Liquidity mining
defi · incentives
Token rewards paid to users who supply liquidity to pools or protocols, usually to bootstrap market depth and usage.
- Also known as
- yield farming
Liquidity mining rewards users for depositing assets into liquidity pools, lending markets, or other protocol contracts. Rewards are usually paid in a project token in addition to ordinary fees or interest.
Liquidity mining can bootstrap depth quickly, but rewards may attract mercenary capital that leaves when emissions stop. Token inflation, smart contract risk, impermanent loss, and unclear APR calculations are common concerns.
Related terms
Decentralized Exchange
→A decentralized exchange (DEX) lets users trade digital assets from their wallets through smart contracts or peer-to-peer settlement.
trading · exchange · blockchain
Fair Launch
→A contested distribution label for projects that claim to avoid privileged pre-launch allocations or access.
token · distribution
Fungible Token
→A fungible token has interchangeable units, so each unit of the same token is equivalent for payment, accounting, or trading.
token · standard