https://nested.fi

Introduction

Nested Finance is a decentralized protocol providing customizable financial products in the form of NFTs. The platform allows users to put several digital assets, i.e. ERC20 tokens, inside an NFT (abbreviated as NestedNFT).

Each NestedNFT is backed by underlying assets:

• Purchased or sold on a decentralized exchange (AMM).
• Collected/earned after adding liquidity or staking.
• Exchanged/Minted on a protocol that is not a decentralized exchange.
• (...)

The main idea is to allow adding modules (operators) to interact with new protocols and enable new assets, without re-deploying.

The tokens are stored on a self-custodian smart contract.

At the end of the creation process, the user receives the NFT which allows to control all underlying assets of the portfolio. Furthermore, we allow users to copy other users NestedNFTs. The creator of the initial NestedNFT earns royalties.

Further documentation and details can be found here: https://docs.nested.finance/

Architecture

Core contracts

Name	Purpose
NestedFactory	Entry point to the protocol. Holds the business logic. Responsible for interactions with operators (submit orders).
NestedAsset	Collection of ERC721 tokens. Called NestedNFT across the codebase.
NestedReserve	Holds funds for the user. Transferred from the NestedFactory.
NestedRecords	Tracks underlying assets of NestedNFTs. (Amount, NestedReserve).
FeeSplitter	Receives payments in ERC20 tokens from the factory when fees are sent. Allows each party to claim the amount they are due.
NestedBuyBacker	Pulls tokens from the FeeSplitter, buys back NST tokens on the market, and burns a part of it.

Upgradability

The contracts NestedAsset, NestedReserve, and NestedRecords are whitelisting multiple factories (to create NFTs, update records, withdraw from reserve,...).

However, we are also using the TransparentUpgradeableProxy for NestedFactory. Then, the users doesn't have to approve multiple times.

We have kept both mechanisms to get the best flexibility.

Lock

The users can lock their NFTs until a certain date (timestamp) by calling updateLockTimestamp. This feature allows the "hold by design".

Operators (modularization)

What is an operator?

NestedFactory is the main smart contract, but it can't work without the Operators.

As mentioned in the introduction, we designed the protocol to be modular. We want to be able to interact with any protocol in exchange for an ERC20 token.

So, we had to deal with two issues :

• How to interact with 5, 10, or 20 protocols without blowing up the bytecode size and having too much logic?
• How to add new interactions without redeploying the NestedFactory contract?

Our solution is called the "Operator"... A new interaction is a new operator and can be added on the fly. They kind of work like libraries, but since we don't want to redeploy the factory, they are contracts that are called via delegatecall and referenced by the OperatorResolver.

Operator Resolver

An operator allows performing a precise action, like "swap my token A for a token B" with a specific function, but the operator/interface will change depending on the action/context. To interact with new operators on the fly, we must expose new interfaces to the Factory. The OperatorResolver will whitelist all the Operator (address) with the selectors (bytes4) since we can't trust the caller to provide these informations.

struct Operator {
    address implementation;
    bytes4 selector;
}

The caller will send the (imported) bytes32 name of the Operator/Function, for example "ZeroEx::performSwap".

The OperatorResolver will return the address + selector if the call is whitelisted and revert if not.

Storage

Since the operators are called via delegatecall: how can we store/retrieve useful data?
In fact, we cannot trust the Factory to provide all the data, like the address of the protocol. It must be stored and managed by the owner.

When deploying an operator, it will also deploy the storage contract and transfer the ownership to msgSender().

Diagram

Contracts

Name	Purpose
OperatorResolver	Allows the factory to identify which operator to interact with.
MixinOperatorResolver	Abstract contract to load authorized operators in cache (instead of calling OperatorResolver).
ZeroExOperator	Performs token swaps through 0x (read more).
ZeroExStorage	ZeroExOperator storage contract. Must store the 0x swapTarget.
FlatOperator	Handles deposits and withdraws. No interaction with any third parties (read more).

More operators will be added. e.g. CurveOperator or SynthetixOperator

Orders

The NestedFactory is using the operators to interact with other protocols. The call from the Factory to an Operator is an "Order".

An Order has several information:

• The operator/selector to use
• The token processed (swapped, stacked,...) by the operator (from the portfolio or wallet).
• The calldatas (without the selector).

struct Order {
    bytes32 operator;
    address token;
    bytes callData;
}

It help us to make one interaction, but we want to make multiple interactions. For example, to create a portfolio with multiple tokens, we need to "batch" these orders.

There are two types of "Batched Orders" processed by the Factory to create or edit Portfolios :

Batched Input Orders

• One same input for every orders but multiple outputs.
• 1% Fee on the input.
• The input (source) is from a wallet or a porfolio owned by the transactions signer.
• The ouput (destination) is the portfolio owned by the transactions signer (only).

struct BatchedInputOrders {
    IERC20 inputToken;
    uint256 amount;
    Order[] orders;
    bool fromReserve;
}

Batched Output Orders

• Multiple inputs for every orders but one output.
• 1% Fee on the output.
• The input (source) is the portfolio owned by the transactions signer (only).
• The ouput (destination) is from a wallet or a portfolio owned by the transactions signer.

struct BatchedOutputOrders {
    IERC20 outputToken;
    uint256[] amounts;
    Order[] orders;
    bool toReserve;
}

Ownership & Governance

Some functions of the protocol require admin rights (onlyOwner).

The contracts are owned by the TimelockController contract from OpenZeppelin, set with a 7-days delay. This ensures the community has time to review any changes made to the protocol.

The owner of the TimelockController is a three-party multisignature wallet.

During the next phase of the protocol, the ownership will be transferred to a fully decentralized DAO.

Development & Testing

Setup

• Install Node > 12
• Install Yarn
• yarn install
• Copy .env.example to a new file .env and insert a dummy mnemonic and a mainnet api key

Commands

• Start a local blockchain yarn run

• Start a hardhat console yarn console

• Compile yarn compile

• Generate typechain files yarn typechain

• Run tests yarn test

License

GNU General Public License v3