LST/re-staking lately has made me feel more and more that the returns aren’t really falling from the sky. To put it plainly, it’s just taking the same security and selling it multiple times: on one side, the consensus rewards from basic staking; on the other side, the incentives or fee sharing provided by additional services/the intermediary layer. The problem is that the latter part often feels more like it’s “subsidy-driven.” When things are hot, the numbers look great; when they cool down, all that’s left is a promise.

The risks are also pretty straightforward: adding one more layer of packaging adds one more layer of contracts, oracles, and liquidation/punishment rules. If something actually goes wrong, it’s not as simple as losing a little bit of transaction fees—underlying staked assets could also be pulled into it. Meanwhile, over on L2, people are constantly comparing TPS, fees, subsidies, and so on… it’s a bit like the same logic: subsidies can prop up the narrative, but that doesn’t mean they can prop up cash flow. In any case, I’m more concerned now about where the money actually comes from, and what happens if that supply dries up—less of the illusion that it looks “profitable.”