What is the difference between liquidity mining and staking?

It is essential to note the differences between these two types of staking and compare the risks and rewards.

Liquidity mining: You are staking two or more different tokens into a liquidity pool with a decentralised exchange (DEX). You are creating the liquidity other users will use when swapping tokens. By providing liquidity, you already earn some network rewards. Liquidity mining gives a bonus reward depending on the pool. Your stake here is often not locked in a pool as you are at risk of impermanent loss.

(Single-Sided) Staking: You are staking a single asset, often in a staking pool that has a timer that restricts you from withdrawing the tokens until it is expired. The risks are relatively low in this type of staking. You will always get the exact number of tokens back (plus accumulated rewards) that you staked. You are not at risk of impermanent loss.

Did you find it helpful? Yes No

Send feedback
Sorry we couldn't be helpful. Help us improve this article with your feedback.