NFTR — Tokenomics and Architecture Deep Dive
Edit: Please note this documents is in regards to V1 of our tokenomics. This document no longer applies to the current NFTR protocol. V2 of our tokenomics can be found here and in more detail in the docs.
RNM is an ERC-20 token that will fuel the NFTR ecosystem. 365 RNM must be spent to register a name for an NFT in the NFTR name registry. 90% of each naming and renaming fee will be burnt, while 10% will be distributed to the protocol to fund liquidity provisions and growth.
RNM will also be distributed to Hold Farmers, Stakers, and Liquidity Providers as incentives to NFTR participants.
dRNM, or dropped RNM, is an ERC-20 token intended exclusively for usage. 365 dRNM will be claimable by holders of NFTs in Curated collections. Functionally, dRNM = RNM. dRNM can be used to register an NFT with a name within NFTR.
Once a curated NFT is named, it begins Hold Farming.
Holders of NFTs from projects that have been included in the NFTR Curated list will accumulate a claim to 1 RNM token every 6,500 Ethereum blocks (approximately 1 per day). The accumulated RNM token balance will show on nftr.name and can be claimed on demand after the corresponding NFT has been named for the first time. This implies that holding an NFT from the Curated List grants the right to claim enough RNM tokens to name another NFT annually, or rename the NFT being used to Hold Farm.
If a named NFT on the Curated list is sold, the NFT remains named and the buyer inherits claim to any unclaimed RNM and future Hold Farming yield.
It will be within the power of the Protocol and an eventual DAO to taper or determine a deadline for Hold Farming rewards.
By staking, 0.0005479 RNM tokens will be farmed every 6,500 blocks per staked RNM token, which implies a ~20% APY. This APY will taper by 50% per year, before reaching 0% at the end of year 4. Farmed tokens can be claimed on demand at nftr.name.
RNM-ETH Liquidity Providing
Liquidity providers in the RNM-ETH Sushiswap pool will farm RNM tokens at a 5x faster pace than stakers. That is, liquidity providers will farm 0.0027395 RNM tokens every 6,500 blocks, which implies a ~100% APY on the RNM portion of the liquidity provision, in addition to the proportional share of trade fees. This APY will taper by 50% per year, before reaching 0% APY in the 5th year of NFTR.
Built-in Exit Liquidity of the Golden Ticket Bonding Curve
The Golden Ticket Bonding Curve facilitates buying and selling on demand without a counterparty.
Golden Ticket price is predefined by the following function + curve:
f(n)=(0.01n)^2 + 0.1 where n is the ticket # and f(n) is cost
90% of each Golden Ticket sale is stored in the Golden Ticket contract as exit liquidity. The remaining 10% is kept by the protocol for continued liquidity provision + growth. At any point in time, a Golden Ticket can be sold back into the bonding curve for 90% of the most recent mint price.
This allows dynamic strategies to be implemented regarding the trading and usage of Golden Tickets. Traders may speculate on future Golden Ticket sales increasing the redemption value of held tickets, individuals may buy Golden Tickets to name NFTs they don’t yet own, anyone can liquidate a Golden Ticket immediately should the need for liquidity arise, etc.
Once Golden Tickets are used to claim top 1000 names, the ETH reserved as exit liquidity is redeemable by the protocol for liquidity provisions and growth. For example, once 100 Golden Tickets are used, 90% of the collective sale price of the first 100 Golden Tickets can be claimed by the protocol while leaving sufficient exit liquidity for every outstanding Golden Ticket.
Name Marketplace Mechanisms
A Name Marketplace is planned within Stage #2 of project development, after Initial Launch. The assurance of an eventual NFTR Marketplace again allows participants to deploy many strategies as it relates to the acquisition of names.
A Name Marketplace can be accomplished natively and atomically, limiting associated gas fees.
Since names are not tokenized, a name purchase transaction would require:
- Buyer purchases a name for list price or submits bid (via NFTR.name w/ signature). To process, buyer must hold sufficient ETH or WETH + 365 RNM for seller’s rename + 365 RNM to inherit and assign the purchased name to their NFT.
- The particular NFT desired to inherit the purchased name must be selected at this time. Seller selects replacement name upon listing or accepting a bid. Transaction initiator pays the gas.
- Single transaction renames the seller’s NFT and registers the buyer’s NFT name under the “purchased” name.
- 90% of RNM is burned during naming + renaming (657 total).
Avenues for Token Burn
A significant rate of RNM token burning will counteract the minting of Hold Farming, Staking, and Liquidity Providing rewards.
328.5 RNM (90%) of each naming and renaming fee will be burned, while 10% is allocated to the NFTR protocol. Each time a name is sold and replaced, 657 RNM will be burned (two naming fees occur).
NFTR state consists of four contracts:
- The NFTRegistry (main) contract
- The RNM (Rename) token contract
- The dRNM (dropped Rename) token contract
- The Golden Ticket contract
The front-end at nftr.name pulls state from the dRNM, RNM, Golden Ticket, and NFTRegistry contracts, metadata of ERC721 compliant NFT Projects and CryptoPunks.
NFTR Protocol: RNM Allocation
Upon launch, 365,000 RNM tokens will be allocated to the NFTR protocol. Additionally, 3,285,000 RNM tokens will be minted and locked for monthly unlocking and distribution to the NFTR protocol. 50% of the tokens allocated to the protocol will be used to provide liquidity to the RNM-ETH trading pair on Ethereum, while the other half will fund team growth and NFTR development.
These 3,650,000 tokens allocated to the NFTR Protocol divided into 10 monthly installments will match the maximum number of RNM generated by Hold Farming. Since the team liquidity provision supply will be rationed in this way, it is conceivable that a supply shock may occur given a high demand for naming and an initially shallow liquidity pool. Only in the case of RNM supply shock will the NFTR Protocol tap into future installments for the sole purpose of providing additional liquidity to the RNM-ETH trading pair. This would increase RNM supply for purchase and usage while reducing the price impact of RNM buys.
At project launch, each CryptoPunk owner address will be able to claim 365 dRNM tokens per Punk owned, thus allowing each owner to immediately name their CryptoPunk on NFTR. Hence, in total, CryptoPunk owners will have the right to claim 3,650,000 (365 x 10,000) dRNM tokens upon project launch.
The Protocol will also accrue 10% of naming/renaming fees transacted in RNM and 10% of each Golden Ticket purchase, as well as 100% of Golden Ticket fees once Tickets are spent and thus locked in the Registry contract.
The team’s RNM market share will decline as more projects are curated, more staking rewards are distributed, and team liquidity provisions are bought for naming fees and subsequently burned (90% of naming fees).
Initially, but decreasingly so, a majority of RNM allocation is reserved for the Nifter Protocol. Half of this allocation will provide liquidity to the RNM-ETH trading pair on SushiSwap. The other half will be held in the Nifter Treasury, available for activation in a variety of ways to benefit the protocol.
The treasury will also accumulate ETH from the Golden Ticket bonding curve mints. This ETH will be used for the same purposes described below.
Use of Funds
Example uses of treasury funds include:
- Contract security audits
- Creation and promotion of marketing materials
- Team growth and outside contracting
- Treasury investments, including acquisition of Curated NFTs to directly engage and interact with Curated communities