Decentralized Finance Simplified Operations: Opportunities and Crises Coexist

In the world of cryptocurrency, a frequently overlooked fact is: "the simpler, the more dangerous". With the development of Decentralized Finance, we are moving towards a "foolproof operation" direction. Nowadays, even without understanding contracts or blockchain, various SDKs, aggregators, and wallet plugins can simplify complex on-chain operations into "one-click interactions". For example, a certain SDK can compress DeFi operations that originally required multiple steps of signing, authorization, and transfer into a single click.

This simplification sounds perfect: who wouldn't want to complete on-chain operations as easily as using mobile payments? However, the problem is that these "no-threshold tools" also hide complex on-chain risks. Just like someone overspending irresponsibly after getting a credit card, the issue is not the credit card itself, but their lack of understanding that overspending needs to be repaid. In the field of Decentralized Finance, once you authorize a contract to manage assets, it may permanently control all the balances in your wallet. For inexperienced users lacking awareness, casually clicking "authorize all assets" could become the start of a "one-click liquidation."

This convenience hides huge risks behind it:

• Clicking "Authorize All Assets" is equivalent to permanently handing your bank card and password over to a stranger;
• Behind the high-yield promotions, there may be hidden risks such as 100% slippage and funding pool hazards;
• Most users are unaware that certain contract authorizations may allow the other party to control your wallet for an extended period of time;

A real case: In 2023, a user lost $180,000 within 2 minutes due to mistakenly clicking a phishing link - the operation process was as simple as scanning a payment code, but it resulted in disastrous consequences.

Why is the blockchain pursuing "fool-proof interaction"?

The reason is simple: on-chain interactions are too complex and extremely unfriendly to new users. You need to download a wallet, manage mnemonic phrases, understand Gas fees, learn about cross-chain bridges, understand token conversions, identify contract risks, authorize transactions, complete signatures, and more. Any mistake in any step could lead to asset loss. Even after completing the operation, you still need to pay attention to whether the interaction was successful and whether you need to revoke authorization and other subsequent steps.

For Web2 users without a technical background, the learning curve feels like having to learn a new language just to make mobile payments. To allow them to seamlessly enter the on-chain world, we must first lower this "technical barrier." Therefore, interactive tools like certain SDKs have emerged: condensing what originally required 100 steps of on-chain operations into 1 step, simplifying the user experience from "expert-level operation" to the level of "mobile payment" with "one-click interaction."

From a broader ecological perspective, infrastructures such as RaaS (Rollup as a Service) and one-click chain deployment are becoming increasingly mature. In the past, launching a chain required writing underlying code, deploying consensus mechanisms, building browsers, and developing front-end interfaces, which typically took several months of development time. Now, by using certain services, a usable EVM-compatible chain can be delivered within weeks, and it can even come with governance tokens, economic models, and block explorers, making the process as simple as opening an online store. This allows any project team, community, or even individual hackathon teams to "start a chain business," truly realizing the "democratization" of on-chain entrepreneurship.

A low technical threshold does not mean an easy cold start

Many people mistakenly believe that "a chain can be quickly built" means it will be successful. In reality, the biggest challenge of a cold start is not "can it be done," but rather "are there people using it?" Technology is just the foundation for getting started; the key to whether a chain can survive is whether it can accumulate real and sustainable user behavior.

Subsidies and airdrops can indeed attract a large number of users and TVL in the early stages, just like a free promotion at a milk tea shop can draw a crowd across the street. However, once the subsidies stop, just like when the milk tea returns to its original price, if the product itself is not good and the service is poor, consumers will quickly leave, and the queue will disappear in an instant.

The situation on the chain is similar: many new chains appear to have a high TVL during the subsidy period, but most of it is the mutual pledging of funds from project parties, foundations, or institutions, creating a false data illusion. The number of real users and transaction volume has not increased. Once the subsidies and high APY end, liquidity disappears like a receding tide, on-chain transaction volume plummets, and TVL evaporates.

Worse still, if there is a lack of genuine trading demand on the chain, subsidy-driven funds will only create a short-term arbitrage loop—the user's goal is to "take advantage and leave," rather than using applications on the chain and forming an ecosystem closure. The higher the subsidies, the more speculative funds there are; once the subsidies stop, the withdrawal is faster. What truly determines whether a chain can successfully cold start is not the scale of airdrops or subsidies, but whether there are projects that can attract users to continuously consume, trade, and participate in the community on the chain—this is the starting point for a public chain to enter a virtuous cycle.

Taking PoL as an example: How the chain incentivizes the real economy

Among the many new chains, a certain chain has made an interesting attempt. It pioneered the PoL (Proof of Liquidity) mechanism—unlike traditional PoS, which distributes rewards to nodes, PoL directly distributes the chain's inflation rewards to users who provide liquidity, driving real economic behavior on the chain through incentives.

This design is more like directly distributing company shares to users— as long as you invest assets into the DEX, lending, LST, and other protocols on the chain to provide liquidity for the ecosystem, you can continuously earn rewards.

The three-token system design of the chain is also very distinctive:

• Native mainnet token: used for paying Gas fees and also serves as the main carrier for PoL rewards;
• Stablecoins within the ecosystem: used for trading, lending, etc.;
• Governance Token: Can participate in voting or earn additional rewards through staking.

The interaction of three tokens forms a virtuous cycle of "earn-use-governance," promoting the retention of funds on the chain while enhancing governance participation.

According to the data, the mainnet of this chain has been online for only 5 months, and the TVL is approaching $600 million, with over 150 native projects active. Compared to other popular L1s, its MC/TVL ratio is only 0.3x (the industry average is usually above 1), which means that the current market capitalization has not fully reflected its on-chain economic value.

This data has sparked a division of sentiment within the community:

• Pessimists believe that PoL incentives easily give rise to "mining, withdrawing, and selling", worrying about the long-term price pressure on tokens;
• Optimists believe that real transactions and ecological landing driven by PoL will lead to price increases along with ecological development.

The key is whether real trading demand can be formed in the ecosystem; otherwise, high APY subsidies may evolve into a "funds circulation".

Fortunately, projects that can bring real trading income have emerged in this ecosystem:

• A certain project: Using "behavioral rewards" to motivate users to quit smoking, combining healthy behavior with token rewards, and has collaborated with medical institutions in multiple countries;
• Multiple DEXs, lending, and LST projects are promoting real asset trading, continuously increasing TVL.

The activity and income capability of such projects are key to addressing the "unsustainable liquidity subsidy" problem.

Exploration of Cold Start for Other Chains

When deploying public chains becomes as simple as opening an online store, the core of competition shifts to whether it can continuously generate real transaction demand and fees, rather than relying on subsidies to maintain TVL.

Different chains are seeking breakthroughs through different narratives:

• Certain chain: Focused on RWA (Real World Assets), bringing physical assets on-chain;
• Another chain: Finding a new path in cold start through subchain feedback and ecological fission;
• Some new ecosystems attract projects to supplement their own trading volume through multi-chain deployment.

These explorations point to the same issue: without real transactions on the chain, subsidies will eventually run out; only when there are users, when people are willing to pay, and when funds are willing to stay on the chain, can the chain truly initiate a virtuous cycle.

Conclusion

The simplification of DeFi operations and the lowering of thresholds are indeed necessary pathways for more people to participate in blockchain. However, this path cannot rely solely on "one-click interactions"; it must also be complemented by user education, transparent risk control, and a sustainable economic model driven by genuine demand within the ecosystem.

Otherwise, the convenience of "allowing everyone to interact with one click" may only turn into a disaster of "losing everything with one click."

Just like those who run online stores know that giving out red envelopes can attract new customers, what truly sustains the business is being able to retain loyal customers who are willing to make repeat purchases. The construction of a blockchain is similar: to enable users to feel confident using it, to be able to use it, to understand it, and to continuously generate transactions is the true beginning of a public chain's cold start.