Lock REF to reduce circulating supply of Ref and mint NFTs, Ownership of the NFTs provide additional benefits beyond what the amount of locked Ref could usually get.
As part of research, we came across the following mechanics in Serum where you can lock 1,000,000 SRM together to create 1 MSRM, and you can redeem 1 MSRM out for 1,000,000 SRM. Note that there is a supply cap of 1,000 MSRM, so at most 10% of all SRM can be locked in MSRM at any point in time. Hence there is scarcity factor. Each MSRM receives slightly more rewards than 1M SRM would, and in many cases more than the maximum without MSRM. Staking : Each node requires at least 10,000,000 SRM (each MSRM counts as 1M), and each node must have at least 1 MegaSerum (MSRM) in it
With the recent recognition on the role that NFT plays, we start to see utility beyond just PFP. Prior to this, we see NFT being used as a passport to allow gated access to Discord or events for example.
Combining the two, my proposal is to consider locking up Ref tokens to mint NFT : Similar to Serum, the concept helps to lock up circulating supply of tokens in order to mint NFT.
Lock X REF via contract and mint NFT. The contract should also allow redemption of said NFT for X REF. This helps to determine the floor value of the NFT.
Set max mints possible for NFT at Y.
This helps to lock up to X * Y REF into the NFT mining contract. That helps to remove that amount of REF out of circulation. We can further determine what is the right %. 10%? 20%?
I am very against the idea of NFT for the sake of being NFT. I believe in having a strong use case to justify the demand. To that end, we need to carefully craft out what are the benefits for NFT holders that will be attractive to them. One thing to note as we design this is since the tokens are locked in a contract, the user is technically not able to use them for LP which is the current main use case (Besides “numba goes up”) coming from a DeFi perspective.
Some preliminary ideas as follows. It can be a combination of the following.
a) Potentially introducing staking so that users can still get some yields?
b) Earn a share of the swap fees (We see this similar mechanism such as dQUICK and xSushi)
c) Preferential swap fees on Ref
d) Gated access to private communities
e) Partnership with other NEAR Ecosystem Projects Eg. Cheaper minting/trading fees at Paras? Higher farming rates at Metapool and Cheddar? An egg at PixelPets etc
f) Ref Mechandise swag
h) Early access to IDO (Need some calibration since there are existing platforms such as Skywards)
To further gamify it, we might even do a collaboration with artists and introduce rarity to the NFTs with various traits. Recently, we start seeing AMM DEX introducing NFTs. One very recent example is SpookySwap.
One further extension within the realm of possibility is whether it is possible to make those NFTs available on Paras for secondary market to trade freely? This has value of introducing value beyond the X REF tokens locked. Benefits + Limited mints. Similar to various gaming projects, a carefully crafted game economy has “sinks” to attract use case and demand of their token. Eg. $SKILL for Cryptoblades to summon new hero and buy Sword and Shield in order to earn more $SKILL, Aavegotchi Gotchis and Wearables to compete for a slice of earnings from Rarity Farming event help to keep demand for $GHST token.
Other details to deliberate on
a) Design of Contract : What can we do with the REF locked up that is locked up, while ensuring there is sufficient liquidity for users to redeem their NFTs for the X amount of REF tokens? Is it possible to trigger to buy back REF tokens from the market whenever someone redeems? This will clearly have a positive impact on the price, but this is complicated and question of where does the funds come from. Another alternative mechanism is a token bonding curve, but I feel this is too much change.
b) Who owns the NFT contract? REF Treasury?