What Is "Mercenary Capital" in the Context of DeFi and TVL? ⎊ Path

What Is “Mercenary Capital” in the Context of DeFi and TVL?

Mercenary capital refers to short-term, yield-chasing funds that flow into a DeFi protocol solely for high, temporary liquidity mining rewards or high APYs. These funds are not sticky and will leave immediately once a better yield opportunity appears elsewhere.

This capital artificially inflates the TVL, making the protocol appear more successful than it is. The risk is that the TVL will collapse when incentives end, leading to a sudden drop in token value.

How Does the Token’s Emission Schedule Distort the MC/TVL Ratio?

What Is the Concept of “Wash Trading” and How Does It Affect NFT Valuation?

How Can a Protocol Artificially Inflate Its TVL without a Corresponding Increase in Utility?

How Do “Liquidity Mining” Incentives Affect the Stability of a Lending Protocol?

How Does a Protocol’s Total Value Locked (TVL) Relate to Its Projected Cash Flows?

How Does Wash Trading Specifically Inflate the Perceived Liquidity of an Asset?

Can Wash Trading Artificially Inflate the Price Discovery Mechanism in a Cash-Settled Crypto Future?

How Does Wash Trading Artificially Inflate Trading Volume?