When NFTs Become the "Golden Shovel" for DeFi Mining: Exploring iZUMi Finance's veNFT New Model
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When NFTs Become the "Golden Shovel" for DeFi Mining: Exploring iZUMi Finance's veNFT New Model
The integration of NFTs and DeFi, along with the financialization of NFTs, may usher in a new narrative chapter.
Navigating Web3 tides with focused insightsWritten by: morty, TechFlow
The launch of ApeCoin by Bored Ape Yacht Club (BAYC) has become one of the most compelling narratives in today's market.
A consensus is forming: truly valuable NFTs must be more than just JPEGs. On one hand, PFP NFTs represent recognition of a uniquely crypto-native aesthetic, community, and culture. On the other, their value premium comes from ongoing utility and value accrual—such as ApeCoin being integrated into multiple games as a functional token. An NFT thus becomes not only a status symbol but also an entry point into an ecosystem.
NFTs are transitioning "from virtual to real." A critical question now arises: What underpins the fundamental value of NFTs?
My first thought goes to Uniswap V3 LP tokens and ENS domains—both represented as NFTs, yet each embodying real financial assets: liquidity provision and digital identity. Few would question their intrinsic value.
The convergence of NFTs and DeFi, or the financialization of NFTs, may open a new narrative chapter—and among the leaders in this space is iZUMi Finance with its veNFT innovation.
iZUMi: A Flowing Spring
iZUMi, derived from the Japanese word "izumi" meaning "spring," is a DeFi protocol focused on liquidity management.
iZUMi Finance emerged alongside Uniswap V3, which introduced two groundbreaking changes: first, replacing traditional LP tokens with LP NFTs; second, allowing users to concentrate liquidity within custom price ranges, significantly improving capital efficiency.
How to further enhance capital efficiency? This challenge gave rise to numerous Uniswap V3 liquidity management protocols, with iZUMi Finance being a prime example. iZUMi aims to optimize Uniswap V3 liquidity mining by helping projects reduce costs while offering users higher fee earnings and yield rewards.
iZUMi Finance addresses this through three core liquidity mining models:
Fixed Range: A fixed-price-range liquidity mining model ideal for stablecoins or low-volatility assets, allowing both projects and users to define specific price bands. Users deposit liquidity into designated ranges and stake their Uniswap V3 NFTs on iZUMi to earn trading fees plus platform token rewards. Currently supporting USDT/USDC pairs on Ethereum and Polygon, it offers APRs up to 20%.
Dynamic Range: iZUMi collaborates with other protocols on time-bound liquidity mining campaigns. The active price range expands around the current market price by a predefined multiplier. Liquidity providers who deposit their Uniswap V3 LP NFTs earn trading fees, $iZi tokens, and partner project tokens.
One Side: As the name suggests, this model allows users to use only one side of their LP position (e.g., USDT) for liquidity mining, while placing the other half (e.g., project token iZi) into izumi LiquidBox for staking. When the token price rises, users avoid automatically selling their appreciating asset due to AMM mechanics, reducing impermanent loss—hence its nickname, the “diamond hands model.” Currently live for iZi/ETH and DEVT/USDC pools, users holding $iZi can boost their mining yields.
In essence, iZUMi Finance represents an optimization layer over Uniswap V3. But can we go even further? Just as LP tokens evolved into LP NFTs, could the renowned veToken economic model evolve into veNFT?
This is precisely the frontier iZUMi Finance is exploring today.
veNFT
To understand veNFT, we must first revisit veToken—a concept pioneered by Curve.
"ve" stands for "vote-escrowed." Users lock CRV tokens to receive veCRV, which grants governance rights, a share of protocol fees, and enhanced yield in liquidity mining. However, veCRV cannot be transferred or traded.
The veToken model aligns long-term incentives between participants and the protocol. Locked tokens also help curb inflation and support token price appreciation in secondary markets.
The introduction of veNFT represents another evolution of the veToken model.
The veNFT concept was first introduced by Solidly, which airdropped ve(3,3)NFTs to the top 25 performing protocols. Yearn Finance founder Andre Cronje refined the original veToken architecture, reconstructing it as veNFT—meaning users who lock SOLID receive transferable veNFTs during the lock-up period. This maintains long-term alignment while enabling tradability among participants.
Within the iZUMi ecosystem, veNFT is known as veiZi.
To simplify, think of veNFT as a co-branded membership card issued by a bank that backs its value. In this analogy, iZUMi acts as the "bank" providing financial services for this "co-branded card." The DeFi rights and collectible value embedded in veNFT are both backed by iZUMi. The collectible value comes from partnered NFT projects, while those NFT projects’ tokens are supported by iZUMi’s DeFi design.
Just like how Visa partners with World of Warcraft or China CITIC Bank with Final Fantasy—the banks handle the financial infrastructure, while the game IPs provide cultural and collectible value.
In the DeFi ecosystem, veiZi serves three primary functions: voting, staking, and mining acceleration (up to 2.5x).
Voting applies to iZUMi’s governance. Traditional DeFi protocols like Uniswap rely solely on native token holdings for voting power—more tokens mean greater influence. With veiZi, governance weight correlates with both the amount of $iZi staked and the duration of the lock-up. This deepens the alignment between participants and the protocol’s long-term success.
In traditional veToken models, locked tokens cannot be traded during the vesting period. veiZi, however, leverages the NFT format to introduce liquidity to veTokens—no lock-up required, broader accessibility, and easier usability.
Staking relates directly to iZUMi’s platform revenue and growth. Compared to syrup pools like those on PancakeSwap, iZUMi users who stake veNFTs earn a share of protocol profits and partner tokens.
Additionally, veiZi enables mining acceleration, allowing users to earn up to 2.5x more in mining rewards.
Yet these applications mainly use NFT traits to empower DeFi. Can we reverse this—use DeFi attributes to empower NFTs?
Merging DeFi’s financial value with NFT’s collectible appeal—this could give birth to a new NFT issuance mechanism.
HOURAI
For every NFT holder, there’s a persistent dilemma: Is buying an NFT an investment or a collection?
When profitable, we call it a smart investment; when losing money, we console ourselves with "I own a cute picture"—Schrödinger’s NFT.
Is there a way to give NFTs tangible financial value beyond identity and art?
HOURAI provides the answer.
HOURAI is a PFP NFT project launched by crypto art enthusiasts from Studio Ghibli and Musashino Art University. Beyond artistic excellence and a rich fantasy backstory, iZUMi has built a value anchoring mechanism using veNFT, making HOURAI the industry’s first NFT metaverse project backed by DeFi derivatives.
Each HOURAI NFT can be redeemed for a veNFT containing $iZi tokens worth 0.2 ETH. Since the veNFT holds 0.2 ETH equivalent in value and the mint price for a whitelist spot is only 0.1 ETH, there’s no risk of the NFT floor price dropping below cost.
Example of a HOURAI NFT
Thanks to veNFT backing, HOURAI NFTs enjoy strong floor price support—iZUMi effectively insures the NFT launch.
HOURAI NFTs combine investment potential with collectible value.
This could become a new NFT issuance paradigm: using NFTs to lock token liquidity, while the token’s value in turn supports the NFT’s valuation—all while preserving the NFT’s identity and artistic merit.
HOURAI may be just the beginning. The iZUMi team stated,“iZUMi Finance is actively exploring collaborations with blue-chip projects to become the financial infrastructure for NFTs, empowering many more NFT ecosystems.”
Conclusion
Thanks to the extensibility of veNFT, veiZi from iZUMi Finance can serve as an efficient Lego component within the Uniswap V3 ecosystem, enabling developers to build new DeFi protocols atop iZUMi’s infrastructure.
At a time when NFT finance is still emerging, veiZi represents a bold step toward practical DeFi applications for NFTs. Its financial framework offers a viable path for PFP NFT projects to capture value—delivering both collectible appeal and DeFi-driven value accrual.
As a protocol rooted in traditional DeFi yet constantly evolving, iZUMi stands at the intersection of NFT and DeFi. Whether it can build a sustainable moat in this space remains to be seen—but certainly worth watching.
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