# Stability mechanisms `kaal:entity:stability-mechanisms` **Status.** derived This node is assembled mechanically from the 8 claims that carry the concept tag `stability-mechanisms`. 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 8 claims across 3 works, 2018 to 2019. **2018** - [3249860-031](https://wulfkaal.github.io/claims/3249860-031) [mechanism/argued] -- 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. > Unlike deflationary token models, inflationary token models allow the use of stability mechanisms. Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860 - [3249860-032](https://wulfkaal.github.io/claims/3249860-032) [failure/argued] *(failure mode)* -- 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. > 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. Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860 **2019** - [3396522-005](https://wulfkaal.github.io/claims/3396522-005) [failure/asserted] *(failure mode)* -- Every stable cryptocurrency project, Tether included, remains afflicted with significant design challenges; no existing design has solved the stability problem. > Like all other stable cryptocurrency projects, Tether is still afflicted with significant design challenges. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-013](https://wulfkaal.github.io/claims/3396522-013) [failure/asserted] *(failure mode)* -- 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. > At the time of this writing no uncollateralized algorithmic project had created a provable stable mechanism for its tokens. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-022](https://wulfkaal.github.io/claims/3396522-022) [failure/argued] *(failure mode)* -- 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. > 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. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3402701-007](https://wulfkaal.github.io/claims/3402701-007) [condition/argued] -- 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. > 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 Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701 - [3402701-012](https://wulfkaal.github.io/claims/3402701-012) [design/argued] -- 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. > 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 Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701 - [3402701-017](https://wulfkaal.github.io/claims/3402701-017) [condition/argued] -- 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. > Reserves are necessary to address the instability of a currency due to hot money Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701 ## 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/stability-mechanisms.md | sha256sum **Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.