Nest Protocol (NEST)

Nest Protocol

Type	Oracle
Total supply	10,000,000,000
Website	https://nestprotocol.org/

 Basics

• Founded in:
• Mainnet release:
• Based in: China
• An oracle provider

Token

Token allocation

• From their blog (12-6-2020):

"100% released through quote mining mechanism, no pre-mining, no ICO, no early release. Mining & decay mechanism: The mining reward for each block is 360 NEST. Decrease by 10% every 2.4 million blocks (about 1 year)"

• From their docs (7-2020):

"Assuming that the quoted NEST mining quantity is 100, then the quoted miner will get 80, the developer will get 5 and the guardian node will get 15.

Quoted miners: Refers to the miners who participate in the NEST prediction machine quotes;

Developer: Refers to the NEST Protocol Developer Group;

Guardian Node: Refers to NestNode holders, who are early investors and supporters of NEST Protocol.

Note: When NEST releases 2 billion, the developer’s 5% NEST revenue distribution will be cancelled. On that time, miners will account for 85%, and guardian nodes will account for 15%."

Utility

• From their blog (12-6-2020):

"Hold NEST to obtain system income distribution

— In the current NEST protocol version 2.0 , you can get ETH income distribution, and the annualized income in the near future is about 25%.

— After version 3.0 released, you can also get nToken income distribution.

Participate in community governance，NEST DAO will release with NEST protocol 3.0 in the near future."

Stablecoin

• Wants to create a stablecoin (see roadmap below).

Tech

• Whitepaper can be found here (14-8-2020).
• Code can be viewed here (14-8-2020).
• Built on: Ethereum

How it works

• From their docs (7-2020):

"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."

Quote Mining

• From their blog (12-6-2020):

"Miners provide price quotes and pay commissions to receive NEST tokens。

Taking ETH/USDT as an example, if miner X intends to quote a price of 1 ETH = 200 USDT, miner X needs to put 10 ETH and 2000 USDT into the quote contract and pay 1% commission which is 0.1 ETH. Miner X gets NEST tokens as reward. Anyone can become a miner.

After miner X submits the assets and price to the quote contract, there is a 25 block / 5 minute verification period. Anyone believes that the price has an arbitrage opportunity can trade either ETH or USDT . This mechanism ensures that miner X’s price is fair price in the market. Otherwise it will be taken up by an arbitrager. Miner X can take the assets back after the verification period. If the price submitted by miner X survives after the verification period, it goes into the price feed.

How does system revenue come from？

1. ETH 1% fee charged for quotation
2. 0.2% fee charged on quote arbitrage
3. Fee charged for oracle price call by other projects"

Interoperability

• Only on Ethereum
• From their docs (7-2020):

"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 oracle that has been created cannot be created again."

Their Other Projects

• The whitepaper mentions a bunch of other possibilities for the project:

1. Equilibrium token
2. Decentralized transactions; are mainly baed on p2p quotation matching.
3. Automatic settlement mortgage loan
4. Futures
5. Volatility products; derivatives based on the volatility of equilibrium prices

Governance

• From their docs (7-2020):

"Step 1: NestNode holder initiates voting contract

1) Deploy an execution contract and set it to open source state to generate a contract address to execute the contract;

2) Deploy a voting contract through the voting factory contract, pledge at least 10 NestNodes, and set the execution contract address.

Step 2: Enter the NestNode voting session

1) After the voting contract is created, NestNode holders can participate in node voting and the voting period of NestNode holders is 1 day;

2) During the voting period, if the number of NestNodes pledged reaches more than 100, the NestNode vote is passed;

3) If the NestNode vote is not passed, the pledged NestNode can be retrieved after the one-day voting period; if the NestNode vote is passed, the pledged NestNode can be retrieved after the NEST Token voting ends (NEST Token holder voting period 7 days).

4) NestNode's NEST income during the pledge period will be destroyed.

Step 3: Enter the NEST Token voting session

1) The voting period is 7 days, during which NEST holders can use the NEST currently deposited in the NEST access contract to vote.

1 NEST = 1 vote

2) Only one voting contract can be voted at a time, and it can be cancelled before the vote is passed.

3) During the voting state, if you need to retrieve NEST, you need to cancel the voting first.

4) Voting rate = Total votes cast / NEST total circulation when the voting contract is initiated.

5) At the end of the voting period, the vote rate is >= 51%, then the vote is passed, anyone can execute and make the contract effective (executable after the 7-day voting period ends).
2. Emergency management

State of emergency:

1) There must be 1000 or more NestNodes in the voting factory, switch the emergency state and set the emergency time;

2) In an emergency, use 10 NestNodes to create an emergency vote; within 1 day after the emergency voting contract is created, the number of NestNodes in the emergency voting contract is greater than or equal to 100, and you can enter the NEST Token voting process;

3) The total circulation in the emergency voting contract is calculated based on the snapshot data of the first two periods of the system's revenue distribution; the number of individual NEST Token votes in the emergency voting is calculated based on the snapshot data of the individual locked NEST Token in the previous two periods of the system's revenue distribution;

4) In the emergency voting, NEST voted are more than 51%, and the revised content can be executed immediately;

5) After the emergency state duration (3 days), anyone can trigger a switch back to the normal state.

DAO

• From their blog (12-6-2020):

"NEST DAO will release with NEST protocol 3.0 in the near future."

Upgrades

• Is at V3 as of 14-8-2020.

Roadmap

• Can be found here (14-8-2020). Although it can barely be called a roadmap:

"Phase 1: Developing of NEST DAPP on Ethereum based on NEST protocol.

Phase 2: NEST DAPP to launch more DeFi products and services, such as digital assets mortgage loan, insurance, option, stablecoin and more.

Phase 3: Partnership with more projects, support more types of digital assets."

Audits

• Bug bounty program can be found [insert here].
• Has done an audit on V3 (13-7-2020).

Usage

• From this blog by Dragonfly Capital research (7-10-2020):

"It is arguably the largest community-driven DeFi project in China, and for the last 6 months, even before the recent DeFi bull run, NEST was one of the most used contracts on Ethereum. In spite of the DeFi mania, today it’s in the top 5 gas guzzlers, above even Chainlink."

Projects that use or built on it

• CoFix uses it (7-10-2020).

Competition

• Other oracle projects such as Chainlink, Band Protocol, Open Oracle System, etc.
• From this CMC post (13-8-2020):

"The innovation of NEST-Price is that every data point has been agreed upon by market validators, in line with the blockchain consensus mechanism. NEST-Price synchronizes the off-chain price in a highly decentralized manner, creating real and valid price data on-chain. This is the unique differentiator between NEST-Price and other price oracles."

• From this blog by Dragonfly Capital research (7-10-2020):

"NEST currently quotes ETH/USDT about once every 2.5 minutes — when the network was less congested, it was quoting roughly once every 4 blocks. This is much more real-time than Chainlink, whose nodes report price updates roughly once every 45 minutes (with an explicit SLA to update every 3 hours or on every 0.5% price change). Most AMMs we’ve seen that use external oracles rely on Chainlink, including DODO and Bancor v2. As an example, DODO LPs have seen massive impermanent loss due to traders frontrunning the infrequent Chainlink oracle updates."

Pros and Cons

Pros

• Updates ETH prices quicker (at least as of 7-10-2020) than the biggest competitor Chainlink does.

Team, Funding, Partnerships, etc.

Team

• Full team can be found [here].

Funding

• Dragonfly holds a position in Nest (7-10-2020).

Partners 

• According to their website (14-8-2020): DeFi Pulse, Secbit and DDVP
• HBTC.com is a partner according to this article (13-8-2020).
• Is a member of the Global DeFi Alliance of Huobi (17-8-2020).