NEST 3.0: forming price in the game and continuously outputting value

NEST, the decentralized oracle machine system developed by the anonymous team, officially released version 3.0 on July 13; at the same time, NEST was also officially opened to the outside world, providing an external calling interface. This is the first time the NEST oracle system is officially open to the outside world, providing an external call interface for other DeFi developers.

This means that the NEST oracle quote system, which has been in internal testing, will be openly verified by the market for the first time to verify whether the quote oracle it provides can be used by other blockchain systems. If it passes the test, NEST’s continuously running quote mining system will eventually reach the real world, providing real value to the real world-that is, solving the difficult problem of predictor quotes that has never been solved, thus providing NEST, the core token in the system. Provide value support.

Providing accurate on-chain asset pair quotes is the core value provided by the decentralized oracle NEST, and it is also a core problem that has not been solved in the blockchain system and open financial system.

At the same time, NEST3.0 also added the nToken quotation system, that is, in addition to the original unique quotation pair ETH/USDT, it also supports the opening of any ERC20 token and ETH trading pair.

What new features does NEST3.0 have? How does the newly added nToken system achieve a cold start? How does nToken capture value? And do ordinary people still have investment opportunities? The following news will explain the update one by one. In addition, Lianwen also interviewed the head of the NEST community, who changed his name to Bruce, and asked him to tell us the guiding strategy of NEST’s overall promotion and the intention behind its incentive design.

New quote deviation defense mechanism to improve resistance to attack

First, let’s see what new features are available in the 3.0 version of the Nest oracle machine-of course, if readers still don’t know about the decentralized oracle machine system NEST, it is recommended to read the articles published before Lianwen if Uniswap is not a good one How to improve the prediction machine? , To understand its basic design concepts and operating principles.

According to Bruce, NEST 3.0 has added a price deviation defense mechanism.

Previously, in order to prevent quotations from being malicious, the NEST system would impose a limit on the size of the bidder’s quotation (that is, the “verifier” of the system). Quotation of integer multiples of the former beta, where beta> 1 (currently beta=2), which means that the price chain will eventually terminate (downtime) with the expansion of the scale, and the cost of the perpetrator will increase geometrically, thus resisting the attack behavior .

This time, NEST 3.0’s new “price deviation defense mechanism” further effectively protects against malicious behavior: if the bidder’s quotation deviates from the last effective quotation by more than 10%, the current quotation scale is 10 ETH * 10 (scale 10 times larger), which makes the system more secure.

New nToken system

The newly added nToken system is essentially an extension of NEST 2.0. In addition to the original unique asset pair ETH/USDT, any ERC20/ETH asset pair quotation is added-this means that the new version supports the opening of any ERC20/ETH trading pair. In NEST 3.0, this is called “nToken” system”.

Each individual nToken system has its own independent nToken token, which is an ERC20 Token issued based on the Ethereum network. Every time an ERC20 Token/ETH price oracle is opened, an nToken will be created. It may be nDAI or nHBTC.

Taking HBTC Token/ETH as an example, once the trading pair is opened in NEST 3.0, a token “nHBTC” mapping HBTC will be generated in the NEST system.

How does the nToken system work?

In the new nToken system, miners mine through quotes. The mining method is basically similar to the 2.0 system, but how to open a new quote pair is a matter of learning.

The nToken oracle is an open system. Any wallet address or smart contract address can create a new ERC20 Token/ETH price oracle through the nToken auction contract. Each ERC20 Token/ETH price oracle can only be created once, and the oracles that have been created cannot be created again.

To innovate any new ERC20 Token/ETH price oracle machine, it is necessary to use NEST tokens to open-opening nToken system has become one of the new use cases of NEST tokens.

To open any new ERC20 Token/ETH quotation pair, the creator needs to hold a minimum of 100,000 NEST through bid auction. Anyone can participate in the auction and the auction will last for 5 days. Of course, the successful bidder will eventually need to pay NEST tokens as auction funds, and these tokens will be permanently destroyed in the system. The advantage for the successful bidders is that once the bidding is successful, the “5%” share of nToken, the reward for block mining release, can be obtained permanently.


Participants who have not succeeded in bidding can not only get back the bidding funds, they can even earn NEST token income through nToken’s bidding incentives. Specifically, the auction incentive mechanism will use a portion (50%) of the difference between the bid price of the current bidder and the previous bidder to reward the previous bidder. This mechanism can effectively reduce the loss of bidders who failed to bid successfully. You can even use this speculation to earn NEST tokens to stimulate market participation. For example, speculators will buy NEST directly in the market to participate in the auction, and start to join the auction to earn NEST when the price is low. Since they know that they cannot shoot the final bid price, it is safe to earn NEST in this way.

This is an ingenious game design: on the surface, it is equivalent to subsidizing the amount of NEST destruction to auction participants, but at the same time it stimulates more auction competition, and the participation of more bidders will stimulate a higher bid Amount.

Bruce told Lianwen that the design of this auction incentive mechanism is mainly to stimulate market participation. Although the total amount of NEST destroyed after each auction is reduced, the calculation formula of NEST token destruction is (starting price P0 + final bidder bid Pm) /2, which is equivalent to subsidizing part of NEST’s destruction to unsuccessful bidders, but overall increased interaction and increased market participation. The whole process went down, increasing the demand of NEST. He foresaw that in the early stage of the project, the effect of destruction was not necessarily more direct than increasing the activity.

According to the new version of the white paper, there is no upper limit on the total amount of nToken, and the release mechanism is deflation year by year. In addition to the successful bidders who opened the quotation pair, they can permanently receive the “5%” block release reward, and the remaining 95% is obtained by the miners. Miners mining will successfully quote the asset pair (successful quotation means that the quotation has not been accepted, but adopted by the system), you can get nToken block reward. According to the new version of the white paper, the Ethereum block number of the nToken oracle when it is activated is the initial output block, and each block starts to produce 4 nTokens, which decays every 2.4 million blocks (about 1 year) The number of nTokens produced by each block in turn decayed to 80% of the original, and the decay stops when the number of nTokens produced in a single block is 0.4.

What is the value of nToken?
What is the use of the obtained nToken? In other words, what is the motivation for miners and developers to obtain nToken?

In the NEST ecosystem, nToken tokens have two main uses, one is freely tradable on exchanges, OTC platforms or DEX, and the other is holding nToken to get ETH weekly reward pool rewards.

According to the new version of the white paper, based on the proportion of positions held by nTokens, miners can obtain the distribution of the ETH revenue pool of the nToken system. The system will pool the ETH revenue pool for distribution once a week. The allocation mechanism is similar to NEST and is also based on specific nToken tokens. The proportion of positions is calculated.

In other words, the more nTokens held, the more ETH income will be received from the weekly income pool, and the decisive influence on the nToken income pool is the nToken predictor call fee (When DeFi developers call nToken predictor price data, A certain amount of ETH fee needs to be paid to the nToken system, 80% of the fee goes to the nToken revenue pool, and the other 20% is rewarded to the quoted miners who dug the block at that time. Is 1% of the quoted ETH scale) and the nToken quoted processing fee for the validator (the order processing fee is 0.1% of the ETH scale).

In other words, the value capture of nToken depends on the number of times the downstream DeFi product calls the nToken oracle. This is a process in which the oracle system obtains the “value” input by the external system by exporting the quotation. The more often the downstream DeFi application uses the NEST quotation system, the greater the value captured by the oracle system. However, only when the newly created nToken quote pair has more miners participating in the quote, and a stable and accurate quote is achieved, will more downstream DeFi products choose to call their quotes. In the early stage, how to promote the cold start of nToken quote trading pairs?

Bruce told Lianwen that although the DeFi downstream call determines the stability of the system, the downstream call cannot achieve a cold start, and only the incentive determines whether the system can start. He said that nToken uses a deflation mechanism to motivate early participants to mine mining quotes, allow advanced people to mine more nTokens, and provide early mining advantages. When the advantage is maintained until the quotes appear continuously, the caller will appear .

Taking the popular quote asset HBTC as an example, because people have high expectations for it, once nHBTC is launched on NEST, it will promote the demand for people to hold nHBTC, which will effectively promote the cold start of the quote pair.

NEST 3.0 has been officially launched for 1 day. At present, there are multiple oracle machine quote assets under auction opening, of which the HBTC oracle machine auction bidding assets amounted to 1.33 million NEST, and other quotation assets under auction opening are HT (115 Million NEST), OKB (1 million NEST), HUSD (930,000 NEST), DAI (780,000 NEST), imBTC (730,000 NEST), WBTC (720,000 NEST), BIX (710,000 NEST), LINK (500,000 NEST) and MKR (410,000 NEST).


“Only when there is continuous input of value in the future, can the NEST system be further amplified or balanced. The early stage is unbalanced, and all advanced people have advantages.”

It should be noted that in the nToken revenue pool, part of the ETH payment fee paid by nToken miners will be “blood transfusion” to the NEST revenue pool. Initially, 40% of the revenue will be lost to the NEST revenue pool, and then decay once every six months, and then decay to The 20% is kept constant, that is, 20% of the nToken miner’s quote processing fee is always sent to the NEST revenue pool.

How have the original quoted assets changed from ETH/USDT?

After the new version 3.0 is launched, in addition to the ETH/USDT quote asset pair, there will be multiple independent nToken quote pairs in parallel. The original ETH/USDT quote asset pair will continue to operate. As a mainstream crypto asset, ETH’s quote volume and continuous operation will play a crucial role. However, after the 3.0 is launched, there will be some changes to the ETH/USDT quoted assets that have been running, mainly reflected in the source of income.

Previously, the main sources of the ETH revenue pool for weekly revenue distribution were the quoted miner’s fee (1% of the quoted ETH size) and the verifier’s fee for taking the order (the ratio is 0.2% of the amount of the ETH).

3.0 After going online, the income pool of the ETH/USDT asset pair will add two new sources of income: One is the call fee ETH paid by downstream developers, of which 80% of the call fee will be input into the ETH/USDT asset to the income pool Dividends are distributed every week, and the remaining 20% ​​is allocated to the quoted miners in the corresponding block at the time of the call; the second is the part of the handling fee ETH paid by nToken miners when quoted.

Among them, the ETH call fee obtained through external DeFi call not only becomes the core income of the ETH/USDT revenue pool, but also the key to support the entire NEST ecosystem. As a decentralized oracle machine, only when its core quotation asset is validated by the market for ETH/USDT and can be called by developers can it truly capture the value outside the system and become a product that matches the market (Product-market fit).

Every time the ETH/USDT price oracle is called, the developer needs to pay a certain amount of ETH fee to the NEST system. Regarding the charging rules, DeFi developers need to pay 0.0001 ETH for each call to the price of each block, the minimum payment fee for a single call is 0.001 ETH, and the maximum payment fee for a single call is 0.01 ETH. Of this part of the ETH revenue, 20% will be directly rewarded to the quoted miners, and the other 80% will flow into the system revenue pool.

At the same time, as the most important core asset in the NEST system, the NEST token will gain new use value (the governance voting function mentioned below), as well as a series of new destruction mechanisms, will bring NEST tokens Invisible value support. These destruction mechanisms include the above mentioned. Participation and opening of nToken oracle bidding need to hold a minimum of 100,000 NEST tokens, and once the bidding is successful, the bidding fee will be permanently destroyed. In addition, in decentralized governance, participating nodes The NEST income of the voting NestNode holders during the governance vote will be destroyed by the system; and the downstream DeFi application needs to destroy a certain amount of NEST tokens when it is docked with the NEST oracle for the first time.

Added voting system to support NEST governance

In the upgrade of NEST 3.0, another important function update is the addition of a voting system. The governance mechanism is divided into regular governance and emergency governance. The participants are mainly NestNode holders and NEST token holders.

Here we need to briefly introduce the NestNode token, which is the governance token in the NEST system, which can initiate and vote. As an ERC20 token, NestNode tokens can be traded and circulated, but the total amount is constant at 1500. In addition to the governance authority, holding the NestNode token can also obtain 15% of the NEST Token mining revenue, that is, during the mining process of the quoted miner, for every 100 NEST Tokens released by the NEST mining pool contract, 15 will be allocated to the guardian Node NestNode.

A typical conventional governance process is: After the NestNode holder pledges at least 10 NestNode tokens, they can initiate a voting contract, and then enter the 1-day “node voting (NestNode voting)” link, pledge the number of NestNode to reach more than 100, Then the node votes to pass (NestNode’s NEST proceeds during the pledge period will be destroyed), and then enters the 7-day “community voting (NEST Token voting)” link, during which NEST holders can use the currently deposited NEST access contract NEST tokens vote, 1 NEST = 1 vote, and only one voting contract can be voted at the same time. At the end of the voting period, the vote rate is >= 51%, then the vote is in the pass state, anyone can execute and make the The contract takes effect.

The main goal of the emergency governance module is to prevent the risk of NEST being stolen in the contract.

When NEST is stolen, you can initiate a fork of the contract through governance, which is the highest level of governance in the NEST system-emergency governance. This means that when NEST is stolen, the contract can be forked and a NEST token rewritten.


A typical emergency governance process is as follows: Like the ordinary governance process, a pledge contract is initiated after pledged at least 10 NestNodes, and then enters the “NestNode voting session”, where at least 1000 NestNodes are pledged during the voting period (compared to the conventional In governance, the process only needs 100 NESTNodes to pass) The quantity is considered to pass (NestNode’s NEST proceeds during the pledge period will be destroyed), and will enter into the next “NEST Token voting link” immediately after passing. In this session, since NEST was attacked at this time, it is necessary to vote through the number of NEST locks in the “n-1” period, which is also 1 NEST = 1 vote. Once the vote rate is >= 51%, the vote is passed, anyone can execute and make the contract effective without waiting for the 7-day voting period to end.

Briefly summarize the new governance system:

  • NEST 3.0 incorporates both NEST tokens and NestNode tokens into the governance system, which adds new use value to NEST tokens and NestNode tokens, namely the right to vote and the right to vote. Among them, the pledge of NestNode tokens can initiate voting, while NEST tokens can be used to vote;
  • Holding a NestNode token can initiate a contract fork vote. This situation applies to emergency governance when the NEST token is stolen. For the highest governance level in the system, the contract can be forked, and then rewrite a NEST token;
  • During the governance period, the block release rewards of NestNode tokens will be destroyed. This destruction mechanism will increase the value of NEST tokens.

Main use cases of various tokens in a multi-token system

It can be said that the NEST ecosystem has evolved from the original NEST token to a multi-token system, each of which has its own use case and performs different functions.

It is necessary to summarize the main use cases of each token after the 3.0 version upgrade:

NEST token use case: As the earliest native asset in the NEST ecosystem, the NEST token has become the most decentralized token with the most users and the most decentralized tokens. In the 2.0 stage, holding NEST can perform the following operations: 1) Proportion of holding positions to obtain the ETH income distribution of the NEST system; 2) As a native asset on the chain, it can be freely traded;

After the launch of 3.0 this time, NEST tokens have added more utility, such as voting rights in governance, 1 NEST = 1 vote; at the same time, NEST tokens have added a series of destruction mechanisms, which will become a basic value of NEST Support, including 1) NEST Node holders’ NEST revenue during the governance vote will be destroyed by the system; 2) NEST holders can participate in nToken bidding and open nToken oracles, once the bidding is successful, the bidding fee will be permanently destroyed; 3) downstream DeFi When docking the oracle for the first time, a certain amount of NEST needs to be destroyed.

Use cases of NestNode: 1. Have the right to initiate the voting contract of the NEST system; 2. Have the right to initiate the fork of the NEST system; 3. Have the right to earn 15% of the NEST system mining release; 4. Native assets on the chain, free transaction.

Use cases of nToken: 1. Obtain the ETH income distribution of the nToken system according to the proportion of positions held each week; 2. The native assets on the chain can be freely traded;

Undoubtedly, NEST is a team with a strong incentive mechanism. They hope that when the demand for early calls is insufficient, the design of the incentive mechanism will stimulate early participants to join and guide liquidity to encourage continuous quotation and promote consensus. Eventually, when the demand for downstream calls emerges, and when the NEST system can continue to provide value input for itself, the system will further amplify and present a balanced state. Theoretically, NEST’s mechanism design is very clever, and the results need to wait for the market to verify.

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