Best Liquidity Mining Platforms in 2022 for Making Passive Income


The massive growth of DeFi applications and governance tokens will increase the demand for clear data aggregators and dashboards. The Proof-of-Work consensus algorithm successfully came to life with the introduction of Bitcoin in 2009. It is the algorithm that is used to confirm transactions and the creation of new blocks in a blockchain. Specialised devices, computers or graphic cards can be used to do calculations.

what is liquidity mining

As a result of the change in balance, the price of Eth will increase and the price in Dai will decrease. How much the price moves is dependant on the size of the trade in proportion to the pool’s size. A larger pool will experience a smaller price impact for each trade.

Liquidity mining

However, the LP tokens you earn from the liquidity pool will earn you Token B as a reward for your additional liquidity provision via the LP tokens. As a result, your Token A deposit allows you to earn twice as much money. This guide explains the key differences in yield farming vs. staking and helps you to decide which method is better among the passive income strategies. It uses the Bancor stable coin to address fluctuations in liquidity caused by the reliance of the native token on BNT.

They can use this control to create specific incentives for miners. In Bitcoin, the incentives are for miners to include as many transactions as they can and always mine on the tip of the chain. With Balancer, investors also can participate in decentralized trading in cryptocurrencies.

What is DeFi Liquidity Mining?

Other more sophisticated types of bonding curves exist, two of which stand out. One of them is an Augmented Bonding Curve which was introduced by the Commons Stack. Bob sees that the price has increased, and decides to cash in his token for a profit. Since the price is now at 3 ETH, what is liquidity mining Bob can deposit his token back in the curve and redeem 3 ETH, therefore pushing the point backwards along the curve and the price decreases to 2 ETH. The campaign is issuing 2,200,000 HOP every month (around 2.6% annualized) split across the ETH, USDC, DAI, and USDT bridges.

Operating independently of any bank, a cryptocurrency uses sophisticated mathematics to regulate the creation and transfer of funds between entities. For example, Height 0 would be the very first block, which is also called the genesis block. APY is short for ‘annual percentage yield’, which is the total return rate that is earned on an interest-bearing asset or savings account. The compounding interest should be taken into account when the APY percentage is projected. An APY of 5% will turn £100 into £105 after exactly one year.

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While we haven’t seen evidence of selfish mining in the wild, the risk that miners discover a better strategy that doesn’t benefit Bitcoin users always exists. The main advantage of investing in liquidity mining is that your return is proportional to the risk you take. It allows you to measure the trouble with your investments the way you want. This particular investment strategy is also easy to learn, making it ideal for beginners.

what is liquidity mining