In the wake of the COVID-19 pandemic and the substantial financial and economic hardships, investors are exploring alternative sources of income to supplement their earnings. Perhaps, as an investor or an aspiring investor, you are wondering how you, too, can improve your income.

Well, the crypto market has a viable and lucrative opportunity for you to earn passive income! You can now invest in liquidity mining and reap optimum financial benefits in terms of rewards. In this article, we delve into the concept of liquidity mining, its benefits in the crypto market, and its enormous potential in improving your passive income. Ideally, this article enlightens you on how to start trading in liquidity mining and earn additional income through a reward system.

Liquidity mining, also called yield farming, involves a process where cryptocurrency holders can earn rewards on their holdings/deposits. Liquidity providers deposit their cryptocurrencies in decentralized exchanges (DEXs) to earn interest from trading fees. In essence, DEXs rewards traders who invest their funds/capital with their platform.

In liquidity mining, a liquidity provider deposits their funds in a liquidity pool, a smart contract with cash that drives the decentralized finance (DeFi) market. DeFi product users who put assets into the liquidity pool earn tokens in addition to the expected yield. Here, trading is regulated by a smart contract known as an Automatic Market Marker; thus, ensuring the process is decentralized. Ideally, traders effectively transact with each other and without the need for conventional order books.

FLy eco liquidity mining program

VRM and FLy ecosystem, for instance, gives you an avenue where you can deposit your liquidity provider tokens in a liquidity pool and receive rewards in terms of Fly tokens.  Under the VRM ecosystem, FLy token holders add liquidity and receive liquidity pool tokens, which they stake into farming. In return, they receive a percentage of the liquidity pool. Moreover, customers also receive additional funds in the farming pool, distributed evenly depending on the number of participants in the pool. The participants receive such rewards in FLy tokens. Fly eco provides an opportunity for farming in both the ETH and BSC networks. FLy liquidity pool is open for one month, with an estimated 150 000 FLy tokens.

VRM ecosystems provide traders with a broad array of benefits attributed to the Fly tokens. For instance, as a Fly token holder, you enjoy the discounted trading fees and additional rebates and benefit from the opportunities provided by the FLy ecosystems. Such solutions include liquidity mining opportunities, staking, trading signals for manual and API trading, launchpad, and more to come.

Once you deposit your liquidity provider tokens from Uniswap (UNI-V3), you will receive Fly tokens. Liquidity provider tokens are locked up for a specified period. Other users (token swappers) can access the funds for different trading purposes such as lending, exchange, or general-purpose for interests. Under the liquidity mining protocol, the token swappers pay a specified fee to use the locked funds, a percentage of which goes to the liquidity provider based on the number of their embedded LP tokens.

The benefits you receive as a liquidity provider in terms of return on investment varies from one platform to the other. FLy ECO offer for the liquidity providers, Fly token holders, and miners favorable terms, including good and sustainable projects with high APY. Our platform ensures deep liquidity, including institutional and retail liquidity providers globally, without market influence.

Risks

While liquidity mining exhibits myriad advantages to investors, it is not devoid of risks, as discussed herein. The risks range from large capital requirements, impermanent loss risks to smart contract risks. For instance, liquidity mining is capital-intensive and requires large amounts of funds to trade.

Much of the cost is associated with the Ethereum network, especially the gas fees. On the other hand, impermanent loss risk may emanate from sharp fluctuations in the crypto market trend. Unfortunately, the AMM does not update the prices of tokens when such sharp changes in market trends occur. Although the smart contract is safer, cheaper to transact, and eliminates intermediaries, they are prone to attacks, especially from vectors and bugs, targeting the paperless digital code.

Prospects of liquidity mining

Liquidity mining has significant growth potential in the crypto market because it uses investors’ funds to create liquidity. Nonetheless, it has a fair share of challenges. Key among these shortcomings is the use of Ethereum blockchain, which has a weakness of scalability. As investors hope to stabilize the platform, other blockchain platforms such as Polkadot and Solana have developed more attractive features to the DeFi platforms.

As an investor, you should not be left behind as the world is shifting attention from traditional trading to the cryptocurrency space. Perhaps the time is quite suitable for you to consider investing in liquidity mining to enjoy the myriad benefits highlighted herein.

We hope that you’ve found this article easy to follow and useful. If you have any further questions or want to learn more about our native FLy token, feel free to join our official Telegram Global community channel. Don’t miss our news and new products launching – join FLy and BO Newsletter.

At VRM Research, we provide regular investment analysis of the cryptocurrency markets in cooperation with our trading department. Check it out, and don’t miss the newest trends and developments in the crypto space.