# What is Liquidity Mining?

![](/files/d54437XvqcIWzfCwLaHq)

Liquidity mining, also known as yield farming, involves providing liquidity to a Decentralized Exchange (DEX) by participating in liquidity pools (LPs). Users are rewarded with tokens, often the native or governance token of the protocol, for their participation. In the case of DFX, these tokens can be locked and used for voting (veDFX) and contributing to the protocol's future.

This practice is vital as it boosts liquidity, facilitating trades between various token pairs. By offering incentives, liquidity mining encourages users to contribute liquidity, thereby enabling smoother trading experiences. Most liquidity pools involve trading pairs where users can deposit two different cryptocurrencies.


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