Incentivizing liquidity with any rewards other than a regular interest rate.
Many DeFi protocols need high liquidity to streamline the services that their technology enables. An AMM needs liquid coin pairs for users to be able to swap tokens efficiently. A lending protocol need liquidity for users to be able to borrow assets. Usually the more liquidity the better and the more streamlined the user experience is.
As liquidity is a limited resource and in DeFi highly mobile the different protocols are in competition to each other for the available liquidity. A very widespread approach is to incentivize liquidity providers to choose a specific protocol is to reward liquidity provision or usage of said protocol with the protocol’s governance token.