When asked where the returns from liquidity mining come from, I usually answer like this: In 2020, SushiSwap used SUSHI rewards to encourage Uniswap liquidity providers to move their liquidity over. This practice is commonly known as a “vampire attack.” Funds attracted by rewards are usually very sensitive to annualized yields, and may leave quickly once the rewards are reduced.
$SUSHI 0.2225 (-4.87%)
Have you ever learned this the hard way? Share your experiences to help others avoid the same pitfalls.