Liquidity mining is a DeFi strategy where users provide tokens to a liquidity pool on a decentralized exchange (DEX) and earn rewards in the form of trading fees or additional tokens. It can be a powerful way to earn passive income, but also comes with risks like impermanent loss.
It involves supplying crypto assets to a DEX liquidity pool and earning rewards.
Staking secures a network, liquidity mining supports trading by supplying liquidity.
Uniswap, PancakeSwap, SushiSwap, Curve, and Balancer.
Usually token pairs like ETH/USDC, BNB/BUSD, etc.
Connect your wallet to a DEX, choose a pool, deposit token pairs.
They represent your share in a liquidity pool and earn rewards.
Yes—especially due to impermanent loss and market volatility.
It occurs when the price ratio of tokens in the pool changes over time.
In trading fees, governance tokens, or platform-specific rewards.
Yes—in most countries, earnings are considered taxable income.
It varies—APYs can range from 5% to over 200% depending on the pool.
Use major DEXes with high volume and avoid high-risk meme tokens.
Yes—your funds are non-custodial and can be withdrawn at any time.
No—most DEX platforms are non-custodial and anonymous.
Network transaction fees paid to process your deposits/withdrawals.
Somewhat—but users should understand DEX and token mechanics first.
A broader term that includes liquidity mining, staking, lending, etc.
Yes—pairing stablecoins can reduce price volatility risks.
Legal in most countries but always check your local regulations.
Yes—many DEXes support MetaMask, Trust Wallet, or WalletConnect.