# Volatility

`kaal:entity:volatility`

**Status.** derived

This node is assembled mechanically from the 26 claims that carry the concept tag `volatility`. 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

26 claims across 18 works, 2014 to 2025.

**2014**

- [2389416-037](https://wulfkaal.github.io/claims/2389416-037) [empirical/evidenced] -- 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.
  > 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.
  Wulf A. Kaal, Barbara Luppi, Sandra Paterlini, Did the Dodd-Frank Act Impact Hedge Fund Performance (2014). SSRN: https://ssrn.com/abstract=2389416

**2017**

- [2998033-024](https://wulfkaal.github.io/claims/2998033-024) [mechanism/argued] -- 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.
  > Although crypto investments can to be just as and more volatile than traditional investments, digital currencies might be used to hedge against traditional investments.
  Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033
- [3067615-025](https://wulfkaal.github.io/claims/3067615-025) [failure/argued] *(failure mode)* -- 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.
  > 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.
  Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615
- [3071378-008](https://wulfkaal.github.io/claims/3071378-008) [failure/argued] *(failure mode)* -- 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.
  > 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.
  Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378

**2018**

- [3117224-011](https://wulfkaal.github.io/claims/3117224-011) [mechanism/argued] *(failure mode)* -- Because ICOs give investors very limited assurances through upfront and continuous disclosures, the token market is highly volatile.
  > ICOs on the other hand, give investors very limited assurances through upfront and continuous disclosures, making the token market highly volatile.
  Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224
- [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**

- [3396522-008](https://wulfkaal.github.io/claims/3396522-008) [failure/argued] *(failure mode)* -- 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.
  > Collateralized fiat currency pegs bear the brunt of expensive capital requirements and uncollateralized cryptocurrency pegs face heavy volatility pressures and swings.
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522
- [3396522-012](https://wulfkaal.github.io/claims/3396522-012) [mechanism/argued] *(failure mode)* -- 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.
  > 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.
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522
- [3396522-019](https://wulfkaal.github.io/claims/3396522-019) [failure/argued] *(failure mode)* -- 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.
  > 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.
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522
- [3396522-020](https://wulfkaal.github.io/claims/3396522-020) [failure/argued] *(failure mode)* -- Leverage offered by cryptocurrency exchanges worsens rather than cures the market's illiquidity, because borrowed money rather than genuine demand is driving the price.
  > 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.
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522
- [3396522-034](https://wulfkaal.github.io/claims/3396522-034) [condition/argued] -- 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.
  > 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.
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522
- [3402701-004](https://wulfkaal.github.io/claims/3402701-004) [condition/argued] -- 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.
  > 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
  Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701
- [3406323-018](https://wulfkaal.github.io/claims/3406323-018) [predictive/evidenced] -- 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.
  > demand for products that help manage the volatility inherent in other crypto assets is likely to continue to increase.
  Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323
- [3406323-022](https://wulfkaal.github.io/claims/3406323-022) [condition/argued] *(failure mode)* -- 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.
  > Finally, people will not enter into a long-term smart contract unless they have a stable currency to refer to.
  Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323
- [3409548-029](https://wulfkaal.github.io/claims/3409548-029) [condition/argued] -- 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.
  > Although crypto investments can be just as and more volatile than traditional investments, digital currencies might be used to hedge against traditional investments.
  Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548
- [3411897-027](https://wulfkaal.github.io/claims/3411897-027) [failure/argued] *(failure mode)* -- 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.
  > 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.
  Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897

**2020**

- [3606663-020](https://wulfkaal.github.io/claims/3606663-020) [failure/argued] *(failure mode)* -- 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.
  > but it arguably fails as a store of value and as a unit of account because of its volatility and lack of intrinsic value.
  Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663
- [3606663-021](https://wulfkaal.github.io/claims/3606663-021) [mechanism/argued] *(failure mode)* -- 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.
  > 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.
  Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663
- [3606663-023](https://wulfkaal.github.io/claims/3606663-023) [condition/argued] *(failure mode)* -- 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.
  > 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.
  Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663

**2021**

- [3782205-028](https://wulfkaal.github.io/claims/3782205-028) [failure/argued] *(failure mode)* -- 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.
  > 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.
  Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205
- [3782216-027](https://wulfkaal.github.io/claims/3782216-027) [condition/argued] -- 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.
  > 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.
  Craig Calcaterra, Wulf A. Kaal, Decentralized Finance (DeFi) (2021). SSRN: https://ssrn.com/abstract=3782216

**2022**

- [4033886-033](https://wulfkaal.github.io/claims/4033886-033) [definitional/argued] -- 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.
  > 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
  Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886

**2024**

- [4900878-035](https://wulfkaal.github.io/claims/4900878-035) [design/asserted] -- 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.
  > The integration of stablecoins pegged to fiat currencies provides a stable medium for transactions, mitigating the volatility often associated with cryptocurrencies.
  Wulf A. Kaal, Quantum Economy and Tokenomics (2024). SSRN: https://ssrn.com/abstract=4900878

**2025**

- [5454054-007](https://wulfkaal.github.io/claims/5454054-007) [mechanism/argued] -- 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.
  > 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.
  Wulf A. Kaal, Liquid Equity Rewards (2025). SSRN: https://ssrn.com/abstract=5454054
- [5583610-037](https://wulfkaal.github.io/claims/5583610-037) [failure/evidenced] *(failure mode)* -- 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.
  > 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.
  Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610

## Verify

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

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