Liquidity mining
Liquidity mining is the distribution of tokens to users who provide liquidity to pools or protocols, bootstrapping depth and usage.
Protocols incentivize LPs with token rewards on top of trading fees, improving depth and attracting users. Programs may be temporary, targeted, or ongoing.
"A DEX issues governance tokens to LPs of key pairs to strengthen markets during launch."
"Dual incentives combine project and partner tokens to amplify rewards."
Rewards can cause mercenary liquidity that leaves when incentives end, and emissions can dilute token value. Careful design aligns long-term participation with protocol health.
"Vesting or lockups reduce immediate sell pressure and encourage durable liquidity."
"Dynamic rewards can target pools with poor depth to improve UX across the platform."
Related Terms
Decentralized Exchange
→A decentralized exchange (DEX) is a platform that allows users to trade digital assets directly with each other, without the need for an intermediary, such as a brokerage or bank.
Fair Launch
→A token or project distribution with no insider allocations, private sales, or pre-mines—everyone can participate equally from the start.
Fungible Token
→A token where each unit is interchangeable with any other unit of the same type, like currency.
All terms and definitions may update as the Cryptionary improves.
