Sticky Capital

Definition ∞ Sticky capital refers to investment funds that are committed for long periods and are not easily removed from a system. This term describes investment capital that remains committed to a specific asset, protocol, or platform for an extended duration, resisting short-term market volatility or the temptation of quick withdrawals. In decentralized finance (DeFi), sticky capital often refers to assets locked in liquidity pools, staking mechanisms, or long-term governance commitments. It provides stability and depth to markets, supporting the sustained operation and growth of digital asset ecosystems.
Context ∞ The attraction and retention of sticky capital are critical topics in crypto news, particularly for the long-term health and stability of DeFi protocols and new blockchain networks. Projects often implement incentive mechanisms, such as higher yield for longer lock-up periods, to encourage this type of capital. The presence of sticky capital is a key indicator of a platform’s resilience and its ability to weather market downturns, fostering greater confidence among participants.