In 2021, inflation rose 7% – a 40-year high – in the U.S. Nagging supply chain issues have hit businesses and consumers hard, while new Covid variants make it difficult to anticipate the best way to shift spending and ameliorate inefficiencies.
Inflation on the fiat side of the economy is a hot topic in the world of decentralized finance (DeFi) where there is growing recognition of the need for alternative sources of transparent, decentralized inflation data. Decentralized inflation indexes can be used to fuel a number of inflation-fighting smart contract applications, such as inflation-tracking algorithmic stablecoins, that help users hedge against inflation risk.
Truflation is a crypto-native index engineered to provide a more accurate daily representation of U.S. inflation by using a remastered version of the Consumer Price Index (CPI) that substitutes 55.5% of the current CPI datasets with recent market prices for rent, utilities, food, and transport. Truflation also repositions certain data subcategories and uses chained-CPI basket weights to more accurately reflect consumer budgets and spending habits.
This week, Truflation made its custom index available on-chain through Chainlink’s blockchain middleware which allows existing APIs to seamlessly and securely deliver data to various smart contracts and applications. Truflation’s team told Chainlink Today that Truflation offers an alternative, more current, and accurate data source for today’s fast-changing, highly inflationary economic environment.
In a recent Based Space AMA, Truflation CEO Stefan Rust detailed the importance of revamping century-old infrastructure and taking a developer’s approach to building an open-source inflation index for the future. Truflation’s team told Chainlink Today that by using Chainlink’s industry-leading oracle network to deliver its data on-chain, Truflation can become the price data provider for various consumables.
“We see there is a lot of interest in finding out real-market price increases of products and services, and also differences between regions, even globally, that could lead to all sorts of dapps and opportunities,” they said.
Such use cases would ideally make markets more efficient while giving people the business intelligence needed to source more affordable products.
“We are thrilled to be a part of the Chainlink ecosystem; they are a leader in the oracle market but also have an incredible vision and mission to support that,” Truflation’s team told Chainlink Today, noting that their mission to provide the most objective, decentralized, current inflation data is inspired by Chainlink Co-founder Sergey Nazarov’s vision of a world powered by a cryptographic truth machine.
“We are adapting our processes, like data quality control, and our path to decentralization to match that, and generally staying agile and adaptive to the needs of the community,” said Truflation’s team. “It’s an exciting time to be in DeFi.”