{
 "failure_mode": "token-transferability-defect",
 "specific_names": [
  "Capital reputation duality dilution",
  "Forced RNFT Liquidation On Undersubscription",
  "Fungible token governance as common failure denominator",
  "Lockup versus token economic flexibility tradeoff",
  "Reputation Exit Illiquidity",
  "app-specific-token-lock-in",
  "lockups erase the early liquidity advantage of ICOs",
  "purchasable governance token attack surface",
  "retroactive-restriction-on-nonconsenting-shares",
  "traceability breakdown at the smelting stage",
  "transaction-value-exceeds-fee-base",
  "vote buying through tradable governance tokens",
  "vote-buying"
 ],
 "count": 13,
 "claims": [
  {
   "id": "kaal:claim:3067615-024",
   "url": "https://wulfkaal.github.io/claims/3067615-024",
   "claim": "Hardcoded lockup periods can protect token holders against supply side induced devaluation, but they also decrease the token economic flexibility the promoter team needs to raise additional funds, so the remedy trades investor protection against issuer financing capacity.",
   "specific_name": "Lockup versus token economic flexibility tradeoff",
   "conditions": [
    "tokens subject to hardcoded lockup periods"
   ],
   "source": "Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags",
   "year": "2017",
   "quote": "However, while such lockup periods may protect token holders against dilution, it also decreases much needed token economic flexibility for the promoter team to raise additional funds when needed.",
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615"
  },
  {
   "id": "kaal:claim:3017612-024",
   "url": "https://wulfkaal.github.io/claims/3017612-024",
   "claim": "Transfer restrictions cannot be imposed on shareholders who did not consent: Delaware refuses to allow them unless the holders are parties to the agreement or voted for the restriction, and courts have refused to apply restrictions retroactively to nonconsenting shares.",
   "specific_name": "retroactive-restriction-on-nonconsenting-shares",
   "conditions": [
    "Delaware and states following the same rule",
    "previously issued shares"
   ],
   "source": "Shareholder Agreements - National Report of the United States of America",
   "year": "2017",
   "quote": "Likewise, Delaware does not allow transfer restrictions \"unless the holders of the securities are parties to an agreement or voted in favor of the restriction.\"78 Courts have also refused to allow transfer restrictions to be applied retroactively to nonconsenting shares.",
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612"
  },
  {
   "id": "kaal:claim:3249860-036",
   "url": "https://wulfkaal.github.io/claims/3249860-036",
   "claim": "App-specific tokens exert less influence over value from other projects and typically fail to support a broader user market, because their limited use curtails user access.",
   "specific_name": "app-specific-token-lock-in",
   "conditions": [
    "tokens fundamentally restricted for use in a given ecosystem"
   ],
   "source": "Crypto Economics - The Top 100 Token Models Compared",
   "year": "2018",
   "quote": "App-specific tokens generally can exert less influence over the value from other projects. App-specific tokens also typically do not allow for a broader user market as the limited use of the token curtails user access.",
   "citation": "Wulf A. Kaal, Crypto Economics - The Top 100 Token Models Compared (2018). SSRN: https://ssrn.com/abstract=3249860"
  },
  {
   "id": "kaal:claim:3125827-012",
   "url": "https://wulfkaal.github.io/claims/3125827-012",
   "claim": "No consensus protocol can guard against Byzantine faults when a single transaction is worth more than the promise of all future fees for the entire platform, because in that case a party can profitably bribe the whole node set to destroy the chain's own integrity.",
   "specific_name": "transaction-value-exceeds-fee-base",
   "conditions": [
    "a single transaction whose value exceeds the present value of all future platform fees"
   ],
   "source": "Secure Proof of Stake Protocol",
   "year": "2018",
   "quote": "No protocol can guard against Byzantine faults if a transaction is more valuable than the promise of all future fees for the entire platform; in this case a party could bribe the entire set of nodes (or 51%)",
   "citation": "Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827"
  },
  {
   "id": "kaal:claim:3709041-040",
   "url": "https://wulfkaal.github.io/claims/3709041-040",
   "claim": "Complete supply chain tracking is particularly difficult in the mineral industry because of the prevalence of smelting during processing, which is why supply chain mapping for conflict mineral due diligence is costly, time intensive, and not entirely effective.",
   "specific_name": "traceability breakdown at the smelting stage",
   "conditions": [
    "applies to conflict mineral due diligence under US disclosure requirements"
   ],
   "source": "Blockchain Technology for Good",
   "year": "2020",
   "quote": "Complete tracking is particularly difficult in the mineral industry because of the prevalence of smelting during processing.",
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041"
  },
  {
   "id": "kaal:claim:3606663-006",
   "url": "https://wulfkaal.github.io/claims/3606663-006",
   "claim": "By 2019 the ICO market had lost its defining advantage over venture capital: because most ICOs between 2018 and 2019 imposed one to three year lockups, neither market offered early liquidity to investors or issuers, making the two substantively similar.",
   "specific_name": "lockups erase the early liquidity advantage of ICOs",
   "conditions": [
    "ICOs conducted between 2018 and 2019",
    "lockup periods of one to three years"
   ],
   "source": "Digital Asset Market Evolution",
   "year": "2020",
   "quote": "Most ICOs during that period required one to three-year lockup period for their investors. Accordingly, the ICO market in 2019 is very similar to the venture market in the sense that neither of these markets offers early liquidity to investors and issuers.",
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663"
  },
  {
   "id": "kaal:claim:3949098-013",
   "url": "https://wulfkaal.github.io/claims/3949098-013",
   "claim": "Exit by selling reputation tokens is more problematic for reputation than for other cryptocurrency tokens, because reputation is less fungible: a token's value is tied to the specific post in which the reputation was created and is subject to separate review.",
   "specific_name": "Reputation Exit Illiquidity",
   "conditions": [
    "a member wants to exit by selling reputation tokens at fair market value"
   ],
   "source": "Reputation as Capital – How DAOs Upgrade Finance",
   "year": "2021",
   "quote": "This is more problematic for reputation than for most other cryptocurrency tokens, since reputation is less fungible because a token's value is tied to the post in which the reputation was created and subject to separate review. But in principle it could be algorithmically valued.",
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098"
  },
  {
   "id": "kaal:claim:3949098-014",
   "url": "https://wulfkaal.github.io/claims/3949098-014",
   "claim": "In a firm commitment underwriting deal whose public portion does not sell out, a member is forced to sell reputation non fungible tokens on the over the counter market to satisfy the resulting capital call, but only if that member cannot cover the pro rata capital requirement with liquid capital.",
   "specific_name": "Forced RNFT Liquidation On Undersubscription",
   "conditions": [
    "firm commitment underwriting deals",
    "public portion undersubscribed",
    "member lacks liquid capital"
   ],
   "source": "Reputation as Capital – How DAOs Upgrade Finance",
   "year": "2021",
   "quote": "the inability to sell out the public portion of the firm commitment deal, the respective RNFT member is forced to sell RNFT on the OTC market only if the respective ICD member cannot satisfy his or her pro rata capital requirement with liquid capital held by the ICD member.",
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098"
  },
  {
   "id": "kaal:claim:3962614-030",
   "url": "https://wulfkaal.github.io/claims/3962614-030",
   "claim": "The basic VC DAO model mixes fungible cryptocurrency investment with minted non fungible reputation, and this duality prevents the full benefits that are generated when non fungible reputation is staked alone on deals.",
   "specific_name": "Capital reputation duality dilution",
   "conditions": [
    "early phase VC DAO models that combine capital and reputation staking"
   ],
   "source": "REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu",
   "year": "2021",
   "quote": "Rather, the VC DAO GP invests both fungible cryptocurrency from a pool as well as non-fungible and minted reputation on the portfolio companies. This duality does not allow for the full benefits that are generated if non-fungible reputation is staked alone on the deals.",
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614"
  },
  {
   "id": "kaal:claim:4067783-012",
   "url": "https://wulfkaal.github.io/claims/4067783-012",
   "claim": "The absence of proper decentralized governance built on non-fungible tokens is a key common denominator across DAO failures and rug pulls.",
   "specific_name": "Fungible token governance as common failure denominator",
   "conditions": [],
   "source": "DAO Fallacies",
   "year": "2022",
   "quote": "The lack of proper decentralized governance with non-fungible tokens is a key common denominator among DAO failures and rug pulls.",
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783"
  },
  {
   "id": "kaal:claim:4529715-020",
   "url": "https://wulfkaal.github.io/claims/4529715-020",
   "claim": "Fungible governance tokens expose a DAO to vote buying and other forms of manipulation.",
   "specific_name": "vote-buying",
   "conditions": [
    "fungible token based governance"
   ],
   "source": "Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis",
   "year": "2023",
   "quote": "However, fungible governance tokens also have some limitations and challenges, such as the potential for vote buying or other forms of manipulation.",
   "citation": "Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715"
  },
  {
   "id": "kaal:claim:5254152-003",
   "url": "https://wulfkaal.github.io/claims/5254152-003",
   "claim": "Fungible governance tokens deliver liquidity and transparency in DAO voting rights, but because they are tradable they simultaneously create exposure to vote buying and manipulation.",
   "specific_name": "vote buying through tradable governance tokens",
   "conditions": [
    "DAOs whose voting rights are represented by tradable fungible tokens"
   ],
   "source": "DAO Market Meta Analysis 2024",
   "year": "2024",
   "quote": "These tokens represent voting rights and can be traded, providing liquidity and transparency but also risking vote buying and manipulation.",
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152"
  },
  {
   "id": "kaal:claim:5254152-013",
   "url": "https://wulfkaal.github.io/claims/5254152-013",
   "claim": "Low attack resistance in DAOs is typically caused by the use of easily purchasable or transferable governance tokens, which leave the organization vulnerable to attacks such as 51 percent and Sybil attacks.",
   "specific_name": "purchasable governance token attack surface",
   "conditions": [
    "DAOs whose voting power is embodied in freely purchasable or transferable tokens"
   ],
   "source": "DAO Market Meta Analysis 2024",
   "year": "2024",
   "quote": "Lower scores indicate vulnerability to attacks, often due to the use of easily purchasable or transferable governance tokens.",
   "citation": "Wulf A. Kaal, DAO Market Meta Analysis 2024 (2024). SSRN: https://ssrn.com/abstract=5254152"
  }
 ]
}