CoFiX 2.0: Systematic Upgrade of the Computable Finance Protocol

NEST Protocol, as a decentralized oracle network, is transforming into a non-cooperative game system, providing permissionless and verifiable price information flows for the blockchain world. Based on this information flow, various valuable financial products can be developed, among which CoFiX, a calculable finance application, is the first financial application based on NEST Protocol.

CoFiX Development Overview

Since its launch in October 2020, CoFiX's initial liquidity provision of (LP) once reached hundreds of millions of dollars. The protocol's earnings have accumulated to over 6000 ETH, with 20% allocated to CoFi Token lock-up users. Currently, the earnings pool still holds over 5000 ETH.

CoFiX 1.0 is positioned as computable finance, utilizing on-chain price information streams provided by NEST Protocol for risk management calculations, achieving effective hedging in a decentralized exchange ( DEX ).

CoFiX 2.0 Main Upgrade Contents

1. Hedge Mechanism Optimization

CoFiX 2.0 introduces an arbitrage hedging approach, no longer requiring liquidity providers (LP) to perform perfect hedging. The new mechanism requires that the asset ratio of trading pairs remains constant, and encourages traders to engage in reverse trading through an incentive mechanism to maintain the initial ratio.

2. Market-making mining adjustment

• The NEST/ETH pool produces 3 CoFi per block.
• The ETH/USDT pool produces 1 CoFi per block.
• The ETH/HBTC pool produces 1 CoFi per block.

10% of the output from market-making mining flows to nodes, with the remainder distributed to market makers.

3. DAO Governance Optimization

DAO governance mainly involves the following aspects:

a) Code correction and upgrade: Initially adopted multi-signature, gradually transitioning to a voting mechanism.

b) Determination and Distribution of Mineable Assets:

• Determine mining assets, with its commission entering the dividend contract
• Non-mining asset commissions go directly into the asset pool

c) DAO account management:

• Hold both CoFi and ETH assets
• Implement a buyback function, allowing users to sell CoFi to the DAO at the NEST oracle CoFi price.
• The repurchase operation releases a quota of 50 CoFi per block, with a maximum accumulation of 300 blocks.

4. Upgrade Principles

• Keep the asset pool unchanged to avoid asset migration.
• Adopt an upgrade method that triggers after deployment.
• Establish and validate the community upgrade process

Outlook

The upgrade of CoFiX 2.0 is not only an innovation in the DEX field but also a validation of the value of the NEST Protocol non-cooperative game system. Although the development of decentralized protocols is full of challenges, it needs to be viewed with an objective, rational, and developmental perspective. We look forward to CoFiX 2.0 achieving greater breakthroughs while adhering to the essence of blockchain.