Crescent Docs

Liquid Farming

Description of Liquid Farming in Crescent

Tokenization of LP Farming Position

Liquid Farming liberates LP farming positions by tokenizing it, where that tokenized one is called LF coin. In other words, Pool coin can be tokenized as LF coin by Liquid Farming.
Tokenization Flow
When a farmer provides liquidity to a pool and gets rewards via farming, the farmer’s liquidity as pool coins is locked in the farming module as staking of the pool coins. Due to this lock of the pool coins in order to get the farming rewards, the farmer’s liquidity of the pool coins cannot be utilized in other DeFi products. In this regards, getting the farming rewards and utilizing the farmer’s liquidity cannot be satisfied simultaneously so far.
In order to resolve this necessity, Crescent introduces a new feature called liquid farming. This is for the farmers to utilize their liquidity, which is provided for a pool.
Difference between Farming and Liquid Farming

Auto-Compound Rewards

More than that, Liquid Farming provides auto-compounding of the rewards by going through an auction process, which results in the exchange of the farming rewards coin(s) into the pool coin. Due to the existence of uncertainty of rewards auction, there can be a risk to underestimate the rewards as pool coins, e.g., the case that all bidders to the auction place bids with lower bidding price. However, when Liquid Farming is settled down and multiple bidders participate the rewards auction, the rewards would be exchanged in a proper price thanks to the market competition.