secondary title
1. Introduction of NEST Protocol
NEST Protocol is a decentralized price oracle network, which solves the price on-chain problem through a decentralized incentive scheme.
secondary title
2. The operating principle of NEST oracle
1) NEST quotation miners need to transfer the specific amount of bilateral encrypted assets corresponding to the quotation transaction pair to the quotation contract at the same time when they conduct quotation mining. The minimum unit is 10 ETH. Assuming that the current market price of USDT-ETH trading pair is 1 ETH = 600 USDT, then the quotation miner needs to transfer 10 ETH and 6000 USDT quotation assets to the quotation contract list at the same time.
2) After the transfer is successful, the quotation contract will take effect on the chain for 25 blocks (about 5 minutes); during this period, anyone (verifier) can make transactions according to the quotation data of the miner; For example, the verifier can transfer 6000 USDT to the quotation contract to take 10 ETH, or transfer 10 ETH to the quotation contract to take 6000 USDT.
This means that if the miners quote deviates greatly from the real market price, then an arbitrage opportunity is provided for the verifier, and anyone can become a verifier to participate in the arbitrage; through this arbitrage penalty mechanism, the miner is urged to quote according to the fairness of the market The price is quoted, and then the real and effective price information is sent to the NEST oracle system and generated on the chain.
3) Every single quotation on NEST will be verified by validators in the whole market, and the quotation data that survives the verification cycle will participate in the block price generation on the NEST oracle chain. Therefore, NEST is the oracle solution that is most in line with the consensus mechanism of the blockchain. The price data of each effective block has been consensused by the whole market. It needs to be verified before it takes effect! This is also the essential difference between the NEST oracle and other oracles.
4) The NEST oracle machine is designed to provide the required block price data for various smart contracts in the chain world, such as ETH/USDT block price, average price, volatility data, etc.
secondary title
3. QP Token Economic Model
The full name of QP Token is Quote Pool token, translated into Chinese as quote certificate, which is the mining certificate corresponding to each oracle quote track. For example: the quotation voucher of ETH/USDT price oracle machine is NEST Token, the quotation voucher of YFI/ETH price oracle machine is nYFI, the quotation voucher of HBTC/ETH price oracle machine is nHBTC, etc.
Both NEST Token and nYFI Token are quotation certificates on the NEST Protocol network, just like various Tokens issued on the Ethereum network. Among them, NEST Token is quite special. It is not only the quotation certificate of the ETH/USDT price oracle machine, but also the equity token of the entire NEST Protocol network, with income rights and governance rights; while other QP Tokens represent their corresponding prices. The certificate of the oracle track has the income right of its own oracle track, but does not have the governance right. For example, nYFI is the quotation certificate of the YFI/ETH price oracle machine, and has the right to earn income from the YFI/ETH price oracle track.
Next, we will list the release schedules of NEST Token and nYFI and other QP Tokens:
NEST Token, nYFI and other QP Token income source introduction:
The price oracle machine corresponding to each QP Token has its own independent economic system, and its core income sources are mainly miners’ quoted mining fees and oracle machine price data call fees;Among them, the income from invoking oracle price data is the external income of the system, which is its value as a price oracle.
Taking the Yearn Finance protocol token YFI as an example, it not only has the governance rights of the Yearn Finance system, but also has the right to earn income. In the foreseeable future, $YFI with a market value of US$1 billion will become one of the most influential on-chain native assets in the industry, and will also become the underlying asset of most DeFi protocols. (Note: The so-called native assets on the chain mean that their value capture is completed on the chain in a decentralized way, such as ETH, NEST, YFI, etc.)
Therefore, the emergence of the YFI price oracle machine is very meaningful to both the Yearn Finance ecology and the entire DeFi world. We can see that YFI has been introduced into various financial derivatives DeFi agreements such as mortgage lending agreements, stable currency agreements, oracle-based DEX agreements, insurance, options, etc. These agreements all require YFI price oracles to provide on-chain prices data.Every time the YFI price oracle is invoked, an ETH fee needs to be paid to the oracle system, which means that the making money ability of the YFI oracle is very imaginative.
secondary title
4. Introduction to QP Token Mining
QP Token mining algorithm: this mining output = block height difference from the last quotation x block reward
NEST Token mining distribution rules:
1) Quotation miners: 80%
2) NEST developers: 5% (NEST v3.5 version will cancel the income distribution, 5% will enter the DAO system)
3) NestNode group: 15%
Other QP Token (nYFI, nHBTC, etc.) mining distribution rules:
1) Quotation miners: 95%
secondary title
5. Development Status of NEST Price Oracle
Since the NEST 3.0 version was launched in July 2020, up to now, 57 token price oracles have been activated on the NEST Protocol. Among them, USDT/ETH, YFI/ETH, and HBTC/ETH are the three price oracles with the best quotation density. The quotation interval of USDT/ETH is about 10 blocks, HBTC/ETH is 19 blocks, and YFI/ETH is 31 blocks.
Since the blockchain network naturally has financial characteristics, all kinds of token assets issued in the blockchain world must give full play to their financial attributes as encrypted assets and create more value on the chain. Therefore, each token should have its own price oracle on the chain, ready to enter the DeFi world.As one of the most important public infrastructures in the Web3.0 era, NEST Protocol will provide basic support for these native assets on the chain. Each token can create its own price oracle through NEST Protocol, generate a safe and stable block price on the chain, and then be referenced by more DeFi protocols.
