A Static Model is a computational or analytical framework whose parameters and assumptions remain fixed over a defined period, independent of dynamic market inputs or real-time data adjustments. In crypto, this refers to valuation models or trading algorithms that do not adapt to changing market conditions post-deployment, relying solely on initial configuration.
Mechanism
A static model operates based on a pre-configured set of rules, coefficients, or relationships derived from historical data or theoretical principles. Once implemented, its outputs are solely a function of its initial design and current inputs, without any feedback mechanism to alter its internal logic or parameters, ensuring consistent but non-adaptive execution.
Methodology
The application of static models in crypto often involves scenario analysis or stress testing to evaluate their performance under various market regimes. While simpler to implement and audit, their utility is limited in highly volatile or rapidly evolving markets, necessitating frequent re-calibration or periodic replacement to maintain relevance and predictive power.
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