The Price Mechanism of the NEST Protocol

The decentralization of the Bitcoin protocol is produced and extended by the design of the internal system, and the same is true for the construction of the Ethereum smart contract. However, price variables cannot be actively generated within the blockchain. The price needs to be uploaded by someone as the bitcoin transfer needs to be operated by someone and the Ethereum smart contract needs to be triggered by someone. The key is not who performs the step but whether it is broadcast to the entire network and anyone can participate in the verification without permission.

NEST has chosen to continue the decentralized path of Bitcoin, completing the production through the non-cooperative game and outputting the price information flow which introduces the pricing game into the decentralized protocol and generates the price information simultaneously on-chain.

The kernel of NEST Protocol is an oracle which can quote and verify any ERC20 Token / ETH that has been opened. Miners will send the bilateral assets into the quoting contract for quotation mining without any permission or guarantees of a third party. Miners will be rewarded with NEST by injecting bilateral assets to maintain the output of price information flow, which is equivalent to that miners will be rewarded with BTC by injecting Bitcoin hash rate to maintain the operation of the transfer protocol.

It does not matter who the quoter is that can be any institution or individual. The point is that anyone can validate this price which means that the validator is incentivized to arbitrage the price when there is arbitrage space. A price that is not arbitraged within 25 Ethereum blocks can be considered the real price and entered by the NEST system for callers to use. This is equivalent to a transfer initiated within the Bitcoin protocol, it has to be confirmed by everyone involved in the network before this transaction is recorded. NEST initiates a quotation and anyone associated with the quoted asset can validate that price, confirming that there is no arbitrage space for that price. That price is the real one and will be entered by the system.

The more gamers participate in NEST Protocol, the safer the system is and the larger the volume of funds it can carry. If fewer gamers participate, the opposite will work. The larger volume of funds, the more trustworthy. It is to trust yourself but not to trust any subject, in the same way as Bitcoin.

Bitcoin has absorbed the centuries-long ledger system in traditional areas to take games on transfers in a decentralized way, which path has been taken for twelve years. NEST will absorb the price gaming battlefield of the crypto world and bring the price gaming in centralized exchanges to NEST Protocol, which will be a constant battle of consensus.

The on-chain world and the real world are two parallel worlds. The imperfect mechanism prevents the oracle from being applied to traditional assets more accurately and effectively. Any so-called “trusted” verification node is not credible. A decentralized approach to price information flow of native assets on-chain is the first step to meet the challenge.

Nest Protocol is a decentralized oracle built on Ethereum and powered by the NEST token. The protocol is a distributed price oracle network.🌍