With the Fraxtal launch starting to gain steam, the first third party major application has just been deployed. Ra Exchange is now the first non-Frax DEX on Fraxtal and is poised for growth in the coming weeks.

What is Ra Exchange

Ra Exchange is a decentralized exchange built on Fraxtal. It is created by the Ramses team, who launched their original DEX on Arbitrum. Ramses uses the Solidly (3,3) ve model and concentrated liquidity pools first pioneered by Uniswap.

Ramses is one of the earliest projects on Arbitrum and has attracted good community buy in and TVL since it launched. The protocol was one of the few selected to receive Arbitrum STIP rewards and it has captured the most Frax TVL other than Curve on Arbitrum.

The (3,3) ve Model

The ve(3,3) system introduced by Andre Cronje's Solidly in the Ra platform integrates various successful DEX improvements into a comprehensive system. This system is designed to provide users with incentives and protections to encourage the locking of tokens and participation in the platform's ecosystem.

One of the core components of the ve(3,3) model is the dilution protection mechanism, which is implemented through a rebase process that occurs at the end of each epoch. This rebase mechanism is designed to encourage users to lock in their tokens early by adjusting their holdings based on the total supply and their current share. For example, if you hold 10% of the total supply and the supply doubles, the rebase ensures that your share increases (in this example, by 50%) to maintain a proportionate stake in the total supply, albeit at a slightly reduced percentage.

Another key feature is the gauge boost system, which allows users to enhance their rewards based on their veRA (vested RA) position relative to the total liquidity they provide to the platform. The system offers a boost ranging from 1x to 2.5x, incentivizing users to increase their veRA holdings to maximize their potential rewards. This mechanism ensures that those with significant veRA positions relative to their liquidity contribution receive higher yields, promoting a more engaged and committed user base.

The veRA, or veNFT, tokens are specialized non-fungible tokens (NFTs) that represent a user's staked position and offer various benefits within the Ra ecosystem. These include voting on gauge emissions, earning from vote bribes and swap fees, and the ability to transfer or merge NFT positions. The introduction of veNFTs adds a layer of flexibility and utility for users, enhancing their engagement with the platform.

Revenue distribution in Ra is designed to reward active participation. For example, vote bribes are distributed immediately after an epoch concludes, allowing users to earn based on their contributions to the voting process. Additionally, trading fees are accumulated in real-time, providing continuous rewards for users based on their chosen pools.

Dex Functionalities

Ra offers two types of liquidity pools users can add their assets to for trading, Volatile, Correlated and Concentrated.

Volatile pools are similar to Uniswap v2 LP positions where liquidity is provided across the entire range. These pools use the x*y=k formula that maintains equal weights of the tokens at all prices.

Correlated pools are for tokens with similar prices like LSDs or stablecoins. The goal with these pools is to minimize slippage and allow for large swaps to take place with low fees.

Concentrated pools use the Uniswap v3 model for liquidity, where a range of prices must be chosen. LPs earn fees when prices are in the range and eventually are swapped into one of the two assets depending which way they go out of range.

Ra Exchange uses the following fee structure for its pools:

• Volatile Pair (vAMM) - 0.25% swap fee
• Correlated Pair (cAMM) - 0.01% swap fee

For concentrated pools there are 4 fee tiers:

There are 4 default fee tiers when creating a Concentrated Liquidity position on RA:

• 0.01% - The lowest fee tier available (1 bps), this provides the best rate for highly correlated and pegged assets: e.g. (USDC,USDT)
• 0.05% - The second lowest fee tier, this is good for competitive asset classes, such as USDC/WETH, which generate a lot of volume.
• 0.3% - This fee tier is the standard for pairs that do not fall in the other categories.
• 1.0% - Currently the highest fee tier available, 100bps provides sufficient fee generation to offset the risk of providing liquidity for highly volatile assets.

From these fees Ra splits the revenue in the following manner:

• 5% of fees will be routed to the ecosystem incentives fund.
• 45% of swap fees will be distributed to LP positions (to counter Impermanent Loss).
• 50% of swap fees will be distributed to veRA voters in the same manner traditional ve(3,3) does.

Competitive Farming

More so, Ra Exchange tracks how efficient a users position is for "competitive farming," which introduces a dynamic approach to liquidity provision and yield farming. This concept encourages LPs to strategically select their liquidity ranges to maximize their rewards.

In traditional liquidity models, LPs provide liquidity across a wide price range, which can lead to inefficiencies in capital utilization. However, with concentrated liquidity, LPs can specify the price ranges in which they want to provide liquidity. This granularity allows LPs to concentrate their funds in price ranges where they anticipate more trading activity, leading to more efficient capital use and potentially higher returns.

The idea of competitive farming comes into play as LPs who choose more "competitive" or optimized price ranges for their liquidity are rewarded more. This is because their liquidity is more likely to be used for trades, driving higher trading volumes and, consequently, more fees for the liquidity providers. The competitive nature of this system encourages LPs to closely monitor the market and adjust their liquidity ranges to maintain optimal positions.

Ra Exchange Tokenomics

Initial Token Distribution:

The initial supply of RA is set at 5,000,000 with a maximum supply cap of 12,500,000. The distribution of these tokens is categorized into five equal parts, each constituting 20% (1,000,000 tokens) of the initial supply:

1. Airdrop: Ra will give tokens to the Fraxtal and Frax community in the form of xRA and Ra. These tokens will be vested
2. Contributors: This allocation is for contributors who have helped with the project. These tokens are vested.
3. LBP on Mainnet: Ra will bootstrap liquidity with an LBP at a future date. This means they will take in frxETH to pair against this initial set of RA for trading.
4. Ve Partner Allocations: veRA will be distributed to various other Fraxtal partners and will not circulate.
5. Frax Ecosystem veNFT

Emissions Schedule:

The emissions schedule for RA tokens operates with a 1% exponential decay per week, which means that each week, the number of new tokens emitted will decrease by 1%, reducing emissions indefinitely.

Conclusion

Ra is set to be one of the big three DEX's on Fraxtal with Fraxswap and Curve. It's launch offers a great way for liquidity providers to maximize revenues with concentrated liquidity pools and incentivized token distribution.

The RAMSES team has successfully deployed and grown their DEX on Arbitrum and will bring their experience to Fraxtal. RAMSES has been one of the biggest growth stories during the Arbitrum STIP campaign and we hope they can replicate the same growth on Fraxtal.