# Liquidity Provision **What is liquidity mining?** Liquidity mining is an incentive system that rewards liquidity providers with additional tokens in return for depositing their liquid assets into a liquidity pool. **What is a liquidity pool?** Liquidity pools are pools of crypto assets that a decentralised exchange uses to facilitate any buy or sell orders that appear. This automated market-making mechanism allows decentralised exchanges to replace centralized market makers with decentralised liquidity providers. Assets in these pools are provided by ‘liquidity providers’, who deposit their liquid assets in order to earn yield from transaction fees charged to users who place buy or sell orders for assets in the pool. This is similar to how market makers profit by providing liquidity to centralized exchanges. However, in this case, the yield is divided among all of the liquidity providers in proportion to the liquidity provided by each pool participant. **Why does Sumero incentivise liquidity provision with additional Clay tokens?** In order to incentivise sufficient liquidity Sumero offers an additional incentive, in the form of Clay tokens, to reward early users who stake their USDC-CLAY LP tokens using the Sumero protocol. For step-by-step instructions on how to acquire and stake USDC-CLAY LP tokens, please see the [Staking LP Tokens](https://app.gitbook.com/o/-MW51XU_Xc09gaDokQ3D/s/-MUsP4_4YsnVEyBaKfGx/~/changes/EKqDDT0ZDopp5BzvBA7k/using-sumero/staking/staking-lp-tokens) page. **How are Clay rewards distributed?** Clay rewards are distributed to users in proportion to both the amount of capital committed and the length of time it is committed. **How can I earn Clay rewards?** Sumero users can earn Clay rewards in two ways: * Buy a cSynth and deposit it into a liquidity pool with USDC. * Mint a cSynth by staking Ether (ETH) or USDC and deposit this cSynth in a liquidity pool with USDC. * Buy Clay and stake it in the bonds contract. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.sumero.finance/frequently-asked-questions/faq-sections/liquidity-provision.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.