As one of its first actions, the Hop DAO enacted a liquidity mining campaing to attract liquidity in the bridge AMM's.
Maintaining a high level of AMM liquidity is important for keeping bridging costs low and rates competitive. Higher AMM liquidity allows users to bridge large amounts with less slippage.
This is especially important for arbitrageurs. Bridge arbitrageurs make tight margins and need to offset their gas costs. Being able to transact in larger volumes with less slippage allows arbitrageurs to keep price differences across networks closer. Smaller price differences mean better rates for all users.
The campaign is issuing 2,200,000 HOP every month (around 2.6% annualized) split across the ETH, USDC, DAI, and USDT bridges.
The split is based on the % of total volume a given bridge AMM receives and can be adjusted by the Hop governance.