The Four Modules of Izumi Finance
1. v3NFT Mining
v3NFT Mining provides non-homogeneous liquidity mining (LM) protocols with Uniswap v3 NFT. It is designed to support LM incentive distribution for Uniswap V3. In Uniswap v2, liquidity providers (LPs) earn fungible tokens, though, in v3, they earn non-fungible tokens (NFTs), enabling incentive distribution according to liquidity ratio. The most significant advantages of v3NFT Mining are that it automatically rewards every NFT holder and supports non-homogeneous distribution among different price ranges.
One of the inherent risks in liquidity mining is impermanent loss (IL), which is a deterrent to new LPs interested in participating in automated market maker (AMM)-based liquidity pools. IL occurs when prices fluctuate in the currency that is being staked. Since many cryptocurrencies are price-volatile, frequently, these inherent risks outweigh potential rewards for providing liquidity. Izumi Finance will provide additional LM incentives in specific price ranges, compensating for the IL. This critical component of the protocol will attract many liquidity providers into Uniswap V3.
2. C-AMM Bridge
Under Business Source License 1.1, other decentralized exchanges (DEXs) cannot commercially use the Uniswap v3 source code for two years. The result is that multichain users cannot enjoy the capital efficiency of Uniswap’s concentrated liquidity.
The C-AMM Bridge expands the concentrated liquidity ability of Uniswap V3 to multiple blockchains. These transfers are speedy and cost-efficient, taking less than a minute each at the rate of 0.3%. In the first half of 2022, this bridge will be updated to the Uniswap V3 mechanism.
The process is quite simple and can be illustrated in the following example. ‘Address A’ creates an order in the form of a smart contract on ‘Chain A.’ This order is sent through the bridge with a multi-validator relay network. After passing through several nodes, it reaches and interacts with a smart contract on ‘Chain B.’ Once an agreement is made, the order is completed. On the Izumi Finance website, one can find an easy-to-use guide to begin using the C-AMM Bridge.
The v3ToolBox provides various novel tools that will significantly improve the trading and liquidity management efficiency for Uniswap V3 users. A few examples include cross-chain arbitrage mining, on-chain data tracking, gas fee estimation, automatic range-order withdrawal, an MEV-shield, and an oracle-computing relay network. Expect to see these tools developed in the second half of 2022.
4. R3 Vault
Izumi’s R3 Vault adds features that are not native functions within Uniswap v3, such as limit or concentrated orders, for example. R3 designs active liquidity management strategies of Uniswap V3 based on data mining. It selects the most profitable pools with the most volume and best incentives and then decides which price ranges to deploy liquidity, which is different from previous yield aggregators. The crucial part of R3’s strategy is finding the price range with the maximum expected price fluctuation density in Uniswap v3. Expect these strategies to be finished in the second half of 2022.
Litepaper & Research: https://docs.izumi.finance/
#IzumiFinance #Izumi #iZi #C-AMMbridge #Uniswap #UniswapV3 #v3NFTMining #LiquidityMining #LM #LiquidityProviders #LPs #AutomatedMarketMakers #AMMs #ImpermanentLoss #IL #DecentralizedFinance #DeFi #DecentralizedExchange #DEX #NFTs #Non-FungibleTokens #Crypto #Blockchain #Cryptocurrency