Liquidity Mining
Liquidity mining is when a protocol pays extra token rewards to people who deposit liquidity — bootstrapping its markets by printing ownership to early pro
Liquidity mining is when a protocol pays extra token rewards to people who deposit liquidity — bootstrapping its markets by printing ownership to early providers. It launched DeFi Summer: deposit stablecoins, earn trading fees *plus* a stream of governance tokens.
Why it matters
Liquidity mining works brilliantly to bootstrap — and terribly as a permanent model, since rewards paid in the protocol’s own inflating token dilute toward zero. When evaluating any “high APY farm,” separate the sustainable fee yield from the mercenary mining emissions.