How Does the Concept of “Liquidity Mining” Aim to Reduce Slippage on DEXs?

Liquidity mining is a mechanism where a DeFi protocol rewards users with native tokens for providing liquidity to the platform's pools. This incentivizes a greater supply of assets in the pools, which increases the pool's depth.

Greater depth means a larger trade will have a smaller price impact (less slippage) as the price curve is flatter due to the larger reserve of tokens.