The journey to wiser shores continues.

In this vast DeFi realm you’re wandering, one fact has become ever more prevalent: the more you learn, the more you’ll realize how little you know. You are a little spec in the endless chasm of information and knowledge.

You are saturated with so much innovation and opportunity, it’s impossible to grasp. Of course, you are fortunate, there is no denying that. Never before has potential been so readily available, and never before has freedom been so obviously obtainable.

That doesn’t make it easy.

It requires work. You must research. You must take notes. You must collect your thoughts, and analyze the outcomes to relish in the lands of the learner. You must lose the tactics of the fool; you must harness the wisdom of the wise.

You and I are much the same.

Let us begin.

What are we learning from the wise this week?

Weekly wisdom serves as a medium to learn from those wise wanderers among us. From DeFi to macro, we will look at some of the best resources that have been released the week and analyze what they mean. This week we break down:

• ChainLink Economics 2.0

• The Byte Masons

• On the radar

• The Wise Nick Drakon

• UK Bond Market

• CPI readings

DeFi

ChainLink

ChainLink has always been one of the big boys. With over 1534 projects and 1812 integrations, you are likely utilizing ChainLink without even realising it. If you believe in blockchain, you surely believe that the world between web2 and web3 will begin to merge. Those that place themselves as paramount intermediaries between worlds will likely become a dominant superpower. ChainLink is one of those intermediaries.

But, there has always been one problem.

Tokenomics. Apart from a payment token to Oracle providers, the LINK token serves no use case for the everyday person. Oracle providers sell tokens to recoup operating costs, the team sells LINK to fund development, and there is no user participation. There is likely rampant growth and development, but there hasn’t been a reason for true value accrual.

This all looks to change for the better with the new economic model. The Wise ChainLinkGod explained Economics 2.0 in this informative article. With this new economic foundation, there are now multiple new avenues for value accrual for LINK holders.

What are they?

1. Staking allows users to earn a share in revenue.

2. It also incentivizes node operators to stake further and not sell, further strengthening security.

3. BUILD program unlocks a wide range of benefits for teams as far as ChainLink services. They pay a portion of their native token supply in return for this service, as this scales a portion of these will flow to LINK stakers.

This is a huge leap in the right direction. ChainLink looks likely to play a pivotal role in the future of the blockchain realm, and with revised tokenomics it looks an ever more inviting investment too. If you want a overview of the project, I wrote a full summary here:

The Byte Masons

Bear markets are the time to get your head down and build. This is not only true for you, this is true for every team in the space. You should keep an eye out for those diligently building in the shadows, when the markets turn, those are the teams that will propel into a brighter future.

One of those you should be following closely is the Byte masons. Since the launch of Oath in March, there has been little information released regarding the token's utility. In fact, there has been little information released regarding any of the technology this team has been working on... Until now.

The Wise Bebis shared an intriguing article.

The overall takeaway from the article is that the Byte Masons believe that protocols should fund their own incentives. Revenue ≥ token emissions. So, how are they planning to go about this? More importantly, what are they actually building?

The Byte Masons are working on five core projects.

1. Reaper - A Yield Optimizer and asset management protocol. (already live).

2. Granrary - Lending and borrowing protocol (already live).

3. Reliquary - Masterchef evolution that leverages fNFTS with maturity traunches.

4. Ethos Reserve - Stable asset protocol.

5. Moon - User aquisition platform (wallet, appstore, social)

Damn, sure sounds like a lot. No wonder they have been taking their time.

As Bebis state: “in software, the tortoise always beats the hare.”Every project the Byte Masons are creating fluently interlinks within the OATH ecosystem. This is evident with this beautiful web3 sandwich. Jump into the article to find out more: Sowing Oats

On the radar

What is it?Scroll is a Layer 2 zkEVM scheduled to launch at the beginning of next year.

The Wise Nick Drakon

Stories are what shape the world we live in. The greatest stories of all, are the stories of Life. Those are the ones that are real, raw, and relatable, those are the ones you can truly learn from. Nick is an individual who has trailblazed his own path; professional poker player, trader, full time-crypto investor… The list goes on. I won’t summarise or spoil the interview, as quite frankly, you should just go read it.

Macro

If you’re interested in diving a bit deeper into the macroeconomic landscape, I would throughouly recommend Blockworks Macro on youtube. Jack Farley does an excellent job of interviewing and breaking down complex subjects. This video goes into multiple topics but one thing that has been an interesting topic of late has been the UK bond market.

UK Bond Market

Unless you have been hiding under a rock for the whole of 2022, you might have realised that we are economically in a pretty perilous place. It turns out that rapidly printing money can have quite a negative effect on the economy. One shining example of this economic uncertainty has been the UK bond market.

Alongside tea, scones and Brexit the UK has now become notorious for economic bond market turmoil. But, what is going on? What even is a GILT?!

A GILT is a UK bond, or more precisely, it is a UK government liability in sterling.

With all Bonds, you are essentially loaning your money to a government or company that needs to raise money. You do this for a set period, once the bond reaches maturity, you get your money back, plus interest. Bonds are usually deemed as a safe investment, and as such, are often incorporated into pension funds.

One thing that you should understand is that Interest rates and bond price share an inverse relationship. When bonds are deemed risky investments, investors will demand higher interest rates. This is evident with the rapid rise in interest rates for GILTs. Increasing interest rates is a key sign that the government is having to persuade people to invest, which is often an ominous sign.

When the UK government announced questionable tax cuts alongside large new spending bills, the market was spooked. The tax cut and spending proposed that the government was going to begin unfunded borrowing. As such, GILT's value plummeted and brought pensions funds down with them.

To ensure these pension funds didn’t collapse, the UK central bank announced it would buy up to £65 billion worth of GILTs to try and stabilise the market. This helped (for a very brief period). You can see in the chart that interest rates did drop, however, they have since been steadily climbing back up. We have now reached the same point before the spending began, and that spending stops tomorrow…

Just as I was writing this, the UK seems to be announcing a plan to U-TURN on the proposed tax cut.

CPI

Earlier today CPI readings came out 0.1% higher than expected at 8.2%. This was the market’s reaction:

What is CPI? This infographic breaks it down for you.

So, why did the market react adversely to this above-expectation reading?

As the CPI is greater than expected, it means that inflation is not reducing as quickly as the market would hope. The FED's goal right now is to break inflation. That’s it. If there is no evidence that this is happening they will continue to tighten.

Many traders hoped CPI would fall below the estimated amount, hinting that inflation was under greater control. Markets would have reacted positively in the hopes of a FED pivot in the next FOMC meeting in November.

This 8.2% print sends a signal that we aren’t there yet.

Damn, what a rollercoaster we are on. Just as I was about to post this, markets have fully retraced back to the point before the CPI release. Who even knows anymore…Hold on to your seats and enjoy the ride.That is all for this week, catch you next time!