Liquidity mining emerged as a core growth mechanism in DeFi around 2020 when protocols needed to rapidly accumulate liquidity without traditional venture capital constraints. Instead of paying market makers with stablecoins, protocols distribute their own tokens as mining rewards, creating alignment between user incentives and protocol success. A liquidity provider deposits token pairs into an automated market maker (AMM) or lending protocol, earns trading fees, and receives additional token rewards based on their share of total pooled liquidity and the duration of participation. The mechanics of liquidity mining create both opportunity and risk. Protocols design emission schedules specifying how many tokens are distributed per block or per epoch, typically concentrated in early periods to accelerate adoption. High initial emissions attract capital quickly—a protocol can accumulate millions in liquidity within weeks. However, mining rewards represent new token supply, diluting existing holders unless offset by genuine token demand. The critical variable is whether mining attracts users who remain after rewards decline, or merely mercenary capital that withdraws as soon as emissions taper. Liquidity mining supply dynamics have profound long-term effects on token price. When emissions are front-loaded and substantial, sell pressure accelerates as miners liquidate rewards to recover capital or realize profits. Successful protocols (Uniswap, Aave) structured emissions to decline over time while building genuine utility that justifies holdings after mining ends. Failed protocols faced coordinated miner exits once rewards became insufficient relative to trading volume, leaving liquidity depleted and prices collapsed.