Liquidity Mining
Earning token rewards by providing liquidity to a DeFi protocol.
In-Depth Explanation
Liquidity mining (yield farming) incentivizes users to deposit assets by rewarding them with protocol tokens. It bootstraps liquidity but often attracts mercenary capital that leaves when rewards decrease. Successful programs convert subsidized users into long-term participants.
Related Terms
Emissions
New tokens distributed by a protocol as incentives, typically to liquidity providers or users.
Total Value Locked
TVLThe total value of crypto assets deposited in a DeFi protocol or across all of DeFi.
Mercenary Capital
Capital that moves between protocols purely to chase the highest incentives, with no loyalty or long-term commitment.
Annual Percentage Yield
APYThe annualized return on an investment accounting for compound interest.
More in Tokenomics
View all →Emissions
New tokens distributed by a protocol as incentives, typically to liquidity providers or users.
Token Buyback
When a protocol uses revenue to purchase its own token from the open market, reducing circulating supply.
Dividend
Direct distribution of protocol revenue to tokenholders, typically in ETH, stablecoins, or the protocol's native token.
Vesting
A schedule that gradually releases tokens to recipients over time, preventing immediate selling.