DeFi liquidity mining is the process of earning rewards by providing liquidity to decentralized finance (DeFi) protocols. Liquidity providers deposit their cryptocurrency into liquidity pools, which are used to facilitate trading. In return, liquidity providers earn a portion of the trading fees generated by the pool.
Liquidity mining is a relatively new concept, but it has quickly become one of the most popular ways to earn passive income in the DeFi space. This is because DeFi liquidity mining offers a number of advantages, including:
High APYs: Liquidity mining pools often offer very high annual percentage yields (APYs). This is because DeFi protocols are competing with each other to attract liquidity. Low barrier to entry: Liquidity mining is accessible to everyone, regardless of the size of their investment. Flexibility: Liquidity providers can withdraw their funds from liquidity pools at any time.