What is Liquidity Mining?

Well, Crypto mining and liquidity mining are 2 totally different things!

Crypto mining requires you to have hardware, be it GPU's or ASICs to solve/validate computational problems with pay-outs being in the token you're validating, this is usually something like Bitcoin.

Liquidity mining on the other hand does not require any hardware, however, you will need to hold onto the coin pair that you would like to LM (Liquidity Mine). You will be lending assets to the exchange, in this case CAKEDEFI and in return, you get rewarded with Liquidity Mining rewards!

What's a Coin Pair?

When you want to LM, a coin pair is needed, so this could be something like BTC/DFI or even a decentralized asset such as DUSD-DFI.

DFI is the native token of the DefiChain, DUSD is the stablecoin of the DefiChain network. You will need to ensure both coins are paired on a 1:1 basis, or a 50:50 split in value.

Therefore in simple terms, if you would like to LM BTC/DFI, you would need a 1:1 ratio of BTC and DFI in terms of their asset value. Fret not, if you don't have enough of a certain pair, you can to the swap/trade within CAKEDEFI itself to top-up until the pair is sufficient.

You will be essentially providing liquidity to the pool which can be used for swaps in the orderbook to provide liquidity!

CakeDefi provides numerous mining pairs such as

LTC-DFI
BCH-DFI
USDT-DFI
USDC-DFI
BTC-DFI
ETH-DFI
DOGE-DFI

There are also pairs that are paired to an asset ( a decentralized asset). A few popular pairs are:

dGME-DUSD
dTSLA-DUSD
dGOOGL-DUSD
dAAPL-DUSD
dUSD-DFI

A more detailed explanation on decentralized assets can be found here

I personally provide liquidity for the DUSD-DFI pool as the DUSD is pegged to the price of the US Dollar, this means that the value of this pool is more dependent on the price of DFI as compared to DUSD which should remain at around $1 at all times. This however means I lose out on upside gains but protects me from any downside risk if things take a plunge!

This should not be taken as financial advice and always do your own research to see what is best for you!

Are there any risks?

Let's address the elephant in the room which is Impermanent loss!

This risk is due to the price fluctuation of any or both asset pairs which would mean that if you were to withdraw your assets from the pool, you could be at a loss. This is due to the huge price change. In the long run however, this risk is near non-existent! So take this as a short term risk, therefore, do not provide liquidity on funds that you may need to withdraw in the near future!

Next would be the most obvious risk which is just a rug-pull! This means that CakeDefi runs away with everyone's money and would mean game over for all of us!

However, this risk is small as well as CakeDefi is based in Singapore (Singapore is a hella strict country)! They are also operating under an exemption pursuant to the Payment Services (Exemption for Specified Period) Regulations 2019. This risk is something which you would need to assess and see if this company is worthy enough of them holding your funds!

How do I start?

First, you would need an account with CakeDefi of course, if you don't have an account, sign up using my referral link hereand you'll get $30 in DFI token free after you sign up and make a deposit of at least $50USD worth in any of their supported assets!

You would then need to decide on which pool to provide liquidity in, ensure that you have a near 50:50 allocation in both assets. For example, if I were to provide liquidity in the DUSD-DFI pool, I would need $200 worth of both tokens!

If you have insufficient tokens in either, simply click the SWAP button and swap the tokens out till you have a 50:50 allocation, after that, just click on ADD LIQUIDITY and you'll be able to start mining and getting the sweet cash-flow! As simple as that!

How much can I earn?

The amount you earn depends on how much capital you have. A rough gauge of my past 6 months of around $1000USD in the DUSD-DFI pool gives me around $2.50 a day or around $75 a month which is awesome as this is free money given to you be it the market activity. As DFI has been doing pretty well too given the red in the Crypto market, this also has given me higher gains!