Liquidity mining in DeFi can lead to short-term capital flows. By offering high-yield rewards, it attracts capital seeking quick returns, often resulting in rapid inflows and outflows. Investors may move funds to platforms with the highest APYs, prioritizing short-term gains over long-term stability. This "hot money" behavior can cause volatility in token prices and liquidity pools, as capital shifts frequently. However, well-designed protocols with lock-up periods or gradual reward vesting can mitigate this, encouraging longer-term commitment. Balancing incentives is key to reducing transient capital flows.