Recently, I’ve seen some investors pouring大量资金 into LP on a certain mainstream DEX, hitting several BNB, dozens of BNB, all for the gimmick of永久分红. Honestly, isn’t this kind of operation a bit irrational?

First of all, you need to understand that LP liquidity mining sounds great—locking assets in exchange for永久分红收益. But in practice, there are many pitfalls. Slippage costs, impermanent loss, token price volatility… all of these can directly eat into your returns. Especially in a market with sharp fluctuations, a sudden crash can instantly shrink your LP position.

The problem is, many people seem to overlook this. They only see the increasing dividends from Cake, BNB, but don’t consider that their principal is shrinking. It’s like earning dividends but your principal drops by 50%—no matter how high the dividends are, it’s pointless.

Of course, long-term holders are a different story. If you believe in the development of a certain DEX ecosystem and are willing to endure short-term volatility, then LP might be a good allocation. But blindly throwing money into it? That’s a bit problematic.

The market’s biggest fear is this "herd mentality"—one person starts playing LP, looks like they’re making money, ten follow suit, a hundred rush in, and eventually the liquidity bubble bursts once it’s poked. I hope everyone truly assesses their risk tolerance and investment cycle before deciding how much to invest in LP.