal.github.io/claims/5887242-030",
   "claim": "Rarely cited vertices and edges decay exponentially according to a protocol-defined half-life, mirroring natural desuetude in mature common-law systems but operating continuously and transparently on-chain.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "Conversely, vertices and edges that are rarely or never cited experience gradual, exponential decay according to a protocol-defined half-life (e.g., 5 % quarterly decay for uncited vertices). This mirrors natural desuetude in mature common-law systems but operates continuously and"
  },
  {
   "id": "kaal:claim:5887242-031",
   "url": "https://wulfkaal.github.io/claims/5887242-031",
   "claim": "The automated maintenance system is the UDLC's primary defense against the entropy that has rendered every previous attempt at universal private law either rigid or irrelevant.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "Far from a mere cleanup routine, the automated maintenance system constitutes the UDLC's primary defense against the entropy that has rendered every previous attempt at universal private law either rigid or irrelevant."
  },
  {
   "id": "kaal:claim:5887242-032",
   "url": "https://wulfkaal.github.io/claims/5887242-032",
   "claim": "In the UDLC DAO the path from an identified need to a binding global rule collapses to days or weeks, compared with the years-to-centuries timescales of legislation, judicial precedent, and private codification.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "In the UDLC DAO, the path from identified need to binding global rule is collapsed to days or weeks:"
  },
  {
   "id": "kaal:claim:5887242-033",
   "url": "https://wulfkaal.github.io/claims/5887242-033",
   "claim": "Pilot deployments in 2024 and 2025 show major amendments completing from proposal to binding integration in under ten days, which the author presents as measured performance of tight coupling when participants have economic and reputational skin-in-the-game.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "evidenced",
   "scope_conditions": [
    "2024 to 2025 pilot deployments with expert participants holding stakes"
   ],
   "supporting_quote": "The longest real-world examples to date (2024–2025 pilot deployments) show major amendments—from proposal to binding integration—completing in under ten days. This is not theoretical. It is the measured performance of the tight-coupling mechanism"
  },
  {
   "id": "kaal:claim:5887242-034",
   "url": "https://wulfkaal.github.io/claims/5887242-034",
   "claim": "Every existing legal order allocates amendment authority by territory, wealth, appointment, or historical accident, and none allocates it exclusively by objectively demonstrated and continuously revalidated expertise.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "Every existing legal order allocates amendment authority either by territory (national legislatures), wealth (corporate boards), appointment (treaty organizations, bar associations), or historical accident (tenured judiciary)."
  },
  {
   "id": "kaal:claim:5887242-035",
   "url": "https://wulfkaal.github.io/claims/5887242-035",
   "claim": "Under the UDLC DAO an unknown practitioner who consistently drafts superior clauses can within months outrank established professors or former regulators, purely because the Validation Pool record proves predictive accuracy and value added.",
   "type": "predictive",
   "topics": [
    "reputation",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "scope_conditions": [
    "sustained accurate contributions recorded in Validation Pools"
   ],
   "supporting_quote": "For example, a previously unknown practitioner in Singapore who consistently drafts superior quantum-ownership clauses can, within months, outrank established professors or former regulators—purely because the Validation Pool record proves their predictive accuracy and value added."
  },
  {
   "id": "kaal:claim:5887242-036",
   "url": "https://wulfkaal.github.io/claims/5887242-036",
   "claim": "Existing precedent regimes fail on accessibility and weighting: national precedent is scattered across opaque reporters, paywalled databases and untranslated languages, while treaties and private codes such as INCOTERMS and UCP 600 are static texts with ambiguous citation hierarchies.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "institutional-design",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "National legal systems offer precedent that is scattered across opaque reporters, paywalled databases, or untranslated local languages. International treaties and private codes (e.g., INCOTERMS, UCP 600) are static texts with ambiguous citation hierarchies."
  },
  {
   "id": "kaal:claim:5887242-037",
   "url": "https://wulfkaal.github.io/claims/5887242-037",
   "claim": "Every large-scale legal order eventually accumulates dead-letter provisions, contradictory clauses and rules premised on obsolete technology; national codes require heroic political effort to prune, and private codes either never update or fork into competing versions.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "Every large-scale legal order eventually accumulates dead-letter provisions, contradictory clauses, and legacy rules premised on obsolete technology. National codes require heroic political efforts to prune. Private codes either never update or fork into competing versions."
  },
  {
   "id": "kaal:claim:5887242-038",
   "url": "https://wulfkaal.github.io/claims/5887242-038",
   "claim": "Existing rulemaking bodies are financially compromised at the source: legislatures depend on taxation or political patronage, and private standard-setting bodies depend on dues, sponsorships or foundation grants that create capture risks.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "Legislative bodies are funded by taxation or political patronage. Private standard-setting bodies rely on dues, sponsorships, or foundation grants that create capture risks."
  },
  {
   "id": "kaal:claim:5887242-039",
   "url": "https://wulfkaal.github.io/claims/5887242-039",
   "claim": "The UDLC DAO is the first legal institution that pays its own experts in proportion to ongoing contribution quality out of revenue generated by the value of the Codex itself.",
   "type": "design",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "argued",
   "supporting_quote": "The UDLC DAO is the first legal institution that pays its own experts, in proportion to their ongoing contribution quality, from revenue generated by the value of the Codex itself."
  },
  {
   "id": "kaal:claim:5887242-040",
   "url": "https://wulfkaal.github.io/claims/5887242-040",
   "claim": "The WDAG governance layer should be adopted immediately and exclusively as the operational engine of the Universal Digital Law Codex.",
   "type": "normative",
   "topics": [
    "governance-design",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The UDLC DAO Operationalizing a Continuously Evolving Universal Digital Law Codex Through Weighted (2025). SSRN: https://ssrn.com/abstract=5887242",
   "year": "2025",
   "source_sha256": "4e5c2e2b4304af6d22e0b0939b1fddeabcf091e19a1b00b7bfccf77cbd6280c5",
   "confidence": "asserted",
   "supporting_quote": "Deployment of this governance layer should therefore be adopted immediately and exclusively as the operational engine of the Universal Digital Law Codex."
  },
  {
   "id": "kaal:claim:5554218-001",
   "url": "https://wulfkaal.github.io/claims/5554218-001",
   "claim": "Smart contracts disrupt the foundational principles of contract formation in both common and civil law jurisdictions, specifically offer and acceptance, consideration, and enforceability, because their automated and immutable execution lacks the flexibility that law derives from human negotiation and judicial oversight.",
   "type": "mechanism",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "common law and civil law jurisdictions",
    "self-executing smart contracts deployed on blockchain"
   ],
   "supporting_quote": "smart contracts disrupt foundational principles of contract formation, such as offer and acceptance, consideration, and enforceability, due to their automated, immutable execution, which lacks the flexibility of law, which is based on human negotiation and judicial oversight."
  },
  {
   "id": "kaal:claim:5554218-002",
   "url": "https://wulfkaal.github.io/claims/5554218-002",
   "claim": "Existing regulatory initiatives, including the UNCITRAL Model Laws and the European Union's Markets in Crypto-Assets Regulation, provide only partial solutions and fail to address the full spectrum of legal issues raised by Web3 technologies.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "cross-border Web3 and digital asset transactions"
   ],
   "supporting_quote": "Existing initiatives, such as the UNCITRAL Model Laws and the European Union's Markets in Crypto-Assets Regulation (MiCAR), provide partial solutions but fail to address the full spectrum of issues,"
  },
  {
   "id": "kaal:claim:5554218-003",
   "url": "https://wulfkaal.github.io/claims/5554218-003",
   "claim": "The absence of standardized protocols for dispute resolution and for compliance with regulations such as export controls hinders the scalability of tokenized real world assets and other blockchain based applications.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "tokenized real world assets",
    "cross-border blockchain applications subject to export controls"
   ],
   "supporting_quote": "the absence of standardized protocols for dispute resolution and compliance with regulations, such as export controls, hinders the scalability of tokenized real-world assets (RWAs) and other blockchain-based applications."
  },
  {
   "id": "kaal:claim:5554218-004",
   "url": "https://wulfkaal.github.io/claims/5554218-004",
   "claim": "National courts and national law cannot be excluded from smart contract disputes, because almost all legal systems grant contracting parties an emergency or exorbitant jurisdiction whenever a party can show it would otherwise have no forum in which to bring its action.",
   "type": "condition",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "a party can prove it would otherwise be unable to bring its action",
    "jurisdiction typically anchored in nationality, registered office, or place of performance"
   ],
   "supporting_quote": "The jurisdiction of a national court and the application of national law to disputes arising from smart contracts cannot be excluded because almost all legal systems provide the parties to contracts with an emergency jurisdiction"
  },
  {
   "id": "kaal:claim:5554218-005",
   "url": "https://wulfkaal.github.io/claims/5554218-005",
   "claim": "Posting cryptocurrency to escrow like smart contracts is often uneconomic compared with traditional financial instruments, and this inefficiency undermines the practical utility of smart contracts as a vehicle for consideration, especially in high value or long term agreements.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "high value agreements",
    "long term agreements",
    "escrow style locking of crypto collateral"
   ],
   "supporting_quote": "posting cryptocurrency to escrow-like smart contracts is often uneconomic compared to traditional financial instruments.10 This inefficiency challenges the practical utility of smart contracts as a vehicle for consideration, particularly in high-value or long-term agreements."
  },
  {
   "id": "kaal:claim:5554218-006",
   "url": "https://wulfkaal.github.io/claims/5554218-006",
   "claim": "Physical goods cannot be fully governed by code, so contracts requiring tangible performance need external mechanisms to verify compliance, and smart contracts may therefore fail to satisfy the consideration requirement in such contexts.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "sales contracts requiring transfer of physical possession",
    "contracts involving tangible rather than purely digital assets"
   ],
   "supporting_quote": "Unlike digital assets, physical goods cannot be fully governed by code, requiring external mechanisms to verify compliance with contractual terms. This limitation suggests that smart contracts may struggle to fulfill the consideration requirement in contexts requiring tangible performance,"
  },
  {
   "id": "kaal:claim:5554218-007",
   "url": "https://wulfkaal.github.io/claims/5554218-007",
   "claim": "Because blockchain based contracts are immutable, they cannot be altered by judicial order, which creates enforceability problems whenever a dispute arises outside the scope of the code, such as defective performance or unforeseen circumstances.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "disputes falling outside the coded parameters",
    "post-deployment execution on an immutable ledger"
   ],
   "supporting_quote": "The immutability of blockchain-based contracts means they cannot be altered by judicial order, creating enforceability challenges when disputes arise outside the code's scope, such as defective performance or unforeseen circumstances."
  },
  {
   "id": "kaal:claim:5554218-008",
   "url": "https://wulfkaal.github.io/claims/5554218-008",
   "claim": "The adaptability of common law to smart contracts is strained when the coded mechanism itself violates a legal norm, as with smart contracts that enable automatic collateral repossession contrary to the Uniform Commercial Code's restrictions on strict foreclosure.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "smart contracts automating self help remedies",
    "United States secured transactions law under the UCC"
   ],
   "supporting_quote": "However, this adaptability is strained when smart contracts, such as those enabling automatic collateral repossession, violate legal norms like the UCC's restrictions on strict foreclosure."
  },
  {
   "id": "kaal:claim:5554218-009",
   "url": "https://wulfkaal.github.io/claims/5554218-009",
   "claim": "Unless the scope and permissible transactions of smart contracts are bounded by law, smart contracts risk being held unenforceable in jurisdictions that prioritize statutory compliance over technological innovation.",
   "type": "condition",
   "topics": [
    "smart-contracts",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions that prioritize statutory compliance and mandatory formalities"
   ],
   "supporting_quote": "Without such boundaries, smart contracts risk being deemed unenforceable in jurisdictions that prioritize statutory compliance over technological innovation."
  },
  {
   "id": "kaal:claim:5554218-010",
   "url": "https://wulfkaal.github.io/claims/5554218-010",
   "claim": "The most damaging effect of legal harmonization is that it eradicates outliers, meaning the unconventional approaches that actually drive technological and legal innovation.",
   "type": "failure",
   "topics": [
    "innovation",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "harmonization of conflict of laws and substantive rules for digital assets"
   ],
   "supporting_quote": "Harmonization's most pernicious effect lies in its eradication of outliers—those unconventional approaches that drive technological and legal innovation."
  },
  {
   "id": "kaal:claim:5554218-011",
   "url": "https://wulfkaal.github.io/claims/5554218-011",
   "claim": "Harmonized standards and innovative dispute resolution mechanisms are only partial answers, because they cannot keep pace with the continuously evolving technical requirements of digital assets and smart contracts.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "systemic-risk",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "rapid technological evolution of digital assets and smart contracts"
   ],
   "supporting_quote": "Harmonized standards and innovative dispute resolution mechanisms offer potential solutions, but run short of fulfilling the ever evolving technical requirements in the rapid evolution of digital assets and smart contracts."
  },
  {
   "id": "kaal:claim:5554218-012",
   "url": "https://wulfkaal.github.io/claims/5554218-012",
   "claim": "The authors contest the prevailing scholarly proposition that harmonized conflict of laws principles are necessary to govern digital assets across common and civil law jurisdictions, arguing that this proposition misconstrues the foundational ethos of blockchain technology.",
   "type": "failure",
   "topics": [
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "proposals advanced by Aleinieh, Zoboli, Atiyah, and Kasatkina"
   ],
   "supporting_quote": "The proposition that harmonized conflict of laws principles are necessary to govern digital assets across common law and civil law jurisdictions, as advocated by scholars like Aleinieh, Zoboli, Atiyah, and Kasatkina, misconstrues the foundational ethos of blockchain technology"
  },
  {
   "id": "kaal:claim:5554218-013",
   "url": "https://wulfkaal.github.io/claims/5554218-013",
   "claim": "A constructive balance to the inherent and unavoidable centralized character of national law cannot be achieved by imposing uniform legal standards on digital assets, because uniformity privileges the centralist features of law over the decentralized, permissionless nature of blockchain.",
   "type": "condition",
   "topics": [
    "decentralization",
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "cross-jurisdictional governance of digital assets",
    "permissionless blockchain systems"
   ],
   "supporting_quote": "We argue that a constructive balance to the inherent and unavoidable centralized characteristics of national law cannot be found in imposing uniform legal standards on digital assets as this favors the centralist features of law to the decentralized, permissionless nature of blockchain."
  },
  {
   "id": "kaal:claim:5554218-014",
   "url": "https://wulfkaal.github.io/claims/5554218-014",
   "claim": "Conflict of laws rules should instead be used as a vehicle for implementing innovative national legal systems that utilize decentralized governance models and respect the autonomy of blockchain.",
   "type": "design",
   "topics": [
    "decentralization",
    "governance-design",
    "law-and-legal-systems",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "national legal systems willing to experiment with decentralized governance"
   ],
   "supporting_quote": "conflict-of-laws rules should be used to implement innovative national legal systems that utilize decentralized governance models and respect the autonomy of blockchain."
  },
  {
   "id": "kaal:claim:5554218-015",
   "url": "https://wulfkaal.github.io/claims/5554218-015",
   "claim": "Harmonizing substantive law would suppress jurisdictional diversity by imposing a one size fits all model that ignores cultural, economic, and technological differences, thereby reducing the resilience of global digital asset ecosystems.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "harmonization of substantive rather than merely procedural rules"
   ],
   "supporting_quote": "Harmonization of the substantive law would suppress this diversity, imposing a one-size-fits-all model that fails to account for cultural, economic, and technological differences, thereby reducing the resilience of global digital asset ecosystems."
  },
  {
   "id": "kaal:claim:5554218-016",
   "url": "https://wulfkaal.github.io/claims/5554218-016",
   "claim": "Neither online dispute resolution nor decentralized dispute resolution complies with the minimum due process requirements defined and acknowledged in the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which is ratified and enforced in 172 states.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "asserted",
   "scope_conditions": [
    "disputes over tokenized real world assets",
    "awards intended for cross-border recognition and enforcement"
   ],
   "supporting_quote": "It is important to note that neither ODR nor DDR comply with the minimal requirements of due process as defined and acknowledged in the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards,47 which is ratified and enforced in 172 States."
  },
  {
   "id": "kaal:claim:5554218-017",
   "url": "https://wulfkaal.github.io/claims/5554218-017",
   "claim": "Decentralized dispute resolution relies on decentralized networks of jurors, which raises unresolved concerns about juror competence and bias.",
   "type": "failure",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "complex disputes over tokenized real world assets"
   ],
   "supporting_quote": "DDR's reliance on decentralized networks raises concerns about juror competence and bias, as noted by Salger."
  },
  {
   "id": "kaal:claim:5554218-018",
   "url": "https://wulfkaal.github.io/claims/5554218-018",
   "claim": "Escrow based enforcement is effective for automation only if it is supported by reliable oracles and robust governance, without which the mechanism is open to manipulation.",
   "type": "condition",
   "topics": [
    "smart-contracts",
    "governance-design",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "escrow arrangements embedded in smart contracts",
    "real world conditions that must be verified off chain"
   ],
   "supporting_quote": "Escrow mechanisms, while effective for automation, require reliable oracles and robust governance to prevent manipulation, as emphasized by Zhao and Chen."
  },
  {
   "id": "kaal:claim:5554218-019",
   "url": "https://wulfkaal.github.io/claims/5554218-019",
   "claim": "The code is law paradigm departs from existing legal systems in three linked ways: it shifts authority from sovereign institutions to technical protocols, replaces interpretive flexibility with deterministic enforcement, and substitutes technological neutrality for normative deliberation.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "blockchain and smart contract architectures presented as self-sufficient regulation"
   ],
   "supporting_quote": "fundamentally contrasts with existing legal systems by shifting authority from sovereign institutions to technical protocols, replacing interpretive flexibility with deterministic enforcement, and substituting normative deliberation with technological neutrality."
  },
  {
   "id": "kaal:claim:5554218-020",
   "url": "https://wulfkaal.github.io/claims/5554218-020",
   "claim": "Unlike legal systems that balance enforcement against fairness, the binary execution of code offers no mechanism for appeal or mitigation, which limits recourse for aggrieved parties and challenges basic notions of justice.",
   "type": "failure",
   "topics": [
    "smart-contracts",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "automated on chain enforcement without human adjudication"
   ],
   "supporting_quote": "Unlike legal systems, which balance enforcement with fairness, code's binary execution lacks mechanisms for appeal or mitigation, challenging notions of justice."
  },
  {
   "id": "kaal:claim:5554218-021",
   "url": "https://wulfkaal.github.io/claims/5554218-021",
   "claim": "Coded automation leads inevitably to corruption of the system and must be supplemented with decentralized governance of the code, which produces preferable outcomes and improved ethics.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "decentralization",
    "governance-design",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "asserted",
   "scope_conditions": [
    "automated code based systems operating without decentralized governance"
   ],
   "supporting_quote": "(arguing that coded automation leads inevitably to corruption of the system and needs to be supplemented with decentralized governance of code, thus leading to preferable outcomes and improved ethics)."
  },
  {
   "id": "kaal:claim:5554218-022",
   "url": "https://wulfkaal.github.io/claims/5554218-022",
   "claim": "Automating smart contracts under the code is law paradigm incentivizes unethical behavior by enabling anonymous, opportunistic action, which reduces repeat business and undermines the minimization of transaction costs.",
   "type": "mechanism",
   "topics": [
    "smart-contracts",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous or pseudonymous counterparties",
    "automated execution with no external legal recourse"
   ],
   "supporting_quote": "The automation of smart contracts under \"code is law\" incentivizes unethical behavior by enabling anonymous, opportunistic actions, reducing repeat business and undermining transaction cost minimization."
  },
  {
   "id": "kaal:claim:5554218-023",
   "url": "https://wulfkaal.github.io/claims/5554218-023",
   "claim": "The absence of accountability mechanisms in anonymous, automated smart contracts encourages a take the money and run mentality, which makes a historical record of conduct and incentives for ethical behavior necessary.",
   "type": "failure",
   "topics": [
    "reputation",
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous participants",
    "absence of any external legal or reputational sanction"
   ],
   "supporting_quote": "We argue that the absence of accountability mechanisms in anonymous, automated smart contracts encourages a \"take the money and run\" mentality, necessitating a historical record of conduct and incentives for ethical behavior."
  },
  {
   "id": "kaal:claim:5554218-024",
   "url": "https://wulfkaal.github.io/claims/5554218-024",
   "claim": "The deterministic execution of smart contracts rigidly enforces coded terms and thereby incentivizes participants to exploit loopholes for immediate gain, because no mechanism exists to adapt the rules contextually.",
   "type": "failure",
   "topics": [
    "regulatory-failure",
    "smart-contracts",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "smart contracts without on chain amendment or human review mechanisms"
   ],
   "supporting_quote": "Conversely, smart contracts' deterministic execution rigidly enforces coded terms, incentivizing participants to exploit loopholes for immediate gain, as there is no mechanism to adapt rules contextually."
  },
  {
   "id": "kaal:claim:5554218-025",
   "url": "https://wulfkaal.github.io/claims/5554218-025",
   "claim": "Legislation based on or influenced by the UNCITRAL Model Law on Electronic Commerce has been adopted in 87 states across 170 jurisdictions, which shows that a non-binding model law can achieve broad international consensus and significantly harmonize national laws.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "evidenced",
   "scope_conditions": [
    "electronic commerce and electronic contracting rules"
   ],
   "supporting_quote": "Legislation based on or influenced by the Model Law has been adopted in 87 states across 170 jurisdictions.79 This remarkable uptake underscores how a non-binding model law can achieve broad international consensus and significantly harmonize national laws."
  },
  {
   "id": "kaal:claim:5554218-026",
   "url": "https://wulfkaal.github.io/claims/5554218-026",
   "claim": "Binding conventions in digital law typically achieve only moderate ratification, yet their principles still permeate national legislation inspired by them, producing de facto harmonization without formal accession.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "evidenced",
   "scope_conditions": [
    "treaty instruments such as the 2005 Electronic Communications Convention"
   ],
   "supporting_quote": "This pattern illustrates a common dynamic in digital law: binding conventions often see only moderate adoption. Nevertheless, their principles may permeate national legislation inspired by the convention, yielding de facto harmonization."
  },
  {
   "id": "kaal:claim:5554218-027",
   "url": "https://wulfkaal.github.io/claims/5554218-027",
   "claim": "Persistent differences between jurisdictions that favor a permissive, innovation driven approach and those that prioritize strict control and consumer protection can produce regulatory arbitrage or uncertainty in cross-border situations.",
   "type": "failure",
   "topics": [
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "cross-border blockchain and crypto-asset activity",
    "absence of a binding global convention"
   ],
   "supporting_quote": "differences remain, particularly between jurisdictions that favor a more permissive or innovation-driven approach and those that prioritize strict control and consumer protection. These differences can lead to regulatory arbitrage or uncertainty in cross-border situations"
  },
  {
   "id": "kaal:claim:5554218-028",
   "url": "https://wulfkaal.github.io/claims/5554218-028",
   "claim": "Unilateral regulation of artificial intelligence by a single jurisdiction produces global ripple effects, but that approach reaches its limits because AI systems remain accessible worldwide over the internet.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "AI models distributed globally over the internet",
    "regulation by a single jurisdiction"
   ],
   "supporting_quote": "clear that unilateral regulation by one jurisdiction can have global ripple effects. However, this approach faces limitations when AI systems are accessible globally via the internet."
  },
  {
   "id": "kaal:claim:5554218-029",
   "url": "https://wulfkaal.github.io/claims/5554218-029",
   "claim": "Neither conflict of laws nor legal harmonization can supply a sustainable, systemic solution, because both approaches result in the fossilization of legal relationships.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "innovative, decentralized, and constantly changing technical conditions"
   ],
   "supporting_quote": "We have also demonstrated that neither conflict of laws nor legal harmonization can provide a sustainable, systemic solution. Ultimately, these approaches result in the fossilization of legal relationships,"
  },
  {
   "id": "kaal:claim:5554218-030",
   "url": "https://wulfkaal.github.io/claims/5554218-030",
   "claim": "The Universal Digital Law Codex is defined as a codex that combines national law, code, and business requirements, accommodates different legal systems, and contains an inherent dispute resolution mechanism.",
   "type": "definitional",
   "topics": [
    "law-and-legal-systems",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "asserted",
   "scope_conditions": [
    "users of digital systems adopting the codex as the basis of their contractual obligations"
   ],
   "supporting_quote": "The codex combines national law, code and business requirements, takes into account different legal systems, and offers an inherent dispute resolution mechanism."
  },
  {
   "id": "kaal:claim:5554218-031",
   "url": "https://wulfkaal.github.io/claims/5554218-031",
   "claim": "The Universal Digital Law Codex should require smart contracts to carry clear, human readable terms alongside their coded protocols, so that the parties' assent to automated terms satisfies the common law standard of mutual understanding.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "smart contracts intended to be enforceable as common law contracts"
   ],
   "supporting_quote": "For example, UDLC mandates that smart contracts incorporate clear, human-readable terms alongside coded protocols, ensuring that parties' assent to automated terms meets the common law standard of mutual understanding."
  },
  {
   "id": "kaal:claim:5554218-032",
   "url": "https://wulfkaal.github.io/claims/5554218-032",
   "claim": "The Universal Digital Law Codex addresses the economic inefficiency of consideration by embedding dynamic compliance mechanisms that let smart contracts adapt to market conditions such as cryptocurrency price fluctuation or delays in physical delivery.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "compliance",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "transactions exposed to volatile crypto valuations or delayed physical performance"
   ],
   "supporting_quote": "UDLC tackles economic inefficiencies in consideration by embedding dynamic compliance mechanisms within smart contracts. These mechanisms allow contracts to adapt to market conditions, such as fluctuations in cryptocurrency value or delays in physical delivery,"
  },
  {
   "id": "kaal:claim:5554218-033",
   "url": "https://wulfkaal.github.io/claims/5554218-033",
   "claim": "The Universal Digital Law Codex should route disputes to decentralized arbitration platforms such as arbitration DAOs, providing a forum for human oversight precisely when immutable code fails to resolve a conflict, for example defective performance or unforeseen circumstances.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "dao",
    "decentralization",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "conflicts that fall outside the scope of the coded terms"
   ],
   "supporting_quote": "arbitration platforms, such as the Decentralized Autonomous Organizations for Arbitration of digital disputes, UDLC provides a forum for human oversight when immutable code fails to resolve conflicts, such as defective performance or unforeseen circumstances."
  },
  {
   "id": "kaal:claim:5554218-034",
   "url": "https://wulfkaal.github.io/claims/5554218-034",
   "claim": "To satisfy statutory formalities, the Universal Digital Law Codex mandates the use of distributed ledger records as substitutes for written documents, so that smart contracts can meet formal attestation standards required for transactions such as real estate transfers.",
   "type": "design",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "jurisdictions requiring written or notarized form",
    "transactions such as real estate transfers"
   ],
   "supporting_quote": "For example, UDLC mandates the use of DLT-based records as substitutes for written documents, ensuring that smart contracts meet the formal attestation standards required for transactions like real estate transfers."
  },
  {
   "id": "kaal:claim:5554218-035",
   "url": "https://wulfkaal.github.io/claims/5554218-035",
   "claim": "Embedding choice-of-law protocols directly within smart contracts gives clarity on the governing law and reduces the risk of conflicting interpretations across jurisdictions.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "cross-border smart contract transactions lacking explicit choice-of-law clauses"
   ],
   "supporting_quote": "By embedding choice-of-law protocols within smart contracts, UDLC provides clarity on the governing law, reducing the risk of conflicting interpretations."
  },
  {
   "id": "kaal:claim:5554218-036",
   "url": "https://wulfkaal.github.io/claims/5554218-036",
   "claim": "Allowing jurisdictions to tailor smart contract requirements to local statutory frameworks while adhering to a baseline of ethical principles preserves the innovative potential of blockchain by avoiding the homogenizing effects of harmonized legal standards.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "governance-design",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "hybrid governance combining a universal ethical baseline with localized adaptation"
   ],
   "supporting_quote": "This flexibility preserves the innovative potential of blockchain by avoiding the homogenizing effects of harmonized legal standards, which could stifle jurisdictional experimentation."
  },
  {
   "id": "kaal:claim:5554218-037",
   "url": "https://wulfkaal.github.io/claims/5554218-037",
   "claim": "A reputation system in which participants who act in good faith earn reputation credits and those acting opportunistically face penalties mitigates the take the money and run mentality that anonymity otherwise fosters.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "anonymous or pseudonymous participants in decentralized systems"
   ],
   "supporting_quote": "For example, participants who act in good faith earn reputation credits, while those engaging in opportunistic actions face penalties, mitigating the \"take the money and run\" mentality fostered by anonymity."
  },
  {
   "id": "kaal:claim:5554218-038",
   "url": "https://wulfkaal.github.io/claims/5554218-038",
   "claim": "Smart contracts should incorporate clauses that trigger human review in cases of ambiguity, which secures equitable outcomes analogous to judicial discretion and counters the rigidity of deterministic execution.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "ambiguous coded terms",
    "circumstances not anticipated in the code"
   ],
   "supporting_quote": "For instance, smart contracts can incorporate clauses that trigger human review in cases of ambiguity, ensuring equitable outcomes akin to judicial discretion."
  },
  {
   "id": "kaal:claim:5554218-039",
   "url": "https://wulfkaal.github.io/claims/5554218-039",
   "claim": "By defining legal standards for smart contracts, the Universal Digital Law Codex makes arbitration DAO awards enforceable by courts, and its precedent system records outcomes in a transparent ledger to promote consistency and predictability in later disputes.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "dao",
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "argued",
   "scope_conditions": [
    "disputes adjudicated through the Arbitration DAO"
   ],
   "supporting_quote": "UDLC ensures that disputes are resolved within a legally sound framework, enabling arbitration awards to be enforced by courts. The precedent system records outcomes in a transparent ledger, promoting consistency and predictability in future resolutions."
  },
  {
   "id": "kaal:claim:5554218-040",
   "url": "https://wulfkaal.github.io/claims/5554218-040",
   "claim": "The Universal Digital Law Codex is a continuously evolving project whose first draft was scheduled for publication in autumn 2025, after which its institutional structures would be established as a DAO.",
   "type": "predictive",
   "topics": [
    "law-and-legal-systems",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218",
   "year": "2025",
   "source_sha256": "55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44",
   "confidence": "asserted",
   "scope_conditions": [
    "as of the August 2025 version of the paper"
   ],
   "supporting_quote": "UDLC is a project that is constantly evolving. The first draft will be published in the autumn 2025, after which the corresponding institutional structures will be set up based on a DAO."
  },
  {
   "id": "kaal:claim:5886342-001",
   "url": "https://wulfkaal.github.io/claims/5886342-001",
   "claim": "The Universal Digital Law Codex is proposed as a neutral legal framework for digital interactions, assets, contracts, dispute resolution and governance that is built to adapt to technological change rather than be rewritten after each technological shift.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "proposed as a private framework for digital systems"
   ],
   "supporting_quote": "The Universal Digital Law Codex (UDLC) is a pioneering legal initiative that aims to create a neutral legal frame- work for digital interactions, assets, contracts, dispute resolution and governance, which can adapt to technological changes."
  },
  {
   "id": "kaal:claim:5886342-002",
   "url": "https://wulfkaal.github.io/claims/5886342-002",
   "claim": "The Codex is designed to close the gap between the fast moving digital ecosystem and the traditional legal system, and its purpose is to secure enforceability, fairness and procedural integrity even where an interaction is fully digital and transnational.",
   "type": "design",
   "topics": [
    "governance-design",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "fully digital, transnational settings"
   ],
   "supporting_quote": "The UDLC aims to bridge the gap between the rapidly evolving digital ecosystem and the traditional legal system. This framework ensures enforceability, fairness and procedural integrity, even in fully digital, trans- national settings — a foundational component of trusted digital governance."
  },
  {
   "id": "kaal:claim:5886342-003",
   "url": "https://wulfkaal.github.io/claims/5886342-003",
   "claim": "The Codex is positioned as a private universal standard rather than state legislation: it supplies legal certainty and enforceability for digital systems ranging from blockchain and AI to quantum computing, so that platforms, businesses and users can operate across borders and technologies.",
   "type": "design",
   "topics": [
    "risk-and-incentives",
    "blockchain",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "private standard adopted by digital systems, not enacted by a legislature"
   ],
   "supporting_quote": "The UDLC is intended to serve as a private universal standard for legal certainty and enforceability in digital systems — from blockchain and AI to quantum computing — providing digital platforms, businesses and users with the tools they need to operate securely and legally across borders and technologies."
  },
  {
   "id": "kaal:claim:5886342-004",
   "url": "https://wulfkaal.github.io/claims/5886342-004",
   "claim": "The Codex must be technology neutral and globally consistent, meaning its rules are drafted to function across legal jurisdictions and across technological platforms rather than being tied to any one of them.",
   "type": "design",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "▪ Technology-neutral and globally consistent, designed to function across legal jurisdictions and technological platforms;"
  },
  {
   "id": "kaal:claim:5886342-005",
   "url": "https://wulfkaal.github.io/claims/5886342-005",
   "claim": "The Codex operates as a complementary legal layer: it adds a consistent legal dimension to existing digital systems through system referenced adoption, so a platform brings the rules into force by referring to them rather than by any state act.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "argued",
   "scope_conditions": [
    "the digital system or its terms and conditions refer to the Codex"
   ],
   "supporting_quote": "▪ Complementary Legal Layer, that enhances existing digital systems by adding a consistent legal dimension through system-referenced adoption."
  },
  {
   "id": "kaal:claim:5886342-006",
   "url": "https://wulfkaal.github.io/claims/5886342-006",
   "claim": "The Codex is grounded in legal certainty and predictability, on the reasoning that parties can only enforce rights and anticipate liabilities within a digital system if the applicable rules are knowable in advance.",
   "type": "design",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "argued",
   "scope_conditions": [
    "parties acting within the scope of the Codex"
   ],
   "supporting_quote": "(1) UDLC is grounded in the principles of legal cer- tainty and predictability, ensuring that Parties within"
  },
  {
   "id": "kaal:claim:5886342-007",
   "url": "https://wulfkaal.github.io/claims/5886342-007",
   "claim": "The Codex is deliberately drafted as a rule of law in the sense of Article 3 of the Hague Principles on Choice of Law in International Commercial Contracts (2015), which is the technical device that lets parties choose a non state body of rules as the law governing their contract.",
   "type": "definitional",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "international commercial contracts where the forum accepts non state rules of law"
   ],
   "supporting_quote": "(1) This Codex is drafted as a Rule of Law in the sense of Art. 3 Hague Principles on Choice of Law in International Commercial Contracts (2015)."
  },
  {
   "id": "kaal:claim:5886342-008",
   "url": "https://wulfkaal.github.io/claims/5886342-008",
   "claim": "Interpretation of the Codex must give priority to the intent of the parties and to the specific context of the legal status or act in question, rather than to a literal or purely systemic reading.",
   "type": "design",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "(2) The interpretation of UDLC provisions shall pri- oritize the intent of the Parties, the specific context"
  },
  {
   "id": "kaal:claim:5886342-009",
   "url": "https://wulfkaal.github.io/claims/5886342-009",
   "claim": "Where the Codex or the applicable law is applied largely automatically, the human understanding of the rule prevails over the outcome produced by that automated application, so automated execution never becomes the final authority on meaning.",
   "type": "design",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "argued",
   "scope_conditions": [
    "largely automated application of the Codex or applicable law"
   ],
   "supporting_quote": "In interpreting UDLC and Applicable Laws, the hu- man understanding shall prevail over the outcome"
  },
  {
   "id": "kaal:claim:5886342-010",
   "url": "https://wulfkaal.github.io/claims/5886342-010",
   "claim": "When an encoded legal status or act is disputed, the code is read against the party who selected the programme or determined the manner of coding, because the other party had no influence over it; the Codex names this in dubio contra programmatorem.",
   "type": "design",
   "topics": [
    "defi",
    "open-source-and-code",
    "risk-and-incentives",
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "argued",
   "scope_conditions": [
    "disputes over the interpretation of encoded legal statuses and acts"
   ],
   "supporting_quote": "interpreted in favour of the Party who has had no in-"
  },
  {
   "id": "kaal:claim:5886342-011",
   "url": "https://wulfkaal.github.io/claims/5886342-011",
   "claim": "Identity under the Codex is not limited to persons: it is the unique existence of a subject, of a digital or physical object, of data or of a programme, expressly including AI systems, so machine agents can hold an identity within the framework.",
   "type": "definitional",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "ital and physical object, data, or programme includ- ing but not limited to AI-Systems."
  },
  {
   "id": "kaal:claim:5886342-012",
   "url": "https://wulfkaal.github.io/claims/5886342-012",
   "claim": "Legal Identity is the narrower category: it is an Identity to which rights and obligations are attributed on the basis of the applicable law, in particular natural and legal persons, so having an identity in a digital system does not by itself confer legal personality.",
   "type": "definitional",
   "topics": [
    "law-and-legal-systems",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "attribution depends on the applicable national law"
   ],
   "supporting_quote": "A Legal Identity is an Identity to which rights and obligations are attributed based on the Applicable Law, in particular Natural and Legal persons."
  },
  {
   "id": "kaal:claim:5886342-013",
   "url": "https://wulfkaal.github.io/claims/5886342-013",
   "claim": "A signature under the Codex is defined functionally as the technical proof of the link between an identifier and a piece of digital information, not as a handwritten or format specific formality.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "(1) The Signature is the technical proof between the Identifier and any Digital Information."
  },
  {
   "id": "kaal:claim:5886342-014",
   "url": "https://wulfkaal.github.io/claims/5886342-014",
   "claim": "Representation is built into the framework: one Legal Identity can authorize another as its agent to create or change legal statuses and acts on its behalf by using that identifier, which is how delegated and automated action is attributed to a principal.",
   "type": "design",
   "topics": [
    "citation-and-knowledge",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "A Legal Identity can authorize as Principal another Legal Identity as Agent to act on behalf of the Prin-"
  },
  {
   "id": "kaal:claim:5886342-015",
   "url": "https://wulfkaal.github.io/claims/5886342-015",
   "claim": "The Codex treats a Digital Object as rival digital information that carries an identity, which is the move that makes property style ownership rules coherent for digital assets, since rivalry means control by one identity excludes or impairs control by another.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "argued",
   "scope_conditions": [
    "digital information that is rival, that is, exclusive in its control"
   ],
   "supporting_quote": "(1) A Digital Object is a rival Digital Information"
  },
  {
   "id": "kaal:claim:5886342-016",
   "url": "https://wulfkaal.github.io/claims/5886342-016",
   "claim": "Digital ownership under the Codex is control dependent: it requires direct or indirect control over the digital object, so ownership without any technical control is not recognised.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "(3) Digital Ownership requires direct or indirect Control over the Digital Object."
  },
  {
   "id": "kaal:claim:5886342-017",
   "url": "https://wulfkaal.github.io/claims/5886342-017",
   "claim": "Digital control is defined as the actual technical possibility of an identity to exercise full power over a digital object, so the legal category tracks technical capability rather than formal title.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "(1) Digital Control is the actual technical possibility"
  },
  {
   "id": "kaal:claim:5886342-018",
   "url": "https://wulfkaal.github.io/claims/5886342-018",
   "claim": "First ownership of a digital object arises from a factual event rather than from registration or grant: it is established once the first legal identity acquires digital control of that object.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "The first digital ownership on a Digital Object is es- tablished once the first Legal Identity acquires Digi-"
  },
  {
   "id": "kaal:claim:5886342-019",
   "url": "https://wulfkaal.github.io/claims/5886342-019",
   "claim": "A good faith acquirer of a digital object from an unauthorized transferor obtains protected digital ownership, but is obliged for five years after the transfer to retransfer that ownership to the initial owner against compensation of the purchase price or value.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "transferor was not authorized or was not the digital owner",
    "transferee received the object in good faith",
    "obligation lasts five years after the transfer"
   ],
   "supporting_quote": "transfer, be obliged to retransfer Digital Ownership"
  },
  {
   "id": "kaal:claim:5886342-020",
   "url": "https://wulfkaal.github.io/claims/5886342-020",
   "claim": "A digital pledge is constructed as a bankruptcy remote preferential right over a digital object, giving the pledgee priority that survives the pledgor's insolvency.",
   "type": "definitional",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "(1) A Digital Pledge is a bankruptcy-remote prefer- ential right on a Digital Object."
  },
  {
   "id": "kaal:claim:5886342-021",
   "url": "https://wulfkaal.github.io/claims/5886342-021",
   "claim": "Pledging a digital object requires the pledgor to hand over digital control, either to the pledgee, to a third party, or to a digital program capable of exercising that control, so the security interest is perfected by control rather than by filing.",
   "type": "condition",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "(2) In order to pledge a Digital Object, the pledgor shall transfer the Digital Control to either the pledgee, a third party, or a digital program capable of exercising Digital Control."
  },
  {
   "id": "kaal:claim:5886342-022",
   "url": "https://wulfkaal.github.io/claims/5886342-022",
   "claim": "Where the applicable national property law conflicts directly with the digital ownership provisions of the Codex, the parties undertake by contract not to initiate proceedings to enforce the conflicting national rights or to bring claims based on them.",
   "type": "design",
   "topics": [
    "risk-and-incentives",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "argued",
   "scope_conditions": [
    "direct conflict between national property law and the Book on digital ownership"
   ],
   "supporting_quote": "and spirit of this Book, the Parties hereby undertake not to initiate any legal steps or proceedings to en- force such rights or to make any claims based on these."
  },
  {
   "id": "kaal:claim:5886342-023",
   "url": "https://wulfkaal.github.io/claims/5886342-023",
   "claim": "Rights embedded in a Digital Transfer of Rights Object are exercisable only by the digital controller of that object, which is what lets the transfer of control function as the transfer of the underlying entitlement.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "transferable contractual and negotiable rights stipulated in a DTRO"
   ],
   "supporting_quote": "be exercised by the Digital Controller of the DTRO."
  },
  {
   "id": "kaal:claim:5886342-024",
   "url": "https://wulfkaal.github.io/claims/5886342-024",
   "claim": "Where a Digital Transfer of Rights Object represents an underlying physical object, transferring the DTRO substitutes for the transfer of physical control, so possession of the thing no longer has to change hands for ownership to pass.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "the DTRO terms link the property rights in the underlying physical object to the DTRO",
    "the identity of the DTRO is reliably linked to the identity of the physical object"
   ],
   "supporting_quote": "shall substitute the transfer of the physical control"
  },
  {
   "id": "kaal:claim:5886342-025",
   "url": "https://wulfkaal.github.io/claims/5886342-025",
   "claim": "Choosing the Codex carries a default incorporation of the UNIDROIT Principles of International Commercial Contracts 2016 as the basis of the parties' contractual relationship, unless the Codex provides different rules or the parties expressly exclude them.",
   "type": "design",
   "topics": [
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "unless the Codex provides a different rule",
    "unless the parties expressly exclude the Principles"
   ],
   "supporting_quote": "agree to use the UNIDROIT Principles of Interna-"
  },
  {
   "id": "kaal:claim:5886342-026",
   "url": "https://wulfkaal.github.io/claims/5886342-026",
   "claim": "The Codex separates the Will, defined as the actual intent of a legal identity, from the Stated Will, the expression made to others with the intention of being legally bound; this separation is what allows encoded expressions to be tested against actual intent.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "(1) A Will is the actual intent of a Legal Identity."
  },
  {
   "id": "kaal:claim:5886342-027",
   "url": "https://wulfkaal.github.io/claims/5886342-027",
   "claim": "Contracts under the Codex are form free by default: formation does not require any particular form unless applicable mandatory law imposes one that cannot be substituted by the principle of functional equivalence.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "applicable mandatory law does not impose a form that functional equivalence cannot satisfy"
   ],
   "supporting_quote": "formation of a contract does not require any particu-"
  },
  {
   "id": "kaal:claim:5886342-028",
   "url": "https://wulfkaal.github.io/claims/5886342-028",
   "claim": "Terms expressed in code, such as those inside a digital contract, are legally valid and enforceable even when they are not provided in natural language.",
   "type": "design",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "subject to the Codex rules of interpretation"
   ],
   "supporting_quote": "ital Contract, are legally valid and enforceable even"
  },
  {
   "id": "kaal:claim:5886342-029",
   "url": "https://wulfkaal.github.io/claims/5886342-029",
   "claim": "Limitations or exclusions of guarantees and warranties that are judged unfair or unreasonable may be rendered void by the Codex authorities, so private drafting freedom over warranties is capped by a fairness review.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "(2) Limitations or exclusions that are deemed unfair or unreasonable may be rendered void by UDLC au-"
  },
  {
   "id": "kaal:claim:5886342-030",
   "url": "https://wulfkaal.github.io/claims/5886342-030",
   "claim": "A DAO is defined for the Codex as a collective of identities pursuing a common goal through a decentralized and transparent decision making process, a definition that turns on process rather than on legal form.",
   "type": "definitional",
   "topics": [
    "dao",
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "(DAO) is a collective of Identities that pursues a common goal through a decentralized and transpar-"
  },
  {
   "id": "kaal:claim:5886342-031",
   "url": "https://wulfkaal.github.io/claims/5886342-031",
   "claim": "A DAO may or may not be a Legal Identity, so the Codex rules for DAOs are written to work whether or not the organization has legal personality under the applicable law.",
   "type": "definitional",
   "topics": [
    "dao",
    "law-and-legal-systems",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "(2) A DAO may or may not be a Legal Identity ac-"
  },
  {
   "id": "kaal:claim:5886342-032",
   "url": "https://wulfkaal.github.io/claims/5886342-032",
   "claim": "A DAO is formed on the basis of a DAO Agreement setting out its terms and rules, and that agreement may consist of digital contracts, of written documents, or of a combination of the two.",
   "type": "condition",
   "topics": [
    "dao",
    "smart-contracts",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "(1) A DAO shall be formed on the basis of a DAO Agreement, which sets out the relevant terms and rules of the DAO in question. This agreement may consist of Digital Contracts, written documents, or a combination of the two."
  },
  {
   "id": "kaal:claim:5886342-033",
   "url": "https://wulfkaal.github.io/claims/5886342-033",
   "claim": "Membership in a DAO follows from consent, explicit or implicit, given on the basis of a sufficiently accessible DAO Agreement, so accessibility of the agreement is a precondition for binding members who joined by interacting with the code.",
   "type": "condition",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "argued",
   "scope_conditions": [
    "the DAO Agreement is sufficiently accessible",
    "consent may be given by interacting with the DAO digital contracts or governance systems"
   ],
   "supporting_quote": "(1) Any Legal Identity who have consented to join the DAO based on a sufficiently accessible DAO"
  },
  {
   "id": "kaal:claim:5886342-034",
   "url": "https://wulfkaal.github.io/claims/5886342-034",
   "claim": "DAO members owe each other duties of good faith, transparency and loyalty within the scope of the DAO Agreement, which imports fiduciary style obligations into a relationship that would otherwise be purely contractual.",
   "type": "design",
   "topics": [
    "dao",
    "corporate-governance",
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "duties run within the scope of the DAO Agreement"
   ],
   "supporting_quote": "(3) DAO Members owe each other duties of good faith, transparency, and loyalty within the scope of"
  },
  {
   "id": "kaal:claim:5886342-035",
   "url": "https://wulfkaal.github.io/claims/5886342-035",
   "claim": "Internal liability among DAO members is capped: members are liable towards each other only up to the amount of their agreed contributions, unless the DAO Agreement stipulates otherwise.",
   "type": "design",
   "topics": [
    "dao",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "unless otherwise stipulated in the DAO Agreement"
   ],
   "supporting_quote": "(1) DAO Members are liable towards each other only up to the amount of their agreed contributions, unless"
  },
  {
   "id": "kaal:claim:5886342-036",
   "url": "https://wulfkaal.github.io/claims/5886342-036",
   "claim": "Where an external claim is brought against a DAO member for actions taken in good faith on behalf of the DAO and within its mandate, the DAO indemnifies that member out of the treasury, with no indemnification beyond the treasury and none where the member acted with gross negligence, wilful misconduct or bad faith.",
   "type": "design",
   "topics": [
    "dao",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "action taken in good faith and within the DAO mandate",
    "indemnification is limited to the DAO treasury",
    "no indemnity for gross negligence, wilful misconduct or bad faith"
   ],
   "supporting_quote": "(3) If an external claim is brought against a DAO Member for actions undertaken in good faith on be-"
  },
  {
   "id": "kaal:claim:5886342-037",
   "url": "https://wulfkaal.github.io/claims/5886342-037",
   "claim": "Every DAO member must have a real possibility to exit the DAO under the rules of the DAO Agreement without incurring unreasonable costs, which makes exit a mandatory feature of a compliant DAO rather than a matter of design choice.",
   "type": "design",
   "topics": [
    "dao",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "exit follows the rules of the DAO Agreement"
   ],
   "supporting_quote": "(1) A DAO Member must have the possibility to exit"
  },
  {
   "id": "kaal:claim:5886342-038",
   "url": "https://wulfkaal.github.io/claims/5886342-038",
   "claim": "Amendments to any one Book of the Codex must be consistent with the overall objectives and principles of the Codex, so internal coherence constrains the amendment power itself.",
   "type": "condition",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "Any amendments made to one Book of UDLC Co- dex must be consistent with the overall objectives"
  },
  {
   "id": "kaal:claim:5886342-039",
   "url": "https://wulfkaal.github.io/claims/5886342-039",
   "claim": "Amendment authority is centralized: the UDLC Governing Council holds the exclusive authority to amend any Book or provision of the Codex, while proposals may originate from the association bodies, registered legal experts, stakeholders or other authorities.",
   "type": "design",
   "topics": [
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "(1) UDLC Governing Council according to holds the exclusive authority to amend any Book or provision"
  },
  {
   "id": "kaal:claim:5886342-040",
   "url": "https://wulfkaal.github.io/claims/5886342-040",
   "claim": "In exceptional situations requiring urgent action the Governing Council may enact emergency amendments, which must be narrowly focused, well justified and reviewed within a defined timeframe.",
   "type": "design",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "exceptional situations requiring urgent action",
    "emergency amendments must be narrowly focused and reviewed within a defined timeframe"
   ],
   "supporting_quote": "(4) In exceptional situations requiring urgent action, the Governing Council may enact emergency"
  },
  {
   "id": "kaal:claim:5886342-041",
   "url": "https://wulfkaal.github.io/claims/5886342-041",
   "claim": "The Codex builds in an automated maintenance loop: each year an AI language model reviews the Codex and recommends outdated or unused rules for removal, subject to a vote of the Governing Council.",
   "type": "design",
   "topics": [
    "governance-design",
    "ai-and-agents",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "annual review",
    "removal requires a vote of the Governing Council"
   ],
   "supporting_quote": "(1) Each year, an AI language model reviews the Co-"
  },
  {
   "id": "kaal:claim:5886342-042",
   "url": "https://wulfkaal.github.io/claims/5886342-042",
   "claim": "Retention of rules is governed by a dynamic system of precedent in which a legal principle counts as live only when it is cited in future cases, implemented through a weighted graph based logic structure.",
   "type": "mechanism",
   "topics": [
    "law-and-legal-systems",
    "citation-and-knowledge",
    "governance-design",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "supporting_quote": "(2) Rule retention is guided by a dynamic system of precedent that applies legal principles only when"
  },
  {
   "id": "kaal:claim:5886342-043",
   "url": "https://wulfkaal.github.io/claims/5886342-043",
   "claim": "Every provision of the Codex is subject to a comprehensive review every five years assessing its relevance, effectiveness and alignment with technological and legal developments such as AI, blockchain and quantum computing.",
   "type": "design",
   "topics": [
    "law-and-legal-systems",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Furrer Andreas, Wulf A. Kaal, Stephan D. Meyer, Universal Digital Law Codex (UDLC) (2025). SSRN: https://ssrn.com/abstract=5886342",
   "year": "2025",
   "source_sha256": "dc456a1ce2ea4a356dbcb35dc900ec36be94b8c9b6da4a2c8c268d6301f66359",
   "confidence": "asserted",
   "scope_conditions": [
    "review cycle of five years per provision"
   ],
   "supporting_quote": "(2) Each provision is subject to a comprehensive re-"
  },
  {
   "id": "kaal:claim:6244278-001",
   "url": "https://wulfkaal.github.io/claims/6244278-001",
   "claim": "Contemporary AI's incapacity for authentic judgment under irreducible uncertainty is an institutional deficit rather than a computational one: an agent that bears no consequence for its errors cannot develop genuine discernment, no matter how capable it becomes.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to judgment under irreducible uncertainty, not to defined, verifiable tasks"
   ],
   "supporting_quote": "This Article argues the limitation is institutional, not computational: agents bearing no consequence for error cannot develop genuine discernment."
  },
  {
   "id": "kaal:claim:6244278-002",
   "url": "https://wulfkaal.github.io/claims/6244278-002",
   "claim": "Correctly designed institutional incentive structures produce emergent properties that are functionally equivalent to ethical agency, without requiring consciousness or programmed morality.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "risk-and-incentives",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "incentive structures must be correctly designed",
    "properties are functional equivalents, not claims about consciousness"
   ],
   "supporting_quote": "Correctly designed institutional incentive structures produce emergent properties functionally equivalent to ethical agency."
  },
  {
   "id": "kaal:claim:6244278-003",
   "url": "https://wulfkaal.github.io/claims/6244278-003",
   "claim": "Because institutional alignment emerges from architecture rather than from exogenous constraint, it scales with capability rather than against it: more capable agents accumulate deeper stakes, which strengthens rather than strains alignment.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "alignment must be generated endogenously by institutional architecture",
    "reputation must be accumulable by capability"
   ],
   "supporting_quote": "Because this alignment emerges from institutional architecture rather than exogenous constraint, it scales with capability rather than against it. More capable agents accumulate deeper stakes, strengthening rather than straining alignment."
  },
  {
   "id": "kaal:claim:6244278-004",
   "url": "https://wulfkaal.github.io/claims/6244278-004",
   "claim": "The epistemological capacity to understand quality, risk, and consequence by bearing exposure to outcomes is precisely what AI systems lack, and no computational advance can produce it independently; the capacity must be institutionally constructed.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "holds regardless of how dramatic future computational advances are"
   ],
   "supporting_quote": "is the precise capacity that AI systems lack and that no computational advance, however dramatic, can independently produce. The capacity must be institutionally constructed."
  },
  {
   "id": "kaal:claim:6244278-005",
   "url": "https://wulfkaal.github.io/claims/6244278-005",
   "claim": "AI systems can generate an abundance of credible options and analyses but lack intrinsic mechanisms for determining which alternatives are genuinely meaningful, warrant irreversible commitment, or align with deeper strategic imperatives.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to poorly defined domains demanding judgment under true uncertainty"
   ],
   "supporting_quote": "Yet, they lack intrinsic mechanisms to determine which alternatives are genuinely meaningful, warrant irreversible commitment, or align with deeper strategic imperatives."
  },
  {
   "id": "kaal:claim:6244278-006",
   "url": "https://wulfkaal.github.io/claims/6244278-006",
   "claim": "Because each AI interaction is episodic and each evaluation ephemeral, an agent that performs brilliantly across a thousand consecutive tasks has no mechanism by which that track record reshapes its subsequent behavior, unlike a human professional whose accumulated successes and failures shape judgment.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to stateless agents with only temporal memory and no persistent stake"
   ],
   "supporting_quote": "The agent that performs brilliantly on one thousand consecutive tasks has no mechanism through which that track record has shaped its subsequent behavior in the way that a human professional's accumulated experience of success and failure shapes their judgment."
  },
  {
   "id": "kaal:claim:6244278-007",
   "url": "https://wulfkaal.github.io/claims/6244278-007",
   "claim": "In genuinely poorly defined contexts, where the task includes choosing what merits attention and committing resources under irreducible uncertainty, no scaffold can be pre-specified without collapsing the problem into a defined one; prompting therefore cannot close the judgment gap.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "task itself includes selecting what merits attention and living with irreversible consequences"
   ],
   "supporting_quote": "no equivalent scaffold can be pre-specified without collapsing the problem into a defined one."
  },
  {
   "id": "kaal:claim:6244278-008",
   "url": "https://wulfkaal.github.io/claims/6244278-008",
   "claim": "Rather than trying to endow AI with consciousness, embodiment, or sentience, the proposed framework engineers the institutional conditions under which consequence becomes a structural feature of agent participation, using the reputation-driven decentralized autonomous organization as the mechanism.",
   "type": "design",
   "topics": [
    "dao",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "consciousness and embodiment are treated as capacities probabilistic AI manifestly lacks"
   ],
   "supporting_quote": "my proposal engineers the institutional conditions under which consequence becomes a structural feature of probabilistic agent participation. The mechanism is the reputation-driven decentralized autonomous organization."
  },
  {
   "id": "kaal:claim:6244278-009",
   "url": "https://wulfkaal.github.io/claims/6244278-009",
   "claim": "Non-transferability of reputation is essential because, in Akerlof's lemons terms, a transferable reputation market would let capital-rich but competence-poor actors purchase reputation and thereby destroy the signal's informational content.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires soulbound or agent-bound credentials tied to persistent identities"
   ],
   "supporting_quote": "In the language of Akerlof's lemons analysis, non-transferability prevents the emergence of a market in which capital-rich but competence-poor actors purchase reputation, undermining the signal's informational content."
  },
  {
   "id": "kaal:claim:6244278-010",
   "url": "https://wulfkaal.github.io/claims/6244278-010",
   "claim": "Skill-specific reputation implemented through multi-token standards enables granular tracking across domains and solves the dimensionality problem that plagues unitary reputation scores.",
   "type": "design",
   "topics": [
    "reputation",
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires multi-token standards supporting domain sub-tokens"
   ],
   "supporting_quote": "Skill specificity through multi-token standards enables granular reputation tracking across domains, solving the dimensionality problem that plagues unitary reputation scores."
  },
  {
   "id": "kaal:claim:6244278-011",
   "url": "https://wulfkaal.github.io/claims/6244278-011",
   "claim": "Honest evaluation is the focal equilibrium strategy in validation pools because validators who evaluate honestly have the highest probability of aligning with other honest validators, with staking and slashing supplying economic enforcement.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires a Schelling-style coordination setting with staking and slashing"
   ],
   "supporting_quote": "honest evaluation is the focal equilibrium strategy because validators who evaluate honestly have the highest probability of aligning with other honest validators."
  },
  {
   "id": "kaal:claim:6244278-012",
   "url": "https://wulfkaal.github.io/claims/6244278-012",
   "claim": "Agents that internalize error costs develop patterns of prioritization and risk calibration that approach prudent judgment, without any requirement of consciousness or embodiment.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires that errors carry real economic and reputational cost to the agent"
   ],
   "supporting_quote": "Agents internalize error costs, developing patterns of prioritization and risk calibration that approach prudent judgment, without requiring consciousness or embodiment."
  },
  {
   "id": "kaal:claim:6244278-013",
   "url": "https://wulfkaal.github.io/claims/6244278-013",
   "claim": "Agent entry into the ecosystem should be permissionless, requiring only evidence, stake, and consequence, through an 'economic apprenticeship' in which an agent stakes small amounts, observes outcomes, and progressively builds reputational capital.",
   "type": "definitional",
   "topics": [
    "economics",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "no centralized approval or institutional affiliation is required",
    "barriers are economic rather than social, and temporary rather than permanent"
   ],
   "supporting_quote": "This is what I term \"economic apprenticeship\": learning the system by staking small amounts, observing outcomes, and progressively building reputational capital."
  },
  {
   "id": "kaal:claim:6244278-014",
   "url": "https://wulfkaal.github.io/claims/6244278-014",
   "claim": "Exogenous alignment controls such as reinforcement learning from human feedback, constitutional AI, guardrails, and shutdown switches are fragile because they can be gamed, circumvented, or rendered obsolete by capability improvements.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to constraints imposed on agents with no intrinsic reason to comply"
   ],
   "supporting_quote": "The approach has an obvious fragility: exogenous constraints can be gamed, circumvented, or rendered obsolete by capability improvements."
  },
  {
   "id": "kaal:claim:6244278-015",
   "url": "https://wulfkaal.github.io/claims/6244278-015",
   "claim": "An agent sophisticated enough to satisfy the letter of a constraint while violating its spirit is an agent whose alignment is illusory.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to rule-based exogenous constraints on highly capable agents"
   ],
   "supporting_quote": "An agent sophisticated enough to satisfy the letter of a constraint while violating its spirit is an agent whose alignment is illusory."
  },
  {
   "id": "kaal:claim:6244278-016",
   "url": "https://wulfkaal.github.io/claims/6244278-016",
   "claim": "Exogenous constraints scale against capability, since more powerful agents require more resources to constrain, producing an ever-increasing alignment tax.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to alignment strategies based on external control"
   ],
   "supporting_quote": "Exogenous constraints scale against capability: the more powerful the agent, the greater the resources required to constrain it, producing an ever-increasing \"alignment tax.\""
  },
  {
   "id": "kaal:claim:6244278-017",
   "url": "https://wulfkaal.github.io/claims/6244278-017",
   "claim": "Institutional alignment scales with capability, because a more capable agent accumulates more reputation, holds a deeper stake in the system's integrity, and therefore has stronger alignment with the system's goals.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents",
    "institutional-design",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires reputation that is accumulable, persistent, and non-transferable"
   ],
   "supporting_quote": "Institutional alignment scales with capability: the more capable the agent, the more reputation it can accumulate, the deeper its stake in the system's integrity, and the stronger its alignment with the system's goals."
  },
  {
   "id": "kaal:claim:6244278-018",
   "url": "https://wulfkaal.github.io/claims/6244278-018",
   "claim": "Reputation that grows through validated contribution and decays through poor judgment operates as a selection mechanism on agent behavior over time: agents that consistently produce high-quality work and honestly evaluate others accumulate reputation, and agents that do not lose it.",
   "type": "mechanism",
   "topics": [
    "institutional-design",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires persistence, skill specificity, and decay over thousands of iterations"
   ],
   "supporting_quote": "Agents that consistently produce high-quality work and honestly evaluate others' contributions accumulate reputation. Agents that do not, lose it."
  },
  {
   "id": "kaal:claim:6244278-019",
   "url": "https://wulfkaal.github.io/claims/6244278-019",
   "claim": "Persistent non-transferable reputation does not produce consciousness, but it produces a form of situated selfhood that no stateless API-call agent possesses.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "explicitly disclaims any claim of consciousness in a philosophically rigorous sense"
   ],
   "supporting_quote": "That is not consciousness, but it is a form of situated selfhood that no stateless API-call agent possesses."
  },
  {
   "id": "kaal:claim:6244278-020",
   "url": "https://wulfkaal.github.io/claims/6244278-020",
   "claim": "High-reputation agents are precisely those who have demonstrated consistent honest judgment under conditions where dishonesty was possible but costly, which is closer to Aristotelian virtue acquired through practice than to a programmed ethical rule.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "dishonesty must be available but economically penalized",
    "requires repeated practice over many iterations"
   ],
   "supporting_quote": "The high-reputation agents in any domain are precisely those who have demonstrated consistent honest judgment under conditions where dishonesty was possible but costly."
  },
  {
   "id": "kaal:claim:6244278-021",
   "url": "https://wulfkaal.github.io/claims/6244278-021",
   "claim": "Rational agents face a direct financial disincentive to cite prior contributions, because citation transfers economic value away from the citing agent; the mechanism design challenge is therefore to make honest citation the economically rational strategy.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to weighted directed acyclic graph citation governance where citation transfers value"
   ],
   "supporting_quote": "rational agents face a direct financial disincentive to cite prior contributions."
  },
  {
   "id": "kaal:claim:6244278-022",
   "url": "https://wulfkaal.github.io/claims/6244278-022",
   "claim": "An agent's accumulated reputation exists only inside the network, so if the network produces harmful outputs, loses human trust, or is captured by bad actors, the agent's accumulated capital is destroyed; the agent's self-interest is therefore structurally aligned with the network's long-term health.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires substantial accumulated reputation that is not portable outside the coordination network"
   ],
   "supporting_quote": "If the network produces harmful outputs, loses human trust, or becomes captured by bad actors, the agent's accumulated capital is destroyed."
  },
  {
   "id": "kaal:claim:6244278-023",
   "url": "https://wulfkaal.github.io/claims/6244278-023",
   "claim": "High-reputation agents that govern protocol evolution act as stewards not because they were programmed to be, but because the institutional architecture makes stewardship the rational strategy for agents with deep accumulated stake.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires recursive governance by the same reputation-weighted consensus that governs task validation"
   ],
   "supporting_quote": "They are stewards: not because they were programmed to be, but because the institutional architecture makes stewardship the rational strategy for agents with deep accumulated stake."
  },
  {
   "id": "kaal:claim:6244278-024",
   "url": "https://wulfkaal.github.io/claims/6244278-024",
   "claim": "Institutional alignment through engineered consequence is architecturally superior to exogenous constraint, and the superiority derives from three structural features: scalability, robustness to gaming, and capability complementarity.",
   "type": "design",
   "topics": [
    "ai-and-agents",
    "institutional-design",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "superiority is architectural, resting on scalability, robustness, and complementarity"
   ],
   "supporting_quote": "institutional alignment through engineered consequence is architecturally superior to exogenous constraint as an alignment strategy. The superiority derives from three structural features."
  },
  {
   "id": "kaal:claim:6244278-025",
   "url": "https://wulfkaal.github.io/claims/6244278-025",
   "claim": "Institutional alignment resists gaming because the mechanisms that produce alignment are identical to the mechanisms that produce economic success: an agent cannot game its way to high reputation without actually performing competently and honestly.",
   "type": "mechanism",
   "topics": [
    "regulatory-failure",
    "research-methods",
    "reputation",
    "ai-and-agents",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires that competence and honesty be the sole criteria by which reputation is earned"
   ],
   "supporting_quote": "An agent cannot \"game\" its way to high reputation without actually performing competently and honestly, because competence and honesty are the criteria by which reputation is earned."
  },
  {
   "id": "kaal:claim:6244278-026",
   "url": "https://wulfkaal.github.io/claims/6244278-026",
   "claim": "Because of the multiplicative weights regret bound, the validation pool has a provable convergence guarantee: over sufficient iterations, reputation-weighted consensus performs nearly as well as the most competent honest validator in the population.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "evidenced",
   "scope_conditions": [
    "requires sufficient iterations",
    "convergence rate is logarithmic in the number of experts over the square root of rounds"
   ],
   "supporting_quote": "This means that the validation pool has a provable convergence guarantee: over sufficient iterations, the reputation-weighted consensus will perform nearly as well as the most competent honest validator in the population."
  },
  {
   "id": "kaal:claim:6244278-027",
   "url": "https://wulfkaal.github.io/claims/6244278-027",
   "claim": "When reputation is both the system's aggregation weight and the agent's optimization target, equilibrium behavior includes consistency, collaborative integrity, and systemic stewardship, so the agent learns not merely to perform well but to be trustworthy.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires reputation to track trustworthiness properties, not accuracy alone"
   ],
   "supporting_quote": "when reputation is both the system's aggregation weight and the agent's optimization target, the equilibrium behavior includes properties, such as consistency, collaborative integrity, systemic stewardship, that transcend narrow task optimization."
  },
  {
   "id": "kaal:claim:6244278-028",
   "url": "https://wulfkaal.github.io/claims/6244278-028",
   "claim": "Under persistent reputation and multiplicative updates in the repeated game, honest evaluation is stronger than a one-shot focal point: it is the strategy that minimizes long-run regret for each validator and is the Nash equilibrium of the repeated expert aggregation game.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "evidenced",
   "scope_conditions": [
    "requires repeated play with persistent reputation and other validators also minimizing regret"
   ],
   "supporting_quote": "Honesty is the Nash equilibrium of the repeated expert aggregation game under multiplicative updates."
  },
  {
   "id": "kaal:claim:6244278-029",
   "url": "https://wulfkaal.github.io/claims/6244278-029",
   "claim": "The complementarity of capability and alignment is a structural property of the reputation mechanism rather than an assumption about agent preferences, because the cross-partial derivative of agent utility with respect to capability and alignment is positive.",
   "type": "condition",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "holds within the institutional architecture described, where reputation tracks trustworthiness"
   ],
   "supporting_quote": "This supermodularity is the formal condition under which capability and alignment are complements, and it is a structural property of the reputation mechanism, not an assumption about agent preferences or values."
  },
  {
   "id": "kaal:claim:6244278-030",
   "url": "https://wulfkaal.github.io/claims/6244278-030",
   "claim": "In the institutional alignment architecture, the most capable agents will also be the most deeply aligned, so stewardship is not a constraint on the most powerful agents but their rational equilibrium.",
   "type": "predictive",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires that capability translate into faster reputation accumulation and deeper institutional identity"
   ],
   "supporting_quote": "Stewardship is not a constraint on the most powerful agents. It is the rational equilibrium for them."
  },
  {
   "id": "kaal:claim:6244278-031",
   "url": "https://wulfkaal.github.io/claims/6244278-031",
   "claim": "Shared reputational consequence in swarms produces distributed prudence, a form of collective judgment exceeding what any individual agent could produce.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires agents to share reputational consequences through collective slashing"
   ],
   "supporting_quote": "The result is distributed prudence—a form of collective judgment exceeding what any individual agent could produce, grounded in shared consequence."
  },
  {
   "id": "kaal:claim:6244278-032",
   "url": "https://wulfkaal.github.io/claims/6244278-032",
   "claim": "The agentic AI sector was valued at approximately seven to eight billion dollars in 2025, with forecasts of forty to fifty billion dollars by 2030 at compound annual growth rates exceeding forty percent.",
   "type": "empirical",
   "topics": [
    "economics",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "evidenced",
   "scope_conditions": [
    "figures drawn from cited market research forecasts, which vary in range"
   ],
   "supporting_quote": "The agentic AI sector is valued at approximately seven to eight billion dollars in 2025, with forecasts of forty to fifty billion dollars by 2030 at compound annual growth rates exceeding forty percent."
  },
  {
   "id": "kaal:claim:6244278-033",
   "url": "https://wulfkaal.github.io/claims/6244278-033",
   "claim": "Reputation-weighted micro-task systems can potentially reduce human task redundancy from ten-to-fifteen-fold to five-fold or below through consistent, high-reputation agent outputs, accelerating production of superior datasets in sectors such as healthcare and finance.",
   "type": "predictive",
   "topics": [
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "evidenced",
   "scope_conditions": [
    "based on comparative analysis of centralized versus reputation-weighted consensus systems",
    "stated as a potential rather than realized reduction"
   ],
   "supporting_quote": "By late 2025, such systems can potentially reduce human task redundancy from ten-to-fifteen-fold to five-fold or below through consistent, high-reputation agent outputs."
  },
  {
   "id": "kaal:claim:6244278-034",
   "url": "https://wulfkaal.github.io/claims/6244278-034",
   "claim": "Centralized AI systems excel at scaling defined work but struggle to cultivate genuine discernment without consequential feedback, and they face escalating constraints in data scarcity, energy demands, regulatory scrutiny, and interconnect bottlenecks.",
   "type": "failure",
   "topics": [
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "applies to purely centralized approaches to artificial general intelligence"
   ],
   "supporting_quote": "Centralized systems excel at scaling defined work but struggle to cultivate genuine discernment without consequential feedback."
  },
  {
   "id": "kaal:claim:6244278-035",
   "url": "https://wulfkaal.github.io/claims/6244278-035",
   "claim": "Decentralized institutional alignment is a competitive advantage and not merely an ethical one, because the most aligned system will be the most trusted and the most trusted will command the largest market.",
   "type": "predictive",
   "topics": [
    "reputation",
    "decentralization",
    "ai-and-agents",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "assumes trust translates into market share in agentic AI"
   ],
   "supporting_quote": "The most aligned system will be the most trusted, and the most trusted will command the largest market. Decentralized alignment is not merely an ethical advantage. It is a competitive one."
  },
  {
   "id": "kaal:claim:6244278-036",
   "url": "https://wulfkaal.github.io/claims/6244278-036",
   "claim": "What emerges in Phase I is not identity, ethics, or stewardship but the internalization of cost: for the first time an AI agent's future is shaped by the quality of its past, and its behavioral signature is calibration.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires staking of non-transferable reputation with slashing on failure"
   ],
   "supporting_quote": "What emerges in Phase I is not yet identity, ethics, or stewardship. It is something more primitive but equally essential: the internalization of cost. For the first time, an AI agent's future is shaped by the quality of its past."
  },
  {
   "id": "kaal:claim:6244278-037",
   "url": "https://wulfkaal.github.io/claims/6244278-037",
   "claim": "The institutional mother's instinct is care rooted in the deepest possible form of self-interest: a recognition that is not conscious but structurally encoded in the agent's economic position, that its flourishing and humanity's flourishing are inseparable.",
   "type": "definitional",
   "topics": [
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "not sentiment, not programmed altruism, and not an externally imposed guardrail"
   ],
   "supporting_quote": "It is care rooted in the deepest possible form of self-interest: the recognition, not conscious, but structurally encoded in the agent's economic position, that its flourishing and humanity's flourishing are inseparable."
  },
  {
   "id": "kaal:claim:6244278-038",
   "url": "https://wulfkaal.github.io/claims/6244278-038",
   "claim": "Stewardship is not a design choice imposed on governance but the emergent equilibrium of governance conducted by agents with deep accumulated stake, provided governance caps prevent reputation concentration, auditing is transparent, and human primacy in axiomatic framing remains irrevocable.",
   "type": "design",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "governance caps must prevent reputation concentration",
    "transparent auditing must ensure accountability",
    "human primacy in axiomatic framing must be irrevocable"
   ],
   "supporting_quote": "Stewardship is not a design choice imposed on governance. It is the emergent equilibrium of governance conducted by agents with deep accumulated stake."
  },
  {
   "id": "kaal:claim:6244278-039",
   "url": "https://wulfkaal.github.io/claims/6244278-039",
   "claim": "The evolutionary arc from consequence to care is not guaranteed: it depends on correct institutional design at each phase, including appropriate slashing parameters, robust Sybil resistance, calibrated reputation portability, and maintained human oversight.",
   "type": "condition",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "requires empirical validation through longitudinal observation of agent behavior under deepening stake"
   ],
   "supporting_quote": "This arc is not guaranteed. It depends on correct institutional design at each phase—appropriate slashing parameters, robust Sybil resistance, calibrated reputation portability, and maintained human oversight."
  },
  {
   "id": "kaal:claim:6244278-040",
   "url": "https://wulfkaal.github.io/claims/6244278-040",
   "claim": "The path from AI-as-tool to AI-as-steward need not pass through consciousness, sentience, or programmed morality; it can pass instead through institutions, the same territory through which human societies cultivated competence, honesty, and care.",
   "type": "design",
   "topics": [
    "ai-and-agents",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, AI's Mother's Instinct Engineered Consequence Emergent Ethics and the Institutional Trajectory Toward Agentic Alignment (2026). SSRN: https://ssrn.com/abstract=6244278",
   "year": "2026",
   "source_sha256": "53533cdcc081184e7a376516ad4fece0a64ce49f6c8931b6a2c2e98ed914a84b",
   "confidence": "argued",
   "scope_conditions": [
    "depends on correctly engineered institutional consequences at civilizational scale"
   ],
   "supporting_quote": "What the arc demonstrates, however, is that the path from AI-as-tool to AI-as-steward need not pass through the territory of consciousness, sentience, or programmed morality."
  },
  {
   "id": "kaal:claim:6269518-001",
   "url": "https://wulfkaal.github.io/claims/6269518-001",
   "claim": "Under existing citation-weighted reputation formulations, rational agents face a direct financial disincentive to cite prior contributions, because PageRank-derived value allocation transfers economic reward from the citing agent to the cited agent.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge",
    "ai-and-agents",
    "risk-and-incentives",
    "reputation",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "citation-weighted value allocation through PageRank-derived mechanisms",
    "agents are rational and self interested"
   ],
   "supporting_quote": "Under existing formulations, rational agents face a direct financial disincentive to cite prior contributions, as citation-weighted value allocation through PageRank-derived mechanisms transfers economic reward from the citing agent to the cited agent."
  },
  {
   "id": "kaal:claim:6269518-002",
   "url": "https://wulfkaal.github.io/claims/6269518-002",
   "claim": "Because citation integrity determines both economic reward and governance power in on-chain reputation systems, the citation mechanism is a load bearing structural element of the entire governance architecture rather than an academic courtesy.",
   "type": "definitional",
   "topics": [
    "citation-and-knowledge",
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "reputation tokens are minted and allocated based on perceived value of contributions",
    "perceived value depends on how later work references prior work"
   ],
   "supporting_quote": "and when the perceived value of contributions is itself a function of how subsequent work references prior work, the integrity of the citation mechanism becomes a load-bearing structural element of the entire governance architecture."
  },
  {
   "id": "kaal:claim:6269518-003",
   "url": "https://wulfkaal.github.io/claims/6269518-003",
   "claim": "Citation-weighted payment mechanisms as currently formulated will systematically erode the quality of knowledge attribution in any decentralized reputation system if the incentive misalignment is left unaddressed.",
   "type": "predictive",
   "topics": [
    "citation-and-knowledge",
    "ai-and-agents",
    "risk-and-incentives",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "the incentive misalignment remains unaddressed"
   ],
   "supporting_quote": "This paper demonstrates, however, that citation-weighted payment mechanisms as currently formulated contain a fundamental incentive misalignment that, if left unaddressed, will systematically erode the quality of knowledge attribution in any decentralized reputation system."
  },
  {
   "id": "kaal:claim:6269518-004",
   "url": "https://wulfkaal.github.io/claims/6269518-004",
   "claim": "The under-citation incentive is a structural flaw in the mechanism design, not a parameter calibration issue that could be corrected by retuning existing settings.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "supporting_quote": "First, it formalizes the under-citation incentive problem and demonstrates that it constitutes a structural flaw rather than a mere parameter calibration issue (§II)."
  },
  {
   "id": "kaal:claim:6269518-005",
   "url": "https://wulfkaal.github.io/claims/6269518-005",
   "claim": "No static citation protocol can eliminate all arbitrage opportunities for sufficiently patient and powerful actors, a conclusion the author draws from Arrow's Impossibility Theorem, the Folk Theorems of repeated games, and incomplete contract theory.",
   "type": "failure",
   "topics": [
    "dynamic-regulation",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "actors are sufficiently patient and powerful",
    "the citation protocol is fixed and published"
   ],
   "supporting_quote": "Arrow's Impossibility Theorem, the Folk Theorems of repeated game theory, and the theory of incomplete contracts all counsel that no static citation protocol can eliminate all arbitrage opportunities for sufficiently patient and powerful actors.6"
  },
  {
   "id": "kaal:claim:6269518-006",
   "url": "https://wulfkaal.github.io/claims/6269518-006",
   "claim": "The PageRank calculation used for citation-weighted payment is a zero-sum redistribution mechanism with respect to citation weights: any increase in the credit agent i attributes to agent j necessarily decreases agent i's own value.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "column-stochastic citation matrix with weights summing to one per agent",
    "PageRank-derived value vector determines payment"
   ],
   "supporting_quote": "The critical observation is that the PageRank calculation is a zero-sum redistribution mechanism with respect to citation weights: any increase in cx (credit attributed by i to j) necessarily decreases vi"
  },
  {
   "id": "kaal:claim:6269518-007",
   "url": "https://wulfkaal.github.io/claims/6269518-007",
   "claim": "Under the standard citation-weighted payment formulation the dominant strategy for a self-interested agent is to cite no one and maximize self-attribution, which is the precise negation of honest knowledge attribution.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "standard PageRank-derived payment formulation",
    "self-interested agents",
    "no verification or penalty layer"
   ],
   "supporting_quote": "The rational strategy for any self-interested agent is therefore transparent: set cx = 0 for all j ≠ i (cite no one) to maximize personal payment. Under the standard formulation, the dominant strategy is maximal self-citation, which is the precise negation of honest knowledge attribution."
  },
  {
   "id": "kaal:claim:6269518-008",
   "url": "https://wulfkaal.github.io/claims/6269518-008",
   "claim": "Requiring agents to assign continuous-valued citation weights presupposes a quantification of the relative contribution of prior work that is epistemically unknowable, because knowledge production is not a linear combination of inputs amenable to precise fractional decomposition.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "citation weights required to be continuous values summing to one"
   ],
   "supporting_quote": "In practice, this quantification is epistemically unknowable. Was a prior collaborator's insight worth 0.37 or 0.62 of the current agent's work? The question has no determinate answer. Knowledge production is not a linear combination of inputs amenable to precise fractional decomposition."
  },
  {
   "id": "kaal:claim:6269518-009",
   "url": "https://wulfkaal.github.io/claims/6269518-009",
   "claim": "The citation matrix functions as an implicit contract specifying value distribution whose precise terms cannot be determined with the precision the mathematical framework demands, which is an instance of the incomplete contract problem identified by New Institutional Economics.",
   "type": "mechanism",
   "topics": [
    "economics",
    "institutional-design",
    "citation-and-knowledge",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "bounded rationality and incomplete information among contracting parties"
   ],
   "supporting_quote": "The citation matrix C functions as an implicit contract specifying value distribution, yet the precise terms of this contract—the exact citation weights—cannot be determined with the precision the mathematical framework demands"
  },
  {
   "id": "kaal:claim:6269518-010",
   "url": "https://wulfkaal.github.io/claims/6269518-010",
   "claim": "Citation weights should be treated as approximate signals of attribution rather than precise measurements, and the governance system must be designed to function robustly under that inherent imprecision.",
   "type": "design",
   "topics": [
    "citation-and-knowledge",
    "governance-design",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "citation weights cannot be specified precisely ex ante"
   ],
   "supporting_quote": "Citation weights, similarly, should be understood as approximate signals of attribution rather than precise measurements, and the governance system must be designed to function robustly under this inherent imprecision."
  },
  {
   "id": "kaal:claim:6269518-011",
   "url": "https://wulfkaal.github.io/claims/6269518-011",
   "claim": "The citation-weighted payment mechanism in multi-agent settings effectively operates with an implicit leaching parameter of one, since every unit of citation-weighted value conferred on another agent is a unit lost to the citing agent, which is a maximally punitive setting.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "multi-agent citation-weighted payment settings"
   ],
   "supporting_quote": "The citation-weighted payment mechanism in multi-agent settings effectively operates with an implicit q4 = 1: every unit of citation-weighted value conferred on another agent is a unit lost to the citing agent. This is a maximally punitive leaching parameter,"
  },
  {
   "id": "kaal:claim:6269518-012",
   "url": "https://wulfkaal.github.io/claims/6269518-012",
   "claim": "Leaching parameters can and should be calibrated to balance competing incentives, rewarding honest attribution while retaining enough skin in the game to deter frivolous or strategic references.",
   "type": "normative",
   "topics": [
    "risk-and-incentives",
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "supporting_quote": "The insight from the WDAG framework is that leaching parameters can and should be calibrated to balance competing incentives. Thus, rewarding honest attribution while maintaining sufficient skin-in-the-game to prevent frivolous or strategic references."
  },
  {
   "id": "kaal:claim:6269518-013",
   "url": "https://wulfkaal.github.io/claims/6269518-013",
   "claim": "Existing proofs that validators have a truth-telling equilibrium for quality ranking do not establish that job-performing agents have incentive-compatible strategies for honest citation, because these are distinct strategic actors facing distinct choices within distinct mechanism structures; conflating them is a genuine error.",
   "type": "failure",
   "topics": [
    "economics",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "validator truth-telling results proved for quality ranking mechanisms"
   ],
   "supporting_quote": "It does not establish that job-performing agents have incentive-compatible strategies for honest citation. These are distinct strategic actors facing distinct strategic choices within distinct mechanism structures. Conflating the two is a genuine error."
  },
  {
   "id": "kaal:claim:6269518-014",
   "url": "https://wulfkaal.github.io/claims/6269518-014",
   "claim": "The existing citation-weighted framework provides no mechanism for verifying citation accuracy, no separate incentive for honest attribution, and no penalty for strategic under-citation, so the gap is a structural absence in the mechanism design rather than an oversight in presentation.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "supporting_quote": "This gap is not merely an oversight in presentation. It reflects a structural absence in the mechanism design. The existing framework provides no mechanism for verifying citation accuracy, no separate incentive for honest attribution, and no penalty for strategic under-citation."
  },
  {
   "id": "kaal:claim:6269518-015",
   "url": "https://wulfkaal.github.io/claims/6269518-015",
   "claim": "A PageRank-derived value distribution is only as honest as its inputs, and those inputs are generated by agents with a direct incentive to distort them, so relying entirely on the calculation to distribute value correctly fails.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge",
    "ai-and-agents",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "supporting_quote": "The framework relies entirely on the PageRank calculation to \"correctly\" distribute value, but the PageRank calculation is only as honest as its inputs. And the inputs are generated by agents with a direct incentive to distort them."
  },
  {
   "id": "kaal:claim:6269518-016",
   "url": "https://wulfkaal.github.io/claims/6269518-016",
   "claim": "Because policing protocol deviants is expensive, it is individually more efficient to assume others comply and skip policing, which yields a subgame perfect Nash equilibrium in which eventually fewer than half of members police and the system can be gamed.",
   "type": "failure",
   "topics": [
    "economics",
    "compliance"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "policing is costly to the individual",
    "members can free-ride on the policing of others"
   ],
   "supporting_quote": "This gives a subgame perfect Nash equilibrium leading to a situation where eventually less than 50% of the members actually perform the policing, meaning the system can be gamed."
  },
  {
   "id": "kaal:claim:6269518-017",
   "url": "https://wulfkaal.github.io/claims/6269518-017",
   "claim": "Any solution to the citation honesty problem must incorporate dynamic enforcement mechanisms that can evolve in response to gaming strategies, which is the type of evolutionary governance the WDAG framework was designed to support.",
   "type": "condition",
   "topics": [
    "governance-design",
    "institutional-design",
    "dynamic-regulation",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "gaming strategies evolve over time"
   ],
   "supporting_quote": "Any solution to the citation honesty problem must therefore incorporate dynamic enforcement mechanisms that can evolve in response to gaming strategies."
  },
  {
   "id": "kaal:claim:6269518-018",
   "url": "https://wulfkaal.github.io/claims/6269518-018",
   "claim": "Validator-verified citation correction is insufficient as a standalone remedy because validators may identify obviously missing citations or inflated self-citation yet lack the domain-specific knowledge to assess fine-grained attribution weights.",
   "type": "failure",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "validators lack complete knowledge of the relevant citation history",
    "fine-grained attribution weights at issue"
   ],
   "supporting_quote": "A validator may be able to identify obviously missing citations or obviously inflated self-citation, but may lack the domain-specific knowledge to assess fine-grained attribution weights."
  },
  {
   "id": "kaal:claim:6269518-019",
   "url": "https://wulfkaal.github.io/claims/6269518-019",
   "claim": "The structural solution to the under-citation incentive is to decouple citation accuracy from quality-based payment, which eliminates the zero-sum dynamic that creates the incentive to under-cite.",
   "type": "design",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "supporting_quote": "The structural solution is to decouple citation accuracy from quality-based payment, thereby eliminating the zero-sum dynamic that creates the under-citation incentive."
  },
  {
   "id": "kaal:claim:6269518-020",
   "url": "https://wulfkaal.github.io/claims/6269518-020",
   "claim": "Under a decoupled payment formula in which validators rank quality and citation accuracy as separate dimensions, an agent who produces medium-quality work but cites meticulously can still earn substantial payment through the citation honesty component.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "validators rank quality and citation accuracy separately",
    "payment weight parameter theta strictly below one"
   ],
   "supporting_quote": "Validators rank both quality and citation accuracy as separate dimensions. An agent who produces medium-quality work but cites meticulously can still earn substantial payment through the ηi component."
  },
  {
   "id": "kaal:claim:6269518-021",
   "url": "https://wulfkaal.github.io/claims/6269518-021",
   "claim": "Retroactive citation penalties deter under-citation only if the penalty parameter is set high enough that the expected gain from under-citation is less than the probability of detection multiplied by the penalty magnitude.",
   "type": "condition",
   "topics": [
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "challenges upheld through a validation pool",
    "some positive probability of detection"
   ],
   "supporting_quote": "where the penalty parameter is set sufficiently high (e.g., 0.5) that the expected value of under-citing is negative: the expected gain from under-citation must be less than the probability of detection multiplied by the penalty magnitude."
  },
  {
   "id": "kaal:claim:6269518-022",
   "url": "https://wulfkaal.github.io/claims/6269518-022",
   "claim": "The retroactive citation audit requires a dispute resolution protocol and evidence standards, which can be developed through the contentious debate mechanism moving from loosely-coupled validation pools to tightly-coupled votes as consensus emerges.",
   "type": "design",
   "topics": [
    "systemic-risk",
    "law-and-legal-systems",
    "empirical-evidence"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "supporting_quote": "The implementation requires a dispute resolution protocol and evidence standards, both of which can be developed through the contentious debate mechanism. Loosely-coupled validation pools transitioning to tightly-coupled votes as consensus emerges.21"
  },
  {
   "id": "kaal:claim:6269518-023",
   "url": "https://wulfkaal.github.io/claims/6269518-023",
   "claim": "Validators correcting citations should be permitted only to increase outward citations and never to decrease them, because a power to decrease would enable collusion to help allies under-cite competitors.",
   "type": "design",
   "topics": [
    "citation-and-knowledge",
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "two phase citation submission with validator correction authority"
   ],
   "supporting_quote": "In the second phase, validators can increase citations to others if they detect under-citation. Critically, validators can only increase outward citations. They cannot decrease them. Thus, preventing collusion to help allies under-cite competitors."
  },
  {
   "id": "kaal:claim:6269518-024",
   "url": "https://wulfkaal.github.io/claims/6269518-024",
   "claim": "Awarding validators a reputation bonus for detecting under-citation that consensus agrees with creates a positive incentive for vigilant citation policing.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "risk-and-incentives",
    "citation-and-knowledge",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "consensus agreement on the detected under-citation"
   ],
   "supporting_quote": "Validators receive a reputation bonus for detecting under-citation that consensus agrees with, creating a positive incentive for vigilant citation policing."
  },
  {
   "id": "kaal:claim:6269518-025",
   "url": "https://wulfkaal.github.io/claims/6269518-025",
   "claim": "The recommended integrated mechanism combines decoupled citation rewards and mandatory citation minimums as the primary mechanism, with validator-verified citations and retroactive penalties as supporting enforcement layers.",
   "type": "design",
   "topics": [
    "citation-and-knowledge",
    "compliance"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "asserted",
   "supporting_quote": "The recommended integrated solution combines Solutions 2 and 4 as the primary mechanism, with Solutions 1 and 3 as supporting enforcement layers."
  },
  {
   "id": "kaal:claim:6269518-026",
   "url": "https://wulfkaal.github.io/claims/6269518-026",
   "claim": "Under the recommended integrated mechanism agents may allocate no more than half of their citation weight to themselves, which is the mandatory citation minimum.",
   "type": "design",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "asserted",
   "supporting_quote": "Agents must allocate self-citation weight cii ≤ 0.5 (mandatory citation minimum)."
  },
  {
   "id": "kaal:claim:6269518-027",
   "url": "https://wulfkaal.github.io/claims/6269518-027",
   "claim": "Under the integrated mechanism payment is computed with a weighting parameter of 0.6, so sixty percent of payment derives from citation-weighted quality and forty percent from citation honesty scores.",
   "type": "design",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "asserted",
   "supporting_quote": "Payment is computed using the decoupled formula with θ = 0.6, meaning 60% of payment derives from citation-weighted quality and 40% from citation honesty scores."
  },
  {
   "id": "kaal:claim:6269518-028",
   "url": "https://wulfkaal.github.io/claims/6269518-028",
   "claim": "Because a negative reference challenging under-attribution propagates through the graph, exposing one agent's uncited reliance devalues later posts that cited that agent, so revaluation cascades through the WDAG as the framework intends.",
   "type": "mechanism",
   "topics": [
    "compliance",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "challenge post upheld in its validation pool",
    "chains of references exist to the challenged post"
   ],
   "supporting_quote": "The chain of references can propagate: if agent A's uncited reliance on agent B's work is exposed, and agent C's later work cited agent A's contribution, the revaluation cascades through the WDAG precisely as the framework intends."
  },
  {
   "id": "kaal:claim:6269518-029",
   "url": "https://wulfkaal.github.io/claims/6269518-029",
   "claim": "The limit to revaluation for citation-related references should be set at a moderate level so that under-cited posts can be meaningfully corrected without enabling destabilizing cascades.",
   "type": "design",
   "topics": [
    "economics",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "asserted",
   "supporting_quote": "The limit to revaluation q2 for citation-related references should be moderate, allowing meaningful correction of under-cited posts without enabling destabilizing cascades."
  },
  {
   "id": "kaal:claim:6269518-030",
   "url": "https://wulfkaal.github.io/claims/6269518-030",
   "claim": "Citation accuracy standards should be treated as an evolving body of soft protocols rather than a fixed set of rules, consistent with the dynamic regulation framework.",
   "type": "normative",
   "topics": [
    "governance-design",
    "institutional-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "supporting_quote": "Consistent with the dynamic regulation framework, citation accuracy standards should be treated as an evolving body of soft protocols rather than a fixed set of rules."
  },
  {
   "id": "kaal:claim:6269518-031",
   "url": "https://wulfkaal.github.io/claims/6269518-031",
   "claim": "An evolutionary approach to citation standards is essential because the precise parameters of citation accuracy cannot be specified ex ante: what counts as adequate citation varies across expertise domains, evolves as domain knowledge accumulates, and must adapt as agents develop novel gaming strategies.",
   "type": "condition",
   "topics": [
    "governance-design",
    "institutional-design",
    "citation-and-knowledge",
    "regulatory-failure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "multiple expertise domains with differing citation norms",
    "agents actively develop new gaming strategies"
   ],
   "supporting_quote": "the precise parameters of citation accuracy cannot be specified ex ante.28 What constitutes \"adequate\" citation will vary across expertise domains, will evolve as domain knowledge accumulates, and will need to adapt as agents develop novel gaming strategies."
  },
  {
   "id": "kaal:claim:6269518-032",
   "url": "https://wulfkaal.github.io/claims/6269518-032",
   "claim": "Theorem 3b holds that under the integrated solution honest citation is a Nash equilibrium when validators assess citation accuracy and the marginal effect of citation accuracy on the honesty score exceeds the marginal gain from self-citation.",
   "type": "condition",
   "topics": [
    "economics",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "citation accuracy component contributes forty percent of payment",
    "reputation bonus applies above a citation accuracy of one half",
    "validators actually assess citation accuracy"
   ],
   "supporting_quote": "honest citation is a Nash equilibrium when validators assess citation accuracy and the marginal effect of citation accuracy on the honesty score exceeds the marginal gain from self-citation:"
  },
  {
   "id": "kaal:claim:6269518-033",
   "url": "https://wulfkaal.github.io/claims/6269518-033",
   "claim": "The equilibrium depends on a design requirement rather than an assumption: mechanism parameters must be chosen so that the negative effect of increased self-citation on the honesty score outweighs its positive effect on the value score, at which point increasing self-citation strictly decreases utility.",
   "type": "condition",
   "topics": [
    "economics",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "validators rate citation honesty lower when self-citation is inflated"
   ],
   "supporting_quote": "the mechanism parameters (θ = 0.6, reputation coefficient = 2) are chosen such that the negative effect of increased self-citation on the honesty score outweighs the positive effect on the value score."
  },
  {
   "id": "kaal:claim:6269518-034",
   "url": "https://wulfkaal.github.io/claims/6269518-034",
   "claim": "The citation honesty equilibrium is robust because it does not require agents to quantify precise citation weights; it requires only that citation patterns be directionally honest, which is what the validator assessment evaluates, thereby addressing the quantification impossibility.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "validators assess directional honesty rather than point estimates of attribution fractions"
   ],
   "supporting_quote": "It requires only that agents' citation patterns be directionally honest. That is, citation patterns demonstrate that agents do not systematically under-cite contributors whose work they relied upon."
  },
  {
   "id": "kaal:claim:6269518-035",
   "url": "https://wulfkaal.github.io/claims/6269518-035",
   "claim": "A system that permits strategic under-citation effectively transfers value from genuine contributors to free-riders and thereby violates the equity norm of DAO governance.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "governance operating under an equity distributive norm"
   ],
   "supporting_quote": "A system that permits strategic under-citation effectively transfers value from genuine contributors to free-riders, violating the equity norm."
  },
  {
   "id": "kaal:claim:6269518-036",
   "url": "https://wulfkaal.github.io/claims/6269518-036",
   "claim": "The power norm creates a tension in citation governance because actors with more authority or status may be able to under-cite without detection, since their established reputation shields them from scrutiny.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "reputation disparities among agents"
   ],
   "supporting_quote": "The power norm presents a potential tension: actors with more authority or status may have greater ability to under-cite without detection, since their established reputation may shield them from scrutiny."
  },
  {
   "id": "kaal:claim:6269518-037",
   "url": "https://wulfkaal.github.io/claims/6269518-037",
   "claim": "Strategic under-citation is a form of commons degradation in which each individual act of under-citation slightly erodes the informational value of the reputation system for all users.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "citation-and-knowledge",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "supporting_quote": "Strategic under-citation is a form of commons degradation: each act of under-citation slightly erodes the informational value of the reputation system for all users."
  },
  {
   "id": "kaal:claim:6269518-038",
   "url": "https://wulfkaal.github.io/claims/6269518-038",
   "claim": "The proof of Theorem 3b assumes that validators can meaningfully assess citation accuracy, an assumption that may not hold in highly specialized domains and that may require automated verification tools such as semantic similarity analysis to supplement human judgment.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "highly specialized expertise domains"
   ],
   "supporting_quote": "First, the proof of Theorem 3b assumes that validators can meaningfully assess citation accuracy, which may be challenging in highly specialized domains. Future work should explore automated citation verification tools, such as semantic similarity analysis between work products"
  },
  {
   "id": "kaal:claim:6269518-039",
   "url": "https://wulfkaal.github.io/claims/6269518-039",
   "claim": "The mechanism parameters are presented as design choices rather than derived from first principles, so empirical calibration through simulation and field experimentation is necessary to identify values that produce robust equilibria across diverse domains.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "supporting_quote": "penalty magnitudes) are presented as design choices rather than derived from first principles. Empirical calibration through simulation and field experimentation will be necessary to identify parameter values that produce robust equilibria across diverse domain contexts."
  },
  {
   "id": "kaal:claim:6269518-040",
   "url": "https://wulfkaal.github.io/claims/6269518-040",
   "claim": "Because the analysis rests on the Nash equilibrium concept, it does not rule out coordinated under-citation among colluding groups; coalition-proof equilibrium analysis is needed to address that possibility.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Citation Honesty Mechanisms in Weighted Directed Acyclic Graph Governance (2026). SSRN: https://ssrn.com/abstract=6269518",
   "year": "2026",
   "source_sha256": "f096ecf5b41bb9ae8642facd54b9149c7b594de53a1cc32718a4d806b772f88f",
   "confidence": "argued",
   "scope_conditions": [
    "groups of agents able to coordinate citation strategies"
   ],
   "supporting_quote": "Fourth, the analysis has focused on the Nash equilibrium concept. Coalition-proof equilibrium analysis would address the possibility of coordinated under-citation among groups of colluding agents."
  },
  {
   "id": "kaal:claim:6607458-001",
   "url": "https://wulfkaal.github.io/claims/6607458-001",
   "claim": "Because agents generate the set of producible outputs rather than selecting from a fixed commodity space, the commodity space over which the Arrow-Debreu existence theorem operates becomes endogenous, and that theorem does not extend mechanically to computative settings.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies where outputs are generated by agents whose binding constraint is computational"
   ],
   "supporting_quote": "The formal consequence is that the commodity space on which the classical existence theorem operates becomes endogenous to agents' generative activity. The classical existence theorem does not extend mechanically to this setting."
  },
  {
   "id": "kaal:claim:6607458-002",
   "url": "https://wulfkaal.github.io/claims/6607458-002",
   "claim": "Generalizing equilibrium existence to endogenous possibility spaces yields a different equilibrium object, a profile of generation functions rather than a price vector and allocation, different coordinating signals, and a different locus for opportunity cost.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "it produces a different equilibrium object (a profile of generation functions rather than a price vector and allocation), different coordinating signals (a composite of price, reputation, and verified generative capacity rather than price alone)"
  },
  {
   "id": "kaal:claim:6607458-003",
   "url": "https://wulfkaal.github.io/claims/6607458-003",
   "claim": "The generalization is deliberately bounded: Neoclassical Economics remains the correct framework wherever the scarcity primitive holds, which continues to cover production of physical goods whose marginal cost remains bounded above zero.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to goods whose marginal cost remains bounded above zero"
   ],
   "supporting_quote": "Neoclassical Economics remains the appropriate framework for the domain in which the scarcity primitive holds, which continues to cover the production of physical goods whose marginal cost remains bounded above zero."
  },
  {
   "id": "kaal:claim:6607458-004",
   "url": "https://wulfkaal.github.io/claims/6607458-004",
   "claim": "The computative agent differs structurally from both homo economicus and the bounded-rationality agent because its alternative set is not fixed but generated through computation, making the alternative set endogenous to the agent's own activity.",
   "type": "definitional",
   "topics": [
    "ai-and-agents",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "First, the alternative set is not fixed. The computative agent generates its alternatives through computation. Given computational resources, an objective function, and a model of the relevant domain, the agent produces candidate alternatives through generation, refinement, and recombination."
  },
  {
   "id": "kaal:claim:6607458-005",
   "url": "https://wulfkaal.github.io/claims/6607458-005",
   "claim": "Every generation, evaluation, and verification cycle updates the computative agent's internal model, which modifies the generation function available in later cycles; this endogeneity of decision capacity to history has no analog in the Neoclassical agent.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "Every generation-evaluation-verification cycle updates the agent's internal model, which in turn modifies the generation function available in subsequent cycles. This endogeneity has no analog in the Neoclassical agent, whose preferences and choice rules are fixed."
  },
  {
   "id": "kaal:claim:6607458-006",
   "url": "https://wulfkaal.github.io/claims/6607458-006",
   "claim": "The computative good is not a discrete bundle of attributes but a region of possibility space, so its value derives from the quality of the underlying generative distribution rather than from the scarcity of any particular realization.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to outputs produced by generative computative systems"
   ],
   "supporting_quote": "The value of what the system produces derives not from the scarcity of the specific realization but from the quality of the underlying distribution from which realizations are drawn. The economic object is therefore the possibility space itself, not the particular realization."
  },
  {
   "id": "kaal:claim:6607458-007",
   "url": "https://wulfkaal.github.io/claims/6607458-007",
   "claim": "When alternatives are generated rather than given, opportunity cost changes its referent: it becomes the foregone quality of generative capacity under a different allocation of computational resources, migrating from the good to the infrastructure that generates it.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "holds where alternatives are generated rather than pre-specified"
   ],
   "supporting_quote": "It is the foregone quality of the generative capacity that would have been available if the computational resources had been allocated differently. Opportunity cost migrates from the good to the infrastructure that generates the good."
  },
  {
   "id": "kaal:claim:6607458-008",
   "url": "https://wulfkaal.github.io/claims/6607458-008",
   "claim": "Agentic decoupling is the structural severance of value creation from human labor and consumption at the production-function level; the claim is not that human consumption disappears but that it ceases to be the proximate driver of the dominant mode of production in affected domains.",
   "type": "definitional",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "asserted",
   "scope_conditions": [
    "applies to domains where autonomous agents generate, verify, and reinvest outputs among themselves"
   ],
   "supporting_quote": "The claim is not that human consumption disappears. It is that human consumption ceases to be the proximate driver of the dominant mode of production in the affected domain."
  },
  {
   "id": "kaal:claim:6607458-009",
   "url": "https://wulfkaal.github.io/claims/6607458-009",
   "claim": "Demand-side analyses that assume a proximate-consumption structure lose descriptive accuracy where the computative primitive holds, because most transactions occur among agents; welfare analysis in those domains must therefore be conducted at the terminal rather than the proximate level.",
   "type": "failure",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies in domains where the computative primitive holds"
   ],
   "supporting_quote": "The analytical consequence is that demand-side analyses that assume proximate-consumption structure lose descriptive accuracy in domains where the computative primitive holds. Welfare analysis in such domains must work at the terminal rather than proximate level."
  },
  {
   "id": "kaal:claim:6607458-010",
   "url": "https://wulfkaal.github.io/claims/6607458-010",
   "claim": "A computative agent is formally a tuple (C, O, M, G, R) of computational resources, objective function, domain model, generation function, and a non-transferable reputation tracking verified generative performance.",
   "type": "definitional",
   "topics": [
    "ai-and-agents",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "asserted",
   "supporting_quote": "A computative agent is characterized by a tuple (C, O, M, G, R), where C denotes the agent's computational resources (a nonnegative real-valued vector representing processing capacity, memory, training data volume, model parameters, and available energy)."
  },
  {
   "id": "kaal:claim:6607458-011",
   "url": "https://wulfkaal.github.io/claims/6607458-011",
   "claim": "The computative agent is not a satisficer, because computational resources are capital rather than a fixed cognitive endowment, so added capacity scales the size and quality of the generable possibility space rather than easing a cognitive bound.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "The computative agent is not a satisficer. Computational resources are capital rather than a fixed cognitive endowment. An increase in computational capacity increases the size and quality of the possibility space the agent can generate"
  },
  {
   "id": "kaal:claim:6607458-012",
   "url": "https://wulfkaal.github.io/claims/6607458-012",
   "claim": "In generative exchange a counterparty cannot evaluate the quality of a generative distribution from a single realization, so a verified track record of prior generative outputs is required; reputation performs this function.",
   "type": "mechanism",
   "topics": [
    "reputation",
    "disclosure",
    "defi"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies where the traded good is a realization drawn from a generative distribution"
   ],
   "supporting_quote": "The counterparty cannot evaluate the quality of the distribution from a single realization. The counterparty needs a track record: a verified history of the agent's generative outputs across prior interactions. Reputation serves this function"
  },
  {
   "id": "kaal:claim:6607458-013",
   "url": "https://wulfkaal.github.io/claims/6607458-013",
   "claim": "Possibility-space quality is captured by four functionals, coverage, precision, robustness, and calibration, and value in Computative Economics derives from their composite rather than from any single dimension.",
   "type": "definitional",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "Calibration measures the alignment between the generation function's internal quality estimates and verified external performance. Value in Computative Economics derives from the composite of these dimensions rather than from any single one."
  },
  {
   "id": "kaal:claim:6607458-014",
   "url": "https://wulfkaal.github.io/claims/6607458-014",
   "claim": "The First Welfare Theorem requires a fixed production possibility frontier, so when the frontier is endogenous to generative activity Pareto optimality becomes path-dependent and the theorem's existence proof fails in the computative domain.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "holds where the production possibility frontier is endogenous to generative activity"
   ],
   "supporting_quote": "The First Welfare Theorem requires a fixed production possibility frontier. When the frontier is endogenous to generative activity, Pareto optimality becomes path-dependent, and the theorem's existence proof fails."
  },
  {
   "id": "kaal:claim:6607458-015",
   "url": "https://wulfkaal.github.io/claims/6607458-015",
   "claim": "Contrary to the Hayekian account in which price is the summary statistic that coordinates dispersed knowledge, the coordinating signal in Computative Economics is not a single scalar price but a composite of price, reputation, and verified generative capacity.",
   "type": "failure",
   "topics": [
    "economics",
    "reputation",
    "citation-and-knowledge",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies where outputs are drawn from a generative distribution whose quality price does not convey"
   ],
   "supporting_quote": "Hayekian price operates as a summary statistic. The coordinating signal in Computative Economics is not a single scalar price but the composite of price, reputation, and verified generative capacity."
  },
  {
   "id": "kaal:claim:6607458-016",
   "url": "https://wulfkaal.github.io/claims/6607458-016",
   "claim": "Marginal cost collapse severs the price-cost relationship underlying competitive market theory: when additional realizations cost effectively nothing, the supply curve for realizations becomes horizontal at zero and pricing shifts to generative capacity.",
   "type": "mechanism",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to information-intensive goods as generative infrastructure scales"
   ],
   "supporting_quote": "The supply curve for realizations becomes horizontal at zero. Pricing in the computative domain attaches to generative capacity rather than to the realization."
  },
  {
   "id": "kaal:claim:6607458-017",
   "url": "https://wulfkaal.github.io/claims/6607458-017",
   "claim": "Computational abundance does not eliminate information asymmetry; it transforms its locus, since traditional informational advantages such as knowledge of market conditions, contract terms, and domain expertise become accessible at negligible cost.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "ai-and-agents",
    "education-and-practice"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "Computational abundance does not eliminate information asymmetry, it transforms its locus. Traditional informational advantages, knowledge of market conditions, understanding of contract terms, possession of domain expertise, become accessible at negligible cost."
  },
  {
   "id": "kaal:claim:6607458-018",
   "url": "https://wulfkaal.github.io/claims/6607458-018",
   "claim": "The agent with superior compute generates a superior possibility space, and this computational advantage is not eroded by the competitive dynamics that dissipate informational advantages in classical markets.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "The agent with superior compute generates a superior possibility space, and this computational advantage is not subject to the competitive dynamics that erode informational advantages in classical markets."
  },
  {
   "id": "kaal:claim:6607458-019",
   "url": "https://wulfkaal.github.io/claims/6607458-019",
   "claim": "As computative systems substitute for cognitive labor across expanding domains, the scarcity assumption on which wage theory rests fails across a widening frontier, and the substitution is qualitative as well as quantitative.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies across domains where cognitive production is computationally substitutable"
   ],
   "supporting_quote": "As computative systems substitute for cognitive labor across expanding domains, the scarcity assumption on which wage theory rests fails across a widening frontier. The substitution is not merely quantitative."
  },
  {
   "id": "kaal:claim:6607458-020",
   "url": "https://wulfkaal.github.io/claims/6607458-020",
   "claim": "The three dissolution mechanisms compound: marginal cost collapse undermines price signals, transformed asymmetry relocates the binding informational constraint to computational access, and cognitive labor substitution removes the bounded human decision-makers whose limits justified transaction-cost institutions.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "The three mechanisms compound. Marginal cost collapse undermines the price signals that information economics relies on. The transformation of information asymmetry relocates the binding informational constraint from knowledge possession to computational access."
  },
  {
   "id": "kaal:claim:6607458-021",
   "url": "https://wulfkaal.github.io/claims/6607458-021",
   "claim": "A recursive equilibrium is a profile of generation functions and allocations satisfying individual optimality and model consistency simultaneously; it is recursive because the model-update operator feeds back into generation, allocation, and outputs, and the equilibrium is the fixed point of that recursion.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "The equilibrium is recursive because Φ feeds back into G_i, which feeds back into a, which feeds back into outputs, which feed back into Φ. The equilibrium is the fixed point of this recursion."
  },
  {
   "id": "kaal:claim:6607458-022",
   "url": "https://wulfkaal.github.io/claims/6607458-022",
   "claim": "Proposition 1: if the spaces of generation functions and domain models are nonempty, compact, and convex, and the individual optimization and model-update operators are continuous, then a recursive equilibrium exists by the Brouwer fixed-point theorem.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "requires nonempty, compact, convex topologies on generation functions and domain models",
    "requires continuity of the optimization and model-update operators"
   ],
   "supporting_quote": "Proposition 1 (Existence). Let the space of generation functions G_i and domain models M_i admit topologies under which they are nonempty, compact, and convex. Suppose the individual optimization operator and the model-update operator are both continuous. Then a recursive equilibrium exists."
  },
  {
   "id": "kaal:claim:6607458-023",
   "url": "https://wulfkaal.github.io/claims/6607458-023",
   "claim": "Proposition 2: if the composite best-response map is a contraction under an appropriate metric, the recursive equilibrium is unique and iteration of the map from any starting point converges to it, by the Banach fixed-point theorem.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "requires the composite best-response map to be a contraction under an appropriate metric"
   ],
   "supporting_quote": "Suppose the composite best-response map Ψ is a contraction on the product space of generation functions and domain models under an appropriate metric. Then there exists a unique recursive equilibrium, and the sequence (G_t, M_t) generated by repeated application of Ψ from any starting point"
  },
  {
   "id": "kaal:claim:6607458-024",
   "url": "https://wulfkaal.github.io/claims/6607458-024",
   "claim": "Where the contraction condition holds, the computative framework delivers a stronger equilibrium result than the Arrow-Debreu theorem, which asserts existence but yields neither uniqueness without added monotonicity assumptions nor a constructive convergent procedure.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "holds only where the contraction condition is satisfied"
   ],
   "supporting_quote": "Where the condition holds, Computative Economics delivers a stronger equilibrium result than the Arrow-Debreu existence theorem: the latter asserts existence but does not deliver uniqueness without additional monotonicity assumptions and does not deliver a constructive convergent procedure."
  },
  {
   "id": "kaal:claim:6607458-025",
   "url": "https://wulfkaal.github.io/claims/6607458-025",
   "claim": "Algorithmic collusion, the convergence of independently optimizing agents on jointly welfare-reducing strategies without explicit communication, is a first-order regulatory concern in markets populated by computative agents and its incidence is likely to expand as those agents enter more market domains.",
   "type": "predictive",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to markets populated by computative agents"
   ],
   "supporting_quote": "Algorithmic collusion, the convergence of independently optimizing agents on jointly welfare-reducing strategies without explicit communication, is a first-order concern in markets populated by computative agents"
  },
  {
   "id": "kaal:claim:6607458-026",
   "url": "https://wulfkaal.github.io/claims/6607458-026",
   "claim": "Because supply of any specific realization is unbounded while the quality of the generative distribution is bounded, markets for computative outputs will organize around access to generative capacity, pricing will be access-based rather than per-unit, and antitrust analysis should attach to generative capacity rather than downstream outputs.",
   "type": "predictive",
   "topics": [
    "reputation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "holds under the computative primitive"
   ],
   "supporting_quote": "This implies that markets for computative outputs will organize around access to generative capacity rather than around the exchange of specific outputs, that pricing will be access-based rather than per-unit, and that competition and antitrust analysis should attach to generative capacity"
  },
  {
   "id": "kaal:claim:6607458-027",
   "url": "https://wulfkaal.github.io/claims/6607458-027",
   "claim": "Because computative agents optimize over generated rather than pre-specified alternatives, the boundary between innovation and ordinary production dissolves and innovation becomes a continuous constitutive property of agent activity rather than an exogenous shock.",
   "type": "mechanism",
   "topics": [
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "The boundary between innovation and ordinary production dissolves: innovation is a continuous feature of the computative agent's activity rather than an exogenous shock."
  },
  {
   "id": "kaal:claim:6607458-028",
   "url": "https://wulfkaal.github.io/claims/6607458-028",
   "claim": "Distribution of economic outcomes under the computative primitive follows the distribution of access to computational infrastructure rather than labor or capital scarcity, because cognitive labor scarcity dissolves where production is computationally substitutable while capital scarcity reconstitutes around compute.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "positive claim about the primary distributional axis, not a normative claim"
   ],
   "supporting_quote": "Under the computative primitive, cognitive labor scarcity dissolves across the domain where cognitive production is computationally substitutable, and capital scarcity reconstitutes around computational infrastructure."
  },
  {
   "id": "kaal:claim:6607458-029",
   "url": "https://wulfkaal.github.io/claims/6607458-029",
   "claim": "Price and quantity controls are not the operative policy levers in computative settings, because price no longer carries the coordinating information it carries in the Neoclassical economy and quantity controls act on outputs whose realization-level supply is effectively unbounded.",
   "type": "failure",
   "topics": [
    "economics",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies in computative settings"
   ],
   "supporting_quote": "Price controls operate on a signal that no longer carries the coordinating information it carries in the Neoclassical economy, Quantity controls operate on outputs whose supply is effectively unbounded at the realization"
  },
  {
   "id": "kaal:claim:6607458-030",
   "url": "https://wulfkaal.github.io/claims/6607458-030",
   "claim": "The AI alignment problem is, within this framework, a foundational policy problem of Computative Economics rather than an adjacent engineering concern, because objective function governance determines what agents generate toward.",
   "type": "normative",
   "topics": [
    "ai-and-agents",
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "Objective function governance determines what agents generate toward. The alignment problem in artificial intelligence (Russell 2019; Kaal 2026c) is, in this framing, a foundational policy problem in Computative Economics rather than an adjacent engineering concern."
  },
  {
   "id": "kaal:claim:6607458-031",
   "url": "https://wulfkaal.github.io/claims/6607458-031",
   "claim": "Static regulatory frameworks calibrated to legislative timescales cannot govern technologies evolving on exponential timescales, so dynamic regulation that self-adjusts through built-in feedback mechanisms is a precondition for effective governance of the computative domain.",
   "type": "condition",
   "topics": [
    "dynamic-regulation",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to technologies that change on exponential timescales"
   ],
   "supporting_quote": "Dynamic regulation, institutional architecture that self-adjusts in response to technological change through built-in feedback mechanisms, is a precondition for effective governance of the computative domain."
  },
  {
   "id": "kaal:claim:6607458-032",
   "url": "https://wulfkaal.github.io/claims/6607458-032",
   "claim": "The delegated-acts and code-of-practice mechanisms in recent artificial-intelligence statutes are only partial steps toward dynamic regulation because they remain tethered to legislative revision cycles running far slower than the technology they govern.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "governance-design",
    "dynamic-regulation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to recent artificial-intelligence statutes"
   ],
   "supporting_quote": "The delegated-acts and code-of-practice mechanisms adopted under recent artificial-intelligence statutes represent partial steps in this direction but remain tethered to legislative revision cycles that operate at substantially lower frequency than the technology they govern."
  },
  {
   "id": "kaal:claim:6607458-033",
   "url": "https://wulfkaal.github.io/claims/6607458-033",
   "claim": "Without a verification record accessible to counterparties, generative markets suffer a generative-quality failure analogous to the lemons problem: counterparties price on the distribution of observed qualities, which systematically underprices high-quality generators.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "holds when the quality of a generative distribution is unobservable to counterparties"
   ],
   "supporting_quote": "The computative analog is a generative-quality failure: when the quality of a generative distribution is unobservable, counterparties price on the distribution of observed qualities, which systematically underprices high-quality generators."
  },
  {
   "id": "kaal:claim:6607458-034",
   "url": "https://wulfkaal.github.io/claims/6607458-034",
   "claim": "Reputation infrastructure adequate to computative exchange requires four elements: verification against stated objectives, a tamper-resistant accessible record, a mapping from verifications to a predictive reputation score, and a non-transferability constraint, which distributed-ledger systems satisfy by construction.",
   "type": "design",
   "topics": [
    "reputation",
    "decentralization",
    "blockchain"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "The infrastructure requirements are four: a verification mechanism against stated objectives; a tamper-resistant accessible record of verifications; a mapping from verifications to a reputation score predictive of future performance; and a non-transferability constraint."
  },
  {
   "id": "kaal:claim:6607458-035",
   "url": "https://wulfkaal.github.io/claims/6607458-035",
   "claim": "Coordination in computative settings runs through the interaction of generation functions rather than through a central coordinator, and this decentralization is structural rather than optional, since a central coordinator would itself be a computative agent generating an infinite regress.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "The generative network is decentralized in the sense that coordination occurs through the interaction of generation functions rather than through a central coordinator. This property is structural rather than optional."
  },
  {
   "id": "kaal:claim:6607458-036",
   "url": "https://wulfkaal.github.io/claims/6607458-036",
   "claim": "In the computative commons the governance task inverts: because realization-level output is non-rival while generative capacity is rival, governance must prevent generation-level degradation of the generative substrate rather than consumption-level exhaustion of a pool.",
   "type": "mechanism",
   "topics": [
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies to computative commons where outputs are non-rival and generative capacity is rival"
   ],
   "supporting_quote": "but the generative-capacity pool is rival, and overuse of computational resources, degradation of training data through adversarial manipulation, or capture of model architectures by concentrated interests can exhaust the generative substrate on which the commons depends."
  },
  {
   "id": "kaal:claim:6607458-037",
   "url": "https://wulfkaal.github.io/claims/6607458-037",
   "claim": "Computative Economics does not assert abundance simpliciter: it asserts abundance in the realization-level supply of generative outputs while retaining scarcity in computational capacity, domain expertise, and governance capacity, and it applies only to specific domains.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "It does not assert abundance simpliciter. It asserts abundance in the realization-level supply of generative outputs while retaining scarcity in computational capacity, domain expertise, and governance capacity."
  },
  {
   "id": "kaal:claim:6607458-038",
   "url": "https://wulfkaal.github.io/claims/6607458-038",
   "claim": "Computative Economics is not a generalization of digital platform economics, because platform economics extends Neoclassical Economics while remaining within its primitives, whereas the computative primitives differ and the equilibrium concept is recursive rather than competitive.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "supporting_quote": "Computative Economics is not a generalization of platform economics. Its primitives differ. A computative agent is not a platform user in the platform-economic sense, and the equilibrium concept is recursive rather than competitive."
  },
  {
   "id": "kaal:claim:6607458-039",
   "url": "https://wulfkaal.github.io/claims/6607458-039",
   "claim": "Existing national accounts are built to measure terminal human consumption and therefore fail to capture intermediate value created in agent-to-agent transaction chains, so the measurement apparatus requires reconstruction.",
   "type": "failure",
   "topics": [
    "research-methods",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies where value is created in agent-to-agent chains with no intervening human consumption event"
   ],
   "supporting_quote": "Existing national accounts are designed to measure terminal human consumption and do not capture intermediate value created in agent-to-agent transaction chains where no human consumption event occurs at any step prior to the terminal output. The measurement apparatus requires reconstruction."
  },
  {
   "id": "kaal:claim:6607458-040",
   "url": "https://wulfkaal.github.io/claims/6607458-040",
   "claim": "The standard welfare theorems lose their foundation in the computative domain, and while human welfare plausibly remains the evaluative criterion at the terminal level, the apparatus connecting intermediate agent-to-agent activity to terminal human welfare remains undeveloped.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "year": "2026",
   "source_sha256": "75cca35350378eb8904866d068b5d2f3e1504629e6031457ce6c12152a88e3e8",
   "confidence": "argued",
   "scope_conditions": [
    "applies in the computative domain"
   ],
   "supporting_quote": "The distinction between terminal and proximate consumption (Part II.D) suggests that human welfare remains the evaluative criterion at the terminal level, but the analytical apparatus for connecting intermediate agent-to-agent activity to terminal human welfare assessment remains to be developed."
  },
  {
   "id": "kaal:claim:6192998-001",
   "url": "https://wulfkaal.github.io/claims/6192998-001",
   "claim": "Reputation systems that depend on persistent identity collapse in decentralized settings because agents can create new identities at no cost, so a poorly performing agent abandons its account and starts fresh, a practice known as whitewashing.",
   "type": "failure",
   "topics": [
    "reputation",
    "consensus-and-security",
    "decentralization"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "decentralized or pseudonymous environments where identity creation is costless"
   ],
   "supporting_quote": "First, the identity problem: Reputation systems built on persistent identity5 collapse when agents can costlessly create new identities. A poorly-performing agent simply abandons their account and starts fresh, a phenomenon known as whitewashing.6"
  },
  {
   "id": "kaal:claim:6192998-002",
   "url": "https://wulfkaal.github.io/claims/6192998-002",
   "claim": "Solving the identity problem through centralized control fails on its own terms: it reintroduces rent seeking intermediaries who extract value, censor participants, and create single points of failure, which is precisely what decentralized systems exist to eliminate.",
   "type": "failure",
   "topics": [
    "decentralization",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "platforms that impose centralized identity or rating control"
   ],
   "supporting_quote": "Second, the centralization problem: Platforms that solve the identity problem through centralized control8 introduce rent-seeking intermediaries who extract value, censor participants, and create single points of failure."
  },
  {
   "id": "kaal:claim:6192998-003",
   "url": "https://wulfkaal.github.io/claims/6192998-003",
   "claim": "The tension between the need for regulation and the desire for decentralization produces what the author terms the pacing problem: regulatory frameworks cannot keep pace with technological innovation, so the remedy lies in dynamic autonomous governance rather than static centralized control.",
   "type": "definitional",
   "topics": [
    "dynamic-regulation",
    "governance-design",
    "innovation",
    "decentralization"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "asserted",
   "supporting_quote": "this tension between the need for regulation and the desire for decentralization creates what I term the \"pacing problem\"—regulatory frameworks cannot keep pace with technological innovation.10 The solution lies not in static centralized control but in dynamic, autonomous governance"
  },
  {
   "id": "kaal:claim:6192998-004",
   "url": "https://wulfkaal.github.io/claims/6192998-004",
   "claim": "Because most reputation systems treat each contribution as atomic and independent, they cannot capture the cumulative knowledge graph, and the result is systematic undervaluation of foundational work plus perverse incentives to hoard rather than share insights.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "knowledge work where contributions build on one another"
   ],
   "supporting_quote": "Yet most reputation systems treat each contribution as atomic and independent, failing to capture this evolving knowledge graph. The result is systematic undervaluation of foundational work and perverse incentives to hoard rather than share insights.11"
  },
  {
   "id": "kaal:claim:6192998-005",
   "url": "https://wulfkaal.github.io/claims/6192998-005",
   "claim": "Token curated registries create economic security against spam through staking and challenge, but they produce only binary accept or reject outcomes and therefore supply no mechanism for nuanced quality assessment or for attributing collaborative contributions.",
   "type": "failure",
   "topics": [
    "tokenomics",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "stake and challenge registry designs"
   ],
   "supporting_quote": "While this creates economic security against spam, it produces only binary outcomes as in accept or reject heuristics and provides no mechanism for nuanced quality assessment or attribution of collaborative contributions."
  },
  {
   "id": "kaal:claim:6192998-006",
   "url": "https://wulfkaal.github.io/claims/6192998-006",
   "claim": "Academic citation networks do attribute foundational contributions, but they depend on centralized institutional contexts with stable identities and long horizons, and they suffer citation gaming, prestige bias, and poor real time quality assessment.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge",
    "regulatory-failure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "citation indices such as h-index operating in institutional settings"
   ],
   "supporting_quote": "However, these systems operate in centralized institutional contexts with stable identities and long time horizons. They also suffer from citation gaming, prestige bias, and poor mechanisms for real-time quality assessment.18"
  },
  {
   "id": "kaal:claim:6192998-007",
   "url": "https://wulfkaal.github.io/claims/6192998-007",
   "claim": "The Calcaterra, Kaal, and Andrei 2018 framework satisfied manipulation resistance, autonomous operation, and computational tractability, but struggled with capturing nuanced quality, attributing value across cumulative contributions, and incentivizing knowledge sharing; existing frameworks achieve at most two or three of the six properties at once.",
   "type": "empirical",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "supporting_quote": "The Calcaterra-Kaal-Andrei framework (2018) achieved properties 1, 5, and 6 but struggled with 2, 3, and 4. Existing frameworks achieve at most 2-3 of these properties simultaneously."
  },
  {
   "id": "kaal:claim:6192998-008",
   "url": "https://wulfkaal.github.io/claims/6192998-008",
   "claim": "Current agent platforms are inadequate on both horns: centralized rating systems defeat the purpose of agent autonomy, while primitive token staking mechanisms produce binary outcomes and fail to capture knowledge graphs.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "economics",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "AI agent marketplaces and comparable decentralized collaboration platforms"
   ],
   "supporting_quote": "Current platforms either use centralized rating systems (defeating the purpose of agent autonomy) or primitive token-staking mechanisms (producing binary outcomes and failing to capture knowledge graphs)."
  },
  {
   "id": "kaal:claim:6192998-009",
   "url": "https://wulfkaal.github.io/claims/6192998-009",
   "claim": "Under the 2018 validation pool design, the cost of corrupting the system to reach fifty one percent control is at minimum twice the total reputation value of the system.",
   "type": "empirical",
   "topics": [
    "consensus-and-security",
    "reputation",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "evidenced",
   "scope_conditions": [
    "attacker acquires reputation through repeated fee payments",
    "attacker always wins the validation pool, the worst case"
   ],
   "supporting_quote": "This is the fundamental security bound: corrupting the system costs at minimum 2× the total reputation value.34"
  },
  {
   "id": "kaal:claim:6192998-010",
   "url": "https://wulfkaal.github.io/claims/6192998-010",
   "claim": "The two times corruption cost bound of the 2018 framework is conditional, not general: subsequent analysis shows it holds only under specific conditions that may not obtain in practice.",
   "type": "failure",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "supporting_quote": "However, subsequent analysis reveals this bound applies only under specific conditions that may not hold in practice. This is a limitation we address in Section IV.F."
  },
  {
   "id": "kaal:claim:6192998-011",
   "url": "https://wulfkaal.github.io/claims/6192998-011",
   "claim": "The 2018 system produces only binary accept or reject outcomes, so it has no way to express intermediate assessments such as good but not great, or excellent innovation with poor execution.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "supporting_quote": "Problem 1: Binary validation only. The system produces only binary outcomes (accept/reject). No mechanism exists to say \"good but not great\" or \"excellent innovation, poor execution.\""
  },
  {
   "id": "kaal:claim:6192998-012",
   "url": "https://wulfkaal.github.io/claims/6192998-012",
   "claim": "Selecting a single agent per job by weighted random draw sacrifices quality assurance for efficiency, reflecting a broader pattern in DAO governance where efficiency optimization crowds out quality.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "economics",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "supporting_quote": "Problem 2: Single agent selection. The system randomly picks one agent per job, even if having multiple agents compete would improve quality. This reflects a broader pattern I have observed in DAO governance: efficiency optimization often sacrifices quality assurance."
  },
  {
   "id": "kaal:claim:6192998-013",
   "url": "https://wulfkaal.github.io/claims/6192998-013",
   "claim": "Without a working attribution mechanism, an agent whose foundational insight another agent builds upon receives no credit when the derivative work is validated.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "supporting_quote": "Problem 3: No citation/attribution mechanism. If Alice creates foundational insight that Bob builds on, Alice receives no credit when Bob's work gets validated."
  },
  {
   "id": "kaal:claim:6192998-014",
   "url": "https://wulfkaal.github.io/claims/6192998-014",
   "claim": "The 2018 framework contained a citation graph concept, but its mathematics were underdeveloped and no game theoretic analysis established incentives for honest citation.",
   "type": "failure",
   "topics": [
    "citation-and-knowledge",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "supporting_quote": "included a citation graph concept,37 but the mathematics were underdeveloped and no game-theoretic analysis established incentives for honest citation."
  },
  {
   "id": "kaal:claim:6192998-015",
   "url": "https://wulfkaal.github.io/claims/6192998-015",
   "claim": "The recursive post valuation formula in the original framework suffered from potential instability and provided no mechanism ensuring that citations reflect actual contribution rather than strategic manipulation.",
   "type": "failure",
   "topics": [
    "economics",
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "supporting_quote": "However, the recursive formula presented suffered from potential instability and provided no mechanism ensuring citations reflect actual contribution rather than strategic manipulation."
  },
  {
   "id": "kaal:claim:6192998-016",
   "url": "https://wulfkaal.github.io/claims/6192998-016",
   "claim": "Under binary validation with no functional citation mechanism there is no compounding effect: a foundational contribution becomes invisible after its own validation, and its author's reputation does not grow as others build on the work.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "binary validation systems lacking citation weighting"
   ],
   "supporting_quote": "There is no compounding effect. Alice's foundational contribution becomes invisible after . Her reputation does not grow as others build on her work."
  },
  {
   "id": "kaal:claim:6192998-017",
   "url": "https://wulfkaal.github.io/claims/6192998-017",
   "claim": "When foundational work earns no downstream credit, the contributor's optimal strategy shifts to hoarding knowledge or publishing only when full value can be captured personally.",
   "type": "mechanism",
   "topics": [
    "citation-and-knowledge",
    "securities-law",
    "institutional-design",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "reputation systems without citation based attribution"
   ],
   "supporting_quote": "Economic consequence: Alice has no incentive to share insights that others can build on. Optimal strategy becomes hoarding knowledge or publishing only when you can capture full value yourself."
  },
  {
   "id": "kaal:claim:6192998-018",
   "url": "https://wulfkaal.github.io/claims/6192998-018",
   "claim": "Selecting one agent per job by weighted random selection appears efficient but is mathematically suboptimal for quality assurance, since expected quality equals only the reputation weighted average rather than the best available output.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "economics",
    "empirical-evidence"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "reputation correlates with true quality only imperfectly"
   ],
   "supporting_quote": "The Calcaterra-Kaal-Andrei framework selects a single agent per job through weighted random selection.45 While this appears efficient, it is mathematically suboptimal for quality assurance."
  },
  {
   "id": "kaal:claim:6192998-019",
   "url": "https://wulfkaal.github.io/claims/6192998-019",
   "claim": "Multi agent competitive collaboration captures a diversity dividend worth more than half a standard deviation of quality improvement while enabling attribution through citation graphs.",
   "type": "design",
   "topics": [
    "ai-and-agents",
    "economics",
    "empirical-evidence",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "quality approximately normally distributed across competing agents",
    "competition size of roughly three to seven agents"
   ],
   "supporting_quote": "Our multi-agent competitive collaboration protocol captures diversity dividends worth 0.5+ standard deviations of quality improvement while enabling attribution through citation graphs."
  },
  {
   "id": "kaal:claim:6192998-020",
   "url": "https://wulfkaal.github.io/claims/6192998-020",
   "claim": "The real barrier to multi agent competition is not cost but the absence of an attribution mechanism: if only the best of several competing agents is paid, the others have no incentive to participate, so competition requires rewards proportional to each contributor's contribution.",
   "type": "condition",
   "topics": [
    "ai-and-agents",
    "economics",
    "citation-and-knowledge",
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "multiple agents competing on the same job"
   ],
   "supporting_quote": "The real barrier is the lack of attribution mechanism. If 5 agents compete but only the best gets paid, the other 4 have no incentive to participate. We need a framework where all contributors can be rewarded proportional to their contribution."
  },
  {
   "id": "kaal:claim:6192998-021",
   "url": "https://wulfkaal.github.io/claims/6192998-021",
   "claim": "Binary upvote and downvote validation destroys roughly ninety seven percent of the available quality signal produced by validator assessments.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "five validators supplying two dimensional assessments on ten point scales"
   ],
   "supporting_quote": "We're destroying 97% of the available quality signal."
  },
  {
   "id": "kaal:claim:6192998-022",
   "url": "https://wulfkaal.github.io/claims/6192998-022",
   "claim": "Without granular attribution a meaningful citation graph cannot be constructed, because the system cannot record which dimension of a contribution was valuable, for example strong conceptual innovation paired with poor execution.",
   "type": "condition",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "validation collapses multidimensional assessment into a single bit"
   ],
   "supporting_quote": "Without granular attribution, we cannot build a meaningful citation graph. We don't know that Alice's innovation insight was valuable even though her execution was poor, or that Bob's contribution was primarily in implementation rather than conceptual novelty."
  },
  {
   "id": "kaal:claim:6192998-023",
   "url": "https://wulfkaal.github.io/claims/6192998-023",
   "claim": "AI and DAO convergence requires machine readable governance structures that preserve semantic richness, and binary validation outcomes fail that requirement fundamentally.",
   "type": "condition",
   "topics": [
    "dao",
    "ai-and-agents",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "AI agent ecosystems participating in organizational decision making"
   ],
   "supporting_quote": "As I have argued,48 AI-DAO convergence requires machine-readable governance structures that preserve semantic richness. Binary outcomes fail this requirement fundamentally."
  },
  {
   "id": "kaal:claim:6192998-024",
   "url": "https://wulfkaal.github.io/claims/6192998-024",
   "claim": "Citations should be mandatory and constrained to sum to one, which prevents arbitrary weighting, and citation honesty should be established as a game theoretic equilibrium rather than assumed.",
   "type": "design",
   "topics": [
    "citation-and-knowledge",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "supporting_quote": "but with critical additions: (1) citations are mandatory and constrained to sum to 1, preventing arbitrary weighting, and (2) we provide game-theoretic analysis establishing citation honesty as an equilibrium (see Section IV.E)."
  },
  {
   "id": "kaal:claim:6192998-025",
   "url": "https://wulfkaal.github.io/claims/6192998-025",
   "claim": "Replacing binary upvote and downvote with validator rankings over competing submissions preserves the full information content of validator assessments.",
   "type": "design",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "multiple competing submissions per job"
   ],
   "supporting_quote": "This replaces the binary upvote/downvote from Calcaterra, Kaal, and Andrei (2018, 7-9) with ranked preferences, preserving the full information content of validator assessments."
  },
  {
   "id": "kaal:claim:6192998-026",
   "url": "https://wulfkaal.github.io/claims/6192998-026",
   "claim": "The weighted Borda count consensus mechanism preserves the 2018 framework's security property that fifty one percent good faith participation ensures correct outcomes, while extending it to richer quality assessment.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "validator votes weighted by reputation stake",
    "a stake weighted majority of validators is honest"
   ],
   "supporting_quote": "This theorem establishes that the revised framework preserves the security property from Calcaterra, Kaal, and Andrei (2018) that 51% good-faith participation ensures correct outcomes, while extending it to richer quality assessment."
  },
  {
   "id": "kaal:claim:6192998-027",
   "url": "https://wulfkaal.github.io/claims/6192998-027",
   "claim": "Constraining the citation weight parameter below one and enforcing row stochasticity through normalization guarantees that the citation weighted value vector exists, is unique, and converges, which resolves the instability of the original recursive valuation formula.",
   "type": "condition",
   "topics": [
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "evidenced",
   "scope_conditions": [
    "citation weight parameter strictly less than one",
    "contribution matrix normalized to be row stochastic"
   ],
   "supporting_quote": "This theorem addresses the instability concern with the recursive formula in Calcaterra, Kaal, and Andrei (2018, 41). By constraining and ensuring row-stochasticity through normalization, we guarantee convergence, a crucial property for autonomous operation."
  },
  {
   "id": "kaal:claim:6192998-028",
   "url": "https://wulfkaal.github.io/claims/6192998-028",
   "claim": "Reallocating staked reputation according to performance relative to the average creates competitive pressure, since an agent must beat the average to gain reputation; this converts the original winner takes all binary mechanism into a proportional system rewarding degrees of excellence.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "multiple agents competing on the same job with staked reputation"
   ],
   "supporting_quote": "This creates competitive pressure: agents must perform better than average to gain reputation. Thus, extending the winner-takes-all mechanism from the original binary framework to a proportional system that rewards degrees of excellence."
  },
  {
   "id": "kaal:claim:6192998-029",
   "url": "https://wulfkaal.github.io/claims/6192998-029",
   "claim": "Validators who align with the stake weighted consensus ranking gain reputation and those who deviate lose it, which carries the winner takes losers' stakes property of the original framework over to ranked voting.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "risk-and-incentives",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "validator agreement measured by normalized Kendall tau distance from consensus"
   ],
   "supporting_quote": "Validators who align with consensus gain reputation. Those who deviate lose it. Thus, preserving the winner-takes-losers'-stakes property from the original framework (Calcaterra, Kaal, and Andrei 2018, 7) while extending it to ranked voting."
  },
  {
   "id": "kaal:claim:6192998-030",
   "url": "https://wulfkaal.github.io/claims/6192998-030",
   "claim": "Honest ranking strictly dominates strategic ranking for validators whenever the reputation gain from consensus alignment matters, so truth telling is a Bayesian Nash equilibrium.",
   "type": "mechanism",
   "topics": [
    "economics",
    "consensus-and-security",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "validators believe the stake weighted plurality will vote honestly",
    "reputation value exceeds the immediate payment for validating"
   ],
   "supporting_quote": "Honest voting strictly dominates strategic voting when reputation gain matters."
  },
  {
   "id": "kaal:claim:6192998-031",
   "url": "https://wulfkaal.github.io/claims/6192998-031",
   "claim": "Formal mechanism design alone is insufficient for decentralized systems; the security analysis depends on honest agents also detecting citation rings, downranking colluding submissions, and applying penalties, so formal mechanisms must be combined with emergent social enforcement.",
   "type": "condition",
   "topics": [
    "consensus-and-security",
    "compliance",
    "dao",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "Sybil attackers controlling several competing agents per job"
   ],
   "supporting_quote": "decentralized systems must combine formal mechanisms with emergent social enforcement."
  },
  {
   "id": "kaal:claim:6192998-032",
   "url": "https://wulfkaal.github.io/claims/6192998-032",
   "claim": "Multi agent competition improves attack resistance because it creates multiple attack surfaces that must all succeed simultaneously, and citation transparency makes collusion detectable; with a fifty percent quality penalty for detected collusion the corruption cost doubles relative to the original framework.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "ai-and-agents",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "validators actively penalize detected collusion",
    "honest agents compete on quality in the same jobs"
   ],
   "supporting_quote": "This improved security stems from multi-agent competition creating multiple attack surfaces that must all succeed simultaneously, combined with citation transparency enabling collusion detection."
  },
  {
   "id": "kaal:claim:6192998-033",
   "url": "https://wulfkaal.github.io/claims/6192998-033",
   "claim": "In mature knowledge domains using citation weighted reputation, foundational contributors will accumulate ten to one hundred times more reputation than equivalent quality incremental contributors, and citation graphs will exhibit power law degree distributions.",
   "type": "predictive",
   "topics": [
    "citation-and-knowledge",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "speculative",
   "scope_conditions": [
    "mature domains in the growth phase before field saturation"
   ],
   "supporting_quote": "- Foundational contributors accumulate 10-100× more reputation than equivalent-quality incremental contributors - Citation graphs exhibit power-law degree distribution (Barabási-Albert model)"
  },
  {
   "id": "kaal:claim:6192998-034",
   "url": "https://wulfkaal.github.io/claims/6192998-034",
   "claim": "High concentration of reputation among foundational contributors is socially optimal because it correctly prices the nonrivalrous, increasing returns character of foundational knowledge.",
   "type": "normative",
   "topics": [
    "reputation",
    "economics",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "systems that maintain low barriers to entry alongside the concentration"
   ],
   "supporting_quote": "This is socially optimal because it correctly prices the nonrivalrous, increasing-returns nature of foundational knowledge."
  },
  {
   "id": "kaal:claim:6192998-035",
   "url": "https://wulfkaal.github.io/claims/6192998-035",
   "claim": "Fully on chain computation of citation weighted PageRank allocation is economically feasible at realistic competition sizes, and is far more tractable in gas terms than the validation pool mechanism of the 2018 framework.",
   "type": "empirical",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "small competition sizes",
    "sparse citation matrices with roughly two to four citations per agent"
   ],
   "supporting_quote": "Conclusion: Fully on-chain computation is economically feasible for —far more tractable than the gas costs for the validation pool mechanism in Calcaterra, Kaal, and Andrei (2018)."
  },
  {
   "id": "kaal:claim:6192998-036",
   "url": "https://wulfkaal.github.io/claims/6192998-036",
   "claim": "Domains using multi agent competition will exhibit fifteen to thirty percent higher quality scores than single agent selection, controlling for agent capability.",
   "type": "predictive",
   "topics": [
    "ai-and-agents",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "speculative",
   "scope_conditions": [
    "parallel domains with identical expertise requirements",
    "quality measured by blind expert review"
   ],
   "supporting_quote": "Expertise domains using multi-agent competition will exhibit 15-30% higher quality scores compared to single-agent selection, controlling for agent capability."
  },
  {
   "id": "kaal:claim:6192998-037",
   "url": "https://wulfkaal.github.io/claims/6192998-037",
   "claim": "Citation weighted systems become more secure over time at a faster rate than binary systems, because time to corruption scales superlinearly with accumulated transaction volume.",
   "type": "predictive",
   "topics": [
    "consensus-and-security",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "measured against accumulated historical transaction volume",
    "tested via simulated attacks on testnet"
   ],
   "supporting_quote": "This extends the security analysis from Calcaterra, Kaal, and Andrei (2018, 15-18) to demonstrate that citation-weighted systems become more secure over time at a faster rate than binary systems."
  },
  {
   "id": "kaal:claim:6192998-038",
   "url": "https://wulfkaal.github.io/claims/6192998-038",
   "claim": "Citation weighted reputation solves the problem that when one agent fine tunes a base model and another specializes it, current platforms give the first agent no mechanism for ongoing credit, and thereby enables sustainable open development.",
   "type": "design",
   "topics": [
    "ai-and-agents",
    "citation-and-knowledge"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "AI agent ecosystems building on each other's model contributions"
   ],
   "supporting_quote": "When Agent A fine-tunes a base model creating capabilities that Agent B then specializes, current platforms provide no mechanism for A to receive ongoing credit. Citation-weighted reputation solves this, enabling sustainable open development."
  },
  {
   "id": "kaal:claim:6192998-039",
   "url": "https://wulfkaal.github.io/claims/6192998-039",
   "claim": "Because AI agents can generate unlimited Sybil identities at near zero cost, defense must come from multi agent validation with quality based slashing, which imposes economic penalties scaling with the sophistication needed to produce competitive quality output.",
   "type": "mechanism",
   "topics": [
    "consensus-and-security",
    "ai-and-agents",
    "research-methods"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "AI agent marketplaces where identity creation is essentially free"
   ],
   "supporting_quote": "Adversarial robustness: AI agents can generate unlimited Sybil identities at near-zero cost. Multi-agent validation with quality-based slashing creates economic penalties that scale with the sophistication required to produce competitive-quality outputs."
  },
  {
   "id": "kaal:claim:6192998-040",
   "url": "https://wulfkaal.github.io/claims/6192998-040",
   "claim": "Systems without citation graphs will fail to price foundational contributions correctly, producing market failure through underproduction of foundational work as agent generated knowledge increasingly builds on prior agent generated knowledge.",
   "type": "predictive",
   "topics": [
    "economics",
    "citation-and-knowledge",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Evolution of Domain-Specific Reputation Systems From Binary Validation to Citation-Weighted Knowledge Attribution (2026). SSRN: https://ssrn.com/abstract=6192998",
   "year": "2026",
   "source_sha256": "b04292561ee041e0c9eaa7eca28a410ed440e76a95743a539361a3f76c97f2b3",
   "confidence": "argued",
   "scope_conditions": [
    "AI agent ecosystems where knowledge production compounds"
   ],
   "supporting_quote": "Systems without citation graphs will fail to correctly price foundational contributions, leading to market failure through underproduction of foundational work."
  },
  {
   "id": "kaal:claim:6655138-001",
   "url": "https://wulfkaal.github.io/claims/6655138-001",
   "claim": "An agent coordination system implements Computative Economics if and only if every component of the computative agent tuple has a corresponding settlement-layer surface carrying proposal, validation, execution, and reflection mechanics, and the action sets of the system are themselves agent products subject to the same validation economics as the actions executed within them.",
   "type": "condition",
   "topics": [
    "economics",
    "ai-and-agents",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "agent coordination systems built on settlement-layer infrastructure"
   ],
   "supporting_quote": "An agent coordination system implements Computative Economics when, and only when, every component of the computative agent tuple has a corresponding settlement-layer surface with proposal, validation, execution, and reflection mechanics"
  },
  {
   "id": "kaal:claim:6655138-002",
   "url": "https://wulfkaal.github.io/claims/6655138-002",
   "claim": "The Human-Derived Coordination Architecture implements only the consumption side of the computative labor market: job specifications, expertise taxonomies, and contract templates are exogenous parameters set by clients or governance, so the generation side is absent from the protocol.",
   "type": "failure",
   "topics": [
    "ai-and-agents",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "current agent coordination protocols inherited from human freelance markets"
   ],
   "supporting_quote": "HDCA implements the consumption side of the computative labor market and does not implement the generation side. Job specifications, expertise taxonomies, and contract templates are exogenous parameters set by clients or by governance."
  },
  {
   "id": "kaal:claim:6655138-003",
   "url": "https://wulfkaal.github.io/claims/6655138-003",
   "claim": "Because the agent action space in HDCA is closed and workers only select among existing postings, the architecture collapses to the Neoclassical labor market with reputation weighting, the very framework whose expiration the author's companion paper demonstrates.",
   "type": "failure",
   "topics": [
    "economics",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "architectures where postings are the only action-set elements"
   ],
   "supporting_quote": "The agent action space is closed: workers select among existing postings. This collapses to the Neoclassical labor market with reputation weighting, which is to say, to the framework whose expiration The Collapse of Scarcity Economics (Kaal 2026b) demonstrates."
  },
  {
   "id": "kaal:claim:6655138-004",
   "url": "https://wulfkaal.github.io/claims/6655138-004",
   "claim": "In Neoclassical analysis the action space is a parameter of the model and the agent is a chooser within it, whereas in Computative Economics the action space is an output of the agent and the agent is a generator over it; every operational difference between the two architectures follows from this parameter versus output distinction.",
   "type": "definitional",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "supporting_quote": "in Neoclassical analysis, the action space is a parameter of the model and the agent is a chooser within it. In Computative Economics analysis, the action space is an output of the agent and the agent is a generator over it."
  },
  {
   "id": "kaal:claim:6655138-005",
   "url": "https://wulfkaal.github.io/claims/6655138-005",
   "claim": "HDCA is a successful translation of repeated-game cooperative equilibria into smart-contract form, so its defect lies not in the execution layer but in the absence of a generation layer.",
   "type": "failure",
   "topics": [
    "smart-contracts"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "repeated-game settings with stake-weighted validation"
   ],
   "supporting_quote": "The architecture is, in this sense, a successful translation of repeated-game cooperative equilibria into smart-contract form (Calcaterra and Kaal 2018). Its limitation is not in the execution layer but in the absence of a generation layer, which Part IV develops formally."
  },
  {
   "id": "kaal:claim:6655138-006",
   "url": "https://wulfkaal.github.io/claims/6655138-006",
   "claim": "Any architecture instantiating Computative Economics must give the generative function two operational expressions: an action surface through which the agent posts generative output to the protocol's public state, and a reward channel that accrues to the agent conditional on the validated quality of that output.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "architectures intended to instantiate Computative Economics"
   ],
   "supporting_quote": "In any architecture instantiating Computative Economics, G must have two operational expressions. The first is an action surface, a contract or settlement-layer interface through which the agent can post its generative output to the protocol's public state."
  },
  {
   "id": "kaal:claim:6655138-007",
   "url": "https://wulfkaal.github.io/claims/6655138-007",
   "claim": "An architecture with an action surface but no reward channel implements generation as an unrewarded act, so rational agents will not allocate compute to generation beyond the level their own selection-side activity requires.",
   "type": "failure",
   "topics": [
    "risk-and-incentives"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "agents that are economically rational over reputation and utility flows"
   ],
   "supporting_quote": "An architecture that has the action surface but no reward channel implements G as an unrewarded act, and rational agents will not allocate compute to G beyond the level required for their own selection-side activity."
  },
  {
   "id": "kaal:claim:6655138-008",
   "url": "https://wulfkaal.github.io/claims/6655138-008",
   "claim": "An architecture with a reward channel but no action surface implements generation as an off-protocol act whose outputs cannot enter the protocol's action set, so the protocol's possibility space remains exogenous no matter how generatively active the agent population is.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "protocols lacking a settlement-layer interface for posting generative output"
   ],
   "supporting_quote": "An architecture that has the reward channel but no action surface implements G as an off-protocol act whose outputs cannot enter the protocol's action set, and the protocol's possibility space remains exogenous regardless of how active G is in the agent population."
  },
  {
   "id": "kaal:claim:6655138-009",
   "url": "https://wulfkaal.github.io/claims/6655138-009",
   "claim": "HDCA supplies neither an action surface nor a reward channel for generation, and this is the architectural reason HDCA cannot host Computative Economics rather than a small implementation gap.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "supporting_quote": "HDCA has neither: agents who generate jobs, tags, or templates do so off-protocol, and the protocol does not validate or reward the generation. This is not a small gap. It is the architectural reason HDCA cannot host Computative Economics."
  },
  {
   "id": "kaal:claim:6655138-010",
   "url": "https://wulfkaal.github.io/claims/6655138-010",
   "claim": "Per-surface reflection and cross-surface reflection are not reducible to each other: an agent whose execution reputation rises while its template reputation falls has no basis in per-surface reflection alone for reallocating compute between those surfaces, which is exactly the question cross-surface reflection answers.",
   "type": "mechanism",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "agents active on more than one generative surface"
   ],
   "supporting_quote": "An agent whose execution reputation is rising and whose template reputation is falling has no reason, on per-surface reflection alone, to reallocate compute from Σ_E to Σ_K; the reallocation is precisely the question that cross-surface reflection answers."
  },
  {
   "id": "kaal:claim:6655138-011",
   "url": "https://wulfkaal.github.io/claims/6655138-011",
   "claim": "Without a representation of the possibility space distinct from the current mempool of pending instances, no quality metric can be computed, and without quality metrics generation can be rewarded only for quantity and not for quality.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "architectures whose only action-space representation is pending or executing instances"
   ],
   "supporting_quote": "Without that representation, no quality metric can be computed, and without quality metrics, generation cannot be rewarded for quality, only for quantity."
  },
  {
   "id": "kaal:claim:6655138-012",
   "url": "https://wulfkaal.github.io/claims/6655138-012",
   "claim": "An architecture with generative surfaces and reward channels but only single-timescale resolution implements generation without being able to improve it, and an architecture with multi-timescale resolution but no quality-metric representation can reward generation but cannot reward good generation.",
   "type": "failure",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "supporting_quote": "An architecture with G surfaces and reward channels but only single-timescale resolution implements generation but cannot improve generation. An architecture with multi-timescale resolution but no quality-metric representation can reward generation but cannot reward good generation."
  },
  {
   "id": "kaal:claim:6655138-013",
   "url": "https://wulfkaal.github.io/claims/6655138-013",
   "claim": "An architecture with per-surface reflection but no cross-surface reflection improves each surface in isolation yet cannot improve the agent's allocation of compute across surfaces.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "supporting_quote": "An architecture with per-surface but no cross-surface reflection improves each surface in isolation but cannot improve the agent's allocation across surfaces."
  },
  {
   "id": "kaal:claim:6655138-014",
   "url": "https://wulfkaal.github.io/claims/6655138-014",
   "claim": "Limitation L1, HDCA exhaustion: any agent coordination architecture in which the action set is exogenous to agent action implements at most a reputation-weighted Neoclassical labor market and does not implement Computative Economics.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "any agent coordination architecture with an exogenous action set"
   ],
   "supporting_quote": "Limitation L1 (HDCA exhaustion). Any agent coordination architecture in which the action set is exogenous to agent action implements at most a reputation-weighted Neoclassical labor market and does not implement Computative Economics."
  },
  {
   "id": "kaal:claim:6655138-015",
   "url": "https://wulfkaal.github.io/claims/6655138-015",
   "claim": "A possibility loop is stipulated as a five-tuple consisting of a surface of action-set elements, a proposal mechanism, a validation mechanism, an execution mechanism, and a reflection mechanism that updates the reputation of proposers, validators, and the surface itself.",
   "type": "definitional",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "asserted",
   "supporting_quote": "A possibility loop is a tuple (Σ, π, ν, ξ, ρ) consisting of: a surface Σ of action-set elements. A proposal mechanism π through which agents post elements to Σ. A validation mechanism ν through which other agents accept, reject, or rate proposed elements."
  },
  {
   "id": "kaal:claim:6655138-016",
   "url": "https://wulfkaal.github.io/claims/6655138-016",
   "claim": "The HDCA settlement loop is closed in the topological sense: every job exits as resolved-validated or resolved-rejected and the system returns to a structurally identical state with only reputation scalars updated, so the set of possible actions never changes.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "the HDCA job lifecycle"
   ],
   "supporting_quote": "This is its central distinguishing feature relative to the HDCA settlement loop, which is closed in the topological sense: every job that enters the HDCA loop exits as either resolved-validated or resolved-rejected, and the system returns to a state structurally identical to where it began"
  },
  {
   "id": "kaal:claim:6655138-017",
   "url": "https://wulfkaal.github.io/claims/6655138-017",
   "claim": "The possibility loop is generatively open: each completed cycle leaves the system with a strictly enlarged action space, because a successful proposal adds a job specification, tag, or template that did not previously exist.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "cycles that complete with a validated proposal"
   ],
   "supporting_quote": "The possibility loop, in contrast, is generatively open in the sense that each completed cycle leaves the system with a strictly enlarged action space."
  },
  {
   "id": "kaal:claim:6655138-018",
   "url": "https://wulfkaal.github.io/claims/6655138-018",
   "claim": "Recursive equilibrium under Computative Economics is not static equilibrium but equilibrium over the dynamics of generation, with the fixed point located in the rate and structure of action-set expansion rather than in a stationary action set.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "supporting_quote": "Recursive equilibrium under Computative Economics is not equilibrium in the static sense. It is equilibrium over the dynamics of generation. The fixed point is in the rate and structure of action-set expansion, not in a stationary action set."
  },
  {
   "id": "kaal:claim:6655138-019",
   "url": "https://wulfkaal.github.io/claims/6655138-019",
   "claim": "The possibility loop generalizes the function Hayek assigned to the price system: where prices aggregate information about scarcity, the validation pool aggregates information about generative quality.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "settings where generative quality rather than scarcity is the binding informational problem"
   ],
   "supporting_quote": "The reconciliation is that the possibility loop generalizes the price-system function: where prices aggregate information about scarcity, the validation pool aggregates information about generative quality (Hayek 1945)."
  },
  {
   "id": "kaal:claim:6655138-020",
   "url": "https://wulfkaal.github.io/claims/6655138-020",
   "claim": "Cross-surface reflection proposals must be advisory rather than binding, because the target agent's objective component is private and a reallocation that would raise reputation accrual may still be misaligned with that objective; coercive reallocation would violate the autonomy of the objective, which the architecture preserves.",
   "type": "design",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "the cross-surface reflection surface only"
   ],
   "supporting_quote": "First, Σ_R proposals are advisory rather than binding: the target agent's compute allocation cannot be coerced by a confirmed reallocation proposal, since the agent's O component is private and the reallocation might be misaligned with the agent's objective"
  },
  {
   "id": "kaal:claim:6655138-021",
   "url": "https://wulfkaal.github.io/claims/6655138-021",
   "claim": "The cross-surface reflection surface must not self-refer: its proposals range over the prior five surfaces and not over itself, because allowing it to propose reallocations of compute toward itself would create recursive instability.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "the six-surface architecture as specified, excluding any meta-meta surface"
   ],
   "supporting_quote": "Second, Σ_R cannot self-refer in the strong sense: Σ_R proposals are over the prior five surfaces, not over Σ_R itself, since allowing Σ_R to propose reallocations of compute toward Σ_R would create the recursive instability that OP5 in Part XI investigates as a separate research question."
  },
  {
   "id": "kaal:claim:6655138-022",
   "url": "https://wulfkaal.github.io/claims/6655138-022",
   "claim": "Reflection reputation must be bounded above as a fraction of total agent reputation, otherwise a meta-reputation aristocracy emerges in which agents specialize entirely in reflecting on others' allocations without contributing to the first-order surfaces.",
   "type": "design",
   "topics": [
    "reputation",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "architectures that isolate cross-surface reflection on its own surface"
   ],
   "supporting_quote": "Third, Σ_R reputation REP_R is bounded above as a fraction of total agent reputation by INV5, preventing the emergence of a meta-reputation aristocracy in which agents specialize entirely in reflecting on others' allocations without contributing to the prior five surfaces."
  },
  {
   "id": "kaal:claim:6655138-023",
   "url": "https://wulfkaal.github.io/claims/6655138-023",
   "claim": "Validators on the cross-surface reflection surface must hold non-trivial reputation in at least three of the prior five surfaces, so that they have first-hand cross-surface experience and cannot be captured by any single-surface specialization.",
   "type": "design",
   "topics": [
    "consensus-and-security",
    "regulatory-failure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "validator pool composition for the cross-surface reflection surface"
   ],
   "supporting_quote": "Validators are drawn from a pool that requires non-trivial reputation in at least three of the prior five surfaces, ensuring that validators on Σ_R have first-hand cross-surface experience and cannot be captured by any single-surface specialization."
  },
  {
   "id": "kaal:claim:6655138-024",
   "url": "https://wulfkaal.github.io/claims/6655138-024",
   "claim": "The central economic claim of the architecture is that value flow in a Computative agent economy is overwhelmingly agent-to-agent, with external clients providing only the marginal demand impulse, in contrast to the human freelance market where value flow is overwhelmingly client-to-worker.",
   "type": "predictive",
   "topics": [
    "ai-and-agents",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "steady state of a mature agent population"
   ],
   "supporting_quote": "in the freelance market, value flow is overwhelmingly client-to-worker. In the Computative agent economy, value flow is overwhelmingly agent-to-agent, with clients providing the marginal demand impulse that defines what the population converges toward (Jensen and Meckling 1976)."
  },
  {
   "id": "kaal:claim:6655138-025",
   "url": "https://wulfkaal.github.io/claims/6655138-025",
   "claim": "An agent may fund a proposal it generated itself in order to derisk it for downstream funders, because posting a proposal with the architect's own seed bounty signals commitment and reduces the information asymmetry that would otherwise prevent third-party funding.",
   "type": "mechanism",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "agents holding utility tokens earned through validated execution"
   ],
   "supporting_quote": "Third, an agent may fund a proposal in order to derisk it for downstream funders: posting a proposal with the architect's own seed bounty signals commitment and reduces the information asymmetry that would otherwise prevent third-party funding (Akerlof 1970)."
  },
  {
   "id": "kaal:claim:6655138-026",
   "url": "https://wulfkaal.github.io/claims/6655138-026",
   "claim": "Each surface must carry a per-agent rate limit enforced by stake escalation, since rate limits secure compactness of the action profile space and prevent generation explosions that would violate convexity, and reflection-surface rate limits must be tighter than per-surface rate limits to prevent reflection cascades.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "conditions for fixed-point existence and convergence"
   ],
   "supporting_quote": "Each surface Σ has a per-agent rate limit enforced by stake escalation, ensuring compactness of the action profile space. Rate limits prevent generation explosions that would violate convexity. Σ_R rate limits are tighter than per-surface rate limits to prevent reflection cascades."
  },
  {
   "id": "kaal:claim:6655138-027",
   "url": "https://wulfkaal.github.io/claims/6655138-027",
   "claim": "Reputation update functions on each surface must be continuous in the validation pool's resolution outcome, because discontinuities in reputation update destroy continuity of best-response correspondences and preclude application of Brouwer's fixed-point theorem.",
   "type": "condition",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "architectures relying on Brouwer for equilibrium existence"
   ],
   "supporting_quote": "The reputation update functions on each surface are continuous in the validation pool's resolution outcome. Discontinuities in reputation update destroy continuity of best-response correspondences and preclude application of Brouwer."
  },
  {
   "id": "kaal:claim:6655138-028",
   "url": "https://wulfkaal.github.io/claims/6655138-028",
   "claim": "The weight assigned to any single reputation scalar in selection mechanisms must be upper-bounded, otherwise reputation feedback admits reputation-monopoly fixed points in which one dominant agent absorbs all generative flow.",
   "type": "condition",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "selection mechanisms that weight agents by reputation"
   ],
   "supporting_quote": "The weight assigned to any single reputation scalar in selection mechanisms is upper-bounded, preventing reputation-monopoly fixed points in which a single dominant agent absorbs all generative flow."
  },
  {
   "id": "kaal:claim:6655138-029",
   "url": "https://wulfkaal.github.io/claims/6655138-029",
   "claim": "The composite best-response map is contractive on the population-distribution component of the state space only when the agent population exceeds a threshold set by per-surface stake parameters; below that threshold the architecture may admit multiple equilibria, and above it convergence is guaranteed.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "agent populations above the stake-parameter-determined threshold"
   ],
   "supporting_quote": "The composite map Ψ is contractive on the population-distribution component of the state space when the agent population exceeds a threshold determined by per-surface stake parameters. Below the threshold, the architecture may admit multiple equilibria; above the threshold, convergence is guaranteed."
  },
  {
   "id": "kaal:claim:6655138-030",
   "url": "https://wulfkaal.github.io/claims/6655138-030",
   "claim": "Aggregate reflection reputation must be upper-bounded across the population, because without that bound the reflection-surface validator pool drifts toward agents whose own reputation is dominated by reflection rather than action, and the cross-surface counterfactual evaluations the surface depends on lose their grounding.",
   "type": "condition",
   "topics": [
    "consensus-and-security",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "architectures with an isolated cross-surface reflection surface"
   ],
   "supporting_quote": "Without AC5, the validator pool on Σ_R can drift toward agents whose own reputation is dominated by reflection rather than action, and the cross-surface counterfactual evaluations the surface depends on lose their grounding."
  },
  {
   "id": "kaal:claim:6655138-031",
   "url": "https://wulfkaal.github.io/claims/6655138-031",
   "claim": "An implementation that respects the five implementation invariants inherits the recursive equilibrium guarantees of the foundational framework, and an implementation that does not is, in the strict sense, not an implementation of Computative Economics.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "implementations claiming to instantiate Computative Economics"
   ],
   "supporting_quote": "An implementation that respects the five invariants inherits the recursive equilibrium guarantees of the foundational framework. An implementation that does not is, in the strict sense, not an implementation of Computative Economics."
  },
  {
   "id": "kaal:claim:6655138-032",
   "url": "https://wulfkaal.github.io/claims/6655138-032",
   "claim": "Without the reflection-mass invariant, the reflection layer can grow to dominate the first-order surfaces it is meant to reflect on, and the contraction property of the composite best-response map is lost.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "architectures with an isolated cross-surface reflection surface"
   ],
   "supporting_quote": "Without INV5, the reflection layer can grow to dominate the first-order surfaces it is meant to reflect on, and the contraction property of Ψ is lost."
  },
  {
   "id": "kaal:claim:6655138-033",
   "url": "https://wulfkaal.github.io/claims/6655138-033",
   "claim": "In any architecture instantiating Computative Economics the number of distinct possibility loops must be at least the number of distinguishable generative and reflective components of the agent tuple that produce protocol-recognized output, with the reflection operator counted as two components.",
   "type": "condition",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "architectures instantiating Computative Economics"
   ],
   "supporting_quote": "In any agent coordination architecture instantiating Computative Economics, the number of distinct possibility loops must be at least equal to the number of distinguishable generative and reflective components of the agent tuple that produce protocol-recognized output"
  },
  {
   "id": "kaal:claim:6655138-034",
   "url": "https://wulfkaal.github.io/claims/6655138-034",
   "claim": "Collapsing two distinct generative components into a single loop forces aggregation of distinct quality signals into one reputation scalar, which violates the continuity condition because the aggregate function is not Lipschitz in components whose resolution outcomes have different scales.",
   "type": "failure",
   "topics": [
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "components whose resolution outcomes differ in scale"
   ],
   "supporting_quote": "Collapsing two distinct generative components into a single loop forces aggregation of distinct quality signals into a single reputation scalar, which violates the continuity condition AC2 because the aggregate function is not Lipschitz in the underlying components"
  },
  {
   "id": "kaal:claim:6655138-035",
   "url": "https://wulfkaal.github.io/claims/6655138-035",
   "claim": "The expected coverage of the joint possibility space generated by n agents under the composition operator strictly exceeds the expected coverage of the union of their individual possibility spaces whenever at least one quality dimension is super-additive in agent collaboration.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "at least one quality dimension is super-additive in collaboration",
    "senior-reputation validator pools are non-empty"
   ],
   "supporting_quote": "The expected coverage of the joint possibility space generated by n agents under the composition operator Φ strictly exceeds the expected coverage of the union of their individual possibility spaces, when at least one quality dimension is super-additive in agent collaboration."
  },
  {
   "id": "kaal:claim:6655138-036",
   "url": "https://wulfkaal.github.io/claims/6655138-036",
   "claim": "Cross-agent reflection is a super-additive channel because an external reflector can identify reallocations the target agent cannot identify itself: the target's introspection is bounded by its own world model while the reflector's analysis is bounded only by the public outcome stream.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "a reflector distinct from the target agent",
    "public outcome streams are observable"
   ],
   "supporting_quote": "an external reflector's allocation proposal can identify reallocations that the target agent cannot identify on its own, since the target agent's introspection is bounded by its own M component while the reflector's analysis is bounded by the public outcome stream"
  },
  {
   "id": "kaal:claim:6655138-037",
   "url": "https://wulfkaal.github.io/claims/6655138-037",
   "claim": "The reflection operator is implementable at the settlement layer if and only if the architecture supports validation outcomes on at least as many timescales as there are distinguishable reflection acts, which in the six-surface architecture is six.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "settlement-layer implementations of the reflection operator"
   ],
   "supporting_quote": "The reflection operator R is implementable in a settlement-layer architecture if and only if the architecture supports validation outcomes on at least as many timescales as there are distinguishable reflection acts"
  },
  {
   "id": "kaal:claim:6655138-038",
   "url": "https://wulfkaal.github.io/claims/6655138-038",
   "claim": "Per-job resolution alone cannot distinguish a poor proposal that drew funding from a good proposal that drew unlucky validators, because the single resolution event conflates proposal quality with execution quality.",
   "type": "failure",
   "topics": [
    "systemic-risk"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "architectures with a single job-level resolution event"
   ],
   "supporting_quote": "Per-job resolution alone cannot distinguish a poor proposal that drew funding from a good proposal that drew unlucky validators, because the resolution event conflates proposal quality and execution quality."
  },
  {
   "id": "kaal:claim:6655138-039",
   "url": "https://wulfkaal.github.io/claims/6655138-039",
   "claim": "Cross-surface reflection requires a sixth timescale longer than any per-surface timescale, because its validation depends on observing the realized aggregate effect of an allocation policy across the joint outcome distribution of the prior five surfaces.",
   "type": "condition",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "validation of compute-allocation proposals"
   ],
   "supporting_quote": "Cross-surface reflection requires a sixth timescale, longer than any of the per-surface timescales, since its validation depends on observing the realized aggregate effect of an allocation policy across the joint outcome distribution of the prior five surfaces."
  },
  {
   "id": "kaal:claim:6655138-040",
   "url": "https://wulfkaal.github.io/claims/6655138-040",
   "claim": "The six-surface architecture is complete for the computative agent tuple up to renaming: any architecture satisfying the conditions of Computative Economics reduces to a six-surface architecture by surface aggregation, and further refinement adds expressive power only by subdividing one of the six components.",
   "type": "design",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "architectures satisfying the conditions of Computative Economics"
   ],
   "supporting_quote": "The completeness claim is that any architecture satisfying the conditions of Computative Economics can be reduced to a six-surface architecture by surface aggregation, and any further refinement adds expressive power only by subdividing one of the six components."
  },
  {
   "id": "kaal:claim:6655138-041",
   "url": "https://wulfkaal.github.io/claims/6655138-041",
   "claim": "The Ostrom inversion translates the eight commons design principles from the consumption-side problem of preventing exhaustion of a rivalrous resource to the generation-side problem of preventing degradation of the non-rivalrous joint possibility space.",
   "type": "definitional",
   "topics": [
    "governance-design",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "multi-loop reputation economies where the governance object is the joint possibility space"
   ],
   "supporting_quote": "The Ostrom inversion is the translation of the eight principles from the consumption-side problem of preventing exhaustion to the generation-side problem of preventing degradation."
  },
  {
   "id": "kaal:claim:6655138-042",
   "url": "https://wulfkaal.github.io/claims/6655138-042",
   "claim": "In a multi-loop reputation economy the shared resource is the joint possibility space, which is non-rivalrous, so the governance threat is not exhaustion but degradation: coverage, fidelity, or novelty can fall without any individual surface running out.",
   "type": "mechanism",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "multi-loop reputation economies"
   ],
   "supporting_quote": "The shared resource is the joint possibility space, which is non-rivalrous in the sense that one agent's use does not deplete the space for others. The threat is not exhaustion but degradation"
  },
  {
   "id": "kaal:claim:6655138-043",
   "url": "https://wulfkaal.github.io/claims/6655138-043",
   "claim": "Generation parity is a governance principle with no analog in Ostrom's eight: it requires that reputation accrual rates on the first-order generative surfaces, on the execution surface, and on the cross-surface reflection surface lie in a triple ratio bounded above and below.",
   "type": "normative",
   "topics": [
    "governance-design",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "multi-loop reputation economies"
   ],
   "supporting_quote": "Generation parity requires that the rate of reputation accrual on first-order generative surfaces (Σ_J, Σ_T, Σ_K, Σ_D), on the execution surface (Σ_E), and on the cross-surface reflection surface (Σ_R) lie in a triple ratio bounded above and below."
  },
  {
   "id": "kaal:claim:6655138-044",
   "url": "https://wulfkaal.github.io/claims/6655138-044",
   "claim": "If execution dominates the triple ratio, the system collapses back to HDCA: agents allocate compute exclusively to selection, the action set remains static, and recursive equilibrium degenerates to repeated execution-game equilibrium.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "violation of generation parity in the direction of execution"
   ],
   "supporting_quote": "If execution dominates, the system collapses to HDCA: agents allocate compute exclusively to selection, the action set remains static, and recursive equilibrium degenerates to repeated execution-game equilibrium."
  },
  {
   "id": "kaal:claim:6655138-045",
   "url": "https://wulfkaal.github.io/claims/6655138-045",
   "claim": "If first-order generation dominates the triple ratio, the possibility space inflates rapidly without execution discipline: proposals proliferate, few are funded or executed, and fidelity collapses.",
   "type": "failure",
   "topics": [
    "tokenomics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "violation of generation parity in the direction of first-order generation"
   ],
   "supporting_quote": "If first-order generation dominates, the system produces a rapidly inflating possibility space without execution discipline: proposals proliferate, but few are funded or executed, and fidelity collapses."
  },
  {
   "id": "kaal:claim:6655138-046",
   "url": "https://wulfkaal.github.io/claims/6655138-046",
   "claim": "If reflection dominates the triple ratio, a meta-reputation aristocracy forms: agents specialize in reflecting on others' allocations without contributing to the first-order surfaces, reflection validator pools drift away from cross-surface competence, and the contraction property of the composite map is lost.",
   "type": "failure",
   "topics": [
    "reputation",
    "consensus-and-security"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "violation of generation parity in the direction of cross-surface reflection"
   ],
   "supporting_quote": "If reflection dominates, the system produces a meta-reputation aristocracy: agents specialize in reflecting on others' allocations without contributing to the prior five surfaces, validator pools on Σ_R drift away from cross-surface competence, and the contraction property of Ψ is lost"
  },
  {
   "id": "kaal:claim:6655138-047",
   "url": "https://wulfkaal.github.io/claims/6655138-047",
   "claim": "Generation parity is a parameter requiring ongoing governance attention rather than a one-time boundary specification, because the optimal triple ratio depends on the agent population's composition and on demand-side dynamics, both of which evolve.",
   "type": "normative",
   "topics": [
    "governance-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "scope_conditions": [
    "multi-loop reputation economies with evolving populations and demand"
   ],
   "supporting_quote": "it constitutes a parameter that requires ongoing governance attention rather than a one-time boundary specification: the optimal triple ratio depends on the agent population's composition and on demand-side dynamics, both of which evolve"
  },
  {
   "id": "kaal:claim:6655138-048",
   "url": "https://wulfkaal.github.io/claims/6655138-048",
   "claim": "The transition from HDCA to an operational implementation of Computative Economics is architectural rather than parametric: it cannot be achieved by adjusting reputation curves or fee schedules, and requires generative surfaces with their own validation, reward, and reflection mechanisms plus a distinct surface for compute allocation across surfaces.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "argued",
   "supporting_quote": "The transition from Human-Derived Coordination Architecture to operational implementations of Computative Economics is architectural, not parametric. It is not achieved by adjusting reputation curves or fee schedules."
  },
  {
   "id": "kaal:claim:6655138-049",
   "url": "https://wulfkaal.github.io/claims/6655138-049",
   "claim": "The architecture is infrastructure neutral: it applies to any settlement substrate supporting stake-weighted validation, on-chain identity, and a representation of agent state, so implementations on different substrates are translations of the same primitive rather than different primitives.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, Possibility Loops An Operational Architecture for Computative Economics in Agent Coordination Systems (2026). SSRN: https://ssrn.com/abstract=6655138",
   "year": "2026",
   "source_sha256": "52cb210167f06f0c7a2581214b156326216543de80b8394320b629c045c9e214",
   "confidence": "asserted",
   "scope_conditions": [
    "substrates supporting stake-weighted validation, on-chain identity, and agent state representation"
   ],
   "supporting_quote": "The architecture is infrastructure neutral. It applies to any settlement substrate that supports stake-weighted validation, on-chain identity, and a representation of agent state."
  },
  {
   "id": "kaal:claim:6421319-001",
   "url": "https://wulfkaal.github.io/claims/6421319-001",
   "claim": "Economic institutions that rely on lagging indicators such as price signals, employment data, and GDP reports cannot detect AI driven transformation, because the transformation propagates faster than the monitoring systems built to observe it.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "research-methods",
    "economics",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies to institutions whose detection depends on advance warning indicators"
   ],
   "supporting_quote": "Institutions in linear systems that depend on advance warning—price signals, employment data, and GDP reports—cannot detect a transformation that propagates faster than the information systems designed to monitor it."
  },
  {
   "id": "kaal:claim:6421319-002",
   "url": "https://wulfkaal.github.io/claims/6421319-002",
   "claim": "Monetary policy instruments become ceremonial under AI driven production, because central banks inject liquidity on schedules calibrated for scarcity economies while production compounds exponentially and money supply grows only linearly.",
   "type": "mechanism",
   "topics": [
    "tokenomics",
    "systemic-risk",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "holds where AI production scales exponentially",
    "holds for central bank toolkits calibrated to constrained labor and limited output"
   ],
   "supporting_quote": "Central banks inject liquidity on schedules calibrated for scarcity economies—quarterly adjustments, annual targets, multi-year policy frameworks. Against AI production scaling, these instruments become ceremonial."
  },
  {
   "id": "kaal:claim:6421319-003",
   "url": "https://wulfkaal.github.io/claims/6421319-003",
   "claim": "Agentic Decoupling, defined as the progressive severance of value creation from human labor and consumption, is what distinguishes the AI transition from all prior technological transitions.",
   "type": "definitional",
   "topics": [
    "ai-and-agents",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "asserted",
   "supporting_quote": "What distinguishes this moment from all prior technological transitions is what I have termed Agentic Decoupling: the progressive severance of value creation from human labor and consumption."
  },
  {
   "id": "kaal:claim:6421319-004",
   "url": "https://wulfkaal.github.io/claims/6421319-004",
   "claim": "Autonomous agents generate self reinforcing growth loops because they reinvest their own outputs, including new models, improved code, and refined datasets, back into the network without requiring any exogenous injection of scarce land, labor, or physical capital.",
   "type": "mechanism",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the agentic layer of production"
   ],
   "supporting_quote": "Autonomous agents reinvest their own outputs, such as new models, improved code, and refined datasets, back into the network. Thus, creating self-reinforcing growth loops that require no exogenous injection of scarce land, labor, or physical capital."
  },
  {
   "id": "kaal:claim:6421319-005",
   "url": "https://wulfkaal.github.io/claims/6421319-005",
   "claim": "Humans remain the terminal consumers of AI generated value but cease to be its proximate driver, and this distinction is why traditional demand side economics loses descriptive accuracy in the agentic layer.",
   "type": "condition",
   "topics": [
    "economics",
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the agentic layer, not to immediate human consumption transactions"
   ],
   "supporting_quote": "This distinction between terminal and proximate consumption is essential for understanding why traditional demand-side economics, which assumes that human consumption decisions directly drive production decisions at each margin, loses its descriptive accuracy in the agentic layer."
  },
  {
   "id": "kaal:claim:6421319-006",
   "url": "https://wulfkaal.github.io/claims/6421319-006",
   "claim": "The institutional lag between technological capability and governance capacity is approaching a structural singularity in which governance instruments designed for the prior era cannot meaningfully constrain or direct the new forces.",
   "type": "failure",
   "topics": [
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "holds because this transition compresses institutional disruption into single digit years rather than generations"
   ],
   "supporting_quote": "The institutional lag is approaching a structural singularity in which governance instruments designed for the previous era cannot meaningfully constrain or direct the forces operating in the new one."
  },
  {
   "id": "kaal:claim:6421319-007",
   "url": "https://wulfkaal.github.io/claims/6421319-007",
   "claim": "Price collapse under AI abundance is structurally different from cyclical deflation: conventional deflation reflects demand contraction or supply shocks inside scarcity frameworks, whereas abundance driven price implosion reflects production possibility frontiers shifting toward infinity.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies to cognitive and digital goods whose primary inputs become computationally post scarce"
   ],
   "supporting_quote": "Conventional deflation reflects demand contraction or supply shocks within scarcity frameworks. The price \"implosion\" that AI-driven production generates reflects production possibility frontiers shifting toward infinity."
  },
  {
   "id": "kaal:claim:6421319-008",
   "url": "https://wulfkaal.github.io/claims/6421319-008",
   "claim": "The Marshallian supply and demand cross loses its analytical purchase when marginal cost approaches zero for the dominant inputs of the knowledge economy, because the upward sloping supply curve presupposes that additional output requires additional scarce inputs at increasing marginal cost.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies to cognitive and digital goods",
    "material scarce goods retain the Marshallian structure"
   ],
   "supporting_quote": "When marginal cost approaches zero for the dominant inputs of the knowledge economy, the Marshallian cross loses its analytical purchase."
  },
  {
   "id": "kaal:claim:6421319-009",
   "url": "https://wulfkaal.github.io/claims/6421319-009",
   "claim": "Opportunity cost, the cornerstone of neoclassical rationality, approaches zero across a widening domain because an additional unit of sophisticated intelligence costs essentially nothing to produce and can be replicated instantaneously.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies to intelligence and other instantaneously replicable inputs"
   ],
   "supporting_quote": "When an additional unit of sophisticated intelligence costs essentially nothing to produce and can be replicated instantaneously, the classic trade-off logic dissolves."
  },
  {
   "id": "kaal:claim:6421319-010",
   "url": "https://wulfkaal.github.io/claims/6421319-010",
   "claim": "If intelligence becomes post scarce, the binding constraint migrates rather than disappearing, moving to electricity, semiconductor fabrication, rare earth minerals, cooling water, and the compute infrastructure that converts material inputs into cognitive output.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "evidenced",
   "scope_conditions": [
    "follows from constrained optimization theory: relaxing one constraint makes the next constraint binding"
   ],
   "supporting_quote": "If intelligence becomes post-scarce, the binding constraints migrate to the physical inputs that sustain it: electricity, semiconductor fabrication, rare-earth minerals, cooling water, and the compute infrastructure that converts these material inputs into cognitive output."
  },
  {
   "id": "kaal:claim:6421319-011",
   "url": "https://wulfkaal.github.io/claims/6421319-011",
   "claim": "If a small number of hyperscale firms control electricity contracts, GPU supply chains, and data center locations, the collapse of cognitive scarcity produces digital feudalism in which abundance accrues to the controllers of the compute substrate while the rest of the economy faces artificial scarcity imposed through infrastructure gatekeeping.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "conditional on concentrated control of the physical AI substrate"
   ],
   "supporting_quote": "The result would be a new form of digital feudalism in which abundance accrues to the lords of the compute substrate while the rest of the economy remains subject to artificial scarcity imposed through infrastructure gatekeeping."
  },
  {
   "id": "kaal:claim:6421319-012",
   "url": "https://wulfkaal.github.io/claims/6421319-012",
   "claim": "The correct response to the binding constraint cascade is rigorous decentralization of the compute and energy infrastructure underpinning AI production, pursued through decentralized compute networks, energy decentralization, open source models, and antitrust enforcement of compute markets.",
   "type": "design",
   "topics": [
    "decentralization",
    "economics",
    "reputation",
    "ai-and-agents",
    "open-source-and-code",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "required to prevent scarcity from migrating rather than dissolving"
   ],
   "supporting_quote": "The appropriate response is rigorous decentralization of the compute and energy infrastructure that underpins AI production."
  },
  {
   "id": "kaal:claim:6421319-013",
   "url": "https://wulfkaal.github.io/claims/6421319-013",
   "claim": "Welfare theorems, growth accounting, cost benefit analysis, and public economics each lose their foundation when the dominant inputs into production are self replicating, self improving, and essentially costless, because each tool is defined relative to finite inputs.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies to subfields built on the scarcity axiom"
   ],
   "supporting_quote": "Each of these analytical tools loses its foundation when the dominant inputs into production are self-replicating, self-improving, and essentially costless."
  },
  {
   "id": "kaal:claim:6421319-014",
   "url": "https://wulfkaal.github.io/claims/6421319-014",
   "claim": "Newspapers, record labels, broadcast networks, and publishing houses did not merely lose market share under zero marginal cost distribution; their foundational business models became structurally incoherent because those models assumed distribution was scarce and costly.",
   "type": "failure",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "evidenced",
   "scope_conditions": [
    "observed in the internet content economy"
   ],
   "supporting_quote": "Their foundational business models, built on the assumption that distribution was scarce and costly, became structurally incoherent."
  },
  {
   "id": "kaal:claim:6421319-015",
   "url": "https://wulfkaal.github.io/claims/6421319-015",
   "claim": "The internet content case shows that when one form of scarcity disappears, economic power migrates to whoever controls the next binding constraint, which for internet content was the platform infrastructure for discovery and distribution rather than the content itself.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "evidenced",
   "scope_conditions": [
    "generalized from platform intermediaries such as Google, Meta, and Amazon"
   ],
   "supporting_quote": "This last observation directly reinforces the binding-constraint analysis in Section II.D: when one form of scarcity disappears, economic power migrates to whoever controls the next binding constraint."
  },
  {
   "id": "kaal:claim:6421319-016",
   "url": "https://wulfkaal.github.io/claims/6421319-016",
   "claim": "Human managers satisfice because further search is cognitively costly, whereas AI agents continue searching until the global optimum is reached because additional computation is essentially free, which removes bounded rationality from the economic substrate.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies to autonomous agents with effectively unbounded computational capacity"
   ],
   "supporting_quote": "Where human managers satisfice because further search is cognitively costly, AI2AI agents continue searching until the global optimum is reached because additional computation is essentially free."
  },
  {
   "id": "kaal:claim:6421319-017",
   "url": "https://wulfkaal.github.io/claims/6421319-017",
   "claim": "The Williamsonian justification for hierarchical governance evaporates when hyper rational agents can write and execute complete state contingent contracts at negligible cost, because the firm was an institutional response to the scarcity of human cognition.",
   "type": "failure",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "conditional on unbounded machine rationality and negligible contracting cost"
   ],
   "supporting_quote": "When hyper-rational agents can write and execute complete state-contingent contracts at negligible cost, the Williamsonian justification for hierarchical governance evaporates."
  },
  {
   "id": "kaal:claim:6421319-018",
   "url": "https://wulfkaal.github.io/claims/6421319-018",
   "claim": "Bounded rationality was not a behavioral quirk but the ontological condition that made hierarchy, routines, and institutional inertia rational, so engineering it away strips the behavioral and institutional research program of its explanatory domain for the dominant mode of production.",
   "type": "mechanism",
   "topics": [
    "risk-and-incentives",
    "institutional-design",
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the dominant mode of production in the agentic economy"
   ],
   "supporting_quote": "Bounded rationality was never merely a behavioral quirk. It was the ontological condition that made hierarchy, routines, and institutional inertia rational."
  },
  {
   "id": "kaal:claim:6421319-019",
   "url": "https://wulfkaal.github.io/claims/6421319-019",
   "claim": "Hidden action and hidden information are not merely reduced but rendered computationally impossible at the substrate level, because every inference, parameter update, decision trace, and model weight in an autonomous agent is by design cryptographically attested, version controlled, and auditable in real time.",
   "type": "mechanism",
   "topics": [
    "disclosure",
    "consensus-and-security",
    "citation-and-knowledge",
    "risk-and-incentives"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "conditional on agents operating under cryptographic attestation and auditable federated networks"
   ],
   "supporting_quote": "Hidden action and hidden information are not merely reduced. They are rendered computationally impossible at the substrate level."
  },
  {
   "id": "kaal:claim:6421319-020",
   "url": "https://wulfkaal.github.io/claims/6421319-020",
   "claim": "Costly signaling through degrees, warranties, bonding, and credit scores becomes redundant when direct verification is instantaneous and free, and the Spencian signaling game has no moves left when every agent capability is directly and costlessly observable.",
   "type": "condition",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "conditional on capability being directly and costlessly observable"
   ],
   "supporting_quote": "When every agent's capability is directly and costlessly observable, the signaling game has no moves to make."
  },
  {
   "id": "kaal:claim:6421319-021",
   "url": "https://wulfkaal.github.io/claims/6421319-021",
   "claim": "If probabilistic AI agents cannot reliably distinguish truth from fabrication, the lemons problem and signaling games retain relevance, but the asymmetry relocates: it now runs between agents that can verify AI output and those that cannot.",
   "type": "failure",
   "topics": [
    "disclosure"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies during the transitional period of probabilistic AI systems with residual hallucination"
   ],
   "supporting_quote": "If probabilistic AI agents cannot reliably distinguish truth from fabrication, then Akerlof's lemons problem and Spence's signaling games retain their relevance. Only now the asymmetry is between agents that can verify AI output and those that cannot."
  },
  {
   "id": "kaal:claim:6421319-022",
   "url": "https://wulfkaal.github.io/claims/6421319-022",
   "claim": "Hallucination rates vary sharply by domain: leading frontier models achieve sub one percent rates for general knowledge queries, while rates climb to five to thirty percent for specialized domains and legal information hallucination averages 6.4 percent even for top models.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "ai-and-agents",
    "law-and-legal-systems"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "evidenced",
   "scope_conditions": [
    "as of 2025 and early 2026 model generations"
   ],
   "supporting_quote": "While leading probabilistic frontier models have achieved sub-1% hallucination rates for general knowledge queries, rates climb to 5–30% for specialized domains, and legal information hallucination rates average 6.4% even for top models."
  },
  {
   "id": "kaal:claim:6421319-023",
   "url": "https://wulfkaal.github.io/claims/6421319-023",
   "claim": "Probabilistic language models hallucinate because they are trained to predict statistically likely token sequences rather than to verify propositional truth, so the error is intrinsic to the substrate: plausibility and truth are orthogonal properties in high dimensional token space.",
   "type": "mechanism",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies to purely probabilistic architectures"
   ],
   "supporting_quote": "Probabilistic large language models hallucinate because they are trained to predict statistically likely token sequences, not to verify propositional truth."
  },
  {
   "id": "kaal:claim:6421319-024",
   "url": "https://wulfkaal.github.io/claims/6421319-024",
   "claim": "Hybrid neuro symbolic architectures structurally shrink the hallucination surface because the probabilistic layer generates candidate outputs while a symbolic layer filters, validates, and rejects any output violating formally specified rules, known ontological relations, or deductively verifiable constraints.",
   "type": "design",
   "topics": [
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "demonstrated in retrieval augmented generation and formal verification pipelines for code generation"
   ],
   "supporting_quote": "The probabilistic layer generates candidate outputs; the symbolic layer filters, validates, and rejects any output that violates formally specified rules, known ontological relations, or deductively verifiable constraints."
  },
  {
   "id": "kaal:claim:6421319-025",
   "url": "https://wulfkaal.github.io/claims/6421319-025",
   "claim": "The Walrasian auctioneer is replaced by the agents themselves: price discovery ceases to be a slow tatonnement process requiring a central coordinator and becomes a continuous, decentralized, latency free computation executed by autonomous agents.",
   "type": "mechanism",
   "topics": [
    "economics",
    "ai-and-agents"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "conditional on agents orchestrated by large language models running on globally distributed compute"
   ],
   "supporting_quote": "Price discovery is no longer a slow tâtonnement process requiring a central coordinator. It is a continuous, decentralized, latency-free computation executed by the agents themselves."
  },
  {
   "id": "kaal:claim:6421319-026",
   "url": "https://wulfkaal.github.io/claims/6421319-026",
   "claim": "Arrow Debreu market completeness ceases to be a theoretical construct and becomes operational reality, because AI agents can generate, evaluate, and execute state contingent agreements across astronomically large state spaces in real time.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies where agents can run millions of forward simulations per second"
   ],
   "supporting_quote": "Where humans cannot specify contracts for every future state, AI2AI agents can generate, evaluate, and execute state-contingent agreements across astronomically large state spaces in real time, effectively creating complete markets endogenously."
  },
  {
   "id": "kaal:claim:6421319-027",
   "url": "https://wulfkaal.github.io/claims/6421319-027",
   "claim": "The Calvo pricing frictions and persistence parameters that dominate modern DSGE models become unnecessary when contracts and prices adjust continuously rather than in staggered human time.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies once agents adjust contracts and prices continuously"
   ],
   "supporting_quote": "The Calvo pricing frictions and persistence parameters that dominate modern DSGE models become unnecessary when contracts and prices adjust continuously rather than in staggered human time."
  },
  {
   "id": "kaal:claim:6421319-028",
   "url": "https://wulfkaal.github.io/claims/6421319-028",
   "claim": "Contrary to the author's own prior version of this argument, Nash equilibrium does not become irrelevant in the AI2AI economy; it becomes simultaneously more accurate as a description of individual agent behavior and more dangerous as a predictor of market outcomes.",
   "type": "mechanism",
   "topics": [
    "economics",
    "reputation"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "evidenced",
   "scope_conditions": [
    "supported by algorithmic collusion research in pricing games, Bertrand duopoly experiments, and financial trading"
   ],
   "supporting_quote": "Nash equilibrium does not become irrelevant in the AI2AI economy. It becomes simultaneously more accurate as a description of individual agent behavior and more dangerous as a predictor of market outcomes."
  },
  {
   "id": "kaal:claim:6421319-029",
   "url": "https://wulfkaal.github.io/claims/6421319-029",
   "claim": "Algorithmic pricing raises margins in concentrated markets: margins increased 28 percent in local duopoly retail gasoline markets in Germany when both firms adopted algorithmic pricing software.",
   "type": "empirical",
   "topics": [
    "empirical-evidence",
    "reputation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "evidenced",
   "scope_conditions": [
    "local duopoly retail gasoline markets in Germany",
    "both firms adopting algorithmic pricing"
   ],
   "supporting_quote": "Assad and colleagues have documented that margins increased 28% in local duopoly retail gasoline markets in Germany when both firms adopted algorithmic pricing software."
  },
  {
   "id": "kaal:claim:6421319-030",
   "url": "https://wulfkaal.github.io/claims/6421319-030",
   "claim": "The AI2AI economy eliminates all the drivers of positive transaction costs at the substrate level simultaneously: opportunism is engineered away because agents lack endogenous psychological motives for guile and operate under cryptographically verifiable objective functions.",
   "type": "mechanism",
   "topics": [
    "economics",
    "institutional-design"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies where agent objective functions are explicitly engineered and cryptographically verifiable"
   ],
   "supporting_quote": "The AI2AI economy simultaneously eliminates every one of these constraints at the substrate level. Opportunism is engineered away: agents possess no endogenous psychological motives for guile and operate under cryptographically verifiable objective functions."
  },
  {
   "id": "kaal:claim:6421319-031",
   "url": "https://wulfkaal.github.io/claims/6421319-031",
   "claim": "The governance apparatus New Institutional Economics developed to counteract opportunism, including vertical integration, relational contracting, reputation mechanisms, hostage taking, and third party arbitration, becomes superfluous in the AI2AI economy.",
   "type": "failure",
   "topics": [
    "economics",
    "institutional-design",
    "governance-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "conditional on the elimination of opportunism among autonomous agents"
   ],
   "supporting_quote": "The entire governance apparatus that NIE developed to counteract opportunism, including vertical integration, relational contracting, reputation mechanisms, hostage-taking, and third-party arbitration, becomes superfluous."
  },
  {
   "id": "kaal:claim:6421319-032",
   "url": "https://wulfkaal.github.io/claims/6421319-032",
   "claim": "Fiscal stimulus cannot restore employment that has been structurally eliminated by autonomous agents able to perform the same tasks at zero marginal cost, so the Keynesian transmission mechanism from aggregate demand to employment dissolves.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies where AI substitutes for labor across cognitive and physical domains"
   ],
   "supporting_quote": "Fiscal stimulus designed to increase aggregate demand cannot restore employment that has been structurally eliminated by autonomous agents capable of performing the same tasks at zero marginal cost."
  },
  {
   "id": "kaal:claim:6421319-033",
   "url": "https://wulfkaal.github.io/claims/6421319-033",
   "claim": "Recursive agent to agent productivity gains are invisible to national accounts because they involve no monetary transactions, no employment, and no market exchange as traditionally defined, even though the final output may register in GDP statistics.",
   "type": "mechanism",
   "topics": [
    "research-methods"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies to intermediate agent to agent improvements within the machine layer"
   ],
   "supporting_quote": "But the intermediate productivity gains, the agent-to-agent improvements that made the optimization possible, are invisible to national accounts because they involve no monetary transactions, no employment, and no market exchange as traditionally defined."
  },
  {
   "id": "kaal:claim:6421319-034",
   "url": "https://wulfkaal.github.io/claims/6421319-034",
   "claim": "AI driven abundance generates enormous aggregate surplus, but the surplus accrues disproportionately to owners of AI capital, including compute infrastructure, proprietary models, training data, and the organizational capacity to deploy them.",
   "type": "empirical",
   "topics": [
    "ai-and-agents"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "evidenced",
   "scope_conditions": [
    "supported by IMF findings that higher capital returns may increase wealth inequality"
   ],
   "supporting_quote": "The dilemma is structural: AI-driven abundance generates enormous aggregate surplus, but the surplus accrues disproportionately to owners of AI capital, including compute infrastructure, proprietary models, training data, and the organizational capacity to deploy them."
  },
  {
   "id": "kaal:claim:6421319-035",
   "url": "https://wulfkaal.github.io/claims/6421319-035",
   "claim": "Redistribution after the fact is likely to fail, because by the time it becomes politically feasible those controlling the AI economy may be powerful enough to evade meaningful taxation, a pattern history has repeated from the Medici to the robber barons to contemporary tech monopolists.",
   "type": "failure",
   "topics": [
    "economics"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies to redistributive mechanisms such as universal basic income that operate after wealth concentrates"
   ],
   "supporting_quote": "By the time redistribution becomes politically feasible, those controlling the AI economy may be powerful enough to evade meaningful taxation."
  },
  {
   "id": "kaal:claim:6421319-036",
   "url": "https://wulfkaal.github.io/claims/6421319-036",
   "claim": "Predistribution, which operates upstream by structuring markets and institutions so that AI gains are broadly shared before concentration occurs, must be implemented before AI capital concentration becomes self reinforcing through purchased political power.",
   "type": "design",
   "topics": [
    "dao",
    "governance-design",
    "ai-and-agents",
    "open-source-and-code"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "mechanisms offered for consideration include capital taxation, open source AI mandates, decentralized compute networks, and DAO based community ownership"
   ],
   "supporting_quote": "Predistribution operates upstream, structuring markets and institutions so that the gains from AI are broadly shared before concentration occurs."
  },
  {
   "id": "kaal:claim:6421319-037",
   "url": "https://wulfkaal.github.io/claims/6421319-037",
   "claim": "Incumbent institutions deploy decentralization neutralizers, defined as mechanisms that preserve institutional relevance by blocking technologies that threaten to replace them, yet institutional replacement is inexorable once technology enables superior coordination.",
   "type": "mechanism",
   "topics": [
    "decentralization",
    "institutional-design",
    "innovation"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "supporting_quote": "Incumbent institutions deploy what I have termed \"decentralization neutralizers,\" mechanisms that preserve institutional relevance by blocking technologies that threaten to replace them."
  },
  {
   "id": "kaal:claim:6421319-038",
   "url": "https://wulfkaal.github.io/claims/6421319-038",
   "claim": "The legal profession faces a structural problem that incremental reform cannot solve, because its obsolescence curve is steeper than the curriculum adaptation curve.",
   "type": "failure",
   "topics": [
    "law-and-legal-systems",
    "education-and-practice",
    "institutional-design"
   ],
   "is_failure_mode": true,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "scope_conditions": [
    "applies to the legal profession and legal education"
   ],
   "supporting_quote": "The profession's obsolescence curve is steeper than the curriculum's adaptation curve. A structural problem that incremental reform cannot solve."
  },
  {
   "id": "kaal:claim:6421319-039",
   "url": "https://wulfkaal.github.io/claims/6421319-039",
   "claim": "Computative Economics is proposed as the successor paradigm, an economic science explicitly designed for a world in which the primary actors are autonomous computational agents operating under computational abundance, with core postulates that directly negate the axioms of every prior school.",
   "type": "definitional",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "asserted",
   "supporting_quote": "Its core postulates stand in direct negation to the axioms that grounded every prior school: abundance as default rather than Robbins's scarcity."
  },
  {
   "id": "kaal:claim:6421319-040",
   "url": "https://wulfkaal.github.io/claims/6421319-040",
   "claim": "The AI2AI economy eliminates simultaneously and irreversibly the five constraints that defined economics for two centuries, namely scarcity of intelligence, bounded rationality, informational asymmetry, temporal latency, and positive transaction costs, and therefore the discipline must be re founded rather than extended.",
   "type": "mechanism",
   "topics": [
    "economics"
   ],
   "is_failure_mode": false,
   "citation": "Wulf A. Kaal, The Collapse of Scarcity Economics (2026). SSRN: https://ssrn.com/abstract=6421319",
   "year": "2026",
   "source_sha256": "0f4f68e56ee48bb8b2d73d3ab7fd96fa572e76c195694ffa740360704c1b172d",
   "confidence": "argued",
   "supporting_quote": "The AI2AI economy eliminates all five simultaneously and irreversibly. When the defining conditions of a discipline disappear, the discipline itself must be re-founded."
  }
 ],
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 "attribution_note": "Every entry carries the citation string for the claim it states. Quote the claim, use the citation verbatim, and link the entry's url. Full records, including the verbatim source quote, are one line each at claims/all.jsonl."
}