What is liquid mining?
Revenue mining, also known as liquidity mining, is a way to generate rewards by locking or collateralizing the cryptocurrency in the revenue mining pool by cryptocurrency holders.
In order to receive rewards, cryptocurrency holders add funds to the liquidity pool, making them a liquidity provider, and get a return from the fees generated by the Defi platform operating the liquidity pool
Liquidity pool
Liquidity pool is just a simple smart contract, Defi platform users deposit their cryptocurrency funds to get rewards. The smart contract specifies the terms through which the user will be rewarded.
Once the terms or conditions are met, users will automatically receive rewards, which may be in the form of single or multiple tokens. Then, the tokens received as rewards can be used for other purposes, and can also be reinvested in the same pool or other pools to obtain more rewards.
Most liquid mining pools are based on the Ethereum blockchain and therefore use ERC-20 tokens. Therefore, rewards are also in the form of ERC tokens.
How liquidity mining works
As mentioned above, liquidity mining involves liquidity pools and liquidity providers, who are cryptocurrency holders using the Defi platform that operates liquidity pools. Liquidity providers (also known as miners or liquidity miners) provide funds for them by depositing cryptocurrency funds in a liquidity pool.
The liquidity pool then acts as a market where other users interested in the cryptocurrency funds in the liquidity pool can borrow or exchange tokens. As these other users lend or exchange tokens, the Defi platform will charge some fees.
Then, the fees charged by the Defi platform are distributed among the liquidity providers according to their contribution to the liquidity pool. Therefore, the more funds liquidity providers deposit into the liquidity pool, the more rewards they receive.
The algorithm for distributing funds earned through fees is placed in a smart contract. Once the conditions are met, the contract will automatically execute the contract.
In most cases, rewards are in the form of stable coins fixed to the U.S. dollar. The most common stable coins used for liquid mining include USDT and DAI. However, certain Defi protocols also provide a wide selection of tokens, including other ERC tokens such as ETH.
Common Liquidity
Mining Protocols To become a liquidity miner, you will need to join a liquidity mining pool. This is a Defi platform/protocol with a liquidity pool, where you can deposit or mortgage your cryptocurrency in exchange for a period Remuneration after time.
With the rapid development of the Defi ecosystem, many liquid mining pools with different functions have been developed to meet the needs of cryptocurrency holders.
Some of the most productive liquid mining platforms and protocols include:
1. KingSwap
2. Compound
3. MarkDao
4. Synthetix
5. Aave
6. Uniswap
7. Curve Finance
8. Yearn.finance
9. Balancer
KingSwap, Uniswap, Balancer and Curve Finance are all decentralized exchanges with the liquidity pool, where users (liquidity providers) can exchange trustless tokens.
However, the latest Kingswap has added features designed to provide user-friendly real-time revenue (rewards by contributor and price curve). In addition, in addition to providing non-standard legal currency conversion solutions, it is also registered in Singapore to provide users with greater convenience when conducting legal currency transactions, and vice versa.