Mercenary Capital in Crypto: The Role of Temporary Funds
Mercenary Capital is opportunistic capital provided by investors seeking to take advantage of short-term incentive programs run by the platform for personal gain.
What is Mercenary Capital?
Mercenary Capital is opportunistic capital provided by investors seeking to take advantage of short-term incentive programs run by the platform for personal gain. It is often short-lived or temporary, as such investors often withdraw their capital as soon as they find more profitable programs or when the rewards provided become less desirable.
Rewards are often provided in the form of management or the platform’s own tokens) if LPs choose to bid on or lock in LP tokens. Such rewards vary widely depending on the projects decision, but historically they have been attractive enough to interest more investors.
However, platforms implementing such programs are also vulnerable to raising capital, even with blockchain terms. Especially if the programs provide excessive short-term rewards that benefit opportunists rather than community members and long-term investors.
All platforms that use growth hacking software encounter this problem sooner or later, but it can have a negative impact on the long-term development of the platform. Measures such as longer periods of betting on blockchain to get more rewards can be used, but working with hired capital ultimately comes down to a combination of good tokenomics, great products, and strong community trust.