What is liquidity mining


Liquidity mining is a concept from the world of cryptocurrency, which involves receiving passive income by investing in native tokens. These can be different currency pairs, the liquidity of which must be ensured on the selected platform. I propose to dwell on this topic in more detail and understand all aspects of this type of activity on cryptocurrency exchanges and various decentralized services.

The working principle of liquidity mining

First, let’s consider the very concept of “liquidity mining”. This is a process that involves investing one’s own funds in the stock exchange: from their amount, two different tokens are purchased in equal shares, the liquidity of which will be ensured. And here liquidity means the availability of funds in an exchange or a decentralized platform. Other users will see that there is a certain pool of coins, so transactions can be made freely.

Your purchased tokens will be locked for a certain time or until you decide to withdraw your profit and exchange coins if necessary. Most often, no other actions are required from you, as you simply invest your own funds, leaving them at the temporary disposal of the exchange. Instead, passive income is received – a reward for investments. They are usually paid in the form of interest for transactions carried out on this platform.

Schematic description of the concept of liquidity mining

From this, it follows that liquidity mining is the process of obtaining profit at the expense of one’s investments in the common pool of cryptocurrency on the exchange or other special sites where staking and other similar tools are available. At the same time, profitability from such an investment is guaranteed only in those cases, if we are talking about selected pairs in stablecoins, which is not always available. However, this will be discussed a little below.

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Where liquidity mining is used

I will start with the fact that liquidity mining tools are now available on almost all popular cryptocurrency exchanges, but with a small percentage, since there are quite a large number of liquidity providers, that is, investors. So, the more investors come to the project, the lower the percentage of the reward for all investors.

Therefore, new projects are becoming popular, in particular, those specializing in DeFi, i.e. decentralized finance. On such sites, the liquidity pool is not yet fully formed, and they are in great need of investors. If you are lucky enough to be one of the first, then you will receive huge profits based on months and years of liquidity mining. The more new people invest, the faster this percentage will fall.

However, this has its own risks, as new sites cannot always be trusted. In this case, I do not give any recommendations and do not advise you to invest your assets in questionable projects. Always approach this matter carefully and invest only those funds that you are not afraid to lose.

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Which cryptocurrency supports liquidity mining

Let’s try to answer the question from the title of this section of the article. Generally speaking, there are no restrictions, as any pair of tokens available on an exchange or DeFi platform can be chosen. This is the only “but” related to the fact that you can choose only the pair that is presented on the investment platform used.

If the exchange or DeFi site has its own token, it will definitely be possible to own it in combination with other cryptocurrencies. Popular coins and of course stablecoins are supported. In the latter case, the percentage of the reward will be minimal, since this type of passive income is stable and has practically no risks.

Choosing a cryptocurrency pair on the exchange for liquidity mining

In other cases, when it comes to bitcoin, ethereum, BNB and other popular coins, it is necessary to start from the fact that the price of the selected cryptocurrencies changes quite often and not always in a big way. There are risks of losing a percentage of your deposit due to price fluctuations, and as a result, the interest on the commission will only cover the losses or leave you in the red.

Always take into account the following features of passive income and approach wisely when choosing a cryptocurrency pair in which you want to invest your fiat money (rubles, dollars, etc.) or USDT (in any case, it is USDT that is most often established on exchanges and sites with the subsequent purchase of tokens for mining) liquidity in equal shares).

Where to do liquidity mining

Again, I’m not giving any financial advice, I’m just covering the topic by detailing how the tool works. Therefore, when choosing a site for liquidity mining, be guided only by information that you have learned on your own from official documentation or reviewed reviews of people you trust.

If you choose exchanges that have been operating for a long time or DeFi sites with a formed liquidity pool for most coins, the percentage of rewards in this case will not be so large, since there are quite a lot of investors. However, you can be sure that the exchange will not close tomorrow, and you will not lose your money. If you trust a particular site, such as Binance or ByBit, you can browse the available liquidity mining pairs and choose the one that suits you.

More profit is brought by new exchanges or special “swapalkas”, which are engaged in the exchange of unpopular cryptocurrencies. New projects always require deposits, so that when requesting transactions, the tokens are always in the account and users do not experience delays. In this case, the first investors always receive large percentages from liquidity mining. There are even special sites dedicated exclusively to liquidity mining and native token staking. They always optimize the process, allowing the investor not to perform unnecessary transactions.

An example of a decentralized liquidity mining platform

In general, there is somewhere to go for a walk in this regard. If you catch the moment and find a promising project in time, you can make quite a lot of profit in a short period of time just because you were one of the first to invest in liquidity mining and support the site.


From this article, you learned that liquidity mining is the passive earning of profits by investing in certain cryptocurrency pairs on various sites. Interest is paid for blocked funds and transactions performed at their expense by other users. The effectiveness of the tool depends directly on the selected site, coin pair and deposit amount.

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