Today, let's briefly discuss why the dividend model of meme tokens cannot break through the barriers!

In fact, dividends equate to infinite inflation, unless the actual application can surpass the dividend ratio.

Some say, what if we add a burn mechanism on top of the dividend model? For example, what if we send more dividends to a black hole address?

This statement is theoretically correct, it is absolutely not wrong, but in economics, when you actually operate a project, you will find that a project with infinite dividends and infinite deflation combined is a death spiral.

Because in terms of liquidity, five percent of liquidity is directly destroyed, and this destruction does not serve any purpose for the project in terms of liquidity, but the other five percent of dividends is terrifying, as these dividends are constantly consuming the pool's liquidity every day.

During market uptrends, perhaps these dividends will not consume liquidity, but during downtrends, this daily consumption of five percent can be extremely frightening, as it often continues to plummet.

Especially during a major bear market, dividend tokens often fall during this period. Because dividends are actually another form of inflation, like a large corporation using high-interest loans, where they must pay interest every day.

In an uptrend, I am the boss; in a downtrend, the boss has long gone.

In a high-inflation model, even top public chain projects can become trash, for example, EOS, which was killed by high inflation and infinite dividends given to super nodes.