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Re: Should we be able to post about liquidity mining here?
by
ETFbitcoin
on 27/07/2021, 08:43:53 UTC
Should Liquidity mining be acceptable to post about here?

No, even reference mentioned by you emphasize there's no actual mining involved. It's more accurate to say you're investing on currency exchange/FX and lending service.

Generally, most Defi protocols earn revenue from 2 main sources:
Source 1: Trading fees – Some users will want to swap one token for another on a decentralized exchange protocol (e.g., UniSwap). The protocol takes a fee (~0.3%) but gives most of it (~0.25%) to users who loan tokens (i.e., provide liquidity) to the protocol, which is needed to enable trading.
Source 2: Borrow interest – Some users will want to borrow tokens on a borrow/lend protocol (e.g., Aave), generally to leverage up their trading positions. The protocol will charge borrowers an interest, keep some of the interest for themselves, but give most of it to users who loan tokens (i.e., provide liquidity) to the protocol, which is needed to enable the loans.