Liquidity mining pools allow crypto holders to earn passive income by providing liquidity to decentralized exchanges (DEXs) and other DeFi protocols.
When you deposit assets into a liquidity pool, you receive liquidity provider (LP) tokens representing your share of the pool. You earn trading fees from swaps in the pool, plus often additional token rewards from liquidity mining programs.
Top protocols offer APYs ranging from 5% to over 100% for providing liquidity to their pools, making this one of the most popular ways to earn in DeFi.
Uniswap V3 - Ethereum Mainnet
Curve Finance - Ethereum
Connect your Web3 wallet like MetaMask, Phantom, or WalletConnect to the DeFi platform.
Choose a liquidity pool based on your preferred assets, risk tolerance, and potential rewards.
Provide equal value of both assets in the trading pair to the liquidity pool.
Start earning trading fees and liquidity mining rewards proportional to your share of the pool.
Providing liquidity for stablecoin pairs (like USDC/USDT) minimizes impermanent loss since the assets maintain a 1:1 ratio. While APYs are typically lower (2-10%), this is considered one of the safest liquidity mining strategies.
Best for: Risk-averse investors looking for steady returns with minimal volatility.
Pairs like ETH/BTC or ETH/USDC offer moderate APYs (10-30%) with relatively lower risk since both assets are established cryptocurrencies. Impermanent loss is still a factor but less severe than with more volatile pairs.
Best for: Investors comfortable with some market exposure who want balanced risk/reward.
Many new DeFi projects offer extremely high APYs (50-500%) to bootstrap liquidity. While rewards can be substantial, these carry higher risk of impermanent loss and potential project failure.
Best for: Experienced DeFi users who can actively monitor positions and exit early if needed.
Advanced strategy (available on Uniswap V3) where you provide liquidity within specific price ranges. Can generate higher returns but requires active management and deeper understanding of market dynamics.
Best for: Sophisticated users willing to actively manage positions for optimal returns.
Join thousands of liquidity providers earning passive income across multiple blockchains.