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

Mercenary capital is short-term, yield-chasing funds that artificially inflate TVL and leave when incentives end, risking a value collapse.
Greeks.Live17.11.25

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.

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