The reason a four-figure rate lasts as long as the incentive does

A new pool advertised a rate in the thousands of percent. The yield was not generated by the pool’s activity; it was paid from a fixed pot of incentive tokens the project was distributing to attract capital fast. When the pot ran down and the emission schedule stepped the rate lower, the number collapsed to single digits and the capital fled to the next incentive. The four-figure rate was a recruiting bonus with an expiry, dressed as a sustainable return.

What everyone sees

A depositor sees a rate in the thousands and reads extraordinary opportunity: a return this high, even for a while, seems worth chasing. The size of the number dominates attention. The depositor assumes the rate reflects the pool’s earning power and will persist long enough to matter, without asking where such a yield comes from or how long the source can pay it.

What is actually happening

Extreme rates are almost always subsidies: a project spends a fixed budget of its own tokens to bootstrap liquidity, and the advertised yield is that budget divided among current depositors. Research on liquidity mining shows this capital is mercenary — it arrives for the incentive and leaves when it ends, often within days. The rate is a function of the subsidy, not the protocol’s revenue, so it necessarily falls as the subsidy depletes and more depositors dilute the fixed pot.

Why it stays hidden

The hidden mechanism is the presentation of a temporary subsidy as an intrinsic return. The four-figure number is real while the incentive lasts and structurally doomed to fall, but it is displayed as though it were a property of the pool rather than of a depleting budget. The expiry is never shown beside the rate, so the depositor mistakes a recruiting bonus for an earning rate.