The Dangerous Traps of Simplified DeFi Operations and the Challenges of Cold Start in Public Chains

In the crypto world, the truth that "the simpler, the more dangerous" is often overlooked. The development of Decentralized Finance is moving towards a "foolproof operation" direction, with various tools simplifying complex on-chain operations into one-click interactions. However, this convenience hides huge risks.

The simplified interface hides the complex on-chain risks. Users may unknowingly authorize contracts to manage all their assets, which is akin to permanently handing over a bank card and password to a stranger. Behind the high-yield promotions, there may be high slippage and liquidity pool risks. Many users are unaware that certain contract authorizations can lead to long-term control of their wallets.

In 2023, there was a case where a user lost $180,000 in just 2 minutes due to mistakenly clicking on a phishing link. This seemingly simple action resulted in catastrophic consequences.

The public chain ecosystem is pursuing "foolproof interaction" because on-chain operations are extremely unfriendly to new users. From downloading wallets to managing mnemonic phrases, from understanding Gas fees to using cross-chain bridges, each step can potentially lead to asset loss. To attract Web2 users to seamlessly enter the on-chain world, various interaction tools have emerged, simplifying complex operations into one-click completion.

However, the lowering of technical barriers does not equate to success. The biggest challenge faced by public chains is how to attract and retain real users. Subsidies and airdrops can bring users and TVL in the short term, but without genuine, sustainable user behavior, the ecosystem of the chain is difficult to maintain in the long run.

Many new chains appear to have a high TVL during the subsidy period, but this is often a mirage created by mutual pledging of funds from project parties or institutions. Once the subsidies end, liquidity rapidly departs, and on-chain trading volume plummets. Worse still, on chains lacking genuine trading demand, subsidy-driven funds often create short-term arbitrage cycles, with users "taking advantage and leaving," rather than forming an ecological closed loop on-chain.

What truly determines whether a public chain can successfully cold start is its ability to attract users to continuously consume, trade, and participate in the community on the chain. This is the key to the public chain entering a virtuous cycle.

Berachain has made an interesting attempt through its innovative PoL (Proof of Liquidity) mechanism. It directly distributes the chain's inflation rewards to users who provide liquidity, incentivizing real economic behavior. Its three-token system design (BERA, HONEY, BGT) forms a virtuous cycle of "earn-use-governance," promoting funds to stay on the chain and enhancing governance participation.

Berachain achieved nearly $600 million in TVL just 5 months after its launch, with over 150 active native projects. Its MC/TVL ratio is only 0.3x, lower than the industry average, indicating potential value. However, opinions in the community are divided: pessimists worry that PoL incentives may lead to "mining and selling" behavior; optimists believe that real transactions driven by PoL will push prices up.

The key lies in whether the ecosystem can create real trading demand. Some promising projects have emerged in the Berachain ecosystem, such as PuffPaw's "Vape-to-Earn" model, as well as DEX and lending platforms like Kodiak and Dolomite that promote real asset trading. The activity and revenue potential of these projects are crucial to addressing the issue of "unsustainable liquidity subsidies."

As deploying public chains becomes easier, the competition shifts to whether they can continuously generate real transaction demand and fees. Different public chains are seeking breakthroughs with their own characteristics: Pharos Network focuses on RWA, Initia explores new paths for cold starts through sub-chains, and ecosystems like HyperEVM attract projects through multi-chain deployments. All these attempts point to the same goal: only chains with real transactions, continuous payments, and funds willing to stay can truly kickstart the development flywheel.

The simplification of DeFi operations is indeed a necessary path for more people to participate in blockchain. However, this process cannot rely solely on lowering operational thresholds; it also requires user education, transparent risk control, and a sustainable economic model driven by real demand. Otherwise, the convenience of "one-click interaction" may evolve into a disaster of "one-click loss."

What truly supports the development of public chains is the ability to retain and attract returning users. The core of public chain construction lies in allowing users to feel confident in using it, to know how to use it, and to understand it clearly, thus continuously generating transactions. This is the true beginning of a cold start.