CoFiX 2.0 protocol upgrade: Innovative breakthroughs and value enhancement

CoFiX is a decentralized financial product developed based on the NEST Protocol, aimed at providing verifiable price information flows through non-cooperative game theory. Since its launch in October 2020, the CoFiX protocol has accumulated earnings of over 6000 ETH, of which 20% has been allocated to locked users, and currently, there are still more than 5000 ETH stored in the earnings pool.

CoFiX 2.0 Systematic Upgrade

CoFiX 2.0 builds upon the philosophy of version 1.0 and has made significant adjustments based on actual needs and market feedback. The new version focuses on improving capital utilization, enhancing the value capture capability of CoFi Token, and introducing the innovative concept of arbitrage hedging.

arbitrage hedging mechanism

The new version introduces an arbitrage hedging approach, requiring the asset ratio of the trading pairs to remain constant. For example, the initial ratio of the ETH/USDT trading pair is 1:500, and the entire liquidity pool must always maintain this ratio. When traders disrupt this ratio, the system will encourage counter-trading by increasing incentives until the hedging costs are covered.

market-making mining adjustment

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

10% of the total amount of market-making mining flows to nodes, while the remaining is allocated to market makers.

DAO governance optimization

1. Code fixes and upgrades: Initially using a multi-signature approach, gradually transitioning to a voting mechanism.

2. Mining asset determination and allocation:

   • Clarify mining asset standards, and commissions enter the dividend contract
   • Non-mining asset commissions go directly into the asset pool.

3. DAO Account Management:

   • Cancel dividends and introduce a buyback mechanism
   • Anyone can sell CoFi to the DAO at the NEST oracle price.
   • Each block releases 50 CoFi repurchase quota, with a cumulative limit of 300 blocks.
   • The buyback operation requires the payment of the oracle call fee

Upgrade Principles

1. Keep the asset pool unchanged to avoid fund migration.
2. Deploy first, trigger later
3. Establish and verify the community upgrade protocol

The upgrade of CoFiX 2.0 is not only an innovation in the DEX field but also a further validation of the value of the non-cooperative game system of NEST Protocol. This upgrade reflects the project team's in-depth thinking on the development of decentralized finance, and we hope that CoFiX 2.0 can bring users a better experience and higher value.