Lately, I’ve been going through those LST/re-staking “accounts” again, and the more I look, the more I feel the returns basically come down to two things: one is the basic rewards from the underlying staking, and the other is packaging and selling the same trust/security to more people—only when others are willing to pay do you get that extra “soup.” The problem is right here: the more you sell, the more that when something goes wrong, it’s all at once—fines, delayed redemptions, and protocol rules changing—leaving you with the helpless feeling of holding a “receipt,” waiting in line outside to refresh and retry.

It’s a bit like the recent uproar over NFT royalties: creators want to take home more, while secondary liquidity providers complain that the costs are too high. Re-staking is similar—many of the extra gains are often “liquidity friction fees” and “complexity premiums.” When market sentiment shifts and fewer people are willing to pay, the returns soften first, but the risks won’t be discounted along with them. In any case, I now care more about the path to exit; whether the returns are high or not comes second.