Liquidity mining is a process where users contribute their cryptocurrencies to liquidity pools on decentralized platforms and earn rewards in return. This strategy supports the trading infrastructure of DeFi applications and enhances overall market liquidity.
Participants in liquidity mining can benefit from earning a share of the fees generated by the pool, as well as additional incentive tokens.
While it offers attractive returns, liquidity mining also carries risks such as impermanent loss and market volatility.
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