DeFi on Hive came to life through TribalDex solution which enabled Liquidity Pools across a diversity of cryptocurrencies from within this ecosystem or from other blockchains. While the current solution is not acting as a truly decentralized exchange, for sure it brings market makers to this ecosystem. And with ongoing changes and features that were added in time, Liquidity Providers have multiple ways to earn by participating in the existing markets or creating new ones.
So let's see what are the ways that a Liquidity Provider can earn on Hive blockchain. The first way which was just introduced (and you can read more on Fee Structure Changes Coming to Hive-Engine) and which is an industry-standard is through Transaction fees. At this moment 100% of the fees will go to the liquidity providers, while in the future there might be explored that a portion of that to go to BEE token holders, but this seems not to be the next priority.
Another way that Liquidity Providers are incentives is through the LP rewards themselves. Some pools don't have such rewards, but most of them do in order to be appealing to users and reach enough depth to have a smaller gap between buying and selling orders. And the LP rewards are quite considerable, some of them reaching an average APR of 200% - 300% or even more in exceptional cases. I think users are still discovering the DeFi on Hive and this is why some of the pools have great returns.
The third way that Liquidity Providers earn more is through their continuous participation in the pool which is rewarded with a Daily bonus which is somewhere in between 1% - 5% from what I observed. This makes LPs participation increase over time without adding any more liquidity in the pool and being rewarded for an increased share.
Overall I think that the current DeFi solution on Hive blockchain is pretty good and it has various ways to incentivize Liquidity Providers. Being in this ecosystem ensures a passive earning by participating in a pool while benefiting the entire blockchain through increasing the liquidity and being more convenient to exchange between tokens.