A decentralized exchange is only as healthy as it is liquid, and maintaining the long-term health of the SundaeSwap DEX is a top priority. Because the development team chose an AMM (Automated Market Maker) model, the DEX is able to use yield farming to incentivize and reward stability in its liquidity pools.

This article outlines how yield farming will work on the SundaeSwap DEX. To understand yield farming, we’ll start by explaining liquidity pools. Then we’ll describe staking briefly, and finally put all of this together into SundaeSwap’s yield farming process. If you’re already familiar with the process of becoming a liquidity provider, you can probably skip to the “How it will work” section.

Before we dive into the rest of this section, a reminder that using any DEX involves various significant risks, including the risk of financial loss; before using any DEX you should closely review all relevant documentation and audit information, and the terms of any web or mobile interface you use to access the DEX.