Into The Interchain with Shade Protocol and Truflation

Stefan discussed the history of Truflation and the Nuon flatcoin, and what led to its current development. Stefan started out creating solutions to increase the potential for crypto as a payment method, focusing on increasing the money velocity of tokens such as BTC and ETH through widespread adoption and integration of Point of Service (PoS) systems, online payment providers, wallets with fast finality. One of the original goals of Stefan was to provide solutions for average users to “escape” inflation, and he was intrigued by the potential for a new generation of stablecoins that could integrate with the necessary components of traditional finance and Web2, while also providing hedging capabilities usually not accessible to average users.

During the inception of Truflation, Stefan realised the inefficiencies and problems associated with traditional access to financial and economic information, as set out to provide superior open sourced information services available to anybody.

The goal for Truflation was and still is to build something that everyone can contribute to and interact with in regards to inflation data. From this, Truflation was created, which currently sources financial and economic information from 50+ sources, tracks 18 million prices in real time (300x more than Bureau of Labor Statistics), and provides all this information on the Truflation Dashboard. All this information is also available on chain. The improvements Truflation has made to open sourcing higher quality and volume price statistics is imperative not only for their upcoming flatcoin, Nuon, but also for any financial products that utilise real world financial and economic data within decentralised financial products, such as Silk.

Nuon is an overcollateralized flatcoin that originally will start pegged 1:1 with USD. Nuon will be able to provide users the ability to hedge against inflation, and ultimately be a source of truth for real world asset pricing. As time progresses and USD inflation occurs, the price of 1 Nuon will slowly change in relation to USD. For example, if USD inflation increases over time, it will take more USD to buy 1 Nuon. 

During the creation of Nuon, Stefan and the team behind Truflation realised the need to provide additional tooling for users and go beyond the initial scope of services, as well as expand business development initiatives with institutions, small and medium sized businesses, and financial product developers in order to increase adoption success. There hasn’t been a large leap forward in information solutions in decades, and through the initial pricing solutions and future product development from Truflation, the full spectrum of customer bases will have access to incredibly valuable financial and economic information.

The Truflation team has already completely revamped their codebase, database structure, information source transparency, and will be looking to decentralise both their databases and storage of data in order to improve interactions and storage. 

Both Truflation and Shade Protocol realise the value of liquidity for assets, information, and comprehensible education for its user bases. Complex financial products inherently require additional education for its current and prospective user bases, and both protocols have plans to extensively educate and provide transparent access to codebases and sources of information. For too long, crypto has been viewed as a purely speculative vehicle, and it is the duty of both builders and supporters of impactful financial products to focus on the real world potential of the technology that we are currently leveraging. By focusing on providing proper education, development teams are able to build greater trust and loyalty amongst their user bases, which will ultimately increase the positive downstream impact of innovation.

Unfortunately, the most valuable attributes of blockchain technology are often overlooked, and aren’t properly valued until trust is broken within the system. In order to increase the visibility and recognition of the most valuable attributes of blockchain technology, most notably Transparency, Self-Custodianship, censorship-resistance, and Permissionless nature, decentralised financial protocols need to focus heavily on integration and widespread adoption of their tools. If not, centralised actors such as Centralised Exchanges and Market Makers, have a greater likelihood of swaying the narrative surrounding blockchain technology, and thus have a greater chance of negatively impacting the future of DeFi.

Interestingly enough, this need for education extends to regulators and industry executives. In order to ensure a fair, educated, and transparent regulatory framework for these protocols to operate within, both protocols and educators/influencers are compelled to interact with and educate these individuals. We, as builders and users of DeFi products, have the ability to shape the narrative surrounding decentralised finance, and it is imperative that all parties positively contribute to this overarching initiative.

Both Nuon and Silk are considered next generation stablecoin protocols, and will begin using an overcollateralized model. Carter and Stefan discussed some of the hurdles overcollateralized stablecoins run into, as well as how both projects are currently approaching flexibility in collateralization models, and mitigating drawbacks to their current respective models. Both projects are currently researching and scoping collateral acquisition and liquidity provision strategies, as well as keeping a close eye on changes to the regulatory landscape surrounding both stablecoins and DeFi in general.

At the end of the conversation, Carter discussed upcoming changes to the composition of the Silk Currency Basket, which is a basket of global currencies and commodities that SILK’s price is pegged to, and how this impacts the functionality and stability mechanisms for SILK. Most notably, the percentage of the basket comprising hard assets such as gold and BTC have increased, while the number of currencies included in the basket has been reduced. These changes ultimately simplify the Silk Currency Basket, increase the hedging capabilities of the SCB without verging on speculation, as well as open greater SILK redemption opportunities in the future.

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