Let’s talk about liquidity mining.
In 2020, SushiSwap used SUSHI rewards to attract Uniswap liquidity providers to move their liquidity over. This practice is commonly known as a “vampire attack.”
One thing worth thinking about: the reward tokens come from new issuance. If most recipients sell them, the token price often comes under pressure, and the annualized return measured by token price falls as well.
When calculating mining returns, account for both impermanent loss and declines in the reward token’s price. Looking only at the annualized return shown on the page can easily lead to overestimating your gains.
$SUSHI is the SushiSwap token. SushiSwap got its start in 2020 through liquidity mining.
In 2020, SushiSwap used SUSHI rewards to attract Uniswap liquidity providers to move their liquidity over. This practice is commonly known as a “vampire attack.”
One thing worth thinking about: the reward tokens come from new issuance. If most recipients sell them, the token price often comes under pressure, and the annualized return measured by token price falls as well.
When calculating mining returns, account for both impermanent loss and declines in the reward token’s price. Looking only at the annualized return shown on the page can easily lead to overestimating your gains.
$SUSHI is the SushiSwap token. SushiSwap got its start in 2020 through liquidity mining.
