Battle the Hydra
Smite the Hydra's Neck
Look for Mercedes inside the Encampment and choose to spend the night there. You'll wake up in the morning with a hydra wrecking havoc inside. It’s head is its weakness. If you have a melee character, you can grab unto it and climb to its head. If you’re a mage or strider, target the head using your ranged attacks and magic. Once enough damage has been dealt with the Hydra, one of its head will be cut off.
If you take too long to finish it off, Mercedes will hand you an explosive barrel that you can throw to the Hydra. It will swallow it, causing one of its heads to explode. After the quest, a scene will take place and Mercedes will ask you to escort her group to the capital, Gran Soren. This will start the next quest, “Off with Its Head”.