The third time someone asked me where the “returns” from LST/repledge actually come from… I answer using a folded-paper way of thinking: first, fold the returns into two layers to look at them. The bottom part mainly still comes from the consensus rewards of staking—fairly plain. The repledge portion that’s added comes from other protocols paying for “extra security,” or from directly subsidizing to recruit people; in any case, it doesn’t just grow out of thin air.

Risks are folded into two layers the same way: the first layer is price and redemption (when LSTs lose their peg or liquidity is thin, you may not be able to withdraw cleanly even if you want to). The second layer is using the same collateral to back more places—stacking protocols, stacking permissions, stacking penalties/sanctions for hackers; once something goes wrong, it turns into a chain reaction. Recently, with the social mining and fan tokens setup—“attention is mining”—it sounds like they’re packaging subsidies as mining… It’s exciting and bustling, but in the end, it still comes down to who’s paying and who will foot the bill if something happens. For now, that’s it: my own rule is, I only get in if I can understand the cash flow, and the exit button is always there.