These past two days, I’ve been looking into LST and re-staking things like that. Where exactly does the yield come from? To put it plainly, it’s basically two parts: one is the “base interest” from the underlying staking itself, and the other is taking the same security and using it to back other protocols—so those protocols give you some rewards/subsidies. It sounds pretty enticing, but that’s also where the risks come from: the farther you borrow out your security, the longer the chain gets. When something goes wrong, it’s not just “losing a bit of yield”—it’s redemption getting stuck, redeeming at a discount, and even the other protocol side blowing up and causing domino effects.

Recently, I’ve been seeing Layer2 projects sparring over TPS, fees, and ecosystem subsidies, and it feels oddly familiar… Subsidies will eventually ebb. What’s left are the ones with real cash flow and clearly defined risk boundaries. Anyway, I’d rather make a little less right now, and only take action after I’ve figured out the redemption path, the costs, and the worst-case scenarios. That’s it for now—I’m going to get to work.