Liquidity Mining

Liquidity mining is a decentralized finance (DeFi) process where users provide liquidity to decentralized exchanges (DEXs) in exchange for rewards, often in the form of native platform tokens. Liquidity providers (LPs) contribute cryptocurrency pairs to a liquidity pool, and in return, they earn fees from trades that occur in that pool, as well as additional tokens as an incentive. Liquidity mining is a popular method for DeFi projects to attract liquidity and incentivize user participation. However, participants should be aware of risks such as impermanent loss, where the value of provided assets may fluctuate unfavorably compared to simply holding them.