Tracer Drop Episode #10: What We Can Do with The World of Data

What We Can Do with The World of Data

Agenda

  • Introduction
  • Exploiting data outside of academia
  • Reasons to use derivatives
  • Complicated data feeds
  • Applications of DeFi derivative markets
  • Limitations of DeFi derivative markets

Call Recording: Here

Introduction

  • Tracer was voted in Top 5 of Tokemak CoRe Event. More liquidity for TCR and easier for people to buy TCR to vote and join DAO
  • USDC 35m TVL (time of recording)
  • The Marketing team has put out guides to onboard users onto products and Artibtrum
  • RMIT University was ranked as the 2nd best Blockchain University for research and education in the world by Coindesk.
  • We explore moving Tracer products beyond adjusted price feeds
  • In the last decade, we have seen an increase in knowledge of data on all facets of the economy. These are huge databases
  • Using non-price data to build interesting derivatives to hedge or leverage information about the state of the world.
  • In this Tracer Drop episode, the team discusses what we can do with real-life data. The team will talk about what opportunities are available beyond price feeds for Tracer markets and the Tracer ecosystem. In addition, they will explain how to hedge against uncertainty with official government data along with the opportunity to invent new oracles.

Exploiting Data Outside of Academia

  • The Data curve is doubling every few years
  • Massively exploding valuable resource.
  • Data is an input for decision making
  • More Data equals better decision making
  • Data sets in digital economies and people are taking advantage of that.
  • Tracer is poised to exploit that in a democratic and inclusive way.
  • Jack Schwager author of Market Wizards - The moral of the story is how people would make money in financial markets. Silver markets had switchboard operators to run around passing information.
  • Robert Shiller proposed Perpetual futures in 1992 as a derivative contract there has been a massive change since then.
  • Where are we with the house price?
  • Challenge is to get house market indices going and we need access and inclusion
  • As a regular person, you don’t get as much information as well as high barriers to entry.
  • However, if there was a simple derivative market with a price feed I can get that local information and signal to the world house prices in the area I live in are undervalued to everything else. Valuable information.
  • There needs an infrastructure to be built in place.

Reasons to Use Derivatives

  • People have different preferences and how they react to different particular risk preferences
  • If someone is worried about downside risk, they would be willing to move risk around to other people willing to bear it.
  • Differential information - Someone has information and you don’t. This is leverage.
  • Leverage speeds up the process by which others learn the information as quickly as possible.
  • The issue, until the info gets into people’s minds - it is useless. Economic value comes from getting pushed through and getting prices pushed around like an oracle.
  • Different people know different things.
  • Some people are missing information, the world is balanced.
  • Information is surrounding us, but for some reason, we are excluded from the financial system.

Complicated Data Feeds

  • If there is an unemployment feed with a pointed derivative to it, what can we do with this information?
  • The aspect of return on human capital is - the job that you get income from.
  • If you lose your job, you can start thinking of hedging your job. How?
  • If you had an unemployment feed, you can possibly hedge against losing your job.
  • You can buy unemployment insurance or hedge against your region or city
  • DeFi is actually providing access to people who do not have access to traditional markets.
  • Household cares about unemployment, housing, business, etc.
  • You can hedge in a range of circumstances to build custom insurance products.

Applications of DeFi Derivative Markets

  • Huge range of opportunities - Hyperlocal markets where you take in macro measures of the state of the economy
  • We often think about being exposed to particular things and particular assets.
  • The more complex the economy becomes, the more the reason we need these derivatives is as we become more exposed to risk.
  • Hyperlocal markets are everywhere.
  • The ability to throw up markets that are based upon information who is doing what and when is important.
  • You can roll out market derivatives with permissionless technology now. You do not have to wait and waste any time.
  • Hedging against water markets with drought as uncertainty.
  • In most cases, people will know when there will be a drought and that means there’s no hedge there.
  • Already priced in values of land and farmers, however, the markets emerge at the point when we move beyond common knowledge.
  • The opportunities come when we are not certain when and where these things will happen.

Limitations of DeFi Derivative Markets

  • Two difficulties
  • (One) Unemployment data only comes out periodically.
  • Different from microsecond price feeds.
  • Requires additional economic thinking for pool rebalancing
  • (Two) These are centralised oracles (the government) We as a society have agreed that they are refined across jurisdictions and time.
  • Some ideas rely on centralized oracles and information should represent the matter.
  • The unemployment numbers do not actually tell you how many people were unemployed at the time.
  • We can say at the starting point we need to use the ABS to collect data and use those as feeds.
3 Likes

Great notes. Thank you for writing this up.

1 Like

@ozier.mycelium Hi @Redorra here. I’m currently advising Mycelium from a TradFi perspective. I have lots of experience in commercialising and licensing data in those environments. Please let me know if I can help - particularly as you start to require licensing to support product expansion

Appreciate it, thank you so much!

Hi @Redorra, this all sounds good. I may however need to redirect you over to @adam.mycelium on this matter.