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NEST Tokenomics

Overview

NEST coin’s economic model is more complex than other informationized assets. Generally speaking, the price of an asset is affected by the amount of application demand and supply, that is, the game between supply and demand. Therefore, the game relationships involved in NEST mechanics are more complex, which is why we call them game networks. The games involved in the NEST system are divided into four aspects: the game between the bidder and the verifier, the game between buyer and seller of tokens, the game between investors and the system, risk sharing for token holders.

Issuance and burning mechanism:

$NEST can be burned or generated according to the on-chain's instructions. NEST will be destroyed as the cost of generating stochastic assets, while NEST could be generated when the stochastic assets are settled. For example, burning 16 NEST to generate a stochastic asset with 50% probability of obtaining 20 NEST and 50% probability of obtaining 10 NEST, so the total supply of NEST will be reduced by 16. When the stochastic asset is settled, it may generate 20 NEST or generate 10 NEST based on the probability, then the total supply of NEST will increase by 20 or 10.

The game between the Miner and the Arbitrager:

In the process of offering a price for the NEST oracle, a quotation that deviates from the actual market price can be arbitraged away by the Arbitrager, who needs to provide a new quote. This process ensures the accuracy and verifiability of the information flow provided by the NEST oracle. In addition, Miners are rewarded with NEST coins for their quotes, thus becoming miners or minters in the system. Furthermore, the NEST oracle generates less than 3% of the total number of tokens per year through mining new tokens.

The game between buyer and seller of tokens:

Like other tokens, based on market demand, it is influenced by people’s judgment and expectations of the future market.

The game between investors and the system:

Investors can select and customize stochastic assets on NEST’s platform to meet their risk requirements. This is a process for investors to actively manage their asset risks, which is also the main application direction of NEST PVM. During the investment process, the system accounts for the gains and losses of the stochastic assets selected by the investors. Since the first and second constraints guarantee a decrease in expectation, given a sufficient number of investors, the total amount of NEST coins will decline by the Law of Large Numbers.

Risk sharing for token holders:

All NEST token holders will jointly bear the result of the change in the total amount of NEST coins. Since the supply of NEST coins is limited in the long run, the long-term value of NEST coins is guaranteed to rise.

Conclusion

The initial number of NESTs can be fixed, and then for every stochastic asset that is generated, it has to pay at least its expected value. In terms of expected total supply, the number of NESTs is decreasing, a downward curve. In terms of the specific supply amount, it is a distribution band that fluctuates around this downward curve. The management of the concentration of the distribution band depends on the control of the system.