izumi team first proposed and implemented a liquidity mining scheme "LiquidBox", based on Uniswap V3 NFT LP tokens. Unlike the traditional V2 fungible LP tokens that are directly staked for mining, when designing the liquidity mining incentive plan in LiquidBox, the protocol can clearly set the value range of the incentivized LP tokens.
And after users stake V3 LP tokens to izumi protocol, izumi's LiquidBox will automatically determine whether the value range of the LP tokens is within the liquidity incentive value range set by the project owner. If it is within the range, the LiquidBox will issue a liquidity mining token reward for the liquidity provider based on the incentive program.
Compared with Uniswap V2 only allowing LPs to provide liquidity in the full price range from 0 to infinity, Uniswap V3 allows LPs to be within a certain price range. LPs receive NFTs (Non-Fungible Token) after adding liquidity, and due to the non-fungible nature of the positions, fee earnings are stored separately and held as tokens in which the fees are paid.