# Liquidity Mining **Liquidity mining**, often referred to as yield farming, is a mechanism where liquidity providers earn token rewards in return for the liquidity they offer to the platform. Liquidity mining serves to create an additional revenue stream for liquidity providers, offsetting the potential for impermanent loss (IL). Furthermore, implementing liquidity mining also helps nascent platforms bootstrap initial liquidity, which attracts traders with less slippage. Onboarding more traders is essential as it leads to higher swap fees that are distributed to liquidity providers, generating higher returns on their deposits. Liquidity providers may engage in liquidity mining by staking their positions in a dedicated liquidity staking pool. It is important to note that a position can earn swap fees and staking rewards while **it is active**, meaning that the current price of the pool is within its price range. GnoSwap distributes liquidity staking rewards with [Warm-up Periods](/references/warm-up-periods.md), a reward distribution mechanism that applies a dynamic multiplier to each staked position based on its total duration staked in range. This mechanism is designed to encourage **long-term liquidity provision while offering flexibility** for those who often need to adjust their price range to remain active due to liquidity concentration. GnoSwap offers two types of liquidity mining incentives for its liquidity staking pools: #### 1) Internal Reward GnoSwap distributes newly minted $GNS tokens to incentivized pools on a per-block basis, with further details available in the [Emission](/gnoswap-token/emission.md) section. These incentivized pools are **categorized into three tiers** based on their importance to the platform, with **higher-tier pools receiving a greater share of internal GNS rewards** to ensure key liquidity is well-supported. The GnoSwap Governance will select these incentivized pools and determine their appropriate tier from among the pools that hold tokens essential to the GnoSwap platform. More details about the calculation logic can be found [here](https://github.com/gnoswap-labs/gnoswap/tree/main/contract/r/gnoswap/staker#internal-reward). #### 2) External Reward GnoSwap enables third-party projects to inject tokens as rewards to liquidity staking pools to incentivize liquidity providers. The incentive provider must specify the type of the token, its quantity, and a period for the staking contract to automatically distribute rewards to position stakers in a pool selected by the incentive provider. GnoSwap offers this functionality to help new, low-capital projects that lack credibility or reputation become an incentivized pool to bootstrap liquidity for growth. For more details, check out [this session](/user-guide/staking/add-incentives.md). --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.gnoswap.io/core-concepts/liquidity-mining.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.