ChainLinkGod Podcast - All Things Truflation With Stefan Rust
Primer: Inflation eats up our purchasing power over time. How do we know whether the inflation data provided by the government is accurate? ChainLinkGod invites Stefan Rust to present Truflation, a dashboard that provides an even more accurate reporting of inflation in the US. Find out what else Stefan is building in this episode of the ChainLinkGod Podcast.
Background
Grew up through the mobile era
Worked at Sun Microsystems building the Java Virtual Machine
Left Sun in 2007 to build a developer agency helping handset manufacturers and operators to build out their ecosystems
In 2012, one of the developers he worked with requested to be paid in Bitcoin
Started looking at Bitcoin and bought some
Became the CEO of bitcoin.com
When COVID hit, money was being printed. Did not think it’s transitory
Needed to find a greater source of truth as to how inflation was calculated
Inflation was calculated based on a framework made in 1920. It did not include electricity that’s needed for the modern household (e.g. computers, mobile phones, internet)
Took a developer-led approach to aggregate real-time pricing on-chain
Partnered with Chainlink
Was launched in December 2021
Differences In Calculating Inflation
The government surveys the expenditure of a number of households
The government then extrapolate it out with a bit of deviation
In contrast, what they did was to go to a number of sources and pull their APIs in real time:
Zillow and Trulia for real estate
Each item in the basket for the consumer price index (from multiple sources)
They are transparent as to how they weigh each item in that basket:
Transportation: ~18% of expenditure
Rent/real estate: ~30%
Entertainment: 8-12%
Dashboard is found at app.truflation.com
Why Is The Government Still Using Their Methodology?
It takes time to change the legacy processes, given the size of the government
3 forms of tax:
Paying banks a fee for them to look after your money
Government printing money and diluting your funds/causing inflation
Paying tax to the government to support community goods and infrastructure
“You get taxed when earning money, you get taxed for holding money, inflation, and you get taxed for spending the money and so inflation is really like the hidden tax that exists.”
- ChainLinkGod
Are More People Pushing Back Against The Official Inflation Metric?
The feedback they got is that people do not believe inflation is only 7%
People are looking for an alternative, which Truflation is providing
What Causes Inflation?
Inflation impacts how an economy is managed and how the quality of the economy can be optimized
Historically, there is a clear separation between the Government and the Federal Reserve/monetary policy
Eventually, they merged as the performance of an economy drives votes and sentiments
People don’t realize the impact of inflation as they are still paid the same amount
Have been toying with a dynamic NFT that deprecates:
Combine an NFT with Truflation
Over time, the colour starts to fade and the NFT starts to crumble up
Visualization effect associated with what inflation really means
There’s a huge industry called Treasury Inflation-Protected Securities (TIPS)
However, if the true inflation rate is above what is provided by TIPS, purchasing power would be lost
Inflation-Protected Stablecoins
In talks with a few inflation-protected stablecoin projects
These projects are currently using the traditional CPI data
These stablecoins are algorithmic stablecoins
Truflation will be developing indices for various subcategories of the CPI
Participating in the Chainlink hackathon and looking for devs to help them with ideas and use cases
Their Expansion Plans
Currently focused on inflation, as that basket is very big
Goal is to bring as much financial and economic data as possible on-chain
Their main challenge is to aggregate their different data sources that comes in different formats and update the various adapters on a daily basis
Looking to expand into other geographies
Why Did They Choose To Work With Chainlink?
Spoke to every Oracle provider out there
Chainlink was the most responsive and provided good support
They are up on market.link and have an adapter there
A Decentralized Censorship-Resistant Inflation Dashboard
Inspired by Balaji’s tweet
Rushed to launch Truflation as fast as possible
Reached out to Chainlink to get Truflation live as a product
What Were Some Of The Challenges They Faced?
Identifying the basket
Sourcing the pricing data
Aggregating the data from on-chain sources
Working with on-chain payment solutions to get point-of-sales data when people pay for real world products in crypto
How Exactly Is Chainlink Used In Their Infrastructure?
They have an adapter
They run a node
Have brought on another node provider to run Truflation on their node
Working with the Chainlink team to improve their discoverability beyond market.link
Use Cases For Their Data
In the process of exploring
Services in the real world are trying to provide crypto collateral or DeFi services with real world assets. These real world services would need the price points they provide
Synthetic tokens that are priced against real world assets
Dynamic NFTs that visualize the impact of inflation
Will Truflation Become Bigger Than CoinMarketCap?
💡 Balaji mentioned in his post that a decentralized censorship-resistant inflation dashboard will become the next CoinMarketCap. Does Stefan think this is true?
Thinks that this is true because inflation impacts many different aspects of everyday life
Idea is to link your day-to-day wallet used to purchase food, shopping, etc. to a dashboard that details your personal inflation
Which Chains Are They On?
As Ethereum is expensive, they will only be writing to the chain once a day
Truflation is live on Binance chain and Polygon as well
Which Is Their Larger Product? The Dashboard Or The Oracle Service?
It’s the same service used in different ways
Some users would only be interested in the raw data while others would only be interested in the dashboard
Smart contract devs would want to be able to embed the feed directly into their smart contracts
Their Inflation-Resistant Stablecoin Project
Talking to a number of stablecoin developers
Will do it in-house if they are unable to find a suitable developer
Have started on development, with the goal of rushing it to market
Design Of Inflation-Resistant Stablecoins
There are many types on the market:
Fractional reserves
Collateral reserves
Algorithmic
More inclined towards the MakerDAO model
Governance Of Truflation
Have launched and done a private sale of their governance token
Want economists and data architects to help shape their product
Partnering with Penn State university and Duke university for their work in real estate and economics, respectively
Is also concerned that the Bureau of Labor Statistics could buy millions worth of the governance token and influence the direction of the CPI
Thoughts On Bitcoin As An Inflation Hedge
Sees Bitcoin as an inflation hedge
However, stablecoins are better for day-to-day spending
Does He See Crypto Becoming The Dominant World Currency On A 10 Year Timeframe?
Thinks that crypto will be adopted as a global currency
Truflation In 10 Years
Sees Truflation empowering a large number of smart contracts
Truflation to embed and feed smart contracts behind stablecoins and synthetic assets
Smart Contracts As The Dominant Form Of Digital Agreements
Shift from physical paper to the blockchain
Auditors are no longer accountants, but smart contract auditors
As the financial community and governance move on-chain, the legal framework has to change as well
This threatens the rent-seeking incumbents
Responses From Institutions
They realized that Web3 and smart contracts are not going away
They will slow crypto down, position themselves, and bully us into complying with their rules of the game
Already happening in Europe with the travel rule
What If Someone Is Concerned About Inflation? What Advice Would You Give Them?
You can buy crypto assets
Use an inflation-protected stablecoin for day-to-day payments
Minimize your exposure to the fiat dollar
Convert a percentage of your monthly expenditure to crypto on a weekly basis
Borrow from the bank (e.g. if the bank is charging you 5% and inflation is 7%, you are making a net profit of 2% in terms of purchasing power)
Where Can People Learn More About Truflation?
Their website at truflation.com
His Twitter at srust99
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