Crypto Talk: Beginner Pitfall Avoidance Lesson 17｜Why Reward Tokens From Minting-and-Subsidies Need Extra Caution?

Crypto Talk: Beginner Pitfall Avoidance Lesson 17｜08:32
Why Reward Tokens From Minting-and-Subsidies Need Extra Caution?
Some new friends see a project with very high returns and think: “I can claim tokens every day—at least I should take the rewards first.”
But there’s an easy-to-overlook question here: Who is actually paying for the rewards you receive?
If the rewards come from real revenue—like users are willing to pay for the product—then splitting a portion of that revenue reasonably among participants is still worth exploring. But if the project mainly subsidizes users by constantly issuing new tokens, then the apparent high yield is, in essence, just issuing even more tokens.
You can think of it like a store trying to attract customers by handing out large amounts of coupons every day. At first, there are few coupons and many customers, so everyone feels it’s valuable. Later, more and more coupons are issued, but the number of people actually willing to pay to buy coupons doesn’t grow accordingly. When coupon holders try to cash them in, they find the market can’t absorb it.
So when I look at this kind of project, I usually don’t get drawn in by “how much it’s issuing,” but instead focus on why the rewards can exist in the first place.
The first thing is to distinguish whether the rewards come from operating income or from newly issued tokens. The former has at least external cash flow backing it; the latter is more about diluting everyone’s share.
Second, you need to see why the people receiving the rewards would keep holding. If the token has no real use beyond claiming the next round of rewards, and there’s no sustained demand, then the more participants there are, the bigger the potential sell pressure in the future may be.
You also have to ask: After subsidies are reduced, will users stay? People who came in because of rewards often leave right along with the higher rewards. As long as growth must rely on more and more new tokens, the loop is hard to keep going indefinitely.
My judgment boundary is this: Minting-and-subsidies by itself doesn’t mean the project is definitely in trouble. It’s common for early projects to use subsidies to kick-start the network. The key is whether the subsidies can bring real users, real usage, and revenue that doesn’t rely on subsidies. If these things don’t show up for a long time, then the so-called “returns” may just be settled by token value depreciation.
What deep research needs to do here is break down those pretty return numbers: where the rewards come from, how fast the token supply is increasing, and whether real demand can absorb the added supply. Only if these three things can improve step by step, can subsidies be a way to start up—not a way to push the pressure onto people later on.
If you’re currently looking at a project with very high rewards, comment the token name and the reward source. Clarifying “who is footing the bill” is often more useful than the annualized number.