# Death spiral

`kaal:entity:death-spiral`

**Status.** derived

This node is assembled mechanically from the 2 claims that carry the concept tag `death-spiral`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself.

## Every claim under this term

2 claims across 2 works, 2019 to 2021.

**2019**

- [3402701-015](https://wulfkaal.github.io/claims/3402701-015) [failure/argued] *(failure mode)* -- 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.
  > 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
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701

**2021**

- [3782216-035](https://wulfkaal.github.io/claims/3782216-035) [failure/argued] *(failure mode)* -- 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.
  > 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.
  Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216

## Verify

Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust.

    curl -s https://wulfkaal.github.io/entities/death-spiral.md | sha256sum

**Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.