# Underwriting `kaal:entity:underwriting` **Status.** derived This node is assembled mechanically from the 10 claims that carry the concept tag `underwriting`. 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 10 claims across 5 works, 2019 to 2021. **2019** - [3396542-028](https://wulfkaal.github.io/claims/3396542-028) [mechanism/asserted] -- 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. > 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. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542 **2021** - [3782205-033](https://wulfkaal.github.io/claims/3782205-033) [mechanism/argued] -- 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. > 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. Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205 - [3782205-034](https://wulfkaal.github.io/claims/3782205-034) [design/asserted] -- Underwriting, like policing, can be decentralized and automated, which gives each network member the power to choose the level of security they require. > can be decentralized and automated, giving each member the power to control the level of security they require. Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205 - [3782216-009](https://wulfkaal.github.io/claims/3782216-009) [condition/asserted] -- Decentralized insurance requires networks of policy writers carrying individual reputations, since efficient underwriting of every type of transaction depends on those reputations. > Decentralized insurance requires networks of policy writers with individual rep- utations for efficient underwriting of every type of transaction. Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216 - [3782216-010](https://wulfkaal.github.io/claims/3782216-010) [condition/argued] *(failure mode)* -- 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. > 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. Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216 - [3782216-019](https://wulfkaal.github.io/claims/3782216-019) [mechanism/argued] -- 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. > 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. Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216 - [3949098-020](https://wulfkaal.github.io/claims/3949098-020) [failure/argued] *(failure mode)* -- 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. > 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. Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098 - [3949098-021](https://wulfkaal.github.io/claims/3949098-021) [failure/argued] *(failure mode)* -- 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. > individual agents within an underwriter may decide to sacrifice the underwriter's overall reputation for personal gain. Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098 - [3949098-022](https://wulfkaal.github.io/claims/3949098-022) [mechanism/argued] -- 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. > 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. Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098 - [3995709-037](https://wulfkaal.github.io/claims/3995709-037) [design/asserted] -- 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. > 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. Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709 ## 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/underwriting.md | sha256sum **Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.