Hasu & Kain Warwick: Diving Deep Into Liquidity Mining

Crypto is largely reliant on incentive mechanisms, and liquidity mining is one of the more recent cryptoeconomic incentive models to emerge. When decentralized exchanges need liquidity, they can leverage liquidity mining to incentivize users to provide it. In turn, the “miners” generate revenue, generally in the form of a native tokens, proportional to their share of liquidity in a pool. This summer saw a surge in activity surrounding this concept, with Synthetix a notable player.

Kain Warwick is the founder of Synthetix, a company creating synthetic assets for DeFi, enabling exposure to fiat currencies, commodities, and cryptocurrencies. Hasu is a crypto researcher and writer with a focus on game theory and economics. They joined us to explain the key concepts behind liquidity mining, how and why it was created, and its increasingly important role in DeFi.

Topics covered in this episode:

• Introductions by Kain and Hasu
• How and when liquidity mining was created
• What they hoped to achieve with their liquidity mining programs
• How liquidity mining works in Synthetix
• Incentive mechanisms
• Yield Farming and 'getting rich'
• How Automated Market Makers (AMM) played a part in the success of liquidity mining
• How Uniswap leverages liquidity mining
• Projects that don't currently have liquidity mining but would benefit from it
• Use cases in pre-blockchain systems

Episode links:

• Synthetix website
• Kain on Epicenter, Episode 325
• Uncommon Core
• Deribit Insights
• Synthetix on Twitter
• Kain on Twitter
• Hasu on Twitter

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This episode is hosted by Friederike Ernst & Sunny Aggarwal. Show notes and listening options: epicenter.tv/370