How does the liquid mining pool work?
You have probably heard that DeFi liquidity mining pools are a way to make money.
Indeed, many people join liquid mining pools because of their promised annual returns and large amounts of passive income. But most people don't know how liquid mining pools work, or even what liquid mining pools are?
In this article, we will give an overview of liquid mining pools, the working principles of liquid mining pools, the advantages of being a liquid mining pool provider and how to become a liquid pool. We will start our detailed introduction below!
What is a liquid mining pool?
Liquid mining pools are huge staking pools. They are a large number of tokens secured by smart contracts designed to accelerate asset transactions.
As sellers price their tokens higher and buyers require tokens to be traded at lower interest rates, liquidity mining pools will help both parties and create a smooth and effective trading platform for tokens.
DeFi liquidity mining pool providers use AMM (Automated Market Maker) to determine the ideal price of tokens and create a seamless trading environment. Therefore, the liquidity mining pool platform is essential for the trading of encrypted tokens. Examples include DAI-ETH, USDC-ETH, etc.
How does the liquid mining pool work?
The working method of the liquidity mining pool is that several liquidity providers purchase a fixed amount of locked tokens at a specified price. This provides liquidity for the platform, allowing it to start token trading.
Once the transaction starts, the DeFi liquidity mining pool platform charges a certain fee based on transactions and processing requests. This money is allocated to liquidity mining pools, which means that liquidity providers can get a return on investment.
The higher the liquidity in the mining pool, the more elastic the changes in the transaction price (slippage) of the token. This is how the entire system works. Of course, although a liquid mining pool platform can create sustainable income for you, there is always the risk of insufficient platform usage. Transaction fees may not be enough to repay your investment over a long period of time.
Become a liquidity mining pool provider
If you are willing to take a risk and become a liquid mining pool provider, you must find a promising liquid mining pool platform and purchase the required number of tokens in a smart contract!
The classic liquidity mining pool platform is KingSwap. KingSwap is a branch of UniSwap. It is a fully distributed financial protocol for the preparation of an automatic DeFi liquidity pool based on Ethereum. KingSwap's token is called $King. It provides 1 billion tokens in its liquid mining pool to ensure safety, with 10,000 tokens per excavated block and more than 100,000 blocks.
The best part is that KingSwap provides excellent mining pool rewards and network effects, making your investment more profitable over time.
in conclusion
The liquidity mining pool acts as a liquidity provider for most DeFi service transaction tokens. With this article, you have all the knowledge needed to master the liquidity pool and become a provider!