NEST-Protocol x A&Q Community AMA Recap

NEST Protocol

13 min readJun 26, 2021

Questions :

Can you introduce yourself @Heathersyt To our community?

I am the NEST Community Manager that help with partnership development.

Questions 1 :

Could you explain a little about NEST and what Is make it different From another Project?

Just talked about the advantages and features of NEST, the summary is as follows：

1, Price data with accuracy, sensitivity, defensibility.

2, The ability to validate price data directly and the validators can be any third party with no threshold.

3, NEST oracle network system is highly distributed where anyone can become a quote miner to participate in quote mining, free to enter or exit.

4. NEST Protocol is non-cooperative gaming in the production process while output quote voucher tokens for all kinds of ERC20 assets in a decentralized manner, just like ETH can issue any ERC20 tokens.

5、The price information flow output by NEST Protocol can derive a series of risk-calculable financial products through the single point price data, average weighted data, volatility data on-chain.

6, NEST Protocol is a non-cooperative gaming system, the underlying price protocol of Ethereum and an ecosystem rather than a single DeFi financial product.

Our most confident advantage is that NEST Protocol is a non-cooperative gaming system like BTC and ETH in the production process based on which it can generate price information flow.

BTC achieves data anti-tamper (transfer) through non-cooperative game, ETH achieves logic anti-tamper（smart contract）through non-cooperative game, NEST achieves exchange rate anti-tamper（price information flow） through non-cooperative game.

The blockchain world can be copied in the next second. It is difficult to survive long in this world. Projects have to develop and create extreme scarcity to survive in the monotonically increasing world of Ethereum. Analyzing the nature of blockchain, only a real non-cooperative gaming system can survive long. For this, NEST Protocol is very confident.

Questions 2 :

Could you please provide some info about your Roadmap and how NEST is progressing so far?

The highlight of NEST v3.6 is entering true DAO governance. It is a very complex and deep issue about which one or two sentences specifically is not enough to explain. Moreover, there is no better design of DAO governance mechanism which has been polished for a long time in the whole DeFi or even blockchain industry.

Currently, most DeFi projects have semi-decentralized governance with developers holding the rights and using multi-signature for so-called community governance. This is not a sustainable model and relies heavily on teams or individuals and is dangerous for a decentralized non-cooperative gaming system.

NEST DAO governance will remove developer’s privileges and all holders will be able to participate in voting with modifications passing 51% of the votes to be implemented. Once 51% votes are reached, the modifications will be implemented immediately without anyone’s signature. At present, almost no project dares to take this step which has to be broken. Of course, if you want to modify the protocol, you have to propose it in Github and write the code for the modification before the matched implement. The modifications also need to be promoted in the community, or it is difficult to reach 51% votes.

In addition to the DAO governance, we are also removing the dividend altogether and locking the value firmly within the system for NEST Token capture so that the value will no longer spillover. We’ve also modified the quote size and fees, etc. For a detailed explanation, please see this article: https://mp.weixin.qq.com/s/mIg2Jm6pmsKdA0VYvmsdtw

There are several big events in the NEST ecosystem this year.

1. NEST Protocol v3.6 which launched in April will remove developer’s permissions and officially enter the DAO governance.

2. The launch of CoFiX 2.0, an Auto-Market-Maker protocol based on NEST Protocol.

3. Parasset, a parallel asset protocol that provides lending, native assets exchange and insurance pool for the on-chain world is also based on NEST Protocol.

4. Perpetual contract protocol Fort based on NEST Protocol are under development.

5. Thinking, designing and developing NEST Protocol to better solve the GAS consumption and mining randomness problem while proposing to GitHub.

6. Develop and study more cases of financial products based on NEST Protocol price information flow.

Questions 3 :

What is the Usecase of $NEST? can you provide details?

Before v3.6, NEST Token holders can receive weekly dividends of ETH fee in the NEST system, and the more NEST you hold, the higher the percentage of dividends.

NEST v3.6 has replaced dividends with repurchase which will keep all quotation fee inside the NEST ecosystem. All proceeds will be used to empower NEST Token in the system, curbing system value spillover

Based on NEST v3.6, CoFiX 2.0 will become the asset management protocol in NEST ecosystem. NEST holders could provide NEST/ETH liquidity to earn interests just like Uniswap. Besides, users can hold NEST Tokens to participate in community voting and mortgage in Parasset (another synthetic asset protocol in NEST-ecosystem) as well as more application scenarios in the future.

Questions 4 :

What are the present and future goals of NEST?

The keyword for NEST Protocol in 2021 is “demand”. We need to be clear that the crypto world is ultimately targeting the need to get out of the circle which is the real need to be accepted and recognized by the general public.

So far, only BTC is really out of the circle and if ETH or DeFi wants to go out of the circle, they must find the right position and real demand which is the long-term proposition of NEST Protocol.

To establish an on-chain economy, the price mechanism of the non-cooperative game is the core element. Therefore, NEST Protocol’s key development goal this year is to develop more financial products based on price information flow with the vision of becoming the underlying price protocol of the Ethereum on-chain economy.

Questions 5 :

How do you keep the ecosystem going in your project? and what are your plans for future innovations?

1、Ordinary investors: secondary market purchase and hold coins, receive weekly system revenue, and hold for a long time waiting for the ecological prosperity to rise.

2、Technical investors: Develop mining scripts, become quote miners, provide price facts for the blockchain, and deposit the mined QP Token into the revenue contract to receive weekly revenue or secondary market trading cycle mining.

3、BTC/ETH/traditional funds Large investors: can choose to buy in the secondary market the same as category 1, but also can choose to absorb technical talents to develop scripts mining or become a verifier in the NEST ecology for error price arbitrage and maintain the security of the oracle network system. (The prerequisite is to understand the underlying logic of the NEST oracle because becoming a validator is very professional)

4、ERC20 project: build its own oracle track in NEST Protocol, promote the community quotation, enhance the quotation density to within 25 blocks for downstream DeFi protocol calls, and make its own token into an asset that can provide financial services.

5、Financial Product Architect: design financial products about DeFi downstream, such as: DEX, lending, stable coins, options, insurance, etc based on the NEST oracle idea and supported by the theory of finance and game theory

(Class 4 and Class 5 can be formed to cooperate, or form proposals on GitHub and post in the NESTFANS forum, the NEST Core development team is always active on GitHub and will provide advice and technical support when they see the proposals)

6、Smart contract developers: Develop various downstream financial products based on NEST oracle

7、Encourage NEST-hold enthusiasts to build their own communities, forums, KOL, media, etc. to expand the influence of NEST.

8. Encourage NEST-hold enthusiasts with a certain level of knowledge to share on Twitter.

Questions 1 :

From @ASyahteguh

It is well known that express lending was one of DeFi’s original innovations, and the prospects for its future application are vast. Why is it the technology most frequently attacked by hackers in security events in the DeFi field? Is your project really safe from hackers?

Blockchain projects are “fully open” and users can access them at will without KYC, which is totally unimaginable in traditional finance, and every detail of the system is exposed to the public. Security audit is a must, but it does not solve the fundamental problem, which is: “audit results cannot be quantified”.

The code of NEST Protocol has been audited. Here we propose a DeFi risk management framework, mainly divided into ex ante, Interim and ex post.

Ex ante: The main focus is on formal verification of the contract code, including figuring out the boundaries of the methods, resources, and even instructions used in the contract, and the impact of the relevance of these methods, instructions, and resources in the combination process; methods that are not justified or combinations that do not find boundaries are resolutely not used. This is not traditional software development testing thinking, this is a concept close to mathematical argumentation. Good contract development should be based on a combination of methods that have been demonstrated.

Interim: Mainly about downtime design and exception trigger design, that is, the contract can identify and intervene in the attack behavior, including automatic downtime design and governance downtime design. And anomaly trigger is a kind of control management of the contract operation process, over-expectation phenomenon; anomaly trigger is generally automatic, through the anomaly trigger to correct some risk management variables. See the beta factor and anti-blocking attack settings in the NEST Prognostic Machine system, which is one of the industry’s pioneering practices considering downtime and abnormal triggering.

Ex post: Ex post facto risk management consists of several parts, firstly, there is a vulnerability in the code that needs to be corrected, usually through on-chain governance, i.e. DAO governance. The second is an attack on the governance asset itself, at which point a contract fork is required! This is a blind spot that the industry has overlooked. The next is to reduce losses by insuring the contract against possible risks through an insurance mechanism. Finally, the community can work with various institutions to track losses through the tracking of on-chain data. For on-chain governance and contract forking, see the design of NEST, which is an innovation.

Questions 2 :

From @AryParura

“The NEST protocol is the safest oracle to build your next breakthrough DeFi creation” Why do you say this is safest, DeFi Range with Fraud how do you solve this?

At present, the existing oracle network in the industry usually adopts the way of “feeding data” to the on-chain contracts to upload offline data (prices) to the chain, forming the so-called oracle for other contracts to call.

There is a fundamental problem with this scheme, that is, the verification of data is not direct, but indirectly through the verification of the uploader to ensure the authenticity of the data, we call this scheme an indirect oracle. Another problem with the indirect oracle is that the credit risk of the node that uploads the data determines the attack cost of that oracle data. If a $1 trillion asset is derived based on the price provided by the oracle, the credit of the oracle node should also match it, which is obviously impossible in reality and cannot be guaranteed no matter what node randomness is used, which is an essential problem, not a technical one, so the indirect oracle can only be used in small-scale, non-financial attribute scenarios.

DeFi is the most commercially valuable direction for the whole blockchain technology to be applied on the ground, and in the future, it will carry trillions of assets in scale. Therefore, the oracle required for DeFi is never the indirect oracle mentioned above, but a oracle that directly verifies the price data to ensure that the price is real and valid as well as timely enough; at the same time, the oracle should also be able to raise the cost of attack to an extremely high degree, close to infinity; of course, the oracle must also be distributed to remove all the centralized risks.

Now, we can summarize the characteristics of the oracle network that DeFi needs：

1) Accuracy of the data: a true reflection of market data

2) Data sensitivity: fast enough to respond to market data

3) Data is resistant to attack: it is very expensive to distort or influence the real data

4) The data is directly verifiable: the verifier is an arbitrary third party, and no censorship or threshold is required

5) The network system is distributed: no censorship or threshold, free to enter or exit

The above 5 points are our strict requirements for a true oracle system. With few facts available on the chain, it is particularly important to up-chain the data facts below the chain.

The common oracle networks in the market today each have their own characteristics and vary in their degree of decentralization and validation schemes. According to our previous definition, most of them are indirect oracles, which do not generate data facts directly on the chain. nest distributed price oracle network defines and implements a new mechanism for generating on-chain facts on blockchain networks, using market game theory to synchronize the off-chain market price facts on the chain by means of bilateral asset quotes from miners, and combining NEST quote-mining mechanism to incentivize miners, making it a logically closed-loop distributed quotation system that perfectly generates off-chain price facts on-chain synchronously, forming a distributed price oracle.

Questions 3 :

From @OutOfRa42490321

the many crimes that are happening today traumatize every investor. How does the NEST protocol provide friendliness, convenience to its users?

In order to better increase the market participation of NEST Distributed Price Prediction Machine, the NEST quote mining script code has been open-sourced and open to everyone.

Everyone can write their own quote mining script based on the open source script code for secondary development and optimization; ordinary users can also directly download the open source script to run quote mining.

We hope that more strong players will participate in the NEST ecological development and construction by way of quote mining, and jointly maintain the security and stability of the NEST distributed price oracle.

Questions 4 :

From @Iyutnuradi

I heard all the risks associated with the price of the NEST oracle can be calculated, well can you explain how? And how much security level of Oracle NEST is this?

NEST Protocol takes the price mechanism as the core and produces NEST Token in a non-cooperative gaming way in the production. Other kinds of ERC20 assets take the oracle to produce all kinds of native nToken to constantly output the price information flow to the blockchain.

This complete set of price information flow output mechanism can become the underlying price mechanism of the risk-calculable financial products on-chain which can be summarized according to the nature of blockchain as follows:

Questions 5 :

From @sukma0616

What is Oracle NEST, and what is the mechanism and verification of Oracle NEST? And can you give an example?

BTC achieves data anti-tamper (transfer) through the non-cooperative game, ETH achieves logic anti-tamper（smart contract）through the non-cooperative game, NEST achieves exchange rate anti-tamper（price information flow） through the non-cooperative game. From this point of view, other oracles are just price data movers, a single product with only price-output while NEST Protocol is an ecosystem and a real non-cooperative gaming system.

1. NEST oracle quote mechanism

The NEST oracle solves the problem of price on-chain through a decentralized incentive solution, that is, the price predictor.

The core of Nest Oracle: Quote mining (incentive), verification cycle, price chain, beta coefficient.

Take the price of ETH to USDT as an example:

1) Any participant can pass the price that who recognized to the quotation contract, such as 1 ETH = 200 USDT, and then enter these two assets into the quotation contract according to the price ratio, The general scale will be 10–100 ETH and it will charge 1% of the ETH as a handling fee for mining and get NEST incentives.

2) After entering the asset, wait for T0 time (currently 25 blocks, around 5 minutes). During this period, anyone can buy ETH or USDT at the price of the quoter. If there is no transaction in T0, the quote It is hired by the system; if the transaction is completed completely, the price is invalid, and part of the transaction is partially invalid. After this time, the assets can be recovered.

3) If someone is willing to make a deal with the bidder, then at the same time when he deals, he must also report a new price according to the above standard, so that p1, p2 … price chain is formed after the initial quote P0.

4) The quote size of the trader is beta times the scale of his transaction, where beta> 1 (currently beta=2), which means that the price chain will eventually terminate (downtime) with the expansion of the scale, and the perpetrator’s The cost increases geometrically, thus countering the aggressive behavior.

5) NEST value: mining fees and the use of oracles need to pay a certain ETH fee, unified into the system revenue contract, and distributed to all circulating NEST.

Thanks

Price deviation defense mechanism: If this quote deviates more than 10% from the last valid quote, the scale of this quote is 10 ETH * 10 (the scale is expanded by 10 times)

2. NEST quote verification mechanism

Anyone can become a verifier, verify the price of the quoted miner’s quotation, if there is a deviation between a single quotation and the market price, and there is a certain arbitrage space, then the verifier can take a single arbitrage. The specific verification rules are as follows:

1) The minimum number of validator orders is X * 10 ETH, where X must be an integer;

2) The validator needs to submit a new quotation at the same time as the order is submitted. The new quotation size requirement is the beta multiple of the size of the order, the current beta=2;(Note: If the verifier’s new offer deviates from the previous effective offer by more than 10%, then the new offer size will be x 10 times)

3) The new quotation initiated by the verifier has no quotation fee and does not participate in NEST mining;

4) The validator needs to pay a transaction fee of 0.1% of the amount of ETH paid while paying the bill;

NEST-Protocol x A&Q Community AMA Recap

Written by NEST Protocol