This ring is imbued with magic.
As her life neared its end, the Borrower Witch used her powers to recreate deceased people as obedient twigs dolls. Although delighted by her ability, the witch feared damnation and sought to pass on her powers - by giving away the ring - to a younger and impressive witch.
The witch attempted to give her powers to Tasha Banes, but Tasha refused and was subsequently killed and her heart placed inside a twigs doll, in order to recreate Tasha. This fake Tasha met with Tasha's children, Max and Alicia Banes. Intrigued by Max's magical abilities, the witch offered her powers to him next, convincing him that by doing so, he could keep his mother and live as a big happy family.
Max nearly accepted, but Dean Winchester shot and killed the witch. By doing so, the witch presumably went to Hell as intended. The witch's three dolls crumbled back to twigs upon her death. However, Alicia had been killed by the fake Tasha, and it was this loss that compelled Max to take the ring and use it to recreate a twigs doll Alicia. However, in doing so, Max damned himself by utilizing the witch's powers and thus shifting the deal onto himself as well.
- It is never explicitly stated if the witch still gets to keep her powers after giving away the ring. Presumably, she simply loses the ability to recreate people as twigs dolls, given that Max needed the ring's powers in order to do just that.