Table of contents
1. Project Introduction
2. Project Vision
3. Features and advantages
4. Development History
5. Team background
6. Financing information
7. Development achievements
8. Economic Model
9. Industry Analysis
10. Risks and opportunities
1. Project introduction
iZUMi Finance is a Liquidity optimization protocol built on the Ethereum network. It is a Uniswap V3 ecological project that provides blockchain projects with a Uniswap V3-based "programmable Liquidity as-a-service" business.
By continuously expanding the Multichain ecosystem, iZUMi Finance will eventually support the Cross-chain Liquidity trading mechanism, bring systematic Liquidity services to the Multichain ecosystem, and become a one-stop Liquidity as a Service (Liquidity as a Service) with ultra-high capital efficiency in the DeFi industry. a Service, LaaS) platform.
2. Project vision
After Uniswap V3 went live, its ability to provide Liquidity within a certain price range sparked a lot of discussion. The essence of this plan is to give more choices to improve capital efficiency and LP income. However, after actual operation, ordinary users cannot make high-frequency adjustments according to market conditions, or the Liquidity is at a price for a long time due to the high adjustment costs. Outside the range of fluctuations, losses occurred instead.
iZUMi Finance hopes to solve this problem. On the one hand, users can entrust their funds to its management to maximize profits; fluctuations in trading.
In Japanese, iZUMi means "spring". As a Multichain DeFi protocol, iZUMi Finance believes that each token should obtain better on-chain Liquidity in an efficient and durable manner, and provide every partner with the ultimate Liquidity-as-a-service The Liquidity on the chain is like spring water, which is continuous and fresh for a long time.
3. Features and advantages
iZUMi's model solves the problem of the Liquidity of Stablecoin and anchor assets in the Uniswap V3 range and the low return of Liquidity Provider, and minimizes Impermanent Loss and improves capital utilization efficiency. iZUMi is closer to CEX in terms of professionalism, and its core advantages mainly include the following two points:
(1) Discrete Liquidity assets are more efficient
iZUMi has upgraded the Uniswap algorithm, combined with the innovative Discretized Liquidity AMM (DL- AMM), and improved the centralized Liquidity model first deployed by Uniswap V3. It is the first AMM-based, 100% on-chain, and supported DEX for LOB transactions.
DL- AMM enables Liquidity to be deployed on every price tick and reduces slippage when swapping tokens. DL- AMM cuts these price ranges into small and narrow segments, making these price ranges close to 0. DL- AMM further enhance capital efficiency by providing Liquidity at every desired price range. Traders on iZiSwap will benefit from greater capital efficiency, zero slippage and cheaper transaction fees, with guaranteed Liquidity at any price range desired.
(2) Allow limit orders
iZiSwap uses the original DL- AMM discrete Liquidity AMM model, allowing Liquidity to be deployed at each fixed price point. Different from escrow limit order service, escrow is actually a price monitoring program that helps users use Swap (market price function) to trade when the price is triggered, but it cannot judge the success rate of the transaction and the stability of the transaction price.
A user's limit order will be considered to add Liquidity on a certain price movement so that the user can trade at a fixed price as a limit order. The limit order feature is free for users and there is no need to pay any fees.
4. Development History
- 2021.10.08 iZUMi announced the successful completion of the first round of financing of US$600,000
- 2021.12.09 iZUMi completes USD 3.5 million in Series A financing
- 2021.12.20 iZUMi announced that its IZI token will be listed on Bybit
- 2021.12.21 iZUMi launches Uniswap V3 Yield Farming platform LiquidBox
- 2021.12.22 DeFi Derivatives platform DeSyn Protocol reached a technical and business partnership with iZUMi Finance
- 2022.01.17 iZUMi is deployed on Polygon to support Uniswap V3 Yield Farming
- 2022.02.18 iZUMi announced the launch of its decentralized autonomous organization (DAO), and adopted a veNFT-based quadratic voting mechanism for governance
- 2022.03.21 iZUMi launched veiZi, which can be used in three application scenarios of voting, staking and mining acceleration. At the same time, iZUMi announced the official cooperation with the NFT project HOURAI
- 2022.03.26 The Cross-chain payment network cBridge launched by Celer Network announces support for iZUMi Finance
- 2022.03.29 iZUMi launched on Arbitrum
- 2022.05.07 iZiSwap launches BNB Chain
- 2022.05.10 iZUMi becomes part of the Arbitrum Odyssey event
- 2022.05.20 iZUMi announced the completion of US$30 million in Series B financing
- 2022.07.08 iZUMi has successfully redeemed two tranches of bonds issued by Solv Protocol
- 2022.07.18 iZUMi launches The Ultra Evolution mining reward activity
- 2022.09.13 NEAR ecological DeFi platform Ref Finance cooperates with iZUMi Finance and Arctic to release the Ref V2 version
- 2022.12.17 iZUMi launches iZiSwap Pro, a decentralized Order-book exchange
- 2023.04.16 iZiSwap Pro lands on zkSync Era Mainnet
- 2023.04.21 iZUMi announced the completion of US$22 million in financing
5. Team background
The members of the iZUMi team are relatively mysterious. Currently, there is only one co-founder (co-founder) Jimmy Yin in the official team. Jimmy Yin may be related to YIN Finance, the partner of iZUMi Finance's "Joint Yield Farming Plan" announced in early 2022.
Not long ago, Jimmy Yin participated in the Web3 Festival series "Infra and Applications Onboarding the Next Billion Users" in Hong Kong and shared the latest development of iZUMi.
In addition, in an AMA held by the MEXC exchange on December 23, 2021, an iZUMi co-founder named Dima Sharenk participated in the event.
6. Financing Information
On October 8, 2021, iZUMi Finance received US$600,000 in financing from investors including Tess Ventures, Puzzle Ventures, Everest Ventures Group, LucidBlue Ventures, Youbi Capital, Nothing Research, WolfEdge, Adaptive Lab, and ICG.
In November 2021, iZUMi Finance raised $2.1 million in financing, led by Mirana Ventures, with participation from Everest Ventures Group, Youbi Capital, LucidBlue Ventures, Puzzle Ventures, WolfEdge, ICG, Adaptive Lab, Nothing Research, and Tess Ventures.
On December 9, 2021, iZUMi Finance received another US$3.5 million in Series A financing, bringing its total financing to US$5.6 million. Participating investors in the Series A round include Mirana Ventures, IOSG, Cadenza, Fenbushi Capital, EVG, Hashkey, GSR, CyberX, Bixin, Kronos, Dorahacks, Gate Labs, MEXC, and individual investors from Nansen, Perp, Chainlink, and Babel.
On May 20, 2022, iZUMi Finance announced the completion of US$30 million in financing, including from institutional investors such as Ivy Venture, Cobo, and Mirana, of which more than US$10 million came from convertible bond financing (Bond Vouchers) in cooperation with Solv Protocol.
On April 21, 2023, iZUMi Finance announced the completion of a new round of financing of 22 million US dollars. This round of fundraising was supported by Unicode Digital, NextGen Digital Venture, Bella Protocol, Incuba Alpha and other funds and individual investors. ETH, stETH, USDC, USDT, etc. worth 22 million US dollars.
7. Development achievements
(1) veiZi
The veNFT within the iZUMi system is also known as veiZi and will be launched on March 21, 2022. When talking about the origin of veNFT, it must be mentioned that the concept of veToken was first proposed by Curve. "ve" is the abbreviation of "voter escrowed", that is, voter escrow, which works by locking CRV tokens and then converting them into veCRV with protocol governance capabilities. Holders of veCRV will enjoy the governance rights of the Curve protocol, the handling fees generated in Curve, and higher returns in Yield Farming. However, veCRV cannot be transferred or traded.
The proposal of veToken aims to bind the long-term interests of the protocol participants and the protocol, and make decisions that are in line with the long-term interests of themselves and the protocol, and the locked tokens will also reduce the pace of token inflation to a certain extent, and promote the price of the token. Growth in the secondary market.
In the DeFi ecosystem, veiZi will be mainly used in three application scenarios: voting, staking, and mining acceleration.
(2) iZiSwap Pro
iZiSwapPro is an AMM driven Order-book DEX that pursues high capital efficiency. It will be launched on December 17, 2022, allowing users to trade without slippage.
iZiSwap Pro introduces an Order-book style user interface and interactive experience. It has the characteristics of a unified account, no gas fees, low transaction costs, and anti-censorship. More importantly, iZiSwap Pro uses a Non-custodial mode, and the data is transparent and checkable on the chain. .
Compared with other AMM DEXs, iZiSwap Pro has no transaction slippage and is free from "sandwich attacks". Users can trade their tokens at precise prices through the limit order mode, and enjoy the same trading interface and experience as the Order-book exchange.
(3) Community
Twitter followers: 100,000+
Discord: about 65000
TG: 17387
8. Economic Model
The iZi token is a utility token based on Ethereum ERC-20 on the iZUMi platform, with a total supply of 2 billion, which is used to incentivize the use of pool settings and other tools.
iZi is a utility token on the platform, which can be used to pay Cross-chain transaction fees, set up incentive pools and use v3toolbox.
Users can pledge iZi to obtain the governance token veiZi, which cannot be transferred or traded. Its functions mainly include: initiating proposals and voting on governance, obtaining Uniswap V3 Yield Farming rewards, and obtaining some ecological benefits.
The functions of veiZi are as follows:
① Voting: DAO governance and Quadratic voting will be used to determine key issues. The iZi emissions for each cycle will be determined and allocated based on veiZi voting rights. The owner of veiZi can delegate voting rights to another address.
② Pledge: 50% of platform revenue will be used to repurchase iZi, which will be sent to veiZi holders according to voting rights every month. In the first 4 years, a staking reward of 40 million iZi will be issued to veiZi holders each year.
③ Boost: After staking NFT, veiZi will be used to increase the LiquidBox pool APR to 2.5 times. The boost mechanism will take the smaller of the two values to calculate your income weight. The first value is simple, it is the amount of vliquidity calculated by the UniV3 LP NFT pledged by the user on the iZUMi platform.
According to the official website, iZUMi Finance currently has three products: LiquidBox, iZiSwap and iZUMi Bond.
(1) Yield Farming——LiquidBox
The iZUMi team first proposed and implemented the Yield Farming solution "LiquidBox" based on Uniswap V3 NFT LP tokens. Unlike the traditional V2 that can replace LP tokens for direct pledge mining, when LiquidBox designs the incentive scheme for Yield Farming, the protocol can clearly set the value range of incentives for LP tokens.
And after the user pledges the V3 LP token to the iZUMi protocol, iZUMi's LiquidBox will automatically judge whether the value range of the LP token is within the Liquidity incentive value range set by the project party. If it is within the scope, LiquidBox will issue Yield Farming token rewards to Liquidity Provider according to the incentive plan.
Project parties can establish trading pairs and Liquidity pools based on Uniswap V3, and attract Liquidity more effectively through limited rewards and different rewards in different price ranges.
The Liquidity models provided by iZUMi Finance include:
Model 1: "Yield Farming Model", Stablecoin and anchor asset reward price range is fixed
LiquidBox is able to allocate Yield Farming incentive tokens within a specific price range, such as [0.95,1.05], to keep the price of a Stablecoin or pegged asset stable. (0.95p,1.05p) Each block in the price range earns 10 tokens from the Stablecoin and pegged asset issuer. izumi evaluates the total effective Liquidity in the (0.95p, 1.05p) price range, and linearly distributes incentives according to the holding ratio of each LP. These incentives attract Liquidity into this price range, allowing for minimal slippage.
Model 2: Full-price non-stable token "unilateral non- Impermanent Loss mining model"
iZUMi LiquidBox allows Yield Farming incentive tokens within the current price range to compensate for Impermanent Loss caused by price changes within the corresponding time interval.
Similar to the traditional xy=k model, LP also puts half the value of USDC and half the value of project tokens into the iZUMi LiquidBox to start Yield Farming with one click.
However, in order to avoid the "Pool 2 dilemma" caused by the traditional xy=k model (that is, LP puts all USDC as potential buy orders and project tokens as potential sell orders into the Liquidity pool of the trading pair, causing LP to passively sell when the price rises) Losing their own project tokens and suffering Impermanent Loss also increases the passive selling pressure of the project side and prevents the price from rising, resulting in a "lose-lose" situation.)
iZUMi LiquidBox innovated the "unilateral non- Impermanent Loss" model on the basis of Uniswap V3, put LP's USDC into (Pa, Pc), which is just lower than the current price of Pc, and put LP's project tokens into staking mining of Trading pool (that is, above Pc are potential sellers), thus forming a "strong buying and selling" model, which is more conducive to price increases.
Model 3: The "Dynamic Range" model incentivizes non-stable tokens to provide dynamic Liquidity around current prices
In iZUMi model three "dynamic range", users participate in Yield Farming by setting Liquidity within the value range of (0.25Pc, 4Pc) of the current price (Pc). The width of the price range can also be set by the project team, such as (0.5Pc, 2Pc), which will also provide more concentrated Liquidity. After the user provides Liquidity to the currency pair through the iZUMi platform at a set price range, the iZUMi smart contract will automatically pledge Uniswap V3 LP NFT into the Yield Farming program, and the Liquidity Provider will automatically participate in mining and start receiving Yield Farming rewards provided by iZUMi and corresponding projects.
In addition to this, LPs will also receive transaction fee income from Uniswap V3, as the value range set by Liquidity Provider includes the current token price. The combination of these two incomes will significantly increase the expected return of Liquidity Provider. The income of Liquidity Provider participating in Yield Farming will be calculated as a percentage of the total Liquidity of the program based on the Liquidity thickness (v_liquidity) it provides, as follows:
Based on the above equations, we can conclude that, compared to traditional full-range Yield Farming activities, based on the three "dynamic ranges" of the iZUMi model, if the price range is set to (0.5 Pc, 2Pc), it will provide approximately three times capital utilization efficiency. And based on the "Dynamic Range" model, the user does not need to adjust the position frequently. When participating in Yield Farming, even if the currency price fluctuates sharply on one side and breaks through the extreme situation of the value range (0.25Pc, 4Pc) corresponding to the currency price, the Uniswap V3 LP NFT held by the user will not be terminated as long as the Yield Farming is not terminated. It will continue to generate Yield Farming income for users. Of course, Liquidity Provider can choose to redeem and re-provide Liquidity based on the latest price, which ensures that they can continue to receive Uniswap V3 transaction fees in addition to Yield Farming income.
(2) New Liquidity algorithm Swap——iZiSwap
Initially launched on BNB Chain, iZiSwap is an innovative Discretized Liquidity AMM(DL- AMM), which can provide efficient on-chain Liquidity for Web3 assets, and it can have more than 5000 times capital efficiency than traditional xy=k DEX .
The DL- AMM algorithm adopts a new discrete centralized Liquidity algorithm, which has the market-making characteristics of centralized Liquidity similar to Uniswap V3, but it can precisely allocate Liquidity at any fixed price instead of within a price range. This makes iZiSwap easier to manage in terms of Liquidity and supports more trading methods, such as limit orders.
(3) Convertible bonds - iZUMi Bond / iUSD
Bond Farming is the latest paradigm for on-chain financial Derivatives innovation proposed by iZUMi Finance based on the team's deep understanding of traditional finance and dedicated research on the DeFi industry. As an on-chain financing bond issued by iZUMi Finance, it combines the model of traditional financial companies issuing convertible bonds and the model of over-collateralized Stablecoin on the chain.
Based on the special token tools and over-collateralization mechanism in the DeFi field, iZUMi created the first convertible bond denominated in US dollars - iUSD (iZUMi Bond USD). Different from the well-known US dollar Stablecoin concept, it abandons the systemic risks of Algorithmic Stablecoin, and supports the value of iUSD with transparent on-chain funds managed by smart contracts and multi-signature wallets as over-collateralization. The convertible bonds issued by iZUMi through Solv Protocol support investors to convert to iZi tokens at a specific price when they mature, so that investors can also enjoy the potential return on investment brought about by the appreciation of iZi tokens.
9. Industry Analysis
Any centralized entity will have the risk of a single point of doing evil. The asset transparency, security, and no custody provided by DEX, combined with its open and composable features, will prove its reliability with the continuous rise and fall of centralized institutions.
At present, the top DEXs focus on improving the traffic side, including improving user experience and realizing traffic exposure on the mobile and web pages.
The emergence of Uniswap V3's centralized Liquidity has made the matter of Liquidity provision more complicated and professional. Recently, a large number of DEXs with centralized Liquidity design have appeared in multiple ecosystems. Considering the special environment on the chain (including transaction confirmation delay, MEV, handling fee mechanism, slippage, etc.), and the AMM model is completely different from the traditional Order Book Mathematical calculations and characteristics, it is foreseeable that there will be more market-making teams focusing on providing professional Liquidity services in centralized Liquidity DEX in the future, and iZUMi Finance is one of them.
10. Opportunities and risks
(1) Opportunity
Uniswap has gradually formed its own ecosystem, and there are not a few agreements related to Uniswap Liquidity management. However, iZUMi Finance starts from Uniswap V3's interval Liquidity management, and hopes to use Cross-chain bridges and Multichain DEX in the future. There are not many projects that form a larger ecology.
iZUMi Finance has launched iZiSwap Pro, which is compatible with AMM and limit orders of DL- AMM , provides a user-friendly and low-cost trading experience, and realizes a decentralized exchange on the chain. There will be a lot of market space in the future.
(2) Risk
The innovation of iZUMi is an inspiration to the DeFi 2.0 protocol, and it also broadens the application field of NFT. It has attracted a large amount of funds within 90 days of its launch, and has completed multiple rounds of financing, which shows that iZUMi has certain attractiveness and strength. However, data shows that about 50% of the wallets have incurred losses after Uniswap V3 provided Liquidity, and the DeFi field is developing rapidly and the competition is fierce. As iZUMi, which has been online for more than a year, there is nothing too eye-catching except for financing news movement. The project is still in development and it remains to be seen what the future holds.
