# Stablecoin design

`kaal:entity:stablecoin-design`

**Status.** derived

This node is assembled mechanically from the 5 claims that carry the concept tag `stablecoin-design`. 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

5 claims across 1 works, 2019 to 2019.

**2019**

- [3402701-003](https://wulfkaal.github.io/claims/3402701-003) [mechanism/argued] -- 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.
  > Therefore, the price tag of fiat-backed tokens is, at a minimum, the interest rate of the pegged fiat currency
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701
- [3402701-013](https://wulfkaal.github.io/claims/3402701-013) [design/argued] -- 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.
  > 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
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701
- [3402701-016](https://wulfkaal.github.io/claims/3402701-016) [design/argued] -- 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.
  > We also recommend following the example of historical central banks, in minting bonds with fixed expiration so price discovery is more efficient
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701
- [3402701-024](https://wulfkaal.github.io/claims/3402701-024) [failure/argued] *(failure mode)* -- 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.
  > A currency that overestimates this hot money ratio will cost more to use. A currency that underestimates the ratio will be insecure
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701
- [3402701-026](https://wulfkaal.github.io/claims/3402701-026) [design/argued] -- 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.
  > 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
  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/stablecoin-design.md | sha256sum

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