Some emerging token projects frequently attract retail investors with concepts like token burns and dividends, but their mechanism design has fatal flaws. Although burns seem impressive, they do not change the essence of the project—lacking real application scenarios and trading depth support.

Even more painful is the dividend model: claiming to distribute dividends based on holding tokens, but the more holders there are, the less trading occurs, and dividends become meaningless. This leads to a classic death spiral: price drops → users exit → liquidity dries up → further decline. A cyclical pattern.

Many people hope that market makers will step in to rescue the situation, but in reality, the principal is often slowly eroded without notice. Experienced investors understand that the outcome of such models is usually only one—account balance zero. Recognizing these risky projects is far more important than blindly chasing high returns.