The other one you fight in the story appears to gain power from people's feelings and can induce nightmares.
His weak point is on his head, so Zael must use his Gathering skill to lure it out to allow the others attack.
There is also a variation of the Cocoon fought in Chapter 39 at Reptids' Cave Revisited, the Last Cocoon. This battle starts off with the boss actually inside a real cocoon, to which none of the mercenaries can get close. It starts off with barely any health, but it picks the mercenaries up and absorbs their health. Eventually it causes them all to hallucinate, and they begin attacking each other without realising it. By the time they come to their senses, the Last Cocoon has hatched from the cocoon, and the real fight begins.
To defeat it rather quickly, use the bombs near the altar and use them to break the altar. After breaking it, lure Cocoon into the altar that way it will be stuck there, then use burst arrows to knock the huge sword on the ceiling off. It should smack down onto Cocoon, paralyzing it. And Zael should "climb" onto it, dealing 99,999 damage per climb.
It is a long and difficult fight, especially if you knock down the hanging sword and it misses. You will spend most of the battle running and firing at it with your crossbow then, for otherwise it will defeat you quickly.