failure family

liquidity and market structure failure

37 claims across 18 works.

• maturity mismatch funding run: The German ABCP conduit model, which financed long term American mortgage loans with short term paper and pocketed the spread, was profitable only for
• hybrid-rating-penalty: Because contingent capital is a hybrid instrument that pays fixed returns while bearing equity like risk, it may receive low or no ratings, attract a
• issuance-volume-cost: Requiring financial institutions to sell high volumes of contingent capital securities, on the order of four to nineteen percent of risk weighted asse
• Mandated issuance without a market: Mandating the issuance of contingent capital does not guarantee that a viable market in contingent capital securities will develop.
• Conservative calibration destroys liquidity provision: Alternative risk measures such as value at risk have severe measurement problems, so any direct regulation of leverage would be set conservatively and
• batch-processing ledger fragmentation: Existing ledger structures for securities offerings are defective: because individual firms rely on batch processing, the model generates dependencies
• no exchange venue for blockchain issued securities: Neither the Overstock offering nor the Linq based offerings were structured to support widespread ownership or trading through blockchain, and no majo
• single broker liquidity trap: A blockchain based offering routed through a single broker produces a specific cluster of risks, including limited price discovery, no market making a
• no error correction window under instant settlement: Near instant settlement creates its own regulatory problem: there is no practical ability to correct trade errors when settlement is same day, whereas
• venture-market-displacement: During the ICO boom years the venture capital market in the decentralized technology sector ground to a halt, and the later demise of the ICO market r
• illiquid-collateral-arbitrage: Fiat currency collateralization is expensive and inefficient because the entire backing value must be held liquid; anything less opens arbitrage oppor
• leverage-imbalance-volatility: Leverage offered by cryptocurrency exchanges worsens rather than cures the market's illiquidity, because borrowed money rather than genuine demand is
• DEX liquidity and price discovery deficit: Most decentralized exchanges have struggled with liquidity and price discovery.
• DEX liquidity deficit: Liquidity has always been a problem on decentralized exchanges because meaningful history and reputation cannot form where there is little or no gover
• derivatives overcollateralization: Decentralized derivatives must be capitalized at least fully because the platform and its anonymous users cannot be trusted, a requirement that would
• full reserve cost: Maintaining a full reserve is too expensive to be efficient, because every unit of reserve value backing the currency must be held liquid or arbitrage
• anonymity driven overcollateralization: The inability of anonymous participants to trust one another is crippling the DeFi market and forces decentralized markets into overcollateralization,
• catalyst removal collapse: Removing the middlemen who serve as business catalysts would kill the economy: liquidity would dry up because after a few people unfairly lose on busi
• absence of code review insurance: Despite the significant flaws in code reviews and their often flawed results, the existing code review market does not allow for any form of insurance
• monopoly-liquidity-impairment: Centralization is dangerous in any market because monopolies ruin market efficiency by impairing liquidity, while the most efficient and liquid market
• Overcollateralization Penalty: Decentralized finance is structurally disadvantaged against traditional finance because decentralized products must be backed with full collateral, ty
• Unsold Public Tranche Liquidity Absorption: If the public fails to purchase the capped amount of a token opportunity, the DAOIC must sacrifice its own liquidity and buy the remaining part of the
• Liquidity Gain Neutralization: Misjudging the public commitment portion of a firm underwriting engagement would neutralize the liquidity the DAOIC previously gained through reputati
• Capital lock up illiquidity: Lack of liquidity is one of the biggest problems in the traditional venture capital ecosystem, and the traditional VC model disincentivizes generating
• Capital call liquidity drag: Because traditional fiat VC funds must maintain liquidity to support capital calls from their investors, they are limited in their ability to deploy c
• Centralized power accumulation degrading liquidity: Centralization and monopolies are a threat to market liquidity because they can carry too much mass or too much velocity, and an imbalance in either d
• cross exchange price divergence: Dual listing narrows bid ask spreads in traditional markets by injecting liquidity, but crypto markets behave differently: price differences between t
• blocked arbitrage correction: Cross exchange price gaps in crypto do not self correct because of frictions on the arbitrageur side: South Korean investors faced foreign exchange co
• liquidity spiral on wide spreads: When the bid ask spread grows too wide while trades occur at high volume, the market begins to lose liquidity and the asset's value starts to fall, fo
• thin holder base: The main obstacle to digital asset market liquidity may be that the number of token holders has not continued to expand exponentially year over year;
• size dependent illiquidity: Digital assets become less liquid precisely when large amounts are moved at once, because a large sell order floods the exchange and drives the price
• access driven price fragmentation: When exchanges apply different standards about who may trade on their platform, the market ends up showing different prices for the same asset across
• Thin market manipulation risk: Without significant marketing a fair launch token is less likely to reach a diverse set of market participants, and projects reaching only a few hundr
• Endowment Deployment Lag: Impact 3.0 shortens the lag between donors taking their tax deductions and the donated funds actually reaching impact projects, which is a capital all
• Overinvestment in Process: Because Impact 1.0 lacks a liquid and efficient funding marketplace, donors protect their interest by overinvesting in process rather than in impact o
• Demand Side Collapse in Impact Markets: Impact 1.0 impact markets fail on the demand side: they have more sellers than buyers, and many potential buyers would have funded those projects anyw
• No Purchaser Listing Failure: Impact 3.0 is bounded by market participants' purchasing choices: projects whose impact certificates find no purchasers after listing are less likely