As an NFT-powered AMM and a foundational dApp for the SKALE network, Ruby.Exchange will pioneer new use cases for NFTs within DeFi. At launch, users will be able to acquire four categories of gemstone: Profile gems, plus three series of permissioned rewards that will provide various benefits to traders and liquidity providers.
While there's much more to come, these first gemstones will showcase some of the capabilities of SKALE-based NFTs for DeFi.
Power Up Your UX With Ruby NFTs
Ruby's gemstones are designed to offer real financial utility and valuable perks to different categories of exchange users. For these first NFTs, rewards ultimately derive from the commission fees Ruby's AMMs charge to traders, and the way these are allocated to different stakeholders.
Traders are charged a default commission fee of 0.3% on every swap that uses one of Ruby's XY=K pools, and 0.04% for every StableSwap trade. These fees are divided between Liquidity Providers (LPs) for those pools, and the RubyMaker contract, which distributes a percentage of fees to RUBY holders who stake their tokens. LP rewards are vested over a three-month period. LPs who want to access their earnings before the end of their vesting period can do so, but are charged a 50% penalty fee.
RUBY Stakers can opt to receive their rewards immediately, with no lockup period. Alternatively, they can lock their RUBY for three months and receive a higher rate of rewards, paid for by the 50% early-exit penalty fees for LPs.
Read more in How Ruby Exchange Works: A 30,000-Foot View.
Traders: Reduced Fees
The first category of gemstone reduces the commission fee (default 0.3%) that a trader pays on every swap. There are no limits on the size of the swap these NFTs apply to, and they will likely be sought after (including on the secondary market) by larger traders. Because Ruby.Exchange is built on SKALE and has no gas fees, it is the ideal platform for running efficient algorithmic trading bots, in a way that Ethereum mainnet can never be. Over the course of a year, even a small reduction in trading fees adds up to a significant sum for a high-volume trader.
LPs: Reward Boost
Liquidity providers receive 0.25% of the total 0.3% trading fee by default. This is implemented at the time that liquidity is deposited to Ruby's AMM pools: A proportion of LP tokens is minted to the liquidity provider, and a proportion is allocated to the RubyMaker contract. The LP Rewards NFT increases the proportion of LP tokens allocated to the liquidity provider, ensuring they receive a greater percentage of every swap conducted on the platform.
LPs: Reduce Unlock Penalty
Rewards claimed by LPs are locked for a three month vesting period. However, LPs can opt to receive their rewards immediately, at the cost of a 50% early exit fee. A third category of NFT reduces this penalty, effectively giving LPs access to higher rates of rewards with less delay.
Finally, every Ruby user will receive a profile NFT on making their first transaction. These gemstones are generated at random from a wide range of parameters, including number of sides, color palette, surface texture, and edge wear, making each one a unique identifier.
NFTs are allocated at random via a simple raffle process, which is controlled by a smart contract. Each raffle is run for a specified period of time, with a maximum number of tickets, and a set ticket price. A raffle has one NFT as its prize, and so the number of tickets effectively determines the odds of winning.
Tickets are bought with RUBY tokens. The raffle framework is designed to be flexible, allowing RUBY prizes to be paid out to winners, as well as the NFT prize. Where multiple NFTs of the same type and value are to be distributed (for example, a series of 100 gemstones that reduce trading fees), the required number of raffles is simply held consecutively, with the next one starting when the previous one has been won.
All gemstones can be traded on the built-in Ruby NFT Marketplace.
Showcasing DeFi NFTs
Ruby's first four series of gemstones demonstrate some of the possibilities for NFT-powered DeFi, extending the utility of these tokens beyond trading digital images to create meaningful financial use cases. This is just the beginning for Ruby, though, with further applications and more categories of permissioned rewards to be implemented in the coming weeks and months.