Liquidity mining is a popular investment strategy in decentralized finance (DeFi). The process involves locking crypto assets in a decentralized exchange or platform’s liquidity pool to earn yields.
Users can lend their cryptocurrencies to DeFi projects’ liquidity pools for rewards. These rewards could be generated from trading fees earned by the platform or paid in the respective platform’s governance tokens.
The reward-earning potential depends on the number of crypto assets lent to the liquidity pool and the lock-in period. Platforms that enjoy higher trading volumes offer higher yields for liquidity mining.
Liquidity mining is a low-risk and convenient way to profit for crypto investors. It is an effective strategy for HODLers who invest in crypto assets long-term.
