These days I've been looking at LST/re-staking again, and I feel like many people are only focused on the "additional layer of yield," but essentially there are only two sources of profit: one is the basic staking with inflation/fees, and the other is re-staking to "rent out" security for subsidies/incentives. The problem is that the second part is more like a temporary user acquisition phase; once the subsidies stop, it all vanishes.

The risks are pretty straightforward: after leverage is added, there's the risk of price de-pegging and liquidation chains, plus if the contract/operator encounters issues, everyone gets hit together. Last night, I also checked the on-chain net inflow of a certain re-staking protocol; after the 0x7a…c3 transaction came in, it was quickly split into several parts for lending cycles, which made me a bit uneasy.

Additionally, nowadays people love to interpret ETF capital flows, US stock market risk appetite, and crypto market rises and falls together... which isn't without reason, but when the risk switch is turned off, the first to get hit are often these "seemingly stable" layered yield strategies. Anyway, I personally prefer to earn less, at least to understand whose pocket the money is coming from.