Recently, a heated topic has been stirring up in the community, and I want to share some thoughts with everyone. The project that once claimed to be a "revolutionary DeFi innovation" collapsed in a very short time. The token price plummeted from a high level to nearly zero, billions of dollars in funds evaporated, and many core participants were controlled by relevant authorities. Some people in the community are crying over losing their entire assets, which indeed is quite heartbreaking.

But honestly, such incidents have played out countless times in the crypto world. Carefully examining major collapse cases, you'll find that the scripts are almost identical—the promise of ultra-high returns, complex mechanisms that confuse people, and a continuous influx of newcomers. Today, I will analyze how these projects attract people and how they ultimately collapse.

**The ROI Numerical Game**

First, let's look at those eye-catching return promises: 1.2% daily, 41% monthly, over 7600% annualized. Sounds crazy, right? From a different perspective, the current annual yield for bank fixed deposits is about 2%. How can a legitimate business model or investment project continuously generate such outrageous returns? These numbers are speaking for themselves—they are impossible to sustain.

These high-return promises are actually designed to attract participants who want to get rich quick and lack risk awareness. They seem to provide you with data, but in reality, they are selling an "overnight wealth" fantasy.

**The Reality of Internal Mechanisms**

Digging deeper into how these projects operate, you'll find the logic is fundamentally broken:

The project claims to have business activities generating profits, but in fact, there are no real revenue streams. The invested funds are forcibly split into two parts—one part is used to buy the project's own tokens, and the other is funneled into a so-called "liquidity pool." It sounds complicated, but it's essentially a money circulation game. New money is used to pay old investors' returns; as long as new funds keep flowing in, the game can continue. Once the influx of new funds slows down, the entire scheme collapses immediately.

These projects often set up various reward tiers—recruit someone and get a reward, recruit ten and get an even bigger reward. This pyramid-like incentive structure essentially encourages participants to do referral marketing. When many core promoters are controlled because they are involved in such activities, it indicates that regulators have already made a clear judgment about the illegal nature of this model.

**Why Do People Still Believe in These Projects**

This involves information asymmetry. Many participants don't fully understand concepts like DeFi and liquidity mining. Seeing some seemingly technical jargon, combined with friends participating and a lively community atmosphere, makes it easy to get swept in. The project teams exploit this by using some semi-true technical terms to endorse themselves.

**How to Protect Yourself**

The most straightforward advice is: any investment project promising ultra-high returns should make you question it. Markets follow certain rules—there are no stable, sustainable, and outrageously high yields. Any project that promises such returns is either a scam or inherently unsustainable.

Second, examine the project's actual business model. How does it make money? Where do these returns come from? If you can't explain it clearly and simply, there's a problem.

Finally, beware of social pressure and FOMO (fear of missing out). Truly good investment opportunities won't force you to decide immediately, won't pressure you to recruit others, and won't kick you out of groups just because you ask a few questions.

There are many opportunities in the crypto space, but also many pitfalls. Next time you see such projects, I hope everyone can think a bit more before jumping in.