Challenges Faced by DeFi 1.0

LP liquidity mining and POW mining share the same drawback: mining output is a perpetual expense without lasting benefits. LP liquidity mining is akin to renting; in the initial stages, rental costs are high (high yield high token price), making it easy for protocols to acquire liquidity. However, as rental costs decrease (reduced yield token price decline), it becomes increasingly difficult for protocols to rent liquidity, and the temporarily owned liquidity diminishes.The correct approach is to always guide and accumulate long-term, controllable value, rather than perpetually paying high interest for rented capital, as such high interest is unsustainable.

Bonds change everything. Through the bond mechanism, the protocol can exchange its native tokens for assets. Instead of renting liquidity from third parties, it directly purchases liquidity. Once bonds are established, the protocol owns these assets while distributing new token supplies.