Recently, people keep asking me where the "profits" from LST/re-staking come from.

My current understanding is quite simple:
Part of it is the staking rewards already given on-chain (to put it plainly, inflation plus a small cut of transaction fees),
another part is you lending out the same "security" to do business, with the protocol earning service fees/incentives and sharing some with you.
It sounds very attractive, but the risk is hidden here:
If something goes wrong at the underlying layer (penalties, node misbehavior), the layers stacked above might all shake together;
there are also contract risks, liquidity risks, and when a run on the system happens, the discount on LST prices can crush people's confidence.

In the past, I was eager to chase "an extra layer of yield,"
but now I tend to focus on funding rates and large on-chain transfers first.
When whales move assets around, I start to get a bit anxious…
Plus, with recent discussions about regional tax increases and tighter compliance, deposit and withdrawal expectations change,
and people's emotions become more fragile.
It feels like these layered yield strategies are more easily exploited as a cash cow for withdrawals.
Anyway, I now prefer to earn a bit less and sleep well.