A good steel for these knives is carbon steel. Not Stainless, unless its specifically designed to be used for knives,and can be hardened to hold an edge.
Carbon steel will rust, and must be cleaned, and oiled, and given an occasional buffing to polish the blade to keep it looking "new ", if that is the look you desire. Discoloration is rarely more than .001" deep, so they clean up rather quickly when the correct fine abrasive is used.
Your mistake was in not coating the blade in plastic, or tape, or some compound that would dry and protect the blade from the moisture in the leather, and the air around it. Put that blade to a buffing wheel with some polishing rouge, and it will look like knew in short order. :thumbsup: