izumi’s Evolvable Tokenomics: iZi and ve-iZi
Innovative Dual-Tokens + Dual-Phase Tokenomics
The izumi team believes that the core value of blockchain and the tokenomics will always be that it rewards all contributors to the current system in a fair and quantifiable way. The underlying logic of evaluating a blockchain project is is also whether it fairly incentivizes all the contributors who maintain its operations or drive its development.
So when designing the tokenomics model, izumi team also faced three core questions：
1, how to use token incentives early on to drive project development faster?
2. How to reward each izumi user more fairly for their contribution?
3. How to maintain the sustainability of the token economy so that more loyal community users can get more revenue?
In order to solve the above three problems, izumi team researched the tokenomics models of many DeFi platforms, learned from the unique designs of many high-quality projects, and innovatively designed an evolvable tokenomics for the platform, which is the “dual-token plus dual-phase” model of iZi tokens and ve-iZi tokens which will be launched later.
Phase 1 — Initial project launch + iZi tokens
In the initial launch phase of the project, or until the decentralized governance phase begins, the izumi platform will have only one token, the iZi token. iZi is the izumi platform’s utility token, which can be used to pay for iZiswap cross-chain transactions and the LiquidBox Liquidity incentive pool set-up costs.
The most important way for users to obtain iZi tokens, besides the most basic ones through IDO and IEO, or buying iZi tokens directly on the exchange, is through UniV3 LP NFT mining after the launch of the izumi LiquidBox platform. This means that the user needs to provide liquidity on Uniswap V3 for the corresponding transaction pair, and then stake the obtained LP NFTs on the Izumi platform for liquidity mining. (For detailed rules of liquidity mining, please click the link to view)
Also at this stage, once users have acquired a certain amount of iZi tokens, they can select a specific liquidity mining pool and stake their iZi tokens to receive a Boosting of liquidity mining proceeds.This could enable iZi holders earn a boost up to x2.5 on the liquidity mining incentives. The boost mechanism will calculate your earning weight by taking the smaller amount of two values. The first value is simple, it’s the amount of vliquidity calculated from the liquidity user staked on izumi platform. This amount is your maximum earning weight:
min((vliquidity * 40/100) + （Total vliquidity * Staking Balance/ Staking Total * (100–40)/100）,vliquidity)
Note: This algorithm is designed according to the CURVE boosting algorithm.
This design ensures that the project attracts sufficient users as well as high TVL for the izumi platform through liquidity mining incentives at the early stage of the project launch. The function of Boosting using staked iZi is also designed to allow iZi holders to get more expected returns, thus reducing the possibility of users selling iZi tokens directly and cultivating more long-term loyal users for the project.
After entering the second phase of the token model, the iZi tokens will have more utility scenarios and also governance and dividends rights, which is designed to make more izumi users in the first stage to become firm supporters.
Phase 2 — decentralized governance + ve-iZi tokens
When the project is stable enough, izumi Finance will enter the community decentralized governance phase and also open the minting function of ve-iZi tokens.
First of all, ve-iZi is not tradable or transferable and can only be obtained by staking iZi tokens. The amount of the ve-iZi balance is based on the amount of iZi tokens locked, and the time left before the unlock. The ve-iZi balance is linearly decreasing since the time of lock. The iZi tokens locked can not be withdrawn before the timelock has expired. However, it is possible to extend the timelock or increase the amount of staked iZi tokens.The algorithm for calculating the amount of ve-iZi tokens is the following.
The iZi token（let amount be N） can be locked for a selectable locktime t_l, where t_l < t_max, and t_max = 4 years. After locking, the time left to unlock is t ≤ t_l. The amount of ve-iZi token(N) is :
n = N · (t / t_max)
This algorithm sets the amount of ve-iZi to be both amount- and time- weighted, which is suitable to represent a community member’s support and confidence in izumi Finance.
At this stage, the staked Boosting of the iZi token will be terminated, but the user will also get the corresponding interest by minting ve-iZi, as well as more governance and dividend rights of the platform.
ve-iZi token qualifies the holders for earning boosting, dividends distribution and DAO voting rights, based on the amount of ve-iZi tokens in their account.
Boosting
ve-iZi holders can earn a boost up to x2.5 on the UniV3 liquidity mining incentives.The boost mechanism will calculate your earning weight by taking the smaller amount of two values. The first value is simple, it’s the amount of vliquidity calculated from the UniV3 LP NFT the user staked on izumi platform. This amount is your maximum earning weight.
min((vliquidity * 40/100) + （Total vliquidity * Voting Balance/ Voting Total * (100–40)/100）,vliquidity)
Note: This algorithm is designed according to the CURVE boosting algorithm.
Dividends
ve-iZi holders will gain a portion of the ecological revenue, and the portion will be determined by DAO governance. At the beginning, 50% of the platform revenue, including iZiSwap, cross-chain fees and pool setup fees, will be used for buy back iZi tokens and distribute to ve-iZi holders. The other 50% of the platform revenue will be used for operation and development, aimed at expanding the total eco-system of izumi.
Proposals and Voting
ve-iZi holders can initiate and vote on DAO proposals, and the vote weight is based on the obtained amount of ve-iZi tokens at the time of casting the vote. izumi team believes that, combined with the dual-token governance system, users will jointly contribute to a better future of izumi, and will receive lucrative benefits along with the development and governance.
If you wish to create a new official proposal, you should draft a proposal and post it on the governance forum. You must research it is possible and can gauge the interest of community via the izumi Discord, Telegram or Governance forum.
Proposals can include the use and allocation of izumi treasury funds, adjustments to important platform parameters, major development proposals and more aspects of decentralized governance of izumi.If you’re not sure about the technical details of submitting your proposal to the Ethereum blockchain, you can ask a team member to help.
Through the overall design of the “evolvable tokenomics”, the izumi team believes that the three problems mentioned in the beginning have been greatly solved. The iZi tokens and ve-iZi tokens will serve as a bridge of value for all community members, providing a fairer incentive for everyone who contributes to the operation and development of the project, and safeguarding the long-term interests of all loyal users.
About izumi Finance
izumi Finance is the first protocol to support Uniswap V3 “non-homogeneous” liquidity mining and extend concentrated liquidity service for multi-chains. izumi provides “Liquidity as a Service” (LaaS) based on Uniswap V3, with innovatively designed liquidity mining modules of “Concentrated liquidity mining” model for stable assets with a fixed price and “One-sided non-impermanent loss Mining” model for non-stable tokens. These structured models would support any blockchain project to better implement liquidity incentives with much higher capital efficiency and enable liquidity providers to earn extra rewards.
