Crypto Needs an FDIC-Like Protocol to Prevent Liquidity Crises

Crypto Needs an FDIC-Like Protocol to Prevent Liquidity Crises


Let’s assume banks keep 30% of deposits as collateral. If $1,000,000 is deposited, $300,000 will be held in “the vault” and $700,000 will be invested and/or loaned. With proper risk management, that $700,000 is used conservatively in stable and tested ways, so it can be made liquid to cover the rare occurrence when all $1,000,000 is called to be withdrawn at once.

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