DeFiIntermediate

Liquidity mining

Distributing token incentives to participants who provide liquidity or perform qualifying protocol activities.

PLAIN-ENGLISH DEFINITION

In more detail

Liquidity mining rewards a qualifying activity with tokens, often to encourage participation in a protocol. Those incentives are separate from fees earned from actual use. A high reward rate can change when the program ends or the reward token's price moves, so it doesn't by itself show sustainable revenue from the underlying activity.

IN THE WILD

How you might use it

A pool pays trading fees and a temporary reward token incentive; you track the two separately as the liquidity-mining program approaches its end.

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By Crypto Dictionary · Published · Updated

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An original explanation with a reference to follow. Protocol details and community usage can evolve. Sources & standards

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