From the word 'MINING', someone might think of Blockchain mining for example in terms of #Bitcoin but no it doesn't involve block mining at all.
In fact it's a much more simpler process.
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DEFINITION:
Liquidity mining is an investment strategy in which participants within a DeFi protocol contribute their crypto assets to make it easy for others to trade within a platform.
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Liquidity Miners (Liquidity Providers) are incentivised to provide token pairs into a Liquidity pool.
When a transaction occurs in a liquidity pool, fees are charged.
The fees charged go to the Liquidity Providers.
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8. DEX - Decentralized Exchange: Unlike Centralized Exchanges, decisions are voted for by members of the network and transactions are public for everyone to see without an intermediary.
9. PoW - Proof of Work: This is a mechanism Bitcoin uses to regulate the creation of it's blocks and the state of the blockchain.
1. DAO - Decentralised Autonomous Organisation: This is a group of people with no central authority that vote to make decisions in a smart contract. They are also known as the Decentralized Autonomous Corporation. An example is MakerDAO.
2. AMM - Automated Market Makers: An automated Maker is a Decentralized Exchange protocol used in a Liquidity Pool that relies on mathematical formulas to price assets.
Stable coins from the word "Stable" are non volatile tokens that over time have been able to maintain their 1 to 1 peg to a Fiat currency like the US dollar.
- They can be easily traded on #Decentralized exchanges.
- They are used to participate in DeFi without the volatility.
- It makes it easier to transfer Fiat across border without worrying about Foreign Exchange policies.
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When we talk about #Bitcoin, we talk about a peer-to-peer system that allows people to send and receive money without any intermediary like the Bank or stock Exchanges.
But Financial services are more than sending and receiving, ain't that right?
That's where Defi comes in.
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DeFi not only allows transfer of money.
It allows for other financial services such borrowing, lending, fixed deposit, etc.
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