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Ref Finance and the REF Token: The Biggest DEX on NEAR Protocol

By 2sats | 2sats | 23 Apr 2022


*obligatory not financial advice*

 

What is Ref Finance?

Ref Finance is a DeFi application that enables the trade and exchange of cryptocurrencies on the Near blockchain.

Near Protocol is a smart contract chain that is trying to beat the blockchain-trilemma by using a technique called sharding to become more scalable and decentralized at the same time. The blockchain has very low fees and very fast transactions. It has gained a lot of popularity even before its main net was finished and it has only started to launch applications in late 2021, Ref Finance is one of them.

The DEX works like any DEX does. Users can deposit funds into liquidity pools for trading pairs. The traders can use the supplied tokens to trade them at a price that is automatically set based on their ratio, in exchange for a trading fee. The code for the Automated Market Maker of Ref Finance is strongly based on Uniswap, which is one of the most used and secure dApps across all different chains. One thing that makes Ref different is that people that set up new liquidity pools can choose how high the trading fee should be. Most existing pools have a fee of 0.3% per trade like on most other exchanges.

Most tokens that are native to NEAR are available on the DEX, like SKYWARD, REF or wNEAR. There are also bridges to Ethereum, Solana, Aurora, Celo and Terra, which is why Ref Finance also has pairs for many tokens from these blockchains like DAI and WETH.

The standard AMM can have a high slippage for assets that have the same value, like 2 different USD stablecoins, unless there is a lot of liquidity available. That’s why Ref has a stablecoin swap, where the slippage is kept lower because the protocol partly takes in account that the price is supposed to be the same. This was forked from the Curve Finance stablecoin swap, which is also one of the most used and trusted dApps.

People that provide liquidity to earn trading fees can also put the LP tokens that represent their share of the pool into farms to earn additional rewards. The farms are mostly distributing REF, which is the Ref Finance governance token, but some partnered projects are also distributing rewards. For example, if you provide liquidity to the REF / wNEAR pair, then you can earn REF and several tokens for projects on the Near blockchain including SKYWARD and PARAS. If you supply funds to the CELO / REF or the cUSD / USDC pairs, then you can also earn CELO coins.

The decentralized exchange is the second most used dApp on its blockchain and has over 200 million dollars’ worth of funds and will continue to grow if the NEAR blockchain keeps attracting developers and users.

 

 

The REF Token

REF is the governance token of Ref Finance. It is used to vote on changes to the protocol. Ref Finance also shares some of the trading fees with the holders of the token, similar to how SushiSwap does it.

The holders can stake their REF in an xREF pool that receives a share of the fees. Most of the trading fees are added to the liquidity pool, which lets the liquidity providers earn a compounding yield but 0.16% of each trade is used to reward the protocol. 3/4 of that protocol fee is used for buy backs of the REF token which are added to the xREF pool and 1/4 is going to the treasury of the DAO.

There is a max supply of 100,000,000 REF tokens. 60% of that supply is going to the liquidity providers and released over 4 years, 20% are set aside to reward various community contributions, 10% are in a development fund with a 4 year vesting schedule, 1% was airdropped to early users, 4% were set aside for future airdrops and strategic airdrops, 2.5% were used for the initial liquidity and 2.5% were sold in an IDO on the SKYWARD Launchpad. More than half of the supply is going to the users of the platform, like it should.

The value of the token strongly depends on how much liquidity the DEX has and on how many trades are happening there. If more is being traded then more fees are used to buy back the token and the treasury is growing too, which would give REF more demand. Since NEAR is designed to be much more scalable than Ethereum and has much lower fees it will likely attract many new users and they will need Ref Finance to swap their crypto in a decentralized manner. They will also want to provide liquidity to earn many different NEAR tokens with yield farming.

REF can be bought on the MEXC Global Exchange, but of course you can buy it on the Ref Finance DEX itself too if you have some NEAR coins. You can use a standard NEAR Wallet to store you funds and to use the dApp.

 

 

 

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