Liquidity mining: a new way to earn inside the Noah ecosystem
We are launching our liquidity mining program and making it available to all NOAHP and QDAO coin holders. The program will incentivize users to stake their assets in liquidity pools. In this article, we will explain what liquidity mining is and how it works.
Projects in the DeFi environment widely use liquidity pools and mining to attract new users and ensure the stability of their ecosystem. They are ready to reward liquidity providers with fees and additional incentives on top of these earnings. But why is liquidity so important for DeFi?
What is Liquidity?
Let’s answer first what liquidity is. Liquidity is the ability to buy/sell a crypto asset without causing major fluctuations in its rate. For example, one market participant can sell 100 BTC and not affect the Bitcoin price in any way. To visualize liquidity, imagine an ocean; if you scoop out one glass, no one will notice.
What is a Liquidity Pool?
A liquidity pool is similar to storage where market participants put their crypto assets together in order to provide liquidity supply for everyone who wants to exchange/trade/buy/sell a specific asset. In the traditional financial system, such pools are large banks that manage the funds of a large number of depositors and can even “print” additional money.
A crypto liquidity pool is a stock of tokens that is locked in a special smart contract. The tokens are used to facilitate trading and are heavily used by decentralized exchanges (DEX).
Liquidity pools are created for pairs of assets, for example, USDT-ETH. As a rule, such a pool will be filled with both assets in a 50/50 ratio and will ensure the stability of trading operations between USDT and ETH. To become a liquidity provider, it will not be enough to add only USDT or only ETH; you must deposit assets in an equal ratio. After you lock cryptocurrencies in a smart contract, you will receive liquidity tokens that indicate your share of the pool. Now, you are a liquidity provider (LP) and this is where liquidity mining starts!
What is Liquidity Mining?
Liquidity Mining (a.k.a. Yield Farming) is a process whereby users provide liquidity to DEXes by participating in their pools. In other words, when you lock your crypto assets in a smart contract and they flow into the liquidity pool – you become a liquidity miner.
DEXes incentivize LP’s with a share of the pool’s fees. Every time a user interacts with a liquidity pool, they pay some fee. This fee is distributed among all liquidity providers. Plus, decentralized exchanges look to offer some additional profits to lure in liquidity providers, so DEXes give native tokens on top of a share of the fees as a reward.
Becoming a liquidity provider is a good way to establish your very own source of passive income. Judge for yourself, by becoming an LP:
- You help a platform to be more stable and consistent
- You earn income from fees as a liquidity provider
- You get additional incentives in the form of the platform’s native tokens
Please, read this article if you want to learn more about liquidity mining, it’s very useful.
NOAHP and QDAO pools
We have already created liquidity pools on two decentralized exchanges – Balancer and Uniswap. You can participate and earn. We will add detailed tutorials soon, to make everything clear to you.
Balancer is an automated market-maker, decentralized exchange and liquidity pool protocol built on Ethereum that allows users to provide liquidity for multiple assets simultaneously.
Uniswap is a decentralized exchange (DEX) protocol running on the Ethereum blockchain that allows traders to trade ERC-20 tokens directly from their wallets.
As the Noah ecosystem’s developers, we try to provide our community with as many profit-making opportunities as possible. That’s why we’re launching the liquidity mining (yield farming) program. You can use NOAHP and QDAO coins to make passive income and receive more coins as incentives. This is a great way to make the Noah ecosystem more stable, popular and attractive to users worldwide!
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