Model 2: “One-sided non-impermanent loss Mining” model for non-stable tokens in the full price range

Why Does Uniswap V3 need this model?

In izumi’s previous post on an in-depth analysis of the Impermanent Loss of Uniswap V3 liquidity providers (link), we discussed that based on the on-chain data, Uniswap V3 liquidity providers are in an overall loss-making position due to Impermanent Loss. In other words, for these liquidity providers, if they did not choose to provide liquidity on Uniswap V3, but simply hodl the crypto assets in their hands, they would probably end up with a higher return on their investment.

How does izumi solve this problem?

In order to solve this dilemma and reduce the risk of Impermanent loss, izumi innovated the “one-sided non-impermanent loss” model based on Uniswap V3, which puts the LP’s USDC into the (Pa, Pc), just below the current price Pc, and puts the LP’s project tokens into the staking mining instead of into the trading pool (i.e. above Pc as potential sellers), thus creating a model of “stronger buying than selling”, which is more conducive to a price increase.

Comparison with traditional Staking

The design logic of Model#2 essentially takes the advantages of traditional liquidity mining and staking models and combines them organically to form a new” Half Liquidity Mining + Half Staking” model.

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.

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iZUMi Finance

iZUMi Finance

iZUMi Finance: A Multi-chain DeFi Protocol Providing One-Stop Liquidity as a Service; Twitter:twitter.com/izumi_Finance; Discord: discord.gg/izumifinance