Liquidity mining can be much more than just a risky way of passively making money on crypto capital. - web3 web3ecosystems
Liquidity mining can be much more than a risky way of passively making money. Here is how it can be reshaped to bring more value and stability to the entire crypto market.Of course, this clickbait statement is too far from reality: the death of liquidity mining would mean the inevitable end of the whole DeFi sector.
Then if we go more granular and group the crypto liquidity into CEX and DEX categories, here is what we'd have:except for the “blue chips,” liquidity is often thin or even faked, which inevitably incurs the risk of higher slippage. For that, liquidity providers participate in the distribution of trading fees, can stake protocol tokens, and get various extra rewards set forth by a particular liquidity mining program.To understand more comprehensively what liquidity mining is, we should look at why it was actually invented.
for automated P2P digital asset trading. It is the fundamental carrier of DeFi. There is no DeFi without liquidity mining. When liquidity is supplied to a pool, a liquidity provider gets a protocol’s tokens in proportion to how much liquidity they deposited to the pool. Some protocols allow for staking LP tokens while the liquidity is locked up in the contract.
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