On this episode of POD99 we talk with Stefan Rust, the founder of Laguna Labs, a cutting-edge blockchain development house that has launched truflation.com, and nuon.fi.
Inflation has been a major issue around the world for the last 12 months, with consumer prices rising and the cost of everyday goods such as petrol and groceries jumping significantly.
Truflation is an independent and censorship-resistant inflation dashboard based on census-level price information from more than 30 data sources in real-time.
Nuon is the world's first decentralized flatcoin. A flatcoin is a stablecoin pegged to a basket of goods, shielding holders against loss of value from inflation.
https://truflation.com/
Andy Pickering - Host
You're listening to Pod99, a podcast by Wealth99 that helps the 99% take control of their financial future. We talk to experts from across the alternative asset space, who share their insights on new wealth, how to build it, and how to keep it. Let's get on with the show.
Well, today's guest is Mr Stefan Rust. Stefan is the founder of Laguna Labs, a cutting-edge blockchain, development house, which is responsible for Truflation, which we'll learn about today and Nuon, which is also something we'll learn about today. Welcome to the show, Stefan.
Stefan Rust - Guest
Hey, thank you super glad to be here Andy, you know, it's funny when you say 99% - how can 99% of the world's population take back control of their wealth? One of the things that we have at Laguna Labs is a drive towards economic sovereignty so that everybody can be financially independent, and have their own sovereignty back. And so yeah, that's why we built out Truflation and Nuon. So thanks to be here.
Andy Pickering - Host
Yeah, fantastic, Stefan, it's great to hear you frame it like that, just right off the bat, I guess, you know, the big idea from our point of view, with Wealth99 we see this new era of new wealth coming up around the world where you know, the world's most exciting investment opportunities, and no longer restricted to the top 1%. But now, the 99% can also access those opportunities. And of course, a lot of that is driven by blockchain, tokenization, fractional ownership, and all of that good stuff. And of course, Stefan, which is very pertinent to today's conversation, the ability for just normal average, everyday people and investors to hedge their wealth against things like inflation, for example.
Stefan Rust - Guest
So I mean, one of the things why we got into Truflation was, you know, when the governments were printing money, and by the way, in the last decade, just the US government alone has printed $9 trillion worth of new money into the market. So just that in 10 years, and in 2020, when they go, 'Oh, no, it's not going to be inflationary', and then it's transitory with MMT will protect the world. You know, under the hood, you just looked at it, and I just couldn't fathom how that was going to work. And once you looked at how the calculation of inflation was taking place, it's over a century old, 100 years old, in terms of the model and the framework that they use to calculate it. And they do it on a panel basis, not on a census basis, on a panel basis, that means they take out 60 minutes, 60,000 households, and that's a representation of the whole US and that's how they then calculate what and they extrapolate from there to calculate what inflation is, we then sort of took a developer approach and said, Wow, with all these modern technologies available, we should be able to have a really modern approach and being able to aggregate 18 million items from 50 different sources in different formats, to enable investors and participants in the ecosystem to make 365 times better decisions than they do waiting on the government announcements, not to mention the, you know, the sort of internal conflict of interest between the people reporting on an economy who are a part of the management of that economy.
Andy Pickering - Host
That's right, Stefan, and I think to the benefit of the listeners, let's just explain a little bit more about what Truflation is, and listeners, you can find Truflation on the dashboard at truflation.com and tru is just t-r-u .... truflation.com. I guess the kind of headline is Truflation is an independent and censorship-resistant Inflation, a dashboard and one my favourite way of understanding this is actually it's a paragraph written by Balaji a few years ago, which you can kind of fill on the background here, where this all came from. Let me just find this here. So, Balaji Srinivasan who is a leading crypto investor VC guy - Balaji says that inflation is a monetary phenomenon, a function of money printing, but it is also in part a social phenomenon and a function of mass psychology. If enough of the right people believe that inflation is going to happen it will. As such when inflation is happening there is often a push to, censor a discussion of inflation itself, under the grounds that discussing the problem actually causes it and makes it get worse in the first place. And this is what happened in Argentina and Venezuela over the last decade. And bear in mind, of course, listeners that when Balaji wrote that, that was back in perhaps 2021, early 2021. Before we really did see what has come to pass over the last 12 months. Back to you, Stefan. So, you know, what is Truflation?
Stefan Rust - Guest
So many different things. I mean, in essence, all we're doing is calculating what inflation is based on tracking, in real-time, the price evolution of 18 million items that are across the average household expenditure. And we break that down into 19 subcategories of which on the dashboard app.truflation.com you can see 12 subcategories including food, housing, transportation, utilities, health, alcohol, communications, etc. And then what we do in there is we also highlight what are the subcategories of those specific subcategories. What do they consist of? And then what is the weighting of that in the overall context of average household expenditure? And we put that together? Yeah, and update it with strategic partners with very reliable sources of data that have been in the data aggregation business or even real live websites that are making these data points available through an API. And then we just aggregate that together, and we are open-sourcing our algorithms in terms of how we calculate it. And we try to visualise and communicate in simple terms, how we actually compile the different sub-indexes into actually being the inflation index itself.
Andy Pickering - Host
Yeah, that's right Stefan and the data is available via Chainlink oracle as well, isn't it?
Exactly. So Chainlink is an investor and by the way, also Balaji, gave us a lot of backing and support in getting this off the ground. And we provide this all and write all of the pricing information on chain. Once it's been requested, it gets written to the chain, and made available for the community to see.
Stefan Rust - Guest
So the big idea is essentially to try and get a neutral, but accurate understanding of what the historical inflation rate is without letting it go through political spin doctors if you like.
Yeah, I mean, look at what we've gone through, right? I mean, in the US, there was this huge debate only a couple of quarters ago, around what is the definition of a recession. Historically, two, negative, consecutive quarters of negative growth are the equivalent of a recession. And there was a whole issue around changing that narrative that that was not the case that was not actually what is defined as recession, just so we can wordsmith what really is happening, so none of the government bodies could take the blame that the economy is in a recession.
Andy Pickering - Host
Yeah. And, you know, again, really one of the key leading causes of the inflation that we saw last year, which led to the erosion of so many people's purchasing power, was because those trillions of dollars were printed, by governments around the world by central banks as a response, of course, to the pandemic. But, you know, if you inject all that fresh fear into the system, then well, that's just going to drive up prices and cause inflation. And that's what we've seen. Where are we now, Stefan, like, I see that it seems like the Fed is starting to get inflation under control. Is that the sense that you have?
Stefan Rust - Guest
Yeah, I mean, we've seen a regular decline over the last 12 months, if not, you know, sort of 10 months in terms of the cost spikes, but bear in mind, this time last year, we were looking at a 10 to 12% inflation. So on top of that 10% rise that we had a year ago, we're now experiencing a 5.56% inflation rate that said, inflation growth rates are coming down, we're not in a deflationary market, because the deflationary market would mean prices go down, we are still in an inflationary market. However, inflation has been brought down to a five to 6%. My view is that the inflation at this number will be a consistent mark for the next couple of years, as we migrate from a global economy into a sort of more regional local economy, where factories are being built out for economic independence or energy independence for whatever reason. And that results in a unit cost decline, on the one hand, and on the other hand, a growth in investment. And with interest rates being higher, the cost of capital for the investment also is higher. And so how do you manage that? And how do you navigate through that? I think we'll just see a consistent 5% structural inflation that is here. And we'll be here for a while. But the thing is, we won't get down to the 2% that I think the Fed wants to get us to but will stay at a rate at least is predictable, it is consistent, and we know what it's going to be. And I think that is the more important element of what we want to achieve in an economy versus having to drive it down to a base point.
Andy Pickering - Host
Yeah, that's, that's right Stefan. Then if that's the case, and that's really the new environment that we're living in, you know, one of the core ideas behind Wealth99 Is the idea that it's really up to individuals to take advantage of the opportunities that are available in this new world. There are more investment opportunities available than ever again, like I said, in the beginning, part of this is due to just the friction falling away as blockchain opportunities, and tokenization opportunities start to become more widely available to the 99%. So here at Wealth99, obviously, you know, we offer various crypto assets, but also Stefan tokenized precious metals, but I'd be interested in, let's do crypto first Stefan. There was a narrative that Bitcoin was a hedge against inflation, which I suppose is true in bull markets is not so true and bear markets. But of course, if you zoom out over a long enough timeframe, then you know, bitcoins returns will stack up against any other asset class and significantly beat those other asset classes. But you do have to zoom out and you do have to be in the market for long enough. Yeah, where do you see Bitcoin at the moment?
Stefan Rust - Guest
Yeah, I mean, I think Bitcoin is a unique product, I sort of call it in a way the, you know, the institutionalisation of Bitcoin has happened, where, you know, we know that there's 21 million limited supply. However, if I look at the total supply, I'd say, you know, we take Satoshis wallets out of the mix, we look at some of the lost coins, etc, maybe that's minus 2 million, so there's a total supply of 19 million Bitcoins, and the people that hold the Bitcoins today are going to be the largest benefactors of anything going forward. It is gold 2.0. And I think what you're seeing is the entry into bitcoin by the bigger institutions where they're building out reserves, using Bitcoin as those reserves because of its nature and what it offers and the fact that it's confirmed as a utility by Gary Gensler. That said, I think as a result, it is going to go through a managed growth on its path to you know, $2 million a Bitcoin or whatever it is. I don't think it's going to grow any more in the way it did in the past where it has these huge spikes, in the course of two, three days, right, I think is going to be managed, and the institutions are going to market make its way up so that all the executives at these institutions make their bonuses off the trades and the price rise in a sort of proper manner or appropriate manner that they're used to from the traditional finance worlds.
Andy Pickering - Host
A very, very interesting perspective. So, yeah, and, you know, I suppose that's an optimistic view, but it was also slightly pessimistic, as well.
Stefan Rust - Guest
Yeah, I mean, exactly. I think Bitcoin, had a lot of opportunities to innovate. And in itself is a huge innovation and I believe in the value of the velocity of money. So turnover of money. And whilst at a trading level, I think there is a lot of velocity in Bitcoin, there is no greater velocity in crypto than tether. Tether has anywhere between 45 billion and 60 billion on average trading volume every single day. You know, and why is that because in my view, it provides a certain level of stability, it provides counteraction. It provides the ability to pay out and reward e-commerce participants, salaries and other sort of payment mechanisms outside of being a core liquidity provider to multiple exchanges and crypto pairs out there.
Andy Pickering - Host
Yeah, and I suppose, speaking of tether, and speaking of stablecoins Stefan, you know, and this is what Nuon we mentioned that on right at the beginning of the show. So this is another product, that comes from your development house Laguna Labs. What is Nuon Stefan?
Stefan Rust - Guest
Yeah, so, on the one hand, we've been calculating inflation and Truflation now, for the last, I'd say, nearly close to two years. We now have a community of about 70,000, strong, unique visitors and community members that are actually all super smart economists and everybody's been asking and talking about now that I know what inflation is, how do I hedge myself against inflation? I have a large repository or Treasury associated with stablecoins -they're losing value because they're pegged to the US dollar. And so how could we find a mechanism that would allow individuals that would hold the Nuon to retain their purchasing power? And that's what we tried to create, we've created Nuon, Nuon.fi. And we call it the flat coin, which is partially also sort of a coin that Balaji has termed and we've sort of taken that on and tried to build that out, and sort of get to what is a flat coin? How does it look? How does it manifest itself, we're launching that on the 26th of January, so 10 days from now.
Andy Pickering - Host
Fantastic. So the idea, Stefan, is that you know, traditional, stablecoins, while traditional is the wrong word. But as we understand stablecoins today, they are mostly pegged to, well, generally the US dollar, but a fiat currency if you like, so but the idea with Nuon is, instead it's a flat coin, as you've described it, which is pegged against a basket of goods, right. So how, what does that look like?
Stefan Rust - Guest
Think of it as a synthetic representation of the cost of living. It's a synthetic asset that reflects your cost of living and if your cost of living is 100, and you have one Nuon that is balanced against that 100 If the cost of living goes up to 200, the Nuon is still one Nuonthat will meet the 200 costs of living requirements as it relates to a basket of items in combination.
Andy Pickering - Host
Yeah and that basket of goods is essentially what we were talking about with Truflation. Right? We talked about that chainlink oracle, perhaps? Is it as simple as that?
Stefan Rust - Guest
Exactly as simple as that. So, I mean, in a way we're trying to sort of configure a sort of composable. So when we're composing, you know, this, this inflation Oracle, combined with a product, that is the end result, as synthetic assets pegged to this cost of the Truflation. In essence, you're getting to the forum where you have a composable decentralised, autonomous monetary authority. And what does that look like right? So all of a sudden, I've got the cost of living. And we have a and the community can decide on when and what policies are driving a quantitive, easing and quantitative tightening with the acceleration of Nuon into the market or the deceleration, and the extraction of Nuon from the market.
Andy Pickering - Host
And is Nuon is it designed to be like a stable coin for spinning as a medium of exchange or a trading instrument? Or is it more like an investment hedge so that people can park some of their wealth in it to protect against inflation? Or can it be all of those things?
Stefan Rust - Guest
I mean, it can be all of those things. Ideally, we'd love it to be all of those things. I think one of the challenges is obviously going to be regulatory in terms of, you know, the licencing requirements to use crypto as payments, what are the hurdles in order to do that in physical commerce and then in E-commerce. But that is our overall objective to integrate this with points of sales mechanisms, and help scale that as payment. However, realistically, in the first six to nine months, it's going to be used more in the financial aspect of crypto where I'm going to park some of my fiat requirements and save my money there so that I'm not exposed to inflation. Or I may even use some of the defy farms that you find available on sushi swap, uni swap or curve convex where I can then earn rewards for keeping my Nuon locked in and providing liquidity for other assets.
Andy Pickering - Host
Sure. And, you know, you talked about the differences and regulations across different jurisdictions around the world, Stefan and, you know, again, if we bring it back to this idea, here at Wealth99, you know, the idea that over the years ahead, the ability for tokenized assets, to unlock all kinds of new possibilities for individual investors to invest in everything from crypto assets to tokenized precious metals, to tokenize real estate or fine art, things like that. But of course, all of this does hinge on the ability of regulators to let people access these opportunities. And you mentioned that Gary Gensler has effectively said that Bitcoin certainly can be viewed as a commodity, but he's certainly more bearish on almost every other crypto asset so I think it's fair to say, and, you know, some of this is warranted, given what, you know, the fairly dire events that we saw last year and crypto. But of course, you know, the tide will turn, and things will warm up again. But yeah, how do you see this kind of friction, I suppose between technological innovation and, and responsible regulation, if we can frame it like that?
Stefan Rust - Guest
Yeah, I mean, my view is that the markets are already regulated. And what decentralised finance is doing is providing a layer of transparency and extraction of the volume of middlemen needed in a traditional finance world, in order to get to execution. And as a result, it is more modern and more transparent. And as a result, I feel needs a very new approach to regulation, which it doesn't have today. And I don't think it needs heavy-handed regulation at all. I think it needs to be allowed to flourish and be an alternative to the existing models today. And over time, you will see the financial institutions start adopting them, they are already today starting to adopt blockchain solutions and insert defy capabilities into their actions and their processes. And they're just trying to slow it down. So that they can keep up with the rate of change, understand the change that it has, work out the implications and make sure that those implications work in best their favour. And it's in line with their overall operations. Disruption by nature is changing that. That is uncomfortable, that is uncomfortable for the financial institutions, as well as for the regulatory frameworks that have been put in place to try and hinder the evolution of innovation in financial markets. And I think that's why we have this huge friction between what defy is what tokens are, and tokens are a form of venture capital. Historically, all the successful projects from Bitcoin to Ethereum, to the Polkadots to the Avalanches were community-based growth projects, they grew out of not venture capital investing in them, but individuals, investing in them, and allocating funds and having a very broad base of people that had skin in the game with those specific projects and wanted to see the change, and we've killed that business model, we have stopped it and banned It. If you're not an accredited investor, you're not allowed to go in, if you're an American, if you're Chinese, you're not allowed to go in. So all of a sudden, you've just restricted all of these different markets from accessing, whereas in the past with Bitcoin, you had 16-year-olds watching videos, earning Bitcoins that today don't need to work anymore. You've had 16-year-olds or 15-year-olds, 13 year olds set up mining rigs, with their Bitcoin, earning Bitcoin, and then being able to then reinvest that into Etherium, and build out solutions on the Ethereum chain. So you've got lots of case studies whereby enabling community and population and everybody in society to engage in it you've allowed for wealth creation, the creation of hope, and opportunity for the next generation, not for the previous generation, and the boomers but for the next generation that are coming out of school and want to see a change of the world.
Andy Pickering - Host
I love it. So well said Stefan. It's just, you know, representing the 99%. I love it. That feels like a nice place. To finish this part of the podcast. We'll go for a very quick break and then we'll come back and we'll finish off. We'll have some fun and finish with some quick Wealth99 insights into building and holding onto wealth with Stefan.
Andy Pickering - Host
We're back and I'm with Stefan Rust from Laguna labs. And well, Stefan I like to finish each podcast by posing just a quick set of questions to the guest, and we'll just see what you have to say just a bit of fun. But I suppose the first one is, can you think of one piece of financial knowledge that should be taught at schools?
Stefan Rust - Guest
Haha, good question. Really good question. How do, you know, do your own budgets and manage your own finances? I mean, I don't know how to say that. But I mean, I love the fact that I can calculate what's the difference between getting a leasing when you're buying a car, getting a leasing contract from the car manufacturer, and getting a loan from the bank against what's the difference between the two? Which costs more, what do I need to earn in order to make sure that I can meet all the payment requirements? And then how do I build that into a budget?
Next question, Stefan. What would you say is your most contrarian view on building wealth?
One thing it's very difficult for people to comprehend is where certain constituents in the population overcome where and when do I take on debt to be able to grow my business. Debt helps you with your growth. How can you service debt, how much debt do you need to take in order to be able to achieve the growth that you're wanting to achieve? And the second element is to invest in assets and not in consumerised perishable products. So if you're taking on debt, don't spend it on better ice cream, or on a big party, if you're taking on debt to buy a house, buy shares, buy tokens, invest in, you know, upgrading your house, refurbishing the driveway, whatever it is, but then that becomes an asset that has longevity and sustainable value.
Andy Pickering - Host
I like it. If you were 22 years old today, what's one thing you do to try and secure your future?
Ultimately, I'm biased, but I love tokens. So I love crypto, right? So get into the blockchain, look at the assets, and do your research. Find out what some of the tokens are. There is so much information on the blockchain on the internet, right? In YouTube, you've got editorials, you've got write-ups, you've got medium posts, you've got communities and Twitter that are in telegram and discord across all of these digital channels. There is such a vast array of educational material, learn, identify, go slowly and study what tokens are the right tokens to look at, and use them in the form that they're meant to be used as a utility for those specific products, figure out how to use them and work with them. That would be one piece of advice. And then ultimately, I think right now we're seeing a huge boom in AI, learn about AI and figure out how to use that in maybe even in your investment strategies and helping you do research associated with specific products. How can you learn? And how do you qualify? Which AI is a good AI versus a bad actor? AI? Right, because I'm sure we'll see examples of that very soon.
Andy Pickering - Host
Absolutely. I very, very much agree. All right. And 30 seconds or less, Stefan, what's the bull case for Bitcoin?
Stefan Rust - Guest
Um, yeah, I mean, look, I think Bitcoin has a really good chance to be up to 50,000 by the end of this year. I think once interest rates have flattened out and there is no more pressure on the belief that interest rates will go up. That at that point, we will see a turnaround in crypto and Bitcoin go to $50,000. And likely to be around the summer timeframe where I think we'll see you know, sort of terminal rates on the interest, the US interest rates, which will be the most way around five 5.5%.
Andy Pickering - Host
Very nicely said Stefan Alright, finally, can you think of a recent book, documentary podcast, even a piece of music, or anything that springs to mind that you have recently enjoyed or has shown a new perspective or insight that has helped improve the way you live,
Stefan Rust - Guest
Yeah, I think the economy's you know, history repeats itself and so one of the things, I just watched the Madoff documentary and to me 2008. It's a huge repetition of what just happened. And what happened then and that there are people that are always trying to, sort of work through and take advantage of the system. Yeah, you know, I think that was sort of really what stood out. I. Yeah, otherwise, the three books that really stood out from a self-learning perspective, one is,'The One' it's called and it's just really, how do you get to the one thing that really matters to you? How do you nail down all this noise and all these different inputs that we have every single day to get to that one element that is going to matter in our life? 'The Sovereign Individual' that is a really important book to me, I found that super influential and has really shaped me. And the 'Revolt of the Public', I really feel is another good book where we are in a crisis and I think when I read that book, I really felt this is where we are today. Where we no longer trust the authorities that are telling us what to do. And we're just in it living in a level and a layer of, I think Pink Floyd, call it complacent, numbness or normally compliant or whatever the word is. Comfortably numb. That's it yeah, so we're comfortably numb. And as soon as that comfort goes away, we won't be numb anymore. And we need to look up and be a lot more critical of what these things are where Klaus Schwab is trying to dictate the direction of the planet, create a generic, unified army of people that are like herds of ants, teeing to his Queen and direction. It reminds me of Steve Jobs, Apple video in 1984, right? We don't want to create, we want to think differently. We need diversity on the planet, to drive creativity, to continue the innovation that we need to address and drive growth, to create hope, as well as to you know, just challenge each other to think and bring us further as a society and address the problems that we need to address in order to make the planet a better place.
Andy Pickering - Host
Yeah, fantastic. Thank you, Stefan and the 'Sovereign Individual', fantastic book. And when you say talk about you know, Pink Floyd describing the state of being Comfortably Numb at the, you know, reminds me of 'Brave New World' by Aldous Huxley, you know, the pleasant dystopian novel written and I think 1931. And, you know, he was describing this kind of futuristic dystopia where the population is comfortably numb because they're kind of subdued by technological pleasure. And it really does describe the state of the world today, because we're seduced by the, you know, the social media algorithms and pornography and all kinds of digital addiction. And it just makes it harder to see the world as it really is. Anyway, thank you, Stefan, for coming on the show have enjoyed talking to you today. Close it out, by please, telling people where they can go to learn more about Truflation, Nuon and yourself where you like to hang out online, on Twitter or wherever else you may indeed hang out.
Stefan Rust - Guest
Yeah, no, thank you. I mean, yeah, follow us through Truflation.com. And Nuon.fi And then you can follow me at as SRust99. Twitter, that's the best spot to get a hold of me. Those are the products that we're trying to build for economic sovereignty.
Andy Pickering - Host
All right, there you go. There was another episode of Pod99 The Wealth99 podcast. Thank you for listening. Thank you to Stefan for coming on the show. And yeah don't forget listeners to please subscribe to the Pod99 podcast and whatever podcast app you use, please do feel free to give us a rating and Spotify, Apple, iTunes, Apple podcasts, and all that good stuff. Yeah, but hey, we'll see you real soon for the next episode of Pod99 Thanks for listening team and bye for now.
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