How Do DEXs Ensure Sufficient Liquidity for Trading Complex Financial Derivatives?

DEXs incentivize users to provide liquidity through a process called liquidity mining or yield farming. Users who deposit their assets into a liquidity pool for a derivative market are rewarded with a share of the trading fees generated by that pool, as well as additional governance tokens from the protocol.

This creates a powerful economic incentive for individuals to supply the necessary liquidity for the market to function efficiently. Some DEXs also partner with professional market makers to bootstrap liquidity for new or complex derivative products.