Mercenary Liquidity

Crypto isn’t just about technology. It’s about incentives, human psychology, and the brutal game of capital flows. Every bull run and bust isn’t just a story of innovation—it’s a game of liquidity, speculation, and exit strategies. And at the center of it all?

⚔️ Mercenary Liquidity ⚔️

This isn’t a term you’ll see VCs, founders, or influencers throwing around in their Twitter threads (X posts? Whatever). But if you’ve been in the trenches of crypto long enough, you know exactly what it is:

Money that shows up for the incentives, rides the hype, and exits before the real damage starts.

This is the force that pumped your favorite altcoin to 50x… and then rugged it into the abyss. It’s what made DeFi Summer so euphoric and so painful. It’s why every new blockchain launch attracts billions in TVL (total value locked), only to see it evaporate months later.

And understanding how it works is how you stay ahead of the game.

A History of Pumping & Dumping Liquidity

Mercenary liquidity isn’t new. It’s been playing the same game since Bitcoin was just a cypherpunk experiment. Let’s take a walk down memory lane.

1. The 2017 ICO Boom – Free Money & Disappearing Devs

In 2017, Initial Coin Offerings (ICOs) turned whitepapers into billion-dollar “projects.” Ethereum’s ERC-20 standard made launching a token easy, and mercenary liquidity followed the easy money.

• Retail investors FOMO’d into tokens based on nothing but a website and a roadmap.

• VCs and insiders got pre-sale allocations at absurd discounts (sometimes 100x lower than public prices).

• Once tokens listed, they pumped, early investors dumped, and projects ghosted.

Biggest casualties? BitConnect (BCC), Dragonchain (DRGN), Bancor (BNT), Celsius (CEL)—you get the idea. Some were blatant Ponzi schemes, others were just “ambitious founders” who liked Lambos more than shipping products.

2. DeFi Summer (2020-2022) – The Yield Wars

Fast forward to 2020—Ethereum gas fees were still reasonable, and DeFi (Decentralized Finance) became the new playground.

Protocols like Uniswap, Compound, Yearn, and Aave exploded because they offered something new:

💰 Free money in the form of liquidity mining.

Mercenary liquidity flooded in to farm tokens like $COMP, $SUSHI, and $YFI at insane yields. What happened next?

• High APY = High TVL (total value locked).

• Insiders & early whales farmed billions in rewards and dumped on new entrants.

• Once incentives dried up? TVL vanished overnight.

Then, things escalated. The DeFi arms race went nuclear with the rise of OlympusDAO forks, algorithmic stablecoins, and ponzinomic yield farms.

Peak DeFi Ponzinomics:

• OlympusDAO ($OHM) – The "3,3" high-APY staking experiment that collapsed once emissions outpaced demand.

• Wonderland ($TIME) – A fork of Olympus that imploded when it was revealed that its treasury manager was a convicted scammer.

• KlimaDAO ($KLIMA) – The carbon credit-backed Ponzi that promised high APY for saving the planet (until its token cratered).

• SafeMoon – The reflection tax Ponzi where users were encouraged to hold while insiders cashed out.

• StrongBlock ($STRONG) – The "create a node, print money" game that stopped printing money once new entrants dried up.

• Anchor Protocol ($ANC) – The "risk-free 20% APY" that led to Terra’s collapse, erasing $40B overnight.

Some projects survived (Curve, Aave, Uniswap), but many others are now ghost chains, abandoned GitHub repos, or buried under lawsuits.

New cycle, same mercenary liquidity. The next "big thing" will come with new narratives—but the same game mechanics. Will you play it smarter this time?

3. The 2021-2023 NFT Mania – JPEGs, Wash Trading, and the Great Rugging

2021 brought the NFT gold rush, where billions in liquidity flowed into digital pictures, fueled by hype, speculation, and the promise of “owning culture.”

Collections like Bored Ape Yacht Club (BAYC), Pudgy Penguins, and Azuki became status symbols, while wash trading and VC-backed hype cycles pumped the floors to unsustainable heights.

How the Game Was Played:

• VCs and influencers bought low, pumped the narrative, and flipped to retail at the top.

• NFT platforms encouraged wash trading, offering incentives that rewarded volume rather than organic demand.

• Insane valuations ($69M Beeple sales, million-dollar PFPs) fueled mass FOMO.

Then the inevitable happened:

• Wash trading propped up platforms like Blur, where traders farmed airdrops by artificially inflating volume.

• Most collections crashed 95%+ as liquidity dried up, leaving thousands of retail investors holding worthless JPEGs.

• Rug pulls and insider dumps became routine.

The Biggest NFT Rugs & Scams:

💀 Pixelmon ($70M raised) – Promised a AAA metaverse game; instead, buyers got ugly, half-baked 3D monsters (remember Kevin?).

💀Azuki’s Elementals Debacle (2023) – Azuki sold a $38M mint that was nearly identical to their existing collection, tanking community trust.

💀Squiggles ($20M rug) – Raised millions, rugged before launch.

💀Frosties NFT ($1.3M exit scam) – Founders took the money and vanished—later arrested by the DOJ.

💀Mutant Ape Planet ($3M rug) – Another fake BAYC derivative that turned into an FBI case.

💀Friendsies ($5M rug) – Marketed as “forever NFTs,” before abruptly shutting down and deleting everything.

Who survived? BAYC, Pudgy Penguins, and CryptoPunks—but even their floors fell dramatically from peak hysteria.

Lesson: Most NFT projects weren’t “digital art movements”—they were mercenary liquidity farms disguised as culture. And yet, even after the 2022-2023 crash, NFTs still aren’t dead—because speculation never dies, it just evolves.

The next cycle? AI-generated NFTs, tokenized real-world assets, and new Ponzinomic mechanisms to pull liquidity back in. Will you recognize the patterns before it’s too late?

4. 2022-2024 – The L1 Wars & The VC Exit Strategy

As DeFi returns dried up, mercenary liquidity needed a new home. Enter Layer 1 blockchain wars—the next battleground for liquidity rotation and VC exit pumps disguised as “Ethereum Killers.”

Here’s the playbook:

1️⃣ Launch a new blockchain (Solana, Avalanche, Near, Aptos, Sui, Sei, Monad, Berachain—you get the idea).

2️⃣ Give VCs massive early allocations at pre-launch discounts that make retail look like exit liquidity.

3️⃣ Manufacture hype with “high staking yields” and “massive developer incentives” to attract TVL.

4️⃣ Encourage FOMO as early liquidity rushes in, pumping token prices.

5️⃣ VCs slowly start exiting once unlocks begin, retail bags the losses.

Same game, different branding.

For two years, L1 chains printed billions in incentives to attract liquidity, only to watch it leave as soon as the free money stopped flowing.

💀 Aptos ($APT) – Launched in 2022, pumped hard, then struggled with user adoption as VCs unlocked tokens.

💀 Sui ($SUI) – Billion-dollar backing, but more VC unlocks than organic usag

💀 Near ($NEAR) – Heavily incentivized dev grants, but liquidity never stuck.

💀 Internet Computer ($ICP) – Launched at $400, dumped to $5—one of the most blatant VC exit scams of all time.

💀 Sei ($SEI) – The “trading blockchain” with no real users and high inflation.

Some chains barely survived (Solana, Avalanche), but most were liquidity farms that dried up the moment incentives ran out.

5. Bitcoin’s Liquidity Cycles: When Hype Becomes Exit Liquidity

💰 BRC-20 & The Inscriptions Fee War (2023)

Meme tokens like $ORDI, $PEPE, and $MEME sent transaction fees soaring. Bitcoin block space became a gold rush, with miners raking in fees while exchanges like Binance paused BTC withdrawals due to congestion.

📉 The BRC-20 Implosion (2024)

At its peak, BRC-20 tokens had billions in daily volume—then it collapsed by over 90% as liquidity providers rotated out. Most tokens went to zero. A few, like $ORDI, survived, but the majority were just short-term farm-and-dumps.

🚀 Stacks (STX) & Bitcoin L2 Hype (2023-24)

As Stacks (STX) and other Bitcoin Layer 2s gained traction, speculation outpaced real adoption. Insiders and VCs got in early, retail aped in late, and the early money exited near the top.

🔥 Runes Pre-Halving Mania (2024-25)

Runes—Bitcoin’s new fungible token standard—sparked a liquidity rush before even launching. Whales and insiders pushed narratives hard, driving up speculation, but most were positioning to dump once liquidity maxed out.

💸 Bitcoin Transaction Fee Farming (2024)

Miners played their own liquidity game, front-running transactions and prioritizing high-fee trades before market activity cooled down. The cycle was rinse and repeat: speculation drove fees up, miners extracted, the hype faded, and fees normalized.

The Bitcoin Cycle was No Different—Just on a Bigger Stage

Bitcoin’s metaprotocol expansion was inevitable—but it followed the same mercenary liquidity cycle as every other sector in crypto.

• Ordinals brought new use cases, but also fueled JPEG speculation and network congestion.

• BRC-20 attracted billions in volume, then became a liquidity graveyard.

• Runes will launch, and the first ones to take profits will be the ones who created the hype.

Bitcoin evolves, but liquidity games never change. Will you recognize the pattern this time?

So, How Do You Win the Game?

Mercenary liquidity isn’t good or bad. It’s just part of crypto. The question is: Are you using it, or is it using you?

Here’s how to stay ahead:

✅ Follow the Incentives: When a new protocol offers “free money,” it’s not free—someone is exit-liquiding you.

✅ Track VC Unlocks: If a token is heavily backed by VCs, look at the vesting schedules. When unlocks happen, sell pressure follows.

✅ Exit Before the Incentives Dry Up: Once rewards drop, liquidity leaves. Be first out, not last.

✅ Look for Protocol-Owned Liquidity (POL): Projects like OlympusDAO and newer models are experimenting with liquidity that can’t leave overnight.

✅ Don’t Get High on Your Own Supply: If you’re up 10x or 50x, don’t get greedy. Crypto moves in cycles, and you want to be liquid for the next one.

Final Thought: The Next Cycle Will Be the Same (But Different)

Crypto history doesn’t repeat, but it sure rhymes.

• 2017: ICOs

• 2020: DeFi yield farming

• 2021: NFT flipping

• 2022-2024: Layer 1 wars + VC exit pumps + BTC metaprotocols

• 2025: AI + RWAs + GameFi + ???

The narratives change, but the underlying mechanics don’t. The liquidity will chase what’s new, stay for the yield, and leave when the next shiny object appears.

The key is not falling for the same trick twice.

— Wahndo

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