invezz.com
With many believing that liquidity mining is obsolete and attempting to replace it with alternative DeFi farming techniques, Bybit has returned with a bang.
Bybit, the fourth-largest cryptocurrency derivatives exchange by trading volume, introduced its new liquidity mining pool on 19 May.
With the release of the new liquidity mining pool, Bybit users will be able to deposit funds and earn up to a 30% annual percentage yield (APY) on their holdings. Users can choose from three distinct liquidity pools: Bitcoin (BTC), Ethereum (ETH), and BitDAO (BIT), all of which are paired to Tether (USDT).
Bybit utilises an automated market maker (AMM), which results in immediate liquidity. In addition, there is the prospect of getting more rewards via a leverage system that offers up to a 3x multiplier.
Automated market makers are a component employed by exchanges developed to eliminate all middlemen from trading crypto assets. AMM may be seen as computer software that automates the process of supplying liquidity, hence making transactions less expensive and more efficient.
Bybit added a further incentive to the situation by allowing liquidity providers (LPs) to provide one or both sides of the liquidity pair in all 160 countries where it operates. The pool will automatically rebalance the assets to limit the possibility of a sudden loss.
In addition, LPs will receive USDT incentives, which may be placed into their accounts or reinvested in the pool to increase rewards.
The future of liquidity mining
Liquidity mining was the primary reason behind the “DeFi Summer” euphoria in 2020.
DeFi Summer marked the beginning of the DeFi revolution, during which the total value of DeFi smart contracts soared from a few hundred million to billions of dollars in a couple of months.
Meanwhile, liquidity mining refers to users giving liquidity to the platform, such as by pledging stablecoin or valuable tokens and then engaging in trading, lending, and borrowing on the platform.
Currently, liquidity mining seems to have run out of steam, and numerous cryptocurrency sub-industries are eager to discover alternatives.
Moreover, considering the present status of the global cryptocurrency industry and the DeFi sector, in particular, the situation is bleak.
According to DeFiLIama, the total values locked (TVL) in DeFI protocols plummeted from $231.75bn on 5 April to $111.03bn at the time of writing (20 May), a drop of approximately 52%.
Bybit’s establishment of a new liquidity pool may function as a game-changer by providing the much-needed impetus to the reemergence of DeFi’s golden age.