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Author
Jose Aquino
Author
Jose Aquino
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Access to reliable real-time data is vital for DeFi developers tasked with building the next wave of novel financial products. This is why the blockchain oracle market has grown tremendously in recent years, with the demand for providers’ services seemingly on a neverending climb.
By bridging real-world data to blockchain networks, oracles enable smart contracts to execute actions based on off-chain inputs, like equipping an old computer with high-speed internet access.
There are certainly many players active in the Oracle market, but one has been turning heads of late due to its use of decentralized data to manage inflation risk. Since its emergence in mid-2021, Truflation has brought on-chain data delivery to the worlds of TradFi and DeFi, giving builders the tools they need to create cutting-edge finance solutions. So, what’s the new tool, and how might it be useful?
DeFi’s Need for Decentralized Data
Before we get onto the new tool, here is a word about the platform’s central pillar – the Truflation Stream Network (TSN). An independent, transparent, and censorship-resistant oracle that furnishes DeFi developers with a reliable source of real-time data, the TSN has been a godsend for countless on-chain protocols that need accurate, up-to-date, and untampered information in order to function effectively and maintain user trust.
Centralized data sources are popularly known to fall short of meeting these requirements. For this reason, the TSN operates as a decentralized physical infrastructure network (DePIN), complete with globally distributed data providers, node operators, and data scientists. As for the data gathered by this DePIN, it includes info related to perpetual markets, lending protocols, prediction markets, and synthetic assets.
Truflation has long been on a mission to become “the definitive reference point” for indexes and inflation data, its dashboards providing access to over 18 million data points from 65 providers. These dashboards – as the numbers indicate – offer an unprecedented depth of information, including dedicated screens for calculating inflation in several different countries.
The rate of inflation, of course, is an ever-present concern for investors – and not only because it impacts their purchasing power; it also cheapens the value of real-world investments. Truflation’s latest innovation is its RWA Hedge Index, a tool that enables the tracking of real-world assets and provides a way to aggregate their performance over time.
Designed to mitigate potential losses from inflation, the new index tracks price movements across five core asset classes, namely equities, precious metals, commodities, and currencies. Its composition is weighted with gold (25%), silver (20%), WTI Crude Oil (20%), S&P 500 (25%), and Bitcoin (10%), a diverse mix that provides something of an overview of the main asset classes. CEO Stefan Rust has dubbed it “a game-changer for investors seeking to protect their portfolios against inflation.”
In an era of elevated inflation and growing interest in RWAs, the arrival of the index is certainly timely. A recent report published by Binance Research suggests around $12 billion worth of RWAs have already been tokenized. By providing accurate pricing for a wide range of them, Truflation makes it easy for investors and DeFi devs to build the protocols they use to gauge RWAs’ usefulness as hedges against the US dollar. It’s a capability that opens up fresh avenues for creating financial instruments that bridge the gap between TradFi and DeFi.
This work is well underway: Truflation’s decentralized data feeds are already leveraged by several prominent DeFi protocols focused on RWA tokenization, including Nuon Finance, Frax Finance, and Overlay Protocol.
Cutting Through the Noise
In an increasingly complex financial landscape, where traditional economic indicators rarely tell the whole story, Truflation’s transparent approach to data delivery stands out. For DeFi devs seeking to deliver for users, tapping into the platform’s decentralized data – or that of another dependable oracle provider – is a no-brainer.
Expect the RWA market to continue to attract interest and inflation to remain a subject of constant fierce debate. Truflation’s latest innovations, particularly its RWA Hedge Index, represents a mighty tool for DeFi developers looking to cut through the noise.
