An overview of what liquidity mining is in one article
With the rise of DeFi, people want to follow blockchain principles and change centralized exchanges, hoping to replace the "centralized link" with smart contracts to achieve a safer decentralized exchange (DEX) for trading. However, since there is no third-party market maker on DEX, the lack of order depth results in large spreads between users. At this point, the blockchain smart contract-based Automated Market Maker (AMM) mechanism develops a special pool of liquid assets, and this liquidity pool can then provide order depth to the DEX, thus ensuring the stability of trading.